Common Agricultural Policy

HC Deb 24 March 1982 vol 20 cc964-1045

[Relevant Community document: No. 5528/82]

5.43 pm

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

I beg to move, That this House takes note of European Community Documents NOs. 4624/82, 4624/82 Addendum 1, 4624/82 Addendum 2, 4624/82 Addendum 2/1 and 4624/82 Corrigendum 1 on agricultural prices and markets, 10311/81 and 10311/1/81 Revise I on Guidelines for European Agriculture, 8915/81 on multi-annual trade agreements for agricultural products, 4298/82 concerning a report from the Commission to the Council on the Situation of the Agricultural Markets-1981, 7538/81 concerning the reduction of the guide price used for calculating the sheepmeat variable premium, 10104/81 on proposals on the common organisation of the market in wine, and the Ministry of Agriculture, Fisheries and Food's unnumbered Explanatory Memorandum of 12th March 1982 concerning a Commission proposal for the exceptional distillation of seven million hectolitres of red wine; recognises the contribution United Kingdom agriculture makes to the national economy and the need to obtain adequate returns for United Kingdom producers; draws attention to the need to contain prices of those products in structural surplus; and supports the Government's intention to seek an agreement on 1982–83 farm support prices and related measures designed to reduce surplus production, to limit the cost of the Common Agricultural Policy and to take account of the interests of consumers and food processors.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

I should tell the House that Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.

Mr. Walker

The motion sets out a number of important Commission papers. There are papers dealing with the proposals for farm price fixing for 1982–83, the guidelines for reform that the Commission has published, potential arrangements and framework agreements for exports, the sheepmeat regime, the distillation of wine and the general problems connected with surplus wine in the Community.

Mr. Norman Buchan (Renfrewshire, West)

Before the right hon. Gentleman moves beyond that point I wish to ask about the document relating to wine. There was an extremely disturbing report on the tape last night from Brussels that said that qualified agreement had been made in relation to the distillation of wine. That could have certain effects on the Scottish and other industrial alcohol industries. It was said that the agreement was subject to ratification by tonight's debate. Surely it is improper to regard a motion, even if it is passed on a "take note" basis, as ratification by the House. I should like to know the right hon. Gentleman's views.

Mr. Walker

There will be a debate on the motion. When the hon. Gentleman knows the terms agreed, which completely safeguard the British industrial alcohol industry, I am sure that he will welcome them. I hope that, when he has studied the terms, he will—in the wind-up speech, if he is to make it—applaud what has been achieved in the negotiations. There will be no ratification until the House has debated the subject, so the problem is not a serious one.

Before dealing with some of these documents and the points at issue I shall make a general comment about the amendment in the names of the Leader of the Opposition and his right hon. and hon. Friends. It is an interesting amendment. It is the first open sign of what I believe to be Labour Party policy—withdrawal from the European Community. Anybody who supported the amendment would be supporting Britain's withdrawal from the European Community.

A succession of Governments and Prime Ministers have negotiated British entry into the Community. The previous Labour Government renegotiated the terms of our membership. Both my right hon. Friend the Prime Minister and my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs have made it clear that we accept the common agricultural policy as a major and important part of the Community. Therefore, if the amendment were to be accepted, the House would be saying that Britain should no longer remain in the Community.

It should be clear that this is an historic debate. Of all the debates that we have had on this topic, this is the first in which the Labour Party has committed itself to a course which would be exceedingly dangerous for the country as a whole and bad for British agriculture. It would also be bad for the British economy.

A number of my hon. Friends have tabled an amendment which talks about replacing the CAP with something different. I wish to point out the remarkable changes that have been achieved in the three years of this Government. It is worth standing back and looking at the basic change in the facts of the CAP in the past three years.

The cost of the CAP had risen rapidly year after year during the period of the previous Labour Government. By the time that we came into office, it took up 80 per cent. of the total European budget. In the previous four years there had been a rise of 350 per cent. in the CAP. The cost had risen from £1.6 billion to £6 billion.

Throughout that time Britain had suffered from a policy of negative monetary compensatory amounts, which gave an advantage to our European competitors and a massive disadvantage to British agriculture. It is a great tragedy that in those early years, as members of the Community, the Labour Government decided to put British agriculture at such a basic disadvantage.

We also obtained relatively small benefit from the expenditure on the CAP measured in terms of the funds spent by the Community as a whole. Added to all this, we made a substantial budgetary contribution to the Community, on which the previous Labour Government failed to renegotiate better terms. That was the position three years ago.

The position three years later is very different. We have reduced the proportion of the European budget devoted to the CAP from 80 per cent. to 66 per cent.

Mr. Tony Marlow (Northampton, North)

I am absolutely sure that my right hon. Friend will want to be completely objective in his use of statistics in this context. Will he tell the House to what extent that reduction from 80 per cent. to 66 per cent. has come about as a result of a change in Community policy and to what extent it has come about as a result of an increase in world prices? How confident is he that world prices will not come down again in future, thereby increasing the proportion of the Community budget taken up by the common agricultural policy?

Mr. Walker

I shall be dealing with that issue throughout my speech. My hon. Friend is saying that world food prices have moved upwards and that CAP prices have not moved up to the same degree. That is a reflection upon the way in which we have operated the CAP to narrow the gap between world prices and prices within the EEC. That did not happen when the previous Labour Government were in office. Bearing in mind my hon. Friend's views on this topic, I recognise that he much regrets the changes that have taken place in the past three years. That is because all the changes have been against his basic arguments on Europe. During the same period the rise in cash terms has been only 35 per cent., whereas the rise in the cost of the common agricultural policy has been about 350 per cent.

The proportion of the CAP funds that benefit Britain directly have doubled during the same three years. We succeeded in negotiating a major amendment of the budget. During most of this period British agriculture has enjoyed the benefit of having positive rather than negative MCAs as a result of Government action. This has led to a transformation of our balance of trade with Europe and of our balance of trade in foodstuffs generally. During a period of world recession, the common agricultural policy has given a positive advantage to our exports to Europe and to British agriculture in our domestic market. This has resulted in our share of the British domestic market providing our farming activities, producers and food industry with an additional £1, 000 million worth of trade compared with 1978. This has been a considerable achievement and shows the immense benefit that we have obtained as a result of the way in which we have operated the CAP.

Mr. Marlow

I hesitate to intervene again. I am grateful to my right hon. Friend for giving way again. As he said, there has obviously been a benefit to the farming community in positive MCAs, but will he tell the House what benefit there has been to the consumer in terms of prices?

Mr. Walker

I shall take great joy in doing that in a short while. I hope that it will be one of the rare occasions in my hon. Friend's life when he actually listens. If he does, he might discover the considerable benefit that the consumer has derived. I am glad that we now have it on record that my hon. Friend recognises the considerable advantage that the British farmer has enjoyed because of the way that the Government have operated the CAP. That is an advance.

We are again endeavouring to obtain changes in the CAP and in the budget. Talks are taking place in the Foreign Ministers Council, the Finance Ministers Council, and the Agricultural Ministers Council about the CAP and its future and the budget. Throughout the discussions within the Community on the mandate of 30 May 1980 it has been agreed that work on all three chapters—the CAP, the development of other Community policies arid the budgetary problems—must go forward in parallel. All three chapters are interrelated. That is our view and it remains our position. That is why decisions on the CAP can be taken only in parallel with decisions on budgetary problems.

I welcome this opportunity to put into some perspective the realities of prices and their effect on the consumer. The first analysis was carried out not by myself, but by my predecessor during the administration of the previous Labour Government. In April 1979 the right hon. Member for Deptford was asked how much of the price increases in food that had taken place during the life of the Labour Government were due to CAP price increases. He was forced, to his deep embarrassment, having used all his propaganda resources against the CAP, to make a statement in which he said that food prices had risen by about 110 per cent., of which only 10 per cent was due to CAP prices. It is important to recognise that in a nasty period of fast rising food prices and increases in the CAP a Labour Minister who was hostile to the Community and the CAP had to announce that, of a 110 per cent. increase in food prices during the period of the previous Labour Government, only 10 per cent. was due to CAP prices.

There has been remarkable stability in food prices during the inflation of the past three years. The retail price index has risen much more than the food price index and the food price index has risen more than farm gate prices. In the fight against inflation, it has been the stability of farm gate prices more than almost anything else which has had such a considerable impact in keeping Community food prices relatively stable. It is about time that the critics of the CAP, and the critics of what is called the farming lobby and the "fabulous" prices that farmers receive, recognised that the farming community as much as any other sector has made a major contribution during the past three years to keep prices in check through the CAP.

I have been pleased to announce recently that only a small proportion of the price increases that take place are the direct result of CAP price increases. By far the largest factors in the 37 per cent. increase in food prices since December 1978 have been the cost of retailing, wage costs and the costs of distribution. When the previous Labour Government were in office, food prices used to increase each fortnight by the same amount as CAP prices increased in a year. During that period, doubtless high wage inflation was a major factor in the events that led to increased food prices. I published last year estimates of the effect of CAP price increases on various food commodities. I adhere to every one of those estimates as I believe them all to be correct. It is strange that some people try to compare them with price increases that took place because of a range of other factors that had nothing to do with the CAP.

Mr. Buchan

The right hon. Gentleman has referred to my right Friend the Member for Deptford (Mr. Silkin) saying that, although food prices had risen by about 110 per cent., only 10 per cent. of the increase was due to increased CAP prices. In his argument he seems to reject the idea that 10 per cent. is of any real consequence. In fact, it is a major factor to the ordinary British family. If he does not believe me, he should recognise that last year the Government introduced a Bill to take back 1 per cent. of the old age pension. We are now talking about something 10 times as much. The right hon. Gentleman cannot regard it as a minor figure. It is surely a major factor.

Mr. Walker

I am talking about 10 per cent. of CAP price increases that took place during the lifetime of the previous Labour Government. It is a great pity that the Labour Government did not pay more attention to the other 100 per cent. It is extraordinary that, seemingly, Labour politicians expect farm wages to be improved and farmers to meet the cost of increased oil and fertiliser prices without an increase in farm prices. As a method of making British agriculture bankrupt and creating the unemployment of all those who manufacture for British agriculture, it is a good formula, but it is not one that we adopt. It is a formula that I reject.

On other aspects of prices, I was interested to see that a certain newspaper made comparisons between what were predicted to be CAP price increases and what were not. One of the worst comparisons was the enormous increase in beef prices over the last year. The article pointed out that, although I said last year that the CAP price agreement would have virtually no effect upon beef prices, they had nevertheless risen substantially.

That is a very good example of the effect upon the consumer of failure over the years to pay a proper return to the producers. The reason why beef prices have soared in the last year is that there is far less beef available on the market. That is because such has been the price restraint in that sector that more and more farmers have got out of beef production. As a result of not ensuring that the producer had a decent return, there was a substantial increase in prices.

Therefore, I hope that there will be no more nonsense to the effect that CAP prices have been a major factor in price increases. The opposite is the case. Compared with any other factor in the economy, the restraint on CAP price increases has had an important adverse effect on inflation during this period. To that must be added the beneficial effect for the consumer of the butter subsidy, which is double what it was under the Labour Government, and the beef and lamb schemes which basically provide a premium payment to the net benefit of consumers in general.

Therefore, in a period of fast rising wages and energy costs, it can be shown that there has been a period of considerable restraint in the effect of CAP prices upon the consumer.

Mr. Thomas Torney (Bradford, South)

For the second time, the Minister mentioned fast rising wages, which may apply to some industries. A little earlier, however, he mentioned retail distribution costs and high wages. Is he aware that wages in retail distribution are notoriously low and that workers in retail distribution are among the lowest paid in the country? How can he justify the charge that high wages are a factor when they are so drastically low?

Mr. Walker

I said that increases in food prices have a considerable relationship with whatever wage increases take place in the retail trade. I am sure that the hon. Gentleman would not deny that, as it clearly affects retail costs. I am not arguing the relative merits or levels of any particular wage in the country. I am simply saying that the impact of the increased cost of distribution due to wages, oil prices and energy costs is a far greater factor in any increase in food prices over a given period, particularly over the past three years, than any increase in CAP prices.

The Opposition motion also refers to the impact of the CAP on Third world countries. I entirely reject the Opposition's assumption that the CAP is damaging to Third world countries and should be done away with in order to benefit the Third world. Nevertheless, I welcome the opportunity that it provides to point out the reality of the relationship between the Community and Third world countries. It is time that we put on record the remarkable benefit that the European Community brings to the agriculture of the developing countries.

Mr. Marlow

What about sugar?

Mr. Walker

I shall be extremely pleased to deal with sugar. The prime interest of the Third world is tropical products. It would be difficult to find a more liberal or relaxed regime than that of the European Community towards tropical products. For example, nearly all the agricultural products from the 61 ACP countries enter the EEC duty free, and there are special arrangements, with which I shall deal, for sugar and beef.

For the developing countries and the ACP, special concessionary arrangements also apply. On the export side, the Community obviously does not produce tropical products and sales of surplus temperate products, for the most part do not compete directly with existing developing country production. Indeed, the Community frequently provides a cheap supply of food that developing countries are unable to produce. It is time that those who criticise that arrangement recognised that the Community import regimes for the benefit of developing countries under the generalised scheme of preferences—Lomé and bilateral agreements—are unmatched by any developed country importer in the world. The proof of that is that developing countries account for nearly half of the Community's total agricultural imports. I might add that the Community also provided most of the trade with the developing countries or, as the Opposition prefer to call them, Third world countries.

The generalised scheme of preferences provides reduced rates of duty on more than 300 agricultural products. Those rates are enjoyed by all developing countries, with the least developed countries coming down to a zero rate. Under the Lomé convention, apart from duty-free access for most ACP tropical and agricultural products, there are special arrangements for ACP beef, sugar, bananas and rum, and concessions on maize, rice, processed fruits and vegetables.

I am also extremely pleased to deal with the question of sugar. Exports of sugar from these countries to the Community represent more than 60 per cent. of all sugar exports from ACP countries and India. The remainder of ACP production—some 5 million tonnes, mainly produced in India—does not find its way on to the world market in any case.

Critics who argue that ACP sugar would fetch a better price on the world market if Community sugar exports were less should remember not only that 1.3 million tonnes of ACP sugar has guaranteed access to the Community at Community price levels, but that Community producers now bear the full cost of all export refunds on sugar, apart from the equivalent of 1.3 million tonnes of ACP sugar which is borne by FEOGA. Moreover, a joint Community producer initiative has resulted in holding back at least 1.7 million tonnes from the market this year. As one who deals regularly with the leaders of ACP countries and who has ensured that agreements with ACP countries are fulfilled and completed, I assure the House that there is no doubt that those countries recognise the considerable benefits that they enjoy.

Mr. Stanley Newens (Harlow)

Will the right hon. Gentleman confirm that in 1980–81, EEC countries exported to the world market some 4.7 million tonnes of sugar, representing 20 per cent. of total world trade in sugar? Does he realise that that has greatly depressed the world price of sugar and has accordingly reduced the earning power of countries which depend upon the export of sugar? Does he also recognise that the EEC is doing tremendous damage to Third world countries which are dependent on exporting sugar?

Mr. Walker

If the hon. Gentleman had listened to what I said, he would have heard that throughout that period the Community took 65 per cent. of the sugar produced by those countries at prices well above the world price and guaranteed them an absolutely certain market. The rest of the production—the 5 million tonnes produced primarily in India—does not come on to the world market in any case. I assure the House that the financial benefits to those countries from this arrangement are considerable.

Mr. Newens

The right hon. Gentleman is wrong.

Mr. Walker

I repeat, no major developed country or community in the world gives the same benefit to Third world countries as does the European Community. assure the House that if the Community were broken up, as no doubt the hon. Gentleman would wish, the position of Third world countries without the guarantees and open access provided by this vast market would be seriously undermined. It is not in the interests of those countries for the common agricultural policy to disappear.

Having made those comments about consumers and Third world countries, I turn to agriculture and farm incomes in this country.

Mr. Douglas Jay (Battersea, North)

If the CAP is so wonderful in all these respects, why do the Government want to reform it?

Mr. Walker

Because, as I said in my opening remarks, over three years we have reversed the had trends that occurred under the Labour Government. During the past three years we have brought about substantial improvements, for which I have given the relevant figures. I want to go on changing, reforming and improving the CAP. It is wrong to make allegations about the effect on consumers and on Third world countries that are totally unfounded. We must get the matter into perspective.

I want to review agriculture in the United Kingdom and say something about farm incomes. My White Paper shows that, for the first time for some years, there was an improvement in farm incomes during the past year It was an improvement of 14 per cent. and, in real terms, it meant an improvement of probably 2 per cent. That was, of course, after several years of considerable reductions in farm incomes, as a result of which investment began to fall during last year. Naturally, that is not in the interests of the country or of British agriculture.

We hope that in the coming year—there are good signs that it will happen—the burden of interest rates on the agriculture community will be somewhat lower, and I hope that it will be substantially lower than in the previous year.

It is also probable that oil and energy costs—an important element in farming—will be either stable or reduced, compared with last year. That will be beneficial. However, there are other cost factors where substantial increased payments will be made. For example, the latest wage agreement of the Agricultural Wages Board will be a considerable additional cost for the industry. We need an improvement in prices if we are to get higher investment and higher productivity from British agriculture. We shall therefore look at this price fixing and continue a policy of genuine price restraint in areas where there are surpluses, taking into consideration the realities of the situation.

It is right that the Commission, in its guidelines paper and proposals, is suggesting increases for cereals that are somewhat lower than the increases that it is proposing elsewhere. Most of us would like a better balance between the cereal producers and the livestock producers, both in the United Kingdom and elsewhere in Europe. We shall press for that differential to be maintained.

I turn now to the question of milk, which is a vital element in British agriculture. Clearly, we are fortunate in having the doorstep delivery system in this country. During the past year, as a result of the objective inquiry of Binder Hamlyn, I am pleased to say that we have maintained a system between the Milk Marketing Board and the Dairy Trade Federation that will enable that doorstep delivery service to continue. That service provides an important outlet for our milk, and it is an important source of income to our milk producers. It is my intention, now that we have stabilised the system, to see that changes take place, as historically happens in April and October, so that there are variations in price to meet the different volumes of production at different times of the year.

Basically, I do not approve of the principle of the co-responsibility levy. I would prefer to have a lower price increase without a co-responsibility levy rather than to have a co-responsibility levy with a higher price increase. The proposal for a flat-rate 2½ per cent. with an exemption of all production up to 60, 000 litres is not acceptable to the United Kingdom. I am unwilling to go for a system that treats the smaller producer differently from the average or medium-sized producer. We shall continue, as we did last year, to make that clear. We oppose the reduction that was suggested for the butter subsidy, and we wish to retain fully the provisions that have been made for school milk.

We are glad that the beef premium scheme will continue. We hope to make technical changes in the scheme that will benefit the beef producers.

We also welcome the continuance of the sheepmeat regime, which has been of considerable benefit to this country, both to sheep producers and to the country as a whole. It brings us a considerable net benefit. Under the Commission's proposals, that will continue.

We would favour a lower price for sugar than has been suggested by the Commission. It is important to continue the principle whereby surpluses of sugar, if created, are financed by levies paid by the producers to deal with that problem.

There are considerable problems with Mediterranean products, and they could be costly. I am glad to say that after refusing to accept distillation proposals for wine—I hasten to add that distillation of wine produces important savings to the Community budget—we have obtained a wording and an agreement that totally safeguards the British industrial alcohol industry. It will guarantee that there will be no use of distillation or disposal of distillation that will harm its market or its products. That was an essential industrial requirement for this country.

Mr. John Morris (Aberavon)

As this matter could have important industrial consequences, can the Minister assure us that there will be no diminution in employment in this country following the agreement? Even though there are safeguards, does it not mean an extension of the CAP into the industrial field, thereby distorting our industry?

Mr. Walker

Distillation of wine has taken place for some time, and a safeguard has been introduced that did not exist before fully to safeguard the producers of industrial alcohol in this country. I share the right hon. and learned Gentleman's view that if the use of distilled wine had been allowed to develop for industrial alcohol purposes it would have posed a threat to major investments and job opportunities in this country. That is why I refused to agree to the continuation of any system of distillation until I had obtained a cast-iron agreement that no such use would be made of wine as to disturb the market for British producers. I shall ask my hon. Friend to pass on the wording of the agreement, but I can assure the right hon. and learned Gentleman that it is a cast-iron agreement that I am sure that the industry will favour.

Mr. Roger Sims (Chislehurst)

Is the Minister aware of the concern in the consumable spirit industry in this country because the scheme is being extended to produce consumable spirit at very low prices? Is that correct? If so, can I have his assurance that the spirit so produced at very low prices will not compete unfairly with the British spirit industry—in particular, of course, Scotch whisky, gin and vodka?

Mr. Walker

If there is any evidence of damage being done to spirits, I shall of course look into the matter. However, the representations that we received were mostly from the producers of industrial alcohol, whose position we totally safeguarded before reaching an agreement.

Mr. John Morris

Will the Minister say how the wine is to be disposed of, and the purposes for which it will be used?

Mr. Walker

There is a range of purposes. The distillation of wine has been going on for many years, including the time when the Labour Government were in office. It is nothing new. Now we have an improvement in the situation. One of the potentially important developments, developed by a British company, is conversion into certain forms of feedstuffs. That will be a valuable and sensible development. I can only say that the agreement that we have reached is far better than anything that operated under the Labour Government or anything that has been in operation so far under this Government.

Mr. Eric S. Heffer (Liverpool, Walton)

The Minister was asked by my right hon. and learned Friend whether any unemployment would result from this agreement. He answered by saying that there had been a cast-iron agreement. However, he did not answer the question. Before we continue, we want to know what this cast-iron agreement is, because it can damage the industry and put many thousands of workers out of work. We need a guarantee now. The Minister made a great play about sugar. Perhaps I should remind him about Tate and Lyle in Liverpool and the workers who lost their jobs there.

Mr. Walker

That is an interesting sideline. Perhaps the hon. Gentleman will also tell me about the British Sugar Corporation's workers. When I met the hon. Gentleman and other Labour Members there was a considerable division depending on whether they came from a constituency in which the British Sugar Corporation or Tate and Lyle was operating. I shall certainly not accept that there was one clear-cut decision and that the British Sugar Corporation's workers could become unemployed while those of Tate and Lyle could not. The hon. Gentleman knows that that is the case. I will ask my hon. Friend to give the wording of the agreement. The agreement is that industrial alcohol will not be marketed except with the permission of Britain. That is a much better agreement than anything that the Labour Government achieved. It will safeguard jobs in the industrial alcohol industry. I hope that Labour Members will be gracious enough to be pleased at that news, which is important for the workers of that industry.

Mr. Buchan

This is a serious and important issue on which we must have some information before we proceed to a vote tonight. It will be difficult if we are told only at the end of the debate and do not have an opportunity to discuss it. Before the debate continues we must know what guarantee can be given, for example, in relation to the export of British ethyl alcohol to the EEC. How can that be prevented within an open market? What can prevent such alcohol being imported into the United Kingdom and affecting our industry? A thousand jobs in Grangemouth in Scotland, jobs at Port Talbot and Hull depend on this. How can the right hon. Gentleman prevent this happening inside what he regards as a market region?

Mr. Walker

I am sorry that the hon. Gentleman cannot understand. An agreement has been reached under which the disposal policy will be subject to agreement by Britain, and subject to our agreement that it has no adverse effect upon the marketing of our industrial alcohol.

It is a fine agreement. When the detailed wording of it is given by the Minister at the end of the debate, I am sure that the hon. Gentleman, with his usual fairness, will be so pleased with it that he will urge his hon. Friends to join us in the Lobby.

We consider that the revaluation of the green pound by 4 per cent. is a wrong proposal by the Commission. It would be intolerable to have a situation where, with increases of the order of 9 per cent.—or whatever may be finally agreed—British farmers agreed to an increase in their prices of about half those paid to the rest of the Community. The green pound policy is now practical and sensible. It operated against us for many years under the Labour Government and we now believe that it is an important point in our favour.

We shall endeavour to support the measures on cereals and Mediterranean products in the negotiations—

Mr. Marlow

rose—

Mr. Peter Walker

I have given way twice to my hon. Friend.

Mr. Marlow

My right hon. Friend accused me previously of not listening to what was said. I believe that my right hon. Friend has been slightly forgetful because I did ask him about the effect on the consumer of not having the green pound revalued. He said, but gave no evidence, that positive MCAs are beneficial to consumers. Does he not agree with the Consumers Association that current MCAs of 8 per cent. add between £8 million and £10 million a week to the United Kingdom food bill and that the Commission's proposal for a four point revaluation would over a year result in a £110 million reduction in United Kingdom farm income but at the same time would allow British consumers to benefit to the extent of a massive £270 million?

Mr. Walker

I repeat that I am totally in favour of keeping positive MCAs, which I think are a considerable advantage to British agricultural production. I believe that the cost to the consumer is relatively small and is a minute factor in the increase that has taken place in food prices. A classic example of the way in which my hon. Friend's attitude operates is that if we follow his policy, for example, to abolish the advantage that we have on the green pound—to revalue that—we would therefore give our farmers half the increase that is available to the rest of Europe. British agricultural production would begin to be reduced. As with beef, prices would start to soar as production decreased. He has always failed to recognise that it is not in the interests of the consumer to damage the producer's potentiality. We have obtained the advantage and that is shown in all the figures that I have given.

The views that have been expressed are almost—but I hasten to add, not quite—in line with those expressed by the Labour Party in its remarkable document, which was published by the safeguards committee. [Interruption.] The House should know what the Labour Party says about agriculture.

Mr. Heffer

I have heard of that document by the Labour safeguards committee. The committee is not an official body of the Labour Party and the document does not represent the Labour Party's policy. The Labour Party has not seen, approved it or agreed to the document. Therefore, we cannot agree with it. We believe passionately not only in the consumer interest but in a good British agricultural system that also protects the farmers.

Mr. Walker

When the hon. Member for Liverpool, Walton (Mr. Heffer) makes his speech, I should be interested to hear his definition of the safeguards committee. I made inquiries about its members and was told that the president was a chap called the Leader of the Opposition. I was then given a list that included, among others, the former Minister of Agriculture, Fisheries and Food, the right hon. Member for Deptford (Mr. Silkin). Therefore, I was interested to hear that latest denunciation of part of the Labour movement. In case some of the comrades have not heard what was said—

Mr. John Home Robertson (Berwick and East Lothian)

Oh, get on with it.

Mr. Walker

I shall get on with it. The document states: There is no particular merit in having an agricultural industry. A reduction in the exchange rate would help by making imports dearer, but arable farming reduces access to the land, destroys the natural habitat and increases pollution. The tax advantages have made it a vehicle for the avoidance of capital taxes in an industry which has always been the preserve of the very wealthy. Our socialist objective should be to remove the burden from the consumer taxpayer while cushioning the adverse effect of the removal of protection on those least able to bear it, in particular by paying small farmers to leave the industry. Farmers complain that farming is unprofitable. We should take this at face value and fix their compensation accordingly, but we shall need a Minister of Agriculture with great determination to effect the necessary changes".

Perhaps that explains the hon. Member for Walton's appearance on the Opposition Front Bench. I cannot think of any hon. Member who could do that job better.

Mr. Nigel Spearing (Newham, South)

The right hon. Gentleman has spoken about "the document". He has not given the heading. I hope that he has it and has not relied on "Big Farm Weekly." Is there a signed name at the end of the article? Will the right hon. Gentleman give the precise date, nature and title of the Journal or document in which it was contained?

Mr. Walker

I have it here. It is called "Labour and Agriculture". It should be called "Labour, Goodbye Agriculture". It is signed with the following words: Please … subscribe … Individuals £5, Organisations …£10. That is the only signature at the end. I hope that every Labour Member will declare whether he has paid his £5. That attitude reflects much of the thinking behind the Labour Party's position.

The Government have seen a difficult three years in British agriculture; but three years in which it has obtained a bigger share of our market and of the European market and added to the strength of our economy. We intend to see that it continues to do just that.

6.30 pm

Mr. Eric S. Heffer (Liverpool, Walton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: believes that the Common Agricultural Policy cannot provide the British people with reasonably priced foodstuffs, forces the United Kingdom to pay unnecessary taxes on imported foods, undermines the agriculture of Third World countries through the dumping of surpluses, and further believes that even with budgetary changes the Common Agricultural Policy will remain unacceptable as it cannot provide the basis for an agricultural policy which would properly serve the interests of either the British farmer or consumer. The Minister of Agriculture, Fisheries and Food is undoubtedly one of the liberals of the Conservative Party and, as always, we have had an interesting and liberal speech from him. He has endeavoured to put the best possible gloss on the common agricultural policy. I almost came to the conclusion, as did my right hon. Friend the Member for Battersea, North (Mr. Jay), that there was no need for the Government to argue for any changes in the CAP because it was so marvellous. The House knows that not only must the CAP be changed, but while it remains as it is it will never be possible to obtain relatively low food prices for the British people. We are making precisely that point in our amendment.

The right hon. Gentleman said that our amendment was an open sign of the Labour Party's policy of withdrawal from the EEC. That debate will come later. We intend to have a debate in the House on the EEC and we intend to put down a motion that will clearly explain our policy. This amendment does not do what the right hon. Gentleman says, but it states clearly that the Common Agricultural Policy will remain unacceptable as it cannot provide the basis for an agricultural policy which would properly serve the interests of either the British farmer or consumer. That is the essence of the argument that we are putting forward today.

The debate is taking place at a crucial period for the future not only of the EEC but of Britain. In an earlier exchange, the Lord Privy Seal gave us very little information about budgetary talks. From the press we can see that there has been a so-called peace document—a formula determined by Mr. Tindemans and Mr. Thorn—which it is said will solve the problem of the British budget.

It is difficult to obtain information from the Minister. We found the same difficulty in obtaining information from him on the so-called cast-iron agreement on the alcohol industry. We do not yet know what that cast-iron agreement is. We are told that we must leave it with the Government and that we need not worry. Yet we do not know what it is and we are asked to give a blank cheque in the same way that we have been asked in the past to give a blank cheque for the Common Market. On every occasion we have discovered that the figures entered on the cheque were detrimental to the interests of the British people. The same will be true of this formula.

From listening to the right hon. Gentleman earlier, I understand that the formula was a personal proposition of those two gentlemem, Mr. Tindemans and Mr. Thorn. It did not come from the Commission or from the Council of Ministers. The best information that we have is from the front page of The Times and the Financial Times. Again, we are being asked to enter into discussions when we are not certain of the outcome.

Although the main burden of today's debate is the CAP, the Commission's proposals on the price levels and the controversial proposal about the wine lake—which we are not likely to support unless we know what the cast-iron agreement is—we cannot avoid the issue of Britain's budgetary contribution and hence the future of the EEC. The right hon. Gentleman boasted today that Britain's net contribution last year was about £56 million as against what it would have been without the two-year arrangement. What is clear is that it is £56 million too much. Moreover, the right hon. Gentleman did not answer the point made by his hon. Friend the Member for Northampton, North (Mr. Marlow), that that is not likely to continue because world food prices rose. He has made a strange argument. The Minister said that food prices rose, that CAP prices were kept reasonably level and that therefore our contribution was not as high as it would have been. However, those were special circumstances in which world food prices were rising. The right hon. Gentleman knows very well that there is a serious problem in Eastern Europe. The Community countries have been able to sell on the world market some products which may not be sold in the future. There is no guarantee that world food prices will remain as high as they have been.

The CAP is central to the EEC and we cannot treat it in isolation. I get the feeling, listening to Ministers, that they are beginning to hedge their bets and to retreat from a firm stand. If one takes the sum of the right hon. Gentleman's speech today, that was already a justification of the higher prices that are being asked by the Commission. They are laying the ground for what may add up to a sell-out—a shoddy arrangement that can mean much higher prices but which will not solve our budgetary problem.

Sir Anthony Meyer (Flint, West)

A large part of the hon. Gentleman's case appears to be that the rise in world food prices was purely accidental and unlikely to recur. He is as perceptive a critic of the Soviet regime and its failures as any hon. Member and he knows perfectly well about the inability of a Communist Government in any part of the world to deal with its agriculture and therefore, necessarily, with the mounting food deficits that are bound to occur in Eastern Europe and that are a feature of this century.

Mr. Heffer

That does not justify our selling agricultural products to Eastern Europe much cheaper than to people in the Common Market. I am not here to justify the agricultural system in Eastern Europe and the Soviet Union. I was saying that certain exceptional circumstances may continue, but there is no guarantee. Are we to continue the common agricultural policy on the basis that there will always be a crisis in Soviet agriculture? That would be a most remarkable situation. I do not think we can develop our future agricultural policy on that basis.

We were told two years ago that the right hon. Lady the Prime Minister had achieved a great victory. The truth is that she and her colleagues had gained a temporary respite and the basic problem remained, and it still remains. In fact, in no way has the Conservative manifesto been carried out by the Tory Government. I shall not go into it in detail because there is too much of it, but I urge hon. Members to read what it said—for example: What has happened is that under Labour our country had been prevented from taking advantage of the opportunities which membership offers. It also said: By forfeiting the trust of our partners, Labour have made it much more difficult to persuade them to agree to the changes that are necessary in such important areas as the common agricultural policy, the Community budget, and the proposed common fisheries policy. That is really a bit of a joke. Have things really improved in relation to the negotiations, the discussions and the attitude of the others in the Common Market? Although the two-year arrangement was made, we are now faced with similar negotiations and the souring of relationships between this country and the other countries in the EEC and we are back to where we were with absolutely no guarantee whatsoever that the problem will be solved permanently.

It is quite indefensible that Britain should pay such a high contribution, second only to that of West Germany, when our gross national product is lower than that of many countries which are benefiting from the EEC, while we are losers. We believe that the time has come for us as a country to say quite clearly that enough is enough; we have to put the interests of the British people, our electors, before anything else. That does not mean, as has been suggested—I know it has been repudiated, but there are plenty of politicians on the Continent who say this—that we are greedy, egotistical and selfish. That is not a position that we on these Benches can accept. We do not believe that by fighting for the interests of our people we are greedy, selfish or egotistical. We are putting the interests of the British people before those of others, who are equally putting their people first. We have to fight for our people with the same determination as other countries within the EEC fight for theirs.

We must understand that the EEC has always had two aspects, an international aspect and, within that, a national aspect. When the French farmers march demanding higher prices at the farm gate and saying that their problems are due to the British, I do not blame them. I do not say that the French farmers are wrong; I say that they, and the French Government in giving support to them, are concerning themselves with the interests of the French people; they are looking after their interests. We have to look after our interests. President Mitterrand is fully supporting the CAP in supporting the French farmers, to use his own words, "resolutely and with doggedness"

It has been reported that Madame Edith Cresson, the French Minister of Agriculture, is seeking an increase in agricultural prices more than the 9 per cent. put forward by the Commission in the documents we are discussing. All that is perfectly understandable for the French; it is in the interests of the French farmers. But it is not in the interests of the British consumer, and in the long run it is not in the interests of the British farmer. Another price increase could place extra burdens on the shoulders of the British consumer without assisting those who own small or medium-sized farms or, in particular, the farm-workers.

I was very interested in the statement made about farm workers' wages. We know that farm workers' wages have not improved since we have been in the Common Market relative to what they were in the past. As a percentage they have not increased. The farm worker in this country is still one of the lowest paid in the whole of the Community, and it is quite wrong to argue otherwise.

I should like to quote from a document, "Consumer Briefing" recently issued by the Consumers Association, the publishers of "Which?". This is what it says: As a result of high support prices, EEC consumers already pay more for their food than need be the case. The current common price proposals will add 21/2%-3% to food prices over the coming year. It then quotes what the right hon. Gentleman himself said, that this will mean 7½p on a pound of butter, 3p on a kilo bag of sugar, and ¾p on a standard loaf. It also makes the point that the commission's proposal will add between £685 million and £820 million to the United Kingdom's food bill over the next year, adding between 75p and £1 to the weekly food bill of a family of four.

It is our view, as I said earlier, that the right hon. Gentleman has already retreated much too far. The Tory manifesto said: We will insist on a freeze in CAP prices for products in structural surplus. When did that ever happen? When did the Government have such a freeze?

We ought to take note of what The Economist said on 6 March. The Economist, incidentally, is not renowned for its opposition to the Common Market. On the contrary, my right hon. Friend the Member for Deptford (Mr. Silkin), who is now our spokesman on defence, was lampooned—I think that it is not too strong a word—consistently in The Economist because of what he was doing in relation to the Common Market. The Economist said: Europe's common agricultural policy…has been attacked by successive British governments and frequently by this newspaper. But for some time the British farm minister, Mi. Peter Walker, has been humming a different tune. Criticsm of the CAP has been greatly exaggerated, he says; the CAP has its warts but it has on balance been good for Britain. Not so. Mr. Walker is right to point out the real achievements of the CAP. But he is wrong to say that it is good for British interests; and he is wrong to take a soft line (as he has) on farm-price rises and reforms. It continues: The British positive MCA is now 8.4%. The CECG reckon, that this Walker-effect alone adds 2% to British retail food prices. It also adds around £200m to Britain's contributions to the EEC budget. Mr. Walker could cut the MCA (as the commission has sensibly suggested) this year to help British consumers. Because he puts the interests of British farmers before those of British housewives, he will not. We advance the interests of British farmers as well, but we are concerned about the effect of food prices upon the ordinary housewife and her family.

Mr. Peter Walker

Will the hon. Gentleman make one matter clear? The whole House and country will want to know the answer to the following question: Is the Labour Party in favour of revaluing the green pound and of farm price increases substantially below those proposed? If so, how much lower? It is a fair question, and I should like the answer.

Mr. Heffer

It is a fair question. We believe that the Commission's proposals on this matter are reasonable. That is all that we are saying. We are not in favour of the 9 per cent. because of the effect that it will have on our people.

The Economist also said: Mr. Walker should stop pretending that the CAP is not so bad and devote himself to the cause of reform. Until now he has done less for Britain than the much-despised Labour farm minister, Mr. John Silkin.

Mr. Walker

The hon. Gentleman said that he was in favour of the proposal. That presumably means that he is in favour of the revaluation of the green pound by 4 per cent. But he is not in favour of a 9 per cent. price increase. With the revaluation we have a 5 per cent. price increase net. The hon. Gentleman does not believe in 9 per cent., but wants an even lower figure. How much is he telling British farmers they deserve, with an 11 per cent. rate of inflation and increased costs, in his judgment—nothing?

Mr. Heffer

I am in favour of precisely what the Conservative manifesto says—a freezing of CAP prices for products in structural surplus. That is what we are arguing for. [Interruption.] I am glad that the hon. Gentleman agrees with his own manifesto. It would be very good if the Conservatives put it into operation. They have not done that.

The Commission's proposals do not go far enough for the European farmers' organisation, COPA. Incidentally, they do not go far enough for the agriculture committee of the European Assembly, which wants 14.5 per cent. It is interesting that a few French Socialists went out to dinner and failed to be there for the vote. Otherwise, the figure would have been 16.5 per cent., which I understand is precisely what Sir Henry Plumb is in favour of.

Is Sir Henry really putting forward the views of the Tory Party? We should know whether he is speaking for the Tory Party when he argues that case. What exactly is the policy? We do not know. We are told that we shall discover the answer if we read the motion, but we are again giving the Government an open cheque on prices. We are not being asked to decide anything. We are asked to take note, and then the Government can do precisely what they want. We want to know what the Government mean.

Mr. Dennis Skinner (Bolsover)

My hon. Friend was present when a few hours ago the Lord Privy Seal made a statement about the Council of Ministers. I asked whether he agreed with Sir Henry Plumb and the 16 per cent., or whether he agreed with a figure of around 6 per cent.—the amount that the Government are offering the nurses. He said "Wait until the debate, and it will all be told". We have heard nothing. My hon. Friend is correct in demanding to know what the Tory Government's percentage is. Do they agree with Sir Henry Plumb and the 16 per cent?

Mr. Heffer

My hon. Friend has put his finger on it. Is the Minister prepared to repudiate the statement by Sir Henry Plumb, as my hon. Friends have repudiated in print the safeguards statement? I want to know, and the whole House and the country would like to know. We are not having any clear understanding.

I said earlier that we were in a serious crisis. There is no point in denying it or dodging it or hoping that it will go away. The Economist said this week: A 25-year-old in a coma is a pitiful sight. It is talking about the Common Market, because tomorrow the Common Market celebrates 25 years of existence. As Ian Murray wrote in The Times on Monday: The European Communities celebrate their twenty-fifth anniversary this week with about as much enthusiasm as a beefeater in a vegetarian restaurant. I am not surprised that he should say that. What is there for Britain and the British people to celebrate? We have higher food prices than necessary. Unemployment has increased since we joined the Common Market.

Incidentally, we never argued that the British Sugar Corporation should not produce sugar. We argued that there should be a standstill in order to safeguard the jobs of those in the other section of the sugar industry. The Minister referred to the 1.3 million tonnes. We secured that figure because, as a result of pressure applied by hon. Members, my right hon. Friend the Member for Deptford managed to obtain such an agreement to protect workers in the industry. It was not supported with any enthusiasm by Conservative Members. I remember the discussions very well, because I was very much involved.

We have tariffs covering food from our traditional suppliers. There are regulations and directives that undermine the sovereignity of the House. There are now further proposals to increase the cost of food and proposals affecting our alcohol industry. Subsidised food is being sold to the Soviet bloc at the expense of the people of the EEC.

It is no wonder there are no great bonfires and celebrations throughout the EEC. There are certainly none in this country, because the majority of people are fed up with the Common Market as a whole and particularly with the CAP.

The CAP hits our people in a number of ways. First, the system puts the main burden on the consumer through high prices, and not on the taxpayer as our old system of deficiency payments did. That is a fundamental difference.

Secondly, the level of prices set by the Community has consistently been too high. The Economist of 5 November 1977 rightly said: The main nonsense of the CAP—food mountains, protectionism and high prices—spring from one central fault; the level of prices guaranteed to farmers has been consistently too high. Therefore, one can only have sympathy with Mr. Nicholas Horsley, president of the Dairy Trade Federation, who said on 9 January this year: The British government should either substantially change the EEC's Common Agricultural Policy or withdraw from the Common Market. The CAP has outgrown its original intentions and is completely unacceptable to the UK. He added: The claim that the principles and objectives of the CAP have been achieved is complete rubbish … Production of food has increased while consumption has declined. The subsequent growth of surplus is solely due to the inappropriate levels of price support.

Mr. R. C. Mitchell (Southampton, Itchen)

The hon. Gentleman said that he was quoting from The Economist. Has he been quoting from editorials, or from articles written by journalists?

Mr. Heffer

I have sometimes quoted from editorials and sometimes from journalists' signed articles. I shall now bring my speech to a conclusion—

Mrs. Elaine Kellet-Bowman (Lancaster)

It has been an awful ramble.

Mr. Heffer

I do not ramble regularly over to the Common Market and sit in this House, as the hon. Lady does. With all due respect to the hon. Lady, in order to do one's job properly as a Member of the House of Commons one cannot find time to sit in the European Assembly as well.

Mrs. Elaine Kellet-Bowman

The hon. Gentleman knows my constituency. He knows that he will not find one of my constituents who will complain of lack of attention from me in any regard. My constituents are better served than most.

Mr. Skinner

It is supposed to be a full-time job.

Mr. Heffer

I do not intend to enter into a discussion because I am sure that the hon. Lady's constituents will make up their minds when the appropriate time comes. If one wants to do one's job properly in the House of Commons and look after one's constituents, undoubtedly one does not have time to float off to the European Assembly—unless, of course, the hon. Lady does not spend much time there. One cannot have it both ways.

We want to make it clear that when the Labour Party gets back into office at the next election next time—as it will—the British Government will again be able to exercise full control over Britain's food and agriculture policies. It will provide us with the opportunity to devise an agricultural policy more closely attuned to our needs. That policy will shift the burden of agricultural support away from the consumer and back to the taxpayer. It will not allow rich farmers to get richer while poor farmers and farm workers get poorer. It will adopt a support policy that differentiates between the agricultural and social needs of the rural community and recognises that other countries, with more favourable natural conditions, can produce certain foods at a fraction of the price it costs to produce them here. It will also allow the industry to make a positive contribution to our overall Socialist objectives. Those are the views of the Labour Party.

We oppose this Common Market agricultural policy as it stands and the proposals made by the Commission. The proposals must be opposed. We want to see a firm stand by the Government on the budget and the Commission's proposals—[HON. MEMBERS: "You have said that for years."] We have been saying that for years because the Government have done nothing about protecting the interests of the British people. Therefore, I have no hesitation in asking my hon. Friends and others to vote with the Opposition and to support our amendment.

7.5 pm

Mr. Peter Mills (Devon, West)

First, I declare an interest, but I shall try to put forward a balanced view on these matters. We have not so far had a balanced view from the Opposition. We have had little clarification of the real policies of Socialists on these important matters, except for the document that my right hon. Friend read out. That is a devastating document and it will have a profound effect in rural areas when it is circulated.

Mr. Buchan

Let me finish this argument once and for all. That document was repudiated by me on behalf of the Labour Party. It has no relationship to official Labour Party policy. It has been produced by an unofficial body that represents a contrary view to that of the Labour Party. It has been repudiated in Farmers Weekly, the Big Farm Weekly and the rest of the farming press. It is a deplorable stunt. It is disgraceful, even for my pair, to suggest that this is my or the Labour Party's policy on agriculture.

Mr. Mills

Be that as it may, my second point is that rural areas, agriculturists, farmers and farm workers will be interested to learn tonight that there will be a freeze, with revaluation, on all farming products. That will cause even more devastation in rural areas. Before the end of this important debate, I hope that we may have some further words from the Opposition on this matter, because the rural areas will be anxious about it.

This is an important price review. Much is at stake for the producer, the consumer and the various Governments involved. Of course, the effects of the recession—inflation, and wages not increasing as much as many would wish—mean that any further increases in the end price of production and, therefore, food are serious matters for the consumer.

Because of increased costs and, of course, catching up, if production is to be maintained—by catching up, I mean profitability—this price review is important to the producer. It is an important price review for the Government, too, because of the cost of the CAP and all its problems. There should be changes. It is also important to the Government because of what I call the illegal topping-up of producers' returns by national Governments. That problem is growing and I am concerned about it. Therefore, all in all, it is an important price review.

A sense of realism should be injected into tonight's debate. Many sectional interests will be put forward. We must consider the consumer and the producer as well as the Government's views and problems.

Mr. Roger Moate (Faversham)

In calling for a greater sense of realism, is my hon. Friend not contradicting his earlier remark about opposing the growth of national aids? Would it not be more realistic to accept that national aids are now an inevitable part of Community life and should be accepted in that form? New systems should be devised to ensure that we can trade on a basis that allows for such national aids.

Mr. Mills

My hon. Friend has made a good point. If he had read some of the papers that I helped to produce, he would have seen that that is a method of moving forward. However, the laws or rules, as they now apply, do not allow illegal national aids. My hon. Friend must get himself straightened out on this matter. We cannot have it both ways.

Mr. Colin Shepherd (Hereford)

Is it not a fact that as soon as one national aid commences, leap-frogging is a consequence because another national aid seeks to beat the next national aid and so on?

Mr. Mills

That is absolutely correct, and the French are pastmasters at doing it.

I shall not give way again, not because I am afraid of answering—I like it—but because I told Mr. Speaker that I would not speak for very long. Therefore, interruptions do not help.

This realism must also be injected into our producers and farmers. They must realise that incomes are limited. At present, some people find it a real struggle to maintain their standards of living, and any excessive increase in food prices would be damaging.

The French Government and others must realise that if they wish the CAP to continue and do not wish to court retaliation, they must abide by the rules. That is a fact of life. Let the changes be agreed changes.

The Opposition must show a little more common sense and realism. If they want to see the wages of farm workers increased and ensure that the rural areas are no longer depopulated, they must accept an increase in end prices to cover the costs. The rural areas have no say in many of these matters—for example, the actions of electricity workers, the power workers, the miners and even Government action. Therefore, costs must be covered.

The Opposition must show some realism. I hope that we shall hear a speech from the Labour Benches that clearly points out that if food production is to be maintained there must be some increase in prices, not a freeze. It is sad to hear Labour Members speak in the way that they do.

Equally, some realism must be shown by those of my hon. Friends—not all of whom are present—who signed the Conservative Back Bench amendment to the motion. Frankly, I am amazed at the blinkered way in which they look at these things. Their amendment refers to the damage to the consumer, but the greatest damage that we can do to the consumer is to ensure that Britain's agriculture industry is reduced and that production is diminished. I do not understand why they have failed to wake up to reality.

The Conservative amendment also refers to the damage to agriculture if we continue with the present system. There is no question but that the CAP has been of benefit to British agriculture. I would be dishonest if I said that it had not. It has been of help to the consumer, the agriculturist and the farmer.

The Opposition have suggested that we return to a deficiency payments system. Just think of the rows that would take place with the Treasury. Just think how production would be limited by the Treasury saying "We shall again have standard quantities and all the other things that we had in years gone by". I remember the desperate position faced by British agriculture under that system. One of the main reasons why I entered politics was that I was not happy about a certain Minister of Agriculture called Mr.—now Lord—Soames. If we have the interests of the consumer and the farmer at heart, we shall not return to a full deficiency payments system. That would limit our food production.

It is obvious that in a world recession and at a time of high unemployment, consumers must be concerned about any increases; but, as my right hon. Friend said, farmers have played a leading role in containing price inflation. Since 1978, food prices have risen by 37 per cent. Of that, 13 per cent. was due to raw materials and much less to the CAP price proposals. Let us get this quite clear. Farmers have played a real role in seeking to reduce the cost of food production. If only other industries had played the same role! A viable British agriculture industry is to the benefit of the consumer.

What about the effect on producers? It is a simple fact of life that if costs go up, producers must have an increase in the end product price. Otherwise, confidence goes and production falls. My right hon. Friend was absolutely right. One of the reasons why beef is expensive at present is that there is a shortage. If a shortage of beef is created by a lack of confidence in agriculture, the price to the consumer will go up.

I believe that the Commission's proposals are about right at around 9 per cent. The increase of 14 per cent. or 15 per cent. which has been suggested would be too high and difficult to justify. I have two comments on the Commission's proposals. First, there must be no revaluation. That would be totally dishonest towards the British farmer and the farm worker. It would be totally wrong if prices in the Community were higher than in Britain. I hope that my right hon. Friend will remain absolutely firm on that point.

Secondly, there is the co-responsibility levy. That is nonsense. It must not happen. I shall do all in my power to ensure that the Government do not accept that proposal. We are not creating the surpluses of milk in this country. The fault lies with the producers in the Community. The co-responsibility proposals would do great harm to British producers and are totally unfair. Therefore, I believe that we must have an increase, and 9 per cent. is about right. There should be no revaluation, and the co-responsibility proposals should be thrown out.

I believe that the wrangling will go on. We shall have it from the Opposition and from some of my hon. Friends. Those who are interested only in the consumer or the farmer will make their points all the time. We must adopt a balanced view. A moderate increase is essential if we want confidence in British agriculture and production to continue. In the long term, I assure the House that that is in the best interests of the consumer.

7.18 pm

Mr. Douglas Jay (Battersea, North)

So far, both speeches from the Conservative Benches have been made by farmers. I am not sure whether that is a balanced contribution to the debate. Of course, the hon. Member for Devon, West (Mr. Mills) always makes the best of a bad case. I at least agree with him about the co-responsibility levy, and I am glad to do so.

The Minister began with a glaring statistical fallacy that ran throughout his speech when he told us that of the 100 per cent. rise in food prices—he did not say over how many years—90 per cent. was due to factors other than the Common Market. Of course, that 90 per cent. largely consisted of a fall in the value of money during that period balanced by rises in money incomes and was not a real increase at all; whereas the 10 per cent. due to Common Market prices being higher than world prices was real and was the avoidable part of the increase. It is nonsense to add the two together.

The truth is that the common agricultural policy is still doing a great deal of damage to the British economy. It is a cause of higher food prices, a higher cost of living, high costs generally, high pay demands and a lack of competitiveness throughout the country. It is also the main cause of the huge EEC budget tribute that we have to pay to Brussels. We hear that it is going down, but according to the Red Book £2.8 billion is the British Government's estimate of our gross contribution to the budget in 1982–83. The Minister did not mention the Treasury estimate in the White Paper, published only this month, that at present our net contribution will still be over £600 million, which is much higher than anything about which we have been told in this debate.

Apart from that, the CAP is the most restrictive and extreme form of protectionism that has ever been invented. Conservative Members periodically talk about the dangers of having a siege economy in this country. But, if there ever were a siege economy, it is the system of barriers to food imports forced on the United Kingdom by the CAP. Not merely are there high levies and taxes; not merely have our lamb and butter imports from New Zealand been halved by direct prohibitions imposed by the CAP; but cheese imports from New Zealand have been reduced to almost nothing; and butter, cheese, mutton and beef imports from Australia have been cut virtually to zero by direct prohibitions.

If the food prices enforced in the EEC were only a little higher than world prices, all the harm being done, although vicious in my opinion, might be regarded as a small evil. But the EEC prices are still enormously higher than world prices. It is a fallacy to think that the gap between world prices and EEC prices has been narrowing in recent months, because it has not. According to the latest EEC Commission figures on the gap between EEC and world prices, wheat prices over a twelve-month period averaged 63 per cent. above world prices—not 5 or 10 per cent., but 63 per cent. Barley was 61 per cent. above world prices, and maize was 90 per cent. above them. The hon. Member for Devon, West did not say that one of the great increases in British farming costs in the last 10 years has been due to the 50 to 100 per cent. levy on maize and barley imports to this country, which are main feeding stuffs for British agriculture.

According to the latest Commission figures, beef has averaged 104 per cent. above world prices and butter has averaged 300 per cent. above world prices; that is to say, it costs four times as much. Incidentally, the levies on feeding stuffs, such as maize and barley, by raising farmers' costs raise further the price of most other foods produced by British farmers.

Interestingly enough, in its latest annual report the Commission omits this particular table, entirely without explanation. I can only suppose that the figures have become even worse rather than better in the last year and that the Commission dares not publish them. If the Secretary of State or the Minister who replies can give the figures for the latest gap between the EEC and world prices, I should be delighted to hear them. I know of no other way of obtaining those figures if the Commission refuses to publish them.

Therefore, when we read in document No. 4624/82 about prices going up on average all along the line by 9 percent., let us remember that prices are already 100 per cent. or 300 per cent.—as in the case of butter and cheese—higher than world prices already. I believe that the Minister will not disagree with this. The present proposal, according to The Economist, will not bring grain prices any nearer to world prices than they have been up to now.

What then has the Minister done about those problems? My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) quoted some remarks from The Economist of 6 March. He quoted from an anonymous editorial and not from a signed article by an eccentric journalist. I shall quote one or two other statements in The Economist. It says that far from any reforms of the CAP having been made, as promised, the present Minister has made things even worse. It states: The CAP has sharply raised the cost of our food imports. It states further: The extra cost in recent years is partly due to Mr. Walker's own foolhardy policy. The Economist also says that about £200 million a year has been added to the United Kingdom budget contribution, and it contrasts this policy with that of the right hon. Gentleman's predecessor, my right hon. Friend the Member for Deptford, (Mr. Silkin). The Minister congratulated himself for half an hour in the House to-day, but The Economist takes a different view of his activities.

Mr. Peter Walker

The right hon. Gentleman will agree as a student of The Economist that for 25 years it has been hostile to systems of agriculture and farm support. It has always been in favour of a free-moving world trade in foodstuffs, and therefore, if necessary, the eradication of British agriculture. Therefore, its remarks are nothing new. I disagree with my predecessor and The Economist, as I believe that a positive green pound is an advantage to Britain and that a negative green pound is a disadvantage. My view is supported by every other Community country. All those countries would like us to go back to negative MCAs.

Mr. Jay

However, The Economist has always been a strong advocate of our joining the Common Market, whereas the Minister was always an opponent until he became a Minister.

I shall finish my quotation. The Economist states: Mr. Silkin, then Labour's farm Minister, opted for a cheap food policy: he kept British food prices below EEC levels. However, the present Minister has maintained a positive MCA that acts as an import charge on food imported to this country even from the EEC. Therefore, our prices are kept above even the EEC prices.

In his present incarnation, the Minister has caved in and become an old-fashioned agricultural protectionist with no aim other than to keep up farmers' sterling incomes. He has reached the point where he defends the CAP and apparently has no intention of reforming it.

Mr. David Myles (Banff)

Will the right hon. Gentleman give way?

Mr. Jay

Anyone, including the hon. Gentleman, can defend the Minister, but one cannot defend him and at the same time advocate substantial reforms of the CAP. But without such reforms there will be no serious easement of the EEC budget burden on the United Kingdom.

However, although it would have been possible at least to do a little better than the present Minister, to be fair to him, the truth is that, as we all know in our hearts, no substantial reform of the CAP capable of meeting British needs is remotely politically practical.

Ever since the controversy started, we have been told again and again—it was part of the election manifesto of the Conservative Party at the general election—that the common agricultural policy could be reformed. That was repeated when the Prime Minister made her much vaunted budget settlement in Dublin in 1980. But reform has never happened. It is pure humbug to suppose that it will ever happen so long as we are members of the EEC and we are fools enough to go on paying.

Instead of reform, we now have, according to document 4624/82, a further general rise in prices, and a wonderful proposal for turning surplus red wine into industrial alcohol, at a cost of £70 million. We cannot find the money to repair council houses, but we can find £70 million to turn red wine into industrial alcohol with a concomitant promise today that the industrial alcohol will never be used. We have not yet been told what will be done with it. We have a further turn of the protectionist screw in the case of butter and skimmed milk.

The essential need now is to realise why the promises of reform are mere humbug, and why they will never be carried out. The reason is that the whole French political, social and economic system rests on the maintenance of high food prices enforced by extreme agricultural protection. For France, the EEC represents just a device for making other countries' taxpayers rather than its own pay for the whole system. The hard political fact is that, rather than agree to any substantial reform, the French Government—it does not matter which French Government it is politically—would prefer to destroy the EEC altogether. As a result, United Kingdom membership has meant, and is bound to go on meaning, perpetual friction, confrontation and bitterness between ourselves and France. That would be totally unnecessary if we were all pursuing our own separate food and agricultural policies.

Therefore, the urgent necessity now is that we should return to unrestricted food imports and a policy of national support at reasonable levels for British agriculture. That is what the Labour Party supports.

We are sometimes told that there is no food in the world that could be bought at lower prices. That is sheer fiction. There is no doubt, for instance, that the New Zealand lamb and dairy industries, the Australian beef industry, the Canadian suppliers of hard wheat and the Commonwealth sugar producers would jump at the chance to resume their trade with Britain and would very soon—not perhaps overnight—increase production as they easily could if they were reasonably sure of future markets.

If anyone denies that, I would ask this question. If those countries have no food to send here, why does the EEC have to maintain 100 per cent. levies and total prohibitions to stop them doing so? If there is no food available outside, why not sweep away all the barriers to trade in food and see who is right? Why prohibit Australia from selling butter, cheese or beef to Britain if it has none to sell? Why not give market forces a chance? I do not see why we should obey market forces only when they throw industrial labour out of a job and not when they enable us to have cheaper food. And if there is no butter, meat or grain available in the world, why has the EEC been selling huge quantities of them for several years to the Soviet Union at half the EEC price? Where does it come from? As soon as we are outside the EEC, we shall be able if we wish, to buy that EEC food also at half price.

One of the most remarkable results of the whole 10-year distortion of our trade is that, despite all the restrictions, we still import a surprisingly small proportion of our food from the continental EEC. It is still, I believe, only about 25 per cent of our food imports. If that is wrong, the Minister can tell me. What has actually happened, as a result of the policy, is that we have steeply forced up the price of the food that we buy from most of the rest of the world. That matters a great deal because we still import 40 per cent. of our food. The moral is clearly that a switch back to low-cost supplies would not be all that difficult because we already buy so much from outside the EEC area.

At present, the overall financial cost of the common agricultural policy to Britain is put by The Economist, quoting a number of agricultural economists, at £1.4 billion in 1981. We are sometimes told—the hon. Member for Devon, West came close to saying this—that it would cost the British budget just as much to switch over to—deficiency payments—

Mr. Peter Mills

More.

Mr. Jay

—but this is untrue for a number of reasons. First, deficiency payments are paid only on home production and not on imports which, as I have already remarked, represent 40 per cent. of our consumption. Secondly, the guaranteed price under deficiency payments need not be so high as the EEC price, since the removal of the levy on grain would greatly reduce farmers' feeding stuffs costs. Thirdly, we should be using the money to keep down prices rather than to hold them up. Fourthly, the payments would not have to be made across the exchanges and weigh on our balance of payments.

In my view, for all those reasons, liberation from the common agricultural policy would be an overwhelming benefit to the United Kingdom economy. A complete break with it must, therefore, be an essential basis of any final settlement with the EEC.

7.37 pm

Mr. John Spence (Thirsk and Malton)

My hon. Friend the Member for Devon, West (Mr. Mills), in his vigorous and vital speech, answered most effectively the hon. Member for Liverpool, Walton (Mr. Heffer) and also to some extent the right hon. Member for Battersea, North (Mr. Jay) when he stated that Labour policy, if ever again the party is elected as the Government of this country, would be to devise a system of support for agriculture that would shift the burden from the consumer to the taxpayer. What both Opposition Members ignore in the allegations that they make is that under the present EEC system of support productivity within British agriculture has increased considerably. This has meant a saving of about £1 billion over the past two or three years. Some credit must be attached to a system that produces this result. It cannot be ignored. Nor can one play around with another system when there are plenty of precedents to show that our ability to feed ourselves under the old system was considerably reduced—

Mr. Jay

rose—

Mr. Spence

I hope that the right hon. Gentleman will forgive me. I do not propose to give way. I have promised to be brief.

I wish to turn to some of the events over the last year or so that have considerably heartened Conservative Members. We welcome the action of the Minister in taking steps to ensure, through measures based on the health regime, health standards for British agriculture and poultry that I trust will be maintained. After all, by introducing his health regulations with regard to the importation of poultry he is securing a healthy poultry flock in this country. As a number of my constituents earn their living, and have considerable capitable investment in this industry, it is excellent to see that we are prepared to take these measures with a view to a healthy flock. There is also a continuation of the emphasis on animal health and welfare of which we ought to be proud.

I am pleased to see that the recommendation made by the Select Committee with regard to the introduction of a free school milk scheme has been adopted. I wonder whether there is any impediment to using the support, which I understand exists from EEC funds, with regard to cheese on a similar basis to that of milk.

The sheepmeat regime has been of considerable help to my constituents and of considerable help in revitalising some areas, particularly the less favoured and upland areas, where there has been a drift in population. The new sheepmeat regime and the price stability that that has brought has led some people to believe that this is too good to last. I am sure that the Minister will take the point and ensure that it lasts for a considerable time and is not only continued but improved.

The EEC Commission's proposals for a revaluation of the green pound should be rejected out of hand. The weapon of revaluation, against the interests of the British agriculture industry, is bad news. The green pound has been a political football for far too long. It is bad news for our agriculture industry to hear it being brought up again as a weapon. It has been used as an instrument for discrimination in price against the British producer and there has been a rigging of the price structure to his disadvantage.

Economically and financially it would be rather stupid to consider dealing with the green pound in this way. It is not clear whether it is the intention of the French Government to devalue the franc. We have to consider what the position would be if they did so. What advantage could be taken if the devaluation followed our agreement on a revaluation of the green pound? That is an important negotiating point to bear in mind.

I turn to certain of the commodity points. With milk, the Commission proposed that there should be a 9 per cent. rise in the intervention price. People often misunderstand what the intervention price really is and the way that it benefits our agriculture and production. Nothing gives a man greater confidence in his industrial activity than to know his get-out price. It gives him confidence and makes it worthwhile for him to go on, improve and expand, if he has that floor or get-out price.

There is also the question of the maintenance and continuation of the co-responsibility levy with some modulation for the benefit of small producers. There are further measures in 1983, as yet unspecified, to offset the increased disposal costs of the 1982 milk delivery increases by more than 0.5 per cent. My concern is largely over the co-responsibility levy. The levy, for the purpose for which it was introduced, may have achieved something but now that there is a surplus in the fund there is no sense in its continuation nor in the building up of further moneys in this fund. There is no reason why the surplus or the levy should be continued and maintained.

The Select Committee with which I am involved has publicly detailed and reported the considerable problems that we had on the question of national aid. There is no doubt that some member States continue to give national aids to agriculture. Some may do it, as the French do, in the form of cash. Others may do it, as the Dutch do, in the form of goods and services, but they are all forms of national aid. National aids are not necessarily incompatible with the principles of the Treaty of Rome. There may be some that are but not all of them are, in general.

However, there is the danger of an uncontrolled multiplication and diversity of such aids, which could distort free and fair trade within the Community. If it is possible I should like the Minister to introduce some guidelines as to the types of aid that are compatible with the Common Market, and as efficient a system for monitoring such aids as would seem sensible.

There ought to be a means by which we could have aids logged up. Most important of all, the monitoring system for logging aids should at least bring the granting of the aid and its recording close together. At the moment. when an aid is granted it may be many years in some cases before it comes to our notice or the notice of the Commission. There seems to be considerable inefficiency in the monitoring, recording and disclosure of aids. Can anything be done about this situation?

My final point refers to a specific industry that is a considerable employer in this country. For the sake of brevity I have set down, as I understand it, the position with regard to alcohol and certain regulations. The EEC Commission's proposals for the amendment of the wine regulation—337/79—and for the exceptional distillation of 7 million hectolitres of wine alcohol include and provide for substantially increased subsidies for he distillation of wine to solve the problem of the wine lake.

The point is that a considerable subsidy is being provided. It is being suggested that these subsidies should also be given to brandy as well as wine alcohol. On such a basis cheap subsidised spirits could distort competition in the Community's spirituous beverage sector, to the grave disadvantage of the United Kingdom's spirits industry.

United Kingdom-produced spirits are already penalised in certain Community States by discriminatory taxation. Could the Minister give an assurance that, in the Government's attempts to reach agreement on the farm price package and the budgetary contribution, alcohol produced from surplus wine will not be disposed of in a manner prejudicial to the interests of the United Kingdom domestic spirits industry, such as Scotch whisky, gin and vodka. This is an important assurance that we would welcome because it affects so many jobs and such a high export commodity.

Generally speaking, I welcome the Commission's proposals and shall vote in their support.

7.50 pm

Miss Joan Maynard (Sheffield, Brightside)

I ant sorry that the hon. Member for Devon, West (Mr. Mills) has left the Chamber because I wished to tell him that I agree with his view that the wrangle will continue until Britain leaves the Common Market. We shall be doing that when the next Labour Government are elected.

Mr. Home Robertson

Do not bank on it.

Miss Maynard

I shall be doing my utmost to ensure that the Labour Party's policy of withdrawal is implemented. Britain has been a member of the Common Market for slightly longer than nine years and any reform of the Common Market is as distant now as ever it was. There are two main reasons for that. One reason is that the present system suits the majority of the countries that are members of the Common Market because they are exporters of agricultural produce whereas Britain is an importer, although over the years we have greatly increased our production, at a price. The second reason is that many more people work in agriculture in the other Common Market countries than in Britain. They obviously mount a strong political lobby upon the politicians. Not even our Prime Minister can get over those two facts.

Last June we were promised three reforms by the Common Market. We were promised prudent prices, a reduction in cereal prices to bring them nearer world cereal prices and restraint on surpluses. There is now hardly a glimpse of those good intentions. The surpluses remain. We have the highest price increase proposed since 1977 and the small restraint on cereal prices will do nothing to bring EEC prices closer to world prices. American wheat prices, for example, have fallen by 30 per cent. under pressure from a record world cereal harvest in 1981. They are expected to stay low this year too. EEC cereal prices rose by 7.7 per cent. in 1981. Therefore, the proposed reduction of 6 per cent. to 7 per cent. this year will not offset the 1981 price rise let alone come anywhere near the American prices.

I re-emphasise that the average proposed price increase this year of 9 per cent. is the highest since 1977. We are faced with this proposal at a time when the West has large food surpluses and when millions in other parts of the world are starving. I suspect that many in the West die from over-eating despite the starving millions. The EEC's actions compound this ghastly tragedy. It produces food for profit and not to feed people. It pretends to believe in a free competitive market but it manages the market in the interests of the producers.

Will Britain get a deal that will limit its budget contribution? If we get such a deal, will it be at the expense of giving up the fight against higher and higher prices? If that is so, it will be bad news on the inflation front and bad news for consumers, who will be hit where it hurts, in the wallet.

In 1981 the CAP cost us £1.4 billion. Our net contribution in 1982 will run between £840 million and £1.23 billion. We get a bit back by way of regional policy grants, but in 1980 about 70 per cent. of Community spending went on agriculture as against 2.5 per cent. on regional policies and 4.3 per cent. on social expenditure. The shift of emphasis would have to be prodigious to touch Britain's problems.

If a new round of high EEC prices is decreed, it will create record food mountains in the 1980s. I re-emphasise the argument advanced by my right hon. Friend the Member for Battersea, North (Mr. Jay), who talked about my right hon. Friend the Member for Deptford (Mr. Silkin) opting for a cheap food policy when he was Minister of Agriculture, Fisheries and Food. My right hon. Friend the Member for Deptford kept British food prices below EEC levels by not adjusting the green exchange rate in line with the real pound. At one point British prices were 40 per cent. lower than official EEC prices.

In 1980 sterling, as a petro-currency, began to soar and at the same time the Government chose to devalue the green pound. These two changes combined to raise Britain's food prices to EEC levels. The pound continued obstinately to rise. Had the British Government upvalued the green pound, British prices would have stayed at EEC levels. Instead the Government amazed their EEC partners by asking for a positive monetary compensatory amount. That meant that a tax was put on Britain's food imports and our food prices rose above EEC prices.

At one stage Britain's MCAs were over 18 per cent., but the Government refused to upvalue the green pound for fear of the wrath of British farmers, thus putting farmers' interests before consumers' interests. We still import 40 per cent. of the food that we consume and the CAP has sharply increased the cost of those imports. Consumers pay twice. They pay as taxpayers and as consumers by paying high food prices.

Britain's farms perform better than manufacturing industry but they collect more in disguised subsidies than most nationalised industries put together. They received a good living and I do not think that they need any more largesse.

The story is different when we consider the position of farm workers and poultry workers. The membership of my union, the National Union of Agricultural and Allied Workers, is still involved in a strike in Norfolk and Suffolk. It is the sixth week of a strike in a rural area. The Government have helped poultry producers by stopping the import of poultry from the EEC, but that assistance to producers is not being handed on to the workers.

I compare Bernard Matthews' position with that of poultry workers in Norfolk and Suffolk. Bernard Matthews can perhaps best be described as the Laker of the poultry industry. He has been paying his workers starvation wages and many of them have been drawing family income supplements. They have been receiving wages below the poverty line. They have been taking home just over £50 a week and they have had to try to raise families. His own income is nearly £6, 000 a week. The workers have not benefited from the Common Market or from the help that the Government have given to poultry producers.

Farm workers are the key to the success story in agriculture. They have adapted to new methods. They have used new technology and learnt new skills. They have been loyal and good workers but they still earn on average £30 a week less than the average industrial worker. It is high food prices that contribute to inflation and not the wages of farm and poultry workers.

Farm workers form the largest body of workers in receipt of family income supplement—in other words, they are living below the poverty line. It is a scandal that prosperous employers should have their wage bills met by the taxpayer. Their wage bills are being subsidised, especially when they pay no rates on their land to the local authorities for the local services that they receive. That means that other ratepayers, often less well-off ratepayers at that, must pay a higher rate burden. That is wrong.

Involvement in the common agricultural policy and membership of the EEC have proved an unmitigated disaster for Britain. We have lost on the budget and in trade. Britain imports food at EEC prices, not at lower world market prices. Even if we have managed to lower our contribution to the budget, the cost of importing high-priced food will remain and consumers will continue to foot the bill. When we withdraw from the Common Market, as we surely will in line with Labour Party policy, and if we return to the deficiency payments, which I accept will cost money, at least when we spend that money it will not produce surpluses for storage. Once again, we shall be producing food for consumption. What is more, we shall once again be in charge of our own policy. Parliament will decide farm and food prices again in the interests of the British people.

The common agricultural policy was warmly welcomed by British farmers. It gave them guaranteed prices and guaranteed markets, with food simply being put into storage if no one wanted to eat it. No longer would loss of demand depress production and prices. I agree that our system is expensive, but the CAP seemed to offer a solution to that problem as well. Removing control of agricultural support from Westminster to Brussels put those matters beyond the reach of democratic control, or, as the farmers prefer to phrase it, beyond the reach of political interference.

In Brussels as well, British farmers are able to share in the bargaining strength of the massive Continental farmers' lobby. Of the nine Ministers who discuss farm prices, only the British Minister has any real responsibility to the consumer. He is a farmer, so he has a pecuniary interest in the matter, but the sole job of the other eight Ministers is to maximise farm incomes.

It has not been as simple as that, however. Rising consumer prices have depressed demand and thus the whole system of intervention with guaranteed prices and guaranteed markets has been made even more expensive than was expected. That has led, in a time of recession, to a massive transfer of resources to agriculture. The present trends of production are sustained only by high subsidies, high investment, high energy inputs and the ruthless drive for higher output, higher productivity, more profit and higher land costs. That drive puts tremendous pressure on both animals and land. We should remind ourselves that we live off the top few inches of soil. If we destroy it, we shall no longer be able to produce our most essential commodity—food.

I end as I began. After a little more than nine years of membership of the Common Market we are no nearer reforming it than we were when we joined. I believe that it is impossible to reform it in the interests of the British people. The only solution is to take Britain out of the Common Market at the earliest opportunity. I believe that that would be in the interests of the British people.

8.3 pm

Sir David Price (Eastleigh)

The hon. Member for Sheffield, Brightside (Miss Maynard) made a characteristic speech. She followed the tone of all other right hon. and hon. Members who have spoken today who have offered their personal assessment of the Common Market and their solutions to its problems. In the interests of time, I shall be more modest in what I endeavour to encompass. I shall deal only with milk.

I have noticed that practically no right hon. or hon. Member has referred in detail to the documents before us. There are more than 1, 000 pages of them. They are equivalent to two reasonable-sized telephone directories—and I suggest that there is more useful information in the latter.

I notice by contrast that the White Paper on the agricultural review is succinctly contained, including many statistics, in 44 pages. I hasten to suggest that whatever may be the force of the criticisms of the traditional opponents of the Common Market, if Brussels continues to be so prolix in its verbiage it is more likely to be sunk by its own administrators than by the force of its opponents' arguments. It is harder to find milk in the 1, 000 pages than in a Dublin pub.

I unhesitatingly speak on behalf of dairy farmers in Hampshire. I am not a dairy farmer, but I am impressed with the points that they have put to me and my colleagues for many months. Moreover, as I hope the hon. Lady the Member for Brightside will agree, farmers and farm workers get a rather indifferent press in this country. It is taken for granted by far too many people that the pinta arrives on one's doorstep. How it gets there, and especially the process by which milk is produced and those who produce it, is underestimated. We rightly hear much about those who work unsocial hours, and we all have our own views about what extra premium they should be paid. But not nearly enough publicity, if that is the right term, is given to the problems and the hard life of dairy farmers and their employees.

I wonder whether the media and those who control it are almost entirely urban or suburban by temperament—as indeed the vast majority of us are, as that is how most of the population is distributed these days. I make a positive proposal to the press barons. It would be nice if a few of the lobby milked a cow occasionally—just to keep their hand in. There would then be a slightly better understanding of the problems faced by dairy farmers.

Those who know our dairy industry will agree that it is, overall, the most efficient in Europe. This has come not by the fiat of central Government but by hard work, market pressure and, above all, by adopting modern methods. It has also been accepted by the leaders of British farming that, as a result, there is a danger of surplus output which cannot be sustained for too long by any Government of any political complexion. It is not, therefore, in farmers' interests to produce milk lakes or butter mountains.

Therefore, the concept of the co-responsibility levy has been accepted—albeit, be it noted, reluctantly—as a method of controlling and limiting output. But the way in which the EEC operates that levy is regarded as unfair and inefficient by our dairy farmers. They do not see the product of that levy being used to increase demand for milk products, which was supposed to be its original purpose. They do not see the extension into other EEC countries of the British system of the doorstep retail delivery of milk.

There is little doubt from either the dairy farmers' point of view, or that of the milk distributor, that the door-to-door sale of milk keeps up demand and hence output. It makes the type of advertising used by the Milk Marketing Board particularly effective at the point of sale. Put the other way round, in rural areas, where we no longer receive our daily round, there is no doubt, if one talks to dairies, that the average consumption drops. I believe that there is a direct relationship between these two factors.

Therefore, I hope that the Minister will say something about the use of the "surpluses" in the funds of the co-responsibility levy. The problem is how to reduce the alleged oversupply. There is no overproduction in this country. It is in the other countries. Therefore, it should surely be a national responsibility, given that the Common Market is not yet a federal system but a negotiation between sovereign nations.

The proposal to which I am anxious to draw attention is what is called in the quaint English of Brussels modulation of the milk levy". This lays down that if a farmer produces more than 60, 000 kg of milk per year he pays the higher levy. If he produces less, he pays a diminished levy. Those figures may not mean much to the ordinary member of the public. The average yield of a dairy cow in my part of England is about 4, 500 kg per year. Simple arithmetic therefore shows that an average herd of 14 cows in milk throughout the year would exceed the modulation limit.

Mr. Robert Hicks (Bodmin)

It is litres, not kilograms.

Sir David Price

My hon. Friend says that it should be litres, but the literature refers to kilograms, so that is another aspect of the confusion.

The vast majority of British herds, and certainly the vast majority of those in my own county of Hampshire, would therefore exceed this arbitrary and, to me, wholly unnecessary limit.

Table 3 of the annual review of agriculture produced by my right hon. Friend shows that last June there were 60, 500 dairy herds in this country, of which 64 per cent. exceeded not just the 14 cow limit but the 30 cow limit. Working back from that, one discovers that the vast majority of our herds exceeded the limit laid down for the co-responsibility levy. Indeed, according to the White Paper, some 66 per cent. of all our dairy cows were in herds of 60 or more.

Let us consider what that will mean in practice. Taking average figures for Hampshire, assuming one cow per acre and an average rent taken by farm economists in Hampshire of between £32 and £34 per acre, current net profit per cow is between £60 and £80 per year. A co-responsibility levy of 2½ per cent. would mean that the farmer paid £20 per cow. At 4 per cent. he would pay £32 per cow, and at 5 per cent., which is quite possible under these arrangements, he would pay £40 per cow, and he would lose most of his profit if the levy rose to 5 per cent. If it rose to the 8 per cent. that the NFU fears for the future, profit would be completely eliminated. The fear for the future is the one that particularly disturbs my farming constituents. I hope that my right hon. Friend will give assurances that, whatever else may be conceded in Brussels, this will not be conceded.

Mr. Jay

Will the hon. Gentleman give way?

Sir David Price

No, if the right hon. Gentleman will forgive me; I wish to be brief.

The Commission's figures show that only 22 per cent. of all milk delivered in the United Kingdom would come from the very small herds which would attract the lower rate of levy, whereas in other countries of the Community the proportion of farmers who might enjoy such an advantageous position is 79 per cent. in Southern Ireland, 77 per cent. in Germany and 66 per cent. in France. That is an alarming contrast.

It is not right that the British dairy farmer, who has become efficient after many years of hard work and agony, with many people going bust and leaving the industry, should suffer for social reasons applying to other Common Market countries. I recognise that the social reasons in those countries, which wish to prevent rural depopulation and to obtain reasonable incomes for rural communities, are perfectly proper national aims—but they should be paid for by their own taxpayers and not by the Community as a whole. Moreover, even if they were paid by the Community, the money should come from the social budget and the regional budget and not from the agriculture budget. In attempting to strike a fair balance between producer and consumer, it must be in the interests of the consumer to encourage greater agricultural efficiency.

All of us who have studied British agriculture know that since the beginning of the Second World War agriculture in this country has shown a remarkable increase in productivity. If the whole of British industry had shown the same increase, the economy would be a great deal stronger than it is. I am sure that all hon. Members would agree that this has been in the interests of the consumer. It is therefore wrong both in principle and in practice to penalise the efficient British farmer for social reasons in other countries. If we were sitting in the French Chambre des Députés, in the light of what happened in Paris at the weekend, no doubt we should be anxious to help the small farmers of France, but that is a French problem and not a British one.

I was therefore most encouraged when on 18 March my right hon. Friend said in reply to a question about the current negotiations: Discussions took place on the co-responsibility levy. We made it clear that we opposed the giving of any preference to smaller producers and that on balance we favoured abolition of the levy and a lower price for milk."—[Official Report, 10 March 1982, Vol. 20, c. 492.] I hope that I carry the whole House with me in saying "Hear, hear" to that and in giving him all our support in fighting hard to maintain that position. Otherwise, it will be a pure "Alice through the Looking Glass" situation in which most of the aid will go to the least efficient when we are trying at the same time to look after the consumer. That is absolute nonsense.

I hope that my right hon. Friends will go back to the battle in Brussels armed with the knowledge that the House of Commons is determined to get rid of the gross inequalities and inefficiencies of the system relating to milk just as the French will no doubt be anxious to help their peasant farmers.

8.17 pm

Mr. Geraint Howells (Cardigan)

I declare my interest as a farmer and member of one of the marketing boards of this country.

In my eight years' service in the House, I cannot recall a more discouraging display by the Opposition or a more depressing expression of ideology triumphing over common sense in their attitude to the agriculture industry. The Labour Party has clearly decided that its best vote-catching ploy is to denigrate the rural dweller and to concentrate on the urban vote, dismissing centuries of dedication by those who have tended and preserved the countryside for the profit and enjoyment of all in both town and country. In so doing, they display a total ignorance of the subject, which is frightening when one considers that they aspire to rule the country. Their attitude greatly saddens me. On second thoughts, however, perhaps I should not be unduly worried about the future as there is an alliance now making inroads into the British political system. [HON. MEMBERS: "Where are they?"]

Mr. Buchan

No doubt they are supporting the alliance and pursuing rural votes in Glasgow, Hillhead. I remind the hon. Gentleman that it was the Labour Party, especially under Tom Williams, that saved British agriculture when it had been virtually destroyed by decades of Tory rule. It is to the policy that saved British agriculture that we wish partially to return when we have got rid of the monstrous diversion from real agricultural policy represented by the Common Market. The hon. Gentleman should not make such comments about the Labour Party. He is usually a fair man, so perhaps he will withdraw that statement.

Mr. Howells

I stand by what I said. I respected the late Tom Williams, because he was a good Minister of Agriculture. Unfortunately, the present Opposition are pursuing the wrong policies for agriculture. They conveniently forget that the efficiency of the agricultural producer over the years helped our balance of payments by producing a large percentage of the food that we need, and that food prices have been held well below the rate of inflation in recent years.

The Opposition's attack on the European Community is wholly predictable and, in my view, short-sighted and uninformed. It demonstrates only too clearly the Labour Party's obsessive insularity—an attitude not shared, by the way, by other Socialists in Europe. One can only suppose that, here again, the Labour Party is using simplistic arguments for purely political and vote-catching purposes.

Reference was made earlier in the debate to the article in Big Farm Weekly. I want to be fair to the hon. Member for Renfrewshire, West (Mr. Buchan) because I misunderstood what he said to the hon. Member for Devon, West (Mr. Mills) about the issue in Big Farm Weekly. I would like him to clarify the position. Big Farm Weekly of 11 March 1982 contains an article by Barry Wilson, in which he says: More than 100 Labour MPs are members of this committee, including party leader Michael Foot, shadow chancellor Peter Shore and new agriculture spokesman Norman Buchan. The report goes on—and this is what I am getting at: There is no particular merit in having an agricultural industry. I want to be fair to the hon. Gentleman. Does he dissociate himself from the sentiments expressed there?

Mr. Buchan

I am astonished that the hon. Gentleman needs to ask the question. If he had read the next issue of the Big Farm Weekly, he would have seen that it said: Labour agriculture spokesman Norman Buchan this week dissociated himself entirely from the criticism of the United Kingdom agriculture by —this is where it goes wrong— his party's Common Market Safeguards Committee. I completely rejected the expression to which the hon. Gentleman took exception, and to which I took exception, about "particular merit". I said: Far from believing that there is no particular merit in having an agricultural industry, I believe that the role that argiculture has to play in the coming decades requires an enhanced, not a diminished, importance in our national life and national economy. I want to clear the matter up once and for all. The committee is an unofficial body, and it has no relationship to the official policy of the Labour Party. It is true that it is sponsored by a number of Labour Members of Parliament, including myself, but none of us write articles for it. This is the first article on agricultural policy by the committee that I have seen. It is concerned mainly with trade and industrial matters. On behalf of my right hon. Friend the Leader of the Opposition and the Labour Party, I repudiate this article, and I did repudiate it. If the hon. Gentleman wants further repudiation, he should read the interview with me in last week's Farmers Weekly, which carried a fair report of my repudiation. I hope that that is the answer that the hon. Gentleman requires.

Mr. Howells

I wanted to be fair to the hon. Gentleman. He had the opportunity, and he has clarified the position.

The Liberal Party, in contrast to the other parties, has great faith in agriculture and its ability to help the British economy. At the same time, we are convinced that success for the future lies in the Common Market. We accept the basic principles of the Treaty of Rome as a set of objectives designed to serve the public well, both in this country and in the rest of the Community. We believe that staying in the Community is our best hope of a guaranteed supply of food in the future. At the same time, we are well aware of the deficiencies of the CAP. We hope that it will be reformed so that farmers throughout Europe can compete on equal terms. We feel that Britain should take the initiative, where necessary, and be rather more aggressive than it has been so far towards those national aids that result in unfair competition with our own producers and which in many cases have caused great despair in certain sectors of the industry.

Unlike the Labour Party, we are aware of the importance of agriculture to the fabric of rural life. When agriculture suffers, so do the ancillary industries and the rural economy in general. In my view, farmers have a great responsibility to the environment and, despite many claims to the contrary, I believe that the majority take that responsibility very seriously and contribute a great deal towards the pleasure of those who visit the countryside.

Over the years, the industry has had an excellent record on productivity, and it has shown the rest of Britain how to go about improving markets and cost effectiveness. The dedication and hard work of the industry deserves recognition from the Government and the public alike, not the insults hurled at it by those who should know better.

However, despite all efforts, United Kingdom farm incomes rose by only 2 per cent. in 1981. That followed a drop of 24 per cent. in real terms in 1980. Net product in 1981 was down by 1 per cent. The increase in productivity was only 1 per cent. There was a reduction in the breeding herds and flocks, and investment was down by about 12 per cent. Those figures are taken from the annual review of agriculture White Paper, which was published recently, and they reflect a worrying trend. Farmers are having to borrow heavily just to keep going. Therefore, their ability to invest in and improve their land has been seriously eroded. More and more are selling up, to the detriment of the rural community.

The Government are partly to blame for that. They should be criticised for failing to come to the aid of the farmer in a more positive manner. To put the industry on a more sound footing, it is essential that we resist the temptation to accept the prices that have been suggested by the Commission. To restore the industry to greater health, it is necessary to press for a greater increase in support prices. I would not go as far as the European Farmers Union, which insists on a 16.3 per cent. rise. My view is that 12 per cent. is a reasonable figure to aim for to ensure that the confidence of the industry is restored and to enable farmers to start investing more money in the industry again.

At the same time, it is vital that any attempt to revalue the green pound should be resisted as that would immediately cut the increases in the farm prices already suggested to about 4 per cent. Once again, British farmers would be at a great disadvantage compared with the rest of the Community's farmers. We would be back to the unsatisfactory position of two years ago. Any advantage gained since then would be wiped out completely.

It is important that negotiations this year should not be long drawn out. Any great delay would increase the demoralising effect on the industry, and the value of the award would be reduced if negotiations were prolonged.

It is in the consumers' interests that Britain has a flourishing agriculture producing excellent quality products at reasonable prices. That is within the bounds of possibility if we continue to exert pressure for the improvement of the common agricultural policy, and at the same time ensure that farmers and farm workers are adequately compensated for their efforts and encouraged to achieve even higher standards.

Many potato growers and wool producers in Britain are not pleased that the Government have decided—unwisely, in my view—not to give an increase in this year's price review. I am sure that both sectors will be disappointed. I hope that the Minister will tell us why that decision was taken.

Another matter of concern is that Britain has a capital grant system. Farmers have no alternative but to accept the present system. Europe has an alternative scheme of cheap credit facilities. I hold the view—I have held it for many years—that they should be optional. British farmers should be able to decide on one or the other. It would also be fair to other farmers within the EEC.

Reference has been made to the co-responsibility levy. It should be abolished, but we should have co-responsibility. We must work together, but we must do away with the levy system because it is penalising the dairy industry.

The marginal land survey is another matter of concern. It is long overdue. There is unfair competition between those who qualify for the hill compensatory allowance and those living in the marginal area. It is up to the Minister to deny this or otherwise, but when I went to Brussels a month ago I was told that it was the British Government's fault that the marginal land survey had not been finalised. The Secretary of State for Wales did not deny it. It is up to the Minister tonight to say whether that is true or not.

The deficiency payments scheme that operated in Britain has been mentioned. To be fair to the system, it operates today for lamb and beef in Britain, although it has another name—the variable premium scheme. The only advantage that the present scheme has over the old deficiency payments is that it has a headage payment added to it. I hope that the new variable scheme, which will help beef producers immensely, will give them a headage payment as well. If the new scheme advocated by the Government and the Commissioners is as good as the sheepmeat regime, it will be a wonderful scheme for beef producers and will be helpful to consumers in Britain. I hope that the Minister will clarify the variable premium scheme when he replies to the debate.

Many faults can be found with the common agricultural policy. However, we have reformed it a great deal in the last few years, and I hope that we shall continue to do so. After listening to the debate, I am sure that Liberal Members will be voting with the Government tonight.

8.33 pm

Mr. Jim Spicer (Dorset, West)

All hon. Members have a great respect for the hon. Member for Liverpool, Walton (Mr. Heffer). We know that he has stuck to his guns over the years. He has always been constant in his opposition to the common agricultural policy and to the Community. He has made that position clear tonight.

I hope that in the wind-up speech tonight we shall get a slightly clearer picture of where the Opposition stand. When the Commission's proposals were questioned, the hon. Gentleman's first reaction was to say that those proposals were reasonable, but that he could not approve of the 9 per cent. If the 9 per cent. is taken away, there is virtually nothing left. In his closing remarks, the hon. Gentleman clearly rejected the Commission's proposals out of hand. I should like to know the Opposition's view of the Commission's proposals and whether they consider them reasonable, or totally acceptable.

As always, I listened with interest to the speech made by the right hon. Member for Battersea, North (Mr. Jay). One of his great failings is that he never takes any account of input costs. However, they exist for farmers whether they are in Hampshire, Dorset, the United States of America or Canada. The right hon. Gentleman never seems to consider that fact.

The alarm bells for the common agricultural policy started to ring in about 1978. I went to meetings addressed by economists—that awful gathering of people—who thought they knew what was happening in agriculture, and by people from the Commission. They all said that we should watch out, because 1981–82 would be the crunch year. They forecast that the budget would go over the top in that year and that the Community would then have to do something about reforming the common agricultural policy if it was not to become bankrupt. That did not happen in 1981–82 and I suppose that we should welcome that. However, we should not disguise the fact that we have only postponed the day. If we do not bump up against the bankruptcy factor in 1982–83, we shall do so in 1983–84, or 1984–85.

This fact reinforces the need for urgency—which I know exists—when my right hon. Friend the Secretary of State says in the Council of Ministers that the common agricultural policy must be reformed. Something that was designed for a Community of six will not operate for a Community of 12, or, in two years' time, for a Community of 14. What was applicable to the Community of the 1950s is no longer acceptable to anyone in the Community of the 1980s. Therefore, I wish my right hon. Friend well in pressing home that attack and in ensuring that we do what is necessary.

In the brief time available I shall concentrate on one aspect of the Commission's proposals for 1982–83. From the tenor of the speeches that have been made, it is clear that they are also unacceptable to most hon. Members. The co-responsibility levy has been in existence for the past five years. During that time it has had a chequered career, but seems to have become institutionalised and appears set to remain so. On behalf of the dairy farmers of Hampshire, my hon. Friend the Member for Eastleigh (Sir D. Price) spoke passionately about the co-responsibility levy. I do not wish to take issue with him on the merits of the dairy farmers of Hampshire as opposed to those of Dorset. However, Dorset is much nearer to the heartland of the dairy industry and, therefore, I can only reinforce all that my hon. Friend has said.

When the co-responsibility levy was introduced it was not intended that it should be institutionalised or that it should remain for ever. It was introduced in September 1977 when we were still dealing with a massive dairy surplus. As my hon. Friend the Member for Eastleigh pointed out, many people reluctantly agreed that we should take some step—however small—to dispose of the surplus and to build up a fund that could be used for that purpose. However, by May 1978 the rate of the levy—which was at 1.5 per cent. when it was introduced—had been reduced to 0.5 per cent. I took part in a television programme with the late Finn Gundelach, whom many hon. Members will have known and respected. At that time, he made it clear that he had lost all faith in the co-responsibility levy. At his insistence it had been reduced and he hoped that it would disappear completely in the years ahead. Sadly, it has gone the other way. By 1980–81 it had risen to 2 per cent. and in 1981–82 it rose to 2½ per cent. If the Commission has its way it appears that that 2½ per cent. is to be enshrined as the figure that will apply beyond 1982–83, but with the one unsubtle and totally unacceptable change, already commented upon tonight, that we are to have a differential levy. As my hon. Friend the Member for Eastleigh clearly said, the first 600 kg of milk delivered by each dairy will be levied at 1.5 per cent. of the target price for milk, as against 2½ per cent. for quantities in excess of that amount.

Such a change would be totally discriminatory against United Kingdom dairy farmers. This discrimination is well illustrated by the fact that only 22 per cent. of our dairy farmers would come in at the lower figure, whereas in the rest of the Community it would be 60 per cent. That is totally unacceptable and I am delighted that my right hon. Friend has made it clear that he is also completely opposed to it.

This proposal may have been developed because there is a social need to support the hill farmers in Bavaria and parts of France, and 12-cow herds everywhere, to which reference has already been made. If so, that has nothing to do with agricultural efficiency. We cannot accept a tax on the efficiency of our agriculture in support of the peasant farmers—I use the phrase in the nicest sense—in the rest of the Community.

A rural fund was proposed by the Conservative group in the European Parliament some years ago. Such a fund should not be a charge on the common agricultural policy. It must be a social charge, be it on the nation State or on the Community as a whole. We cannot allow the co-responsibility proposals to destroy the basis of confidence in our own dairy industry.

Apart from my objection in principle to the co-responsibility levy, I strongly object to the amount of money that has been collected through the levy over the past five years. The figures are startling. In five years £742 million has been collected, of which only £413 million has been used. I am not too certain about some of the uses to which it has been put, although some would say that there has been some value attached to that usage. That leaves a massive surplus of £329 million. At the very least we should fight for a suspension of the co-responsibility levy for the years 1982–83 and 1984–85. There is enough money in the kitty to cover those years and, one hopes, at the end of that time we shall be in a position to put forward a more suitable proposition.

Finally, I make one small additional point. School milk has been mentioned and also the way in which county councils should be encouraged to use available surpluses. That case has been put strongly in my own county of Dorset. However, one of the objections that my county council members rightly expressed was that they were not too certain, if they took up the proposals, how long the subsidy would continue. If they were placed in the position of having to withdraw school milk, would they not then be attacked for doing so? My understanding is that we now have a guarantee through to the year 1985, or 1987. If so, how much publicity has that been given to county councils through the Department of Education and Science or through the Ministry of Agriculture, Fisheries and Food?

Reference has been made to the late Tom Williams, a great man in agriculture. However, I have the greatest confidence in our agricultural team on the Government Front Bench. I know that they will fight hard for what we know is right for British agriculture and for the British consumer. They do so with my fullest support and, I am sure with the support of most hon. Members on the Government Benches and some others as well.

8.44 pm

Mr. Harry Ewing (Sterling, Falkirk and Grangemouth)

I shall follow the example of the hon. Member for Eastleigh (Sir D. Price) and will choose to talk about only one subject from the wide range of subjects that the House is debating tonight. I shall concentrate on what I regard as the disastrous decision yesterday of the Government to agree to an amendment of the wine regulations and agree to the distillation of 7 million hectolitres of wine, producing 55, 000 tonnes of wine alcohol, which will obviously find its way into the ethyl alcohol market. Whether the Minister of Agriculture, Fisheries and Food likes it or not, it is bound to disturb the ethyl alcohol market in Britain and in other countries.

It is unsatisfactory for the Minister to inform the House that the Government have agreed to the amendment to the wine regulation and then not give the details of the agreement that he claims to have obtained. He said that he had a cast-iron agreement, but when pressed by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) he did not give us the details. He rested on his claim that the Minister who will reply to the debate will give us the details of the agreement.

The decision will affect seriously the ethyl alcohol industry in Britain. Perhaps I may put on record the agreement that was reached yesterday, as I understand it, in Brussels. Agreement was reached for what is called an exceptional distillation of 7 million hectolitres of wine, reducing to 55, 000 tonnes of wine alcohol. Once that has been distilled, the intervention agencies will take over and the alcohol will become their property. At that stage, the intervention agencies will tell the Commission—not ask the Commission's permission—about the price of the surplus alcohol and its destination once it is to be distributed.

The agreement goes on to say that the Commission must then obtain the agreement of the member States. That is a rather obscure phrase. What member States are we talking about? Are we talking about the member States that produced the surplus, the member States into which the surplus will be unloaded, or all the member States? I was astonished to hear the right hon. Gentleman say that the 55, 000 tonnes of surplus alcohol will not disturb the ethyl alcohol market. How he came to that conclusion is completely beyond me. It is fairly obvious that if we unload 55, 000 tonnes of fermentation alcohol into the ethyl alcohol market, 55, 000 tonnes of alcohol that might have been produced will not be produced.

The irony is that, even after the special distillation, the wine lake will still exist. The price that will be fixed by the intervention agencies will be attractive to the wine industry and the other Common Market countries may continue to over-produce. The wine lake will continue to grow. What happened yesterday does not mean that we have dealt with the problem. What the Government have agreed to do, as I understand it, is to deal with a part of the problem, and then we are to have a continuation; and that course has serious implications for the industrial alcohol market and industrial alcohol producers in the United Kingdom.

I turn now to the question of my constituency, because this is what has prompted my intervention in this debate. In my constituency BP Chemicals has just constructed an ethanol plant at a cost of £57 million. The plant will be finished at the end of this week or the beginning of next week and should be commissioned in the next two or three months. That is £57 million for a brand new ethanol plant which is now in serious danger of never being operated because of the decision to which the Ministers committed themselves in Brussels yesterday.

In Grangemouth there are 1, 000 jobs at stake. I am sick and fed up with BP in Grangemouth paying off my constituents who have been employed by it for many years. Therefore, in that sense, I strongly criticise the BP manpower policies, and I am not saying anything here that I have not said outside to the BP management. They know my views on their manpower policies. But this situation is beyond their control and has been put beyond their control by the decision taken by the Ministers yesterday. In addition to the 1, 000 jobs at stake in my constituency, there are jobs at stake in the constituency of my right hon. and learned Friend the Member for Aberavon (Mr. Morris) at Baglan Bay and there are jobs at stake in Hull, where BP has just commissioned a new plant. Throughout the country there will be job losses, whether the Government like it or not, as a result of the agreement which the Ministers reached yesterday.

If we are to believe the press today, the estimated cost of this agreement is about £70 million—£70 million to put people in this country out of work. It would have been cheaper and it would have made more sense to pour the wine down the drain, because then at least we could have retained our jobs in this country. We could have produced the ethyl alcohol for which the ethanol plants have been constructed throughout the country. I am not saying that everyone would have been happy, but at least we would not have had the problem which has been imposed upon us by the right hon. Gentleman in the agreement.

The House must take full cognisance of the importance of this issue of fermentation alcohol as produced by the wine industry as distinct from ethyl alcohol as produced by our chemical industry in Britain. I suspect that the Government have sold out on the fermentation alcohol problem in order to try to deal with the wine lake. I say again that it would have been much cheaper and would have made more sense to pour the stuff down the drain. If what they have done is sold out on this in order to get an agreement on farm prices in the CAP, certainly for my constituency in Grangemouth and the people that I represent it is totally unacceptable.

The hon. Member for Canterbury (Mr. Crouch) understands the problem probably much better than I do and will explain it much more clearly. The problem affects not only the chemical industry but the pharmaceutical industry and the industry which produces perfumes and cosmetics; and every one of those industries will be the victim of the decision reached yesterday.

I was taken by surprise by that decision because it is an open secret and was reported in the press that some of us—the hon. Member for Canterbury and myself and people from the Chemical Industries Association—met the Secretary of State for Industry and the right hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) a few days ago, and we came away from that meeting with the impression, obviously wrongly, that the Ministers understood the problem. We came away from the meeting with some hope that at least we should not face the kind of problem that we face as a result of the sell-out in Brussels yesterday. The whole industry is disappointed and upset at the decision.

I speak again for my constituents. Whilst I strongly criticise BP's manpower policy, I accept that what happened yesterday has placed the future of the ethanol plant at Grangemouth in serious doubt. It was built at a cost of £57 million, and the work is to finish this week. I spoke only this morning to the manager, Dr. Ted Luxton, who made it clear to me that the whole venture was on very thin ice as a result of the decision.

I hope that when permission to implement the agreement is sought right hon. and hon. Members throughout the House will withhold permission and ensure that the Government fully understand that we are not prepared to give up the jobs of British workers to deal with a wine lake problem that was not of our own creation.

Mr. Spearing

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Mr. Crouch.

Mr. Spearing

Does my hon. Friend agree that—

Mr. Deputy Speaker

Order. I have called the hon. Member for Canterbury (Mr. Crouch).

8.56 pm

Mr. David Crouch (Canterbury)

The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has made a strong speech about an important question. He expressed a feeling that came strongly from a constituency interest, and I believe that he has a strong constituency point that must be made. If his worst fears were realised and the decision about the wine lake's distillation into alcohol to replace industrial alcohol were implemented, it would put in jeopardy the production of industrial alcohol at Grangemouth, which is the centre of the hon. Gentleman's constituency, and put at risk many jobs.

I must declare an interest in the chemical industry and the allied pharmaceutical and cosmetic industries, all of which consume alcohol. I confess that I, too, am a consumer of alcohol in more ways than one. Even in a personal way, we are concerned about the subject.

We are asked to take note of European Community documents relating to the disposal of wine. The exact wording is: proposals on the common organisation of the market in wine". We are also asked to take note of the Ministry of Agriculture, Fisheries and Food's unnumbered Explanatory Memorandum of 12th March 1982 concerning a Commission proposal for the exceptional distillation of seven million hectolitres of red wine". One reason for our consideration of the matter, one reason why the Government are putting it before us, as they must, is the prospective enlargement of the Community, with the addition of a great wine-producing country—Spain. There is another reason, also mentioned in the Community document, which is that we are already producing a great deal too much wine within the Community.

The wine lake is no longer a small lake. It has grown to an alarming size. I should like to remind the House of its size in relation to the industrial implications to which the hon. Gentleman referred. At the beginning of the wine year 1981–82, exactly a year ago, there were 92 million hectolitres of wine in stock, equivalent to eight months' stock, or 7.3 million tonnes. If that wine is converted into wine alcohol by distillation we shall be left with a stock of 330, 000 tonnes of alcohol ready to unload on the market.

The average annual EEC production of additional surplus wine is the equivalent of another 140, 000 tonnes of wine alcohol. These figures relate to the EEC's use of industrial alcohol produced synthetically, amounting to about 500, 000 tonnes. Almost a year's supply is already sitting in stock for the whole of the EEC. Therefore, it is a large amount. Scotch whisky production in Scotland is about 250, 000 tonnes of alcohol.

It is now proposed, by exceptional distillation, that 6.25 million hectolitres of wine should be converted into ethyl synthetic alcohol which is about 50, 000 to 55, 000 tonnes of pure ethanol and is only a small amount compared to more than 500, 000 tonnes that can accumulate as a stock of wine alcohol.

Nevertheless, I am grateful to my right hon. Friend and his Department for having stood out against nine other nations when we are not a wine-producing nation of any significance. We have stood out, despite all our other difficulties on which we must argue and seek to bargain in respect of agricultural agreements in Brussels. I am at least grateful that my hon. Friend's Department managed to obtain a distillation of only 55, 000 tonnes, and not the 500, 000 tonnes that might have been the case. It might have traded off the wine lake question to defend our position on milk, butter, apples or land. At least it recognised—because of representations made to it and the Secretary of State for Industry—that there would be a serious adverse effect if so much of the wine lake were so distilled and found its way on to the market.

I am still a little concerned because my right hon. Friend's statement today was not complete. Like other hon. Members, I am concerned about this problem and want to know the whole statement. I know that my right hon. Friend, the Minister of State, when winding up, will make such a statement.

Those hon. Members interested in the chemical and allied industries that use industrial alcohol are concerned that this agreement to distil 55, 000 tonnes could be the thin end of the wedge of a much greater distillation if it is found to be the answer to getting rid of the wine lake. However, this will only produce a much greater problem in industry. Where will the 50, 000 tonnes of ethyl alcohol go? How will it be fed into the market without disturbing it? We already know that BP Distillers is concerned at Grangemouth. That is not a small and easily frightened company. It is a very large company, but it is concerned about the implications for its future production.

I imagine that the Scotch whisky industry—I am not briefed on this subject—might also be concerned about the unloading of wine alcohol on to the market because it could well affect the production of drinkable spirits, including the whisky, gin and vodka markets. As I understand it, an element about distillation that is worrying is the intervention price at which it will be made. On the face of it, it does not appear to be a high price. The distillation price to the wine grower is 81.5 per cent. of the guide price. At first sight, that seems to be nearly 18 or 20 per cent. below the market price. However, that is not so, because the guide price is well above the market price operating in Europe today.

The price of 81.5 per cent. of the guide price would give an intervention price well above the market price of wine today. Such a step in this direction would encourage the production of still further wine and a further increase in the calamitous wine lake. Therefore, I hope my right hon. Friend can give us some encouragement that that will not happen. He should draw the line in Brussels and say that it should not happen. We should not now be dosing anything to encourage this further surplus of unusable wine.

As has been mentioned, British production of industrial alcohol will be seriously affected. The figures that have been quoted are absolutely right. In simple terms, we rare talking about a serious surplus of a product and a way of getting rid of it.

The proposals from the Community will produce serious adverse effects. Its system is to subsidise the sale of wine to be turned into alcohol for use in industry. Let us look at the costs involved in the process. If the wine is turned into alcohol, the cost will be nearly £2, 000 a tonne, yet the cost of industrial alcohol produced by BP is only £400 a tonne. That is a massive difference. Therefore, it is an expensive way of getting rid of a surplus.

Already, Community aid to convert this wine into alcohol amounts to £1, 200 a tonne, but even that is not enough because it only reduces the price of that wine alcohol to £750 a tonne—still way above the price of industrial alcohol at £400 a tonne. If the Community really wants to get rid of this wine by turning it into alcohol, I believe that it will be tempted to go an expensive stage further, with a further subsidy of £350 a tonne or more to bring it down to the market price of industrial alcohol. That is an extremely expensive way of dealing with a surplus.

What about the industries that use alcohol, whether it is derived from molasses—known as agricultural alcohol—or whether it is synthesised ethyl alcohol made by BP Distillers? The pharmaceutical industry uses it, but that industry is bound by strict national and international standards regarding the content of all the constituent products that it uses. Under the British Pharmacopoeia, I doubt whether it would be possible for the British pharmaceutical industry to take wine alcohol instead of the existing pure alcohol that it gets from the chemical industry.

The cosmetic industry is large, with an output of business worth £750 million a year. That uses 25, 000 tonnes of alcohol. It wants the freedom to buy in the cheapest market. It does not want to pay £750 a tonne when it can now buy at £400 a tonne. It wants the freedom to choose.

I am afraid that this problem will not go away. I accept that the cast-iron agreement referred to by my right hon. Friend the Minister of Agriculture, Fisheries and Food is all right as far as it goes. At the very most it goes up to 55, 000 tonnes, but like a sword of Damocles, the wine surplus is hanging above industry both here and in the Community as a dangerous factor that could have serious effects unless something is done about it. I fear that the cast-iron agreement is not doing enough.

I am glad that the cast-iron element is such that the matter has been shelved. At least the distillation is small and, therefore, a lot of this new alcohol will not go to industry. We must look ahead to see what can be done. My right hon. Friend mentioned a possible way out. He said that it was possible to turn the grape must into molasses and to produce a feedstuff. That would be sensible, because the Community now imports about 3 million tonnes of molasses in a year.

In the Community we have a deficit of molasses, which we need. We might use the surplus of grape juice that we produce to replace the molasses that we need not import. It is possible to do that.

Mr. Peter Mills

In his proposals, I hope that my hon. Friend will remember the effect on Commonwealth and Third world countries, which have a large amount of molasses. We must allow that to enter into this country.

Mr. Crouch

I accept that. Whenever one thinks of the Common Market, one finds that one is robbing Peter to pay Paul. That factor will have to be taken into account. I am merely suggesting one way round the difficulty. Something must be done about the wine lake, as the problem will not go away, but will grow bigger every year.

It has been suggested that we put our surplus wine down the drain. That may be better than some solutions, but I do not think that we can do it because that commodity can be used for some other purpose. It could be used as an admixture with gasoline, as in the United States and Brazil. As an alcohol it could be used as an octane enhancer. About 10 per cent. of ethanol can be mixed with gasoline.

We must look at those matters, because they are major questions. Otherwise, we shall find, perhaps in a year's time, that there is a proposition not to produce 55, 000 tonnes of wine alcohol but perhaps 155, 000 tonnes or 255, 000 tonnes. I shall then have something to complain about. I shall now let the House reflect on those alcoholic thoughts.

9.12 pm

Mr. William Ross (Londonderry)

The hon. Member for Canterbury (Mr. Crouch) will be glad to hear that I do not intend to follow him into a wine lake. I have enough of my own problems, as I speak for agriculture in Northern Ireland.

Two or three times during the debate I thought that I heard hon. Members imply that farmers had been doing relatively well over the last year or two. In the light of that expression of view, I thought that I should bring to the attention of the House the answer that I received to a question that I asked on 4 March. Taking the estimates of farm incomes from 1977 to 1980, we find that in 1977 net farm incomes in Northern Ireland were £70.4 million, in 1978, £68.9 million, in 1979, £37 million and in 1980, £14.1 million. In the light of those figures, it will be appreciated that the agriculture industry in Northern Ireland is not in a healthy state.

Therefore, I shall deal with two courses of action which, if implemented, will do much to improve matters in Northern Ireland. The first is the extension of the less-favoured areas. I declare a personal interest, as I am a landowner and my farm is on the fringes of a less-favoured area. The question of extending the less-favoured areas arose in the lifetime of the previous Labour Government. Extension seems to have been proceeding at a snail's pace. The implication of the extension of such areas was that it would raise the income of stock farmers in Northern Ireland and, by inference, throughout the rest of the United Kingdom, where the extension would also apply.

No one will deny the need to maintain the viability of the farming community. There is a tremendous, spin-off to the farm machinery industry. There is also the-question of investment in buildings and all the work in the ancillary industries. That is important in the economic life of Northern Ireland.

As well as the figures for the years 1977 to 1980, I have another figure to quote. The average farm income for 1980 was 15 per cent., in real terms, of the average for the years 1973 to 1978. That shows that farm incomes, regardless of the years one chooses over a comparatively long period—certainly for the years that I have been a Member of the House—have decreased tremendously. That is a decrease not in cash terms, but in real terms. That is the figure that really matters.

Even if the improvement which has been seen in 1981—we have not had the figures yet—brought farm incomes up to three times the 1980 level, they would still be at only 40 per cent. of the average for the years 1973 to 1978. It is against that background that I wish the Minister to answer questions about the extension of the less favoured areas.

In 1973, Northern Ireland had a beef herd of 325, 000. In 1981, the beef herd was 205, 000. That is a decrease of 120, 000—or 37 per cent. The census for December 1981 shows a further drop to 201, 000 cattle—another 2 per cent. In the light of those figures—a steady and long decrease—the delay in extending the less favoured areas is incomprehensible. I cannot understand why this matter has been allowed to drag on for so long. The survey into the areas involved was carried out. The Minister responsible for agriculture in Northern Ireland told the Ulster Farmers Union on 5 August 1980 that the survey had been completed. If the Government had decided to put the less favoured areas idea into effect, the money could have been paid in 1981.

We were told continually that the matter would be raised in Brussels at the end of 1981. My understanding is that it has not yet been raised. Why has there been this delay? The delay has affected the entire United Kingdom, but principally Northern Ireland. The problem lies not in the Northern Ireland Department of Agriculture, but in London. Therefore, no blame can be attached to the Ministers in the Northern Ireland Office. Ministers in London must have the problem laid directly at their door.

There does not seem to be any real commitment to the improvement of farm incomes in Northern Ireland. It is clear that the money is in some way mixed up with the present wheeling and dealing in the EEC. It is equally clear that if the Government had made the determined effort that should have been made in 1981, the process could have been completed. I wonder whether we shall finally see completion in the year before the next general election. Some farmers have suggested to me that that would be in keeping with Government behaviour.

I do not know what the cost of extension would be in Northern Ireland or for the whole of the United Kingdom. Perhaps the Minister will give the House some figures. The Government must have some indication by now from the careful and detailed survey that was carried out.

We must be told the time scale, the reason for the delay and when the process is expected to be completed. It is difficult for the farming community and myself to stomach the hardship caused by the delay. A paper sent to me by the Ulster Farmers Union draws attention to extracts from a European Parliament working document No. 1–177/81, which states: On a Resolution of the Committee of Regional Policy and Regional Planning the European Parliament recommended that the Commission, in reviewing the economic outlook for Northern Ireland, make special study of the development of agriculture and food industries, notably to combat rural unemployment". I have already drawn attention to the severe effects of unemployment in Northern Ireland in recent years. Agriculture represents the only activity in Northern Ireland where reliance does not have to be placed on imports. It seems remiss of the Government not to have built up the industry to maximum output.

The document refers to the role of subsidies to counteract natural disadvantages. One of the great disadvantages for hill farmers is the height at which they work above sea level and the extra cost of producing a given quantity of foodstuffs. One may argue that this is, to some extent, a social matter. It has been recognised over the years by the existence of the hill cow subsidy and other specialist subsidies for people living in those districts.

I fail to see why the Government cannot extend these subsidies, if they are apparently accepted as necessary, to improve the output and the economic well being of the farming community throughout the United Kingdom. Last year, I was told by the Minister responsible for agriculture in Northern Ireland that 56 per cent. of the Province was located outside the less favoured areas. When compared with the Republic of Ireland and Scotland, this situation is unacceptable. It should be corrected as soon as possible.

My second question relates to the problems of lamb producers and sheep farming in the Province. I wish to concentrate on two aspects. One is related to production and the other to the political and constitutional implications of the proposed changes in support mechanism for fat lambs over the next marketing year. The production centres on the control of packs of killer dogs and individual killer dogs. My hon. Friend the Member for Antrim, South (Mr. Molyneaux) has seen the Minister in charge of agriculture only this evening. It was the latest meeting in a series of meetings extending back to 1978 on this issue. The legislation has been rumbling and rattling around various Government Departments for years. The matter has been resolved to the satisfaction of most concerned.

There seems to be no good reason for further delay. The farmers' union and various other bodies have been consulted. The need is recognised. The legislation is apparently ready or nearly ready. When can hon. Members expect it to surface so that we can discuss it and make any necessary improvements? Following so long a period of gestation, there should be no need for improvement, but that cannot be certain. There is, however, need for the measure to be placed on the statute book to enable steps to be taken to control the problem. Even if legislation for Northern Ireland appears slightly ahead of proposals for the rest of the United Kingdom, this might encourage hon. Members to seek to apply pressure for legislation applying to the rest of the United Kingdom where the need is probably equally as great.

The second matter in respect of sheep is the method of support for the production of fat lamb in Northern Ireland. Since this support system, the sheepmeat regime, was introduced 18 months or so ago, we have been on a par with the rest of the kingdom. I remember the claim by everyone concerned that the United Kingdom system was superior to any system that prevailed elsewhere, that it was sensitive and accurate and that it had the machinery to give an up-to-date weekly understanding of the prices received for sheep in the various markets throughout the country. By this means it was possible to decide precisely what moneys should be added to it week by week.

That system operates in Northern Ireland as well, but it has broken down there because of large-scale smuggling across the land frontier. That smuggling exists because the Irish Republic exports its fat lamb to France—something that farmers in Britain have found difficulty in doing. The real problem is that there is fraud on the frontier, which is no stranger to smuggling. It takes place across all frontiers to some extent, but across the Northern Ireland frontier the smuggling of fat sheep in the past 18 months has been an open and public scandal. It should be controlled, because it has ramifications extending far beyond sheep. I have mentioned this matter in the House on a number of occasions.

The Government's problem is that the clawback on the subsidy does not take place on the frontier. Therefore, the United Kingdom Exchequer could find itself responsible for repaying all the variable premiums that have been lost to the criminal element. The proposal put forward to try to get round the smuggling is not the best. It is simply the least unsatisfactory that Government Departments can devise.

I accept the good intentions of the Department of Agriculture in Northern Ireland and that of the Government Front Bench. I accept that it may work out, to the extent that the farmer in Northern Ireland will be on a par, in the prices that he receives, with his compatriots in the rest of the United Kingdom. But that is not the real point at issue. This matter has political and constitutional implications for Northern Ireland, of which Ministers in both Northern Ireland and Westminster are aware.

Once more, confronted with the problems of controlling the land frontier of this nation, the Government have gone for what is essentially the soft option. They have decided that it is easier to twist the institutions that have been set up to deal with sheepmeat support in the United Kingdom, to get rid of them or to change them, than to control the frontier and, by implication, the flow of terrorism—information, arms, weapons and men—across the frontier. I have said this before and I shall say it again. The implication is that the Government are running away from the real problem of controlling the frontier. The problem involves not just the smuggling of sheep. It extends to the smuggling of pigs, cattle, butter and so on. It extends to every possible way in which a smuggler can make a pound. There is a lack of control on the land frontier.

I appreciate that for centuries the United Kingdom did not have a land frontier. I fear that, since we have had one, we have never come to terms with it. Other countries have had to come to terms with frontiers and take steps to control them.

The answer is not to change the system that has been established for sheepmeat. The answer lies in controlling the frontier. That is the first duty of the Government. I must stretch the bounds within which I am permitted to participate in the debate. If we can stop hundreds of thousands of sheep crossing the frontier, we can stop a few men from doing so. By so doing, we can stop a few tonnes of explosives and a few guns crossing the border. I am certain that, in the long run, it will be cheaper to deal with the problem in a proper manner instead of taking the soft option of running away from it, which is what we have been doing for many years.

There is much more that one could say about the problems of farming in Northern Ireland and its implications. Some of the issues have been touched upon by others during the debate. I have satisfied myself by referring to two issues only. I hope that what I have said has been taken on board, and I pray that it will be acted upon.

9.31 pm

Mr. Tony Marlow (Northampton, North)

If we had to have a text for tonight's debate, I think that it would be the statement of my hon. Friend the Member for Canterbury (Mr. Crouch) about robbing Peter to pay Paul—robbing the consumer to pay the farmer, robbing the United Kingdom to pay the rather wealthier Continental countries on the other side of the Channel.

Like others, I have an interest to declare. Unique among my right hon. and hon. Friends who will be speaking this evening, I have no farmers in my constituency. They are all consumers. So I represent purely consumer interests.

First, I congratulate my right hon. Friend the Minister of Agriculture, Fisheries and Food on the magnificent speech with which he opened the debate. My right hon. Friend is, when it comes to statistics, a magician. He can weave a devastating web with figures. He is so good with statistics and he has such good statistics at his disposal that I believe that not only could he make an excellent speech from the Government Dispatch Box, but he could have made the speech of the hon. Member for Liverpool, Walton (Mr. Heffer)—and a rather better speech he would have made as well.

There is, of course, as grown-ups know, no such thing as a conjuror. They are all, in fact, illusionists. If I have a slight criticism, it is that I am rather sad that my right hon. Friend should have tried to present an illusion to the British people that the common agricultural policy is something which benefits us and which we should continue to support.

To put what we are talking about in context to an extent, someone once told me that the Lord's Prayer, for all it means, has got just over 50 words in it and that the American Delaration of Independence has just over 300 words in it. In this debate we have, I understand, some 250, 000 words to contend with. That in a nutshell is one of the problems of the abysmal common agricultural policy with which this country is faced.

In considering from the Conservative Benches our approach to these policies, we have to look back to an aberration that occurred within the Conservative Party. During the leadership of that great Prime Minister, my right hon. Friend the Member for Sidcup (Mr. Heath), this party, contrary to all its traditions and contrary to all its experience and past knowledge, became what was called the party of Europe. This, of course, is no longer the case. The Social Democrats have become the party of Europe. Conservatives have regained their true position as the party of the United Kingdom, working in and with Europe only as far as it benefits the interests of the United Kingdom. It is time that we exorcised that ghost of the past.

I should like to concentrate on two points. The first is the effect of the common agricultural policy on European co-operation. One of the points that I caught from the hon. Member for Walton was the statement that it soured relations between ourselves and Continental Europe. In that, he is right. My second point is the true cost of the CAP.

All of us seek European co-operation. Like motherhood, it is something devoutly to be wished. It is all good, and we are all in favour of it. Nobody could be against it. In a shrinking world, in which we are becoming increasingly interdependent with other countries it only makes sense to co-operate and work with those closest to us both culturally and geographically. But in no way can we do that or continue to do that on the lopsided terms on which we are associated with our friends on the other side of the Channel—terms under which, in all circumstances, we are the givers.

We provide the market for expensive agricultural surpluses produced on the other side of the Channel. We provide a massive market for European manufactured goods. We provide the security of supply for oil. We provide a market for Eastern Europe, through Germany, helping the Germans with their Ostpolitik. We provide—or potentially could provide if our relationship were not continually bedevilled by the budget and the CAP—the political cohesion whereby if and when Europe wished to work together this could be done far better with our co-operation undiminished than it could otherwise be done.

People say that if we tried to get what is due to us, what is right for us and what the British people deserve, this would cause problems with Europe and we are so dependent upon trade with Europe. In the last two months of last year, our deficit with the Continent on manufactured goods was almost as great as for a whole year with Japan. When will people realise that? They complain about Japanese trade, but what about the effect of European trade on our industry? Of course we want to trade with Europe, but let us get the facts straight and realise what we are talking about.

People say that if we changed our relationship with Europe there would be problems. I do not seek to change it very much. I seek purely to change the nature of the budget and the agricultural policy and a few small things besides. People say that if we change the relationship, not only will we lose our trade but there would be a massive increase in unemployment.

As my hon. Friend the Member for Southend, East (Mr. Taylor) has said so cogently so many times, one has only to look around Europe—at Sweden, at Switzerland, at Austria and at other countries bordering the Common Market—to see that unemployment levels there are a quarter of what they are in the Community. Those who say that the relationship cannot be changed are using scare tactics which are untrue. The reason for the problem is the common agricultural policy. That is the root cause of our difficulty.

Mr. Geoffrey Johnson Smith (East Grinstead)

Will my hon. Friend give way?

Mr. Marlow

I should love to give way, but I dearly wish to continue, as many hon. Members wish to speak.

Mr. Johnson Smith

I am grateful to my hon. Friend. He often asks others to give way. As he is leading with his chin, it is only sporting that he should give way now. Is he seriously suggesting that if the United Kingdom were not in the Common Market our unemployment problem would disappear or be much less?

Mr. Marlow

I am told that I have quite an ability to lead with my chin, as I have a fairly big one. I am saying that people put forward scare stories which are completely misleading about the benefit to employment of the present arrangements with the Community. I believe that we could change those arrangements with the Community and that this would have great beneficial effects on our economy. We would not have the massive budget contributions or the costs of the CAP that we now have. We would become a wealthier and more prosperous State and we would therefore have less unemployment.

Mr. Teddy Taylor (Southend, East)

Will my hon. Friend at least point out to my hon. Friend the Member for East Grinstead (Mr. Johnson Smith) that one point cannot be ignored? Although one can never say what would have happened in the circumstances, it is a clear, proyen fact that, although our unemployment level used to be similar to that of Austria, Norway, Sweden and Switzerland, the level here has soared while theirs is still less than 3 per cent.

Mr. Marlow

I have to say that my hon. Friend the Member for Southend, East has a deeper understanding of these issues than anybody else in the House.

The common agricultural policy is not one that we had in this country before we joined the Community. We are saddled with it because we are in the Community. It does not suit us, and it would not suit us. I was a little surprised to hear my hon. Friend the Member for Devon, West (Mr. Mills) say how important it was to us. I know that he is a good Conservative, but surely he would not suggest that if we put massive subsidies into industry in the way that we are putting massive subsidies into agriculture through the common agricultural policy we would have a more efficient industry. I am sure that he would not suggest that. So why does he suggest it for agriculture?

Another problem—there are so many—is that it has forced my right hon. Friend the Minister, who is a very able man, into the absurd position of defending positive MCAs. They mean a tax on food coming into this country, which artificially increases the price to our consumers. I find that difficult to understand. I am told that it should be at 8 per cent. If it is such a good thing, why stop at 8 per cent? Why not have 80 per cent. positive MCAs? After all, if we did, it would benefit the farming lobby by £1, 100 million a year. The fact that it would cost the consumer £2.7 billion is not a matter of great concern. So why stop at 8 per cent.?

I said that I would say a word about the cost of the common agriculture policy and of Community membership. Part of that cost and the agriculture support is paid through the budget. We have had the myth of spending £50 million last year. The cash expended by the United Kingdom net into the Community budget last year, as the Treasury says, was £500 million. The calculations can be done in many ways, but let us see how much cash we spend when assessing what the budget costs us.

There is another cost, too. It is the cost to the consumer in the United Kingdom. When my right hon. Friend was asked a few years ago how much more it cost the consumer to buy food through the CAP, through European membership over and above world prices, it was about £3, 000 million a year. I accept that if the consumer got food at that price we would still wish to provide our farmers with a degree of agriculture support. At the same time, a calculation in The Sunday Times showed that if the same level of agriculture support was provided it would still cost this country net, on top of the Community budget, £1, 870 million. That is a vast amount of money.

There are other ways of doing the calculation. My right hon. Friend has done a calculation on the basis of net trade between ourselves and other Community countries and the differential between world prices and Community prices for agricultural produce. He came up with a figure of £220 million. That is nothing like as big as the figures that I have, but that is a very real cost that Britain is paying for membership of the Community—money cost on top of the budget cost.

I did some research this afternoon. The up-to-date statistics are not available, but two years ago we imported from our Community partners about £1, 200 million worth of food more than that which we exported—force-fed, expensive European food—before we were allowed to buy cheap food that is available on the world market. Prices have increased by, say, 20 per cent., so we are probably running at a level of £15, 000 million a year. Community prices go up, while world prices go up and down. Sometimes the relationship between world prices and Community prices is one and a half times on average, and sometimes it is twice on average. On this calculation, which I believe is as accurate as any, if it is a factor of two, the additional cost on top of the budget is some £750 million a year. Let us say that Community prices on average cost only half as much again as world prices. That is being very charitable. In that case, the additional cost to the United Kingdom of Community membership is £500 million a year. Thus, last year Community membership cost the United Kingdom £1, 000 million of money down the drain.

If there are dynamic benefits from Community membership—the benefits that the Minister and the Government say are available to every country in the Community equally—why must every man, woman and child in this country, every family of four, fork out £80 a year? What is the benefit of it? Do we not pay enough in taxes as it is?

What can we do now? I am a loyal member of the Conservative Party and I always seek to support the Government. This afternoon I went back over the election manifesto and I noticed the sensible statement that we would insist on a price freeze for those Community commodities that were in structural surplus. If the Minister says that we will insist on such a price freeze, I shall happily vote with the Government this evening. I do not want him to qualify it. I do not want him to say that it will be price freeze in real terms, because when the statement was made it was not about a price freeze in real terms, but about a price freeze in money terms. It would have made no sense in any other circumstances. Would we alternatively have been suggesting that we would expect all the prices to go up at the rate of inflation all the time? I am sure we would not.

We can ask for a reform of the common agricultural policy; we can demand a reform of it. One hundred thousand angry French farmers swarmed around Paris yesterday. They are dissatisfied with what they have got. If we have massive reforms of the common agricultural policy, the number will not be 100, 000 but 1 million. We have been talking about reforms of the common agricultural policy for half a generation. Professor Mansholt started it off. Nothing of a fundamental nature has happened and nothing will happen.

We have one alternative and that is to devise our own agricultural policy, an agricultural policy which suits the United Kingdom. We have no business with the common agricultural policy. We have a different agricultural structure. We are large importers of food and always will be. Common Market countries are otherwise.

The common agricultural policy is the main cause of difference and division between ourselves and our Community friends. It divides Europe. It creates the budget dispute that we are suffering from at the moment. It prevents women, children and old-age pensioners in Britain from getting cheap food throughout the world when it becomes available. It provides a secret British subsidy to the wealthier Germans, Dutch and Danes on the other side of the Channel. It dumps food on the world market. The Minister told us that each year Europe accepts 1.4 million tonnes of sugar from ACP countries. Strangely, he did not tell us anything about the 6.5 million tonnes sugar surplus that Europe will be dumping on the world market this year, devastating the markets of the poorer regions of the world with which we want to trade.

My main concern about the common agricultural policy is the massive increase in food prices that it has caused in Britain which has hit the poorest, the sick, the elderly and the young. Not only that, it has hit the Government, because they have to provide—quite rightly—financial support for the poor, the elderly and the young. The higher the cost of food, the higher the cost of that financial support, the higher inflation and the higher the cost of taxes. That is my main complaint. It creates poverty, it distorts and it does not do us any good whatever.

Why can we not pull out? People will say that if we pull but of the common agricultural policy and set up our own agricultural policy we will have trouble with everybody else in Europe. Why should we? Everybody follows his interests. We will still have the oil in the North Sea. We will still have the ability politically to work with everybody in Europe to everybody's benefit. We will still have the massive markets for their manufactured goods—far more massive for them than theirs are for ours. All the other benefits will still be available. What will they be losing? All that they will be losing is the artificial money that we have been pumping in their direction.

Yesterday, French farmers carried banners complaining about the United Kingdom. They do not like the United Kingdom. Do they realise the amount of subsidy? We are their fairy godmother. We are the people who keep them afloat to the extent that they are in money at the moment.

Mr. Myles

May I suggest that what we might be losing would be our biggest single industry and one of our most efficient industries—British agriculture? That would be the sacrifice.

Mr. Marlow

I have more faith in our agriculture than my hon. Friend has. He does not need the massive subsidies that he now receives. As my hon. Friend knows, I also keep a few animals and to an extent I know how the price mechanism works. The present system is devastating and wrong. The Conservative Party should reassert its traditional role of being the party of the United Kingdom.

Those who have read today's edition of The Standard will have noticed that there has been an increase in sexual permissiveness among London's young women. [Interruption.] I understand that that has something to do with virtue being surrendered more readily. If virtue is "British interests, " then the Social Democratic Party—the "Silly Ditherers' Party"—has reduced surrender to the degrading level of nymphomania. It is up to the SDP if it wants to simper and grovel at the shrine of Euro supremacy, but let us in the Conservative Party advance our traditional interests. Let us get out of the common agricultural policy and let us co-operate with Europe in those areas in which our interests are most fundamentally in common.

9.51 pm

Mr. Nigel Spearing (Newham, South)

The most important point raised by the hon. Member for Northampton, North (Mr. Marlow) was that the common agricultural policy—despite its name—divides the interests of one nation from another and the interests of some farmers from those of others. Most importantly, it divides the interests of farmer and consumer. Under our own United Kingdom policy that did not happen and it is one of the worst features of the common agricultural policy. We have had an interesting and remarkable debate. The Minister gave a panglossian view of the common agricultural policy. To him, everything was wonderful for consumers and producers. There was then a succession of speeches from Conservative Members pointing out the ridiculous nature of the co-responsibility levy, which is to be foisted on our dairy farmers, and the apparently ludicrous nature of the alcohol regime. However, we have no details about that, because the Minister was so sensitive to Parliament's interests, that he forgot, or omitted, to give us the details of that important agreement.

Although Conservative Members praised the dairy industry, they forgot to say that the common agricultural policy would have destroyed the Milk Marketing Board—the very body that has been responsible for the liquid milk market in Britain—if the House and my right hon. Friend the Member for Deptford (Mr. Silkin) had not prevented that. Indeed, I am glad to see my right hon. Friend in the Chamber. I cannot help wondering what would have happened if the present Minister of Agriculture had been Minister then. I doubt whether he would have done such an effective job. At the time of the 30 May 1980 negotiations, the former Lord Privy Seal, the right hon. Member for Chesham and Amersham (Sir I. Gilmour)—who has now resigned—told the House about the new deal that the Prime Minister had obtained. He said: we have an unrivalled opportunity to bring about sensible adjustments to the operation of the CAP and to put the Community's finances on a sounder basis than ever before."—[Official Report, 2 June 1980; Vol. 985, c. 1046.]

Those words have come home to roost tonight. There has been no adjustment to the operation of the common agricultural policy. Last Thursday, when the Leader of the House made the Business Statement, he omitted to mention the most important document under discussion tonight—the "Guidelines for European Agriculture". In its lengthy report, which is difficult to read, it clearly shows that there will be virtually no change. Yet that was the purpose of the Conservative Party when it came to power. The Conservative Party manifesto stated: We believe that radical changes in the operation of the Common Agricultural Policy are necessary. I did not hear the Minister of Agriculture, Fisheries and Food say that tonight, although I heard it from his hon. Friends.

The real clue is the spiralling surpluses. Hon. Members representing dairy counties said that they had been told in 1975 "Look out, because in 1978 there will be spiralling surpluses and you will hit the roof of the budget". Some of us heard about that in 1970 and 1971. We were told that the common agricultural policy was in a vicious spiral that could not be stopped. We were told that when Britain joined there would be a temporary pause of three or four years while we perhaps mopped up some of the surpluses that were in the CAP system. After that, agronomists told us, there would be a spiral in the surpluses again. That is happening, but I shall not delay the House in emphasising those facts.

However, we should also realise that the public money going into the disposal of the surpluses and the total production costs is now remarkable. In COM (81) 608 of the Guidelines for European Agriculture a table in annexe 8 shows the proportion of production costs borne by the public in the CAP—12 per cent. for cereals and rice; 27 per cent. for olive oil; 56 per cent. for oil seeds; 77 per cent. for tobacco; and 21 per cent. for milk and milk products. That is the amount of public expenditure on sustaining surpluses that we cannot get rid of. That is happening under a Government who believe in a free market.

Although in their election manifesto the Government said they wanted to change the CAP they now find that they cannot. I suspect that the reason we have had at least some adjustment to the ethyl alcohol policy is associated more with the meeting at Chequers last Sunday about the Budget than it is with the merits of ethyl alcohol.

Anxiety was expressed on both sides about the milk industry. Make no mistake, the Opposition are not only concerned with the consumer. I represent an urban constituency, but I know something about agriculture. I want to see a prosperous agriculture industry in this country, but I do not wish to see an industry where grain barons do well and hill farmers struggle against bad conditions, with cow herds of 50 head or less, and cannot keep going. That is the present position. The Government have got themselves into a state where they cannot defend the efficient dairy farmer who has a herd of 50 cows or fewer. I was told by the Milk Marketing Board this morning that the economics are such that it is not easy for those farmers to keep going. With the levy, the position will be far worse.

Mr. Myles

As a hill farmer I can inform the hon. Gentleman that the greatest improvement in my income that I ever experienced was under the sheepmeat regime.

Mr. Spearing

I am not surprised. The sheepmeat regime, as was mentioned earlier, is based on a variable premium that is, effectively, the old support price of the United Kingdom brought up to date. We would support such a policy.

I noticed that the hon. Member for Devon, West (Mr. Mills)—who is no longer in the Chamber—dissented from the statement that our prices are much higher than they need be. In a written answer on 5 March I was given figures for the current levies. On wheat it is £59 per tonne, on butter £929 per tonne—or 42p per pound—and on beef £1, 500 per tonne—69p per pound. Conservative Members ask how those levies can be paid with rates of 42p and 62p a pound. The answer is that they are not paid. It is such a successful levy that it keeps the commodity out That is what it is meant to do.

I accept what hon. Members have said about farm incomes. It may be difficult because of input costs, farm rates and the cost of land, for some farmers to have the sort of margins that they should. But we are now in a position where British agriculture has become hooked into the CAP. It does not have the power—nor does the House-to get out of that other, than by leaving the Common Market. British agriculture is hooked on the drug known as surpluses.

The report of the intervention board of the United Kingdom shows in table 29 that it paid £63 million in support for exporting cereals from Britain, £82 million for exporting milk and dairy products and £23 million for exporting beef. That is public money spent over and above the increased costs. Of course, it may be thought some of it may be returned in lower purchase prices, but that is not so. Those are the net prices.

I see from the annual review of agriculture 1982—it is a valuable document to which I pay full tribute—that the cost of public expenditure under the common agricultural policy on national grants and subsidies has risen from £255 million in 1977 to £665 million in 1981–82. That is on export guarantees. I suggest that one of our problems is that British agriculture, much as I wish to defend its proper interests, has become hooked on to surpluses and will find it difficult to get off them.

Then we come to the farm package that we are debating today. I refer the House to the Fifteenth Report of the Select Committee on European Legislation &c., which conveniently sets out some of the comments of the interested parties. The Milk Marketing Board considers that The proposals represent a considerable threat to the interests of milk producers in this country. The Ministry of Agriculture did not tell us that, but the Milk Marketing Board represents the interests of a sizeable number of farmers as well as the consumer. We know that, in its administration, what is good for one is sometimes good for the other.

The Dairy Trade Federation says that the proposals for the dairy sector are likely to have an adverse effect on the consumption of dairy products. The United Kingdom Agricultural Supply Trade Association Ltd. says that the proposals appear most generous and believes that, in absolute terms, the proposed prices may be excessive. It welcomes the intention of the Commission to redress the balance between livestock and cereal prices but believes that the relative differential may be insufficient to achieve the much-needed improvement in margins required by the livestock sector. That is confirmation of the excessive returns by hill farmers in the past few years.

I close with the views of the Consumers Association: Farm price proposals run counter to the need—recognised in the Commission's Mandate and Guidelines for European Agricultural papers published last year—to make major changes in the way the Common Agricultural Policy operates. It is quite clear that the Government have not achieved the objectives that they set before the British public when they came to power. I do not know whether they genuinely believed that they could. If they had studied the operation of the common agricultural policy and the EEC, they could not honestly have put that prospectus forward. They are now finding out, unhappily for the first time and at the expense of the British public, that the EEC common agricultural policy is unworkable and is working to the detriment of everyone in Britain, not least our agriculture.

10.5 pm

Mr. Robert Hicks (Bodmin)

Unlike my hon. Friend the Member for Northampton, North (Mr. Marlow), I see nothing inconsistent with the history and evolution of the Conservative Party in our party having espoused the cause of closer relations with European countries and in particular United Kingdom membership of the European Economic Community. I am speaking personally, and I think I am probably in a majority within our party on this occasion. It would be a very sad day for the Conservative Party if we lost that belief by the public that we indeed are the party of Europe.

My right hon. Friend the Minister was correct to point out at the beginning of this debate the strengthening of the structure of United Kingdom agriculture that has taken place in the course of the last year or so in spite of the world depression. Our national farm output now supplies a larger share of the United Kingdom domestic market, prices to the consumer have increased at a rate lower than that of inflation, and the level of food exports from this country has risen.

This is all very encouraging, but we must not forget that in the period 1980–82 there has been a fall of 24 per cent. in real terms in farm incomes. It is against this background that the Commission's proposals should be viewed and, I believe, should be supported, subject to certain qualifications, averaging as they do just over 9 per cent. in agricultural support prices.

I wish to make two general points. The first is simply—and I believe that this fact has been forgotten by some of the contributors to the debate—that a stable and prosperous agriculture is essential if the level of economic activity in rural areas is to be sustained and the countryside as we know it today preserved. Furthermore, the common agricultural policy is a strategy that not only supports farmers' incomes but also acts as a rural development fund. Indeed, within the context of the CAP there is an overseas aid element, a social policy factor and a number of other important aspects. It must not be seen purely in the context of the level of farm incomes, because that is totally misleading as well as inaccurate.

Secondly, it is worth pointing out that the level of current financial support to agriculture as a consequence of United Kingdom membership of the Community helps to ensure the level of farm incomes. If the United Kingdom were not a member of the European Community at present, the level of farm incomes would be entirely dependent upon the United Kingdom Treasury, and at a time of close scrutiny of all facets of public expenditure I doubt whether the level of agricultural support would have escaped the Chancellor of the Exchequer's savings.

Therefore, I believe that it is in the interests of the agricultural community in particular, and of rural areas as a whole, that we are within the Community at present and not dependent upon the Treasury.

Mr. Norman Buchan (Renfrewshire, West)

That point has been running through the entire debate. Why does the hon. Gentleman say that the British Treasury would be more resistant to the demands and needs of British agriculture than it is to Brussels now?

Mr. Hicks

The hon. Gentleman does not—I guess deliberately—seize upon my point, which is that at a time of public saving restricting the rate of increase of public expenditure the Ministry of Agriculture, Fisheries and Food could not have escaped the Chancellor's actions but that as we are a member of the Community the level of farm incomes has been ensured, because it is independent of the Treasury.

I should like to make four specific points about the proposals. First, I believe that the Commission's proposal that there should be a revaluation of the green pound by 4 per cent. must be resisted. If it were implemented, United Kingdom farmers would receive half the support price increases that their competitors in the rest of Europe would receive.

Secondly, like many other hon. Members on both sides of the House, I am not happy about the principle of the co-responsibility levy. If my memory serves me correctly, it was introduced as a temporary expedient. It penalises the efficient milk producers and takes no account of the situation in individual member States. The proposal for a lower level of levy for the smaller producer should be dropped. If during the subsequent bargaining the suggestion of a super-levy is resurrected, that should also be vigorously opposed.

My third point relates to the sheepmeat regime, which has been of considerable benefit to livestock producers in the South-West. It has brought stability to the producer. I think that this is the first year in which from the outset the variable beef premium scheme has been included, and I was pleased to see that. I should like to see continuing support for our hill areas, support which has existed for the past two years. It is encouraging and valuable to areas which are the source of young livestock and lambs for the United Kingdom national farm.

My fourth and final specific point concerns what I consider to be a worrying tendency that has crept into the United Kingdom landscape—the imbalance between the areas of arable and livestock production. For the past 12 years as I have travelled between my constituency and London, from the railway carriage I have seen the grain and arable areas progressing westwards consistently. I believe that this erosion of the traditional areas of pasture is a reason for considerable concern. I hope that when my right hon. Friend and my hon. Friend the Minister of State make their judgments in Brussels about relative price levels they will bear in mind this undesirable trend in the United Kingdom national farm.

10.14 pm

Mr. R. C. Mitchell (Southampton, Itchen)

We should thank the hon. Member for Northampton, North (Mr. Marlow), who unfortunately is no longer present, for at least one thing. He livened up a debate that was beginning to look as if it was going to sleep. I never cease to be amazed by the close affinity between the extreme Right wing of the Conservative Party and the extreme Left wing of the Labour Party. We observe that on all sorts of occasions. They are now spending more time attacking the Social Democratic Party than one another, and I imagine that that will be the trend in the future. I welcome that because, if I am attacked by the Right wing of the Conservative Party and the Left wing of the Labour Panty, I am certain to be on the right lines.

The whole House can agree that membership of the European Community means, if not the present policy, the acceptance of a common agricultural policy. That was clearly set out during the 1975 referendum campaign. The House knows that that produced a decisive result for Britain remaining inside the Community. It is interesting to return to that time because the person who argued most vehemently for holding a referendum was the same person who then refused to accept its result. He is the person who now wants Britain to withdraw from the EEC without even holding another referendum. He is the same person in three different guises—the right hon. Member for Bristol, South-East (Mr. Benn).

When I left the Labour Party three months ago, its policy, as it is today, was that the United Kingdom should withdraw from the EEC without a referendum. Therefore, the official Opposition amendment must be viewed in that context. It implies, although it does not say so explicitly, that any CAP would be unacceptable. If that is so, it means withdrawal from the EEC. Therefore, the Social Democratic Party will vote against the Opposition amendment tonight.

The hon. Member for Northampton, North and other hon. Members have implied that all food price increases over the past years were the result of Britain's membership of the EEC. The Minister adequately dealt with that in his opening remarks when he said that during the time of the last Labour Government there was an increase in food prices of 110 per cent. and that only 10 per cent. during those five years was due to the EEC. Opponents of the EEC talk a great deal of rubbish on this subject.

I and many other hon. Members believe in the need to reform the present structure of the CAP. The hon. Member for Eastleigh (Sir D. Price) was the first to mention it, and I accept the need for a change in the co-responsibility levy or its abolition. Many other structures need changing. We believe that that is more likely to come about if our negotiators in Europe genuinely believe in the concept of the Community. That is evident by the lack of success of the previous Government's negotiators. I was in the European Parliament at that time and everybody said that the person who was negotiating did not believe in the EEC and wanted to come out. People asked how they could negotiate or what point there was in negotiating reform with such a person.

We accept that the words in the Government's motion that agreement on 1982–83 farm support prices and related measures designed to reduce surplus production, to limit the cost of the Common Agricultural Policy and to take account of the interests of the consumers and food processors". are admirable objectives. We agree that there should be a linkage between the farm price review and budget contributions.

However, the hon. Member for Liverpool, Walton (Mr. Heffer) was correct in saying that the Minister did not spell out exactly what his negotiations were trying to achieve. I accept that he may not wish to show his hand completely at this stage. However, he ought to give the House a little more information about his exact objectives. He mentioned many things that he was against, but he was rather less forthcoming on positive aspects.

We should be clear about the implications of the agreement on alcohol. If the Minister has a rabbit to pull out of the hat, he should have produced it during his opening remarks and not left it to the end of the debate. We believe that Britain needs a strong agriculture, and we hope that in the negotiations the Government will ensure that that is maintained.

Much has been said about the document produced by the Labour Party safeguards committee. I fully accept the explanation given by the hon. Member for Renfrewshire, West (Mr. Buchan) that the Labour Party dissociates itself from the contents of that document. However, my experience in the Labour Party was that what the safeguards committee said today the official Opposition said tomorrow. Therefore, I would still be worried about that document. That has been the history of what has occurred in the Labour Party over the last five years—the safeguards committee says something, and it becomes Labour Party policy shortly afterwards.

The hon. Member for Walton stated what he believed to be Labour Party policy. Stripped of all the verbiage, he was really saying that Britain should get out of the EEC. That would be an utter disaster for the British people. A large proportion of our trade is conducted with the EEC. Where are the alternative markets? Anyone who believes that our old, traditional markets still exist where we can buy cheap food is due for a shock. Millions of people in Britain, many of them in my area, depend on exports to the EEC for their jobs. Does the Labour Party really believe that if we withdrew from the EEC we would be able to trade as before with France, Germany, Italy and the others?

I can imagine a British Prime Minister going to Bonn and saying to Chancellor Schmidt—

Mr. Heffer

Will the hon. Gentleman give way?

Mr. Mitchell

Very well, but I am on the way to Bonn.

Mr. Heffer

That may be so, but for all I know the hon. Gentleman may be on the way to Hell. He must surely be aware that if we were to pull out of the Common Market or any other organisation trade between countries would not stop.

Mr. Mitchell

I can envisage a British Prime Minister going to Bonn and saying to Chancellor Schmidt: "Sorry, Helmut, we had to pull out of the Common Market because we disagreed with the CAP. I am sure that you will understand. We know that this has created certain problems for you, but we ask you not to retaliate". I can imagine the answer that Chancellor Schmidt would give. Even more can I imagine the answer that the Socialist President of France, President Mitterrand, would give. Of course, if we were to come out of the EEC, the trade barriers would go up, even if it meant the other countries hurting their own industrial base. For political reasons if for no other, they would put up those barriers. We would be in great difficulty and we would be in danger of losing thousands of jobs in our export industries.

Even more important, during the last 70 years, there have been two major World Wars in Europe. I grew up during the Second World War, during which France and Germany fought each other and Britain was involved. During my period in the European Parliament, I was impressed by the fact that those Frenchmen and Germans who had fought each other during the last War sat around the table talking, had a drink in the bar, and were the best of friends. The EEC has been a strong force for peace in Europe. There are some disadvantages of the CAP, but they are a relatively small price to pay for the continuation of a peaceful Europe.

10.26 pm

Mr. Colin Shepherd (Hereford)

I have listened with interest to the speeches that have been made. I was attracted by the remarks made by the hon. Member for Liverpool, Walton (Mr. Heffer), whom I tried to interrupt in his peroration, but he was in full flight and it was difficult to do so.

While the hon. Gentleman was waxing lyrical on the golden prospects for agriculture if a Labour Government were in power, when there would be expanding agriculture and deficiency payments, I thought that I should draw his attention to a short sentence in the curious Labour agriculture document which has been heavily repudiated but which nevertheless exists. It states: Labour has of course always paid lip-service to the past policy of cheap food. The problem it will find when it comes to office is that importing food at world prices will put an enormous strain on the Exchequer in the form of deficiency payments unless steps are taken to reduce production substantially.

Therefore, there is an anomaly between an open-ended financial commitment to future support of agriculture by a Labour Government and a near certainty that production would have to be reduced. It is worth bearing in mind that when the assessment was done five years ago it was considered that the cost of support for a deficiency payment system would be £1, 000 million a year. If we were to translate that into today's money, the figure would be £2, 000 million a year at least. Our contributions to the CAP pales into near insignificance when considering that. Everything should be looked at in that light. Although we contribute more than we would like to the CAP and although it has many defects, it has a certain number of merits.

The hon. Member for Renfrewshire, West (Mr. Buchan) may repudiate the document, but he will have to do more than repudiate it tonight or even in last week's issue of Big Farm Weekly, Farmers Weekly or any other magazine. He will have to repudiate it all over the country. As well as doing that, he will have to convert his party.

The hon. Member for Southampton, Itchen (Mr. Mitchell) said that, when he was a member of the Labour Party, whatever the Labour safeguards committee said today the official Opposition said tomorrow. The agriculture industry would do well to take that on board, because it cannot take any risk that the country might have a Labour Government again. That is the name of the game with regard to the agriculture industry.

The matter before us is significant. It is an important time of year for the farming industry. I come from a part of the world that is heavily dependent on agriculture. However, half my constituents are from an urban environment. I see the inter-action between the urban environment and the countryside. That is an important reaction that is not generally understood. It is much in the interests of the urban and surburban sections of the population that agriculture remains prosperous, because employment in those sectors depends on healthy agriculture in a variety of ways.

It is worth while bearing in mind that we are looking at the proposed 8.6 per cent. price increase in the light of a massive drop in farm incomes in real terms year upon year for nearly five years during the rule of the Labour Government. Last year, the trend was reversed. It took a long time. One sees a real increase of 2 per cent.—but on a very low base line. This is a very nervous switch that must be consolidated. Any action taken by my right hon. Friend in Brussels must aim to consolidate and build upon this development to restore the health of agriculture that has been so badly damaged.

Borrowings have gone up enormously in real terms over the last five years to something like £3.6 billion. It is a matter of grave concern that these borrowings, more often than not, have been used to finance working capital and not investment. It is worth bearing in mind that investment is shrinking. In volume terms, investment in 1981 was at its lowest for 20 years. This is an awful picture. It has dreadful consequences for the agricultural supplies industry.

There is a substantial record of achievement, I wish to put on record my congratulations to the Minister and his right hon. Friend, who might almost be described as the terrible twins of Brussels. They have done remarkable things while occupying the driver's seat. This is due to their commitment to Europe and to the success of our country in Europe. The hon. Member for Itchen has drawn attention to the difference that such an approach makes to what can be achieved in Europe.

Those achievements include savings on the balance of payments through import substitution of £1, 000 million and record home production of food. It is significant, I suggest, that home production of food has soared under this Government within the Community. Everything that hon. Members have heard from the Labour Benches indicates that a Labour Government would take the opposite direction. Seventy-five per cent. of our needs that can be produced in this country are produced here. The figure for food is 65 per cent. This is a remarkable track record of success since we joined the Community.

I congratulate my right hon. Friend on his actions. I am sorry that the right hon. Member for Deptford (Mr. is not present. A period of between three and five years of green pound negative differential led to horrible negative MCAs when the farming industry was crucified. I am also sorry that my hon. Friend the Member for Northampton, North (Mr. Marlow) is not present. My hon. Friend castigated the agricultural industry for seeking, to enjoy the benefits of a few paltry percentage points of positive MCAs when, for years, the consumer has had a free ride. It is essential that we, the consumers, should realise that we had a free ride during the massive period of green pound negative differential and the negative MCAs that flowed from it.

There is no such thing as a free lunch; retribution conies in due course. If one enjoys the benefit of a subsidy at a particular time, one must expect to pay for it. It is remarkable that we should be able to do so and that my right hon. Friend grasped the green pound differential nettle on taking office and corrected the position. Our industry, and our country as a whole, has been enjoying the benefits of positive MCAs even though there has been some catching-up a little on the price of the foodstuffs.

I congratulate my right hon. Friend on the changes in attitude to marketing and the aggressive approach now taken by the industry. No longer do I hear "Do the Government want an apple industry or don't they?" The effort has now been made to go out and sell apples. The major change that the Minister has achieved is a success story in itself.

The last item of the success story is borne out by the prices. In the period from May 1979 to December 1981 die retail price index may have gone up by 43 per cent., but food prices went up by 28 per cent., a little over half. Farm gate prices went up by only 18.9 per cent. I have much time for the work of the consumers lobby. I wonder, however, if its budget has increased by only 18.9 per cent. in that time. The same applies to all lobbies on this issue. There is not one that would not be screaming, as the agricultural industry has every right to do, if its budget had not gone up by more than 19 per cent. in that time.

I wish to refer to cereals. The differential price increase is, in principle, right. There is a long way to go before we get right the balance between cereal prices and the cost of input needs for the livestock and poultry producers. We should bear in mind the important point of imports of hard wheat for British bread production. We seem to be no nearer to overcoming the problem and we have been tackling it for a long time. I should like to see movement on this front.

I support my right hon. Friend's call for a lower price increase for milk rather than that we should accept the consequences of the co-responsibility levy. It is not on to favour smaller producers merely because they are smaller. Everybody who has a commodity to sell has to work within a market which is organic and which develops according to the criteria which govern it. If we mess it about by favouring one sector artificially, we shall ruin business for someone who is elsewhere in the market. It is not right to take out one sector on the strength of an arbitrary set of criteria.

If we want to tackle the business of the smaller producers for reasons other than agricultural, we must do so, as my hon. Friend the Member for Eastleigh (Sir D. Price) said, outside the common agricultural policy and through, for example, the social policy.

I do not want to see any revaluation of the green pound this year. I have several reasons for saying that, and I shall go through them quickly. First, it is not fair to expect British farmers to accept a lower increase than their Community competitors. We made them do so last year by the rearrangements of the agri-monetary scheme. The United Kingdom producers received lower increases than all except the German producers at a time when farm incomes in Britain were lower than those in all the member States except Denmark, and when we had a higher rate of inflation than almost any other member State.

Secondly, we have a chance to rebuild the industries within agriculture. I am thinking of the pork meat industries and the bacon industries that were shattered after four years of negative MCAs. There are some who complain about positive MCAs reaching 18.7 per cent. Let them think back to the time of negative MCAs of 42.5 per cent. and the damage that they caused. We must take the opportunity to ensure that the agricultural industry, on which the processing industries are based, is allowed to recover.

Thirdly, we want the opportunity for United Kingdom agriculture to operate properly on a Community-wide basis. The industry is not a provider of food for only England, Scotland and Ulster. It is competing in a European market and it is as well that we realise that. We must take our opportunities within a European context. There is a wider base for sales in Europe. We must take the opportunity that is provided by positive MCAs to restore our position and to claw back our overseas markets within the Community.

Fourthly, it is sometimes said that there should be a revaluation of the green pound because that would help the retail price index. I see no merit in that argument. For all that we would lose by so doing, the RPI would gain by only one-eighth of 1 per cent. and the food price index would benefit by one-half of 1 per cent. The variations would be so small that they would hardly be seen against the other factors that are governing the indices. There is no case for a revaluation of the green pound at this stage.

The agricultural industry is a major contributor to the United Kingdom economy and we ignore it at our peril. The employment of people outside the industry depends upon it as does the overall health of the country, and not only in terms of import substitution. It may employ only 2½ per cent. of the population directly, but indirectly the dependence on the health of agriculture is far greater. There are factories in the West Midlands that were making tractors, drop forgings and castings that are now empty because there is no tractor market and no investment because we were not paying enough. Those in the West Midlands who might complain about there being too high an increase in the cost of food should recognise that profits for agriculture will ensure employment, which is important and to be welcomed.

We have had benefits from the CAP. There has been continuity of supply. There are few who remember the crisis in 1973 when there was no sugar. Supplies ran out because we were not prepared to pay enough for it. Since then, we have had continuity of supply and we can look forward to it. We can look forward also to a healthy agricultural and food industry.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Order. I understand that the Opposition Front Bench will start winding up at 10.45. There are still seven hon. Members who wish to speak. I leave the arithmetic to them.

10.40 pm

Mr. Ron Leighton (Newham, North-East)

I am grateful to you, Mr. Deputy Speaker, for giving me these few moments.

It is striking that, apart from the characteristically blustery opening speech of the Secretary of State and the rather sycophantic speech of the hon. Member for Hereford (Mr. Shepherd), not one hon. Member has given us any good news or said anything favourable or encouraging about the common agricultural policy. That is not in the least surprising.

We spent most of our time talking about the wine problem, taking one back to the debates of yesteryear when we were told that if we joined the Common Market we would have not only more sunshine but cheaper wine. Wine now seems to be a great problem. One suggestion was that it should be poured down the drain, but we have come up with a singularly perverse solution which will destroy jobs in Britain. That is not surprising either, as we were told that the CAP would be costly, damaging and deleterious to Britain but that it was the entry price that we must pay to obtain the benefits of the industrial policies and the wider market, for example, for motor cars.

On 1 March, I asked the Secretary of State for Trade what was our balance of trade in motor cars with the EEC since 1970. The answer was: Our crude deficit of trade in motor vehicles with the six original members of the European Community was £11 million in 1970 and £1, 290 million in 1980."—[Official Report, 1 March 1982; Vol. 18, c. 10.] So none of those benefits have arrived.

Since we joined, we have been told that we shall reform the CAP, but it is clear that all the chatter about reform has been idle and has come to nothing. The latest attempt at reform has ended in fiasco. Last May, the Commission was given a mandate. Since then, we have had the British Presidency, of which there were great hopes, but nothing came of it. We have had a couple of summits, but nothing has come of them. Indeed, the situation has worsened, with acrimony and a souring of relations with our partners.

Why can we not face the stark, simple truth that the CAP is the ark of the covenant of the Common Market? It is the quintessence, the very core and basis of the Common Market, and there is no basis for reform, because the vested interests are far too strong. It is part of the Continental way of life, and it is unrealistic to expect them to change for us. A far larger percentage of the population on the Continent is engaged in agriculture, and they have votes and political muscle as we saw from the front page of The Times today with the report of 100, 000 French farmers marching on Paris.

The purpose of the CAP is to give to those engaged in agriculture incomes comparable with those of people engaged in industry through higher prices to the consumer and to protect the market and the higher prices by putting a ring of taxes around the market to keep out cheaper foreign food. In other words, it is a way of bribing the peasant or farming population on the Continent to vote for the ruling parties in their countries. If they want to do that, that is fine, but I do not see why we should pay the bribes.

The Common Market means rigid protection for agriculture but free trade in manufactures. That is the opposite of what we need. This country needs free trade in food, which will give us cheaper food, but a measure of temporary protection for our industry so that we can put it on its feet. The EEC is therefore the opposite of our national interest.

The differences in agriculture go back into history. When the new lands were opened up across the oceans, when the Prairies were put under the plough, when the beef herds were built up in North and South America, when agriculture in New Zealand with its 10 months' sunshine in a year produced an efficient dairy industry, Western Europe had to decide whether to let in that food. In this country the manufacturing interest defeated the farming interest and allowed in that cheap food. On the Continent, people took the other view and kept it out. We repealed the corn laws; they did not. That is the basic historic difference.

Mr. Peter Walker

Everything that the hon. Gentleman said means that by importing cheap food he wants to eradicate British agriculture. I gather that he has been—perhaps he still is—the chairman of the Labour Party's safeguards committee, whose document I quoted today. Does he agree or disagree with that document?

Mr. Leighton

I have not read the document. I would like to take up the matter, but I see that it is now 10.45 pm. I understand that we are to have another debate in a couple of weeks' time, when I shall be only too happy to take up the point with the right hon. Gentleman.

10.46 pm

Mr. Norman Buchan (Renfrewshire, West)

I was interested to hear the intervention of the Minister of Agriculture, Fisheries and Food. He started one canard, and he has intervened at the end of the debate to get it going again.

Indeed, three or four canards have been set loose today. One concerned the document, and that has been completely repudiated more times tonight than the right hon. Gentleman was here. We can dispose of that. But there are one or two other matters that need to be taken up. One was that, for some reason that I cannot understand, because it is the whole purpose of the common agricultural policy, the CAP was not responsible for the high food prices that we are now suffering. Another was the curious phenomenon of the stated agreement last night, the qualified agreement on wine and alcohol. The last—an interesting thread that ran through the debate—was that, if we were to adopt an agriculture policy in which we determined our own fate and made our own decisions about ourselves, the Treasury would not allow it. In other words, the Tory Party has said that it would accept resistance from the Treasury for decisions to be made in our owm interests within Britain, but that the Treasury would kowtow and bow to any decisions made by the Common Market. Those were the strands that ran through the debate, and they originated largely from the Minister of Agriculture.

I want to clarify matters. Our deserted friend, the hon. Member for Southampton, Itchen (Mr. Mitchell), and others suggested that unless one was pro-Market one was anti-European. We reject and repudiate that. The false attempt to get a common policy on agriculture or industry—which are totally different from country to country—has turned the Common Market into a cockpit of warring interests. The real Europeans are those who wish to deal with their problems in their own way and who freely negotiate agreements whether on trade or on other maters with the other countries in Europe. We are the Europeans. We are also told that, unless we are in favour of permanently escalating and increasing prices, we are opposed to the British farming industry. That is the next canard. The need to freeze prices of products that ar in surplus was referred to by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and was strongly attacked. I know where that idea came from. The hon. Member for Itchen might approve of it. It came from the Conservative manifesto. It says: We will insist on a freeze in CAP prices for products in structural surplus. This should be maintained until the surpluses ar eliminated. I cannot see how the reaction that we had to those remarks tonight has any relationship to what was, presumably, in the 1979 election an honest manifesto. The fact that the Government have deserted that policy does not invalidate the truth of the statement in their manifesto.

Furthermore, the validity of our position in relation to prices is corroborated by the Minister. He said in 1979 that the EEC Commission had the wholehearted support of the British Government in the proposal for a general freeze on prices. Therefore, we can dismiss that canard also.

We are opposed to the escalation of prices because we do not think that this is the right way to create a proper support policy for the industry or a proper food policy for the consumers of Britain.

I recognise the dilemma. As long as the Government are devoted to a system which depends for its sole method of support on prices, they are pushed into the position of seeking high prices. It is a dilemma that is caused only because they accept all the crudities and stupidities of the common agricultural policy. It cannot then be brought forward to justify the argument that if one does not support it one is opposed to the farming industry.

Incidentally, the policy has not done a lot of good to the farming industry. We stressed the need to relate the interests of the farmer and the consumer in our amendment. We are told that unless we support high prices we are not supporting the farmer. I hope that they will not go so far as to say that we are not supporting the consumer. However, it is not even true. The sad truth about the common agricultural policy in relation to the farmer is that it has not worked. [AN HON. MEMBER: "They are all in favour of it."] Are they? They say that they are in favour of it until they start writing about it.

On 26 February 1982 the NFU said that it wanted me to support the common agricultural policy. It said: Figures given in the White Paper on the Annual Review of Agriculture 1982 … show that between 1976 and 1980 farming income … was reduced by 17 per cent. in money terms. This represents a fall of more than a half in real terms. It does not even work for the people whom the Government are claiming to defend. It is a stupid form of agricultural support and it does not even have the merit of succeeding for the farmers.

Mr. John Home Robertson

What my hon. Friend says about the state of the agriculture industry is quite right. If he can explain to me how he would support the agriculture industry in the parlous state that it is in today, I might be in a position to support the Opposition amendment in a Division. I am only sorry that I have not had an opportunity to explain why I do not want to support the Opposition.

Mr. Buchan

All will be unfolded in the fullness of time.

The Government say that it is the only policy. It is a kind of latter-day Margaret Thatcherism—"There is no alternative". There is an alternative and I will come to it in a moment.

There is one final illustration showing why the common agricultural policy does not succeed for those for whom it is designed. Let us look at the level of borrowing according to the annual price review. In the past four years, the amount that farmers have had to pay on interest because of the level of their indebtedness and borrowing has trebled. It has increased from £150 million to £460 million. Farmers are now in hock to the banks to the tune of £3.5 billion. So much for a successful agricultural policy.

The answer to my hon. Friend is that, instead of squabbling with the French because of their desire to add national aids to the already lucrative element in the CAP that comes from us, we should tell the French that they are right to think that their problems are different from those in other parts of the Common Market and that both they and we should adopt national aids. We should use national aids.

That is the answer. Two consequences will flow. First, support will be given to those areas of the industry that are in most need. I refer to some of our upland and marginal land farmers and to the livestock industry. As a result of the high price cereal policies, they have not done very well. Secondly, that method of support would be within our control and need not increase prices to the consumer. The money will come from the taxpayer, which will be a fairer and juster form of support.

Mr. Peter Walker

The hon. Gentleman specifically mentioned hill farmers. The Government have increased national aids to hill farmers by 96 per cent. above those given by the Labour Government. Does the hon. Gentleman consider that a pretty good record?

Mr. Buchan

That is very sensible. However, the Government have also hammered the livestock industry by acquiescing in the continual escalation of the price of feed stuffs. If they had not taken that action, they would have liquidated large sections of the livestock industry.

We should adopt that policy, because it would allow us to rectify yet another error in the CAP. It has altered the proper balance beween cereals and livestock. Between 1969 and 1979 the acreage under wheat increased by 65 per cent. but the acreage under rough grazing fell by 10 per cent. The acreage under new grass, less than five years old, fell by 18 per cent. That is a distortion. We cannot allow our agriculture to be based simply on growing expensive cereals to produce beef protein. In a starving world, it is not particularly moral to use eight to 10 tonnes of vegetable protein to produce one tonne of beef protein. I am a grass man.

Mr. Myles

So that the hon. Gentleman can convince the hon. Member for Berwick and East Lothian (Mr. Home Robertson), will he give a categoric assurance that, if the Labour Party ever come to power again, it would maintain the hill cow subsidies, the hill ewe subsidies, the suckler cow premiums, and the level of the sheepmeat regime deficiency payment out of national aid?

Mr. Buchan

The hon. Gentleman has taken the very words out of my mouth. That is precisely what we would do, because that is the right type of policy for those areas. Farming involves not only the farmer but the rural community. If such money is invested to support those industries, it will indirectly help the rural communities.

I turn now to the curious story of turning wine into alcohol. The business of wine lakes and of people being bribed through high prices to produce that which is not needed, and then having the problem of disposing of it, is mad and immoral. It must not continue. We are now told that the surplus of wine cannot be disposed of totally despite the fact that 170 million litres have been sold to the Soviet Union. It is the answer to Trident—instead of blowing up the Soviets, we shall get them drunk. They now propose—expensively, as the hon. Member for Canterbury (Mr. Crouch) said—to turn it into alcohol. Neither he nor I can understand how it is possible to adopt a method which is five times more costly than the production of industrial alcohol and how, having done that, it will not also require a subsidy so that the prices can be made competitive. We cannot see how that can achieve anything other than a free flow of the alcohol over the borders between us and the rest of the Common Market, because that is what the Common Market is about. Unless the Government say that they will impose import controls, they cannot do anything about it.

My right hon. and learned Friend the Member for Aberavon (Mr. Morris) and my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) have that problem. In Grangemouth up to 1, 000 jobs could be lost. It is not good enough for the Minister to start the debate by saying that he will not tell us what the agreement says, but that we must wait until the end of the debate, when there is no time to analyse the matter, and furthermore to pretend that it becomes an endorsement of his policy.

There are other people in Britain and in the countryside besides farmers. One must also consider the consumer. I am told that the CAP, although it is entirely based on escalating prices, is helping to keep prices down on the ground that it is not rising as much as the retail price index. If it rises at all, it must be one of the engines that lifts the retail price index.

From 1960 until 1975, food prices in Britain were always lower than the general index and it is only since then that they have begun to creep up. From then until 1980, prices began to run very much above the general index. There has been a food prices plateau for about the past three years. So far from the CAP preventing increased prices to the consumer, it is one of the major engines in achieving higher prices. I suggest that the Minister should examine recent copies of "Agro-Europe" in which the matter is analysed. Despite the argument that there is no link between consumer prices and producer prices, the link is clearly proven.

This is a question not merely of prices, but of justice. For food, as for most other things, the poor pay more. A higher percentage of their income is spent on food. Therefore, there is an element of redistribution from the poor to the rich. Josling, in "Agriculture and the State", examines the child poverty families and finds that between 5 and 6 per cent. of their incomes goes on farm support. Only 1 per cent. of the income of those in the high income brackets goes on farm support. That cannot be socially just.

I wish to read a letter that I received on the same point: The Common Market is founded on propositions which cannot be accepted by anyone believing in a fair society. The first proposition is that the consumer must pay for farm products whatever the fanner needs to produce whatever the quantity he can produce on his holding. The second proposition is that whatever the surplus the first proposition inevitably produces…that surplus will be sold at knock-down prices outside the EEC, the loss being financed by the EEC taxpayer… Those are two propositions, the writer says, which cannot be accepted by anyone believing in a fair society. It was not my right hon. Friend the Member for Bristol, South-East (Mr. Benn) who said it. It was Sir John Winnifrith, the most distinguished permanent secretary we have had in the Ministry of Agriculture, Fisheries and Food for many years. I agree with him.

As a result, we are seeing, within this policy of resting entirely on prices, distortions taking place in our agriculture and some of the most important aspects of our agriculture being attacked. Is there any justification whatsoever, with the agricultural problems we are facing in Britain, for the cuts in the Animal Breeding Research Organisation? Is there any justification for cutting back as the Government are doing under the pressure of Rayner and his department, let alone the pressure of the Treasury, to allow the slow liquidation of the best science officers that we have in his Department, who should be equipping agriculture properly?

The third group I want to talk about is the group that my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) discussed, the farm workers. If the common agricultural policy is such a favourable policy towards farmers, as has been asserted tonight, it might be thought that the farm workers might at least have benefited to some extent from it, but they have not. If we look at the contribution they have made to productivity, a very interesting picture develops. In the seven years before we entered the Common Market productivity increased by 7.7 per cent., at the cost to the farm worker of 60, 000 jobs. In the seven years after we entered the Common Market productivity has been halved to 3.6 per cent. at the cost of 65, 000 jobs.

Imagine the outcry there would be from the Conservative Party if it were 65, 000 farmers who were being put out of work, but we have heard not a word from it about the loss of farm workers jobs, and the farm workers remain among the poorest and worst paid of all our workers. According to the figures, there has been only a 2.9 per cent. increase in their real earnings between 1975 and 1981. We cannot tolerate a policy which provides that the poorest group involved, the workers themselves, are those who should be made responsible.

The suggestion is made that we are developing a highly expensive policy. We shall have a number of things to do on this, but I want merely to talk on the matter of expense. We have had a look at possible options for the return to an improved deficiency payment structure. One hon. Member—I think it was the hon. Member for Devon, West (Mr. Mills)—quoted the figure of £2, 000 million. That figure came from Mr. Tugendhat, an EEC Commissioner—and, as Mandy Rice-Davies once said, he would, wouldn't he? If we assume the present level of production, the current levels of producer prices, and assume a halving of the difference between our prices and world prices, to apply a full deficiency policy would cost about £880 million on 1980 figures. If we look at the operation of a deficiency policy before we entered the Common Market, it was running at the rate of around £300 million a year. In real terms it is almost equivalent to that perhaps £700 million and it gives us the immense advantage of our being able ourselves to make the decisions we require in relation to British agriculture.

The purpose of an agricultural policy must be to achieve the maximum level and most rational pattern of production consistent with good and humane husbandry; the protection of the environment—we do not hear much about that from Conservative hon. Members; the provision of an adequate and nutritious diet at reasonable prices; I he availability of alternative secure sources of supply—they do exist; and protection of the rights and interests of those who live and work in the rural community. It is a whole policy that we are attempting to develop for our countryside, a policy in which farming will play an enhanced and important part.

11.10 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith)

We have had an interesting debate. Perhaps the most interesting part has been the past 25 minutes, in which the hon. Member for Renfrewshire, West (Mr. Buchan) has tried to justify the policy that he believes his party should have towards agriculture in this country. I find much of that incredible, in view of what he said earlier. For example, at the start of his speech the hon. Gentleman said "We are the Europeans". After what followed, I have to comment that he could have fooled me, as he may have sought to fool many other hon. Members.

At one time in the hon. Gentleman's speech there was support for the French farmers, higher prices, national aids—totally in contrast to some of the things said by the hon. Member for Liverpool, Walton (Mr. Heffer) at the beginning of the debate and by so many other Labour hon. Members. The hon. Gentleman also talked of lack of help for the livestock industry, completely ignoring what this Government have done directly to help the industry in the past few years.

I agree with the hon. Member for Sheffield, Brightside (Miss Maynard) about the importance of the question of wages, but let the Opposition get the facts right. The sensible way to look at the matter is to see that in 1970 agricultural earnings were only about 70 per cent. of industrial earnings and by 1981 were about 80 per cent. Therefore, the position has improved, not deteriorated. I find the Opposition's playing with the facts unconvincing. When we find that alleged facts like that are wrong, we realise how wrong and unconvincing are many of their other arguments.

A number of specific points have been raised, points that I know are important to those who raised them and more important still to their constituents. I should like to deal with one or two at the outset, beginning with some that were raised by the hon. Member for Londonderry (Mr. Ross), particularly about Northern Ireland. I understand what he says about the problems faced by farmers there and the particular difficulties relative to other areas of the United Kingdom.

I appreciate the strength of the hon. Gentleman's feelings, and there is much justice in what he says about the difficulties, but I hope that he recognises what has been done specifically to help farmers in that area by this Government, and by Europe. This is important, because it demonstrates not only what has been done for an area of agriculture in the United Kingdom that has faced particular difficulty but also how within the common agricultural policy, and from Europe, specific difficulties that are unique to the United Kingdom or particular parts of it can be dealt with and are being dealt with at present. The Opposition Front Bench often choose to overlook that.

For example, we have negotiated for Northern Ireland the integrated development programme, in which I was directly involved a year ago. We have seen the extension to Northern Ireland of the special livestock package, arranged in 1981 for the Republic, which includes a whole range of particular helps for that part of the country. We have also seen extra funding in the Buckler cow subsidy. Perhaps most important of all, following last year's review of Northern Ireland agriculture a special package of aid for the intensive livestock industry in the Province was introduced. That package is being increased this year by a further £6.3 million, including, for example, a subsidy to consumers of milk in the Province. Of course, that also helps the dairy farmer.

I appreciate that there are many difficulties and that all is not well in Northern Ireland. However, I mentioned this aspect because it shows that we are sensitive to the problems of Northern Ireland. I know that my right hon. Friend the Secretary of State is sensitive to them and I hope that this demonstrates the action we have taken to help. Most importantly, in the context of this debate, it also demonstrates the particular help we have given within the CAP to ensure that specific difficulties are met. I appreciate that the distillation of wine has given rise to genuine concern. I also appreciate, since yesterday's announcement, that there may not have been enough time, for those with a direct interest, to grasp exactly what was involved. Throughout the negotiations, I and my right hon. Friend the Secretary of State for Industry, as the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and my hon. Friend the Member for Canterbury (Mr. Crouch) acknowledged, have kept in close touch with the interests concerned. I assure both hon. Members that we appreciate their difficulties, worries and anxieties.

I must particularly tell the hon. Member for Stirling, Falkirk and Grangemouth that we have negotiated, in these arrangements, an agreement which should ensure, as my right hon. Friend said at the beginning of the debate, that the market for industrial alcohol in Britain should not be disturbed. I remind the hon. Gentleman and the House that we already have, in the basic wine regulation—agreed by the Opposition some years ago—a condition which states: conditions shall be such as to ensure that the balance of the market in ethyl alcohol is not adversely affected. When I met those who represent these interests—the hon. Member for Grangemouth and my hon. Friend the Member for Canterbury were present—I was asked that before any other future arrangments on the distillation of wine were made, we negotiate equal conditions on non-disturbance of the market.

We have, indeed, negotiated not just the simple phrase I read out, but a much more comprehensive agreement on non-disturbance. We are convinced of the industry's interests and that it should not be put at risk. The guarantee we negotiated stated: before adopting any measures with respect to such disposal, the member State concerned will consult the commission which will, in co-operation with the intervention agencies concerned, ensure that the alcohol taken over is disposed of without disturbing the market in alcohol. That is stronger than the initial negotiations. However, we went one stage further than that. Therefore, a week ago, at the Council of Agriculture Ministers, when a similar proposal was made, I refused to agree to this form of words. I thought it necessary that we should know better how it was proposed to carry out these procedures.

Therefore, we have agreed three further measures and that the procedures for this should be laid down. First, there is an obligation on a member State to advise the Commission when it wishes to dispose of any of this alcohol, stating the price and volume envisaged so that we know exactly what is involved. Secondly, the Commission is then obliged to inform other member States. Of course, that will include those with ethyl alcohol interests, and the Commission will then decide whether the proposed disposal could disturb the market in alcohol. Thirdly, and perhaps most important, if it appears that the market in alcohol will be disturbed, the Commission will request either that the disposal should not take place or that different conditions of disposal should apply and that the member State will act accordingly. That is important. That is precisely what we have agreed. I have arranged for copies of this document to be placed in the Library so that hon. Members can see it in full.

Mr. Harry Ewing

I am grateful to the Minister for giving way and also for that fact that he has arranged to place copies of the document in the Library. Does he remember that when we met him he was asked for two conditions—a non-disturbance clause, which is already contained in the existing wine agreement, and also for the price level at which the intervention agency would intervene?

Significantly, the right hon. Gentleman has not revealed that price level. That is absolutely crucial not only to the price of the 55, 000 tonnes of alcohol to be unloaded on to the ethyl alcohol market but also to the price of ethyl alcohol itself.

Mr. Buchanan-Smith

The hon. Gentleman makes a totally fair point. To some extent I regret having given way because there are many other points with which I must deal, including that one, and I do not have much time left.

The price that has been agreed is less than that proposed. A figure of 85 per cent. was proposed, and we have agreed a price of 81.9 per cent. for red wine and 83 per cent. for white wine. We also negotiated a reduction in quantity. The hon. Gentleman spoke of 7 million hectolitres. That has been reduced to 6.5 million hectolitres, and in some circumstances it can be reduced marginally below that. Here again, we have fulfilled the arrangements that I made with those concerned.

I must take this matter two stages further—

Mr. Buchan

rose—

Mr. Buchanan-Smith

I shall not give way because I have only a short time left in which to reply.

My hon. Friend the Member for Thirsk and Malton (Mr. Spence) asked about the spirit drinks market. While it is perfectly fair to express anxiety, I do not think that anything in this proposal should adversely affect the United Kingdom spirit drinks industry. As my hon. Friend knows, we understand the needs of the industry, which is something the Labour Party has never acknowledged. We have shown our concern in the cereal refunds that we negotiated after they had been outstanding for seven years. From 1980 to the present date, about £60 million had been paid to the Scotch whisky industry. That does not exactly indicate a lack of concern.

We must put all this in perspective. We have had consultations with the industry throughout, and we have even consulted it since yesterday. I understand that the industry accepts the position as we negotiated it in Brussels.

Last but not least—this is important—we must get the amount in perspective. Why is the Opposition Front Bench suddenly putting the case for the ethyl alcohol industry—I know that the hon. Member for Stirling, Falkirk and Grangemouth has consistently championed that cause—when in each of the last two years the programme of exceptional distillation has been greater than this year?

We are talking of 6½ million hectolitres. When the Labour Party was in Government, exceptional distillation at its peak was 19 million hectolitres. That puts into perspective the sentiments that have been expressed by Labour Members.

I turn to what was said by the hon. Member for Southampton, lichen (Mr. Mitchell). He asked what our proposals were to improve the CAP. Instead of the destructive opposition of the Labour Party, and from certain elements on the Conservative Benches, I wish that there had been more concentration on what could he done to improve the CAP.

When we look at what we have done over the last few years, we realise that between 1976 and 1979, the cost of the CAP increased by 86 per cent., yet in the years when the Government have been responsible, the increase has been only 32 per cent. In 1978, the CAP represented 80 per cent. of the Community budget, and last year it was only 66 per cent. Those figures show what has been achieved.

In our own agriculture industry, we have seen the improvement in self-sufficiency from 53 per cent. in 1978 to over 60 per cent. in 1980. For the balance of payments that is a saving of £900 million. Agriculture has been working in the national interest.

Over the last few years we have seen a number of improvements. We have seen the continuation of the variable beef premium scheme, and the introduction of the suckler cow subsidy. When we have 27 per cent. of the suckler cows in the Community, that is a scheme that is of more benefit to the United Kingdom than to any other country in the Community.

We have seen the introduction of the sheepmeat regime with over 90 per cent. of the expenditure coming to the United Kingdom. That is a good deal for Britain. We have seen a doubling of the butter subsidy.

The Opposition have suddenly become concerned about wine growing. Last year, after many years of failure to reach agreement, there was agreement on structural measures to reduce the area of vineyards in wine-producing areas. That deals with the problem of structural surplus at base instead of the manifestations in relation to the question of disposal.

Last year we saw the reorganisation of the arrangements for sugar, with the tightening up of quotas and export refunds financed by producers, with the financial discipline that that involves, and storage arrangements, which means a much more stable and responsible disposal of surpluses in the world sugar markets.

In the proposals before us tonight, to which the Opposition Front Bench paid so little attention, we see those improvements continued. For the first time, as my hon. Friend the Member for Bodmin (Mr. Hicks) said, the continuation of the beef premium scheme is proposed. There are improvements for school milk, a matter that is close to the hearts of Opposition Members. There are lower relative prices for cereals, to which my hon. Friend referred, because the balance between cereals and livestock has been wrong. Most important, for cereals arid milk, through the production thresholds proposed, there are limits on quantities of production, which will be supported at the full guarantee.

All those are improvements. They are all designed to deal with the surplus of production in Europe, yet no mention of them has been made by the Labour Party. Those are all proposals to which the Government arid Conservative Party are committed in the interests of improving the policy.

The hon. Member for Walton made an interesting speech. He told the House—and I hope that it will be noted beyond the House—that he believed that there should be a zero price increase for agriculture products. However, he did not acknowledge that that would mean a sharp reduction in real income as costs continue to rise. If the hon. Gentleman is serious about combining that with a full revaluation of the green pound, I remind him that that would mean about a 7½ per cent. fall in prices of commodities such as barley and butter and about a 30 per cent. fall in producer returns for agriculture in the United Kingdom, amounting to about £350 million in a year. I am glad that the hon. Gentleman said what he did today. British farmers now know where the Labour Party stands. They know what that means in financial terms.

Mr. Heffer

rose—

Mr. Deputy Speaker

Order. The hon. Gentleman knows that if the Minister does not give way, he must resume his seat.

Mr. Buchanan-Smith

I have taken much less time than was taken by the hon. Member for Walton. The hon. Gentleman said that he wanted to see agricultural policy within the overall socialist objective. If he follows it as he outlined it tonight, he will destroy farming, farm workers, the countryside and, more than that, not thousands, but tens of thousands—

It being half-past Eleven o'clock, Mr. DEPUTY SPEAKER put the Questions necessary for the disposal of the proceedings, pursuant to Standing Order No. 3 (Exempted business).

Question put accordingly, That the amendment be made:—

The House divided: Ayes 171, Noes 277.

Division No. 105]	[11.30 pm
AYES
Abse, Leo	Dubs, Alfred
Allaun, Frank	Duffy, A. E. P.
Anderson, Donald	Dunlop, John
Archer, Rt Hon Peter	Dunnett, Jack
Ashley, Rt Hon Jack	Dunwoody, Hon Mrs G.
Ashton, Joe	Eadie, Alex
Atkinson, N.(H'gey, )	Ellis, R. (NE D'bysh're)
Bagier, Gordon A. T.	English, Michael
Barnett, Guy (Greenwich)	Ennals, Rt Hon David
Barnett, Rt Hon Joel (H'wd)	Evans, Ioan (Aberdare)
Benn, Rt Hon Tony	Evans, John (Newton)
Bennett, Andrew (St'kp't N)	Ewing, Harry
Bidwell, Sydney	Field, Frank
Booth, Rt Hon Albert	Flannery, Martin
Boothroyd, Miss Betty	Fletcher, Ted (Darlington)
Bray, Dr Jeremy	Foot, Rt Hon Michael
Buchan, Norman	Ford, Ben
Callaghan, Rt Hon J.	Forrester, John
Callaghan, Jim(Midd't'n&P)	Foster, Derek
Cant, R. B.	Fraser, J. (Lamb'th, N'w'd)
Carter-Jones, Lewis	Freeson, Rt Hon Reginald
Clark, Dr David (S Shields)	Garrett, John (Norwich S)
Cocks, Rt Hon M.(B'stol S)	Graham, Ted
Cohen, Stanley	Grant, George (Morpeth)
Coleman, Donald	Harrison, Rt Hon Walter
Concannon, Rt Hon J. D.	Hart, Rt Hon Dame Judith
Cowans, Harry	Hattersley, Rt Hon Roy
Crowther, Stan	Haynes, Frank
Cryer, Bob	Heffer, Eric S.
Cunliffe, Lawrence	Homewood, William
Cunningham, G.(Islington S)	Hooley, Frank
Davidson, Arthur	Howell, Rt Hon D.
Davies, Rt Hon Denzil (L'lli)	Huckfield, Les
Davies, Ifor (Gower)	Hughes, Mark(Durham, )
Davis, Terry (B'ham, Stechf'd)	Hughes, Robert (Aberdeen N)
Deakins, Eric	Jay, Rt Hon Douglas
Dean, Joseph (Leeds West)	John, Brynmor
Dixon, Donald	Johnson, Walter (Derby S)
Dobson, Frank	Jones, Rt Hon Alec (Rh'dda)
Dormand Jack	Jones, Barry (East Flint)
Douglas, Dick	Kaufman, Rt Hon Gerald

Kerr, Russell	Roberts, Allan(Bootle)
Kilfedder, James A.	Roberts, Gwilym(Cannock)
Kilroy-Silk, Robert	Rooker, J. W.
Kinnock, Neil	Ross, Ernest (Dundee West)
Lambie, David	Ross, Wm.(Londonderry)
Lamborn, Harry	Rowlands, Ted
Lamond, James	Ryman, John
Leighton, Ronald	Sever, John
Lestor, Miss Joan	Sheldon, Rt Hon R.
Lewis, Ron (Carlisle)	Shore, Rt Hon Peter
Lofthouse, Geoffrey	Short, Mrs Renée
Lyon, Alexander(York)	Silkin, Rt Hon J. (Deptford)
McCartney, Hugh	Silkin, Rt Hon S. C. (Dulwich)
McDonald, Dr Oonagh	Silverman, Julius
McGuire, Michael(Ince)	Skinner, Dennis
McKay, Allen (Penistone)	Smyth, Rev. W. M. (Belfast S)
McKelvey, William	Soley, Clive
McNamara, Kevin	Spearing, Nigel
McTaggart, Robert	Spriggs, Leslie
McWilliam, John	Stallard, A. W.
Marks, Kenneth	Stoddart, David
Martin, M(G'gow S'burn)	Stott, Roger
Mason, Rt Hon Roy	Straw, Jack
Maynard, Miss Joan	Summerskill, Hon Dr Shirley
Meacher, Michael	Thomas, Dr R.(Carmarthen)
Mellish, Rt Hon Robert	Thorne, Stan (Preston South)
Mikardo, Ian	Tilley, John
Mitchell, Austin(Grimsby)	Tinn, James
Molyneaux, James	Torney, Tom
Morris, Rt Hon A. (W'shawe)	Varley, Rt Hon Eric G.
Morris, Rt Hon C. (O'shaw)	Wainwright.E. (Dearne V)
Morris, Rt Hon J. (Aberavon)	Walker, Rt Hon H.(D'caster)
Morton, George	Watkins, David
Moyle, Rt Hon Roland	Welsh, Michael
Newens, Stanley	White, Frank R.
Oakes, Rt Hon Gordon	Whitehead, Phillip
Orme, Rt Hon Stanley	Whitlock, William
Park, George	Williams, Rt Hon A.(S'sea W)
Parker, John	Winnick, David
Parry, Robert	Woodall, Alec
Powell, Rt Hon J.E. (SDown)	Woolmer, Kenneth
Powell, Raymond(Ogmore)	Wright, Sheila
Race, Reg
Radice, Giles	Tellers for the Ayes:
Rees, Rt Hon M (Leeds S)	Mr. James Hamilton and
Richardson, Jo	Dr. Edmund Marshall.
Roberts, Albert(Normanton)

NOES
Aitken, Jonathan	Bruce-Gardyne, John
Alexander, Richard	Bryan, Sir Paul
Alison, Rt Hon Michael	Buchanan-Smith, Rt. Hon. A.
Alton, David	Buck, Antony
Amery, Rt Hon Julian	Budgen, Nick
Arnold, Tom	Burden, Sir Frederick
Aspinwall, Jack	Butcher, John
Atkins, Rt Hon H.(S'thorne)	Butler, Hon Adam
Atkins, Robert(Preston N)	Cadbury, Jocelyn
Baker, Kennelb(St.M'bone)	Carlisle, John (Luton West)
Baker, Nicholas (NDorset)	Carlisle, Kenneth(Lincoln)
Banks, Robert	Cartwright, John
Beaumont-Dark, Anthony	Chalker, Mrs. Lynda
Bendall, Vivian	Channon, Rt. Hon. Paul
Bevan, David Gilroy	Chapman, Sydney
Biffen, Rt Hon John	Churchill, W.S.
Biggs-Davison, Sir John	Clark, Hon A. (Plym'th, S'n)
Blackburn, John	Clark, Sir W. (Croydon S)
Blaker, Peter	Clarke, Kenneth(Rushcliffe)
Bonsor, Sir Nicholas	Clegg, Sir Walter
Boscawen, Hon Robert	Cockeram, Eric
Bottomley, Peter (W'wich W)	Colvin, Michael
Bowden, Andrew	Cope, John
Boyson, Dr Rhodes	Cormack, Patrick
Braine, Sir Bernard	Corrie, John
Bright, Graham	Costain, Sir Albert
Brinton, Tim	Cranborne, Viscount
Brittan, Rt. Hon. Leon	Critchley, Julian
Brooke, Hon Peter	Crouch, David
Brotherton, Michael	Dean, Paul (North Somerset)
Brown, Michae1(Brigg&Sc'n)	Dickens, Geoffrey

Dorrell, Stephen	Lee, John
Douglas-Hamilton, Lord J.	LeMarchant, Spencer
Dover, Denshore	Lennox-Boyd, Hon Mark
Dunn, Robert(Dartford)	Lester, Jim(Beeston)
Durant, Tony	Lewis, Kenneth(Rutland)
Eden, Rt Hon Sir John	Lloyd, Ian (Havant& W'loo)
Edwards, Rt Hon N.(P'broke)	Lloyd, Peter(Fareham)
Eggar, Tim	Lyell, Nicholas
Elliott, Sir William	Lyons, Edward(Bradf'd W)
Emery, Sir Peter	McCrindle, Robert
Eyre, Reginald	Macfarlane, Neil
Faith, Mrs Sheila	Macmillan, Rt Hon M.
Farr, John	McNair-Wilson, M(N'bury)
Fell, Sir Anthony	McNair-Wilson, P.(New F'st)
Fenner, Mrs Peggy	McQuarrie, Albert
Finsberg, Geoffrey	Madel, David
Fisher, Sir Nigel	Marland, Paul
Fletcher, A. (Ed'nb'gh N)	Marshall, Michael(Arundel)
Fletcher-Cooke, Sir Charles	Marten, Rt Hon Neil
Fookes, Miss Janet	Maude, Rt Hon Sir Angus
Forman, Nigel	Mawby, Ray
Fowler, Rt Hon Norman	Mawhinney, Dr Brian
Fox, Marcus	Maxwell-Hyslop, Robin
Fraser, Rt Hon Sir Hugh	Mayhew, Patrick
Fraser, Peter (South Angus)	Mellor, David
Freud, Clement	Meyer, Sir Anthony
Gardiner, George(Reigate)	Miller, Hal(B'grove)
Gardner, Edward (SFylde)	Mills, lain(Meriden)
Garel-Jones, Tristan	Mills, Peter (West Devon)
Gilmour, Rt Hon Sir Ian	Miscampbell, Norman
Glyn, Dr Alan	Mitchell, David(Basingstoke)
Goodhart, Sir Philip	Mitchell, R.C. (Soton Itchen)
Goodlad, Alastair	Monro, Sir Hector
Gorst, John	Montgomery, Fergus
Gow, Ian	Moore, John
Gray, Hamish	Morgan, Geraint
Greenway, Harry	Morris, M. (N'hampton S)
Grieve, Percy	Morrison, Hon C. (Devizes)
Griffiths, E.(B'y St.Edm'ds)	Morrison, Hon P. (Chester)
Grimond, Rt Hon J.	Mudd, David
Grist, Ian	Murphy, Christopher
Gummer, John Selwyn	Myles, David
Hamilton, Hon A.	Neale, Gerrard
Hamilton, Michael (Salisbury)	Neubert, Michael
Hampson, Dr Keith	Newton, Tony
Hannam, John	Oppenheim, Rt Hon Mrs S.
Haselhurst, Alan	Owen, Rt Hon Dr David
Hastings, Stephen	Page, John (Harrow, West)
Havers, Rt Hon Sir Michael	Page, Richard (SW Herts)
Hayhoe, Barney	Parkinson, Rt Hon Cecil
Heddle, John	Patten, Christopher(Bath)
Henderson, Barry	Patten, John (Oxford)
Heseltine, Rt Hon Michael	Pattie, Geoffrey
Hicks, Robert	Percival, Sirlan
Higgins, Rt Hon Terence L	Peyton, Rt Hon John
Hill, James	Pink, R. Bonner
Hogg, Hon Douglas(Gr'th'm)	Porter, Barry
Holland, Philip(Carlton)	Prentice, Rt Hon Reg
Hooson, Tom	Price, Sir David (Eastleigh)
Horam, John	Prior, Rt Hon James
Hordern, Peter	Raison, Rt Hon Timothy
Howe, Rt Hon Sir Geoffrey	Rathbone, Tim
Howell, Rt Hon D.(G'ldf'd)	Rees, Peter (Dover and Deal)
Howells, Geraint	Rees-Davies, W. R.
Hunt, David (Wirral)	Renton, Tim
Hunt, John (Ravensbourne)	Rhodes James, Robert
Iriving, Charles(Cheltenham)	Rhys Williams, Sir Brandon
Johnson Smith, Geoffrey	Ridley, Hon Nicholas
Jopling, Rt Hon Michael	Ridsdale, Sir Julian
Joseph, Rt Hon Sir Keith	Rippon, Rt Hon Geoffrey
Kaberry, Sir Donald	Roberts, M. (Cardiff NW)
Kershaw, Sir Anthony	Roberts, Wyn (Conway)
Kimball, Sir Marcus	Roper, John
King, Rt Hon Tom	Rossi, Hugh
Knox, David	Rost, Peter
Lamont, Norman	Royle, Sir Anthony
Lang, Ian	Sainsbury, Hon Timothy
Latham, Michael	St. John-Stevas, Rt Hon N.
Lawrence, Ivan	Sandelson, Neville
Lawson, Rt Hon Nigel	Shaw, Giles (Pudsey)

Shaw, Michael (Scarborough)	Townend, Joh n (Bridlington)
Shelton, William(Streatham)	Townsend, Cyril D, (B'heath)
Shepherd, Colin(Hereford)	Trippier, David
Shersby, Michael	Trotter, Neville
Silvester, Fred	van Straubenzee, Sir W.
Sims, Roger	Vaughan, Dr Gerard
Skeet, T. H. H.	Viggers, Peter
Smith, Cyril(Rochdale)	Waddington, David
Smith, Dudley	Wakeham, John
Speed, Keith	Waldegrave, Hon William
Spence, John	Walker, Rt Hon P.(W'cester)
Spicer, Jim (West Dorset)	Walker-Smith, Rt Hon Sir D.
Spicer, Michael (S Worcs)	Waller, Gary
Sproat, lain	Walters, Dennis
Stainton, Keith	Ward, John
Stanbrook, Ivor	Warren, Kenneth
Stanley, John	Watson, John
Steel, Rt Hon David	Wells, Bowen
Steen, Anthony	Wells, Jobn(Maidstone)
Stevens, Martin	Wheeler, John
Stewart, Ian (Hitchin)	Whitelaw, Rt Hon William
Stokes, John	Wilkinson, John
Stradling Thomas, J.	Wolfson, Mark
Tapsell, Peter	Young, Sir George(Acton)
Tebbit, Rt Hon Norman	Younger, Rt Hon George
Temple-Morris, Peter
Thomas, Rt Hon Peter	Tellers for the Noes:
Thompson, Donald	Mr. Anthony Berry and
Thorne, Neil(Ilford South)	Mr. Carol Mather.
Thornton, Malcolm

Question accordingly negatived.

Main Question put:—

The House divided: Ayes 285, Noes 170.

Division No. 106]	[11.44 pm
AYES
Aitken, Jonathan	Chalker, Mrs. Lynda
Alexander, Richard	Channon, Rt. Hon. Paul
Alison, Rt Hon Michael	Chapman, Sydney
Alton, David	Churchill, W.S.
Amery, Rt Hon Julian	Clark, Hon A. (Plym'th, S'n)
Arnold, Tom	Clark, Sir W. (Croydon S)
Aspinwall, Jack	Clarke, Kenneth (Rushcliffe)
Atkins, Rt Hon H.(S'thorne)	Clegg, Sir Walter
Atkins, Robert (Preston N)	Cockeram, Eric
Baker, Kenneth(St.M'bone)	Colvin, Michael
Baker, Nicholas (N Dorset)	Cope, John
Banks, Robert	Cormack, Patrick
Beaumont-Dark, Anthony	Corrie, John
Bendall, Vivian	Costain, Sir Albert
Bevan, David Gilroy	Cranborne, Viscount
Biffen, Rt Hon John	Critchley, Julian
Biggs-Davison, Sir John	Crouch, David
Blackburn, John	Dean, Paul (North Somerset)
Blaker, Peter	Dickens, Geoffrey
Bonsor, Sir Nicholas	Dorrell, Stephen
Boscawen, Hon Robert	Douglas-Hamilton, Lord J.
Bottomley, Peter (W'wich W)	Dover, Denshore
Bowden, Andrew	Dunn, Roben(Dartford)
Boyson, Dr Rhodes	Durant, Tony
Braine, Sir Bernard	Eden, Rt Hon Sir John
Bright, Graham	Edwards, Rt Hon N. (P'broke)
Brinton, Tim	Eggar, Tim
Brittan, Rt. Hon. Leon	Elliott, Sir William
Brooke, Hon Peter	Emery, Sir Peter
Brotherton, Michael	Eyre, Reginald
Brown, Michael(Brigg&Sc'n)	Faith, Mrs Sheila
Bruce-Gardyne, John	Farr, John
Bryan, Sir Paul	Fell, Sir Anthony
Buchanan-Smith, Rt. Hon. A.	Fenner, Mrs Peggy
Buck, Antony	Finsberg, Geoffrey
Budgen, Nick	Fisher, Sir Nigel
Burden, Sir Frederick	Fletcher, A. (Ed'nb'gh N)
Butcher, John	Fletcher-Cooke, Sir Charles
Butler, Hon Adam	Fookes, Miss Janet
Cadbury, Jocelyn	Forman, Nigel
Carlisle, John (Luton West)	Fowler, Rt Hon Norman
Carlisle, Kenneth (Lincoln)	Fox, Marcus
Cartwright, John	Fraser, Rt Hon Sir Hugh

Fraser, Peter (South Angus)	Mawhinney, Dr Brian
Freud, Clement	Maxwell-Hyslop, Robin
Gardiner, George(Reigate)	Mayhew, Patrick
Gardner, Edward (S Fylde)	Mellor, David
Garel-Jones, Tristan	Meyer, Sir Anthony
Gilmour, Rt Hon Sir Ian	Miller, Hal(B'grove)
Glyn, Dr Alan	Mills, lain(Meriden)
Goodhart, Sir Philip	Mills, Peter (West Devon)
Goodlad, Alastair	Miscampbell, Norman
Gorst, John	Mitchell, David (Basingstoke)
Gow, Ian	Mitchell, R. C. (Soton Itchen)
Gray, Hamish	Moate, Roger
Greenway, Harry	Monro, Sir Hector
Grieve, Percy	Montgomery, Fergus
Griffiths, E.(B'y St.Edm'ds)	Moore, John
Griffiths, PeterPortsm'th N)	Morgan, Geraint
Grimond, Rt Hon J.	Morris, M. (N'hampton S)
Grist, Ian	Morrison, Hon C. (Devizes)
Gummer, John Selwyn	Morrison, Hon P. (Chester)
Hamilton, Hon A.	Mudd, David
Hamilton, Michael(Salisbury)	Murphy, Christopher
Hampson, Dr Keith	Myles, David
Hannam, John	Neubert, Michael
Haselhurst, Alan	Newton, Tony
Hastings, Stephen	Oppenheim, Rt Hon Mrs S.
Havers, Rt Hon Sir Michael	Owen, Rt Hon Dr David
Hayhoe, Barney	Page, John (Harrow, West)
Heddle, John	Page, Richard (SW Herts)
Henderson, Barry	Parkinson, Rt Hon Cecil
Heseltine, Rt Hon Michael	Patten, Christopher(Bath)
Hicks, Robert	Patten, John(Oxford)
Higgins, Rt Hon Terence L.	Pattie, Geoffrey
Hill, James	Pawsey, James
Hogg, Hon Douglas(Gr'th'm)	Percival, Sir Ian
Holland, Philip(Carlton)	Peyton, Rt Hon John
Hooson, Tom	Pink, R.Bonner
Horam, John	Porter, Barry
Hordern, Peter	Prentice, Rt Hon Reg
Howe, Rt Hon Sir Geoffrey	Price, Sir David (Eastleigh)
Howell, Rt Hon D. (G'ldf'd)	Prior, Rt Hon James
Howells, Geraint	Raison, Rt Hon Timothy
Hunt, David (Wirral)	Rathbone, Tim
Hunt, John(Ravensbourne)	Rees, Peter (Dover and Deal)
Irving, Charles(Cheltenham)	Rees-Davies, W. R.
Jessel, Toby	Renton, Tim
Johnson Smith, Geoffrey	Rhodes James, Robert
Jopling, Rt Hon Michael	Rhys Williams, Sir Brandon
Joseph, Rt Hon Sir Keith	Ridley, Hon Nicholas
Kaberry, Sir Donald	Ridsdale, Sir Julian
Kershaw, SirAnthony	Rippon, RtHonGeoffrey
Kimball, SirMarcus	Roberts, M. (Cardiff NW)
King, Rt Hon Tom	Roberts, Wyn (Conway)
Knox, David	Roper, John
Lamont, Norman	Rossi, Hugh
Lang, Ian	Rost, Peter
Latham, Michael	Royle, SirAnthony
Lawrence, Ivan	Sainsbury, Hon Timothy
Lawson, Rt Hon Nigel	St. John-Stevas, Rt Hon N.
Lee, John	Sandelson, Neville
Le Marchant, Spencer	Shaw, Giles (Pudsey)
Lennox-Boyd, Hon Mark	Shaw, Michael(Scarborougrh)
Lester, J i m (Beeston)	Shelton, William(Srreatham)
Lewis, Kenneth (Rutland)	Shepherd, Colin(Hereford)
Lloyd, Ian (Havant& W'loo)	Shepherd, Richard
Lloyd, Peter (Fareham)	Shersby, Michael
Lyell, Nicholas	Silvester, Fred
Lyons, Edward (Bradf'd W)	Sims, Roger
McCrindle, Robert	Skeet, T. H. H.
Macfarlane, Neil	Smith, Cyril(Rochdale)
Macmillan, Rt Hon M.	Smith, Dudley
McNair-Wilson, M.(N'bury)	Speed, Keith
McNair-Wilson, P. (New Fst)	Spence, John
McQuarrie, Albert	Spicer, Jim (West Dorset)
Madel, David	Spicer, Michael (SWorcs)
Marland, Paul	Sproat, lain
Marlow, Antony	Stainton, Keith
Marshall, Michael(Arundel)	Stanbrook, lvor
Marten, Rt Hon Neil	Stanley, John
Maude, Rt Hon Sir Angus	Steel, Rt Hon David
Mawby, Ray	Steen, Anthony

Stevens, Martin	Waldegrave, Hon William
Stewart, Ian (Hitchin)	Walker, Rt Hon P.(W'cester)
Stokes, john	Walker-Smith, Rt Hon Sir D.
Stradling Thomas, J.	Waller, Gary
Tapsell, Peter	Walters, Dennis
Taylor, Teddy (S'end E)	Ward, John
Tebbit, Rt Hon Norman	Warren, Kenneth
Temple-Morris, Peter	Watson, John
Thomas, Rt Hon Peter	Wells, Bowen
Thompson, Donald	Wells, John(Maidstone)
Thorne, Neil(Ilford South)	Wheeler, John
Thornton, Malcolm	Whitelaw, Rt Hon William
Townend, John (Bridlington)	Wilkinson, John
Townsend, Cyril D, (B'heath)	Winterton, Nicholas
Trippier, David	Wolfson, Mark
Trotter, Neville	Young, Sir George(Acton)
van Straubenzee, Sir W.	Younger, Rt Hon George
Vaughan, Dr Gerard
Viggers, Peter	Tellers for the Ayes:
Waddington, David	Mr. Anthony Berry and
Wakeham, John	Mr. Carol Mather.

NOES
Abse, Leo	Forrester, John
Allaun, Frank	Foster, Derek
Anderson, Donald	Fraser, J. (Lamb'th, N'w'd)
Archer, Rt Hon Peter	Freeson, Rt Hon Reginald
Ashley, Rt Hon Jack	Garrett, John (Norwich S)
Ashton, Joe	Graham, Ted
Atkinson, N.(H'gey, )	Grant, George(Morpeth)
Bagier, Gordon A.T.	Hamilton, James(Bothwell)
Barnett, Guy (Greenwinch)	Harrison, Rt Hon Walter
Barnett, Rt Hon Joel (H'wd)	Hart, Rt Hon Dame Judith
Benn, Rt Hon Tony	Hattersley, Rt Hon Roy
Bennett, Andrew (St'kp't N)	Haynes, Frank
Bidwell, Sydney	Heffer, Eric S.
Booth, Rt Hon Albert	Homewood, William
Boothroyd, Miss Betty	Hooley, Frank
Bray, Dr Jeremy	Howell, Rt Hon D.
Buchan, Norman	Huckfield, Les
Callaghan, Rt Hon J.	Hughes, Mark(Durham)
Callaghan, Jim (Midd't'n&P)	Hughes, Robert (Aberdeen N)
Cant, R. B.	Jay, Rt Hon Douglas
Carter-Jones, Lewis	John, Brynmor
Clark, Dr David (S Shields)	Johnson, Walter (Derby S)
Cocks, Rt Hon M. (B'stol S)	Jones, Rt Hon Alec (Rh'dda)
Cohen, Stanley	Jones, Barry (East Flint)
Coleman, Donald	Kaufman, Rt Hon Gerald
Concannon, Rt Hon J. D.	Kerr, Russell
Cowans, Harry	Kilfedder, James A.
Crowther, Stan	Kilroy-Silk, Robert
Cryer, Bob	Kinnock, Neil
Cunliffe, Lawrence	Lambie, David
Davidson, Arthur	Lamborn, Harry
Davies, Rt Hon Denzil (L'lli)	Lamond, James
Davies, Ifor (Gower)	Leighton, Ronald
Davis, Terry (B'ham, Stechf'd)	Lestor, Miss Joan
Deakins, Eric	Lewis, Ron (Carlisle)
Dean, Joseph (Leeds West)	Lofthouse, Geoffrey
Dixon, Donald	Lyon, Alexander(York)
Dobson, Frank	McDonald, Dr Oonagh
Dormand, Jack	McGuire, Michael(Ince)
Douglas, Dick	McKelvey, William
Dubs, Alfred	McNamara, Kevin
Duffy, A. E. P.	McTaggart, Robert
Dunlop, John	McWilliam, John
Dunnett, Jack	Marks, Kenneth
Dunwoody, Hon MrsG.	Marshall, Dr Edmund (Goole)
Eadie, Alex	Martin, M(G'gow S'burn)
Ellis, R.(NE D'bysh're)	Mason, Rt Hon Roy
English, Michael	Maynard, Miss Joan
Ennals, Rt Hon David	Meacher, Michael
Evans, Ioan (Aberdare)	Mellish, Rt Hon Robert
Evans, John (Newton)	Mikardo, lan
Ewing, Harry	Mitchell, Austin(Grimsby)
Field, Frank	Molyneaux, James
Flannery, Martin	Morris, Rt Hon A. (W'shawe)
Fletcher, Ted (Darlington)	Morris, Rt Hon C. (O'shaw)
Foot, Rt Hon Michael	Morris, Rt Hon J. (Aberavon)
Ford, Ben	Morton, George

Moyle, Rt Hon Roland	Smyth, Rev. W. M. (Belfast S)
Newens, Stanley	Soley, Clive
Oakes, Rt Hon Gordon	Stoddart, David
Orme, Rt Hon Stanley	Stott, Roger
Park, George	Straw, Jack
Parker, John	Summerskill, Hon Dr Shirley
Parry, Robert	Thomas, Dr H.(Carmarthen)
Powell, Rt Hon J.E. (S Down)	Thorne, Stan (Preston South)
Powell, Raymond (Ogmore)	Tilley, John
Race, Reg	Tinn, James
Radice, Giles	Torney, Tom
Rees, Rt Hon M (Leeds S)	Varley, Rt Hon Eric G.
Richardson, Jo	Wainwright.E. (Dearne V)
Roberts, Albert (Normanton)	Walker, Rt Hon H.(D'caster)
Roberts, Allan(Bootle)	Watkins, David
Roberts, Gwilym (Cannock)	Welsh, Michael
Rooker, J. W.	White, Frank R.
Ross, Ernest (Dundee West)	Whitehead, Phillip
Ross, Wm. (Londonderry)	Whitlock, William
Rowlands, Ted	Williams, Rt Hon A.(S'sea W)
Ryman, John	Winnick, David
Sever, John	Woodall, Alec
Sheldon, Rt Hon R.	Woolmer, Kenneth
Shore, Rt Hon Peter	Wright, Sheila
Short, Mrs Renée
Silkin, Rt Hon J. (Deptford)	Tellers for the Noes:
Silkin, Rt Hon S. C. (Dulwich)	Mr. Hugh McCartney and
Silverman, Julius	Mr. Allen McKay.
Skinner, Dennis

Question accordingly agreed to.

Resolved, That this House takes note of European Community Documents Nos. 4624/82, 4624/82 Addendum 1, 4624/82 Addendum 2, 4624/82 Addendum 2/1 and 4624/82 Corrigendum 1 on agricultural prices and markets, 10311/81 and 10311/1/81 Revise I on Guidelines for European Agriculture, 8915/81 on multi-annual trade agreements for agricultural products, 4298/82 concerning a report from the Commission to the Council on the Situation of the Agricultural Markets-1981, 7538/81 concerning the reduction of the guide price used for calculating the sheepmeat variable premium, 10104/81 on proposals on the common organisation of the market in wine, and the Ministry of Agriculture, Fisheries and Food's unnumbered Explanatory Memorandum of 12th March 1982 concerning a Commission proposal for the exceptional distillation of seven million hectolitres of red wine; recognises the contribution United Kingdom agriculture makes to the national economy and the need to obtain adequate returns for United Kingdom producers; draws attention to the need to contain prices of those products in structural surplus; and supports the Government's intention to seek an agreement on 1982–83 farm support prices and related measures designed to reduce surplus production, to limit the cost of the Common Agricultural Policy and to take account of the interests of consumers and food processors.