Commons Sitting of 3 July 1984

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    SELBY BRIDGE BILL
    Lords amendments agreed to.
    CHARING CROSS AND WESTMINSTER MEDICAL SCHOOL BILL [Lords]
      SWAVESEY BYE-WAYS BILL [Lords]
      Read the Third time, and passed.
    MERSEYSIDE DEVELOPMENT CORPORATION BILL
    To be read the Third time.
    LONDON TRANSPORT (TOWER HILL) BILL [Lords]
    Read a Second time and committed.
Oral Answers to Questions
  EMPLOYMENT

    Youth Training Scheme
    Mr. Haselhurstasked the Secretary of State for Employment if he will make a statement about the future of the youth training scheme.
    The Minister of State, Department of Employment (Mr. Peter Morrison):The Government expect to receive further advice from the Manpower Services Commission on the future development of the youth training scheme within the next few weeks and will take this into account in reviewing the scheme.
    Mr. Haselhurst:Has my hon. Friend seen sufficient of the scheme to be satisfied that it has been successfully instituted? Could it be expanded in the reasonably near future to become a two-year programme?
    Mr. Morrison:I entirely agree with my hon. Friend that, by general consent, the scheme has been very successful indeed. Expanding the scheme so that it lasted for two years would, of course, involve considerably more resources.
    Mr. Cyril Smith:If the Minister is not able to give the House an assurance that the whole scheme can be extended to last for two years, will he give particular consideration to the needs of young people who are slow learners or who are physically handicapped? They need a two-year
    130
    scheme, as opposed to a one-year scheme, in order to obtain the full benefit from it. Will the Minister consider extending the scheme for two years for such young people?
    Mr. Morrison: I assure the hon. Gentleman that the needs of the groups to whom he refers are among the matters which my right hon. Friend and I are carefully considering. As the hon. Gentleman will know, the scheme has been extended for the disabled.
    Mr. Rowe: Given the often extremely mischievous attempts to decry the scheme as a total failure, can my hon. Friend tell us how many of the young people involved have managed to find permanent employment, or the promise of permanent employment, at the conclusion of the first year of the scheme?
    Mr. Morrison: It is a little early to give a precise figure. However, the early signs are very encouraging and suggest that the placement rates will compare very favourably with those achieved on the youth opportunities programme.
    Mr. Leighton: Why have the Government devalued the YTS by lowering the real value of the YTS allowance? Is the Minister aware that an increase of 5 per cent. in no way keeps pace with the rate of inflation? Has he noticed that the Secretary of State for Transport plans to increase London Transport fares by 10 or 12 per cent., on the plea that that is necessitated by the rate of inflation? What is the reason for those double standards?
    Mr. Morrison: There are just under a quarter of a million trainees on the scheme and they do not entirely agree with the hon. Gentleman about the level of allowance. The hon. Gentleman will be aware that the Manpower Services Commission recently made a recommendation to my right hon. Friend, which we are now considering.
    Mr. Wilson: Does the Minister not realise that when his Department and the MSC took the decision to abolish mode B1 places for community projects under the YTS considerable damage was done to area boards? Will he, in reviewing the operation of the scheme, take the advice of area boards of the MSC rather than rely on the MSC, which seems to be out of touch with the realities of the situation?
    Mr. Morrison: As the hon. Gentleman will appreciate, it is a significant waste of taxpayers' money if only 55,000 of the 90,000 mode B1 places are occupied. We have decided that there will be about 70,000 places, which seems to be the right way of approaching the matter.
    Mr. Stokes: Will my hon. Friend liaise with his hon. Friends in the Ministry of Defence to ascertain whether its scheme, which, I believe, is one of the best in the country, can be further extended and advertised?
    Mr. Morrison: I assure my hon. Friend that my hon. Friends in the Ministry of Defence and I talk about that scheme. I appreciate what my hon. Friend said about advertising the scheme.
    Mr. John Smith: Is the Minister aware that the proposal to increase the YTS allowance by only £1·25 per week is disgraceful, bearing in mind that the YTS allowance has been pegged at £25 since its inception? Is the hon. Gentleman aware that the Government

    131
    continually veto all proposals to increase that allowance in line with inflation, such as the proposal recommended by the MSC? Is he further aware that YTS trainees should be paid properly, at a figure of about £34 per week, not £26·25 per week? Are the Government not using this measure to depress wage levels for all young people generally?
    Mr. Morrison: Surely the right hon. and learned Gentleman is aware that the MSC recommended an increase to £26·25, by a majority of six to three. That means all the local authorities agreeing with the CBI, and the TUC dissenting. My right hon. Friend the Secretary of State has not yet made up his mind about the precise level of allowance in the year ahead.

    Work Permits
    Mr. Ashbyasked the Secretary of State for Employment what action has been taken about the corrupt issuing of work permits by officials of his Department.
    The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): The Director of Public Prosecutions has recently decided that there is no adequate basis for proceedings against any official of my Department. Following this, an internal investigation has been started to establish whether further procedural safeguards are needed to supplement those already introduced since these matters first came to light in 1982.
    Mr. Ashby: I thank my hon. Friend for that answer. Is he aware that the investigation was carried out by the most junior police officer that one could find? Is my hon. Friend really satisfied that these matters have been fully and properly investigated? Does he think that the decision by the Director of Public Prosecutions was based on evidence obtained by police officers who did not have the will to investigate the matter properly?
    Mr. Clark: I have read the transcript of the trial. I understand some of the points that my hon. Friend has implied, although I certainly would not endorse the tone of his question. My Department co-operated fully with the police in this matter. I am not responsible for the vigour with which the police pursue their investigations or the level at which they conduct them—those are matters for my right hon. and learned Friend the Home Secretary.
    Mr. Ron Brown: Is it fair that Mark Fiora and Brett Saunders have been denied work permits and prevented from riding for the Monarchs, the famous Edinburgh speedway team?
    Mr. Clark: The hon. Gentleman has made great headway on these cases, and he knows very well that I have done my best to help him. The fact remains that speedway riders in that category of competition do not earn sufficient money to support themselves simply by speedway riding. It is generally recognised that they take odd jobs and perform casual labour, to the detriment of the prospects of the domestic work force, and, for that reason, their permits are refused.
    Mr. Dickens: Is my hon. Friend aware that Reuben Davis was earning £50,000 per year from illegal immigration into this country—£8,000 a time for a work permit from the Department? Is my hon. Friend also aware that in 1975 Alex Lyon, then the Minister of State, Home Office, warned the right hon. Member for Glasgow,
    132
    Hillhead (Mr. Jenkins), then the Home Secretary, of what was going on in his Department and that there seems to have been a glorious cover-up? Does my hon. Friend understand that Back Benchers will not tolerate the kind of cover-up that we have seen in the Civil Service?
    Mr. Clark: I always welcome my hon. Friend's robust interventions. I am sure that the whole House appreciates the manner in which he sets himself up as a watchdog on this type of subject. I have no knowledge of Reuben Davis's earnings, whether legal or illegal. As I said earlier, an investigation is under way. I hope that the report will be to hand by the end of the month. If my hon. Friend attends the next Employment Question Time on 2 August, he will be able to ask me about the subject again.

    Special Employment Measures
    Mr. Martinasked the Secretary of State for Employment what is the total number of people occupied on Government special employment measures; and how this number has altered since 1979.
    The Minister of State, Department of Employment (Mr. John Selwyn Gummer): A total of 622,000 people in Great Britain were supported by the Government's special employment and training measures at the end of April 1984. This is an increase of 388,000 over the April 1979 figure.
    Mr. Martin: Surely this shows that Government intervention can reduce unemployment. Therefore, the Minister should embark on schemes of public expenditure to help inner cities such as the area which I represent. Does he accept that he should embark on road-building schemes and perhaps even turn his attention to the sewerage systems in many major cities? That approach would help to reduce unemployment.
    Mr. Gummer: I believe that we should seek every means of reducing unemployment, but it would not help to reduce unemployment by taxing successful schemes to produce jobs which would reduce the opportunities of employment in successful firms. I shall pass on the hon. Gentleman's remarks to my right hon. Friend the Secretary of State for Scotland.
    Mr. Thurnham: At what level does my hon. Friend envisage the total number on such schemes in future?
    Mr. Gummer: We are examining the schemes, because we have to consider how we may improve them. I shall be happy to answer my hon. Friend's question when we have completed the investigation.
    Ms. Clare Short: Is the Minister aware that in Birmingham we are gravely concerned about the operation of the largest of the schemes, the youth training scheme, because it appears that between two thirds and three quarters of those who have left it are unemployed? We are told by the local area board that the minimum criteria for renewal that it has set are not met by 40 per cent. of the schemes and that only 3 per cent. are better than the criteria.
    Mr. Gummer: I ask the hon. Lady to help the young people concerned by supporting the schemes which we have introduced instead of constantly attacking them and making statements which seem not to tally with statements made in the Birmingham area.
    Mr. Meadowcroft: Has any estimate been made of the net cost to public funds of these schemes? Even if there is a negative cost to the Exchequer, will the Minister accept that the community benefit of many of the schemes is such that he might be well advised to increase their number, rather than inhibit their growth?
    Mr. Gummer: The hon. Gentleman is right to suggest that we should consider the schemes from that point of view, and we are doing so. Each scheme has a different net cost, and sometimes net costs differ from one part of a scheme to another.
    Mr. Lawler: Will my hon. Friend ensure that the MSC makes it clear to young people who are denied opportunities in the postal services, local and national Government service and in printing that they will not be able to follow schemes in those sectors because of politically motivated opposition from the trade unions?
    Mr. Gummer: My hon. Friend has made an important point. However, I should much prefer Opposition Members to speak in a non-party political way about the youth training scheme. It is for that reason that I have gone in for a self-denying ordinance of not pointing out the outrageous activities of those who seek to oppose the scheme.
    Mr. Evans: Will the Minister acknowledge that the job release scheme, introduced by a Labour Government, is one of the best and most imaginative of all Government schemes, but that, regrettably, more than 250,000 men between the ages of 62 and 64 no longer qualify for that scheme? Should not the Government have reduced the age of eligibility from 62 to 60, rather than increasing it from 62 to 64?
    Mr. Gummer: I am sure we all agree that it is an imaginative scheme —so much so that the hon. Gentleman's party changed the rules four times. [Interruption.] I suggest to the hon. Gentleman that we have to look at all the schemes together and decide how best the money should be spent. We have not at the moment any intention of changing the scheme.

    Labour Statistics
    Mr. Flanneryasked the Secretary of State for Employment what is the latest number of unemployed in the United Kingdom.
    The Secretary of State for Employment (Mr. Tom King): On 10 May the number of unemployed claimants in the United Kingdom was 3,084,457.
    Mr. Flannery: Will you accept from me, Mr. Speaker, that I am about to talk in a non-party political way, like the chairman of the Tory party?
    Will the Minister agree that, after the figures have been massaged so brilliantly, there are 1 million more unemployed than the number to which he is confessing? In view of the Government's grand passion to get the miners back to work, will the Minister begin by getting the other 4·5 million people back to work? They all want to work, but the Government will not allow them to go back to work.
    Mr. King: I am grateful to the hon. Member for his bipartisan approach to the question. I do not see the point of trying to argue about whether or not the figures are
    134
    massaged in a particular way, unless there is an hon. Member who actually thinks that 3 million unemployed is an acceptable figure and that 3·5 million is not acceptable. I hope that the hon. Gentleman will join me in saying that the figure is too high, that it is a matter of concern to everybody in the House, and that we are all concerned to see that unemployment is reduced and people are able to get real jobs. Against that background, I hope the hon. Gentleman will welcome the fact that in the past month, in his city of Sheffield, placings in the jobcentre were 22 per cent. higher than for the same period last year.
    Sir Dudley Smith: In view of that last answer. will my right hon. Friend say whether productivity is increasing, and, if it is, what effect it is having on employment generally?
    Mr. King: My hon. Friend puts his finger on a very important point. Of course, we have the problem of a further 160,000 people corning into the work market at present. It is also important to note that we have a continuing improvement in productivity of about 8 per cent. in manufacturing. That is very important indeed for the future competitiveness of Britain, but it raises problems at the present time in regard to employment. It is vital, if we are to have real jobs, that we continue to improve our productivity.
    Mr. Nellist: Is the Secretary of State aware that, despite his attitude about the unemployment figures in the west midlands, the unemployed to vacancy ratio stands at over 35? Even if every one of the unemployed—on the Secretary of State's definition—got a job, there would still be 34 in the west midlands, on his statistics, who would not. Does the Secretary of State agree that he actually likes to have 3 million unemployed, because he uses them as a weapon against the rest of the organised trade union movement?
    Mr. King: The hon. Gentleman will have heard me say categorically from this Dispatch Box that the present level of unemployment is unacceptably high, and I do not in any sense regard it as acceptable. The only hope of getting jobs that last is to have an economy in which inflation is low, in which interest rates are lower than those of some of our major competitors overseas, in which productivity keeps rising, and in which growth continues to improve. Those are the conditions that we have established and they are the best hope for the unemployed.
    Mr. Latham: Does my right hon. Friend appreciate that there would be a further severe rise in unemployment if there were to be a public sector moratorium on construction work? Will he make it clear to his Cabinet colleagues that such a thing must be resisted at all costs?
    Mr. King: I feel that, in a previous incarnation, I have been here before. My hon. Friend will know—I do riot wish to trespass on other matters—that one of the most important issues which we must tackle are the levels of public expenditure to ensure that, through them, interest rates do not rise and that we do not have inflation rising again, otherwise we shall do infinitely more damage to the construction industry and every other industry, but I have no comment to make on the point that my hon. Friend raises.
    Mr. Wrigglesworth: In view of what the right hon. Gentleman has been telling the House, can he say whether unemployment at the end of this year will be lower than it was at the beginning of the year?
    Mr. King: So far as I know, no Minister of any Government has forecast future levels of unemployment. I have put these issues to the House in what I hope is a sensible and responsible way. The House knows the challenges that we face. The rates of unemployment of some of our partners in the EEC are now at significantly higher levels than those which we face. This is a world problem that we are tackling, and we are tackling it in a responsible way.
    Mr. Beaumont-Dark: Does my right hon. Friend agree that the mad antics of Arthur Scargill and his cohorts are likely to cause more long-term unemployment than anything else that is happening in Britain, because of the effects of what they are doing on other people's costs, coupled with the fact that people will find substitutes for coal, which in turn will damage long-term employment in the mining industry?
    Mr. King: The present situation is extremely serious. It is interesting to note, for example, that were serious damage to be done to the steel industry by the present dispute, that would be likely to cost more jobs in the mining industry than possibly even in the steel industry. Therefore, the present situation poses a major threat to jobs.
    Mr. John Smith: Is the Secretary of State aware that included in the appalling unemployment total is the high figure of long-term unemployed, now running at more than 1·25 million? Is he further aware that we would take his protestations of concern more seriously if the Government would, for example, give the long-term rate of supplementary benefit to the long-term unemployed? If the Government are not prepared to give these people social justice, what hope does the right hon. Gentlemam offer to more than 1 million people, most of whom will never work again?
    Mr. King: That was an irresponsible statement for the right hon. and learned Gentleman to make. He knows that about 6 million people will get new jobs in Britain this year and that among them will be many of the long-term unemployed. I have complaints coming to my Department about the difficulties faced, for example, by London Transport in recruiting bus drivers in London, and about the difficulty that is being experienced in getting people for skilled and semi-skilled jobs in London and the southeast. It so happens that the greatest number of long-term unemployed are in London and the south-east. I do not accept that they must feel that there is no chance of getting a job. We are determined to see that they have that chance.

    Westcombe Industrial Unit, Peterborough
    Dr. Mawhinneyasked the Secretary of State for Employment if he will visit the Westcombe industrial unit for the disabled in Peterborough.
    Mr. Alan Clark: As my hon. Friend will know, I intend to visit the unit on Tuesday 24 July.
    Dr. Mawhinney: Is my hon. Friend aware that he will be most welcome in Peterborough? Is he further aware that the Westcombe unit and its associated sheltered workshops
    136
    are among the best in the country and that we hope that as a result of his visit he will be able to disseminate information to other workshops for the benefit of the disabled?
    Mr. Clark: I look forward to being able to corroborate the favourable comments of my hon. Friend. Westcombe industries are playing a constructive part in the employment of the disabled, because a high proportion of the work force is in sheltered industrial groups, which give better value to the taxpayer and, we believe, give a greater degree of fulfilment and self-esteem to the disabled people so placed.
    Mr. Pavitt: Will the Minister, when looking at the whole question of industrial development and sheltered workshops, consider changing the law in regard to blind people? Is he aware that the only disabled who cannot move in and out of sheltered employment are the blind? Paraplegics can. Is this not an injustice to the blind?
    Mr. Clark: I think I heard you say under your breath, Mr. Speaker, that the general question of the blind was not really germane to the main question. When in Peterborough, I shall look at the position as it relates to Westcombe industrial estates.

    Race Relations Act 1976
    Mr. Proctorasked the Secretary of State for Employment whether he has any plans to introduce legislation to amend section 47 of the Race Relations Act 1976; and if he will make a statement.
    Mr. Alan Clark: Yes, Sir, but precise details have yet to be decided. My right hon. Friend will make an announcement in due course.
    Mr. Proctor: Does my hon. Friend agree that the Commission for Racial Equality's code of practice for employment exacerbates rather than soothes racial feelings? Since the code was introduced under section 47 of the Race Relations Act in a way which makes it impossible for the House or the Secretary of State to amend it, does my hon. Friend accept that many hon. Members would like that legislation to be amended as soon as possible?
    Mr. Clark: I reject the allegation that the code exacerbates racial feelings. The code has no legislative force, as my hon. Friend knows, but it is extremely useful as a general document of reference for the majority of cases in which natural common sense and humanity applies and which might need reference to a set of advisory assertions. The code has a value in that role. My hon. Friend says that the Secretary of State does not have the power to amend the code, only to accept or reject it. We hope to correct that by legislation in the near future.
    Mr. Janner: If the Minister rejects the views expressed by the hon. Member for Billericay (Mr. Proctor), which I venture to doubt, why do he and his Government play down the importance of the code by calling it merely advisory, when it has more force than that? Why do Ministers fail to implement its recommendations in any Government Department, including that of the Minister?
    Mr. Clark: On the contrary, I am surprised that the hon. and learned Member for Leicester, West (Mr. Janner), who lays claim to a certain stature and respect in

    137
    the House, should make personal allegations of that kind at Question Time. I do not propose to comment further. The Commission for Racial Equality published its report today. The hon. and learned Gentleman might not have had time to see it. That report welcomes the steady progress that the Government are making in this respect.
    Mr. Budgen: Is it the business of the Government to introduce codes which have no legal force and which are merely advisory? Would it not be better to say honestly and openly that this is not an area of activity in which any Government should be engaged?
    Mr. Clark: No. In this complex and evolving example of race relations it is useful to have a work of reference. The code is no more than that.
    Mr. Sheerman: Will the Minister not only reject the views expressed by his colleagues on the Back Benches, but go further and give the code a more positive position in his Department and in the Manpower Services Commission? Is the hon. Gentleman aware that after much probing Opposition Members discovered that only 15 of the area manpower boards have any ethnic representation? Will he ensure that his Department issues a directive so that black people can be members of the manpower boards?
    Mr. Clark: I note what the hon. Gentleman says. The Manpower Services Commission is aware of the position. The trouble is that the candidates are not coming forward.

    Professional and Executive Recruitment Service
    Mr. Michael Brownasked the Secretary of State for Employment whether he will consider proposals for the privatisation of the Professional and Executive Recruitment Service.
    Mr. Peter Morrison: There are no plans for the moment to change the basis of operation of the service, but we shall be keeping it under review in the light of its financial performance.
    Mr. Brown: Since the service used to cost the taxpayer £5 million a year, and since, thanks to the excellent work of the Manpower Services Commission, it now operates on a cost-recovery basis, does my hon. Friend agree that it is time to invite the Manpower Services Commission to prepare proposals for the privatisation of the service?
    Mr. Morrison: As my hon. Friend says, the Manpower Services Commission and the officials in the Professional and Executive Recruitment Service have done a magnificent job in putting it on to a cost-recovery basis. We have only just achieved that position and in future options can, perhaps, be considered.
    Mr. Fatchett: Given the growing public concern over the number of Tory Members of Parliament financially linked with companies seeking privatisation, would it not be useful for the Government to ask any company which seeks private work through the Professional and Executive Recruitment Service to publish the names of those Conservative Members who are on the payroll of such interested companies?
    Mr. Morrison: As I understand it, all hon. Members declare their interests.

    Community Programme
    Mr. Knoxasked the Secretary of State for Employment if he will make a statement about the operation of the community programme.
    Mr. Tom King: Since its introduction in October 1982 the community programme has proved a valuable scheme to help the long-term unemployed. Its progress has been much helped by the efforts of sponsors, who have organised projects to achieve the programme's objectives. We now have 116,000 long-term unemployed on the scheme.
    Mr. Knox: Does my right hon. Friend have any plans to extend the community programme, which is very popular and which provides jobs?
    Mr. King: The community programme is expanding and we are building up to the first target of 130,000 places. I am reviewing a number of schemes at this moment and I am aware of the popularity of the community programme.
    Mr. Penhaligon: Is the Secretary of State aware of the difficulties which the £60 average wage is creating in running some of the courses? How much has the real purchasing power of that depreciated since the scheme was introduced? Why can it not be adjusted according to inflation?
    Mr. King: The hon. Gentleman will know that there is a straight test between the level of the average wage or salary on the scheme and the number of people who can be accommodated on it. We are anxious to provide for the maximum number of people and therefore it is a question of trying to determine the right balance in that respect. I understand why he asks that question.
    Mr. Colvin: Is my right hon. Friend aware that the community programme is being used to support the so-called TUC centres for the unemployed? While some of those are doing a constructive job in helping the unemployed, others are no more than centres for extreme Left-wing party political propaganda. What guidelines will he give the MSC on the use of the community programme for that purpose?
    Mr. King: I know that the MSC has been concerned about some aspects of the earlier schemes in some of the centres that were set up. I understand that it has been having discussions with the TUC on that matter.
    Mr. Campbell-Savours: Is the Secretary of State aware that in the county of Cumbria community programme places have been cut from 1,600 to 900 in two years and yet we made a valiant effort to make the scheme succeed within the county? Will he give us an assurance now that he will go into the Cabinet and argue with Treasury Ministers the need for an additional allocation next year to compensate for the loss in areas such as my own where this is the only form of new employment available?
    Mr. King: I know that the hon. Gentleman has been having discussions with my hon. Friend the Minister of State on that matter. I know also that he will be fair and recognise that it was possible in the initial stages to give Cumbria an allocation higher than its percentage of long-term unemployment would have justified, because there. was a short delay in take-up in other places. I am sure that

    139
    he would not argue for Cumbria to have an unfair allocation in relation to other counties, but I know why he raises the question.
    Mr. Hirst: Is my right hon. Friend aware that the community programme has done excellent work, particularly in Scotland? In view of its worthwhile contribution to improving the environment, will he give an assurance that the scheme can be carried on and so provide employment for workers from the very depressed construction sector?
    Mr. King: There is general support, which I note from comments made in the House, for the community programme as a means of helping the long-term unemployed. I do not propose to comment further at this moment, but I hope to have something to say before too long about the programme and its continuance.
    Mr. Evans: Will the Secretary of State take the trouble to read the CBI report "The Fabric of the Nation", where he will see that Britain's industrial managers are calling for a sensible programme of public works which would, first, benefit Britain's infrastructure and, secondly, reduce long-term unemployment? Surely that would be the most intelligent community programme of all?
    Mr. King: The hon. Gentleman raises that question as though there were not a very substantial programme of public works at the moment. We are carrying out a substantial programme of public works in terms of public expenditure on infrastructure and other areas consistent with what we think the country can afford and which does not damage the prospects for inflation and interest rates, thereby damaging employment prospects for the whole country. That is an issue which we must have very much in mind.

    Apprenticeships
    Mr. Lofthouseasked the Secretary of State for Employment if he will make a statement about the role of apprenticeship training in meeting the requirements of British industry for a skilled work force.
    Mr. Peter Morrison: Apprentice training remains an important source of skilled manpower. But the wider aim must be to open up access to training and hence to jobs through a coherent system of standards and certificates of competence.
    Mr. Lofthouse: Does the Minister not see the need to expand Government aid for the apprenticeship scheme, especially when they have abolished the ITBs, and bearing in mind the effect of the Government's disastrous policy on the scheme? If the hon. Gentleman shares that view, why has he or the Secretary of State, found it necessary to give instructions in recent weeks to stop the unemployment pay of craft apprentices in the mining industry? Was it a direct instruction from the Secretary of State, or was it a nudge from Mr. MacGregor to put the boot into the miners yet again?
    Mr. Morrison: I agree with the hon. Gentleman that training is very important. As I said in my original answer, apprenticeships have a very important part to play. But, as I also said, we must have broader based training. That is why the Government, on behalf of the taxpayer, have invested a significant amount of money through the youth training scheme.
    Mr. Adley: Is my hon. Friend aware that in my constituency already, as a sign of emergence from recession, employers, especially in the newer industries, are again finding a shortage of skilled people to work in those industries, despite all that this Government and their predecessors have tried to do? In view of that, is my hon. Friend willing to meet a deputation from the Dorset chamber of commerce and industry so that it may make direct representations to him?
    Mr. Morrison: I am always happy to meet any deputation, especially when there are skill shortages. However, the general form of the adult training strategy is to be more flexible and more responsive than has been the case hitherto.
    Mr. Sheerman: Is the Minister aware of the role that revamped apprenticeship schemes could play in the uprating and updating of our technical skills for the high-tech industries? Is he aware, further, of the recent NEDC report, which showed the horrific gap between this country, Japan, Germany and the United States in this respect? Was he not present at a recent meeting of eight senior Ministers which turned down a proposal for £400 million to switch into new technology training?
    Mr. Morrison: I thought that there was general agreement in the House that we should get away from time serving and get on to standards. That is precisely what we are doing in terms of the quality of both the YTS and our adult training strategy.

    Labour Statistics
    Mr. Andrew MacKayasked the Secretary of State for Employment if he will make a further statement on the level of unemployment in the United Kingdom.
    Mr. Gummer: The fight for jobs is a battle to improve Britain's competitiveness and to ensure that higher productivity leads to new opportunities and not only to higher wages for those in work.
    Mr. MacKay: Will my hon. Friend confirm that the best way of creating real lasting jobs for the future is for us to produce goods and services at a competitive price and thus create real new markets?
    Mr. Gummer: I can confirm that, and I remind my hon. Friend that other countries are finding a very much better way of decreasing unit labour costs compared with ourselves. We have to make sure that those at work do not kill the prospects for jobs of others who do not have them.
    Mr. Canavan: Is it not ironic that when unemployment seems to be our only growth industry the Government propose to cut the services to help the unemployed get jobs? What advice would the Minister give to an unemployed person in a place such as Denny in my constituency, where unemployment is more than 30 percent. and the Government's only response is to downgrade the local jobcentre so that anyone unemployed who cannot afford the bus fare has to walk several miles into Falkirk to the nearest jobcentre?
    Mr. Gummer: The present proposals will create 200 more jobcentres and provide a better service than the present ones.
    Sir John Page: Does my hon. Friend agree that employment could be improved greatly if people bought

    141
    more British goods, provided that they were of equal quality and competitive in price? Will he smile upon the "Think British" campaign?
    Mr. Gummer: It is obviously true that if people bought more British goods there would be more jobs in Britain, but those goods much be competitive in price and design. One of the problems at present is that the Labour party does little to help that work.
    Mr. James Hamilton: Will the hon. Gentleman reflect on his statement in reply to a previous question, when he exhorted us to adopt a non-party approach to unemployment? Will he also reflect on the statements made by the Tory party in 1979 and in its manifesto in 1983, when it decided to cut unemployment? Has it done so, and if not, when does it intend to do so?
    Mr. Gummer: The hon. Gentleman will remember that I said that the youth training scheme would be benefited if people took a non-party political view, instead of constantly attacking it, like the hon. Member for Birmingham, Ladywood (Ms. Short) does.
    Sir Kenneth Lewis: Is it not time that the Labour party recognised that Arthur Scargill is threatening to cause more unemployment, not only among the miners but among steel workers, transport workers and many other groups, than anyone else in the country?
    Mr. Gummer: The jobs of miners and steel workers depend on sensible production in the coal mines. The Government are providing £2 million a day to ensure that those coal mines are able to produce as they ought to. It is very sad that in the name of only part of the mining industry some people are trying to torpedo that.

    PRIME MINISTER

      Engagements
      Mr. Skinnerasked the Prime Minister if she will list her official engagements for Tuesday 3 July.
      The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.
      Mr. Skinner: Now that the Prime Minister has turned the United Kingdom into a land fit for drug pushers to live in and is bailing out the international bankers, the French farmers and shutting British pits, is it not treating the British people with contempt to agree proposals at Fontainebleau to have a European flag, a Common Market coin and a Euro anthem? Why did the Prime Minister not have the guts last Wednesday to come to the Dispatch Box and tell us about this sell-out to European federalism?
      The Prime Minister: That was a rapid tour around many subjects — from international bankers to Fontainebleau. I answered questions on Fontainebleau for about an hour, and on the whole I thought that I answered all the questions that were put to me. I note what the hon. Gentleman has said about this country, but I am happy to report to him that Bolsover colliery has won a £2 million a year contract — [Interruption.] — which will keep people working in the pit.
      Dr. Hampson: In considering the Government's response to their Lordships' recent decision on the Local
      142
      Government (Interim Provisions) Bill, will my right hon. Friend bear in mind that if she is considering a compromise which allows for an extension of the term of office of the existing councillors, it will be tolerable to many of us only if at the same time she introduces legislation which ensures that we do not get asset-stripping on a massive scale which any fag end of local government will ensure occurs, particularly if it is as ideologically committed as the metropolitan counties and the GLC?
      The Prime Minister: I am grateful to my hon. Friend. We are aware of that point and will take it into account.
      Mr. Kinnock: On the subject of asset-stripping, why was it apparently against the public interest for one purchaser to own more than 10 per cent. of Enterprise Oil last Thursday, but apparently not against the public interest for the same purchaser to own 15 per cent. of Enterprise Oil on the following Monday?
      The Prime Minister: My right hon. Friend the Secretary of State answered that point yesterday. I think that the right hon. Gentleman has muddled two things. The 10 per cent. in the initial allocation is made under very special conditions. The rest must be obtained under the normal rules of the panel on takeovers and mergers and the Council of the Securities Industry. Those rules apply to shares bought in the market place. Shares that are allocated come under different rules.
      Mr. Kinnock: Why was the 10 per cent. not mentioned in the prospectus, and why, if the Prime Minister understood the situation so well, did the Secretary of State have to come here last Thursday to make a panic statement to explain the condition? Can the right hon. Lady tell us whether she understood what would be the consequences of the flotation of shares in Enterprise Oil? If she did, why was it necessary for the Secretary of State to come to the House? If she did not know, how can she excuse such crass ignorance of the capital market system—[Interruption.] Hon. and right hon. Gentlemen can laugh. In the Cabinet a week last Thursday, neither the right hon. Gentleman nor the Prime Minister understood the God-awful mess they were going to get us into over Enterprise Oil. Can the right hon. Lady excuse ignorance of a system which she is supposed to regard with something near religious faith?
      The Prime Minister: The reality is that the privatisation of Enterprise Oil was completed successfully last week and the sale raised £392 million for the taxpayers. Under the terms of sale, Enterprise Oil is now an independent British oil company. RTZ has not gained control. The Government clearly stated in the prospectus their intention that the company should be free from outside control in its early years. All that has been carried out successfully.
      Mr. Kinnock: If the Enterprise Oil fiasco has been a success, God help us if the Government encounter a failure.
      Can the right hon. Lady tell us what will happen in the future — [Interruption.] If the Prime Minister understands what her right hon. Friend said last Thursday, she should be able to tell us, as well as the British taxpayers and those who are interested in the affair around the country, what will happen in the future. Can she tell us whether other major purchasers will enjoy the same generosity as that shown to Enterprise Oil? Can she tell us,

      143
      as the Government are supposed to be in charge, what is their policy, given RTZ's stated objective of getting 49 per cent. control of Enterprise Oil—[Interruption.]
      Mr. Speaker: Order. I ask the House to give the Leader of the Opposition a fair chance.
      Mr. Kinnock: These are our assets, the British people's assets, that are being flogged off by the Government. We want to know from the Government where they will stop this list of flops, failures and fiascos, drop their programme now, before they get in an even bigger mess over Jaguar, British Airways, British Aerospace, or British Telecom.
      The Prime Minister: I have never heard a bigger mess made of a question than that. I wonder whether the right hon. Gentleman has lost sight, in his tirade, of the fact that the Government took a special share to protect Enterprise Oil's independence for a number of years. Therefore, if anyone in the market were to bid up to a substantial figure for shares, he would know full well that that special share would be used to keep Enterprise Oil independent, so long as that special share lasted. To call something a fiasco which in fact gets £392 million for the taxpayers and which is independent, merely means that the right hon. Gentleman does not have a clue about the way in which these matters work.
      Mr. Ottaway: Does my right hon. Friend agree that it is impossible to intervene in the coal mining dispute when, on the one hand, there is a commercial standpoint and, on the other, a political argument?
      The Prime Minister: I see little point in intervening. Indeed, there is no point in the Government intervening when it seems as though the dispute is not about the industrial side of the offer, but about something else.
      Mr. Dobsonasked the Prime Minister if she will list her official engagements for Tuesday 3 July.
      The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
      Mr. Dobson: Will the Prime Minister take time today to instruct the Minister for Health—who has already met the employers, Crothalls—to meet representatives of the women on strike at Barking hospital who object to their pay being reduced from £57 to £17 per week? Could any of the right hon. Lady's family get by on £17 a week?
      The Prime Minister: I gather that the hon. Gentleman is talking about the dispute at Barking hospital between a private company and the health authority. I understand that the company that was tendering re-examined its work schedules and carried out a re-rostering of staff to produce the most cost-effective work patterns. It also altered the conditions of employment. The effect was to reduce staff hours by between 40 and 60 per cent., and earnings by 40 per cent. However, rates of pay are being maintained at previous levels. The health authority is using the savings to improve nurse staffing, and I am sure that the hon. Gentleman welcomes that.
      Mr. Thornton: Is my right hon. Friend aware that this morning the millionth person visited the international garden festival on Merseyside? Has not the festival proved to be an overwhelming success and justification of this Government's faith in the ability of the people of
      144
      Liverpool and all connected with the festival to make it a success? May I invite my right hon. Friend to congratulate them?
      The Prime Minister: The festival is a great success and morale booster for the people of Liverpool. It is also a great success for the chairman and other members of the Merseyside Development Corporation. I hope it means that Liverpool will enter a new era and that it can be fully associated with success.
      Mr. Woodall: Is the Prime Minister aware that this year unemployment in my constituency has risen, due to the mining dispute? Is she further aware that married and single ladies in my constituency who cannot work in colliery canteens because of the dispute have signed the register as being unable to work? A test case was brought and they received unemployment benefit, but a diktat came from somewhere and that unemployment benefit has now been stopped. That is yet another blatant example of the attempt to starve miners back to work. Will the right hon. Lady have a word with the Secretary of State for Employment, who shakes his head, and ask him and his colleagues to review that case urgently and to act like honourable Gentlemen?
      The Prime Minister: I note that the hon. Gentleman has clearly made the point that strikes cause unemployment. They do so in the coal, steel and rail industries, and in many other industries that depend on coal supplies. However, the hon. Gentleman is well aware that decisions about unemployment benefit are made not by the Government but by independent authorities. If the first decision is the subject of argument, there is a right of appeal to independent authorities. The Government cannot interfere with their decision.
      Mr. McQuarrie: Will my right hon. Friend offer her support to the steel unions which have refused to accept the blackmailing diktats of Arthur Scargill, and record her congratulations of those lorry drivers who, for 24 hours, have carried coal and iron ore to Ravenscraig steelworks to keep Scottish steel workers working?
      The Prime Minister: There are 60,000 people working in the mining industry and earning good money. Many people are taking the products of that work to steelworks and power stations. I earnestly congratulate those who regard it as their responsibility to continue to work and look after their families.
      Dr. Owen: As the only negotiations between the Soviet Union and the United States are the comprehensive test ban negotiations, in which Britain plays a full part, will the Prime Minister ensure that when the Foreign Secretary talks to President Chernenko he suggests that the comprehensive test ban negotiations should be resumed, especially since considerable progress was made on the issue of verification in 1978? Will the Prime Minister confirm that she is not withholding her permission or wish to continue with the negotiations because of the Trident missile system?
      The Prime Minister: The difficulty with the comprehensive test ban treaty is its verification, as the right hon. Gentleman surmised. My right hon. and learned Friend the Foreign Secretary has seen President Chernenko, and will, with your permission, Mr. Speaker, make make a full report to the House tomorrow.
      Later—
      Mr. Rathbone: On a point of order, Mr. Speaker. You have quite rightly continued the habit of previous Speakers in granting extra time to the Opposition Front Bench for asking supplementary questions during Prime Minister's
      146
      Question Time. However, I have never before noticed the Opposition Leader having to read out most of his third supplementary——
      Mr. Speaker: Order. The hon. Gentleman is very experienced, and I am sure that he knows that that is not a matter for me.

Halvergate Marshes
3.30 pm
Dr. John Cunningham(by private notice) asked the Secretary of State for the Environment if he will make a statement about the future of 92 acres of Halvergate marshes which is a grade 1 listed landscape in the ownership of Mr. David Wright.
The Secretary of State for the Environment (Mr. Patrick Jenkin): Four of the five farmers who gave notice some months ago of their intention to plough parts of Halvergate marshes have now agreed not to proceed this year. The fifth, Mr. David Wright, declined to enter into a holding agreement, and the strategy committee of the Broads authority decided last week not to offer him a full management agreement, nor has it sought a direction under article 4 of the general development order. While I greatly regret that Mr. Wright has decided to start drainage operations on his land, I do not consider that the Broads authority's decision in this case seriously jeopardises the protection of the Halvergate landscape as a whole.
Dr. Cunningham: Is the Secretary of State aware of the widespread anxiety about our national heritage, and the fact that Halvergate marshes are a unique example of that heritage? Why did the Under-Secretary of State tell the House on 4 April that Halvergate marshes were safe for at least one year, when that clearly was not the case? He gave that reply to a question from my hon. Friend the Member for Linlithgow (Mr. Dalyell). Is it not also the case that several more farmers have notified the Broads authority of their intention to drain and plough grade 1 listed land? Does the Secretary of State agree that they decided to do that because of the common agricultural policy, and that they intend to grow cereals, much of which will go, at public expense, into intervention?
Surely those examples show that the Wildlife and Countryside Act 1981 is incapable of properly protecting our natural heritage. Will the Secretary of State agree to our frequently repeated proposal to sit down and talk with us about a Bill to plug the loopholes in the Act? Finally, will he assure the House that he will act by means of an article 4 order, or in some other way, to protect the marshes until a long-term solution can be agreed?
Mr. Jenkin: My hon. Friend the Under-Secretary of State used the words to which the hon. Gentleman referred but has since corrected himself in a further parliamentary answer. When he gave his first answer, it was hoped that it would be possible to negotiate management agreements with all five farmers. I regret that it has not proved possible in this case.
The hon. Gentleman raised the point about other farmers. He may be aware that the Broads authority received notification late last week from the Howell brothers of their intention to convert their holding of about 76 acres. I understand, however, that there is no immediate threat to plough. The hon. Gentleman referred also to the common agricultural policy and the incentives that it offers to convert grazing land to cereals. I am well aware of that. He may have taken note of the speech that I made when I launched the Nature Conservancy Council's new strategy document.
With regard to the Wildlife and Countryside Act 1981, my hon. Friend the Under-Secretary has today sought to
148
get in touch with the hon. Gentleman to discuss a possible Bill to close the three-month loophole. This Government have shown a real interest for the protection of landscapes and nature conservancy special sites. It was this Government who carried through the House the Wildlife and Countryside Act after our predecessors had done nothing for the previous five years.
Mr. Richard Ryder (Mid-Norfolk): Is my right hon. Friend aware that a vast number of my constituents around Halvergate supported his welcome readiness to intervene in the case of Mr. Archer's land at Limpenhoe and wonder why he cannot do so in the case of Mr. Wright's land?
Mr. Jenkin: I am grateful to my hon. Friend for the recognition that I acted in the case of Limpenhoe, in response to a request from the Broads authority for an article 4 direction which would withdraw the land from the general consents of the general development order. In the case of Mr. David Wright's land, for reasons which no doubt seemed good to it, the Broads authority has not sought such a direction. In those circumstances, because an article 4 direction involves an encroachment upon the rights of ownership of the land, I have not thought it right to act on my own.
Mr. Tam Dalyell: Has the Secretary of State been told that, during the passage of the Wildlife and Countryside Bill in Committee, briefed by Mr. Robin Grove White and Mr. Tony Long of the Council for the Protection of Rural England when I spoke for one and a quarter hours on Halvergate —[HON. MEMBERS: "Not long enough."] That was clearly not long enough, in view of what has happened. The Department cannot say that it has not been nagged endlessly about Halvergate. I asked:
"Is Halvergate now safe?"
The Under-Secretary replied:
"I can assure the hon. Member that Halvergate is safe for a year."—[Official Report, 4 April 1984; Vol. 57, c. 954.]
Will the Secretary of State spell out what has happened between the time that the Under-Secretary gave that undertaking to the House—I am sure in good faith—and today, when there is a completely different explanation?
Mr. Jenkin: At that time my hon. Friend answered the hon. Gentleman — I have already said that my hon. Friend has since corrected it in Hansard — we were optimistic that it would be possible—[Interruption.]—to negotiate management agreements for all the land. As I said in reply to the hon. Member for Copeland (Dr. Cunningham), regrettably it has not proved possible in this case. The Broads authority decided not to offer a management agreement because of the cost involved, and it has not asked for an article 4 direction.
Mr. Jerry Wiggin: Is my right hon. Friend aware that this is but one example of the problems that arise all over the country, not least in Somerset? Bearing in mind that a farmer's livelihood depends on how he uses his land, will he see that management agreements, which are the solution to this extraordinarily difficult problem, get sufficient funding from his Department so that both sides can be properly satisfied?
Mr. Jenkin: I am grateful for my hon. Friend's recognition that it is indeed the Government's policy to proceed in this complex and difficult matter by voluntary agreements wherever this is possible. The article 4 direction which I gave in the case of Mr. Archer's land at

149
Limpenhoe represented a departure from that, and one which I am perfectly prepared to justify in the particular circumstances of that case. I entirely take the point that the Wildlife and Countryside Act needs to be backed by sufficient funds so that the voluntary system can work.
Mr. Stephen Ross: Is it not a fact that existing mechanisms are quite inadequate to deal with the pressure that is put on authorities like the Broads authority and the Nature Conservancy Council, in that landowners are demanding enormous sums in compensation, as a result of which some 25,000 acres of marshland are now estimated to be at risk? What discussions are taking place to rectify the situation? I realise that the Secretary of State has just announced that he intends to introduce legislation, but that will take too long. The matter is immediate. What discussions have been held?
Mr. Jenkin: The legislation will be on the rather narrow point of the three-month loophole in the Wildlife and Countryside Act. I can tell the hon. Gentleman that I have recently received a report of an interdepartmental working party specifically on the question of trying to find a new and more satisfactory regime for the Broads, and have sought various ways of helping the Broads authority to finance landscape conservation. One interesting possibility canvassed in that report, which we are studying urgently, is an experimental scheme by the Countryside Commission to offer incentive payments to farmers who retain livestock grazing. Therefore, the matter has been under consultation for some time, and I hope to reach conclusions on this very soon.
Mr. Nicholas Lyell (Mid-Bedfordshire): Is my right hon. Friend aware that there is widespread support on the Conservative Benches for sensible strengthening of the Wildlife and Countryside Act, but that underlying the problem is the fact that EEC influences are pulling in two directions, and, more specifically and immediately, that sensible intermediate proposals have come forward from the Countryside Commission and, I think, from the EEC, for a system of management for this important area of the Broads?
Mr. Jenkin: I do not disagree with what my hon. and learned Friend has said. Indeed, it is obvious to all who have studied this problem that the desire to conserve landscapes and sites of special scientific interest pulls in the opposite direction from some of the pressures under the common agricultural policy. However, I think that it is right to point out that my right hon. Friend the Minister of Agriculture, Fisheries and Food is the first Minister who has succeeded in negotiating the first major change in the common agriculture policy, and I hope that that is a step in the right direction.
Mr. Ken Weetch: Is the Secretary of State aware that the problem under consideration in respect of this marshland is but one example of something that is happening throughout East Anglia, in that hedgerows, woodlands and other areas for wildlife are constantly disappearing? Is the Secretary of State aware that a stipulation that one pays farmers and landlords not to use land is an open invitation to blackmail the taxpayer? Will he give the House an undertaking that the entire countryside legislation will be critically reconsidered?
Mr. Jenkin: The implication of the hon. Gentleman's question is that he would move immediately to some form
150
of compulsion on this matter without question, and that is not the Government's policy. We wish, if we can—the great majority of farmers are prepared to go along with this — to have a programme of voluntary agreements in order to secure the conservation of land.
Mr. John Evans: It does not work.
Mr. Jenkin: The hon. Gentleman shouts that it does not work. In the great majority of cases, it is working and has worked, and the vast majority of farmers who have been approached in this regard have negotiated perfectly sensible satisfactory agreements. The problem arises when, for reasons which may seem good to them, they wish to deal with their land In ways that do not involve an agreement. That is something of which we must clearly take account, and which I am discussing with my right hon. Friend the Minister of Agriculture, Fisheries and Food.
Mr. Henry Bellingham: Is my right hon. Friend aware that the concern expressed by my hon. Friend the Member for Mid-Norfolk (Mr. Ryder) is shared by people throughout Norfolk and in particular by my constituents in north-west Norfolk, where there are considerable expanses of similar marshland?
Mr. Jenkin: I am well aware of the concern in East Anglia, and of the general concern about the impact of some farming practices upon the natural landscape. My right hon. Friend the Minister of Agriculture has withdrawn grants for grubbing up hedges, and I understand that there are now grants for replanting hedges. I hope that those measures will help to restore the traditional countryside. The Government are giving careful and urgent attention to the matter.
Mr. Jack Straw: If the Secretary of State is unwilling to make an article 4 direction under the general development order, does he not already have power under section 29 of the Wildlife and Countryside Act to make an order which extends to the whole area, including Halvergate marshes, and does not the Minister of Agriculture have power to refuse to make discretionary grants for drainage, including the pumps? Why does not the Secretary of State use his powers under section 29 to give a year's breathing space, as we have demanded?
Mr. Jenkin: The short answer is that the Broads authority, which is the planning authority for the area, has not asked me to do so. [Interruption.] It is all very well, but how often should Governments take matters out of the hands of those who are appointed to deal with them? [Laughter.] That is the truth of the matter.
In a suitable case, I made an order under article 4, and it was widely welcomed by those who have followed this affair.
Several Hon. Members rose——
Mr. Speaker: Order. I have to have regard to the subsequent business, and a private notice question is merely an extension of Question Time.
Mr. Peter Shore: On a point of order, Mr. Speaker. A very important distinction has arisen out of the recent exchanges with the Secretary of State for the Environment. My hon. Friend the Member for Linlithgow (Mr. Dalyell) referred to a specific assurance given in the House of Commons. An assurance is something which, if it does not actually have legal

151
status, certainly has tremendous authority. All Members of the House and members of the public are greatly influenced in their conduct if any Minister gives a specific assurance. Certain trains of action may be no longer pursued, while others may take a particular direction.
A ministerial assurance is the nearest thing that there is in the House of Commons to a specific commitment. Are we to be told that a ministerial assurance given in such circumstances is no more than an expression of optimism? If that is so, the currency of ministerial statements is totally devalued and the very nature of the Government's relationship to the House and to the country is altered. I should be grateful, Sir, if you could throw some light on the matter.
Mr. Speaker: The right hon. Gentleman knows that I cannot do that. However, I believe that the Secretary of State is about to respond.
Mr. Jenkin: I cannot let the right hon. Gentleman get away with that. As soon as my hon. Friend realised that the assurance that he had given would not be delivered, he answered a question from the hon. Member for Cambridgeshire, North-East (Mr. Freud), stating the position perfectly accurately. My hon. Friend's reply has been on the record for many weeks. It is less than fair to my hon. Friend to chide him with having misled the House when he gave his answer in perfectly good faith.
Dr. Cunningham rose——
Mr. Speaker: Order. No point of order can possibly arise for me on that matter.
Dr. Cunningham rose——
Mr. Speaker: Well, the hon. Gentleman may try it out.
Dr. Cunningham: Further to the point of order raised by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). The fact is, Mr. Speaker, that the House was given an assurance on this matter. We have raised the matter several times since. The Secretary of State has the power to ensure that an assurance is carried
152
through. He is now choosing not to exercise that power. The House deserves more of an explanation about that decision than it has had. The Secretary of State is effectively telling the House that he is withdrawing the assurance given by his hon. Friend.
Mr. Speaker: I cannot rule on such matters. Ministers and every other hon. Member must take responsibility for what they say.
Later——
Several hon. Members rose——
Mr. Dalyell: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I do not propose to go back over what has already been said about the private notice question. Mr. Tam Dalyell.
Mr. Dalyell: This is a new point of order, involving parliamentary procedures. If an assurance is given by a Minister in good faith——
Mr. Speaker: Order. The hon. Member is doing precisely what I asked him not to do. There is no way —the hon. Member knows this—in which I can answer for what the Secretary of State has said. That is not a matter for me; it is a matter for him.
Mr. Dalyell: On a point of order, Mr. Speaker. If an assurance is given to an hon. Member, is it not a matter at least of parliamentary courtesy that the withdrawal of the assurance should be given to that hon. Member and other hon. Members? The truth is that my hon. Friends and I, and, more importantly, a number of interest groups outside such as the Council for the Protection of Rural England, did not know that the assurance had been withdrawn. Is it not a matter for you, Mr. Speaker, that when assurances solemnly given in the House are for some reason withdrawn, those to whom the assurances were given should at least be told?
Mr. Speaker: There is nothing particularly novel in this. It is not a matter for the Chair. All right hon. and hon. Members must take responsibility for what they say.

Questions to the Prime Minister
3.50 pm
Mr. David Winnick: On a point of order, Mr. Speaker.
Mr. Speaker: Order. We have a heavy day before us. Does the point of order have anything to do with the subject of Halvergate marshes?
Mr. Winnick: My point of order arises on a different subject, Mr. Speaker. You rightly told hon. Members that the position of the Leader of the Opposition during Prime Minister's Question Time is certainly not a matter for you. We know that over many years the Leader of the Opposition has rightly had the opportunity of questioning the Prime Minister. That should occur. Is it not important that hon. Members have the facilities in the Chamber to ask the Chief Executive, the head of the Government, questions relating to Government responsibilities? Today's Order Paper shows that a large number of hon. Members have tabled questions to the Prime Minister. I do not want to declare an interest, but I am third on the list.
Is it not the case, Mr. Speaker, that 15 minutes on Tuesday and 15 minutes on Thursday are totally inadequate, bearing in mind the large number of right hon. and hon. Members who wanted the right—we should have this right—to question the Prime Minister orally today? I know that you are in no position to extend Question Time, but would it not be appropriate for this matter to be dealt with by the Procedure Committee to ascertain how much time should be devoted to occasions such as Prime Minister's Question Time?
Mr. Speaker: I am sorry that we did not get beyond question No. 2 today. I have to balance both sides of the
154
House. I shall bear the hon. Member's point in mind for some future occasion. The proposal made by the hon. Member is a matter not for me but for the usual channels.

Presentation of Bills
3.53 pm
Mr. Robert Maclennan: On a point of order, Mr. Speaker. The rules for presentation of a Bill in the House require the publication of its short title. There are usually procedures by which hon. Members may know what is included in the Bill. This afternoon, the Secretary of State announced not only his intention to introduce a Bill but the fact that he had obtained the prior agreement of the Opposition, as represented by the hon. Member for Copeland (Dr. Cunningham). This type of cosy consultation between the two Front Benches is an abuse of the procedures of the House. If the Minister intends to shorten the normal procedures, he might at least have the courtesy to consult other Members who have at least as great an interest in the matter.
Mr. Speaker: That is not a matter for me either.

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: With permission, I shall put together the questions on the two motions relating to statutory instruments.
Ordered,
That the draft International Tropical Timber Organisation (Legal Capacities) Order 1984 be referred to a Standing Committee on Statutory Instruments, &c.
That the Export of Goods (Control) (Amendment No. 6) Order 1984 (S.I., 1984, No. 553), be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Archie Hamilton.]

Co-ownership of Flats
3.56 pm
Sir Brandon Rhys Williams: I beg to move,
That leave be given to bring in a Bill to give powers to residents of purpose-built blocks of flats in private ownership to form a company constituted for the purpose of acquiring the premises of which their flats are part; to specify the procedures to be adopted; to make consequential provisions as to the management and upkeep of premises so purchased; and for connected purposes.
The Bill addresses itself to a problem which is important for Kensington, which I have the honour to represent. It concerns a serious matter, however, for the whole of London, for many cities outside London and for the south coast, where there are many mansion blocks and converted buildings which are occupied as flats in private ownership.
The difficulty, which is well known, is that the condition of the blocks and the relationship between the tenants and the owners is often extremely unsatisfactory. Current repairs are often delayed or neglected, and the structures of the blocks are often in need of major capital work for which no one is prepared to pay. As time passes, the neglect of these important repairs often means that the cost, when the problem reaches the stage where it has to be tackled, is so severe that in the end there is nothing for it but to demolish the structure. This is a waste of capital which Parliament should seek to avoid.
I am sure that my hon. Friend the Minister for Housing and Construction is well aware of the problem. He has done the right thing by setting up a committee to make a specific study of it under the chairmanship of Mr. Edward Nugee, QC. I have read the questionnaires which have been devised and sent out by the committee. They are extremely well drafted by experts on the problem and I have no doubt that they will introduce a great deal of invaluable and up-to-date information into our debates. Both sides of the House will look forward to receiving the committee's recommendations.
Whatever recommendations are made, the analysis will still stand that a large amount of money must be found to prevent the blocks and structures from deteriorating. Landlords, for very many reasons, are not prepared to find the money. Some of them have been disheartened by years of rent control and feel that it would be inappropriate to lay out a great deal of capital on which they may never get a satisfactory return. Others have acquired their blocks with a view to making a quick capital gain. They use various methods to obtain vacant possession as quickly as possible so that they can make their profit and move out.
I think the House will agree that it is no good looking to the owners of the property to put up the capital that is required. Some years ago it was possible for the owners to obtain extremely generous levels of grant; but I am sure that there was a considerable element of abuse and unnecessary public expenditure through the grant system for modernising premises. The Department rightly made the payment of grant much more difficult to obtain.
I am not averse to grants being made available with discretion for the maintenance or improvement of blocks of flats in private ownership, provided that there is a corresponding increase in the rates, which has the effect of turning grants into long-term loans; but I am sure that
156
we cannot expect hard-pressed ratepayers to find enormous sums to improve or at any rate repair and maintain these premises.
The obligation therefore comes down to the tenants, and the tenants have shown, by resistance to increases in service charges, and by the resentment that has arisen in many instances where large capital sums are demanded from them, that they will not find the money and that in various ways they will resist even the maintenance of the premises in which they live unless they have a hope of ownership.
Home ownership is axiomatic for Conservatives. I think it is widely accepted in all parts of the House as a principle of great value. We have seen legislation introduced on the enfranchisement of leasehold houses. In recent years the Government have introduced powers under which people living in council houses and flats may acquire their freeholds, but premises in private ownership and occupied as flats are still not covered by comparable powers, and that puts the tenants and residents of flats in private ownership into the position of second-class citizens. They ought to have the opportunity of the right of home ownership which is available to other classes of tenant.
I recognise that there are particular difficulties, and that is the reason why the House stopped short of extending the principle of leasehold enfranchisement to flats 10 or 15 years ago when the enfranchisement of houses was carried through. We cannot leave the position unattended to however, and I hope that the House will feel that my seeking to introduce the Bill again this afternoon is timely and worth while.
This is not the first time that I have sought to introduce a Bill on co-ownership of flats. I know that the difficulties that I ran into with earlier Bills arose on two particular points. One was that I provided for an element of compulsory purchase, so that a tenants' association—constituted as I thought appropriate in my previous Bills —would have the right to acquire the block, whether or not the landlord was willing to sell. that, I recognise, gave rise to opposition fom a number of hon. Members. It also gave rise to difficulties over the definition of the principle of valuation, because if one is to introduce power for compulsory purchase, one has to specify the way in which the valuation will be arrived at.
I have never wanted the tenants to be put in a position where they could acquire their premises for less than the market price, but the situation which obtains at the moment is that the tenants, even when they are given the opportunity to buy by a willing seller, are not able to mobilise themselves quickly enough and to raise the funds that are necessary to meet the price which other buyers of the block may be willing to lay down, sometimes at quite short notice. Therefore, to try to solve that problem I am seeking to reintroduce some ideas from earlier Bills.
It should be appropriate for the tenants to set themselves up as a company properly constituted for the purposes of acquiring and managing the block. With a view to achieving that I should like—if I am given leave to introduce my Bill—to repeat the schedule which set out the memorandum and articles specially designed to be appropriate for a company which had set itself up with a view to the management of a mansion block or conversion.
We should find every method that we can to make such a company eligible for grants or assistance or tax concessions in so far as it is possible to do so. I should like

157
to give time to that aspect and, If I am able to introduce the Bill, I should like to make specific suggestions as to the ways in which such things might be done.
It is important, too, that the condominium company or the co-ownership company should be a recognisable legal entity with which building societies or other people who may be willing to offer funds can deal on a recognised basis, and will not be afraid that if there were defaults they would have no one against whom they could proceed.
I want the apparatus of a company to be used rather than a partnership or some other form of looser association, because I think the idea of running a company is very generally understood. People know that it must have annual meetings, that there must be proper accounts, that directors must be named and that reports must be properly filed. It is also appropriate because in many cases mansion blocks are worth very substantial sums of money.
The memorandum and articles of a company should set out specific rules to establish the rights and also the obligations of the tenants of a company which in fact consists of the tenants or residents themselves. In many of the blocks in London—and, I think, in other parts of the country — there are mixed regimes, with some people still living under protected tenancies and others who have bought leases, sometimes of different lengths and under different terms, even within the same block. It is necessary to establish exactly what are the rights and obligations of each of the different classes of residents within the block.
It is possible to find fair solutions and it is necessary to lay them down so that they are clearly understood from the start. Having looked into the question extensively with the aid of people who are expert in this area, I am certain that such companies can be viable without subsidy in the long run, and that they can find the money necessary to purchase on fair terms the blocks in which the residents live. But they can do it only if they are properly run over a substantial length of time and if the residents do not try to take out more than is their fair share of the gain which
158
undoubtedly arises over the course of time through home ownership. Those are the provisions that I want to deal with in the Bill.
Very briefly, within the confines of a ten-minute Bill, I should like to say that the financial structure which I envisage should allow equity shares in the company to be held by the residents themselves, and that there should then be provision for debentures or for participating preference shares for building societies, the Housing Corporation, perhaps the local authority, or possibly for a special revolving fund which the Department may think fit to set up for the purpose of such companies.
Mr. Speaker: Order. The hon. Gentleman has now spoken for 10 minutes. Perhaps he will bring his remarks to a close.
Sir Brandon Rhys Williams: I ask the leave of the House to finish my speech, which I can do very shortly.
I believe that Parliament, sooner rather than later, will have to address itself to the question of the tenure of flats in private ownership. There is a need for legislation. I hope that my Bill will be seen as a useful contribution to finding a practical and fair solution to the many problems. I hope that the House will give me leave to introduce it.
Question put and agreed to.
Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. Peter Bottomley, Mr. Michael Shersby, Mr. Martin Stevens, Sir David Price and Mr. John Wheeler.

Co-ownership of Flats
  CO-OWNERSHIP OF FLATS
  Sir Brandon Rhys Williams accordingly presented a Bill to give powers to residents of purpose-built blocks of flats in private ownership to form a company constituted for the purpose of acquiring the premises of which their flats are part; to specify the procedures to be adopted; to make consequential provisions as to the management and upkeep of premises so purchased; and for connected purposes; And the same was read the First time; and ordered to be read a Second time upon Friday 6 July and to be printed. [Bill 210.]

European Community (Milk Quotas)
[Relevant documents: Draft Dairy Produce Quotas Regulations 1984 and EEC document No. 6059/84.]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Donald Thompson.]
Mr. Speaker: Before I call the Minister, may I say to the House that there is great interest in the debate? No fewer than 35 right hon. and hon. Members have indicated their wish to take part in it. I make a special plea for brevity today. There is no profit in coming to the Chair. I have done my utmost to balance the various parts of the country and also to take into account those who have spoken in previous debates.
4.6 pm
The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): In the debate today, hon. Members and the House will, I am sure, be mainly concerned with the milk supplementary levy, and I intend to direct most of my remarks to that issue. We had wide-ranging debates on CAP prices and other related issues in the House on 1 December and 22 March.
I reported to the House on several occasions earlier in the year on the progress of the negotiations, including the final settlement. Detailed notes on the price fixing have been given in an explanatory memorandum in document 6059/84 and in a note on the settlement prepared by my Department which is available in the Library of the House.
Nevertheless, today's motion enables us to have a wide debate, and if hon. Members wish to raise points on the price fixing not concerned with the supplementary levy I am sure my hon. Friend will do his best to answer them when he winds up the debate. For the moment I shall simply record that among the important decisions taken at this year's price fixing, apart from the milk supplementary levy, were the non-revaluation of the green pound, thereby meeting the NFU's primary negotiating objective, a reduction in cereals prices which will aid livestock producers, and retention of the beef premium scheme in the face of widespread and total opposition within the Council.
At the same time, common prices were reduced by an average of about 0.5 per cent. and, taking account of "green" currency changes, real prices will be reduced in all member states. Guarantee thresholds were introduced for several extra commodities. The effect of the price fixing on the retail price index was negligible; if anything, it is expected to be beneficial. All this marks a major step towards reforming the CAP and containing its costs.
Other important decisions were taken recently which will benefit agriculture, including the extension of less favoured areas in the United Kingdom to include 1·2 million hectares of marginal land, the doubling of the suckler cow subsidy and a 5p per kilo increase in the wool guarantee.
We should also note the major achievement gained by the Prime Minister at Fontainebleau last week. It was a major achievement for Britain and for the Community. We now have a fair and durable solution to a problem that has preoccupied the Community for a long time. As a result, agriculture can begin to look ahead with greater certainty. Of course, there remain difficulties still to be sorted out in Brussels, but the problem of rapidly increasing
160
expenditure on agriculture must continue to be tackled, and negotiations in Brussels can now proceed in a more orderly way.
One major benefit for us is that other member states will in future have a greater interest themselves in making more rational expenditure decisions, since they will have to make a larger contribution. This can only be good for the long-term interests of the Community.
The European Community has, for a number of years, recognised the problem that the milk sector posed. Genetic improvements in dairy cows, leading to higher yields, as well as improvements in the management of dairy herds, have resulted in the increase in production. At the same time, consumption of milk and milk products has not grown at anything like the same rate. Supplies of milk have continued to rise faster than consumption. The surplus of milk has grown, and so has the cost of dealing with it.
Efforts have been made to try to keep the growth of milk production under control and to find outlets for more milk and milk products, through, for example, schemes to encourage farmers to abandon milk production and to convert to beef production and through a wide range of subsidies on milk and milk products aimed at increasing consumption generally and at stimulating the use of skimmed milk and skimmed milk powder in feeding livestock. Markets have also been sought outside the Community both through general export refunds on milk products and through offering milk products as food aid.
The combined effect of the various measures, including price policy, as well as the massive expenditure directed towards stimulating consumption and facilitating exports, have not brought the European Community's milk market into a better state of balance. On the contrary, the gap between supply and demand continued to grow and so did the cost of disposing of the surplus.
Mr. Ron Leighton: Has Britain any surplus of dairy products?
Mr. Jopling: The hon. Member will see from page 185 of "Dairy Facts and Figures, 1983", published by the Milk Marketing Board, that in 1982 the United Kingdom was self-sufficient to the extent of 131 per cent. in solids not fat, and 91 per cent. in butter fat. If we add to that the extra production in 1983 of about 3 per cent., and take into the account the fact that successive Governments, including the last Labour Government, have taken the political view that part of our butter market should be reserved for New Zealand, we end up with the rough estimate—I accept that it is an estimate—that in 1983 we were about 103 per cent. self-sufficient, including New Zealand, for butter fat and about 131 per cent. self-sufficient in solids not fat.
Last year we reached the point where expenditure on the milk regime was about £3 billion, representing one third of expenditure of the CAP. The milk surplus in the Community represented more than one fifth of milk production, and was continuing to grow. The Community budget was simply not in a position to absorb the cost involved in maintaining this milk regime.
At the price fixing in 1982, a threshold was set at the level of milk production in 1981, plus 0·5 per cent. At the price fixing in 1983, this threshold mechanism was implemented by scaling back the general level of price increase to contain the cost of the milk regime within the threshold. In July 1983, after the Stuttgart summit, the

161
Commission made proposals for changes to the common agricultural policy to respond to the need for the most efficient use of the Community's financial resources.
The Commission concluded that there was a need for radical action to correct the milk situation. World market prospects offered no possibility of further significant increases in the Community's exports, even with high levels of subsidisation. The grave market imbalance which had existed when the guarantee threshold for milk was first introduced in 1982 had deteriorated even further.
The Commission recorded that the price decisions over the past 10 years had not been sufficient to redress the market balance. It concluded that the guarantee threshold, if applied to offset fully the additional expenditure likely to arise from excess production in 1983, would require the milk price for 1984–85 to be abated by as much as 12 per cent.
The Commission thus came to the view that the only practical alternative to action on a drastic scale through the common price mechanism was the introduction of quotas. It announced last July that there would be a reference quantity established from each dairy based on 1981. All deliveries in excess of the quantity would be charged a levy which would, in turn, be passed on to producers.
We must recognise that the Commission made its proposals, having examined other possibilities, concluding that only a supplementary levy system would operate sufficiently quickly and effectively to stem the rising surplus and contain the cost of the milk regime, without at the same time creating unacceptable consequences for producers or member states.
The possibility of a much increased and graduated co-responsibility levy was an option which several member states believed to be highly attractive. Let there be no doubt that that would have been a disastrous response to the milk surplus for the United Kingdom. It would have entailed a high rate of levy on larger enterprises and a rather low rate for small enterprises. But the various thresholds would certainly have had to be set at levels which would have left us with a disproportionately high part of the burden of the levy.
We joined the Commission in strongly resisting that option during the autumn. We also forced the Commission and other member states to examine fully the possibility of cutting back prices as the primary mechanism for tackling the surplus. That route would have avoided the complex and difficult arrangements needed to operate quotas and would have given consumers an immediate advantage.
However, as I warned the House in the debate on 1 December, it became clear that price cuts on the scale needed to curtail production quickly and to make the necessary savings could not be agreed by the great majority of member states. We therefore pressed vigorously to ensure that the supplementary levy system was introduced in a way which, as far as possible, would meet our requirements.
The Commission had no intention, for example, of covering the substantial part of milk production which is used to make direct sales. In some member states, such sales are quite substantial. If such sales had not been covered by the super levy, producers would have taken advantage of the gap and switched sales away from dairies. There would have been a flood of sales direct on to the market, thus undermining the levy system itself and jeopardising the existing businesses, both of the dairy
162
sector and of those involved already in direct sales. As a result of our continued pressure to bring direct sales within the quota system, the proposals were amended in that way.
We also secured provisions so that the quotas would be set taking account of the special circumstances of individual producers who had suffered some setback in their base year or who were engaged in developing their milk production.
I should remind the House that in its proposals for the milk sector the Commission also included a highly discriminatory proposal to place a special tax on dairy farms where production was more intensive. This measure was highly attractive to several member states, including France, but we successfully resisted it, along with other suggestions to bias the supplementary levy in favour of small producers.
I cannot accept claims that the cutback in milk production faced by the United Kingdom is somehow much worse than that faced by other member states. The major milk producing countries in the Community are France, Germany, the Netherlands and ourselves. We all have quotas based on our production in 1981.
Since 1981, German and Dutch production has increased relatively more than ours and that of France. As a result, Germany and the Netherlands face bigger cuts by comparison with 1983 than do either we or France. However, French milk yields are significantly lower per cow than our own. Therefore the introduction of a quota system will prevent French producers from improving their yields unless, at the same time, there are considerable cuts in cow numbers.
I regret that the milk industry has to face the introduction of these elaborate controls to contain and reduce the milk surplus. It gives me no pleasure that I should be the Minister of Agriculture who, with his European colleagues, has had to face this important challenge and to implement the system which is being imposed on producers throughout the Community.
Mr. Gavin Strang: The Minister rightly referred to the position in France. He will be aware of the great anxiety in the industry that the French Government are not introducing and applying the quotas in the way that the British Government are attempting to do. May we have an assurance that there is no question of quotas being imposed upon our producers if they are not imposed with equal vigour on the French?
Mr. Jopling: I recognise that concern, which is reflected in all parts of the House and outside. I shall deal with the issue later in my speech.
I entirely reject suggestions that the arrangements that we have negotiated represent a poor deal for our industry. The measures will impinge on milk producers throughout Europe. There is no doubt that our producers have been contributing to the Community's surplus stocks and drawing on the massive funds needed to dispose of them.
I shall detail the action taken since the 31 March. settlement. I am acutely aware of the problems facing producers in changing over to a quota system. Difficult decisions have to be made, and it is important that they should be made in a logical way on the basis of sound information. We therefore sent out initial guidance to farmers as quickly as we possibly could; indeed, we were the first member state to do so. I wrote to all registered producers on 10 April explaining the arrangements for the

163
introduction of the milk supplementary levy. At the same time, a Ministry advisory service note "Coping with the Quota" was distributed to help producers decide how to adjust their enterprises.
On 25 May I announced that I intended to make quotas available as quickly as practicable to assist those small milk producers who wished to stay in milk production, and to provide funds to compensate those farmers who wished to give up milk production. I shall enlarge on the aims and details of this scheme later.
On 12 June a letter was sent to all registered milk producers in England and Wales giving guidance on the types of special case which can be considered under the rules of the scheme. At the same time a notice was sent about the arrangements being made to issue initial provisional allocations of wholesale quotas to producers who started deliveries after 1 January and to producers with mixed wholesale and direct sales businesses.
On 19 June a notice was issued to milk producers who sell direct to the public, giving guidance on how the quota system would be applied to them. It was not possible to issue guidance to direct sellers earlier, because a number of important points had to be taken up with the Commission and these were not resolved until 14 June.
I appreciate that milk producers want and need to know where they stand at the earliest opportunity. This is why the Secretaries of State and I sent out provisional guidance on as many points as possible as rapidly as we could.
I have all along been extremely concerned to finalise the details of the quota arrangements, but, following the agreement in Brussels, it was most important that their implementation was fully considered with all interested parties before draft regulations were presented to Parliament.
The draft regulations were laid before this House on Wednesday 27 June. When they have been approved by both Houses we shall send out forms and implement the detailed arrangements.
Mr. David Penhaligon: The Minister accurately summed up the fear in some milk circles when he said that farmers want to know where they were. The Minister has outlined the calendar of events since April. When does he expect the final appeal for the special hard cases to take place? If we had a target date, the farmers would really know where they are.
Mr. Jopling: It is not possible to give a target date, because one imponderable involves when the House decides that it wishes to give its assent. Much will depend on what is said in today's debate. I want to listen to hon. Members' views, and we can then decide how soon we can ask the House to respond to our request.
The other big imponderable is that we have no idea what proportion of milk producers will apply to be regarded as special cases. That is why it is extremely difficult. I am glad to see the hon. Member for Aberdeen, North (Mr. Hughes) nodding. It is difficult to give a date.
I was about to refer to the draft dairy produce quota regulations. Any quota system is inevitably complex. That is one reason why I was in favour of tackling the surplus problem by the price mechanism. Opposition Members have always been suspicious of the price mechanism and have, when they have had the opportunity, tried to circumvent it. I understand why. When they have done so,
164
we have quickly seen the bureaucratic tangles into which one can get when one prevents market forces from operating. It is therefore ironic to hear that Opposition Members do not like the milk quota system.
I agreed reluctantly to introduce the quota system, accepting it as the only way of getting effective Community action to tackle the milk surplus. But I went into this with my eyes open, realising full well the problems and the complexities into which it would lead us, and so it has proved.
I shall be interested to hear any constructive suggestions, but I emphasise that a great deal of work and consultation has been done to produce rules which are fair and sensible within the framework of the Community's legal provisions.
The basic concept behind the draft dairy produce quota regulations is simple. A quota is calculated for each holding on which milk production was taking place on 2 April 1984. Normally, the quota will be the milk production in the calendar year 1983, less 9 per cent.
There are special rules for producers who were not in production throughout 1983, who have moved to a different holding or who have changed the area of land that they are using. There are also special rules for direct sellers —producers who do not sell their milk to a dairy. Because of the way in which the Community legislation is written, these producers will have a different base year —normally 1981.
Mr. David Crouch: I have just been talking to dairy farmers from Kent, who urged me to ask my right hon. Friend whether it is possible to interchange the wholesale quota with the retail quota. They say that they have a market for selling a certain amount of milk, but are denied the ability to do that even though people want to buy from them.
Mr. Jopling: I shall come to that shortly. One of the difficulties is that the Community's rules, despite our pleadings, do not permit quotas to be interchanged.
The draft regulations naturally also have to cover the position of somebody who is both a direct seller and a wholesale producer—who, for example, may sell some of his milk to the Milk Marketing Board and the rest on his own milk round. But the basic principle is the same in all cases. The primary quota is related to production in the appropriate base period, adjusted by a percentage to ensure that the total of all producers' quotas is contained within the national ceiling.
The Community legislation recognises that extra allocations of quota are appropriate in certain circumstances, and our draft regulations reflect this. They provide for two types of special case. First, there are the producers whose production in the base year was affected by exceptional events such as a natural disaster, illness of the producer or disease among the cattle. These producers are entitled to have their quota calculated from a different base year.
Many producers have said that in the base year their production was hit by bad weather and the Council regulation lists as a special case
"a serious natural disaster affecting the producer's farm to a significant extent".
The new tribunals, for which the regulations provide, will have to interpret that provision and give guidance to the

165
panels reviewing individual cases. When the tribunals are set up, we shall suggest some guidance for them to consider.
At this stage we are inclined to think that, as a rule of thumb, a serious natural disaster might be said to occur if a drop in production due solely to the weather were some 10 or 15 per cent. of the base year sales. I shall be interested to hear the views of the House.
It is clear that the six exceptional events listed in the Community regulations will not cover all hardship cases. Many hon. Members will have heard from individual constituents. I have had their letters and heard of the individual problems. We recognise the problems and are determined to do what we can to help, subject to the recognition that total milk production must be cut back and that we must abide by Community rules. We intend to tackle the problem as soon as it is clearer where the most serious hardship lies.
The second category of special cases is that of the producers who, before 1 March 1984, had made, or committed themselves to make, capital investments aimed at increasing their production. In that case, the amount of extra quota to be given is at the member state's discretion, and we have decided to set a limit on the amount allocated to this type of producer. The first 7·5 per cent. of expansion will be ignored, and only half the next 5 per cent. will be taken into account. Above 12·5 per cent., the full expansion will be counted.
However, that does not mean that producers who are expanding sharply will get extra quota equal to all their expansion beyond the first 12·5 per cent. We have made provision for an amount of extra quota to be allocated to special cases in the wholesale sector. This amount is around 2·5 per cent. of the national wholesale quota.
There is nothing magic about the figure of about 2·5 per cent. It is not the result of a precise estimate of the likely volume of claims for special case treatment; it is simply the remainder resulting from the 9 per cent. general deduction instead of the 6·5 per cent. cutback required. We could have decided by taking a figure higher than 9 per cent., but this would have been at the expense of the generality of producers.
Dame Judith Hart: Does the Minister include bank loans in commitments to capital investment?
Mr. Jopling: Such matters will be looked at by the panels and tribunals, and if a producer can demonstrate that he was committed they will be taken into account. I imagine that the panels and tribunals will take a great interest in correspondence that milk producers have had with their banks.
Mr. Charles Morrison: Given that, as my right hon. Friend has implied, there are so many uncertain and unknown factors, given that the quota is an annual quota, given that there is uncertainty about the ability of other member states of the Community to collect the levy, and given that the figures for production are unknown except that we all know that there has been a sharp cut in production in recent months, will my right hon. Friend consider postponing the actual collection of the levy until next spring? My right hon. Friend has already been helpful in terms of the cash flow of individual farmers by ensuring that the levy will not be collected until October, but no one will know what the individual quotas will add up to in
166
relation to the annual quota until next spring. It might be helpful if he could postpone the collection, while, so to speak, giving a warning to farmers in the meantime.
Mr. Jopling: I shall consider that, but my prime consideration is to ensure that other countries in the Community follow the rules and carry out the scheme as well as we intend to. It would not be a good thing at this stage to make it more easy for them to comply. However, let me bear that matter in mind.
Mr. Nicholas Budgen: My right hon. Friend talks about enforcement in other countries, but, although the Court of Auditors often speaks about the non-compliance of other countries, there is no enforcement mechanism. How can our farmers ensure that there will be any sort of common enforcement?
Mr. Jopling: I have already brought that matter up with the Commissioner, the Commission and the Council on many occasions. My hon. Friend can be assured that I intend to persist in pressing the Commission to make sure that the rules are properly enforced.
The first call on the reserve will be for producers who have suffered from exceptional events. After those producers have been given the extra quota awarded to them, the rest of the reserve will be apportioned among those who are involved in expansion programmes.
I have been conscious, in planning the arrangements for the operation of the quotas, of the importance of ensuring that justice is done, and seen to be done, to individual producers. That is why the draft regulations provide for the setting up of three tribunals—one each for England and Wales, Scotland and Northern Ireland. Except in Scotland, each tribunal will consist of up to seven members, with, below them, a network of local panels.
Appeals for special case treatment will initially be sent to the appropriate agriculture Department which will examine the claims to establish whether they are prima facie eligible. If so, they will be forwarded to the local panel, which will reach a decision. If the producer is unhappy with the panel's decision, he will be able to appeal to the tribunal. Where an application is rejected by the agriculture Department in the initial sift, the producer will be able to appeal to the local panel against the rejection. Thus, every applicant will have the right to one appeal.
Dame Judith Hart: The Minister has explained the position for England and Wales. I do not see a Minister from the Scottish Office in the Chamber. What will be the position in Scotland?
Mr. Jopling: The right hon. Lady apparently does not come here often enough to recognise the Under-Secretary of State for Scotland. If she cares to read the regulations, she will find that there is provision for a tribunal in Scotland, which, I think I am right in saying, will have 20 members, who will sit in panels of three. I hope that that answers the right hon. Lady's question.
The arrangements for direct sellers differ in a number of respects from those for wholesale producers. The Community legislation does not make provision for a specific amount of quota to be set aside as a reserve for special cases in the direct sales sector. The result of that is that, whereas for wholesale producers the calculation of quota is a two-stage operation, the total requirement of all direct sellers for special case allocations will have to be

167
known before the national direct sales quota can be apportioned between direct sellers. That unfortunately means that it will take rather longer to firm up direct sellers' quotas than those for wholesale producers.
The arrangements for direct sellers generally are less satisfactory, and in particular less flexible, than I should have wished. That is the point that I made to my hon. Friend the Member for Canterbury (Mr. Crouch) earlier. I shall be continuing to press in Brussels for improvements to be made in this area. We have made a good deal of progress already, but there is more to be done.
Mr. Mark Hughes: We all accept that the problem of the direct seller is particularly difficult, but how long a delay is there likely to be?
Mr. Jopling: I have to give the hon. Gentleman much the same answer as I gave to the hon. Member for Truro (Mr. Penhaligon). At the moment we do not know how many people will apply for special case treatment and how much work will be involved for the panels and tribunals. For that reason, it is not possible to give any date. However, the hon. Member for City of Durham (Mr. Hughes) can be assured that we shall move as quickly as possible. I hope that he will accept that.
I move to land transfers and the ownership of quotas. I am frequently asked who owns the quotas. The simple answer is that no one does. A quota is allocated to a holding for the use of the occupier. If the holding passes to a new occupier, the quota goes with it. If the holding is divided into different parts, the draft regulations set out detailed rules for determining where the quota goes. Normally it will go with the part of the holding on which the dairy buildings are situated, but the parties concerned —buyer and seller or landlord and tenant—may agree on a different arrangement if they wish. If they fail to reach agreement, there is provision for arbitration.
As for freer transfers of quotas, about which I have been asked a question already, I have a great deal of sympathy with those who argue in favour of the greater freedom of movement of quotas between individuals. There are obvious attractions in a system of marketing. It would enable us to get back to something more like a free market. However, the Community legislation is restrictive and is based on the concept of quota being attached to the holding. These are difficult issues, but I shall be looking urgently at possible rules for easing transfers.
Mr. Alex Carlile: Will the right hon. Gentleman give way?
Mr. Jopling: No; I shall not give way to the hon. and learned Gentleman. I have been speaking for some time already, and this is a long and complicated issue.
I move to the outgoers' scheme and the position of small producers. In addition to the steps that we are taking to assist special cases, and as a major element in our efforts to help those who will be most deeply affected by the quota system, we are setting up a non-statutory outgoers' scheme.
We have been well aware from an early stage in the implementation of quotas in the United Kingdom that one group of dairy farmers will be particularly badly hit. I refer to the smaller specialist dairy farmer producing milk from a restricted acreage. I recognise that these producers often
168
have no economic possibility of alternative production. Therefore, to stay within the quota they will have to scale down output. They lack the possibilities open to larger dairy farmers who may have an opportunity of an alternative enterprise or of altering their methods of milk production.
A majority of these specialist dairy farmers quite naturally and understandably wish to continue in production. It is the reductions that they face in order to stay within their quotas that threaten to prevent them from doing so. The most important thing to do, and the best means of ensuring an economic future for them, is to rebuild their quota entitlement as quickly as possible. To do this we need to obtain spare quota very rapidly.
On the other hand, some specialist dairy farmers will wish to quit dairying altogether and could be direct beneficiaries of our outgoers' scheme. Payments will, if they wish, help to give them the means of establishing an alternative enterprise.
In our outgoers' scheme we are helping those who wish to leave. At the same time, their departure from milk production will release the spare quota that we need to help those who wish to stay.
To give an idea of the scale of the scheme, let me give some more precise details. We are aiming to buy up 2·25 per cent. of the total quota in Great Britain, which is almost as much as the initial reserve for special cases, and 5 per cent. in Northern Ireland because of the large proportion of small producers there. We shall be aiming specifically to make extra quota available to dairy farmers who produce less than 200,000 litres annually—broadly speaking, those with fewer than 40 cows. In England and Wales this means some 16,000 producers who, although they produce only 13 per cent. of the milk, constitute about 40 per cent. of all producers.
To restore their 1983 levels of production we need about 160 million litres of milk in England and Wales, or 1·25 per cent. of the total quota, so we expect to have something left over to help other deserving producers, and over the next few months we shall be thinking about how we can use this remaining quota most effectively. No doubt many hon. Members will tell us today where they think the priorities lie for the next stage after we have brought the small producers back to their 1983 production patterns.
In general, tenants will have to obtain their landlords' consent. I am discussing with the NFU and the CLA the circumstances in which consent might be waived. I have taken careful note of the debate in the House on Second Reading and on Report of the Agricultural Holdings Bill, and I have sought to find ways in which we can ease the problem. I have met both the NFU and the CLA to this end. Both have expressed their agreement with the principle that the tenant should discuss with his landlord the terms on which they could agree that the application should go ahead.
We are, of course, imposing certain conditions on producers who wish to take advantage of the outgoers' scheme. Producers who receive payments under the old non-marketing schemes but later resume milk production will not be eligible, and successful applicants will not be able to re-enter milk production, because the quotas on their holdings will be cancelled, so that no milk can be sold from those holdings without liability to levy. In general, tenants will have to obtain their landlords' consent, as I have said. As I am discussing the matter with the NFU and

169
the CLA, I hope that we can arrive at a position where it is not as difficult as my hon. Friend the hon. Member for Tiverton (Mr. Maxwell-Hyslop) suggested in our earlier debate.
As regards the cost of the scheme, we are devoting £50 million to it, at a rate of 13p per litre of quota surrendered or the equivalent of about £650 per cow for the average yield of 5,000 litres per cow. We believe that this is a reasonable incentive.
I wish to express some conclusions about the milk quota arrangements. I have described the quota system which is set out in detail in the draft regulations awaiting the approval of the House. We shall have an opportunity to debate the draft itself very shortly, but I welcome the opportunity of today's debate to go over the main issues raised by the introduction of the new system. I hope the House will agree that, although the problems in introducing a quota scheme are formidable, we have designed arrangements which are fair and practical.
A great deal of work lies ahead of us. All concerned — the agricultural Departments, the milk marketing boards, which will be undertaking much of the detailed work, the producer organisations, the tribunals and the local panels—will be fully occupied in the next few months.
I have made it clear throughout the Community that I attach great importance to the effective administration of the supplementary levy arrangements. At the Agriculture Council on 18 and 19 June in Luxembourg I stressed the need for all member states to implement the arrangements in accordance with the decisions of the Council. I said that it would not be acceptable if some producers were required to pay the levy while some member states were manifestly failing to apply the agreed rules. I am pleased to tell the House that the Agriculture Commissioner agreed with and supported my statement on that occasion.
There have been suggestions that these changes undermine agriculture. I am sure that this is quite untrue. It is necessary to deal with the frightening spiral of CAP costs by cutting common prices and taking other measures. There is no avoiding this, but, at the same time, we must be looking constructively to the future. I shall welcome dialogue with all sections of the industry on this in the immediate period ahead.
We are talking about an industry which has shown remarkable resilience and drive in the recent past. It has achieved notable increases in its productivity and improved our national self-sufficiency in temperate products by no less than 15 percentage points over the past 10 years. I am confident that the industry will adapt successfully to the new challenges of the present and of the future.
4.49 pm
Mr. Robert Hughes: I welcome the general nature of the debate, and I am sure that I express the views of the whole House when I welcome the opportunity to discuss the draft regulations. That is without prejudice to a full debate on those regulations once a Minister has taken the views of the House into account.
In general, the Opposition's position is best expressed in early-day motion 850, which states:
"That this House, whilst accepting the need for a reduction in the production of milk within the European Economic Community, deplores the disproportionate share in that reduction which the United Kingdom is having to bear, the failure to
170
adequately protect small producers, the lack of time for producers to adjust, the confusion which has accompanied the introduction of the scheme, the inadequacy of the financial help which is being made available and the failure to accommodate many genuine cases of hardship; and asserts that the attempt to deal with the problems of the Common Agricultural Policy on a commodity by commodity basis and in terms purely of budgetary control without proper planning does not constitute that fundamental and comprehensive reform of the Policy both in its funding and methods of support without which such problems will, inevitably, continue and multiply to the disadvantage of producers and consumers alike."
Up to today that early-day motion has been signed by 126 hon. Members, and I know that many others in other parts of the House wish that they were free to sign it.
In our opinion, the Minister got a bad deal in Brussels, and, within the confines of that bad deal, the Government have mishandled the application of quotas. That opinion is not confined exclusively to the Opposition. I have with me two quotations, one from a farming organisation that does not want to be named. However, the more perspicacious of Conservative Members may have an inkling as to its source. It was sent to me on 29 June. It states:
"The Council of Ministers introduced the present system of quotas with under two days' notice. We have been engaged in discussion with the Minister and warned of the many problems now facing us, some of which are peculiarly difficult for our country. Despite every effort being made from then onwards to work out and to administer the new system in this country, a process in which we have, of necessity, co-operated in order to protect our members, the result has been chaos. The Minister and the Government must bear full responsibility for the result of their hasty and ill-judged actions."
The Farmers Guardian of 29 June stated:
"Without question, managing the milk industry's financial affairs at the moment is a task of fantastic difficulty. The other danger is that the board"—
the Milk Marketing Board—
"and the union should be blamed for mistakes made by the Government itself. So let us be clear about two things: first, that it was first and foremost the Government's responsibility to consult with those who would have to make quotas work before it agreed to them and this it manifestly failed to do; and, second, that our national interpretations of quota detail have been entirely in the hands of the Ministry and it is at that door that responsibility for the present confusion must be laid … There have been few administrative blunders of this dimension in agriculture's modern history."
It is clear that there is much apprehension about the way in which things have worked out. We have landed in this position because we got a bad deal in Brussels.
The deal was bad in general because the 1984 CAP guarantee fund is 7·8 per cent. higher than the 1983 revised budget. So much for the much vaunted claim about reform of the CAP. Secondly., the latest estimates are that the fund will be overspent by a further 12·9 per cent. That means that spending on agriculture support in 1984 will be 21·7 per cent. above the revised 1983 budget figure. In fact, agricultural spending continues to grow at an alarming rate.
In a written answer on 9 April, at column 78 of the Official Report, the Minister pointed out that half of the CAP expenditure in 1983 was devoted to disposal of surpluses, and, even more alarming, that this represented 34 per cent. of all EEC expenditure—much more than the social and regional funds put together. Furthermore, the milk quota scheme institutionalises surpluses for the next five years and does nothing whatever to eliminate them. The Minister might have proceeded more productively had he got a deal spread over two or three years, with larger overall cuts in EEC milk production to

171
give people time to adjust. That would have been a much better way of proceeding than simply arriving at the present deal.
Mr. Jopling: The hon. Gentleman advances an interesting proposition. As he knows, the proposal this year is to reduce Community production from a projected 106 million tonnes to fractionally under 100 million tonnes. Where, within the next five years, does he think we ought to have taken it to below the projected figure of just under 99 million tonnes? Is he saying that we ought to have taken it right back to 86 million tonnes, which is the actual level of consumption within the Community?
Mr. Hughes: I would not go as far as cutting back to the level of self-sufficiency. There must always be some sort of reserve to deal with matters outwith our control. However, instead of arriving at a panic decision, it would have been much better had this been spread over a longer period so that people could have had more time to adjust.
The milk quota deal was particularly bad for the United Kingdom. No one can deny that, although today the Minister sought to put a gloss on it. We have accepted too high a reduction, given our position vis-a-vis other Community producers.
On self-sufficiency, I use the Minister's information. In a written answer on 4 June, at columns 71–72 of the Official Report, he pointed out that we were only 91 per cent. self-sufficient in butter fat compared with 122 per cent. in France, 126 per cent. in Germany, 206 per cent. in Ireland, 199 per cent. in Denmark and 121 per cent. in the Community as a whole. Even if one takes the figures for milk solids not fat, we are still only mid-table and fractionally above the Community average, yet our cut in production is to be greater than that of any other member state.
The French example is particularly bad, because it has been asked to take only a 2 per cent. cut this year and a 3 per cent. cut next year, although it is quite clear that the French are more self-sufficient than we are.
We are entitled to ask why the Minister conceded so much in Brussels. How did he land in that position? It is clear that he was under pressure from No. 10 Downing street to get a CAP settlement by a given deadline, otherwise the summit negotiations on our overall budget rebate could not continue. Indeed, all the other agriculture Ministers were well aware of that pressure, and used it to full advantage.
Sir Peter Mills: In order to have obtained a better deal, would the hon. Gentleman have conceded the sheepmeat and beef premiums, because that is what was at stake?
Mr. Hughes: That is not what was at stake. The hon. Gentleman ought to reflect on what he has just said. If I have misinterpreted his words, he will correct me; but he is almost saying that, in order to protect the sheepmeat and beef premiums, the Minister gave more in terms of milk. That may well be the case. In the event, despite the efforts to settle the common agricultural policy, the general budget discussion was not concluded. We had to wait until the meeting at Fontainebleau a few days ago before it was settled. Two things happened before the settlement was reached, although it was not to our advantage. First, the
172
Government had to concede an increase in own resources of 1 to 1·4 per cent. Hardly had the ink dried on the paper when Gaston Thorn said that 1·4 per cent. was not enough and that 1·8 per cent. was needed to keep the Community solvent.
The problem for the future of agriculture and of the CAP is that such a growth in own resources will take the pressure off the move for reform of the CAP. If we do not reform it this year, we must do so in the future. We may be forced to put off consideration of other commodities until, once again, the Community runs into financial crisis, and a panic decision will be taken.
The view that that should not be allowed to happen is well summed up in the editorial of the current issue of the Country Landowner. Hon. Members know that I am totally addicted to that publication. It says:
"Never again must the future of a major industry be left to compromises reached at midnight by exhausted politicians trying to meet an arbitrary deadline."
That is why the Minister has had trouble this year, and that is why, unless we examine the matter generally and on a long-term basis, we shall face difficulties in later years.
Coming to the draft regulations, the least uncomplimentary thing that can be said about them is that they will provide a feast for the lawyers and paradise for them in terms of interpretation. The other factor to bear in mind
is that they are enabling regulations. Regulation 5.2 states:
"The Minister shall, by advertisement published in the Gazette and farming press, announce … the regions into which the United Kingdom is divided for the purposes of article 1(2) of Council Regulation 857/84 (which deals with regions), and … any change, in respect of any quota year, of the regions into which the United Kingdom is divided."
Regulation 5(3) states:
"The Minister shall, in respect of each quota year, announce by advertisement published in the Gazette and the farming press — …the implementation of a formula, and … the allocation from the national wholesale quota of a regional wholesale quota."
It goes on for several pages.
The first major point is that, once the regulations return to the House and have been adopted, there will not be an opportunity for further parliamentary scrutiny of the decisions. Whatever complaints people have about the regions or the quotas, it simply remains for the Minister to publish those decisions in the Gazette and farming press. We really should have proper parliamentary scrutiny.
I understand why the Minister cannot produce in the regulations any details of the formula, of the regions, or of other matters. That would mean the whole lot being produced each year. I hope that the Minister will at least consider an amendment to the regulations, so that they will
state
"The Minister shall publish in the Gazette and fanning press details of the formula for consultation for 30 days and thereafter subject to the approval of both Houses of Parliament",
or such form of words as the parliamentary draftsmen use to cover the point.
The point at issue is simple. The Secretary of State should publish his quota schemes, give 30 days' notice of consultation, and bring the final details to both Houses for approval. After that, they can be published in their final form.
The second major point that the Minister touched upon, although not satisfactorily, is that the regulations fail to cover the transfer of a producer's quota from retail or direct sales to wholesale sales, and vice versa. That issue has been raised with me in almost all representations,

173
whether from the Aberdeen and North-East of Scotland Milk Marketing Board, the Scottish NFU, the English NFU or farmers in Wales. They have all made the same point.
The NFU, for example, is particularly concerned at the position of direct sellers. It has pressed for reasonable terms for individual quotas. It believes that the regulations will permit that. I believe that the regulations do so, although they do not recognise problems facing direct sellers who wish to increase sales to satisfy market demand. As matters now stand, individual producers cannot reduce their deliveries to the Milk Marketing Board in order to increase sales without incurring levy charges on the over quota of direct sales at the end of the milk year. The NFU considers it vital that quotas should act only as production control and that direct sellers should be able freely to interchange direct sales and wholesale quotas, always within the fixed total.
The NFU says—and the Opposition will continue to press the point—that the Government should introduce sensible arrangements to interchange the two types of quota. The NFU goes on to say that if such an interchange is not allowed, both existing and potential direct sellers would be tempted to break what they regard as a totally unacceptable restriction.
Mr. Albert McQuarrie: My right hon. Friend has said that the quota belongs to the land and the holding. That means that it does not belong to the individual farmer. If that is right, why is it not possible, as the hon. Gentleman is trying to illustrate, for someone with a direct or a wholesale quota to have that interchangeability? As the cow is producing a quota, which in turn is related to the land, why should it not be possible to have that necessary interchangeability, either for direct sales or wholesale to the Milk Marketing Board?
Mr. Hughes: That is exactly the point that I have put. I shall return to the question of where quotas should go, whether to the land or to the producer.
So that there is no doubt about the matter, I think that the best explanation has been given in a letter that I have received. I shall not quote from it in detail, as time is moving on rapidly. I do not wish to name the producer who wrote to me as that would be invidious. He says that he has already cut back his production by 8 to 10 per cent., so that he is within what he would expect to be his 1984 quota. He says:
"My real problem is I had a contract to supply local hospitals with 100 gallons daily, but I lost this contract to a big distributor on 1 April 1984. Now I am sending this milk to the Board. Therefore I am now well over my wholesale quota. The Aberdeen Milk Board informs me I cannot move milk from my retail quota to wholesale quota or vice versa. If we have to live within the confines of the MMB (which we support) we must have this crazy situation changed.
To sum up, I am not alone in this situation, and we must be able to move milk from one quota to another. After all, if a distributor needs more or less milk, he could just lift his phone and say so.
I do hope you can make some Civil Servant see common sense in this matter."
That producer has been outbid in a contract by a bigger producer. He has been beaten by a lower price and finds that his quota has been adversely affected. That cannot be allowed to happen. The Minister knows there are many similar producers up and down the country whose circumstances are changing for some reason. The Minister might well say, as he has said today, that he is tied by the
174
EEC regulations about the matter and that he is trying hard to resolve the problem. The Minister should have foreseen that this would happen. He should not have signed such an agreement. If he is tied to the extent that he says he is by the EEC regulations, he should get on his bike PDT) to Brussels and get it sorted out.
I turn to the issue raised by the hon. Member for Banff and Buchan (Mr. McQuarrie). Incidentally, in view of the time, I shall not give way to other hon. Members as interventions will simply prolong my speech and make it more difficult for other hon. Members to speak. Thus, I turn to the vexed question of in whom the quota should be vested. Should it be vested in the producer or the land? The NFU says that it recognises the interest of the landlord. Of course, interests vary enormously over a wade spectrum, from the landlord who invests heavily and provides the capital equipment and buildings to the tenant who invests in the equipment, and so on. The NFU firmly says that the quota should be vested in the tenant and that, if there is a dispute between the tenant and the landlord, it should be referred to arbitration in the normal way.
Not unnaturally, the Country Landowners Association adopts a different stance and believes that the landowner should have an opportunity to determine the fate of the quota on his land. So far the Minister has not made it clear that the landlord will not have a veto in this matter. I hope that the Minister will do so as such a veto would not be right.
The producer should be defined in the regulations in definite terms that are not capable of different interpretations. I think that there are about five or six pages of definitions, and the Minister should add to them the definition that the producer should be
"a person or persons who carry out the business of milk production."
That would cover an individual farmer, a company farm, partners, or whatever.
As the Minister has pointed out, six hardship cases are set out. The first case involves a serious natural disaster affecting the producer's farm to a substantial extent. I shall not go through all the cases, because I could talk on each of them for a long time. But it is clear that the first case is the most significant. My understanding of the regulations is that that cannot possibly include weather variations. I am not talking about three months of snow. I know that the Minister said that he was looking at the matter, but, as the regulations stand, I do not see how they take care of normal, or even slightly abnormal, weather variations. A natural disaster i s quite capable of definition. As currently expressed, the provision is highly restrictive.
Farmers up and down the country, and particularly from my part of the country, say that production was down significantly in 1982, and more particularly in 1983, by 8, 9 or even 10 per cent. because of adverse weather conditions. The significance of the Minister's statement RS that he said he thought that the first case might be dealt with on the basis of a 10 or 15 per cent. reduction due to weather variations. However, that would not cover the majority of farmers who lost production in 1983. The Minister had better write 10 to 15 per cent., or some other figure, into the regulations; otherwise he will find himself in trouble in Brussels, although he will be in difficulty when someone says that he lost 9·5 or 10·5 per cent. Indeed, otherwise, the Minister will have to judge each

175
case on its merits. That might seem to be a good idea, but, in the interests of justice, we had better try to be as clear as possible.
I have received many representations over the hardship issue, especially on the reserve of 2·5 per cent. It has been quite frankly put to me that 2·5 per cent. cannot hope to compensate all the hardship cases. It has also been pointed out that it will take at least 12 months, and possibly longer, to work through all the hardship cases.
The Minister was quick to seize on the fact that I was earlier nodding my head. He is looking for agreement and allies wherever he can find them. If I nod my head, he thinks that that is a marvellous step forward. However, I was nodding my head in agreeing with him that he cannot know how many hardship cases will apply. Thus, when he is perfectly fairly asked when he is going to resolve the hardship issues, he is bound to say that he does not know. It is not unreasonable to suggest that it will take at least 12 months to sort out and process all the hardship applications, so the Minister must take some account of how things will work.
The Country Landowners Association may find it strange that I quote it with approval, but it says:
"No levy should be charged on any producer who has not received a definitive statement as to his entitlement to quota."
How does the Minister respond to that? Does he accept that? Will he state quite clearly that, if someone makes a hardship claim or seeks to get the quota altered, no levy will be charged until the matter is resolved?
I come to the outgoers scheme. Once again, I regret that the Minister has far too narrow a perspective in considering the problems faced by the milk industry. Nothing that the Minister has said, either inside or outside the House, takes any account of the fact that farm workers will lose their jobs as a result of the changes. Not a single word, nor penny of compensation, has been mentioned. I accept that he mentioned compensation to those whom he wants to buy out. The figure is £650 per cow per annum for as long as they stay out of the scheme — [HON.MEMBERS: "Five years".] I apologise to the House and accept the figure of five years. However, the earlier press release that the Minister sent out suggested that the compensation would go on for as long as the scheme existed. The figure of five years does not detract from the point that the Minister did not consult farm workers.
I am sure that the Minister has received a letter from Jack Boddy, the national secretary of the agricultural workers trade group of the Transport and General Workers Union, asking to meet him to discuss the problems that will face farm workers as a result of the cuts in dairy production. I hope that he is prepared to meet Jack Boddy and his colleagues and to hold a proper discussion.
One factor common to all our debates is that there has not been any mention of the problems of those who work in the creameries. Many are losing their jobs as a result of the cuts. Hardly a day goes by without a mention in the newspapers of redundancies. Indeed, today's edition of The Times mentions such redundancies. However, I am sure that one of my colleagues will dwell on that point. I have received letters and spoken to people from many creameries and they all tell me the same thing—that there will have to be staff cuts in order to cope. I do not want to be an alarmist, but the viability of some creameries will be threatened by the scheme's operation and whole
176
creameries may close. Again, there is nothing in the Minister's statement about compensation or assistance for them. I wish that he would interpret his mandate as Minister much more widely.
The Minister appears to be extremely proud of the £50 million over five years, or £10 million a year. The truth is that that compensation is paltry when compared with what the Germans and the French are providing. The Germans are providing £25 million per annum to those who give up production. The French are providing £200 million over the next three years. Compared with that, £50 million over five years is pretty mean. Furthermore, as an illustration of the way in which the whole thing is to be carried out, the Germans are implementing quotas on a sliding scale to help small producers. I wish that the Minister had adopted that course instead of his present one.
I have put a much better scheme to the Minister. According to figures published in the annual review—the Minister's own review —there are 57,700 dairy holdings, of which 35,600, or 61 per cent., have herds of fewer than 60 cows. However, the average size herd is 59, and 69·9per cent. of cows are in herds of 60 or more. Producers with herds under 60 account for 30 per cent. of total production. Above that herd production, the distribution is different. We propose that all holdings with an annual production below 300,000 litres should be exempt from the levy, provided their production does not exceed the 1983 level, because 300,000 litres is approximately the yield of an average-sized herd.
Sir Peter Mills: What about the French?
Mr. Hughes: We are considering how the Minister applies the scheme in the United Kingdom. There is no point in evading responsibility by asking about the French. The French can apply this scheme in their way, and, provided they do it within the rules, we cannot complain about it.
No one has told me that my proposed scheme is outwith EEC rules and regulations. We have acceded to an agreement which sets a total amount of production for us. If we do not produce more than that total, we do not pay a levy. If that is the case, we can adapt the scheme to our own advantage and to the best advantage of small producers. My proposed scheme would exempt about 60 per cent. of producers. Every succeeding 200,000 litres of production above that level would attract a levy at a successively higher rate—for example, 20 per cent., 25 per cent., 30 per cent., and so on.
My scheme is simple, straightforward and easy to understand. People would know where they stood. It could be said that the problem with such a scheme is its simplicity. If I had the same back-up as the Minister—the same number of public servants—I could have come up with a more sophisticated and complex scheme. Had I done so, I would have undoubtedly landed up in the same mess and chaos as he has.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): The hon. Gentleman said that small producers should be exempted from the super-levy. Is he aware that that would not be permitted within the regulations? If we had sought such a scheme, it would have given greater exemptions to the French.
Mr. Hughes: The Minister has persistently sought to misrepresent the point. We are proposing that small producers in Britain should be allowed to produce up to the 1983 quota, not beyond it. If they went beyond the 1983 production level, the levy would apply. If the Minister says that he failed during negotiations to grasp the fact that the application of the scheme in the United Kingdom is outwith the regulations, he should have got the regulations right. We are not proposing to base the national quota on small producers. We accept that we have a bad deal and have taken a big cut in production, but within the present quota allocation agreed by the Minister it is perfectly possible to adapt my scheme to better effect.
The Germans are adapting their quotas to suit smaller producers. Their scheme is more complicated than the one that I suggested. If the Germans can do that, why cannot we protect our small producers?
The Minister's scheme is uncertain. He rightly said that he did not know whether its aims would succeed, because he does not know how many people will apply. Our scheme would be more certain. The Minister will not succeed, although his objectives may be laudable. Furthermore, the outgoers scheme is non-statutory. Parliament will not scrutinise the scheme, nor will its approval be sought. I hope that the Minister will be prepared to convert the scheme into a statutory scheme so that hon. Members can decide such issues in Parliament.
The acute problems raised by the reductions in milk production will be repeated and multiplied as time goes on. There must be a fundamental, comprehensive reform of the common agricultural policy. However, that is as far away as ever, and even receding further into the distance because the Prime Minister gave ground on own resources. Many more people are coming to the views that we have consistently advocated. In considering the CAP, we need to have an examination of the environment, a plan to control production, to include consumers in the consultation and to encompass wider questions of rural development.
Support has come from surprising sources, which would disavow any connection with the Labour party and would object if it were hinted that they had a taint of Socialism about them. I refer to the Country Landowner. If this goes on, I shall have to apply for a commission! The editorial in the June edition states:
"There is no point in defending the indefensible. The CAP is in a mess and has to be extricated. It would be absurd, however, to go about the job blindfold. The whole question of land use in the countryside is at stake…
Matters of Government organisation are boring, but deficiencies in that organisation can have painful consequences. Better to put any weaknesses right before the faults claim their victims. Do the different departments with their separate responsibilities know what Government actions are going to do to the countryside and will they be ready and able to work together to handle the situation that Government itself has created? These questions require immediate consideration and urgent answers."
So say all of us.
The need for a widespread, fundamental and comprehensive reform of the CAP is now well understood in many quarters. We need to consider the consumers, the farmers and those who work in the industry. We need to change the method of support. We need to control the CAP budget and to consider the overall rural environment and land use.
The Government have palpably failed on those counts. They have failed to protect British interests, and they
178
bungled the application on the deal, to which they acceded. We shall therefore vote against the Government this evening.
5.28 pm
Mr. Edward du Cann: I apologise for the fact that other parliamentary engagements —long arranged—prevented my being present for all of the debate.
First, I shall follow the intervention of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills). The fact that the debate is chiefly concerned with the worrying problems of the dairy industry should not be allowed to obscure the appreciation which the agricultural industry feels for the several real successes which my right hon. Friend the Minister has achieved in his term of office. It is good that the green pound has not been revalued, that beef and sheep variable premiums have been retained, that the suckler cow premium has doubled and that support for less favoured areas has been extended. That is a substantial catalogue of successes at a time of economic difficulty, and it should be acknowleged. I am, however, at present corresponding with him about a matter of argument in Brendon hills in my constituency.
I should like to congratulate my right hon. Friend on the way in which he has withstood the barrage of criticism, which has often been unfair and frequently ill informed, with dignity and humour. My answer to what the hon. Member for Aberdeen, North (Mr. Hughes) said at the beginning of his speech is that, in my view, and I believe that of many others, the industry is fortunate to have at its head at this difficult time Ministers who are unusually sympathetic to its aspirations and knowledgeable about it.
It is true, however, that one cannot deny or disguise the fact that the new quota arrangements are a matter of anxiety for our dairy industry. In some respects, it is for the United Kingdom an unsatisfactory system for dealing with an undoubted problem m the European Community. However one looks at it, the system is arbitrary, capricious in its effect, distorts the market, and will establish a new bureaucracy and control apparatus at a time when the general thrust of Government policy is in the opposite direction. It favours the larger producer at the expense of the smaller. On that subject, incidentally, United Kingdom milk producers declined in number from some 150,000 in 1960 to 53,000 in 1983—almost 100,000 fewer. That is a shocking statistic to those of us who believe in the ever-widening diffusion of ownership.
If the outgoers scheme attracts the smaller producers, as it is designed to do, it must accelerate that trend. How many producers will there be in 1985? There will certainty be under 50,000—one third of the number of a mere 25 years ago. It is pity to see more small producers quit the industry. I should rather see Government policy working in the opposite direction.
The quota arrangements will discourage new entrants to the industry and will undoubtedly give rise to bad feeling for a long time. My right hon. Friend was correct when he said that the scheme was bound to be painful for farmers, but it is bad for Great Britain also. The quota system will assuredly discourage Great Britain' s burgeoning export efforts in dairy produce to which so much energy has lately, and in my view rightly. been devoted. News that Dairy Crest is to cut exports by some 50 per cent. to maintain milk supplies for the home market is most discouraging. We shall lose exports.

179
There is another unpleasant side to this unattractive coin. According to the chairman of the Milk Marketing Board, if the United Kingdom's self-sufficiency falls from 89 to 83 per cent, imports will rise by 6 per cent. To a simple chap like me, a proposal which discourages exports and encourages imports is economic madness.
Last, but by no means least, as the hon. Member for Aberdeen, North said, the quota system will cause unemployment. We have had this morning's news, and in Somerset unemployment is already happening—one or two redundancies here and there, and 50 employees went from the feed compounders, Pauls of Radstock, last week. There will be others. The knock-on effect is inevitable, and what a depressing list it is.
I do not believe that the United Kingdom should have agreed to the quota system. I am aware, of course, of the desperate need for a consensus within the European Community with all the problems of surplus, the cost of agricultural support and the like, but the pressing need to reach agreement among Ministers in the European Community — whether we discuss this matter or any other — should never have a higher priority than agreement on sensible systems.
We have a system, and the question for us today is: what should we do now? First, in the long term, I am sure that my right hon. Friend should bend all his energies and his considerable talents to reaching an agreement to scrap it, and replace it, as he proposed earlier, with the price mechanism. I hope that he will discuss that seriously during the process of the reform of the common agricultural policy. Until that time, the worst effects of the present arrangements must be mitigated. That is the duty all of us in the House of Commons must discharge towards an industry whose only crime, it appears, is that it has been too efficient, and whose reasonable aspiration was to a better share of its home market and a developing export trade. It is not —I remark in parenthesis —the only British industry to be devastated by a combination of Community and domestic state regulations. The private sector steel producers, of which I had some unhappy experience, was another.
I shall make some specific proposals to mitigate the dreadful unhappiness and uncertainty with which we are living at present. I make five points, but in no special order. Some of them have already been made by the hon. Member for Aberdeen, North. The first is that, surely, no super-levy should be collected from any farmer until all hardship and special cases have been sorted out and everyone has been given a quota; and until the Government can be certain that the system is being applied properly and fully in every other EEC country.
Secondly, I can think of a multitude of cases of hardship beyond the catalogue that my right hon. Friend described. I come to the specific point of disaster. I have made the point to my right hon. Friend and other Ministers on other occasions that for us in Somerset the weather pattern in the spring and summer of 1983 was a disaster. We had the wettest spring for over 100 years, followed immediately by the driest summer, barring one, for over a century. Such extraordinary conditions mean, as everyone knows, lower yields and lower feed production.
The production of at least 150 dairy farmers in Somerset was more than 5 per cent. down on the figure for 1981. National production increased by 8 per cent. during
180
those two years. Therefore, those Somerset farmers are 13·4 per cent. worse off than the national average. My right hon. Friend was good enough to quote figures to us this afternoon. Surely it is reasonable that any producer who can show that his production was more than 10 per cent. out of line with the national average should be allowed to choose a different base.
Mr. Jim Spicer: Does my right hon. Friend accept that in the neighbouring county of Somerset exactly the same figures would apply for the west and other parts of Dorset?
Mr. du Cann: I accept that, and I dare say that it applies to other counties.
I hope that significant variations in weather conditions should be allowed as a criterion of treatment of hardship cases. Southern Ireland is regarded as a special case. Counties such as Somerset should also be so regarded. Milk production is every bit as economically important to us in Somerset and some other counties as it is to southern Ireland. In any case, I believe that charity begins at home.
Thirdly, direct sales quotas were mentioned by the hon. Member for Aberdeen, North. It seems extraordinary to me that the Government are seeking to impose a quota on the amount of milk which producer-retailers and processors are allowed to sell to their customers. I see no justification for that. Surely we want to encourage more sales. If we do not take care, some producer-retailer businesses will be forced to close. Some are at risk in Somerset. That will benefit no one.
Fourthly, to encourage new entrants, there should be some flexibility in the ownership and transfer of quotas. A completely free market would enable larger farmers to buy quotas at the expense of the small producer. I should not favour that. I hope that my right hon. Friend will arrange soon for quotas to be made saleable within a county or smaller area.
My fifth point is about timing. Today is 3 July. Proposals were agreed by European Community Ministers on 31 March. That is over three months ago. I regard it as intolerable that uncertainty remains. The guidance given to producers by our Ministers has been prompt and full, but the same urgency has been by no means shown by Community officials. Who do those people think they are? Who are those faceless Community bureaucrats who are responsible for the delays? What reprimands have been given to them for their dilatoriness? Has anyone been dismissed or demoted? Bearing in mind that we face other changes in the future, what have Ministers done to ensure that there will be no repetition of such delay? We must learn lessons from this unhappy experience and see that it is not repeated.
I leave my greatest anxiety until the end. I can best express it in two questions to my right hon. Friend. The first is: what will we do if the new system does not work properly? To put it another way, is my right hon. Friend certain that supply and demand will now for ever be in rough equilibrium in the European Community and, if there continues to be a surplus, what further action is proposed? I feel—I am sure that I carry right hon. and hon. Gentlemen on both sides of the House with me—that it would be unbearable if in a year or two this upheaval, all this agony, for whatever reason, proved to have been in vain. Let us never go through an experience like this again.

181
Secondly — perhaps not entirely relevant to the debate, but nonetheless much in everyone's mind—what other proposals does my right hon. Friend think will come out of the European Community — for example, for cereals? We all know what deputy director-general Mr. Pooley said the other day in this country. I thought that the threats he made to grain producers were intolerable. We know that we have to go through a period of reform. If there are other proposals to come for other commodities, the best service that my right hon. Friend can do agriculture is to make sure that we know about them as soon as possible. The sooner we know what they will be the better; the sooner we get rid of uncertainty the better, for uncertainty is bad for any business, and especially for farming.
I ask these questions not in any carping spirit, but out of a real anxiety for my friends and neighbours, for their standard of life and for their way of life in the county that is my home; and because I believe, and always have believed, that a thriving and prosperous countryside is an essential part of the United Kingdom's economic and social fabric. To provide it and to maintain it is a trust for us, and especially for my right hon. Friend. I hope that we shall all be worthy of it. If I may end as I began, I am sure that my right hon. Friend will be, and that is the one factor that gives me confidence at this time.
5.41 pm
Dame Judith Hart: I follow the right hon. Member for Taunton (Mr. du Cann) with some pleasure because I agree with a great deal that he has said, although I may put it a little less tactfully and with less discretion than he has done. He has spoken for Somerset, with the assistance of his hon. Friend the Member for Dorset, West (Mr. Spicer). I think we know what the Welsh farmers think about all this.
I represent a Scottish constituency in which there is a high concentration of small dairy farmers. I was approached first by my local branch of the National Farmers Union when the Minister made his arrangements within the Community, and since then I have been approached by individual small farmers.
I wish to begin by giving the picture as it effects one of the typical small dairy farmers in my constituency. I should say that in Lanarkshire—and a large part of the rural area of Lanarkshire, though not all, is in my constituency—there are 440 dairy farms. The average size, according to the local NFU, is between 150 and 200 acres. In my part of Scotland there are not many options, and farmers are growing grass. On grass, they can raise sheep and beef and dairy cattle. They cannot switch to wheat and other grains. They have a limited choice in what they can produce on what is essentially hill and marginal land. The reliance is on grass.
I should like the Minister to consider the following, as I think that it does not quite fit into his careful explanation of the outgoers' scheme. I have a constituent who farms 200 acres. He has 50 milk cows, 120 sheep and between 10 and 15 store cattle. He works the farm with his wife. They have no employed labour. He has gradually built up to the position of having 50 cows. Indeed, he did not have those when he began. At that time, he did not borrow. Now, however, he has an overdraft of £67,000, because he has been carrying out drainage and other improvements on the land. Last year he had a total income, after tax, for himself and his wife—his wife is a full-time worker on
182
the farm, and, indeed, his young daughter helps to raise the calves — of £10,600. As his wife is a full-time worker, that means that each of them is earning less than the average industrial wage. What is he to do? If he takes advantage of the outgoers' scheme, what does he do? Does he go out of farming altogether and into the ranks of the unemployed? He has no capital, he is unskilled, and he has no qualifications to do anything else. I think that he does not quite fit the right hon. Gentleman's definition.
Mrs. Elaine Kellett-Bowman: The right hon. Lady says that he is unskilled.
Dame Judith Hart: Perhaps the hon. Lady was not present when the outgoers' scheme was outlined. I said that he was unskilled in any other occupation. He is a farmer. He does not have engineering or computer qualifications. He is not qualified to go into the sunrise industries that the Prime Minister proclaims so much in Scotland. He has qualifications only for farming, which he is doing well. The hon. Lady should give me more credit than to assume that I was saying that he was unskilled at farming. He farms well.
The Minister said that "difficult decisions have to be made." I do not envy him the difficult decisions that have to be made on "how to adjust." He has "no idea how many milk producers will apply for special case treatment." It is surely not so much that he does not know how many will apply as that he has set aside a certain amount and, until he knows how many will apply, he does not know how much he can give to each one. That is the fact of the matter. He then said, "Let us go back to a free market situation." This afternoon, the right hon. Gentleman said that "agriculture can look ahead with greater certainty," and he expressed his concern for the small producers.
There are certain expressions that we are not allowed to use in the House, but when I hear the Minister speak of his concern for the small producers, greater certainty for agriculture and a free market solution, I must ask him where he thinks he stands in relation to his own Conservative philosophy of protecting the small man. We have a Government apparently dedicated to encouraging small businesses. What about small farmers? What a contradiction there is between Government policy, as it is expressed, and what he has achieved for the small business people in his own industry.
The solution is to be found not in improvements in the regulations, improvements in the quota arrangements and amelioration of the conditions that will be provided for small farmers who find themselves in difficulty, but in going back to Brussels and fighting back, and there ate ways of doing that. I have been in Brussels at meetings next door to my right hon. colleagues who were in the Council of Ministers with Sir Henry Plumb, now MEP, and I know exactly what goes on in the Council. I know perfectly well just what the French would do. What do they come away with? They come away with a percentage adjustment of less than 3 per cent. compared with ours of over 7 per cent. If the French were in our position, they would not be playing cricket, as the right hon. Gentleman is doing, at a cost to our small farmers. The French would be going back to Brussels and saying "Look, we have to face difficulties all along the line in other areas, but this we cannot accept. This has to be changed because of the effect that we find it has on our milk production."
I am afraid that the right hon. Gentleman is part of a sacrifice that was made at Fontainebleau. In those

183
negotiations—which were supposed to be so tough, but which have turned out to be so fragile—we seem to have sacrificed the concept of total reform of the common agricultural policy to which apparently the Prime Minister was dedicated. The Minister may be part of that sacrifice. The right hon. Gentleman and his colleague the Secretary of State for Scotland must surely be ashamed of themselves when they think of what will happen to small farmers as a result of their easy acceptance of things that they should not have accepted.
The big people can look after themselves. They have enormous acreages in the better parts of the country where it is possible to switch crops. The small dairy farmers on hill farms and marginal land cannot switch out of grass, and the Minister will bear a tremendous responsibility for their fate.
Mr. Robert Maclennan: Can the right hon. Lady help the House by saying what the hon. Member for Aberdeen, North (Mr. Hughes) did not attempt to say: what kind of reform of the CAP would the Labour party seek, which would at the same time secure farming incomes?
Dame Judith Hart: My personal opinion may go a shade beyond what is in the Labour party manifesto, as I am not certain whether the reforms that I would wish to see can be achieved within the context of the Community. However, within that context, I would wish to persuade the whole Community to adopt intervention and support schemes such as we had before we entered the Community. Those schemes were infinitely more satisfactory for farmers, producers and consumers.
Like other hon. Members, I have received a brief from the Worcestershire dairy farmers. The interest in this debate extends from Somerset, Dorset, Wales, Scotland and Worcestershire to Cornwall. I should like to quote from the brief:
"The quota imposed is completely unacceptable. In the U.K. we should be allowed to produce the milk to make us self sufficient in all milk products"—
the right hon. Gentleman's figures do not meet that point—
"and only when this point is reached should there be any restriction on U.K. output."
I have a recent document from the National Farmers Union of Scotland which points out the knock-on effects.
The Under-Secretary of State for Scotland (Mr. John MacKay): Will the right hon. Lady give way?
Dame Judith Hart: No, I am about to sit down.
The union points out the knock-on effects on the beef market. It states:
"It would be unrealistic to expect that a substantial cutback in milk production could take place without knock-on effects on the closely related beef market. We believe that the current weakness in beef prices is directly due to increased slaughterings in the dairy herd."
Mr. John MacKay: Would not the right hon. Lady accept that, unlike the NFU in England, the Scottish NFU urged the Government to try to have quotas set for milk production?
Dame Judith Hart: I am afraid that I have in my hand a copy of the brief from the Scottish NFU, which is headed
"Note for Meeting with Minister (copies to Milk Committee)".
184
Its contents do not agree with what the hon. Gentleman has just said.
I apologise for taking up so much time, but I have had to deal with interventions. Does the Minister wish to intervene otherwise than from a sedentary position?
Mr. John MacKay: I am not interested in the recent document to which the right hon. Lady refers. If the right hon. Lady had been involved in Scottish farming in the period leading up to the time when decisions were taken about quotas, she would know that the Scottish NFU urged my right hon. Friends to aim for milk quotas.
Dame Judith Hart: This document is dated 11 April 1984. I will send the Minister a copy, and he may challenge me then. To the best of my knowledge, the Scottish NFU has opposed the scheme. I have written to the Minister of State in another place because my local branch of the Scottish NFU, in Biggar, is highly critical of what the right hon. Gentleman has said, which contradicts what was promised to the Scottish NFU.
We could have a long correspondence about this matter, but I will not take up the time of the House on it now. The right hon. Gentleman has done tremendous damage to people in the farming industry, upon which this country depends, and in particular to the smallest people. He has damaged his own philosophy of protecting small people, and deeply damaged the working class in farming.
5.55 pm
Sir Peter Mills: I welcome the chance to speak in this debate, which I believe—having taken part in most of them—is one of the most serious debates on agriculture that we have had for a long time.
These regulations clearly show how right my right hon. Friend was to try to achieve an end price reduction. There is no question about it. He was right, and the rest of the Community Ministers were wrong. The Community will regret the decision that has been taken.
This is a sad day for me. I heard today that 60 workers in the milk factory at Torrington have been laid off because of the reduction in the amount of butter being made. That is particularly sad because the factory is one of the largest and most modern in the country. I am very sorry for the men who have given long and devoted service there.
I do not often criticise the Milk Marketing Board, but I believe that it is highly dangerous to restrict a factory to butter production. When something like this happens, there is no other product that it can turn to. I have urged that a wide range of products should be produced at Torrington, but unfortunately that has not come about.
When we consider the regulations, we must admit that British farming is facing an entirely new situation. Farming has to adjust to being treated like other industries, and that is painful. There must be a reduction in milk production, but the method and the speed with which the Community has brought about the change is bound to result in unfairness and in many problems.
I do not blame the Ministry officials for the fact that the regulations are a jungle—they have had to conform to the legal requirements—but the Community should be condemned once more for taking action before giving any thought to what would happen as a result. It is very difficult for farmers to change and to adapt with the speed required. It is difficult for urban people to remember that

185
it takes nine months to produce a calf and two years or more to produce a milking cow. One cannot turn the tap on and off as in other industries, or in the home.
Much is at stake for each dairy farmer—the future of the farm, the profitability of the farm, the value of the assets. That is why the regulations are so important.
I am not in favour of hurrying through the regulations. At present, not a single farmer has suffered any penalty. I hope that that will continue. There should be no deductions. We should ensure that the regulations are right. That will take time. Some hon. Members cry that the arrangemens must be made soon, so that the farmers shall know where they are. I believe that the farmers will be better off if, when they know where they are, they are in a fair situation. If the Minister will take his time, the result will be better in the long run.
I have a joke to tell about the regulations. An American attending a European Community conference wore a lapel badge bearing the letters "BAIC". On being asked what they meant, he replied, "Boy, am I confused." I and many others are confused, too, by the difficulties and complications. I wonder how many other Community countries impose such regulations on their farmers. I doubt that many do.
I repeat what has been said time after time: there must not he a single deduction from British farmers until we ascertain whether the measure is working in the Community. I am told by the Milk Marketing Board that, if the regulations are implemented as proposed, there will be a great deal of unfairness. Individual cases have been put through the computer, showing that there will be massive reductions to some farmers and large unexpected increases to others. I am told that anomalies exist. I hope to have further meetings with the MMB so that I can give my right hon. Friend more examples of the difficulties caused by the regulations in their present unfair form.
I hope that my right hon. Friend will carefully consider my strong points. The regulations contain many unfairnesses, and there should be a general clause to cover the most difficult cases. It is necessary to go beyond the guidelines to deal with the hard cases. I know that it will not be easy to include such a clause and that Ministry officials will not like it. I know that such a measure will give the Minister great power, but he will need such a clause to deal with the special cases that are not covered by any of the other regulations.
The Minister of State should make a clear statement that no dairy farmer will be penalised by more than minus 9 per cent. of his 1983 production. I hope that, in the interests of fairness and increased milk production—we should not forget that we do not want milk production to drop by too much—that will be a reality.
Many of our troubles could be overcome, especially those affecting the producer-retailer, if we did not have two types of quota—direct and wholesale. In its brief to me, the MMB makes it clear that the provision of two types of quota is likely to cause more problems than any other issue. That is true, and I hope that my right hon. Friend will turn his attention to that matter to ascertain what can be done. He may have to return to the Commission and fight the cause again. That would be in the interests of the producer.
The producer-retailer who supplies bottled milk faces a grave problem. Although most farmers produce milk for manufacturing, and therefore for butter and skimmed milk powder, and store it, thereby incurring the cost of
186
intervention and of getting rid of the milk, the people dealing with the lakes of milk are those who are retailing it and putting it on doorsteps. On a Saturday, they may have to say, "I am sorry, but I have run out of my quota. I cannot deliver any more bottled farm milk." That is absurd, and it must be put right. There must be more flexibility. Admittedly, there is not a great deal of such milk. The way to get rid of surpluses is to encourage more people to drink milk. Some Opposition Members often ask for that to be done, and that is the solution.
The position of tenants has to be cleared up. The regulations will be a thorn in the flesh of many small farmers who are tenants of county councils. We must be clear about how the Treasury will tax farmers on the total income of £650 spread over five years which has been given to them to get out of the industry. Farmers should be able to choose. I hope that my right hon. Friend will examine that matter.
My right hon. Friend should look carefully at the proposals aimed at helping some farmers find an alternative means of production—for example. with a pure beef suckler herd as well as a dairy herd on a holding. There will be little cheating, especially now that there is a quota system. It should be possible for farmers to turn to a beef suckler system.
I doubt whether all the measures can be implemented in October. People in Europe will certainly not he ready for them. My message to my right hon. Friend is get all the groundwork done, but do nothing else until we see other countries doing something. Only then should we start to apply the penalties.
I must draw the attention of the House to the extraordinary difficulty facing the Minister and all who are concerned with the problem of surpluses. In south-west England there was a 14 per cent. drop in milk production in April, May and June, caused by a combination of dry weather and over-reaction by farmers. If the dry weather continues, a serious problem will arise.
Mr. David Harris: Does my hon. Friend accept that, on top of the cut in production that he mentioned, last month — this will be repeated next month—farmers experienced a serious reduction in their income because of the seasonally adjusted scheme of the Milk Marketing Board? For many, that means a drop of more than £1,000 in the milk cheque.
Sir Peter Mills: That is true. It imposed an added burden on farmers. The farmers knew that that would happen, because there was at least a year or two's warning. Nevertheless, that does not help when one is putting the milk cheque in the bank.
I am worried about the possibility of supplies drying up. My right hon. Friend will correct me if I am wrong, but I believe that a 9 per cent. quota really means an 18 per cent. cut in the use of milk for butter and cheese. Most milk goes, as a first priority, for bottling and, therefore, doorstep selling. If that scheme continues, we may have a lot of egg on our faces because of the lack of milk for manufacturing and so on.
This is a difficult problem, but my right hon. Friend is trying desperately hard to deal with the matter. I shall certainly support him tonight and I urge my hon. Friends to do the same. However, we clearly reserve our position on what will happen between now and when the regulations return, because there must be some changes.
6.8 pm
Mr. Geraint Howells: This morning I read in one of the Welsh national papers that the president of the National Farmers Union said yesterday to the Minister of Agriculture, Fisheries and Food at the royal show that fanners were very angry about the quota system that was being imposed on them. He went on to say that he hoped the Minister during the debate today would bring forward constructive proposals to save the dairy industry from collapse. After listening to the Minister, I wonder whether he has impressed the president of the NFU and his team. I doubt very much whether he has impressed the Conservative Back Benchers. They have been very quiet. One or two Conservative Members have said that they oppose the quota system.
Like many other right hon. and hon. Members on both sides of the House, I have had the pleasure of representing a constituency for more than 10 years. I am sure that many hon. Members will recollect that the Tory Government of 1973 decided that the beef sector would survive without a guaranteed price system for the end product. In 1974 calves were being given away and best beef was being sold at extremely low prices. It was against that background that Members of all parties persuaded the then Minister of Agriculture, Fisheries and Food to introduce a variable premium scheme. I give due credit to the actions taken by the Labour Minister of Agriculture, Fisheries and Food while the 1974–9 Labour Government were in office. Of course, Lord Pearl is now in another place.
We have learnt that the agriculture industry will not survive unless we have a guaranteed price system for the end product. I agree with the hon. Member for Torridge and Devon, West (Sir P. Mills) that the way forward for the industry is not by means of a quota system for milk or any other product that comes from the land. The sooner we do away with the quota system, the better it will be.
The Government have been guilty on many occasions of introducing hasty and ill-conceived measures, but the introduction of the milk quota system is the most blatant example yet of their appalling lack of sensitivity to the plight of entire sections of society. It is proof yet again of their ignorance of the way in which the rural economy works.
I represent a rural constituency in Wales in which nearly a quarter of the work force is involved in agricultural production. Nearly 70 per cent. of the farm holdings are run by dairy farmers, who are directly affected by the new quota system. Many more of my constituents are employed in industries related to agriculture.
As I am a Welshman representing part of Dyfed, I shall confine my remarks to Wales, especially to Dyfed, as other hon. Members will confine their remarks to their own constituencies and their own countries.
The majority of the holdings in south-west Wales are small family farms with an average herd of 50 to 60 milking cows. Given the nature of the land, the climate and the market conditions prevailing in other commodities, those who are forced out of milk production will have little hope of making the grade in any other sector. If we accept the principle of a quota system for milk, the Government of the day may be forced to accept quota systems for other commodities. Therefore, the milk quota system must be rejected.
188
The future for the majority of farmers in Dyfed is presently bleak. There is a heavy dependence in the area on the agricultural economy, and every man, woman and child in the region can be expected to feel the effects of production cuts. Such is the concern throughout the county that on 30 May the Dyfed county council called a meeting to discuss the crisis facing the entire community and the implications of the collapse of the industry. It invited members of the National Farmers Union, the Farmers Union of Wales, the Country Landowners Association and members of the district councils. I cannot believe that the Government are aware of the real fears of the people of south-west Wales. If they are so aware, they are slow to respond.
Figures prepared by Dyfed County Council show that farmers in Dyfed will have to cut back, mainly because of the rapid expansion encouraged over recent years, up to nearly 15 per cent. on current production. This has led to a direct loss in farmers' incomes of £13 million. That loss will lead directly to job losses on farms and indirectly to job losses in related industries. We have heard only today of many redundancies in creameries throughout Wales and other parts of Britain. Other local businesses will similarly be affected as income and spending power decline severely. There will be a shedding of labour in an area in which there is already an unacceptably high level of unemployment.
We have been told today that more than 34 employees will be made redundant at the Felin-fach creamery. In Whitland, Carmarthen, another 24 will be made redundant. There will be 19 redundancies in Anglesey, and in the Maelor area of Wrexham there will be 49. About 125 full-time and part-time employees in creameries will be made redundant. The total will be 400 if we take the whole of England and Wales. It is a great pity that southwest Wales has such a high rate of unemployment.
The collapse of the economy in south-west Wales will have far-reaching effects, as the viability of many rural services is based on the farming families which populate the district. The rural shops, sub-post offices, village shops and policing and medical facilities will be under even more severe pressure. The future of the family farm is under threat, but so is the very fabric of society in the rural heart of Dyfed. This naturally includes its social and cultural traditions. Its very existence is at threat.
We are fighting for fair play, justice and a way of life. There is a sense of outrage among the farming community that they should have been so easily and complacently betrayed by the Tory Government. The sense of injustice is the stronger because of the concessions won by the Irish Government for their farmers. Our farmers have made strenuous efforts, with encouragement from the Ministry, to improve standards and increase production over the past few years. We see Governments in other parts of Europe making greater concessions to their farmers. The general background tells us that there was no need to impose quotas across the board with little or no warning. It seems that economic and social consequences were not considered.
Mr. Patrick Nicholls: The hon. Gentleman has criticised the Government for making concessions, but will he acknowledge that the package was one that had to be taken for agriculture as a whole? Good features such as the beef premium and the suckler premium were trade-offs which had to be made. Bearing

189
in mind the constituency which the hon. Gentleman represents, it is understandable that he wants to talk about dairy farmers, but if he wants to assist the House, the country and the farmers in his constituency he must talk about the consequences for agriculture as a whole.
Mr. Howells: If the medicine is too strong for the hon. Gentleman, the best thing is for him to leave the Chamber. What I have said is the truth and the hon. Gentleman knows it. He knows that the Government have let down the dairy farmers over the past few months.
It is imperative that action is now being considered by the Government to alleviate the effects of the quota system. It is essential from the Welsh point of view that the Secretary of State for Wales takes his responsibilities seriously and responds to the representations that have been made to him by farming unions and other interested parties. I say with regret that the Secretary of State for Wales, who represents Welsh agriculture, has not been to Brussels once on behalf of Welsh farmers to take part in discussions or negotiations during the price fixing of our commodities. It is a great shame that he has not lived up to his responsibilities and has failed to look after the interests of Welsh dairy farmers.
There must be a concerted effort by the Government and their agencies to improve employment prospects in rural areas, and to make due allowance for that in their overall policy. Rural Wales needs financial aid—and without delay. Confidence in the agriculture industry is now at its lowest ebb since the war. Land values have fallen drastically. Many of my constituents are in deep despair.
The fact that the Ministers responsible for the agriculture industry did so little in Brussels to protect our interests or to seek other solutions to the problems of surpluses has destroyed the credibility of the Government. The claim of the Tory party to be a friend of the farmers in rural areas is now greeted everywhere with hollow laughter.
Let us look at a few statistics—we have not had them today. Perhaps many people who are not interested in the agriculture industry are not aware that in 1983 the dairy farmer paid a levy of approximately £18 per cow on every cow that he kept. In 1984 that levy has been increased by £11 per head to approximately £29 per cow. It is almost unbelievable—very few people are aware of it—that under the quality payments scheme, introduced on 1 April this year, the levy paid is now equivalent to £50 per cow. Based on a 40-cow herd, that levy is £2,000. So the dairy farmer is paying an extra £61 per cow this year as compared with last year. How can the dairy farmers survive with all the pressures that are on them? Via quotas and levies a dairy farmer with a 100-cow herd—I have worked it out with other farmers and with the farmers union — will make a loss of over £10,000 this year. Therefore, the position is not very good.
We have been told that the Minister has a scheme to give £50 million in financial help to dairy producers over five years, but, according to my figures, the dairy farmers in my constituency will make a loss of between £7 million and £10 million. There will not be much left for the farmers of Devon, Cornwall and Scotland once I have taken the quota of £7 million to £10 million for my Cardiganshire farmers. The sooner the Minister goes back to Brussels for more money, the better it will be for everyone concerned.
190
I was told yesterday that the Minister of Agriculture, Fisheries and Food will not be coming to the royal Welsh show this year. I wonder what is the reason for that decision. If he does not accept the figures that I have given, I advise and invite him to come to the royal Welsh show, and to bring with him the Secretaries of State for Wales and for Scotland. If they were to go into the members' tent they would soon find out whether dairy farmers in Wales are willing to accept the present proposals.
Farmers are not very good at dealing with figures. I make the odd mistake now and again, and I am sure that many farmers do as well. If a farmer with a 100-cow herd were by mistake to send an extra 10 gallons of milk per cow to the Milk Marketing Board—it is easy to make that simple mistake—he would have sent 1,000 gallons to the MMB. But the board would not pay a penny for those 1,000 gallons, and the poor farmer would have had to pay more than £800 for the board to collect the milk. I wonder who would get the profit from the extra 1,000 gallons sent to the board.
Like others, I have received many complaints from the producer-retailers. Many of them in various parts of Britain are worried about the draft regulations. I hope that the Minister will ensure that their future interests and the consumers' interests will be protected under the scheme that he is to introduce. Further clarification is needed to ease their worries.
There is only one way out of the dilemma. Long ago the farmers unions and others pressed the Government to accept a quota system for a short period, on one condition — that the farmers would be given three years to put their house in order. It would not have been too bad if we had been given time to adjust our system of farming.
Mr. Edward Leigh: Farmers in the eastern counties will be interested in the hon. Gentleman's earlier comment that he is opposed to quotas in all sectors of agricultural produce. Would he care to tell the House, for the benefit of farmers in my constituency, how he would deal with over-production in cereals? Would it be by a massive cut in the intervention price? I think that they are entitled to an answer from the official spokesman of the Liberal party.
Mr. Howells: The best advice I can give the hon. Gentleman is to wait for four years, when my colleagues will be sitting on the Government Front Bench.
Looking ahead, I suggest that there is only one way out of the difficulty. I have consulted the National Farmers Union, the Country Landowners Association, the Farmers Union of Wales, my colleagues on Dyfed county council and Ceredigion district council and others within Wales. We are all convinced that the Minister should not accept the present draft proposals. He should go back to Brussels once again—taking with him this time the Secretaries of State for Wales and for Scotland—and propose a new scheme under which dairy farmers in Britain will be adequately compensated for loss of business for the next three years. That is the only way forward. The whole package should be put back in the melting pot. We should start all over again. This time, the Government have made a bad mistake; they have made a political blunder. They are well aware of it, and all their supporters in the country are aware of it.
Mr. Nicholas Fairbairn: I notice that the party that is so much in favour of devolved government has not taken into account the attitude of the Scottish Farmers Union, although the hon. Gentleman mentioned it briefly. We have been in favour of a quota system from the start.
Mr. Howells: I am not disputing the hon. and learned Gentleman's statement. If that is the fact, it is a fact. I have not said a word to the contrary.
Figures produced today show that we have 144 days supply of butter in intervention stores, and that we have 692 days supply of skimmed milk powder. We are all aware that it cannot go on. [Interruption.] Wait a while. You are in government and you should have done your homework before now. [Interruption.] We all knew that this would come and I say to whoever was in charge of the marketing division in Europe, if there is one, or of the marketing division in your Government, that you should have known——
Mr. Speaker: Order. It is not my Government.
Mr. Howells: Unfortunately not, Mr. Speaker. I apologise.
Had the Government looked properly at the problems facing the dairy industry, they could have forecast the marketing system that would prevail. Do not hon. Members on both sides of the House believe as Christians that we should do something about the surpluses by selling them or giving them to the Third world? [Interruption.] Many Conservative Members disagree with that. If we believe in what we preach—that we should look after those in need throughout the world—it is our duty to reconsider the marketing system. There may be a way to dispose of our surpluses in the Community. There may be no need to turn skimmed milk into skimmed milk powder.
What is happening at present can only be described as the result of bad management, and it is costing the British taxpayer large sums of money. The Government should be ashamed of themselves. I hope that the Minister will assure the British dairy farmers that the quotas now to be proposed will not be increased in the next two years. Who knows whether the Minister will make further cuts of 10 per cent. in two or three years' time?
We on these Benches will be voting against the regulations tonight. If Conservative Members spoke their minds, they would express the same views and vote with us.
6.32 pm
Sir Hector Monro: I hope that the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) will forgive me if I do not comment on his Welsh story, particularly as Scotland won a grand slam. Accordingly, I shall put Scotland first in my speech. I hope that he will also remember that we shall not be voting on any regulations tonight—this debate is taking place on the Adjournment—so he may decide to think twice about how he votes and leave any action of that sort until the regulations are published.
I congratulate the Minister and the Leader of the House on providing a whole day in which to debate this matter so that our views can be considered by the Government prior to the normal debate before the relevant provisions become law. I also congratulate my right hon. Friend the Minister on his achievement relative to a whole host of
192
matters that are vital to farming, such as the green pound, the beef regime, the increase in the price of wool, the increase in the suckler cow premium—which I hope will be considered for extension to beef projects within dairy herds—his work for the less favoured areas, the hill compensatory allowances and what he has done in respect of interest rates and the national insurance surcharge.
I hope that in his consideration of the sheepmeat regime, which is an important aspect of farming, my right hon. Friend will remember that the great fluctuations in price this year have made marketing extremely difficult. If we can find a better system next year, with a more even level of pricing, that will be welcomed by farmers, dealers and the general public.
The price review this year has disappointed the farming community. Incomes have fallen and, with lower prices, they must fall further. It was rash of the Minister of State, Scottish Office, to have said a few weeks ago, so early in the farming year, that there would be a substantial recovery in earnings this year. I hope that he is right, but, to achieve that, there will need to be a remarkable increase in farm gate prices.
I wish to speak mainly about milk. I represent the important dairy area of Dumfries, and my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang) wishes to be associated with my comments. This whole issue is bound up with the manufacturing of milk products. Like all hon. Members, I am concerned to ensure that consumers have plenty of high quality milk at a reasonable cost. Consumers have been well served by the dairy industry, with milk prices rising by less than the rate of inflation. The dairy industry, with farming generally, has made an important contribution to the national economy.
I am concerned at the fall this spring in milk production, in the area of the Scottish Milk Marketing Board, by about 7 per cent. Do we have ample supplies in reserve to keep the manufacturing processes in Scotland running this year? I am equally concerned, with other hon. Members, about any drop in employment which may occur in this important industry, remembering that dairy farming often takes place in areas of high unemployment. May we be assured that the fall in milk production, coupled with the serious news today about redundancies in south-west England, will not have a dramatic impact on exports?
Every thinking milk producer anticipated reductions in output, even though White Papers over the years encouraged more production. However, it would have been foolhardy of farmers to cut production voluntarily in a period of high costs and inflation—happily, much lower now—as output was the only way by which they could maintain their profitability.
The cuts have been severe, but I have no doubt that with good husbandry and wise advice from the colleges, and from ADAS in England, the majority will overcome the setback and find a profitable way forward. We must not panic during this period of uncertainty, even if the colleges have forecast that net margins will be down by about half this year, with perhaps worse to come in 1985.
Uncertainly lies at the heart of the lack of confidence in the dairying areas. Farmers want to know why, if restrictions by quota or price were inevitable, the EEC Governments had not made preparations for that well in advance of the administrative details that were introduced in April. Contingency plans for either system should have

193
been ready. Had they been ready, that would have helped to cushion the dramatic surprise that the announcement of the cuts had on most dairy farmers.
Meetings arranged by the Scottish Milk Marketing Board and the Scottish NFU have been of enormous help to farmers, as has been the advice of the colleges and the efforts of other boards in Scotland to provide information. Scotland has accepted that if there must be reductions in production, a quota system is the best, and the right hon. Member for Clydesdale (Dame Judith Hart) should have known better than to say otherwise.
Dame Judith Hart: I have been outside the Chamber clarifying the information that I had been given. The NFU in Scotland, at its meeting with the Minister, accepted the quota system, provided that there was equality of treatment for all nations in the EEC. As there is blatantly not, it is now hesitant about the whole thing.
Sir Hector Monro: I am glad that the right hon. Lady has at least tried to clarify what she said, and I shall not delay the House by quoting from the brief which has been provided by the NFU. It is clear that if there must be restrictions the union favours quotas, and it was a pity that, in her original remarks, the right hon. Lady got it wrong.
If we are to have a quota system, we must look after those who have not expanded, because they will be hit hardest of all. The system must be fair, and be seen to be fair, and I am glad that the Minister went further in giving explanations about the issue of self-sufficiency, bearing in mind New Zealand imports. The problem that arises time and again is the unfair position into which Ireland has got itself as a result of the scheme. The Minister should do all that he can to bring home the exact relationship between this country and others in the EEC. We need to be reassured that we are being fairly treated. The Minister has been helpful, particularly when he said that we had reached 100 per cent. self-sufficiency.
Mr. Paddy Ashdown: Will the hon. Gentleman give way?
Sir Hector Monro: No, we must press on. The hon. Gentleman has his own party spokesman.
May we have an assurance that all the EEC countries will adopt similar schemes to ours and that no super levy will be paid until every EEC country is ready to do the same? I believe that no super levy should be paid until special cases are resolved, although I accept that that might take until the end of the year. The Minister must keep flexibility up his sleeve for exceptional cases of hardship that are not covered by the regulations as drafted.
I am glad that my hon. Friend the Parliamentary Under-Secretary of State for Scotland, the hon. Member for Argyll and Bute (Mr. MacKay), is on the Front Bench, because I wish to mention one or two Scottish matters. According to the letter from the Minister of State, Scottish Office, which I received on 28 June there are to be four panels of three members for the whole of Scotland. I wonder whether that is enough to get through all the paperwork quickly, because many farms will have to be visited.
The Minister's letter does not make it clear whether an appeals tribunal will be set up. It would be valuable to know whether such a tribunal is to be established. The impression is that the panels will make the decisions and that there will be no subsequent appeal. Farmers'
194
livelihoods are at stake and, as my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) said, the value of farms and farmers' futures are also at stake.
The producer-retailers face the hardest future. On their own initiative they have built up good milk rounds, goodwill and prospects for further development. In 1983 the Scottish Office introduced compulsory pasteurisation. Producer-retailers had to buy expensive machinery to fulfil the new duty. It led to a reduction in producer-retailers to under 100. Yet that 100 in 1983 picked up all the milk sales handled by the previous 200. They need a substantially increased quota over the 1983 level if they are to remain in business and provide high quality liquid milk for consumption.
An astonishing anomaly exists in the two-quota system for producer-retailers. They have quotas for the board and quotas for direct sale. If a producer-retailer tries for a contract for 100 gallons with a hospital, or school, for instance, he may win it or lose it, but he cannot transfer from one quota to another. We are striving to increase liquid milk production, so I hope that we can find a way round the problem. It is one of the most important issues for the Minister to consider before he redrafts the regulations.
The regulations give the impression that the farming and horticulture development scheme is under discussion for 1984–85. I should like similar facilities to be available for 1985–86 and for further into the future. The matter needs clarification.
We also need clarification on the special issues relating to production on 2 April. Several tenant farmers whom I know negotiated freely with landlords last winter to take on farms at the Whit Sunday term—at the end of May. Their predecessors went out of production in February or March prior to handing over the farm. Technically there was no production on 1 April. Special regulations must be formulated so that such farmers come within the quota system at the end of May.
I advocated the outgoers' scheme when the quota system was announced. I have several matters about which I should like the Minister to think. Are farmers to be taxed on income over five years, or on capital on the original payment? Is the herd basis to be brought into operation, or will the farmer have the option between income and capital?
We must also deal with the outgoes between landlords and tenants. We must be fair to both. When a dairy farm is let and the landlord is involved in the capital provision of equipment, he has a right to know what the tenant is doing in relation to outgoes and he has a right of veto. When the farm is let on an open tenancy, for whatever type of production — arable, beef or dairy — the landlord should have no veto. I hope that arrangements can be made between the Scottish Landowners Federation and the NFU that are fair to both sides.
I support the Government motion, but I hope that note will be taken of my constructive criticisms and that better draft regulations will be presented as soon as possible. I should certainly find it difficult to support the regulations as drafted. Knowing my right hon. Friend's feeling about agriculture, I hope that he will meet the criticisms and that he will present us with better regulations in a fortnight's time.
Several Hon. Members rose——
Mr. Speaker: I remind the House of the great pressure of time in this debate. Shorter speeches would be generally acceptable to most hon. Members.
6.47 pm
Mr. Thomas Torney: "Farmers have been led up the garden path by EEC policies." They are not my words. According to The Times this morning they are the words of the Minister of Agriculture, Fisheries and Food yesterday at the royal agricultural show. It is ironic that the Minister should at last, after all these years, come round to the fact that EEC policies lead not only farmers up the garden path, but taxpayers and many other sectors in our society.
During the referendum campaign, the Minister and I stumped the country together, but on opposite sides of the fence. Even in those days I was trying to convince him of the inadequacies of the Common Market and in particular of the disadvantages for Britain of the common agricultural policy. Now we have a glint of hope. The Minister is beginning to see the light.
Successive Governments have exhorted the farmer to increase production. That was the right policy. We had to try to be self-sufficient in food. A year or so ago I went to the Barbican for the launching of the Food from Britain campaign. Farmers, food manufacturers and all connected with food, including shopkeepers, were exhorted to improve marketing and production techniques and to produce food competitively with nations inside and outside the EEC.
The milk quota scheme must put farming back where it was before the Government started exhorting it. It must at least put the industry back where it was when I first entered the House in 1970, when it was producing but a tiny proportion of the butter that Britain required. I cannot see how the farming industry can get out of the scheme. In such a position no farmer can have any confidence to plan ahead. [Interruption.] I am asked where my farmers are. I do not have a lot of farmers, but I do have a considerable interest in the food manufacturing industries, and they affect farming. I have a few farmers, some of whom will be the hardest hit by the quota system.
The farmers on the perimeter of my constituency are producer-retailers and right hon. and hon. Members from both sides of the House have said conclusively that the producer-retailer—the small man with a few cows and a small parcel of land that cannot be converted to something else — will be hardest hit. So I say yes to that interjection from a sedentary position. I do have a few farmers and they will be the worst hit. Because of my interest in agriculture and food I have also received representations against the scheme from the Yorkshire NFU. As a Yorkshire Member of Parliament, I have a perfect right to put its case.
It is all very well for the Minister to bring his little book out and to explain to us that we are self-sufficient in this, that and the other, but I am sure that he knows full well when he is talking about reducing milk consumption that we do not have huge surpluses. They are to be found in the other EEC countries, not in Britain. I am sure that farmers, when they gather on their farms, in their local pubs or at their NFU meetings, must be asking themselves why in heaven's name Britain, which does not produce a surplus, should be called upon to cut its production. Why should we be called upon to shoulder a greater burden than, for instance, France?
Mr. Jopling: The hon. Gentleman said that we did not produce surpluses. I remind him, quoting figures of 28 June, that in the United Kingdom there were almost precisely 150,000 tonnes of butter in intervention stocks, constituting 177 days of consumption, and there were 170,000 tonnes of skimmed milk powder, representing 621 days of consumption.
Mr. Torney: The Minister can quote such figures, but the surpluses that he is talking about still do not match the surpluses that we have been hearing about; not just the recent ones on the milk quota question, but those when butter and other commodities have had to be sold to east European countries at give-away prices, subsidised by the British taxpayer. We do not produce massive surpluses. If we are in surplus at the moment, it is only temporary and, with a quota system, it will not happen again.
It is well known in farming circles and everywhere else that the United Kingdom has the facilities to implement the quota scheme if the Minister so desires, as he does. We will play cricket as it is played at the Oval and Lords. We will play properly. We will not fiddle in any way. At a meeting of the NFU at Knightsbridge only last week, a responsible executive member told the assembled company that he had just returned from France and that the French farmer did not know anything about quotas or cuts in his milk production. If the French will not cut their production, the Minister should see to it that we do not cut ours. Over the years, France has had massive surpluses. It has sold butter cheap to Russia. If France will not cut —it would not surprise me in the least if it ignored the rules and played the game its way and did not cut—what will he do about it? I challenge him to tell us. Surely we are justified in saying to him that if France does not play to the rules neither shall we. We will not see our dairy industry destroyed while the French do nothing about the quota system despite the fact that they are supposed to be as much part of the bargain as we are.
There is no policing in the EEC, and I am sure that the Minister knows that well. In Brussels recently I asked the Commission representatives a specific question about policing. I was amazed to discover that they had no system of policing at all. That related not so much to milk production as to cereals and other things. They have no system for finding out what is happening. They read newspapers to find out what is going on. To digress for a moment, feelers are being put out by the people in Brussels to discover the reaction of the Governments of member states to a quota system for cereals. There will already be a slight reduction in the price charged for cereals, but that sort of reduction will not be enough—the EEC knows that it will not be enough—to offset the massive stocks of cereals within the EEC.
I am anxious about the knock-on effect. I must declare an interest in that I am sponsored by the Union of Shop, Distributive and Allied Workers. We organise people in the creameries that were referred to by the hon. Member for Torridge and Devon, West (Sir P. Mills). We also organise workers in the milk distribution and milk processing industries. The dairy quota system will hit our members. It will probably cause far more unemployment among our members in the milk processing and delivery industries, in the creameries and butter factories, than among the workers on the farms. That is not an attack on the farm workers. It will create some unemployment

197
among them, but at the moment more people are employed in milk manufacturing than on the farms. For that reason we shall be worst hit.
Mr. Ashdown: I am grateful to the hon. Gentleman for giving way. Such small courtesies seem more in evidence among Opposition Members than among Government supporters. The hon. Gentleman knows that I have lost 60 jobs in a creamery in my constituency only today. Does he not agree that the greatest contributing factor to the damage being done in the industry as a whole is the uncertainty surrounding the future? In the light of that, the Minister's comment that he does not even have a target in mind for when the matter shall be resolved and has not even announced when the review boards will sit will do even more damage and create even more job losses not just in farming but throughout the ancillary industries about which the hon. Gentleman spoke.
Mr. Torney: I agree entirely with the hon. Member for Yeovil (Mr. Ashdown), and I sympathise greatly with the position in which he finds himself. But that was my very point, and the hon. Gentleman's intervention is further evidence that what I say is true.
As the Minister knows, during agricultural Questions, I have attempted to question him about the knock-on effect not only on milk distributors, milk processors and butter manufacturers but also on the feed side of the industry. Considerable unemployment will result because farmers will cut down on artificial feeds to their cows. They will put them out to grass more to reduce the amount of milk given by their cows and this will affect the feed industry.
I appeal to the Minister to examine the position in these other industries and see whether the Government can come up with some aid to those industries. They must be maintained for the future. They were a vital part of the exhortation to farmers to produce more. They are a vital part of the Food from Britain campaign introduced only a short time ago. The Government should be prepared to assist them in some way to get over this very difficult period.
We have too much unemployment already. This package will, albeit in small measure, add to the terrible effect of unemployment in the United Kingdom. That alone is a good enough reason for the Government to attempt to deal with the knock-on effect on other industries tied up with farming. They are being affected already. We have heard evidence of that today, and there will be more in the weeks to come. I implore the Minister to do all that he can to help.
7.3 pm
Mr. Neil Hamilton: It is a great encouragement to me to know that the flagship of the Conservative Back Benches, my right hon. Friend the Member for Taunton (Mr. du Cann), is steaming in the same direction as I am. I must tell my right hon. Friend the Minister that I agree entirely with what my right hon. Friend the Member for Taunton said, especially with his five or six prescriptions for making improvements in the scheme.
I have with some difficulty ploughed through the document that we are debating. I came to the debate as a simple tax lawyer, and I had certain difficulty with the Eurospeak and the rather turgid prose. It is one of the few documents where it is necessary to read the full text to understand the explanatory memorandum.
198
My major criticism of the package is that we have tried to reform one sector of the common agricultural policy in isolation from the rest. In my view, this is a recipe for disaster. I know the difficulties involved, but we should have dealt with a comprehensive reform package.
I regret that the increase in own resources granted by the Government will make matters more difficult in the months and years ahead. But it has made matters more difficult for the dairy sector, which is very important in my constituency, that this sector has been taken in isolation.
Milk accounts for about 30 per cent. of expenditure on the CAP. Therefore, 70 per cent. of CAP expenditure occurs in other areas of agriculture. That being so, it is unfair that we should have singled out this one sector, In particular, it is a shame that, as soon as one begins to compare the incomes of dairy farmers with those engaged in other forms of agriculture, it becomes clear that dairy farmers should not have been singled out for first treatment.
In a written answer to a question by my hon. Friend the Member for Penrith and The Border (Mr. Maclean) on 30 March the Minister gave the figures. Taking the position seven years ago and looking at what has happenend to farm incomes in the intervening period, we see that dairy farmers' incomes are down to 65 per cent. Those of cattle and sheep producers are down to 64 per cent. By comparison with those two livestock sectors, in the cereals sector incomes are up by two thirds and in other cropping incomes are up by 230 per cent., although pig and poultry producers are down to 25 per cent. If any sector of agriculture should have been singled out, the dairy part of the industry comes fairly low down the list.
It would have been much fairer to deal with the whole of agriculture rather than with one sector in isolation, because in that way, although we could have dealt with the surpluses in milk and its associated products—and they need to be reduced—we could have brought down the costs of the dairy farmer at the same time as we brought down his income. That would have equalised the position. I know that there is a 1 per cent. reduction in cereal prices this year, but I agree with the hon. Member for Bradford, South (Mr. Torney) that that is nowhere near enough to produce any significant reduction in the amount of cereals that will be produced.
Surpluses must be cut throughout the CAP, and I applaud the desire of my right hon. Friend the Minister to rely upon the price mechanism to achieve that. However, I regret that we were about the only member state in the Community to pursue that seriously.
It may be of some comfort to my right hon. Friend to know that in my discussions with farmers, although he has been unfavourably compared with his predecessor, my righ hon. Friend the Member for Worcester (Mr. Walker), I have defended him strongly for his work over the last few months. The many benefits in other areas have been catalogued, and I shall not go into them now.
The main reason why farmers perhaps look at my right hon. Friend in a less favourable light than they did his predecessor is that the budgetary problems of the Community are much more acute than they were in previous years. He has to grasp the nettle, which his predecessors did not have to do. Therefore, I have some sympathy with him, but not too much.
The national quota that my right hon. Friend negotiated was probably the best figure that he could have got. I do not criticise him on that ground, because I know the

199
difficulties of persuading the other member states to agree with us. It is only in fairly tales that the frogs turn into Prince Charmings. Certainly it does not happen in the Community.
We are now self-sufficient in most dairy products and in many aspects more than self-sufficient. However, the great expansion in British dairy farming has occurred mainly in the last two or three years. We are in the process of catching up, which is inevitable as a result of our late entry into the Community. Dairy farmers have been increasing production with official encouragement, up to and including recent weeks. I have a great deal of sympathy with them, because they have relied on official advice, only to find the carpet being pulled from underneath them.
Through the dairy settlement, we are institutionalising the inefficient European farms. Three quarters of British herds have 50 or more cows. In France, only 10 per cent. have 50 cows or more, and in Germany only 7 per cent., and France and Germany together are responsible for half the total milk production in the Community. The figures which will apply to the Community in future years are institutionalising inefficiency, and that is regrettable.
The most valid criticism may fall on the application of the quota in this country. United Kingdom farmers—and there are many of them—whose production has not increased since 1981 are understandably aggrieved because they feel that they have not contributed to the surpluses in the Community, yet they must reduce their incomes to pay for profligacy elsewhere. What sympathy does the Minister have for them?
One suggestion is that, instead of going for 1983 minus 9 per cent., we should have taken an average of the years 1981 to 1983. What are the arguments against that?
We are all greatly concerned whether the quota will be policed properly in other Community countries. I agree with the hon. Member for Bradford, South that it cannot be policed properly because of the high proportion of direct sales to the consumer, whereas in the United Kingdom it goes through a monopoly purchase of the Milk Marketing Board.
It will also be impossible to police because I doubt whether we have accurate figures for current production levels for individual farmers. Therefore, how can we tell whether Community farmers are keeping within the new quotas? If, at the end of the day, we decide that there is cheating elsewhere in the Community, will the British Government take unilateral action to prevent the destruction of the British dairy sector? I hope that they will.
It was Austen Chamberlain, a former Conservative Minister, of whom it was said that he played the game and always lost. I hope that it will not be said of this Conservative Government that we played the game and lost. Conservative Members who represent strong dairy constituencies will not be prepared to allow their industries to go to the wall merely to allow other member states not to abide by the letter of the law.
On special cases, the 2·5 per cent. was insufficient to accommodate many of the hard cases that will arise. I hope that that figure can be revised upwards.
200
My right hon. Friend the Member for Taunton said that in order to qualify as a special case some attention must be given to weather conditions last year. I reiterate that point.
I was grateful when my right hon. Friend the Minister of Agriculture said that he may be prepared to accept that anyone whose production was 10 to 15 per cent. below the average would be considered as a special case. That will not necessarily cover many of the hard cases that will arise among Cheshire farmers.
I have spoken today to a farmer constituent whose production was 9 per cent. down in 1983. As he must now reduce his quota by another 9 per cent., his production will be down by a total of 18 per cent. of what it was in a bad year. Consequently, it will be impossible for him to continue, and he will have to leave the industry.
The quota pays insufficient regard to farmers who cannot turn their land over to other forms of production —for example, those who have farms in wetter areas or where the soil is heavy and cannot be ploughed up. My hon. Friend the Member for Horsham (Mr. Hordern) has made this point in earlier debates. It will be impossible for such farmers to stay in business. Therefore, there should be a bias in the quota in favour of wetter areas or areas where the soil is difficult to till.
The speed of transition was well covered by my right hon. Friend the Member for Taunton. We have had four months of uncertainty, which is intolerable for those who must make business decisions for many months ahead. Those people were told that they would have to adjust over a weekend. The original decision was made on a Friday and was to apply from the following Monday, yet four months later we still do not have the details of the scheme. That is disgraceful.
Farmers are now faced with assets that are unsaleable and debts which are unserviceable. Therefore, they will face great difficulty when the payment of the levy comes to be made in October. I hope that my right hon. Friend will bear in mind the possibility of staggering those levy payments to help farmers with their cash-flow problems.
I have in previous months made all these points in correspondence with Ministers, and I shall not therefore detain the House for much longer. I ask the Government to listen carefully to what I and other hon. Members have said. I shall not be able to support these proposals. At present I am minded not to go into the Government Lobby, although I shall not vote against them tonight. However, when we debate the substantive proposals in a few weeks' time, and if there has been no significant improvement, I regret that, for the first time in this Parliament, I shall have to go into the Opposition Lobby.
7.15 pm
Dr. Roger Thomas: About two months before this quota agreement was clinched, the annual review showed that last year farm incomes fell by around 15 per cent. In the livestock sector the fall was even greater, so that livestock and arable farmers continued to exist in totally different economic worlds. This agreement has undermined the existence and the viability of the former even further.
Farmers, particularly those in my constituency —where there are 1,800 milk producers— feel that the changes now taking place are more complex and far reaching than any of the other changes which the industry has had to face in the last 50 years. Naturally, farmers are

201
extremely angered that there has been no sensible transition period. Had there been a three-year period to adapt and to adjust there would have been far more cooperation and far less opposition. Unfortunately, the opposite is the case. Farmers feel that these derogatory measures have been introduced by politicians and can be answered and ameliorated only by politicians.
The whole dairy industry in my county is extremely confused, and it is no exaggeration to say that it has been whipped into turmoil. I am sure that the Secretary of State saw that for himself when he visited the small county town of Llangadog.
The industry finds itself in this ridiculous situation because of ministerial failure to understand an essentially on-farm matter. Carmarthenshire milk producers are extremely aggrieved at the co-responsibility levy, because it is only a tax on production. They feel that it should be reduced forthwith to its original level of 0·5 per cent. to finance, marketing, development and promotional programmes.
Through lack of information and directive, the part of the scheme most confusing to farmers, their agents and advisers is the quota assessment and the transfer of quotas. It will be some time before we are able to arrive at a clear objective, if that will ever be possible. People committed to new farms have no idea where they really stand, and that is especially so of the smaller farmers of Carmarthen.
What about the creameries of Carmarthen and Dyfed? In the autumn of 1983 there was the closure of a creamery at Newcastle Emlyn—one of the six creameries in the constituency—with the loss of 250 jobs. In the four constituencies which make up the new county of Dyfed, 1,250 people are now employed in these creameries. Today we have heard of the loss of 10 per cent. of those jobs — 84 full-time and 46 part-time jobs. People are now extremely concerned, because in these areas of southwest Wales there is no alternative to farming. Farmers there are being coaxed and cajoled, through an ineffective and insufficient scheme of £50 million over five years, to leave the industry, which has been part of their heritage for decades.
Most farmers will, perhaps realistically, concede that the EEC decision cannot be changed fundamentally at this stage. Indeed, the priority is to ensure that British dairy farmers will be treated fairly within the quota system and that surveillance of how other countries apply their levies and quotas will be paramount and decisive. The aim must be to keep the maximum number of producers in the industry.
For farmers in my part of south-west Wales, adaptation and versatility are words that fall on stony ground. They are both impractical and financially impossible. Warnings that a reasonable transition period was imperative are still being waved aside. Our farming unions have pressed for all they are worth the economic damage of such cuts on the rural economy, which discriminate especially against the smaller, specialist producers.
Unless there are better safeguards and conditions than are envisaged at present in parts of south-west Wales, many farmers will not survive and will be forced to capitulate. That will be tragic. The dairy industry in that area will be shattered as a result of nothing less than a major agricultural retreat. As in any retreat, the fittest will probably survive, but only by trampling upon their weaker brethren. Even at this stage, when ameliorating measures
202
are probably flagging, measures should be introduced to help smaller producers in a practical manner, through quota reallocation and transitional compensation.
What were, and still are, needed are measures to help farmers to stay in milk production. They do not need to be given money to get out of milk production. Those measures should be coupled with special aids to assist the grassland livestock producers to keep going. There is already heavy pressure on the beef market, so what alternative is there for hard-pressed dairy specialists? Should they go in the direction of intervention stocks, which are likely to rise and which are at high levels already? No part of the agriculture industry is immune from the damaging effect of the milk quotas, which are applied so rigidly and implemented in such an arbitrary and discriminatory way.
In my opinion, the £50 million involved in the cessation scheme would have been better spent on compensating producers to continue in milk production. Let us remember that many milk producers in south-west Wales have been encouraged to expand in the past two years. Therefore, they must carry a disproportionate share of the quota burden. The Minister is probably adamant and insists upon the cessation payments, but the current scheme must be improved greatly and made comparable to those of other member states. It should not necessarily be used to prevent a producer from producing milk for ever.
It is very provocative for the Secretary of State for Wales to say that because of the success of dairy farming in Wales we are a prime cause of these restrictive measures because we are self-sufficient in butter fats and are a substantial contributor to intervention stores. Welsh farmers feel very aggrieved about that, and also about New Zealand quotas. Producers have been infuriated by the fact that the recent five-year access for New Zealand butter will be continuing at a high level. Farmers have expressed their distaste of the idea that New Zealand imports are included in the United Kingdom's figures to camouflage the real position.
We are not self-sufficient in the United Kingdom. We produce approximately 88 per cent. of our milk and milk products. That situation faces the farmers of south-west Wales. Some of the them have organised demonstrations. According to the papers, they have been rather a rowdy lot. Some of the farmers' wives have been very accurate, or inaccurate, in their use of farming missiles. But that is beside the point.
Hundreds of farmers in south-west Wales do not demonstrate or get themselves in incidents of that sort, but they have written me some passionate, sincere and very heartful letters, in which they say that unless the quota schemes are changed fundamentally they will be out of business in a comparatively short time. They will be out of business in an area which has had chronically high unemployment for many years. I appeal to the Minister, as I appeal to the Welsh Office Minister, to act and stand up for Wales in the agricultural corner. If they do not, I am sure that the farming sector in south-west Wales will remember that at the next general election.
7.27 pm
Mr. Colin Shepherd: I am grateful for the opportunity to participate in this important debate. I feel certain that the hon. Member for Carmarthen (Dr. Thomas) will forgive me if I do not follow him closely, but, coming from the other side of Offa's Dyke, I have a

203
slightly different set of problems with which to deal. However, I must make it clear to my right hon. and hon. Friends the Ministers that there is no shortage of anguish and agony among the dairy producers on my side of Offa's Dyke, in the Marches.
I should like to dispense with rhetoric. I draw the attention of my right hon. Friend—I have written to him on these points—to the very sensitive and constructive contributions from Herefordshire farmers suggesting how the problem might be resolved. I know that my right hon. Friend and my hon. Friend the Minister of State have given careful consideration to and answered some of those points. I have no doubt that other replies will be forthcoming.
I was impressed by the immense wealth of wisdom that exists in the Marches of Herefordshire, and in south Worcestershire. The farmers there have suggested how to examine the problems from another direction. I shall not go into that tonight, because the significance of tonight's debate is as a breathing space within which the Minister and his team can review what has been said tonight and decide how the draft regulations might be amended before they are laid before the House as a statutory instrument.
That was a wise move. To have laid draft regulations before the House as a statutory instrument without this consultative period would have been to invite deep distrust and disturbance among Conservative Members. I know that the Opposition have been totally prejudiced from the beginning—[Interruption.] I have yet to hear anything but prejudice from Opposition Members.
Mr. Ron Davies rose——
Mr. Shepherd: I shall not give way, because I do not want to detain the House if I can avoid it.
I must express some regret, because when, in November, I asked my hon. Friend the Minister about the self-sufficiency levels in the United Kingdom and urged him not to adopt any path that would lead to ossification or stultification of the industry, I was assured that that would not happen. At the time, I knew that my right hon. Friend the Minister and his hon. Friend the Minister of State were actively and vigorously pursuing the policy of trying to achieve a price-type settlement. However, since we now have an arrangement that will lead to ossification and stultification of the industry, we must concentrate on two things.
First, we must consider how we can make the present set of arrangements as fair and understandable as possible; and, secondly, we must consider the future. We must recognise that the Community is still 10 per cent. over production on present consumption levels, even after this reduction, and we must consider how to tackle the next stage. We can either increase sales or make a further reduction in production. The money will not flow ad infinitum. Indeed, Opposition Members and most of my hon. Friends agree that there should be control of agricultural expenditure.
I look forward to seeing how the regulations rate in the gobbledegook competition of the year. I should think that they are odds-on favourites to succeed. That is not necessarily a reflection on the parliamentary draftsman or the Minister. It is a pity that they had to be so complex. Anything with 80 definitions as well as a certain number of minor definitions beforehand is a masterpiece of the
204
first order. It would be interesting to see how they could be streamlined and made more comprehensible. The regulations raise as many questions as they answer. The aim of today's exercise must be in part to pull out the questions so that any further points can be incorporated into the amended regulations.
I hope that my right hon. Friend the Minister will take seriously the question of amending the draft regulations in the light of this debate. During his opening remarks, I thought he indicated that that would be so. If that is his intention, I should be most grateful if he would nod his head at me, as that would be very reassuring. I see a half nod.
One of the particular problems facing the industry is the uncertainty and lack of confidence. That is reflected in a wide variety of ways. Bank managers must also be getting very bothered. It is important to do all that we can at this stage to ensure that the price of land is not undermined by any precipitate pulling out of rugs by bank managers. I hope that those bank managers who read the report of this debate will consider that point. Although times are already uncertain, anything that led to an increase in that uncertainty would not prove helpful to an industry that is having painfully to readjust itself.
Part of that lack of confidence is based on the track record of countries in the Community. It is feared that some countries might seek to circumvent the arrangements agreed in the Council of Ministers. In the past few months several cases have been quoted to me of arrangements under which national Governments have paid levies so that they did not fall on producers. I can understand producers in Britain being concerned. However, with their magnificent efficiency and effectiveness, the Ministry and the industry—which have worked very hard to produce these regulations—may be so far ahead of the game that the question of the levy comes up before other countries have got their own schemes into order. As has been said, it would be wrong to pay any levy before other countries are clear as to whether they are going to pay.
I should like to go a little further, and ask my right hon. Friend the Minister to ensure that no producer in this country parts with a penny of levy from his cash flow until such time as we can see that the other countries have got things organised. That would be a reasonable sanction. If we had to cut back production in the dairy industry because Community money had run out, the lack of levy money going back into the Community might help to concentrate the minds of the other countries and the Commission on the fact that action must be taken to maintain fairness.
There is a conflict of timing and interests. As has been said, producers are anxious about when the hardship cases and expanders will be dealt with. Indeed, the Minister has been asked to say when they will be dealt with. However, he cannot do that until the House has agreed to the statutory instrument and the necessary procedures. But, like my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills), I urge my right hon. Friend not to be in too much of a hurry to get the regulations out. It is far better to get the regulations right and understood than to bounce into play a ball that is bent, crooked or otherwise imbalanced. My message to my right hon. Friend is to take a little time getting the balance of the regulations right, despite the fact that there will be a longer period of uncertainty. At the same time, I urge him to give dairy producers the concrete assurance that they will not be asked to take a bigger cut in production than that indicated

205
by their present provisional quota. That would enable them at least to know where they stand if they are already in production.
Mr. Robert Hughes: Does the hon. Gentleman agree that the regulations merely empower the Minister to prescribe regions and to prepare schemes, but that what we really need is parliamentary scrutiny of both the schemes and the regions?
Mr. Shepherd: I understand the hon. Gentleman's point. The value of this debate lies in the fact that such points can be made.
Given the uncertainty of the present year, may I have an assurance that, if a producer fails to make his provisional quota, he will not be penalised by anyone trying to clutch in quota from somewhere else? In the first year, no one yet knows where he stands. It is important that there should be some confidence that if, by accident, there is a fall below the level of provisional quota set, no penalty is indirectly incurred.
The producer-retailers have already been mentioned, and I shall not rehearse the arguments except to say that that important group deals with the consumption of liquid milk. It is vital that the regulations should be adjusted to enable a producer-retailer to buy from another producer with a wholesale quota on a properly accounted arrangement without necessarily going through the Milk Marketing Board, so that he can meet the sales that he has made. It would be ridiculous if a producer-retailer could not meet his milk round. It would surely be simple to make that small adjustment, which would be properly accounted for, so that nobody's quota was bent and so that the French did not drive a coach and horses through the exemptions for small producers, and so on. We could keep the provisions cast iron but make it possible for a producer-retailer to top up, and thereby encourage him to build on his success. To a certain extent, that would overcome the problem of stultification and ossification. As producer-retailers are also involved in the farmhouse cheese business, they are capable of encouraging additional consumption.
I would prefer to see no tax on the £50 million payment or £650 a cow. That would be reasonable compensation, especially in view of the small amounts in macro terms. If the Treasury is adamant——
Mr. Robin Maxwell-Hyslop: No "If".
Mr. Shepherd: I have sympathy with my hon. Friend.
The scheme must make it more attractive for farmers of larger herds than for farmers of small herds to go out of production. I am anxious that the small man should not be caught in a cleft stick. We can help him best by ensuring that it is slightly more attractive for the bigger rather than for the smaller man to go out of business.
Sir Geoffrey Johnson Smith: Why should the payment be taxed? The compensation is exceedingly small, and could be eroded by inflation.
Mr. Shepherd: My heart goes out to that argument. I agree with it. I hope that the Treasury will hear that we would prefer not to see the payment taxed. It is a straight compensation, which will enable justice to be done within the industry.
I do not understand why there are no dairy farmers on the panels. It is not too late to change that. I cannot see how the panels can understand the nature of the industry
206
if there are no dairy farmers on them. [Interruption.] If dairy farmers are on the panels, perhaps the Minister will put me right when he replies. I should like to see dairy farmers on the panels so that they can give their expertise to that specific provision.
In future we shall have the problem of deciding how to deal with the next 10 per cent. I make a plea to all interested organisations not to sit back and wait for the Government to do something only to complain that they have got it wrong. All sectors of the industry should put forward positive contributions and proposals, and that debate should be extended to the Community. It is not sufficient to be negative. We must make positive proposals about the way forward and bring wisdom to bear on the problem. The same problem. exists for all commodities in the temperate foodstuffs range. That is the problem facing agriculture.
I shall be delighted to support my right hon. Friend tonight. I understand that he is reviewing the draft regulations in the light of our debate. Because of my critical appraisal of the state of the industry, I shall have to consider carefully any consequences before deciding how I shall react at a later date when the regulations are again brought before the House.
7.43 pm
Miss Joan Maynard: It is clear that shock waves are going through our dairy industry. The shocks are even greater because a Tory Government have caused them, and farmers traditionally support the Tory party. The best teacher is always experience, and therefore I hope that farmers will learn from this experience.
The hon. Member for Torridge and Devon, West (Sir P. Mills) said how sad he was that certain people in his constituency had been made redundant. The Opposition appreciate his sadness, but that will not help them to find another job. He talked about the importance of planning to the agriculture industry. My father was a small farmer, so I know something about the importance of planning in agriculture and the need to have security and guarantees. That is why the Labour party introduced the 1947 legislation. We remembered the 1930s, when people were dependent on the end price, when there were more than 3 million unemployed, and when, despite the virtues of private enterprise, farmers were going bankrupt faster than anybody else. The legislation gave farmers the opportunity to plan and to know that they would sell their produce at guaranteed prices.
Britain's entry into the Common Market meant that control was taken out of Parliament's hands. My hon. Friend the Member for Bradford, South (Mr. Torney) said that farmers had been led up the garden path, and he was right.
Mr. Torney: The Minister said that.
Miss Maynard: Both of them are right. The impression was given that there was an open-ended commitment, but that was not the case. The Minister has had to face that. One of his problems in reaching a settlement was that many matters were outside his control. How many times did he say in his speech that the Common Market did not allow this or that? Hon. Members who were opposed to our joining the EC objected because we said that it would take control away from the House and the country, but that is exactly what has happened.

207
On all three aspects of the milk issue the Minister appears to favour the larger farmers at the expense of small dairy units, which often employ no labour, and farm workers. Many people share my view that the bigger farmers will be protected and the smaller farmers and the farm workers hardest hit. What plans does the Minister have to protect the jobs of farm workers, and what compensation does he propose to give to the unfortunate ones who will lose their jobs? I remind the Minister that farm workers have as great a stake in the industry as the farmers. They invest their labour, skill and commitment, and have as much right to consideration as anyone else in the industry. Therefore, I hope that in future the Minister will consult the union that represents farm workers as well as the union that represents farmers and landowners.
Under the outgoer scheme farmers will be given £650 per 5,000 litres over five years. It is clear that the option is unattractive for small dairy farmers, especially in areas where the scope for alternative crops is limited. Hill farmers and marginal farms will not be able to swop over to other crops and commodities. On the other hand, the larger farmers may be inclined to reduce their herds, get rid of stockmen and then claim the money. I have only one example of that, but it is an obvious loophole. It is most aggravating that money is being offered to farmers, but that no compensation will accrue to the stockmen, through whose skill the farmer qualifies in the first place.
For hardship cases, the six grounds on which a dispensation can be claimed are likely to be rigorously checked, especially when small dairy herds are involved. The fact that inclement weather was originally excluded but has now been tentatively accepted is a small sop to west country farmers, for whom 1983 was a bad year. Most of those affected were the medium-sized and small farmers.
On quotas, the 1981 level plus 1 per cent. would have helped the small dairy men more than the 1983 level minus 9 per cent., because of the allowances available within the agreement for those who have recently started production. In addition, the present confusion over the position of the producer-retailer is likely to hit the small operators hardest.
The United Kingdom Government have badly bungled what was not a brilliant agreement in the first place. It is also necessary to observe that the National Farmers Union elite are unlikely to suffer unduly. The Minister pointed out that grain quotas were unlikely to appear on the agenda next year, because of the problems of milk quotas. Milk producers who heard the right hon. Member for Worcester (Mr. Walker) when he was Minister of Agriculture, Fisheries and Food say, "Produce more," will doubtless smile wryly at that, because after milk products the costs of the grain regime are the next highest item in the CAP budget.
Mr. Nicholas Baker: The hon. Lady mentioned the effect of the regulations on west country fanners. Does she agree that if my right hon. Friend is considering including weather as a factor for special cases, he should carefully consider regions as they will be defined under the regulations? For example, Blackmore vale, which is part of Dorset, should be considered, rather than the whole of Dorset, which was not all affected by the weather in the way that she is describing.
Miss Maynard: I have no doubt that the hon. Gentleman knows more about the details of that county than I do, although I was there recently. It is a county that I like very much. I know that west country farmers would be likely to benefit most from help in relation to weather conditions. Clearly, the "barley barons", ably represented by the Minister, are unlikely to accept quotas in relation to grain as meekly as the NFU has allowed the Ministry of Agriculture, Fisheries and Food to interpret the new ground rules.
The United Kingdom is still not self-sufficient in liquid milk supplies. There are repeated stories of a rise in milk imports, particularly across the Six Counties' border. A large proportion of the surplus skimmed milk could be used as pigfeed. A great deal already is. The cardinal point is that it is nonsense and obscene to talk of "food mountains" when two thirds of the world is starving. Bad policy by the Ministry of Agriculture, endorsed by the NFU, coupled with the mean attitude of the United Kingdom Government, means that food stocks are likely to be "denatured" rather than given in emergency food aid. Vietnam is a good example. It has been asking for milk, yet we are talking about restricting output. Surely that is not the way to run our society.
There is NFU complicity and CLA duplicity in the way that the new milk regime is to be made to work. Tenant farmers will have to obtain the landlords' permission to discontinue milk production, but where is the requirement to consult farm workers whose livelihood is being destroyed? The NFU has opted for the path of least resistance, cynically noting that small dairy farmers do not count for much in NFU elections. There is an alliance of Tories, NFU and the CLA that treats consumers, workers and tenant farmers with disdain.
I thought that the Tory party was supposed to be the champion of the small business man. Why is it not helping the small dairy farmer? Does it feel that he does not count? If he is not a small business man, who is? The small farmer must be a small business man. I come from a family of small farmers. I know the long hours that they put in to make a living. If anyone should have had help, it should be the small farmers.
The people who will suffer most from this shabby deal are the farm workers, who will receive no compensation for losing their jobs as the wealth creators in our agriculture industry, and the small dairy farmers, because they are usually in areas where they cannot switch to other crops, and because they are more financially stretched.
This deal spells out the need to leave the Common Market as soon as possible, in the interests of most people in this country. I know that hon. Members have been saying today that we must work for reform. We have been working for reform for more than 13 years and have got nowhere. If I believed that we could reform the Common Market I should argue for that, but I cannot see any hope for that. I believe, therefore, that the best solution for the majority of our people is for Great Britain to leave the Common Market as soon as possible.
7.53 pm
Mrs. Elaine Kellett-Bowman: Last Wednesday, as soon as the draft regulations were laid, I obtained a copy and ploughed relentlessly through them. As the House will be aware, I have been a member of the European Parliament for nine years and I am not unaccustomed to reading EEC documents. When I reached

209
page 73 of these draft regulations, I found that they raised more questions than they answered. What, for example, will happen to the farmer who has developed since 1983 without a farm and horticultural development scheme or an agricultural or horticultural development scheme and who is now geared to producing more milk than he did in 1983?
We are all aware of cases where a man, often with family help, has worked all the hours that there are converting old buildings to modern requirements, but that effort is not reflected in any figures that an accountant or anyone else could certify. What will happen to him? He could face an enormous cut in his permitted production and be driven out of business. Although the suggestion made by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) that no producer should face a cut of more than 9 per cent. would not solve the problem of such a man, it would ease his position somewhat, and I hope that it will be accepted.
Hardship cases worry me most. There are many genuine cases of hardship that will not come remotely within the six rigid categories that have been outlined. I know of a case of two brothers who were running a small farm. It was too small to keep two families. One brother managed to obtain the tenancy of another farm and went off, with his brother's full agreement, to farm on his own. He took half the family herd with him. The brother who left home will be all right, because he will count as a "new starter". What of the brother left behind? Half his herd was not stolen. He can scarcely describe his brother as a natural disaster! Yet, at the crucial time for deciding quotas, his milk production will be down to half the normal production on that farm. What happens to him?
What happens to a man who wants to progress up the farming ladder—if such still exists—who finds another larger farm which has no quota? Can he take his quota with him and progress, or must he stay put for the rest of his life on a holding that he has outgrown? That brings us to the wholly unsatisfactory and unclear matter of who owns the quota, which the Minister discussed but did not clarify in his speech. I hope that when my hon. Friend replies he will clarify the point a little further.
Three tenant farmers came to see me the other day and pointed out that they had put up buildings at their own expense. They felt that they were entitled to sell their quotas on the lines of the Canadian scheme, or to pass them on to their sons as "tenant's fixtures". Others have pointed out that if that were allowed, the farm could be sterilised in regard to milk production, which may be the only form of husbandry for which it is suited. Where does the balance lie? The draft regulations do not tell us. I support those hon. Members who say that speed is not of the essence. Getting it right is what counts. Much more discussion is needed if unfairness and hardship are to be minimised.
The Minister has properly tried to introduce a little flexibility into the scheme to help small farmers who can least afford a cut in income by introducing his outgoers' scheme. As many hon. Members have said, it is important that such payments should be treated as redundancy payments and not taxed. Other people receive £25,000 free of tax and up to £50,000 with a minimal tax payment. All the outgoers' payments should be free of tax.
What is the time scale for hearing appeals? How can farmers conceivably plan their autumn production if they do not know whether their quota appeals will be allowed?
210
Hon. Members on both sides of the House have acknowledged that the most complicated issue is that of producer-retailers of whom a high proportion farm in the north-west. There are nearly 1,000 in Lancashire. That is roughly one third of the total. Many have gone to a great deal of effort to persuade housewives to buy more milk. Their efforts over the past three years will be brought to nought with their frozen quota. That could spell the end of doorstep deliveries. The big five, who in the past have hesitated to withdraw deliveries from an area because, if they did, a producer-retailer might step in, may now decide that it would pay them to sell entirely through supermarkets because the housewife with no alternative source of supply would be obliged to buy there. Producer-retailers must be allowed to expand genuine sales without penalty. Moreover, if a producer-retailer loses one of his contracts to a hospital or to another retailer, as the regulations stand, he cannot put that milk in his bulk tank, although overall he is producing no more milk. This ridiculous situation must be changed.
Many farmers agreed that quotas were becoming inevitable. Whatever they felt about that, however, all are agreed on two things. The first is that in no circumstances must British farmers be asked to pay levies until machinery has been set up in the other nine member states to ensure that their farmers also pay levies. The second is that our scheme must be fair and take proper account of exceptional conditions which go well beyond the limited hardship categories so far offered.
I shall be supporting the Government on this take-note debate, but, like many of my hon. Friends who have a deep and abiding interest in agriculture, I shall expect substantial changes and much greater clarity if I am to vote for the regulations when they are laid before the House.
8 pm
Mr. James Nicholson: We have travelled far through the United Kingdom in the debate. We have been to Wales, to Scotland and to nearly every county and shire in England. I propose to take the House across the Irish sea to Northern Ireland, and to bring to its attention the serious problems that face Northern Ireland producers.
I have listened with interest to the speeches of hon. Members. Every hon. Member seems to have the same problem. Each hon. Member's area is more important and faces greater hardships than those of other hon. Members who have spoken. I, too, am in that position. I believe that I can prove that Northern Ireland has been treated worse than any other part of the United Kingdom.
Milk quotas in Northern Ireland for our farmers and for those involved in ancillary industries will have far-reaching consequences for the agriculture industry. Indeed, on many occasions those involved in ancillary industries have been forgotten about in this discussion, which has been going on since the early days of April. Quotas are objectionable. It seems that we shall have to learn to live with the problem for some years to come, but it is important that the rules and regulations laid before Parliament are capable of controlling and correcting the problems as they arise.
The Minister will doubtless be aware of the feelings of anger, resentment and deep frustration of the dairy farmers in Northern Ireland since the Brussels agreement, the subsequent decision on how that agreement would be

211
implemented and the quota divided, and whether we received in full the 65,000 tonnes which we were supposed to receive.
The dairy sector of agriculture in Northern Ireland is most important. Our dependence on grass-based farming is paramount. I should like to bring to the attention of the House, as I did in the Adjournment debate on 7 June this year, the role played by the small family farms in Northern Ireland. The average herd size in Northern Ireland is 38. Sixty five per cent. of dairy herds in Northern Ireland contain fewer than 40 cows. Alternatives to dairy farming in Northern Ireland are nil. The Minister of State, Northern Ireland Office, the right hon. Member for Bosworth (Mr. Butler), told the Northern Ireland Assembly that
"eventually there are no alternatives for grass-based production for 90 per cent. of Northern Ireland farmers."
Since the entry of the United Kingdom into the EEC we have watched the collapse of our pig and poultry sectors, and many farmers were advised at that time to develop and expand their dairy enterprises by building new silos and milking parlours. This they did effectively and efficiently, and now they find all this hard work and dedication disintegrating round them. The situation in which many farmers have been placed because of the Department's encouragement angers me most. They were encouraged to produce more and more, and to invest more and more, and many now find themselves in serious financial difficulties.
The Minister spoke yesterday about farmers being led up the garden path by the EEC. They were led up more than the European garden path; they were led up garden paths back at home as well, I hasten to add. Many young farmers who are tryng to make a start in agriculture are the hardest hit by quotas. I ask the Minister what advice I can give to such young farmers in my constituency. Northern Ireland is littered with many instances of hard cases, just as I am sure are other areas throughout the United Kingdom.
One young man, after completing his college studies, came home to the family farm. After considering the options available to him, and in consultation with Department officials, he decided to enter into a five-year programme. He entered into a scheme, built a silo and milking parlour and graduated progressively over five years to owning 40 cows. That seems a sensible course for any young man to take, as I am sure most hon. Members will agree. Having taken that responsible attitude, the young man finds himself with buildings erected, money invested and both tanks sitting in his farmyard, which the Milk Marketing Board will not install because he has no quota. The Department of Agriculture will not give him a licence because he has no bulk tank installed. He is currently milking 10 cows and disposing of the milk. Young men such as that must be given consideration. They are the future of the agriculture industry, and some hope must be held out to them if agriculture is to survive.
The information—or should I say lack of information —available to farmers since April has been deplorable. The Minister must realise that farmers cannot change their pattern of farming month by month and, at a stroke, cut back 9 per cent. or, indeed, in the case of Northern Ireland, from 2 April cut back 13 or 14 per cent.
In Northern Ireland, our reliance on milk production, our investment in the industry, our ability to conserve and utilise grass to the maximum and our inability to diversify
212
add up to our being the hardest hit. In the long term, of course, the Minister's buy-out scheme will be of some assistance, but we must wait and see what response it receives. However, it adds no extra quota; it means only the redividing of two other farms or existing amounts available.
I am concerned that there will be further erosion of our small farms and small producers. This will be seriously detrimental to Northern Ireland and, indeed, to any region where more and more farms are being gobbled up by the larger ones.
I deal next with the draft regulations, and in particular, regulation 5(b). I welcome this regulation. It makes it clear for the first time that the quota will apply to wholesale deliveries made during the 1983 calendar year. Some hon. Members may wonder why I welcome the regulation. From Northern Ireland's point of view, it is particularly important. I find it interesting, because I have been told continuously that 1981 was the base year. Indeed, in a reply to me the right hon. Member for Bosworth stated:
"The allocation between the regions of the United Kingdom was initially based on 1981 levels of production, to which was added the special quota of 65,000 tonnes agreed between the EEC Agriculture Ministers. A further addition of almost the same amount was then agreed between the Ministers responsible for agriculture in the various regions of the United Kingdom."—[Official Report, 26 April 1984; Vol. 58, c. 875.]
Therein lies the answer. It is that Northern Ireland received the extra quota negotiated by the Minister for us plus — with the generosity of the other parts of the United Kingdom—an extra bonus. If we had received what we should have received— the 1983 production plus 65,000 tonnes—Northern Ireland would not have needed any extra amount to be added. On 2 April the Minister said:
"I have obtained for Northern Ireland an additional quota of 65,000 tonnes."— [Official Report, 2 April 1984; Vol. 57, c. 661.]"
The Minister has not said how the distribution of quota within the regions was carried out or what method of calculation was used. We have a right to know what happened to the 65,000 tonnes obtained by him in Brussels for Northern Ireland.
The 1,321 million litres which Northern Ireland has been awarded should, on the basis of the draft regulations based on 1983, be 1,315·7 million litres, plus the special allocation of 63·1 million litres, giving Northern Ireland a total of 1,378 million litres. That figure is some 57·7 million litres greater than the figure announced by the Minister. That is the amount that Northern Ireland should have received because of the special circumstances which I outlined to the House in the Adjournment debate on 7 June.
I believe that the special quota negotiated for Northern Ireland has been hijacked from us and that we have not received the full benefit of it. I ask the Minister to clarify, once and for all, the situation of that special quota. It is not believed in Northern Ireland that it has been received. The onus is on the Minister to make the position clear.
There is no mention in the draft regulations on dairy produce quotas of the 65,000 tonnes awarded to Northern Ireland, of how that amount should be used and how it should be treated if the quantity is adjusted in future years. The situation is very unsatisfactory. I believe that the method of calculation of the regional quotas should not be left to Ministers. The allocation of Northern Ireland's special allowances and the method of allocation of those

213
allowances within Northern Ireland, and any subsequent adjustment of the quantity, are also matters that should be covered by the legislation.
Regulation 5(9) states that
"if the regional wholesale quota … is increased in relation to the preceding quota year, the quantity of dairy produce so added shall create, or be added to, the running regional wholesale reserve".
There are inherent contradictions between the two paragraphs involved. Paragraph 10 of the regulations states that where regional quotas is reduced reductions shall apply equally to all producers. If there is an increase in regional quota, that increased quantity should be allocated to the body of producers as an increase in their basic quota amounts.
Other hon. Members wish to speak. There are many other matters that I should have liked to deal with. The beef sector in Northern Ireland is facing difficult times because of the variable premium. Perhaps I shall have a chance at another time to discuss that and other matters. In the beef sector, clawback is having a serious effect.
To use a Northern Ireland expression, there is one matter that needles me very much. If one reads the Republic of Ireland press, one finds that farmers in the Republic are constantly told by the farming press and by Ministers to produce more milk because the Republic cannot meet the 4·5 per cent. that it has been given by Europe. Northern Ireland and other parts of the United Kingdom have been told to cut back, cut back and cut back again. It is ridiculous that the Minister should be telling farmers in the United Kingdom to cut production when farmers in the Republic are being told to produce more and more.
I hope that in the light of what has been said tonight—and I appeal to him on behalf of the dairy farmers in Northern Ireland and all the agriculture interests there—the Minister will reconsider the allocation. We do not believe that we received it. In future, the Minister must make sure that farming interests are paramount and are given the highest possible priority in negotiations.
8.17 pm
Mr. Charles Wardle: I am grateful for the chance to speak in this debate, because it has a direct bearing on the livelihood of many of my constituents who farm in east Sussex and are predominantly dairy farmers.
Two or three weeks ago I hoped to speak in the debate on the arts and the heritage. I had hoped to mention the "1066 Country" initiative launched with a great spirit of enterprise in east Sussex. Because there was a long queue of senior Members who wished to participate, I did not get a hearing. That is a part of life that new Members accept and understand. Sometimes, like Gracie Fields, we take our harp to the party but nobody asks us to play. I am doubly pleased to be able to speak now on behalf of the farming community which I represent.
For some dairy farmers of east Sussex, the notion of enterprise has been pushed into the background over the past three months. The immediate preoccupation has become breaking even and survival. That preoccupation has arisen not only because of the scheduled cuts in milk production but also because of the difficulties involved in switching the basis of a business to different forms of agricultural production.
In complex negotiations at the meeting of the Council of Ministers late in March, my right hon. Friend the
214
Minister of Agriculture played a shrewd hand on behalf of British farmers and won many advantages which were listed earlier today by my right hon. Friend the Member for Taunton (Mr. du Cann). Inevitably, however, the initial reaction to the long overdue decision to tackle the problems of the CAP has been confusion and uncertainty. What is in no doubt is that a remedy must be found for the worst excesses of CAP spending on unwanted food surpluses. We need a system of reducing production in an orderly fashion without making casualties out of thoroughly efficient specialist dairy farmers. I am sure that my right hon. Friend and most farmers would agree about that, and that is why the Government have rightly placed the emphasis on the outgoers scheme and on the room for manoeuvre in special cases.
In Sussex and parts of Kent, however, both those measures should be carefully considered in the context of local farming conditions. In a reply to my hon. Friend the Member for Horsham (Mr. Hordern) in an Adjournment debate on 18 May, my hon. Friend the Parliamentary Secretary referred to a report by the agricultural development and advisory service of January 1983 entitled
"The Weald—Problems and Opportunities".
That report makes it clear that alternatives to dairy production in the Weald are not promising. On page 1 we read:
"Dairy … performance appears as good as in other areas. This is not the case with cereals, beef and sheep. All farm types show much higher financing charges. This reduces dairy profit and gives low profits from other enterprises."
The report continues:
"Cereal yields are generally lower than the regional average due mainly to soil structure and drainage problems."
The report took a pessimistic view of horticulture. It stated that only about 10 per cent. of full-time holdings rely on beef cattle and sheep. The report stated emphatically that dairying is still the best option for many Weald and grass farmers.
What happens to the farmer in the Weald. who, nevertheless, opts for the outgoers' scheme? I shall use a hypothetical, but typical, example of a tenant farmer who purchases 40 Friesian cows with the aid of a bank loan to build up his herd. Let us assume that he purchases those cows at £600 each. He will owe the bank £24,000. It is a fair assumption that he will have spent money on his milking parlour, dairying equipment and so on, bringing his total loan from the bank to £40,000 or considerably more. Like everyone else, that farmer will be paid £650 over five years per 5,000 litres. Let us assume a yield of 5,300 litres per cow, so that his compensation will be roughly £5,500 each year for five years.
If that farmer sells his cows as part of this scheme, they are likely to fetch on the present market no more than £400 each, and if he postpones the sale until after September, when consideration of feed content over grass comes into play, he will receive less. He might receive £16,000 lo repay his loan. The tenant farmer has a high rent to pay for his highly desirable Sussex property, has to find working capital for his new, non-daily farming venture and still has £24,000 outstanding on a capital loan in respect of a business he has dropped and for which he can offer no security to the bank manager.
Mr. Maxwell-Hyslop: My hon. Friend is using a tenant farmer as an example, but he has forgotten to say

215
that that farmer cannot receive even a halfpenny of that compensation if his landlord does not agree with him going into the scheme.
Mr. Wardle: I was going to make that point later. I simply wanted to illustrate the arithmetic and get rid of it, and I have nearly done that.
I have also left out taxation for the purposes of this illustration. Let us assume that that tenant farmer receives £5,500 gross, whatever his status as a fanner. In the first year under that scheme he will be paying £3,000 in interest alone. One solution to his problem would be to allow more of the outgoers' compensation to be paid at the outset, instead of in equal instalments over five years, on condition that it is applied to the repayment of the certified bank loan that had been raised to finance the original dairy business
I hope that my right hon. Friend the Minister will consider the merits of such a change in the regulations. I hope also that, if a farmer decides to continue in dairy production instead of taking the outgoers' route, my right hon. Friend will interpret the rules for the special case arrangements as constructively as possible—or should I say, as flexibly as possible with particular regard to the main category of cases comprising those producers committed to significant capital investment, leading to increased milk output on their holding. I hope that, even when the farmer is not the beneficiary of an approved development grant but has the use of a bank loan to allow expansion of his home, his loan will be taken into account, as my right hon. Friend implied might be the case.
Whether farmers concentrate on the outgoers' scheme or on an application for consideration as special cases, the central and pressing consideration is one that is basic to any business—cash flow. Nowhere is cash flow more crucial than in the proposed timing of the super-levy collection. That point has been made by many hon. Members on both sides of the House. I cannot see much sense in collecting a levy based on total annual production quotas on a quarterly or half-yearly basis. I am worried that somehow we shall adopt a PAYE approach to the regulations while our European partners are looking at it on the basis of the never-never. It stands to reason that I share the view expressed on both sides of the House that control of the scheme in other countries is vital to the morale and long-term well-being of our farmers.
Dairy production may well account for 3·5 per cent. of gross domestic product in the Republic of Ireland, but the proportion of GDP taken up by dairy farming in farming villages — there are many in my constituency — is virtually 100 per cent. That means that there simply is nothing else.
There is a need for a long-term plan. Although there will be substantial savings in 1984 from the introduction of milk quotas, the supplementary levy and the reduction in common prices, the full savings from those measures will be seen only from 1985. That fact, together with the carry-over of a large proportion 1983 capital expenditure into 1984, means that, at the end of this year, either the CAP budget of 16·5 billion ecu will be overrun or member countries will resort to buying into intervention with their own money with the aim of collecting compensation from CAP next year, which will, of course, cause an imbalance to the 1985 budget. It is a safe bet, therefore, that further
216
cuts in other forms of agricultural production will be needed sooner rather than later. Following that will be the question of how to deal with the £2 billion per year still being spent on surplus milk production.
Those factors give urgency to the need for an overall policy directive, outlining the scale of the changes that are probably still to come and inviting farmers to consider the ways in which they can adapt competitively to tomorrow's market place. I hope that that is a point that my right hon. Friend will consider, with the object of reducing the present inevitable confusion and strengthening the resolve for overhauling the CAP.
8.27 pm
Mr. D. E. Thomas: I shall follow only one point made by the hon. Member for Bexhill and Battle (Mr. Wardle). He issued an important warning to the Government about the operation of the quota system. Already a number of agricultural economists are saying that the present volume of 99 million tonnes of milk on quota is substantially greater than the 87 million tonnes produced in the Community. I am worried that we are introducing a quota system which will prove ineffective in its overall objective of curtailing milk production but prove super-effective in the way in which it undermines the livelihood of farmers and of farm, agricultural and manufacturing industry workers who are involved with milk production in many regions, especially in Wales.
I agree with the statements made by the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) and the hon. Member for Carmarthen (Dr. Thomas). The Government must face up to a serious problem. The Minister of State told the House that he preferred a price reduction. Is the right hon. Gentleman seriously saying that the 12 per cent. reduction demanded by the Commission or the 20 per cent. reduction that was proposed by some agricultural economists would have been acceptable to milk producers?
The quota system, whether operated according to production or to a substantial reduction in the pricing system, is a direct result of the CAP system. Our system encourages high institutional pricing for farmers, which is passed on to the consumers, and unlimited intervention. That system still applies, because the quota scheme is not a reform of CAP. It means a limitation in production within which the CAP system remains intact. That leads to the type of over-production and quota system at the European level which the Government have accepted. The EEC has told us that it looked at the Canadian system, which is more flexible and provides for compensation through a pricing and direct subsidy system. Clearly that is not possible in the EEC context.
The Minister of State cannot get away with telling the House that he favours a price reduction system unless he realises that that price system might have the same disastrous consequences as the CAP system is having.
It has already been stressed that the dairy industry is the largest sector of Welsh agriculture. It represents 65 per cent. of Welsh farm output and production worth £200 million a year. Given the present agitation in Wales, it is important to stress that our debates in this place do not reflect the extent of feeling and concern about the interests of dairy farmers. That is normally so, unless an hon. Member has experienced the personal anger of farmers in Dyfed. The Secretary of State for Wales has made visits

217
to the area and he has made the same speeches when talking about the miners as he has when talking about farmers. He uses exactly the same words and it is not surprising that Dyfed farmers are sending their milk to striking miners. That shows the depth of feeling on the issue throughout the agricultural areas of Wales.
We have heard this morning's news that the quota system is already operating. The amount of milk going into the creameries has already been reduced. It has fallen by 15 per cent. already in the Welsh creameries and it seems that there will be a reduction of up to 20 per cent. by March 1985. We have heard that there will be 125 redundancies at Felin-fach, Maelor and Whitland. Further redundancies are likely among transport drivers. That is the direct result of the way in which the quota system is operating.
Some Conservative Members, including the hon. Member for Clwyd, South-West (Mr. Harvey), have been quoted in the press as viewing the announcement of redundancies with deep concern. We shall read the Division lists with interest to learn whether the hon. Gentleman voted with the Government tonight. In agricultural debates there is often cross-party agreement between Opposition Members and Conservatives Members who are critical of the Government, but there is now an unwillingness on the part of Conservative critics to stand up and be counted. I urge Conservative Members to take seriously the criticisms that have been levelled at them by the farming community, who allege that they are trying to have their milk and drink it. They tell us that they are critical of the Government's policy but they are not prepared to abstain or to vote against the Government following debates of this sort.
Dyfed is a good example of the regional effect—I am glad to see that the Secretary of State for Wales has joined us — of the quota imposition. It has had an especially harsh effect in Dyfed. I agree with the hon. Member for Newry and Armagh (Mr. Nicholson), who stressed the differential between the support available in the Republic of Ireland and the lack of support in the United Kingdom. The dairy farmers in the Republic will be able to increase their output by 4 to 5 per cent. but there will be a decrease in production of between 4 and 5 per cent. in Northern Ireland and Dyfed. The arguments that were deployed effectively in the ministerial negotiations by the Republic of Ireland about the essential role played in its economy by the dairy industry apply with equal force to areas of Northern Ireland and areas such as Dyfed.
The situation is so serious in Dyfed that there could be a contraction of the milk manufacturing industry, which is so crucial to the area, leading to the loss of 1,200 jobs. A contraction of that order could lead to the Republic of Ireland and its manufacturers taking advantage of Dyfed. They could well set up manufacturing plants in Dyfed as they have in the beef industry in the north of Ireland.
I warn the Minister of that likely consequence, not because I am jealous of the enterprise of the Republic of Ireland or the ability of its ministerial team to get various concessions but because I am concerned about the differential in the treatment of the republic when contrasted with that of Wales. Dyfed county council has produced a major report on the effects of the milk quota scheme on Dyfed. The cut in production in Dyfed will be between 12 per cent. and 17 per cent. because of the rapid expansion in previous years. That will produce a direct loss to the local economy of about £30 million. The
218
capacity of Dyfed's five creameries is rising to 4·42 million litres with the upgrading of Whitland. There will be an excess capacity for production of 1 million litres a day in the use of milk in Dyfed and this will have major implications for the creameries.
The Secretary of State is aware that I know the area fairly well and that I am aware also of the consequences of the closure of the Newcastle Emlyn Creamery. That knowledge forces me to say that there will be severe economic consequences for the rest of Dyfed's economy. If farm workers are caused to be unemployed and if farmers go out of business, there will be severe consequences for the 1,200 who are employed in creameries and for the 250 or so who are employed in the agricultural feed business. The consequences of the scheme will have a multiplier effect in Dyfed.
The Secretary of State should have been well aware of the consequences for Wales of operating a scheme that would bring about reduced production of milk. I have argued that the scheme will not be effective overall, but the Secretary of State for Wales should have secured a deal to ensure that the regional consequences of sectoral decisions would be reduced in their impact on the economy of areas such as Dyfed. As long as we remain in a common agricultural policy which operates in an open-ended way towards the reduction of production, there will be moves further to reduce production levels and to introduce further quotas. In France, for example, there are differential quota systems within the less favoured areas. We should have considered ways in which a United Kingdom quota system could have been introduced more fairly to ensure that local economies that are dependent on the dairy sector, such as that of Dyfed, do not face such appalling consequences. The manufacturing industry and those who use milk as a raw material could have been protected far more effectively. There is anger that the Secretary of State for Wales, a Dyfed Member, who is responsible for agriculture in Wales, was not able to obtain that protection for the region. I am certain that that anger will be reflected in the forthcoming Carmarthen by-election.
8.37 pm
Mr. Gerrard Neale: I am grateful to you, Mr. Deputy Speaker, for calling me to contribute to the debate. I am aware that other hon. Members wish to speak and I shall try to keep my remarks as brief as possible. I shall address myself mainly to milk, but I wish to be associated with the remarks of my hon. Friend the Member for Dumfries (Sir H. Monro), who listed the benefits that my right hon. Friend the Minister of Agriculture, Fisheries and Food has been able to obtain for the agriculture industry in the recent negotiations in Brussels.
It is tempting, even at this stage of the debate, to rehearse in detail the arguments that have been advanced by others. However, I shall resist doing so.
I wish to be associated with many of the comments of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills). Many in the farming community of Cornwall, North are grateful to him for the enormous amount of work that he undertakes on behalf of the west country's farming community. He outlined ably the producer-retailer argument and the desperate need to ensure that there is a minimum cut in production in all cases. He touched on the deep concern that is felt in my

219
area about retaining every form of dairy production that goes straight to the consumer. I have redundancy problems in my constituency similar to those that he addressed to my right hon. Friend. I also share my hon. Friend's concern about the drop in milk production that we have seen recently in the west country. There is real concern in Cornwall about the differential between Ireland and the United Kingdom. It is strongly felt that we have not safeguarded our own position sufficiently and that it could give rise to considerable anomalies.
It is tempting to limit one's remarks to one's own area, but in an area such as mine and that of my hon. Friend the Member for Torridge and Devon, West we find more or less every possible example of farms which could be affected by the regulations. I know that my hon. Friend the Member for Penrith and The Border (Mr. Maclean) could speak of similar instances.
In the formative stage of the negotiations, the farmers were waiting for the change. They knew that there must be change and they were ready to accept it, as my hon. Friend the Member for Hereford (Mr. Shepherd) said. They were coming forward with all sorts of constructive suggestions. The two main things for which they were asking were clarity as to what the Government expected of them in the future, and to be given a little time in which to put the changes into effect. They said that if those two conditions were met they would co-operate with the change.
In his opening speech my right hon. Friend clarified several points. He said that at various stages detailed letters had been sent to milk producers. There is no doubt about that. I have also no doubt that in that respect my right hon. Friend has done more than his colleagues in the other Community countries. However, there is one aspect that I have found depressing. My right hon. Friend has been to my constituency and helped me on several occasions. I know his commitment to farming and the amount of energy that he has applied—and continues to apply—to resolving its problems. But, unfortunately, there is a considerable lack of awareness in the dairy community of how much my right hon. Friend does and cares, and of his determination to do something about the problem. I have to tell my right hon. Friend that it arises in no small measure from the fact that when individual cases have been put to his Department—where farmers have been petrified by the threats to their livelihood as they imagine them to be—there has been no clear indication as to how they as individuals stand.
In a situation in which there are so many different cases and different sets of circumstances affecting different farmers, large and small, there has been no proper access to the sort of advice that should have been forthcoming. Dairy farmers have not been able to get the necessary details from local offices of MAFF, where they are usually told that the matter is still being sorted out centrally.
I should like to mention the case of a Mr. Rackham from a village called Lanivet. He purchased a farm at an auction prior to the announcement of any quotas. There was a Milk Marketing Board guarantee that he would get his certification, and he duly obtained it. Obviously, there was no stock on the farm, because he had only just purchased it. In addition, the previous owner, who had been ill, had run down the herd to about nine cows. When the new owner had his certification guaranteed and
220
confirmed, he was then told by the MMB that he was unlikely to obtain any quota whatever. Having bought the farm and incurred a considerable overdraft, he has had no indication whatever from the local office of MAFF as to where he stands. I have to tell my right hon. Friend that I have still not yet had a detailed reply from the Ministry.
I feel very strongly that my right hon. Friend should consider setting up an advice centre within the Ministry so that people can telephone and get advice or comment on their cases. My right hon. Friend may say, "How can I face that sort of prospect with the number of dairy farmers that there are?" It is interesting to note that similar arrangements have been made by the National Coal Board in the present difficulties.
I submit to my right hon. Friend that when people understand the truth, when they know how much he is doing, and understand something of the complexities of the argument, they are remarkably understanding. It is because they cannot get the feeling that their own problems are being addressed that they lose patience and tolerance.
With regard to timing, from hon. Members on each side of the House we have had questions concerning the payment of compensation for going out of milk production. There have been doubts about eligibility to claim compensation and with regard to tax. There have been doubts as to who is the owner of the quota. I think my right hon. Friend's words were that the ownership would attach to the holding for the use of the occupier. I can envisage all sorts of questions arising from that definition.
Doubts have also been expressed as to the definition of hardship cases. My hon. Friend the Member for Torridge and Devon, West mentioned several points in that connection with which I should like to be associated.
Several right and hon. Members have expressed grave concern about the fact that other EC countries so far appear to be well behind us in the detailed application of the regulations. As my hon. Friend the Member for Torridge and Devon, West said, it is essential that we should not rush the regulations, but should make sure first that we get them absolutely right. At the same time, I urge my right hon. Friend to give the House an undertaking that he will not enforce any of the penalties until all the detailed and highly complex points have been resolved. As several hon. Members have said, as long as doubts prevail within the industry it is utterly impossible for anybody to plan. It is also impossible for bank managers and others to advise farmers on how to cope with the situation.
Therefore, with regard to timing, I ask my right hon. Friend to wait until he has all the details clarified before enforcing any of the penalties. He should also wait until he is certain that other EC countries are ready to apply equal measures of restraint.
8.48 pm
Mr. Gavin Strang: The House has listened with interest to the speech of the hon. Member for Cornwall, North (Mr. Neale). No matter how energetic and active the Minister is in dealing with the issues before him, ultimately he will be judged, as he should be judged —and as previous Ministers have been judged—on the results of his policies. The reality is that the results of his policies are serious and depressing for the dairy industry.
In listening to the debate I could not help think of the occasions when I had the privilege, as Parliamentary

221
Secretary to the Ministry of Agriculture, Fisheries and Food in the last Labour Government, to represent Britain in the Council of Agriculture Ministers, often with my right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin). I remember, year in and year out, drawing attention to the huge surpluses and to the grotesque cost, particularly of the milk sector of the CAP. I recall that regularly the agricultural price fixing was settled in the early hours of the morning. During breaks in the meetings one would hear the words, "Yes, we must do something about this," but nothing was done. The Labour Government, and the Conservative Government who followed them, were basically committed to the reform of the CAP, but I do not think that we can regard ourselves as blameless.
In a sense, the then Labour Government were committed to the reform of the CAP. Indeed, they achieved some modest changes, such as the introduction of the variable premium, but unfortunately we were prepared to be fobbed off with concessions, such as the butter subsidy. Perhaps if we had stuck to our guns we might have got there in the end, but we never really dug in for decisive changes in the CAP.
The same applies, though with even greater strength, to the present Conservative Government, because, rightly or wrongly — time does not permit me to argue the merits of the case—they have focused their whole effort of late in the EEC on reducing Britain's net budget contribution. The situation has gone on and on, year after year, and we have a grotesque waste of resources with a huge and costly surplus policy of reduction, particularly in the milk sector.
We must not kid ourselves into believing that what is now being implemented has anything to do with the reform of the CAP. In no way can the quotas be described as reforms. Indeed, they are a negation of a common policy because they impose a straitjacket on producers. Successive Governments, particularly the last Labour Government, of which I had the honour to be a member, have been firmly committed to the expansion of the British dairy industry. We in the then Labour Government did not see that as being inconsistent with the need to tackle the CAP. We argued, I believe rightly, that if we could win a greater share of total Community milk production, that would be good for Britain and our dairy industry, consistent with reforming the CAP, with freezing prices, reducing production and the rest.
This morning I was re-reading the second of the White Papers which the last Labour Government published on their agricultural policy. Entitled, "Farming and the Nation", it said—we believed that it was in the national interest to expand the milk sector — in the section dealing with milk:
"The Government will maintain their pressure for sensible Community milk production. An effective common agricultural policy should encourage specialisation of production in the areas best fitted for it. In view of its natural advantages, better industrial structure, and marketing arrangements designed to sustain a high level of demand, the home industry should be in a position to produce a greater proportion of Community milk supplies and so to provide a bigger share of the United Kingdom demand for milk and milk products from home production."
That was written in February 1979, just before the end of the last Labour Government. That policy was continued by the incoming Conservative Government, and it has been our policy to encourage British producers to produce more milk. That is what we should have been doing,
222
because that policy has been in the national interest. After all, by producing more milk, we are providing employment in important areas and at the same time meeting the needs of the people.
It is tragic to think that in this debate we are discussing the reversal of that policy without achieving any reform of or improvement in the CAP. It is already clear that Britain's dairy industry will suffer disproportionately as a consequence of these policies. I am not suggesting that they do not hit the German and Dutch industries hard, but the British industry will suffer disproportionately. Compared with France and Ireland, our two most immediate competitors, our industry will really be screwed down.
Proof of that is already becoming available. A report in today's Financial Times quotes statistics from the Commission in Brussels and statistics collected by German farmers showing the disproportionate cuts in United Kingdom milk production. Also in the Financial Times this morning is news of 400 jobs at the Dairycrest company being destroyed. We are talking about the destruction, not of hundreds, but of thousands of jobs taking into account the farmers, farm workers, dairy men, transport workers and the general decline in the level of demand as a result of the cuts and consequent unemployment.
The Minister was wrong to agree to a policy of quotas. We should have gone down the road of holding prices and having cuts in prices. We could have argued about what level of cuts there should have been, or what freeze might have taken place on prices. The worst of all worlds is a policy which screws our industry but which does not achieve any real improvements in the CAP. Unfortunately, that is the road down which we are going.
Mr. Maxwell-Hyslop rose——
Mr. Strang: I shall not give way, because other hon. Members wish to speak and I am about to conclude my remarks.
If we find that not only does the quota system hit our dairy farmers more than others in the EEC but that those others, such as the French, hardly apply the system, the whole thing will not be on, and the sooner the Government recognise that the better.
I do not doubt the Minister's good faith. I am sure that, as he said, he raised the matter with the Agriculture Commissioner in no uncertain terms, but we have been here before. We have seen how some other member Governments manage to avoid implementing measures such as this, even though they are good at talking about them in Brussels. The Minister must accept that he is on trial, as it were, and that we are not prepared to accept the implementation of quotas if to do so means Britain making disproportionate cuts in its dairy industry.
8.56 pm
Mr. George Walden: There can be no doubt that Britain's dairy farmers have been badly bruised by what is taking place. Indeed, they have been so badly bruised that I am amazed that they are as objective and realistic as they are when one argues with them the points of view of the taxpayer and the need for budget discipline in the Community.
They are responsive to those arguments. In return, the Government should be responsive to the plight of

223
individual farmers, and I was glad that the Minister expressed sympathy on a whole series of detailed points concerning the problems of British dairymen.
One of the best things to have come out of this whole episode is the realisation that British farmers do not consist of fat cats sitting on broad acres, but that they come in all shapes and sizes and that their problems, as a result of the milk levy, come in various shapes and sizes, too. It is important, therefore, to consider the detail of the issues. That detail is complicated, but it must be considered thoroughly if we are to achieve justice and fair play.
Priority must be given to erecting a safety net for small farmers, those with 40 cows or fewer. It would be wrong, however, to deduce from that that those with a few more cows or acres are sitting pretty. They are not. For example, a number of medium size dairymen do not have the flexibility that some believe they possess simply because they have a few more acres. There are those with 70 cows and 100 acres, but because their acreage is split they cannot go in for other forms of production. County council smallholders moving to other county council smallholdings can find themselves in trouble. They may have a quota where they are, but no quota in the area to which they are going. They find themselves trapped in the middle of the new legislation.
While I enjoin my right hon. Friend to continue to examine the detail of each dairyman, I urge him to keep one eye on the broad picture too, because I am worried about the implications for the whole structure of dairy farming in Britain.
Britain's proportion of small producers is one of the lowest in the Community. We have heard some interesting figures tonight. From the structural and social view it is important to maintain a broad balance between small, medium and large producers. We cannot approach the problem from an accountancy view alone.
The Government are right to allow small producers to get out of milk if they wish, but they must also try to encourage small and medium producers to stay in the business. I recognise the difficult judgment and the importance of getting the balance right involved in that. Squaring the circle is difficult.
A friend of mine, who is expert in the subject, says that the larger producers are not always as efficient as everyone supposes them to be. When my right hon. Friend considers the detailed application of measures for encouraging farmers to move out of dairy farming he should bear in mind ways of encouraging some of the larger producers to move out. I know that the problem is difficult, and that the implications are costly, but we must remember that if the larger producers can be persuaded to reduce their herds the extra quota could help maintain the essential balance of the dairy industry in Britain.
I associate myself with the remarks by hon. Members on both sides of the House about the need for more time. We are in a period of dark uncertainty. We do not know the details or the future structure of the industry. Postponing the collection of the levy until spring next year would give a lot of comfort to a lot of people who are in great need of comfort.
I know from experience that farmers are among the best people in the country. They work damned hard. They are not fat cats. They form an integral part of our social structure.
224
The rather fashionable question of the conservation of the countryside has not been much discussed tonight. Let us not lose sight of the implications for conservation of what is happening. We need to maintain small and medium farms because they are part of the conservative pattern—in both senses of the word "conservative"—of the countryside. We must keep them there. The poorer farmers are, the less attention they will be able to give to conservation. It costs money to plant trees. They do not grow from nothing. We must bear that in mind too.
9.2 pm
Mr. Ron Davies: I welcome the opportunity to take part in the debate, not least because the top half of my constituency is a mining valley and the bottom half is rural and many dairy farmers operate there. I have the difficult task of trying to defend the miners against the ravages of Mr. MacGregor and the farmers in the bottom half of the valley against the ravages of the Secretary of State for Wales and the Minister of Agriculture, Fisheries and Food.
I agree with what the hon. Members for Ceredigion and Pembroke, North (Mr. Howells), for Caernarfon (Mr. Wigley) and for Meirionnydd Nant Conwy (Mr. Thomas) said about the problems in Dyfed. We are all aware of the work done by the farmers' action group there to publicise their case.
The problem is not restricted to Dyfed. The problem exists in Powys and the south Wales counties of mid-Glamorgan, west Glamorgan, south Glamorgan and the county of Gwent, which in part is represented by the Minister of State, Welsh Office. The anger expressed in Dyfed is felt in my county of mid-Glamorgan. It is not synthetic anger. It is not part of a politically motivated campaign whipped up by those who are anxious to defend privilege or to improve their standards of living. It is a very real anger which stems from people whose livelihood is directly threatened. That anger is made worse because they understand that the agreement to which the Minister has referred this afternoon will impose penalties on British farmers, particularly those with smallholdings such as we have in south Wales, penalties which are not being applied equally or consistently throughout the EEC.
Reference has been made to Ireland and its deal. That will prove offensive to the people of Wales. They will see about 2,000 people put out of the dairy industry in Wales and at the same time imports will come into the ports of north and west Wales from Ireland. It will be hard for them to accept that they should be out of work to allow imports from Ireland. It will be hard for them to accept the payment of the additional super-levy when they know that at the moment in France only some 25 per cent. of French farmers are paying the existing co-responsibility levy. It will be difficult for them to accept those penalties when they know that the dairy producers in the Low Countries, particularly in the Netherlands, are some 200 per cent. self-sufficient at the moment. Britain is not self-sufficient, yet our farmers are being forced out of their jobs.
The position will also be difficult to accept because the cut—it is a cut—will be an across-the-board cut. There is no suggestion from the Minister or the Secretary of State for Wales that any defensive action will be taken in support of those least able to bear the burden. I accept that Conservative Members have vested interests to defend and, quite properly, they are doing their job in defending those interests. But I must point out the problems that

225
small farmers will face when they are asked to cope with the 9 per cent. cut. It will not be a 9 per cent. cut in their profits. It will not be a 9 per cent. reduction in their standard of living. In many cases the 9 per cent. quota cut that they are being asked to accept will be the difference between existence in the dairy industry and bankruptcy.
I ask the Minister to appreciate the situation of small dairy farmers. They are dairy farmers because the land that they are farming is capable of supporting nothing else. Those farmers have no option to go out of dairy into beef or sheep production. First, for physical reasons such as climate, the land is not suitable for such alternative agriculture. Secondly, who in their right mind in the agriculture industry at the moment would be prepared to embark on a programme of capital expenditure in the beef or sheep industry when they have seen the dairy industry betrayed in the manner that we have seen in the past couple of weeks? There is no prospect of diversifying.
I want to draw the attention of the Minister and the Secretary of State for Wales to the special case arrangements. I have written to the Minister and I am sure that in his normal way he will reply politely and in full detail. I want to take this opportunity of mentioning a case which faces one of my constituents at the moment. Some six years ago he entered into the FHDS with the Government's active encouragement and assistance. Over the past six years he has committed himself to about £80,000-worth of capital investment in land reclamation, fencing, a new silage pit, a new dairy, new barns and new feeding areas. The purpose of that investment was to ensure that by the autumn of 1984 he would have about 60 dairy cows in full production.
That man's quota is being assessed now on the basis of his production last year. He has committed himself to £80,000-worth of expenditure. He finds himself facing not a 9 per cent. quota cut but a 30 per cent. cut. He cannot tell his bank that he is unable to pay his bank charges. Individuals who rent their farms have those standing charges which have to be met, be they bank overdrafts or rent charges. Unless the Secretary of State takes action, they will have no alternative but to sell, and they will be selling in a depressed market which means that they will lose money. The alternative is to go into bankruptcy.
That is what faces small dairy farmers in south and west Wales. I ask the Secretary of State to heed the arguments advanced during the debate. I ask him to fight his corner for Wales and for the regional dimension. I ask him to recognise that we have communities which are dependent on the dairy industry, in the primary sense with farmers and in the secondary sense with the ancillary industries. I ask the right hon. Gentleman please to look at the regional dimension and to take into account personal circumstances. I urge him to recognise the crisis facing dairy farmers in Wales.
9.10 pm
Mr. Mark Hughes: I apologise to the hon. Members for Tiverton (Mr. Maxwell-Hyslop) and for Caithness and Sutherland (Mr. Maclennan), who have been present throughout the debate and, because of the pressure of time, have not been called. There are many other hon. Members in the same position.
It is quite clear that the longer the debate went on, the less comfort there was for the Minister of Agriculture, Fisheries and Food and his colleagues on the Treasury Bench. They were desperately short of friends. This set of
226
proposals, both on the generality of price fixing and on the more detailed elements of the milk arrangements, is unacceptable to a very large number of right hon. and hon. Members of all parties.
The Minister and his colleagues are bereft of friends. Yet I open my remarks with a sense of sympathy for the Minister. It is very rare that one's colleagues in the Council of Ministers pass a poisoned chalice, but that: is the reality of the decisions of the Council of Ministers over the last few years. Against the advice of my right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin) and the right hon. Member for Worcester (Mr. Walker), the Council passed that poisoned chalice to the present Minister. The level of milk production had been upgraded to a point that could not be supported by taxpayers' money whether within the Community or on a national basis. The present Minister, poor soul, has had to reap that harvest. If I may mix the metaphor even further, his Cabinet colleagues have now stabbed him in the back. To achieve a budgetary settlement they said, "Sell out our dairy farmers."
That is the suspicion in the dairy industry and in farming throughout the country. The Minister was encouraged to find a settlement to the milk problem which made a subsequent settlement of the budgetary difficulty more easy. We settled for a bad deal for the milk quota arrangements to achieve a worse deal on the budgetary arrangements. That does not seem to be a very sensible way in which to conduct negotiations.
On this price package in general, and on the milk quotas in particular, a British Minister of Agriculture has betrayed the interests of the British consumer. When the Minister of State replies, will he say in which way, if any, the settlement on milk quotas lowers the price of milk products to the British consumer? In addition, is there any evidence to show that this settlement lowers the quantum of money which the British taxpayer must transfer to the dairy sector of the CAP? There is no evidence that in relation to the milk sector either the consumer or the taxpayer has gained, and there is palpable evidence that this deal is a disaster for the diary farmers.
We have upset the dairy farmers and not aided the consumer, and the totality of budget spending on agricultural support within the Community has increased.
Mr. Nicholas Baker: The hon. Gentleman seems to imply that had he been in office today he would have felt that the taxpayer could no longer support this level of expansion of agricultural production. How would he have checked it? Would he have been able to resist the imposition of quotas?
Mr. Hughes: I refer the hon. Gentleman to the speech that I made as Rapporteur on the 1978 price proposals which I made in the European Assembly on 24 February 1979. At that time, I set out the proposals precisely when we had to control the production of more and more milk because it could not be supported.
Mr. Nicholas Baker: I missed that speech.
Mr. Hughes: And how lucky the hon. Gentleman was.
Some hon. Members such as the hon. Member for Dumfries (Sir H. Monro) say that we should do this by price. Over the years various commissioners from Mr. Gundelach onwards have said that we should control milk production by lowering the price. Even elements within

227
the NFU have said that most of the time. The difficulty is that the moment a politician suggested that the farmers said, "Watch it, if you lower the price we will increase our production to maintain our incomes to offset the price loss." They have always said that, and politicians have always pulled back from that course.
An alternative strategy was to screw the price down hard enough for long enough, but that was not available to the Government when the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) became Minister of Agriculture, because by then it was too late. By then the Community had gone too far down the road of using price as an ineffectual method of controlling quantity to be able to retrench via price control to an acceptable level of quantity and budgetary financing.
Had they gone for what Mr. Gundelach always called a prudent price policy four or five years ago, that might have been possible, but it was not possible by 1982, never mind this year. Therefore, it is unfair for the farming community to blame the right hon. Gentleman. It is not easy for the Opposition Front Bench to forgive somebody for that. What is clear is that by that time that master Houdini of escapology, his right hon. Friend the Member for Worcester, had got away with everything he had left before the price had to be paid. He came to the House year after year proclaiming a great victory for the consumer and for the farmer alike, while he left the unpaid cheque to be picked up. I find it unacceptable in the present package that there is no evidence of remorse within the Government for what they have done in the past four to five years.
When we turn to the details, they show clearly that neither the producer-retailer nor the wholesale supplier can be satisfied with the administrative arrangements. Nobody —no intelligible and intelligent man—can be satisfied with the arrangements. I should like to read a paragraph in reply to my hon. Friend the Member for Aberdeen, North (Mr. Hughes), who asked what a producer is. The regulation on page 9 says that a producer is what a producer is in article 12 of the Council regulation, and so on, plonk, plonk.
A producer is
"a natural or legal person or group of natural or legal persons farming a holding located within the geographical territory of the Community"—
colon—
"selling milk or other milk products directly to the consumer, and/or supplying the purchaser".
That is what is in the Commission regulation. That is crystal clear.
I trust that, later this week, the new bishop of Durham will not have such a difficult theological problem to deal with as paragraph 5(a) of the draft regulations. The virgin birth and walking on water are as nothing. I quote:
"in the case of an applicant to whom the second subparagraph of Article 4(2) of the Commission Regulation"—
bracket—
"which deals with direct sellers in operation for less than 12 months"—
end bracket—
"applies, a quantity calculated by multiplying his base quantity"—
bracket—
"that is to say the quantity of dairy produce sold by direct sale from that holding in the period starting on the first day of the first calendar month"—
228
bracket—we are still in the first bracket—
"or, where the quantities so sold before the first calendar month"—
bracket — this is the third set of brackets in the paragraph—
"not being April 1984"—
end third set of brackets, or first set, whichever—
"is less than one third of the quantity so sold in the first calendar month, the second calendar month"—
end bracket—
"beginning after commencement of direct sale of dairy produce from that holding and finishing on 30th April 1984"—
bracket—
"where that first day is 1st March or 1st April 1984"—
end bracket—
"and otherwise on 31st March 1984"—
end bracket—
"by a fraction"—
here one could only become a precentor to do it properly:
"by a fraction the numerator of which is 12 and the denominator of which is the number of months in that period and"—
bracket—
"except in respect of a holding in a remote area"—
end bracket—
"reducing the result by 6 per cent."—
close quotes, amen.
When the House is involved in the nonsense of supporting and voting for, for example, page 25 of the regulations, we have got things wrong. If that is what those skilled people in the Box and Ministers are on about——
Mrs. Kellett-Bowman: The regulations read better than they sound.
Mr. Hughes: If the hon. Lady were to read them out they would sound better than they read.
That brings me to the fundamental problem at the root of the Opposition's early-day motion. The proposals have given rise to more discouragement, anguish, anger and genuine fear in the agricultural community than anything else in the past 40 years. Nothing done by Government to the agricultural communities in Northern Ireland, Scotland, Wales or England has done as much damage as these proposals have done to the agricultural community's sense of security. They have undermined the consensus advocated by successive Governments, including the Government to whom I gave support from 1974 to 1979. Indeed, I take all the blame for saying then that we should increase production.
It has been said that what happens to the dairy sector this year will happen ere long to the cereal sector, and that if the quotas for one product follow seriatim they will come to another before long. This scheme is ill-advised and ill-considered, and the financial help made available to the outgoer is inadequate. If there is an outgoer scheme, there must be an incomer scheme. The farming industry wants the details of that.
We foresee grave difficulties. We have not been given adequate details about genuine hardship cases, and we do not really know on what terms the tribunals can deal with them. If my last quotation is any indication of the clarity of those terms, they will, as has been said, prove to be a lawyer's paradise and a milk farmer's disaster.
As we say in our early-day motion, any attempt to deal with the CAP's problems commodity by commodity is doomed to failure. It always means that one farmer will be set against another and that one country will be set against another, and the whole process will not work. It

229
is clear that very few British dairy farmers believe that the quota system will be fairly administered as between this country and other countries in the Community. We faced the same problem with fisheries. No fisherman believed that the other side would exercise policing adequately. It is clear that the provision for small farmers and farmers in the predominantly pastoral parts of Wales, the south-west, Cumbria and the west country do not have the opportunities to diversify. The same applies in Cheshire and Staffordshire, where farmers cannot diversify, and personal arrangements for relief are inadequate. Therefore, I commiserate with the Minister and would be reluctant to offer a word of criticism against him personally, beyond saying that the instructions which he received and honourably obeyed were the wrong ones. If they were not, I blame him because few farmers can accept the deal.
Even allowing for the retention of the beef premium and the concessions on sheep levies, the Minister has not done the job properly on the outgoers' scheme. For most tenant farmers, the outgoers' scheme is a snare and a delusion, which they cannot take up, and they cannot enter any other area. The anger that the Minister has created in the dairy sector is not confined to what has happened in parts of my constituency, about which the Minister knows, from having met the few Conservatives that there are there. The Government's policy is crucifying the dairy industry. I hope that Conservative Members will realise that we object to these proposals, not merely because of their longterm inadequacy in dealing with the CAP but because they do a major mischief to the dairy industry which the Government appear not to comprehend.
9.32 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): The debate has naturally and understandably concentrated on milk quotas. It is also a debate about CAP reforms and the price review in general. I shall begin by making one or two quick comments about that.
We should remind ourselves that many items in the package are very good for Britain. My right hon. Friend the Minister of Agriculture, Fisheries and Food spelt them out, and my hon. Friends the Members for Dumfries (Sir H. Monro) and Cornwall, North (Mr. Neale) welcomed them. This is the first time that agricultural reforms of the CAP have been properly faced. I do not complain that the House did not concentrate on those gains, because hon. Members naturally wished to focus on problems. However, it is as well to remind ourselves that the package includes many good things.
My hon. Friend the Member for Dumfries asked about the problem of the new seasonal payment scale for sheepmeat. The Government were unhappy about that. We expressed many misgivings and criticisms about it. The Commission promised to review the new scale, and we shall return to the charge at an appropriate point.
The hon. Member for City of Durham (Mr. Hughes) and my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) said that they were interested in the cereals issue. We believe that cereals surpluses and the costs of disposing of them should be dealt with through price restraint. My right hon. Friend the Minister argued strongly in the Council for a three-year agreement on price restraints so that cereal farmers would have a better basis on which to plan for the long term and for planting. I agree
230
with my right hon. and hon. Friends who have talked about the need for long-term planning in the Community. The difficulty about the price review system is that it militates against the chances of achieving long-term planning. Nevertheless, my right hon. Friend and I have taken that point on board.
Mr. Leigh rose——
Mr. MacGregor: As many hon. Members have asked questions to which I wish to reply, it would be better if I did not give way. My hon. Friend asked about cereals and quotas, to which I am coming.
We believe that the cereals problem should be tackled by prices. My right hon. Friend tried to obtain a three-year agreement this year, but no other member state would go along with us on this occasion. There is no sign within the Commission that quotas are being planned for cereals, and it is hard to see how a quota system could apply for cereals as we are now applying it for milk. I hope that that will deal with the point that my hon. Friend the Member for Gainsborough and Horncastle had in mind.
I come now to the subject of milk, on which I wish to concentrate the rest of my remarks. I am grateful for the welcome which several of my hon. Friends have given to the fact that by this debate we have given the House an opportunity to comment on the milk regulations, without the need for decisions to be taken today. My right hon. Friend and I felt that it was right that the House should do so. I assure my hon. Friends that we have been listening carefully to all that has been said. I shall not be able to respond to all the points tonight, and we shall probably not be able to respond to all the points in the revised regulations, but I assure my hon. Friends and Opposition Members that we shall be studying closely everything that has been said.
One of the acute difficulties that we faced has been highlighted in a number of the conflicting comments made by my hon. Friends. My hon. Friends the Members for Torridge and Devon, West (Sir P. Mills), for Dumfries and for Hereford (Mr. Shepherd) urged that we should take time to get the regulations right and said that a little delay would be desirable in the interests of getting them right and not going too far ahead of the rest of the Community. I believe that that is correct, but we are being criticised for not having given dairy farmers precise guidance as to where they stand. That is a difficult conflict, and one cannot square that circle.
We have tried to give provisional guidance to dairy farmers. We have done so way ahead of other member states, so as to give our dairy farmers at least some provisional idea of how they can plan. We cannot, of course, give final guidance, nor issue the application forms until the House has approved the regulations. My hon. Friends have made it clear that they want us to consider the comments that have been made today. It will take some while to do so and to lay the further regulations before the House. I hope that dairy farmers will realise that we are trying to achieve a correct balance by giving proper consideration to the regulations, while giving provisional guidance as quickly as we can.
My hon. Friend the Member for Torridge and Devon, West asked about provisional guidance for wholesale producers and whether the 1983 minus 9 per cent. was the final figure. As my right hon. Friend said, normally dairy producers can plan on the assumption that that figure is the

231
ceiling — the biggest reduction for which they would have to plan. I say "normally" because some producers will be able to have an allocation that is less than 9 per cent. I can give my hon. Friends the Member for Torridge and Devon, West and for Cornwall, North the assurance that no wholesale producer will have to accept a reduction of more than 1983 minus 9 per cent. I hope that that guidance is helpful.
That brings me to the crucial issue that we faced in the negotiations. Many hon. Members have stressed the difficulties faced by dairy producers. I understand them fully, because I have been meeting dairy producers all over the country. I hope that it is understood—I believe that it is by more of them—that my right hon. Friend faced extremely difficult choices — as the hon. Member for City of Durham was kind enough to acknowledge—in the decisions that had to be taken this year.
I believe that it is known throughout the country and in the House that we did not want quotas. We should have much preferred to act on price restraint, for many of the reasons that have emerged today and because of all the difficulties that we are having in drawing up an acceptable quota system.
Mr. Ralph Howell rose——
Mr. MacGregor: I am sorry, but I must not give way because I have so much to deal with. Many hon. Members have spoken in the debate and want answers to their questions.
When we faced this issue in the Council, we had the choice of dealing with milk in the only way in which it was possible to get agreement in the Council, namely, quotas, or letting the matter slide with the same kind of increases in costs and the surpluses continuing to escalate in the coming year. If we had not tackled the problem of the surpluses and the costs, we would have faced a situation in which there would have been no pay cheque for any farmer—let alone dairy farmers—in the country from approximately September onwards this year. I think that we would have been criticised much more by the farming community if we had allowed that to happen. In the world we are often faced with a choice between two different courses when neither is ideal. That is what happened here.
I deal next with a number of detailed points that were made in the debate. I direct my remarks first to small producers. The hon. Member for Aberdeen, North (Mr. Hughes) suggested a different scheme for helping the small producers. He was attempting to help the small producer with a herd of under 60, I think he said, but, for the moment, let us consider a herd of under 40 cows. Through the outgoers' scheme, we are finding the quickest way to get the small dairy producer with a herd of under 40 back to the 1983 production level which the hon. Gentleman mentioned. That is the best way to approach the matter. By that means, we are going down the route by which other producers are giving up voluntarily.
If we had followed the hon. Gentleman's course—and I now understand his scheme and apologise for having misunderstood it in my intervention—I hope he realises that this would have meant that all other producers, particularly the large ones, would have faced a bigger cut in their production from 1983, whereas this way we
232
achieve the same objective of putting the small producer back to his 1983 quota level, and doing it in a voluntary way that is more acceptable.
The hon. Gentleman referred to the German scheme. I am sure he will acknowledge that the highest cut in Germany directed at the big producers, because of the way they are doing things, is 12 per cent. less than the 1983 production level. I believe that we have a better balance in the way that we are tackling it. It is much better for Scotland. In England and Wales, 37 per cent. of small producers have herds of under 40, but in Scotland the figure is only 11 per cent. Under the hon. Gentleman's scheme, he would be hitting hard a larger number of Scottish milk producers than we are.
The hon. Member for Sheffield, Brightside (Miss Maynard) completely misunderstood the point of the outgoers' scheme. She complained that we were not helping the small producers. We certainly are. As a former Minister with responsibility for small businesses, I am very keen on this. She should recognise that, under the outgoers' scheme, we will get the quota released that will enable us most quickly to help the small milk producer.
I deal next with direct sales. The hon. Member for City of Durham intervened in the speech of my right hon. Friend to ask about the timing of direct sales, and was concerned about the fact that, because of the way the Community regulations work out, we have a more complicated system of giving the overall quota allocation to the direct sales producers. If all goes according to plan, and depending on when we can get the regulations approved by both Houses, we hope that somewhere around late November, after consideration of all cases and appeals, definitive quotas can be sent to direct sellers. The assessment of the quota level for direct sellers will not take place until the end of the 1984–85 marketing year, so they will not have to face the problem at the end of September. Equally, the levy will not be assessed on them until after the end of this marketing year. Thus, we will be giving them their quotas well before the point at which they have to bring their overall allocations into line.
Many hon. Members have referred to a situation which is certainly not ideal. I refer to the possibility of transferability between direct sellers and wholesale producers, and the associated problems. The Community regulations provide for only limited flexibility, but we shall aim to make the greatest possible use of that flexibility. Producers who reduce or cease wholesale delivery may obtain direct sales quotas, provided that there is sufficient quota available within the overall member states direct sales quota. There are similar provisions for cases in which direct sales are reduced.
We have been asked to press hard on this point about direct sales and wholesale producers. In fact, we fought hard in Brussels for that limited flexibility. We did so because throughout the negotiations on the supplementary levy regulations we have been conscious of the problems that could face direct sellers, under a quota system, in meeting local market requirements. The situation is still not ideal, and we will wish to return to the matter later.
That is the answer to my right hon. Friend the Member for Taunton (Mr. du Cann), who also asked about the possibility of better quota transfer and flexibility. My right hon. Friend also asked for quotas to be saleable. That is not permitted under the present regulations, but we may be able to discuss the matter later in Brussels when we have overcome the preliminary difficulties.

233
On the question of flexibility in the exchange of wholesale and direct sale quotas, it is planned that the United Kingdom regulations implementing the proposals will he made when we deal with the allocation of quota surrendered by the outgoers. The precise mechanism has yet to be decided. We are alive to the problem and will do all that we can to deal with it.
In a delightful passage in his speech the hon. Member for City of Durham drew attention to some of the drafting difficulties in the current regulations and called for greater clarity, especially in relation to special cases. I share his view. We will be issuing notes of guidance to producers and to all concerned when the regulations have been passed, and I hope that those notes will be much clearer than the regulations. In drawing up the regulations, we are constrained by drafting requirements.
A number of hon. Members referred to the special cases. My hon. Friend the Member for Tatton (Mr. Hamilton) felt that the allocation of 2·5 per cent. for special cases would not be enough to deal with all the hardship cases. However, he also said that he was greatly concerned about the non-expanders. Several of my other hon. Friends drew attention to the problems of the non-expanders, who have rightly pointed out that they have not contributed to increased production in the United Kingdom and to the resulting problems, and do not see why they should suffer from the cuts. My hon. Friend cannot have it both ways. He cannot help the non-expanders and still increase the 2·5 per cent. I believe that the percentage is about right.
My hon. Friends the Members for Torridge and Devon, West and for Dumfries want us to have flexibility up our sleeve. They would like to see a regulation giving my right hon. Friend discretion in certain hardship cases which are not covered by the special case regulation. We shall certainly consider that point, although it will present difficulties.
My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) and several other hon. Members referred to the hardship cases not included among the special cases. We are very conscious that there are people who are not included in the special case categories in the Community legislation, but who would suffer genuine hardship if it was not possible to allocate them some quota beyond their entitlement—or, in some cases, any quota at all.
We must try to find some means of helping such people. At this early stage in the operation of the quota system we cannot identify all the deserving cases—although we are accumulating a sizeable list—or define rules to cover them. The position will become wholly clear only when we have had some experience of operating the arrangements. We will watch the situation carefully with a view to making provision for special hardship cases in the autumn. At the moment we have no quota to allocate to them, because the 2·5 per cent. will be allocated to the hardship cases covered in the regulations. The quota which we hope to be able to allocate to other cases will be that which is released by outgoers and which remains after we have dealt with the small producers with herds of fewer than 40 cows.
My right hon. Friend the Member for Taunton and my hon. Friend the Member for Dorset, West (Mr. Spicer) referred to the effect of the weather. It would be difficult to designate particular regions as special cases because of the weather, because producers vary even within those regions. We are endeavouring, as my right hon. Friend the
234
Minister said, to have a form of filter—to show a 10 or 15 per cent. production cut compared to the previous year — to ensure that not every producer applies to be considered as a special case for weather reasons, otherwise the tribunals will be inundated. A form of filter will establish whether there has been a serious natural setback because of the weather. Once producers have gone through that hoop and have proved their case, they can be considered under the appeals system for special weather reasons. That is probably the way in which we shall proceed.
My hon. Friend the Member for Hereford referred to the clawback on the first year. He asked whether I could say clearly that producers who had not used their full quota at the end of the current year would not find that their production would be cut back in the next year. I agree with him that it would be inappropriate to take the quota from people who produce less than their quota in the current year. We want the quota to be put to good use, for all the reasons that I have just discussed. At some point we must be able to reallocate that type of quota. I entirely agree with my hon. Friend that we must give producers time to get used to the new arrangments. I hope that that answers my hon. Friend's point. My hon. Friend referred also to dairy farmers on the panels. I assure him that dairy farmers can and will be on the panels.
My hon. Friend the Member for Lancaster asked about the time scale of the appeal. I had hoped that more hon. Members would contribute to the debate on this, so that we could obtain feedback. As we envisage the regulations, producers will have four weeks in which to apply under the special cases categories, and so on. If their case i s turned down, they will have 21 days in which to appeal. Some of my hon. Friends may feel that that period is too short. If they feel that way, they should let us know quickly so that we can consider that aspect. That is the present plan.
My hon. Friends raised several matters about taxation. Obviously, I cannot make any announcement about that tonight. I have listened carefully, as has my right hon. Friend the Minister, to all the points that have been made. We shall discuss them with our colleagues in the Treasury, but that is all that I can say at this time.
My hon. Friend the Member for Dumfries asked about Scottish appeals. The first sift of applications in Scotland will be undertaken by the milk marketing boards, unlike in England. They will check the forms for information and will take decisions on exceptional event criteria. The boards, and the Department of Agriculture for Scotland for the areas outside the boards, will act on clear guidelines. All acceptable development claims will be passed to a panel of three members drawn from the pool of 20, who will act as the tribunal. The tribunal will determine the amount of additional quota for which a producer would be eligible if there were sufficient reserves to be put around. An appeal against a decision by the boards or by the DAFS in that minority of cases will be put to the tribunal. Where: comments are sought by the tribunal from outside bodies, the producer concerned will have the opportunity to comment on the representations. I hope that that helps my hon. Friend.
The hon. Member for Newry and Armagh (Mr. Nicholson) referred to the situation in Northern Ireland. The allocation of quota between the regions of the United Kingdom is based on deliveries in 1983, but in the calculations we have taken account of the trend of

235
deliveries since 1981, and that includes the rapid growth in deliveries in Northern Ireland as compared to the other territories. The regulations permit us to do so, because those who were expanding much faster were contributing more to the problem. At the same time, we have given Northern Ireland the full benefit of the additional 65,000 tonnes. The overall effect is that Northern Ireland producers face a slightly smaller percentage cut than the rest of Great Britain compared with 1983 deliveries.
In addition, I hope that the hon. Gentleman has noted that we have selected Northern Ireland for special treatment under the outgoers' scheme. As a result of buying out 5 per cent. of Northern Ireland in the outgoers' scheme, as opposed to 2¼ per cent. in Great Britain, we shall be spending £4·073 million more in Northern Ireland than if we had applied the same percentage as in the rest of the United Kingdom. We have adopted this approach because we recognise the special problems of Northern Ireland, which include an especially high number of small producers. That is why we have given it favourable terms under the outgoers' scheme.
My hon. Friend the Member for Cornwall, North talked about Mr. Rackham. There are many difficult cases, and his is one of them. I shall be writing to him shortly, but perhaps the following guidance will be helpful. This is a case of no production taking place on the holding on 2 April 1984, and in theory there is no entitlement to a quota arrangement. However, we shall consider such cases sympathetically on an individual basis where the producers can provide documentary evidence that they were firmly committed to milk production prior to 2 April. I should make it clear that the draft regulations before the House do not make provision for these cases, and our intention is to make provision for them in the further statutory instrument, which we shall have to introduce under the outgoers' scheme in the autumn. We hope that some of the quotas surrendered by outgoers can be made available for such cases.
Mr. Mark Hughes: The Minister said that there would be a statutory scheme for outgoers in the autumn.
Mr. MacGregor: We wish to get the outgoers' scheme off the ground quickly, and that is why it is not being introduced as a statutory scheme. Provision will be made for it in the Appropriation Acts. We shall wish at a certain stage to legitimise it, as it were. Our purpose is to get it in place as quickly as possible so that we can release the quotas as soon as possible to help small producers and cases of special hardship.
Mr. Ralph Howell: I am grateful to my hon. Friend for giving way at last to a Conservative Member. Is he aware that I have never heard such nonsense talked in years in this place? We have made a most appalling mistake in providing for special cases. We shall be setting farmer against farmer in village upon village. No tribunal will ever be able properly to sort out the various claims. Much more serious thought should be given to this issue. The only sensible approach is to have a uniform quota system for all dairy farmers.
Mr. MacGregor: If my hon. Friend had been present throughout the debate he would have heard many of my
236
hon. Friends say that we were right to provide for special cases, for a host of reasons. We have endeavoured to achieve the right balance.
No one pretends that quota decisions are easy, and that has been obvious throughout the debate. We are endeavouring to get as near to the right answers in every case as we possibly can and we shall reflect on everything that has been said. I recognise the strong feeling in the House that we cannot implement the regulations in Britain by applying the super-levy if it is clear that other member states are not doing so. That argument was advanced firmly throughout the debate.
As my right hon. Friend the Minister of Agriculture has said on many occasions, we have made it clear to the Agriculture Council that we attach the highest importance to all member states applying the supplementary levy according to the agreed rules. It might be for the interest of the House if I read out one or two of the passages of my right hon. Friend's speech to the Council of Ministers on 19 June at Luxembourg. He said:
"I must say therefore it will be impossible to justify collecting the levy in the autumn if the system is not being applied effectively throughout the Community.
In particular my Government could not accept a situation where individual producers in some member states were being required to pay supplementary levy in accordance with the agreement reached on 31 March while those in other member states were manifestly falling short in applying the agreed rules."
If it becomes clear that some member states are not meeting their obligations within the time scale laid down, we will immediately press the Commission to take appropriate action. We would certainly insist that producers in some member states should not be penalised when, because of administrative or other failures in other member states, the arrangements are not being applied. I hope that that will make our position clear.
The hon. Member for Aberdeen, North referred to his favourite reading, the Country Landowner. While thinking about his speech I was reminded of a paragraph in the leader of one of my favourite pieces of reading, Farmers Weekly, on 8 June. The paragraph says that
"their spokesmen have been the severest critics"—
that is a reference to the Opposition—
"of EEC overspending; they would have attacked the absence of a dairy surplus control policy with the same gleeful venom that they display against its implementation. They are not suggesting an alternative; they are offering no lifeline to dairy farmers. But by arguing loudly—and often incoherently—
Mr. James Hamilton rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put,put and agreed to.
Question put accordingly, That this House do now adjourn:
The House divided: Ayes 212, Noes 313.

Division No. 389]

[10 pm

AYES

Abse, Leo

Beckett, Mrs Margaret

Adams, Allen (Paisley N)

Beggs, Roy

Anderson, Donald

Beith, A. J.

Archer, Rt Hon Peter

Bell, Stuart

Ashdown, Paddy

Benn, Tony

Ashley, Rt Hon Jack

Bermingham, Gerald

Ashton, Joe

Bidwell, Sydney

Atkinson, N. (Tottenham)

Blair, Anthony

Bagier, Gordon A. T.

Boothroyd, Miss Betty

Banks, Tony (Newham NW)

Boyes, Roland

Barnett, Guy

Bray, Dr Jeremy

Barron, Kevin

Brown, Gordon (D'f'mline E)

237

Brown, N. (N'c'tle-u-Tyne E)

Hughes, Simon (Southwark)

Brown, R. (N'c'tle-u-Tyne N)

Janner, Hon Greville

Brown, Ron (E'burgh, Leith)

John, Brynmor

Bruce, Malcolm

Johnston, Russell

Buchan, Norman

Jones, Barry (Alyn & Deeside)

Caborn, Richard

Kaufman, Rt Hon Gerald

Callaghan, Jim (Heyw'd & M)

Kennedy, Charles

Campbell, Ian

Kilroy-Silk, Robert

Campbell-Savours, Dale

Kinnock, Rt Hon Neil

Canavan, Dennis

Kirkwood, Archy

Carlile, Alexander (Montg'y)

Lambie, David

Carter-Jones, Lewis

Lamond, James

Clarke, Thomas

Leadbitter, Ted

Clay, Robert

Leighton, Ronald

Clwyd, Mrs Ann

Lewis, Ron (Carlisle)

Cocks, Rt Hon M. (Bristol S.)

Lewis, Terence (Worsley)

Cohen, Harry

Litherland, Robert

Coleman, Donald

Lloyd, Tony (Stretford)

Concannon, Rt Hon J. D.

Lofthouse, Geoffrey

Cook, Robin F. (Livingston)

Loyden, Edward

Corbett, Robin

McCartney, Hugh

Corbyn, Jeremy

McCrea, Rev William

Cowans, Harry

McDonald, Dr Oonagh

Cox, Thomas (Tooting)

McGuire, Michael

Craigen, J. M.

McKelvey, William

Crowther, Stan

Maclennan, Robert

Cunliffe, Lawrence

McTaggart, Robert

Cunningham, Dr John

Madden, Max

Dalyell, Tam

Maginnis, Ken

Davies, Rt Hon Denzil (L'lli)

Martin, Michael

Davies, Ronald (Caerphilly)

Mason, Rt Hon Roy

Davis, Terry (B'ham, H'ge H'l)

Maxton, John

Deakins, Eric

Maynard, Miss Joan

Dewar, Donald

Meacher, Michael

Dixon, Donald

Meadowcroft, Michael

Dobson, Frank

Michie, William

Dormand, Jack

Mikardo, Ian

Douglas, Dick

Millan, Rt Hon Bruce

Dubs, Alfred

Miller, Dr M. S. (E Kilbride)

Dunwoody, Hon Mrs G.

Mitchell, Austin (G't Grimsby)

Eadie, Alex

Molyneaux, Rt Hon James

Eastham, Ken

Morris, Rt Hon A. (W'shawe)

Edwards, Bob (W'h'mpt'n SE)

Morris, Rt Hon J. (Aberavon)

Ellis, Raymond

Nellist, David

Evans, John (St. Helens N)

Nicholson, J.

Ewing, Harry

Oakes, Rt Hon Gordon

Fatchett, Derek

O'Brien, William

Faulds, Andrew

O'Neill, Martin

Fields, T. (L'pool Broad Gn)

Orme, Rt Hon Stanley

Fisher, Mark

Owen, Rt Hon Dr David

Flannery, Martin

Paisley, Rev Ian

Foot, Rt Hon Michael

Park, George

Forsythe, Clifford (S Antrim)

Parry, Robert

Foster, Derek

Patchett, Terry

Foulkes, George

Pavitt, Laurie

Fraser, J. (Norwood)

Pendry, Tom

Freeson, Rt Hon Reginald

Penhaligon, David

Freud, Clement

Pike, Peter

Garrett, W. E.

Powell, Rt Hon J. E. (S Down)

Godman, Dr Norman

Powell, Raymond (Ogmore)

Golding, John

Prescott, John

Gould, Bryan

Radice, Giles

Gourlay, Harry

Redmond, M.

Hamilton, W. W. (Central Fife)

Rees, Rt Hon M. (Leeds S)

Hardy, Peter

Richardson, Ms Jo

Harman, Ms Harriet

Roberts, Ernest (Hackney N)

Harrison, Rt Hon Walter

Robertson, George

Hart, Rt Hon Dame Judith

Robinson, G. (Coventry NW)

Hattersley, Rt Hon Roy

Rooker, J. W.

Haynes, Frank

Ross, Ernest (Dundee W)

Healey, Rt Hon Denis

Ross, Stephen (Isle of Wight)

Heffer, Eric S.

Ross, Wm. (Londonderry)

Hogg, N. (C'nauld & Kilsyth)

Rowlands, Ted

Home Robertson, John

Ryman, John

Howell, Rt Hon D. (S'heath)

Sedgemore, Brian

Howells, Geraint

Sheerman, Barry

Hoyle, Douglas.

Sheldon, Rt Hon R.

Hughes, Dr. Mark (Durham)

Shore, Rt Hon Peter

Hughes, Robert (Aberdeen N)

Short, Ms Clare (Ladywood)

Hughes, Sean (Knowsley S)

Silkin, Rt Hon J.

238

Skinner, Dennis

Walker, Cecil (Belfast N)

Smith, Rt Hon J. (M'kl'ds E)

Wallace, James

Smyth, Rev W. M. (Belfast S)

Wardell, Gareth (Gower)

Snape, Peter

Wareing, Robert

Spearing, Nigel

Weetch, Ken

Steel, Rt Hon David

Welsh, Michael

Stewart, Rt Hon D. (W Isles)

White, James

Strang, Gavin

Wigley, Dafydd

Straw, Jack

Williams, Rt Hon A.

Taylor, Rt Hon John David

Wilson, Gordon

Thomas, Dafydd (Merioneth)

Winnick, David

Thomas, Dr R. (Carmarthen)

Woodall, Alec

Thompson, J. (Wansbeck)

Thorne, Stan (Preston)

Tellers for the Ayes:

Torney, Tom

Mr. James Hamilton and Mr. Allen McKay.

Wainwright, R.

NOES

Adley, Robert

Cockeram, Eric

Amery, Rt Hon Julian

Colvin, Michael

Amess, David

Cope, John

Ancram, Michael

Cormack, Patrick

Arnold, Tom

Corrie, John

Ashby, David

Cranborne, Viscount

Aspinwall, Jack

Crouch, David

Atkins, Robert (South Ribble)

Dicks, Terry

Atkinson, David (B'm'th E)

Dorrell, Stephen

Baker, Rt Hon K. (Mole Vall'y)

Dover, Den

Baker, Nicholas (N Dorset)

du Cann, Rt Hon Edward

Baldry, Anthony

Dunn, Robert

Banks, Robert (Harrogate)

Durant, Tony

Batiste, Spencer

Dykes, Hugh

Beaumont-Dark, Anthony

Edwards, Rt Hon N. (P'broke)

Bellingham, Henry

Eggar, Tim

Bendall, Vivian

Emery, Sir Peter

Bennett, Sir Frederic (T'bay)

Evennett, David

Benyon, William

Eyre, Sir Reginald

Berry, Sir Anthony

Fairbairn, Nicholas

Best, Keith

Fallon, Michael

Bevan, David Gilroy

Farr, Sir John

Biffen, Rt Hon John

Favell, Anthony

Biggs-Davison, Sir John

Finsberg, Sir Geoffrey

Blackburn, John

Fletcher, Alexander

Body, Richard

Fookes, Miss Janet

Bonsor, Sir Nicholas

Forman, Nigel

Boscawen, Hon Robert

Forsyth, Michael (Stirling)

Bottomley, Peter

Forth, Eric

Bottomley, Mrs Virginia

Fowler, Rt Hon Norman

Bowden, A. (Brighton K'to'n)

Fox, Marcus

Bowden, Gerald (Dulwich)

Franks, Cecil

Boyson, Dr Rhodes

Fraser, Peter (Angus East)

Brandon-Bravo, Martin

Freeman, Roger

Bright, Graham

Gale, Roger

Brinton, Tim

Gardiner, George (Reigate)

Brittan, Rt Hon Leon

Gardner, Sir Edward (Fylde)

Brooke, Hon Peter

Gilmour, Rt Hon Sir Ian

Brown, M. (Brigg & Cl'thpes)

Glyn, Dr Alan

Browne, John

Goodhart, Sir Philip

Bruinvels, Peter

Goodlad, Alastair

Bryan, Sir Paul

Gow, Ian

Buchanan-Smith, Rt Hon A.

Grant, Sir Anthony

Buck, Sir Antony

Greenway, Harry

Budgen, Nick

Gregory, Conal

Burt, Alistair

Griffiths, E. (B'y St Edm'ds)

Butcher, John

Griffiths, Peter (Portsm'th N)

Butterfill, John

Grist, Ian

Carlisle, John (N Luton)

Ground, Patrick

Carlisle, Kenneth (Lincoln)

Grylls, Michael

Carlisle, Rt Hon M. (W'ton S)

Gummer, John Selwyn

Carttiss, Michael

Hamilton, Hon A. (Epsom)

Cash, William

Hampson, Dr Keith

Chalker, Mrs Lynda

Hanley, Jeremy

Channon, Rt Hon Paul

Hannam, John

Chope, Christopher

Hargreaves, Kenneth

Churchill, W. S.

Harris, David

Clark, Hon A. (Plym'th S'n)

Haselhurst, Alan

Clark, Dr Michael (Rochford)

Havers, Rt Hon Sir Michael

Clark, Sir W. (Croydon S)

Hawkins, C. (High Peak)

Clarke, Rt Hon K. (Rushcliffe)

Hawkins, Sir Paul (SW N'folk)

Clegg, Sir Walter

Hawksley, Warren

239

Hayes, J.

Meyer, Sir Anthony

Hayhoe, Barney

Mills, Iain (Meriden)

Hayward, Robert

Mills, Sir Peter (West Devon)

Heath, Rt Hon Edward

Moate, Roger

Heathcoat-Amory, David

Monro, Sir Hector

Heddle, John

Montgomery, Fergus

Heseltine, Rt Hon Michael

Moore, John

Hickmet, Richard

Morris, M. (N'hampton, S)

Hicks, Robert

Morrison, Hon C. (Devizes)

Higgins, Rt Hon Terence L.

Moynihan, Hon C.

Hill, James

Murphy, Christopher

Hind, Kenneth

Neale, Gerrard

Hirst, Michael

Needham, Richard

Hogg, Hon Douglas (Gr'th'm)

Nelson, Anthony

Holland, Sir Philip (Gedling)

Neubert, Michael

Holt, Richard

Newton, Tony

Hooson, Tom

Nicholls, Patrick

Hordern, Peter

Normanton, Tom

Howard, Michael

Norris, Steven

Howarth, Alan (Stratf'd-on-A)

Onslow, Cranley

Howarth, Gerald (Cannock)

Oppenheim, Rt Hon Mrs S.

Howell, Rt Hon D. (G'ldford)

Osborn, Sir John

Hubbard-Miles, Peter

Ottaway, Richard

Hunt, David (Wirral)

Page, Sir John (Harrow W)

Hunt, John (Ravensbourne)

Page, Richard (Herts SW)

Hunter, Andrew

Parris, Matthew

Hurd, Rt Hon Douglas

Patten, John (Oxford)

Irving, Charles

Pattie, Geoffrey

Jackson, Robert

Pawsey, James

Jenkin, Rt Hon Patrick

Peacock, Mrs Elizabeth

Jessel, Toby

Percival, Rt Hon Sir Ian

Johnson-Smith, Sir Geoffrey

Porter, Barry

Jones, Gwilym (Cardiff N)

Powell, William (Corby)

Jopling, Rt Hon Michael

Powley, John

Kellett-Bowman, Mrs Elaine

Prentice, Rt Hon Reg

Kershaw, Sir Anthony

Price, Sir David

Key, Robert

Prior, Rt Hon James

King, Roger (B'ham N'field)

Proctor, K. Harvey

King, Rt Hon Tom

Raffan, Keith

Knight, Gregory (Derby N)

Raison, Rt Hon Timothy

Knight, Mrs Jill (Edgbaston)

Rathbone, Tim

Knowles, Michael

Rees, Rt Hon Peter (Dover)

Knox, David

Renton, Tim

Lamont, Norman

Rhodes James, Robert

Latham, Michael

Rhys Williams, Sir Brandon

Lawler, Geoffrey

Ridley, Rt Hon Nicholas

Lawrence, Ivan

Ridsdale, Sir Julian

Lawson, Rt Hon Nigel

Rifkind, Malcolm

Lee, John (Pendle)

Rippon, Rt Hon Geoffrey

Leigh, Edward (Gainsbor'gh)

Roberts, Wyn (Conwy)

Lennox-Boyd, Hon Mark

Robinson, Mark (N'port W)

Lester, Jim

Roe, Mrs Marion

Lewis, Sir Kenneth (Stamf'd)

Rost, Peter

Lightbown, David

Rowe, Andrew

Lilley, Peter

Ryder, Richard

Lloyd, Ian (Havant)

Sackville, Hon Thomas

Lloyd, Peter, (Fareham)

Sainsbury, Hon Timothy

Lord, Michael

St. John-Stevas, Rt Hon N.

Lyell, Nicholas

Sayeed, Jonathan

McCrindle, Robert

Scott, Nicholas

McCurley, Mrs Anna

Shaw, Giles (Pudsey)

Macfarlane, Neil

Shaw, Sir Michael (Scarb')

MacGregor, John

Shelton, William (Streatham)

MacKay, Andrew (Berkshire)

Shepherd, Colin (Hereford)

MacKay, John (Argyll & Bute)

Shepherd, Richard (Aldridge)

Maclean, David John

Shersby, Michael

McNair-Wilson, P. (New F'st)

Silvester, Fred

McQuarrie, Albert

Sims, Roger

Madel, David

Skeet, T. H. H.

Major, John

Smith, Sir Dudley (Warwick)

Malins, Humfrey

Smith, Tim (Beaconsfield)

Malone, Gerald

Soames, Hon Nicholas

Maples, John

Speller, Tony

Marland, Paul

Spence, John

Marlow, Antony

Spencer, Derek

Mather, Carol

Spicer, Jim (W Dorset)

Maude, Hon Francis

Spicer, Michael (S Worcs)

Mawhinney, Dr Brian

Squire, Robin

Mellor, David

Stanbrook, Ivor

Merchant, Piers

Stanley, John

240

Steen, Anthony

Waddington, David

Stern, Michael

Wakeham, Rt Hon John

Stevens, Lewis (Nuneaton)

Waldegrave, Hon William

Stewart, Andrew (Sherwood)

Walden, George

Stewart, Ian (N Hertf'dshire)

Walker, Bill (T'side N)

Stokes, John

Ward, John

Stradling Thomas, J.

Wardle, C. (Bexhill)

Sumberg, David

Warren, Kenneth

Tapsell, Peter

Watson, John

Taylor, Teddy (S'end E)

Watts, John

Tebbit, Rt Hon Norman

Wells, Bowen (Hertford)

Temple-Morris, Peter

Wells, Sir John (Maidstone)

Terlezki, Stefan

Wheeler, John

Thomas, Rt Hon Peter

Whitfield, John

Thompson, Donald (Calder V)

Whitney, Raymond

Thompson, Patrick (N'ich N)

Wiggin, Jerry

Thorne, Neil (Ilford S)

Wilkinson, John

Thornton, Malcolm

Wolfson, Mark

Thurnham, Peter

Wood, Timothy

Tracey, Richard

Woodcock, Michael

Trippier, David

Yeo, Tim

Trotter, Neville

Young, Sir George (Acton)

Twinn, Dr Ian

van Straubenzee, Sir W.

Tellers for the Noes:

Vaughan, Sir Gerard

Mr. Ian Lang and Mr. Tristan Garel-Jones.

Viggers, Peter

Question accordingly negatived.
Mr. Ashdown: On a point of order, Mr. Speaker. We have just had a debate on milk quotas. May I draw your attention to the problem of speaking quotas? I ask you to recognise that we all understand that you have a difficult job in finding a balance in these debates and that that must be done politically, and, I suppose, geographically as well. No fewer than three hon. Members from the 31 county seats of the south-west of England have spoken from the Conservative Benches, but not one Opposition Member. That is notwithstanding the fact that the southwest of England has been among the most affected by this disastrous move by the Government, which will cause major bankruptcies and unemployment.
May I draw your attention to the fact that the Labour party has had a considerable amount of speaking time, but the Labour party is completely unable to represent the south-west of England, where it lost its deposit in every seat? When we come to further debates on this issue, will you, Mr. Speaker, take into account the fact that I and many in the House and outside feel that the voice of the Opposition in those areas of England which have been most affected by the Government's actions have not been heard at all?
Mr. Tim Yeo rose——
Mr. Speaker: Order. I do not need any more points of order.
If the hon. Member for Yeovil (Mr. Ashdown) is saying that he has not been called, I am sorry. I should tell him that he has spoken 19 times in this Parliament which is not bad going. As he correctly told me, it is difficult to achieve a balance. He must take into account the fact that from the Opposition Benches today I had to call Members of the Liberal party, the Ulster Unionists and the Welsh Nationalists. I have done my best to balance the regions. Those hon. Members who did not manage to catch my eye in this debate will be given priority in the next debate.
Mr. Penhaligon: On a point of order, Mr. Speaker. I recognise your problems. I have been in the House for several years and recognise that Mr. Speaker does not always have an easy task when selecting people to speak.

241
For all that, this has been an important debate for the rural areas of Britain. Constitutionally, we have had a debate when the real opposition in the rural areas of Britain has not had an opportunity to express its views. I cannot recall that having happened before in a debate in the House.
Mr. Speaker: Order. Et is unworthy of the hon. Gentleman to challenge my selection. I have heard plenty of opposition from both sides of the House tonight.

Fisheries
10.17 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): I beg to move,
That this House takes note of European Community Documents Nos. 11209/83, 11209/83 Amdt. 1, 5390/84, 7248/84 and 7286/84 on total allowable catches and quotas for 1984, European Community Document No. 4969/84 on interim arrangements for Norwegian fishing for herring in the North Sea, the Ministry of Agriculture, Fisheries and Food's unnumbered explanatory memorandum of 24th January 1984 on interim arrangements for Member States' fishing for herring in the North Sea and European Community Document No. 7250/84 on technical conservation measures; welcomes the timely adoption of the total allowable catches and quotas for 1984 with the improvements secured for the benefits of the United Kingdom fishing industry, and the subsequent amendments to total allowable catches and quotas, including the quotas for North Sea herring; and urges the Government to ensure that any further decisions on total allowable catches and quotas for 1984 and on technical conservation measures also meet the needs of the United Kingdom industry.
This evening's debate covers a variety of European fisheries documents, spanning the period between now and our last such debate in December and dealing with two important aspects of the common fisheries policy—first, the total allowable catches and quotas for 1984, including the question of North sea herring, and, secondly, proposals for changes in technical conservation measures. I have a lot to cover and report to the House.
A number of the documents have already been adopted by the council as matters of some urgency, but they have all been recommended for the further consideration of the House by the Select Committee on European Legislation. We are as always grateful to the Select Committee for the careful and vigilant scrutiny of these matters which it carries out on behalf of the House.
I should just remind the House that it had been the Government's intention to hold this debate on 23 May, immediately before the Fisheries Council the following day. The hon. Member for Aberdeen, North (Mr. Hughes) and I would have liked to have that debate in good time, but that was rendered impossible by the actions of certain Labour Members. As a result, certain matters have advanced further without the House having had an opportunity to consider them. I regret that.
I propose, if I may, to speak only briefly on the documents on TACs and quotas adopted prior to the 24 May council so that I can devote more time to the position reached on North sea herring and to the outstanding issues on technical conservation, both of which I know will be of considerable concern to the House.
I deal first with the unnumbered memorandum of 24 January concerning interim arrangements for herring fishing by member states in the North sea. The arrangements were that such fishing should be prohibited in the northern and central sectors of the North sea but that the winter fishery already under way in the southern sector should continue, subject to an overall catch limit. The prohibition was later ended when, on 31 January, the Council agreed interim quotas for the period 1 January to 31 July, as part of the 1984 provisional TACs and quotas regulation. The southern winter fishery was allowed to run its course, followed by new interim quotas.
244
Next, I deal with documents 11209/83 and 11209/83, amendment 1. These concern the Commission's proposals for provisional 1984 TACs and quotas; the first one reflects the Commission's thinking before, and the second one after, its discussions with Norway in December. At the Fisheries Council on 31 January we pressed for various improvements and were successful. The result was overall a very acceptable set of provisional quotas, agreement on which so early in the year was an important achievement since it gave fishermen a more secure basis on which to plan. I believe that the House generally welcomed the timely settlement of the 1984 TACs and quotas although concern was expressed on a number of points, particularly concerning herring, cod and haddock. I shall come back to these stocks later in my remarks. But the fact that it was possible to make that settlement so early in the year after the earlier difficulties demonstrates that the common fisheries policy can be made to work.
Document 5390/84 concerns certain amendments made to the TACs and quotas regulation following the agreement in March between the Community and Spain on Spanish fishing opportunities in member states' waters. As a consequence of this agreement, quotas for monk fish and megrim in particular were reviewed and increased; that for monk fish being particularly important for the United Kingdom.
Document 4969/84, which was agreed in principle by the Council on 31 January, concerns interim arrangements for fishing by Norway of 15,000 tonnes of North sea herring before 31 July. This arrangement, which was agreed in parallel with the interim quotas for the Community totalling 54,300 tonnes, was without prejudice to the definitive allocation to Norway for 1984 or subsequent years.
The final adopted document is document 7248/84 concerning the extension of the earlier interim quotas for the member states for North sea herring. This proposal was agreed at the May Council. I will if I may say a little about the background to this decision and about subsequent developments.
Following the original interim agreement to which I referred a moment ago, talks with Norway on the definitive level of the North sea herring TAC for 1984 could not be held until the scientists' advice became known early in May. Two rounds of consultations ensued between Norway and the Community, but no agreement was reached on the definitive arrangements for 1984.
The difficulty in reaching agreement stemmed largely from a difference of opinion between the Community and Norway on the percentage share of North sea herring to which Norway should be entitled this year. A scientific working group held this spring confirmed that Norway should be entitled to only a very small proportion of the total allowable catch for the northern and central North sea, the southern North sea being entirely in the Community zone. However, in the recent consultations Norway rejected these findings on technical grounds and asked for a further scientific review of the data. Instead, she sought to concentrate the discussions on scientists' estimates of Community catches of juvenile herring in 1983 in order to establish a compensatory right to a significant share of herring in 1984. The Commission on the other hand maintained that Norway had no claim to compensation for these alleged catches bearing in mind in particular her very small share of the stock.

245
In the absence of any prospect of early agreement with Norway, there was strong pressure from herring fishermen throughout the Community, but particularly in the Netherlands, for a unilateral increase in the existing interim allocations to allow the main summer fisheries to be opened without fear of a premature closure. The Dutch in particular attach great importance, as some hon. Members may be aware, to their traditional fishery for maatjes herring which needs to begin at the end of May. The Commission accordingly put to the Council on 24 May this proposal to extend the earlier interim quotas for the member states up to a total of 155,000 tonnes to be taken in the Community's own zone. This left ample room, given the scientific advice on the recovery of the stocks, for subsequent negotiation of a reasonable quota for Norway.
The technical details of the proposal were broadly satisfactory. The allocation between member states reflected the key agreed last December and consequently gave the United Kingdom a quota of 35,720 tonnes, 85 per cent. of which could be taken in areas IVa and IVb, where the main interest of our pelagic fleet lies. The proposal also incorporated revised arrangements for the seasonal closure of the spawning grounds in the central North sea. These closures, which were narrowed down considerably from the blanket closure of last year, were considered appropriate and acceptable, as were the other details of the proposals, by the representatives of our industry with whom I was in close contact throughout the Council meeting.
The question faced at the Council was the broad one whether or not it was sensible to take the proposed decision at this stage. On the one hand, there was the possibility that unilateral action by the Community would cause difficulties in relations with Norway, which if extreme could damage the interests of our middle water and distant water whitefish fleets. On the other hand, there was the desire to provide a secure basis for the summer herring fishery, to which our own fishermen also attached importance. On balance I judged it right to let the proposal go through as part of a package.
I stress "as part of a package" because I am happy to say that I was able to secure Council agreement on other decisions of particular interest to the United Kingdom. In particular, I secured a further increase in our monkfish quota in western waters, which was welcome given the increase in our catching figures. This increase has been adopted as part of the same regulation as the increased herring quotas. I also secured a promise of proposals from the Commission to increase the TACs, and with them our quotas, for two other stocks: the so-called Manx stock of herring in the Irish sea; and plaice in area VII f and g—the Bristol channel and Celtic sea. The Commission has now proposed a Manx herring TAC of 3,400 tonnes, meaning an increase in the United Kingdom quota from 1,800 to 2,550 tonnes; and an increase in the TAC for plaice in VII f and g to 1,400 tonnes. This is higher than any of the catches in the last 10 years and would increase the estimated amount of the United Kingdom quota left for the rest of the year by about 45 per cent. Documents on these latest proposals will be deposited in the Library as soon as they are available.
The House will, I know, be concerned to know what the consequences of the main decision on herring have been in terms of relations with Norway and where we go from here. As I reported in a written reply to my hon.
246
Friend the Member for Basingstoke (Mr. Hunter) on 29 June, the Norwegian Government have expressed regret at the Council's unilateral decision and have asked it to be reconsidered. The Commission in reply has pointed cut that the Council's decision was a prudent one, in view of the scientific advice on the recovery of the stocks, and was designed not to prejudice in any way the eventual agreement on the share-out between Norway and the Community. The Commission has confirmed its desire to pursue consultations without delay. Meanwhile, we understand that Norway has followed the Council's example by authorising her own fishermen to fish far herring in the Norwegian sector of the North sea.
Unconfirmed reports indicate that they are landing higher catches than might have been foreseen given the scientists' previous advice on the distribution of the stocks, but we shall need to know more—for example, about the age composition of these catches—before any judgment can be made of the implications for Norway's eventual ownership share of the stocks. I should emphasise that Norway has continued to abide fully by the agreement reached earlier on access for Community fishermen lo Norwegian waters to fish the agreed quantities of species other than herring. We are, of course, anxious to see a resumption on consultations with Norway on herring as soon as possible so as to get back on to a basis of full agreement on the management of the North sea stocks, but the ball is at present in Norway's court.
There the matter stands for the moment. Obviously, the Community will ultimately need to allow Norway an appropriate share of the 1984 herring TAC consistent with her economic interest in the human consumption fishery'. Equally, Norway for her part must be prepared to make up a balanced package with further transfers to the Community, as appropriate, of species of interest to us.
Mr. Austin Mitchell: Will the Minister give way?
Mr. MacGregor: I am anxious to proceed, and I am sure that the hon. Gentleman will catch the eye of the Chair. It is important that I get through my speech quickly.
I have every hope that such a package can still be agreed with Norway which will include further quantities of important whitefish stocks for the Community. In particular, we will be seeking a further transfer of North sea cod from Norway and more haddock either from an increase in the TAC or a further transfer or a combination of the two. This is, of course, a further reason why we would like to see an early resumption of consultations between Norway and the Commission, and I understand Grimsby's interest in this matter.
Before leaving the question of TACs and quotas, I must mention one final document, document 7286/84, which deals with North sea sprat. The Commission has proposed reducing the TAC for North sea sprat from 175,000 to 130,000 tonnes and introducing for the first time an allocation of quotas between member states based on the normal method of calculation within the total available to the Community of 100,000 tonnes. That proposal takes account of the latest scientific recommendation to reduce the TAC in view of the sharp decline in the sprat stock and the risk of excessive by-catches of juvenile herring.
I supported that proposal at the Council on 24 May, but Denmark expressed concern at the difficulty that it would cause in her industrial fishing sector, and made a link with

247
another Commission proposal on the by-catch rules for the Norway pout fishery, which I shall come to shortly. It was agreed that both those matters should be studied further with a view to a decision by 15 September, taking account of the difficulties encountered by Danish fishermen. I should add that I took the opportunity at the Council to make clear our very strong criticism of excessive catches of juvenile herring by Danish vessels.
This brings me to document 7250/84, containing the Commission's proposals for amending the technical conservation rules. The proposals are complex and detailed, covering a number of aspects of the existing conservation regulation. The one aspect on which a decision was considered necessary at the Council in view of the need for adequate notice to the fishing industry was the question of the increase in the minimum mesh size for whitefish in the North sea from 80 to 90 mm.
The House will recall that in October of last year the Council decided to postpone the increase until 1 January 1985 and to consider before 31 May 1984 the possibility of exemptions for sole, plaice and whiting. The latest scientific findings are that, while the increase to 90 mm would have long-term benefits in terms of increased yields of haddock and, to a lesser extent, cod, there would be sharp losses in the short term especially in catches of whiting and sole.
Faced with that dilemma, the Commission proposed what may seem to be at first sight a logical way out, namely to draw a line across the North sea separating the northerly areas where haddock is mainly caught from the more southerly areas were it is not caught, but where sole is more plentiful. From a practical fisherman's point of view, as our industry made clear to us, such an approach would have been nonsense. Fishermen at North Shields would have been subject to one rule and those at Scarborough to another, while a fisherman going out from Whitby would have had to decide which sized net to use, depending on whether he turned to port or starboard on leaving harbour.
The increase to 90 mm involves a balance of advantages and disadvantages, which cannot be ducked, namely, the idea of derogations for individual species, such as whiting, or for particular areas, raises practical difficulties that we can at present see no obvious way of overcoming. On balance, our industry is content with the 80 mm mesh size and the quantity and quality of catches associated with it. It therefore seemed sensible to me, as to others around the Council table, to recognise reality and to put off the increase once again, this time to 1 January 1987, which will give time for a further thorough review of the scientific position and the whole question of derogations on which decisons are to be taken by the end of 1985.
Some hon. Members may feel that that was a retrograde decision from the conservation point of view, but I believe that it was a realistic and sensible one taking all considerations into account. The Council agreed that other aspects of the technical conservation rules should be discussed further at official level. Those discussions are continuing.
I should like to mention the Commission's proposals for changes in the rules on by-catches in the Norway pout fishery in the northern and central divisions of the North sea where small-meshed nets are used. The proposal is that for two periods in each year, from January to May and
248
from October to December, the by-catch of human-consumption whitefish, presently limited to 10 per cent. may be increased to 20 per cent., provided that, with the exception of whiting, the human consumption fish do not exceed 8 per cent.
We are very alive to the dangers that excessive by-catches of juvenile whitefish in these small-mesh fisheries pose for valuable human consumption stocks. We are also very much aware of the feelings of our own fishermen, who are obliged to conform to successive increases in mesh sizes for the conservation of whitefish stocks but who find themselves fishing alongside vessels pursuing industrial species, but taking valuable by-catches of whitefish in nets of a very much smaller mesh than they are able to use. We strongly share their concern.
At the Council on 24 May, Denmark pressed very strongly for the adoption of the proposal on by-catches, arguing that it was a balanced one involving a reduction in by-catches of other species in return for an increase in by-catches of whiting. The Danish Minister emphasised the political difficulty he would face in trying to tighten up controls on the activities of his industrial fishermen in relation to sprat and juvenile herring, if he could not take home what he regarded as a reasonable adjustment of the rules on Norway pout. He did not take it home on 24 May. No other Minister raised any objection, and it was left to the United Kingdom single-handed to put the case against the proposal, which I did as forcefully as I was able. As a result, no decision was taken and the matter was left for further examination and for decision, along with the proposal to reduce the sprat TAC by 15 September. I am well aware of the strength of feeling in the United Kingdom fishing industry on this proposal, and we will continue to muster every scientific argument against it, but I have to tell the House that so far at least our position has not received any support within the Council meeting from other member states. However, I believe that our objections are powerful, and we are doing all that we can to persuade other member states of their validity.
I come now to the third main issue raised in the Commission's proposals, namely beam trawling. Many hon. Members will be aware of the difficulties that have been experienced over the criteria used for defining the size of vessels which could beam-trawl for sole and plaice within 12 miles of coastlines. The Commission's Scientific and Technical Committee has given a great deal of consideration to this problem but because of the varying practices for registering vessels in the different member states it has not been able to come forward with any conclusive and generally acceptable guidelines.
The proposals now put forward simplify the criteria by deleting any reference to registered tonnage, in view of the widely varying systems of tonnage measurement within the Community, and limiting size only by the engine capacity which is now quoted in kilowatts, the normal international unit of measurement of power, but remains equivalent to 300 bhp — the existing size limit. The proposal provides for the detailed criteria for determining engine power to be drawn up by the Commission under management committee procedure: this should allow a detailed interpretation of the engine power restriction to be worked out which would prove easier to enforce and would, in particular, overcome the problems caused by the practice of derating. It is also proposed to extend the ban on beam trawling by large vessels within 12 miles to all

249
species and not simply sole and plaice, which would strengthen some aspects of the enforcement procedures which have caused difficulty in the past.
Although, therefore, the Commission's proposals on beam trawling within 12 miles offer the possibility of some improvement in the enforceability of the restrictions, they would not in our view resolve all the difficulties. In the light of experience, we now see considerable advantage in a return to a restriction based on the length of beam, which provides a clearer measure of the fishing power of a beam trawler. This would, I think, be welcomed by our industry as a whole. A number of other member states share this view, although the Netherlands in particular does not. In the light of the views expressed at the Council, it was agreed that further consideration should be given to the possibility of additional restrictions such as beam length or vessel length, and we shall continue to press the advantages of the beam length approach.
Finally, I should like to say something about the proposals for amending the rules relating to the south-west mackerel box. The House will be aware that in November 1983, on the basis of scientific advice, an extended box was introduced in the south-west in which mackerel fishing was restricted in order to protect the juvenile stock which congregate in those waters. The scientists' advice had been that, because the juvenile stock congregated in this area, fishing should be restricted to gill netting and hand-lining. However, in order to accommodate those fishermen who took by-catches of mackerel in demersal and nephrops fisheries in the area, a derogation was agreed from the rules of the box for bottom trawling provided nets with meshes of at least 60 mm were used.
In the event, that derogation permitted a sizeable directed mackerel fishery to be prosecuted last winter. The Commission's Scientific and Technical Committee recommended that the derogation should be removed. The Commission is now accordingly proposing a modification to the derogation by restricting the percentage of mackerel which may be retained on board to 25 per cent. when bottom trawling with large nets.
The Government attach considerable importance to the conservation of the western mackerel stock which is the basis of one of the United Kingdom's most important fisheries. We clearly must take very seriously the scientific recommendation that the important nursery areas in the south-west require protection. I cannot at this stage be categorical as to the outcome of the Council's further deliberations. But I can assure the House that we shall explore the implications of the Commission's proposal and of any alternative approaches that emerge with a view to reaching as well-balanced a solution as we can, taking fully into account the need to conserve the stock.
I apologise for taking up so much time, but I have tried to cover the many issues involved as quickly as possible.
Progress in the last few months, not least in reaching an early agreement on the 1984 TACs and quotas, shows that the common fisheries policy is being made to work in the long-term interests of the industry. Obviously, it will take time to get it right. The evidence shows that we are listening to the industry and showing flexibility and a willingness to work closely with it within the regulations.
We also have in place the restructuring schemes which, with generous European and national funding, will help the industry to modernise and adapt the fleet to take full advantage of the quotas available to it. As I announced on 22 May, the Government are to provide £7·9 million over
250
three years to help the Sea Fish Industry Authority with its plans for improving the marketing of fish. That is another key part of our strategy for the industry. All of those mean that the industry has at last a secure base on which to plan its future.
10.41 pm
Mr. Robert Hughes: I shall be extremely brief, because many hon. Members wish to speak, some of whom sat through the earlier debate without being called to speak.
I am pleased that, apart from cod, our quota for this year for each of the seven main species is more than cur 1983 catch. It would be pointless not to welcome that. Cod is a valuable species, however, and our reduced quota for cod is not welcome. We must have a scheme for the common fisheries policy, which is settled to the extent that fishermen know what they can catch, where they can catch it and when they can catch it. From time to time there are restrictions or changes, either in the vessel quota or in the quota per crew member, which bring instability to the industry.
Many issues need to be resolved. The main issue is over-fishing. The Minister gave me the figures for the seven major species in an answer on 25 June. In the case of Denmark the facts speak for themselves. The Danish catch, as a percentage of their quota for 1983, for haddock was 163 per cent., for saithe 159 per cent., and for mackerel 162 per cent. That cannot continue. In some respects the Netherlands are bad, but they are not nearly as bad as Denmark. If I had time, I could quote the figures country by country, but suffice it to say that the United Kingdom catches come exceedingly close to the mark. Our fishermen are playing the game.
A great deal is said about policing, but it does not take place. According to the latest information, the logbooks, which were supposed to be available in April, are still unavailable. No one knows when they will become available. When inquiries are made about when they will be available, the answer is either, "We do not know," or" "As soon as possible."
The Minister must recognise, as Opposition Members have always argued, that that sort of monitoring is inadequate. Let us agree to put up with it for the moment, but if logbooks are not available, there can be no monitoring or reporting to the commission, and over-fishing will continue and nothing can be done about it.
There are three further matters of particular concern. First, I hope that the impasse in the negotiations between the Community and Norway will be ended. It cannot continue. Everyone is anxious about it. I hope that the Minister will not allow the Norwegians a higher share o f herring than they are logically entitled to because they complained about the catching of juvenile herring. I have heard of as much as 150,000 tonnes being caught. I do not know the precise figure, but over-fishing is going on and should be stopped. Norway should not be allowed a bigger catch because of Denmark.
Secondly, the Minister expressed great anxiety about the proposition coming before the Council on 15 September to double from 10 per cent. to 20 per cent. the demersal bycatches for human consumption in the pout box. However, he must do more than express concern. He must say that he will not allow that to happen. If that

251
proposal goes through we shall see the marauding of stocks and many years of conservation efforts will be set back. I hope that he will resist that proposal.
The Minister may argue that my third point is special pleading and in a sense it is, and if the scientific evidence goes against us—although it is not always popular to say so—I understand that we must accept it. However, I have received strong pleas that a limited number of vessels be allowed into the south-west mackerel box, even if they are strictly controlled. That is of great importance to fishermen in north-east Scotland at particular times of the year.
I welcome the Government's announcement of £7·9 million for the Sea Fish Authority for marketing. I do not believe that it goes far enough, and one could discuss the matter in greater detail, but I am glad that at least the Government have moved on that. If we intend to ensure a high consumption of fish we must do something about marketing.
I should like to say a great deal about the plea for aid made by the North-East Scotland Fish Merchants Federation. Its representatives received short shrift when they went to see Lord Gray of Contin. They have said publicly and privately that they felt insulted by the abruptness of his manner. I hope that, now he has gone to another place, he has not forgotten that he had constituents and that we have constituents whose needs must be remembered.
I believe that that organisation has a good claim for aid, but one of the problems is that we cannot find out what is happening in the Community. The Minister will be aware that we had an exchange of letters. When I was in Brussels I raised the subject of aid for fish processors. The officials said, "We cannot give you the information; try and get it from your Minister." I raised the point with the Minister and he replied that he had received the figures confidentially, but that even if he could make them available to me they would not do me any good because the figures for 1979 were the last that he had. That is no way to run a common fisheries policy or an industry.
I believe that the North-East Scotland Fish Merchants Federation has a strong case, but I do not believe that its case is helped when it complains bitterly when Grampian regional council rescues Clipper Seafoods and saves 270 jobs. As hon. Members representing the north-east of Scotland will be aware, I have had my quarrels with Grampian regional council, but I pay credit to it for caring for the industry and rescuing the company. It was not done on a party basis. I hope that the North-East Scotland Fish Merchants Federation will think again and withdraw its criticism of the council for helping.
I hope that the Government will not come to the conclusion that because Grampian regional council have helped in this case, they do not have a responsibility to step in and help with continuing aid. I hope that when the Minister replies he will say something about this point.
I should have liked to raise an issue with which so far the Council of Ministers has shown no inclination to deal. It is safety at sea. Without going into the figures —I have them with me — fishing is the most dangerous industry in the country, more dangerous than mining or construction work. The figures are becoming worse despite the fact that fewer vessels are now going to sea.
252
The casualties, per thousand at risk, or number of vessels, are increasing, whereas in mining and construction work the risk is decreasing.
I should have liked to spend a great deal of time discussing that subject because we do not want to go through a period similar to the one which led to the Holland Martin committee being set up, when in three weeks three trawlers from Hull were lost. We certainly do not want that.
There are many things that we need to discuss. Although I will not say that I have given a generous welcome to what the Minister has done, I give it a general welcome, but I hope that he does not assume from that that we are satisfied that he is doing all he might do, and that the industry is in a healthy state. We are not satisfied. Many problems remain to be resolved. At another date, I hope that we will have an opportunity for a longer and more detailed discussion.
10.49 pm
Sir Walter Clegg: I trust that the hon. Member for Aberdeen, North (Mr. Hughes) will forgive me if I do not go down the road that he has, because I want to make a constituency speech, and I am not ashamed of that fact, because that is what we are in the House to do.
One of the great virtues of fish as a food is that it is easily digestible. I wish that the same could be said about the fisheries documents produced by the EEC and the Ministry of Agriculture, Fisheries and Food. I am grateful to the Select Committee on European Legislation for taking out these orders for discussion by the House, and for its explanatory notes. The Minister referred to that, and we are indebted to the Select Committee.
I am afraid that I must tell my hon. Friend that I approach fisheries debates in the House these days in a melancholy mood, and how could it be otherwise, when I have seen the port of Fleetwood virtually lose its deep sea fleet, and the inshore fleet reducing in size and beset with problems on all sides?
The documents are complex and based on scientific advice given to the Commission and to the Ministry. Over the years, there seems to have been clashes between what the scientists believe to be happening and what the fishermen know to be happening on the fishing grounds. To take one example on the documents that are under discussion, it is stated in document No. 11209/83 that the proposed TACs and quotas for the number of sole and plaice stocks in the Irish sea appear to be unduly restrictive in regard to United Kingdom fishermen. This does not square up with the picture that I am getting from my own fishermen.
Recently, the Fleetwood inshore fishermen's association, of which I am president—but in which, I may add, I have no financial interest — commissioned a report by Mr. Roy Wallis of the Preston polytechnic, a copy of which has been sent to the Ministry. The document portrays vividly the position in Fleetwood and in the Irish sea. In the report, Mr. Wallis refers to the Boyd and Brandon report published in the Fishing News in March. The report provides evidence of the declining resources in the Irish sea of the main fish species of cod, plaice, sole and whiting. Preliminary figures of landings for 1983 compared with 1982 show the decline in landings of sole and plaice as 15 per cent. Boyd and Brandon conclude that the level of fishing in the Irish sea is too high on most stocks, and the quotas agreed for 1984 will not help to

253
bring the level down. There seems to be a conflict of view, therefore, about the Irish sea stocks. From what I have been told by local fishermen, the position this season has shown no improvement and fish have been difficult to find, and not always of good quality.
The House is also considering the re-definition of the size of vessel allowed to use beam trawls for sole and plaice within 12 miles of the United Kingdom coast. I was interested to hear what my hon. Friend had to say about that. At present, the 300 brake horsepower is being replaced with 200 kW, and anything that makes it simpler to deal with the problem is to the good. I was interested to hear what the Minister said about restricting the length of beams. Over the years, Fleetwood fishermen have said that heavy beam trawling has disturbed the breeding grounds of the sole and plaice. The scientists have said time and again that this did no harm. The proof of the pudding is in the eating. Following heavy beam trawling in the Irish sea, the fish are not there.
The documents that we are discussing are the results of the settlement of the common fisheries policy. They are —perhaps of necessity—infinitely complex. However, the common fisheries policy has not solved the problems of all the fishing ports in the United Kingdom. The report to which I have referred, commissioned by the inshore fishermen of Fleetwood, shows that the port is under serious threat.
In the United Kingdom as a whole, certain fishing ports — especially in Scotland and Northern Ireland — are viable and are doing well. It is the main English ports that are suffering. England does not have a body similar to the Highlands and Island Development board, the Scottish Development Agency or the Northern Ireland development board. We are therefore at a disadvantage. We do not get the help that other fishermen get.
Unless some financial provision is made for ports such as Fleetwood, and other ports in England—especially on the west coast—we shall be in grievous difficulties. The report on Fleetwood by Mr. Wallis states clearly that financial help is necessary if the collapse of the inshore fleet is to be avoided.
The problem will not be easy to solve. We are comparing one part of the country with another. In the past, financial help for the fishing industry has been given for the whole country right across the board. Once one makes exceptions for this port or that, one runs into problems. However, unless some special help is given, several English ports, including Fleetwood, will be in grave difficulty.
Over the years, a sense of bitterness has crept in. The share fishermen, for example, who have been made redundant, have seen men in other industries receive considerable sums. This is, of course, a matter not for the Ministry of Agriculture, Fisheries and Food but for the Department of Employment, but when they compare themselves with redundant miners, steel workers and other industrial workers, the fishermen feel bitter. They feel that they have been cast on one side. I hope that the Department of Employment will reconsider the situation.
The amount of financial aid provided by the EEC is not sufficient for a port such as Fleetwood. Unless some help is given, our inshore fleet will diminish, and with it the number of associated jobs on shore.
I am having to make pleas. So do the fishermen. They want to be able to stand on their own two feet again as soon as possible. However, the Irish sea is in a very poor state
254
of conservation. The fishing grounds take longer to recover than those on the east coast, because of the climatic conditions and the shelving of the sea bed.
I know that all the problems cannot be solved at once, but I feel deeply about this matter. I therefore ask my hon. Friend to look carefully at the report, which I find very disturbing. I hope that he will be able to convince the Government that they must do something to help the ports that are in special difficulties.
10.59 pm
Mr. James Wallace: Like the hon. Member for Wyre (Sir W. Clegg) I shall endeavour to be brief. I shall make some points on the copious documents that we are considering. As did the hon. Member for Aberdeen, North (Mr. Hughes), I give a general, although not overgenerous, welcome to the documents. Most Opposition Members recognise that there have been increased quotas, except of cod. There is general agreement that this debate should occur in July rather than in the middle of December, as it did last year. The fact that the total allowable catches have been agreed this early in the year is an advantage. It must be recognised that steps have been taken to give the producers' organisations a degree of local management with respect to cod and, ind the case of the Shetland Producers Associations, to both cod and haddock. That is a welcome development. I am sure that those who have been given this power will act responsibly and that the scheme will be a forerunner of even greater local management schemes.
I hope that the Minister of State has sufficient time to respond to some points about conservation measures. The hon. Gentleman said that there TACs would be set on sprats. As I understood the regulations, sprat fishing will still be banned in the Moray Firth and Firth of Forth areas between October and March. I believe that the hon. Gentleman was aware that that matter was specifically raised when the House last debated this issue on 7 December. The Minister of Agriculture, Fisheries and Food said that he would consider the point again in relation to this year. He said also that he would consider especially whether boats under 40 ft in length could continue to catch sprats as a by-catch. Those who greatly depended for their living on the Firth of Forth and Moray Firth areas suggested that, by fishing with boats less than 40 ft in length, they were not doing any serious damage to young herring.
Ther is a very technical regulation on the measurement of crustaceans. I am disappointed that no steps have yet been taken to implement any system of licensing for lobster fishing. I believe that within the past four or five months the Minister has met representatives of the lobster fishing industry and that he is well aware of the depth of worry at the licensing system which the Government have been quick to implement with respect to other species. Such a system is necessary to safeguard an industry which for many people provides a considerable part of their livelihood, especially in areas in which there are not many other forms of economic activity.
I should like to refer to a constituency point on the Orkney and Shetland box, or, as it is sometimes called, the north of Scotland box. It was recognised in the preamble to the regulation of January 1983, which implemented the common fisheries policy as we know it, that measures were required to safeguard localities wher the local population was heavily dependent on the fishing industry,

255
not only directly in the catching site but indirectly in processing. People, especially those in Orkney and Shetland, argued that an excessive number of vessels over 26 m in length were licensed and allowed in to the box. What monitoring has occurred of vessels operating in that box? Is it the case that, because of the way in which the regulations are drafted, the total number of vessels — 128—means 128 at any one time? That might mean that more vessels could enter the box as one left.
I hope that the Minister will recognise that much of the fishing for demersal species in that area is done by boats of less than 26 m. I hope that if the purpose of the regulation was to protect those fishing grounds for those who lived closest to them, the hon. Gentleman will acknowledge that the measures are not as effective as was hoped.
The matter that most concerns the House is the future of herring and the relationship between the Community and Norway. It is regrettable that there has been a total breakdown. There have been reports of the Norwegians having already fished more than 30,000 tonnes of herring in their own sector. That is probably more than our fishermen have fished so far this year.
We are well aware of the damage which the Norwegians' industrial fishing inflicted on the herring stocks in the North sea in the late 1960s and early 1970s. It would be a tragedy if that damage were allowed to be repeated for that which has been achieved over recent years could so quickly be lost.
When the Minister said that the ball was very much at the Norwegians' feet I wondered whether that was entirely correct. He rightly said in another context that he has made representations at the Council of Ministers about the excessive catching of juvenile herring by Danish fishermen. If that is why the Norwegian Government are pressing more than other member states for a larger allocation of herring stocks, I ask the Minister whether representations cannot be made to the Danish Government for a quid pro quo arrangement with them if some compensation has to be paid to Norway.
Those issues concern the past, but the inadequacy of the policing operations of the common fisheries policy allows Denmark excessively to fish juvenile herring stocks. The most recent edition of Fishing News draws attention to the drastic consequences visited upon a Grimsby vessel for the mistakenly wrong reporting of a landing. A contrast was made between the efficiency of the Norwegian policing of its own sector compared with that in many other areas. We have heard within the past week or 10 days of an increase in the Community budget and we must wonder to what extent the Minister will be pressing for more inspectors to be appointed. The number was set originally at well into the 30s, if not approaching 40, but only 13 inspectors have been appointed. There are many hon. Members on both sides of the House who realise that there is an inadequacy in the inspection arrangements and who would press for more effective policing of the common fisheries policy.
We welcome many of the positive achievements within the fishing industry this year, but we do not wish the Government to become complacent. There are still many problems, not least that of herring and the restructuring of the fleet. The introduction of licences has caused a considerable number of problems in many areas. As many warned, the decommissioning grant has become the
256
bottom line for the sale of vessels to effect the transfer of a licence. The purchase of older vessels is being taken into account when consideration is being given to the cost of purchasing a new vessel. That brings problems for areas that have traditionally been dependent on fishing, especially if many of the licences go away to other parts of the United Kingdom and are bought up by corporate bodies. There will be damaging consequences for share fishermen, who in many respects, especially in the peripheral areas of Britain, form the backbone of the local economy.
11.8 pm
Mr. Albert McQuarrie: Like other hon. Members, I shall not seek to detain the House too long in this short debate. Therefore, I shall not go over the documents before us in great detail.
First, I refer to document 4969/84, which is dated 15 February 1984. It seeks to allocate to Norway an interim allocation of herring in the North sea. It would allocate 15,000 tonnes, which must be caught by 31 July 1984. I am glad that the interim arrangement would not prejudice the definitive allocation for 1984 and subsequent years.
The fishing industry will want a guarantee that because the Norwegian share of the interim fishing allocation would be relatively greater that that which the United Kingdom Minister considered appropriate, the agreement on that allocation was reached only because the declaration by the Council of Ministers on 3–4 October 1983 stated that in all future negotiations the Commission must advise Norway that shares between the Community and that country would be according to the relative ownership shares of North sea herring hitherto considered appropriate by the Community. The Government must ensure also that the interim arrangements for the early months of 1984 will not prejudice the definitive allocation for 1984 in respect of our fishermen or for subsequent years.
In this connection, the Grampian regional council's fisheries committee, which met yesterday, passed a resolution requesting Her Majesty's Government to use their influence — as the hon. Member for Aberdeen, North (Mr. Hughes) said—to get the EC and Norway round the table to discuss over-fishing, which is source of great concern in the north-east of Scotland, and particularly to the fishermen in my constituency who have been so adversely affected by Norway's over-fishing, as was again confirmed by the Minister this evening.
In document 11209/83 I observe that the total allowable catches for the North sea cod, haddock and whiting will be lower in 1984 than in 1982 and 1983. What steps do the Ministers propose to take to ensure that any increases in the TACs for saithe, plaice and mackerel will compensate the fishermen for the reduced TACs of the other species? Any major reduction in the overall TAC for the North sea stocks would be greatly detrimental to the fishermen in my constituency.
In connection with document 7248/84, I notice that Denmark has 28,780 tonnes of North sea herring in the northern and central North sea areas 4A and 4B, as against the quota to the United Kingdom of only 29,020 tonnes for the same areas. Can the Minister tell the House why Denmark enjoys such a large proportion of the quota? The same applies in the southern North sea and the eastern English channel, where the United Kingdom has only 6,700 tonnes of herring, as against France, which has 19,000 tonnes, and the Netherlands, with 18,000 tonnes.

257
Why is there such a disparity in the United Kingdom's quota as against that of the other member states, bearing in mind that the greatest amount of fish is caught around the shores of Britain?
I am pleased to see that document 7286/84 says that attempts will be made to control the undesirably high by-catch of young herring being taken when fishing for sprats, to which the hon. Member for Aberdeen, North referred. This was another matter with which the Grampian regional council's fisheries committee was concerned. Can the Minister say—the hon. Member for Aberdeen, North also asked him this question — how effective is the policing and catch reporting in the areas concerned? Much damage was done to the young herring over the past years during the conservation periods when the Norwegians were fishing for sprats and picking up hundreds of thousands of tonnes of small herring. Is this matter now under control in Brussels? Are member states ensuring that there is less by-catching of those young fish?
In document 7250/84, I am pleased to note that the proposed revision of the conservation rules of the southwestern mackerel box would prevent directed fishing for mackerel within the box using bottom trawls, while allowing a by-catch of pelagic species, including mackerel in bottom trawls.
The question of access was also raised by the Grampian regional council's fisheries committee, which requested that access should be granted to a limited number of vessels from the north-east coast of Scotland, on condition that, should small fish be causght, fishing would cease immediately. Last year we had a number of problems in the south-western mackerel box between the fishermen in the south-west and the Scots. Fortunately, reason prevailed in the discussions between the Scots and the south-west fishermen and the problem was resolved. I hope, therefore, that this piece of draft legislation will ensure the smooth working of the south-western mackerel box this year.
Document 5390/84 of 1 March 1984 proposes TACs and quotas on certain stocks affected by the recent agreement reached between the Community and Spain on Spanish fishing opportunities in Community waters for 1984. While I accept that the agreement will provide an increased United Kingdom quota for monkfish, which will be welcomed, I have grave reservations about the United Kingdom agreeing to any TACs or quotas for Spanish fishermen in Community waters where they do not have a history of traditional fishing. It must be borne in mind that the accession of Spain to the Community will be dependent upon the total restrictions being lifted which are at present enforced by the Spanish authorities on our dependent territory of Gibraltar.
Nor should it be forgotten that if Spain secures membership of the Community, it will have the largest fishing fleet among the member states. The British Government must be careful to safeguard the interests of the United Kingdom fishermen, who cannot afford to lose any part of their TACs or quotas, having suffered from the need for conservation over the years.
It is unfortunate that, as usual, we are discussing this important topic of fishing so late at night. Having examined the instruments carefully, I give them a guarded welcome. I trust that the British Government will continue to play a large part in the decision-making in Brussels,
258
bearing in mind that so much of the fish caught in Community waters comes from around the shores of Great Britain.
11.16 pm
Mr. Austin Mitchell: Only two comments need be made about these documents. The first is that one heaves a sigh of relief that the quotas for 1984 have actually been agreed, and so early in 1984, instead of being left until December and an indecent scramble to stitch the whole thing together, which is what usually happens with the common fisheries policy.
The second is to emphasise that the real problem with these quotas is cod. That is the central issue. The cod catch is down, yet we in Grimsby depend on cod almost totally. The fact that the cod quota is down means an 18 per cent. reduction in the earnings of the port because the reductions have not been compensated for by any increase in earnings or increased prices in the market. Also, the Government have kicked away the prop that a port such as Grimsby needs, the operating subsidy, which helped to keep the industry going. Now it must suffer this blow of an 18 per cent. reduction in earnings.
It is not good enough for Britain to end up with a scattered, small boat fishing industry. We need an industry which is concentrated in ports such as Fleetwood and Grimsby, ports which can offer facilities for a professional industry. This industry needs investment and replacement, and the lack of that has caused the decline in the safety record to which my hon. Friend the Member for Aberdeen, North (Mr. Hughes) referred.. It needs confidence, but it will not have it as the industry shrinks and does not receive the backing it deserves from the Government.
Grimsby is suffering partly because of the row which has been precipitated with Norway, a row which has precluded an agreement on extra cod from Norway. This is fish which we are not catching, fish which our Ministers pledged to get for us, fish which the commissioners pledged to negotiate for us but fish which we do not have and which would supplement the reduction in catches.
We do not have that catch because of the Danes. The Minister was mealy-mouthed about allocating responsibility for the breakdown in talks, but responsibility must lie with the Danes. They have caught 170,000 tonnes of immature herring off the west coast of Denmark in Danish vessels. No action has been taken to stop it and, so far as I know, there have been no prosecutions, no cuts in quotas, no threats made and no punishment levied for what they have done. Indeed, there is even talk of rewarding the Danes for this heavy catching of juvenile herring by giving them an increase in the by-catchers allowance for industrial fishing from 10 to 20 per cent.
I warn the Minister that if he accepts that increase in by-catchers, the industry will be up in arms. We want more than an effort of opposition from him. We want his pledge to go on opposing such an increase, because we know how the EEC can soften attitudes in such matters.
That catching of juvenile herring is of great concern to Norway because the fish swim into Norwegian waters—if it is allowed to mature— but the way in which the juvenile herring are being caught gives them no confidence in EEC enforcement mechanisms, about which they feel much as I do. They have become obstructive on extra cod and have begun to catch herring in their own waters much in the way that the Danes have been doing.

259
In this matter, we are on the side of Norway. We have the same concern about conservation. At times, it seems that they and us are the only countries which pay any attention to conservation. More important, we need Norway's co-operation, and the port of Grimsby needs the catch that we make in Norwegian waters. It is essential, therefore, that we press for action against the Danes as a sanction to try to get an agreement with Norway.
That brings me to the central point of quotas, and that is the problem of policing, which has always been the weak link of the common fisheries policy, partly because of collusion between the fishing authorities and the fishing industry in continental countries, but also because the EEC inspection force began weak and finished up weaker, turning from a force into a farce. Only 13 men police that enormous area. Britain suffers both ways. We restrict our effort because our fishing is better inspected and policed than it is anywhere else except Norway. Yet we suffer the sanction of cuts, in cod quotas for example, because of overfishing by others who are not adequately controlled or policed.
The extent of overfishing was revealed when my hon. Friend the Member for Aberdeen, North asked a question only a week ago. The Netherlands' cod catch in 1983 was 112 per cent. of its quota. The Danes caught 163 per cent. of their haddock quota and the Netherlands caught 121 per cent. of its quota of haddock. The Danes caught 159 per cent. of their quota of saithe and 162 per cent. of their mackerel quota. The Netherlands caught 109 per cent. of its mackerel quota. Deliberate and flagrant breaches of quotas has taken place and nothing has been done.
Britain's cod quota has been improved for Grimsby by making it more flexible, but only Britain operates under a restrictive system of licensing and quotas. Why are not other countries so effectively policed? Policing cannot be done without logbooks showing where the fish is caught or without effective co-operation by authorities on shore in the different countries. Until we get that, there can be no satisfaction with the quotas or with the CFP arrangements.
Grimsby's FEOGA money for the Fish Producers Organisation has been withheld because of dissatisfaction with fish grading. We need that money to underpin the prices on the market when the market becomes more difficult — as it will at the end of the year and the beginning of the next fishing season—to guard against a collapse of prices and to keep the FPO solvent.
Our grading, although no better, is certainly no worse than that in most other ports. The difference is that ours is more continuously and closely inspected by officials. The inspection at other ports is not as rigorous. I challenge the Minister to examine grading at other ports. If he cannot go to other ports, I urge him to come to the Mecca of the fishing industry —Grimsby — and to inspect the boxes from Peterhead. He will find that grading there is exactly the same as ours. It is unreasonable to make Grimsby an example while not dealing with the problem elsewhere.
The cut in the cod quota is causing severe problems in Grimsby. The industry faces a crisis of survival in the coming winter months when the viability of the landing companies and of some of the vessels which are old and not making money will be threatened without the special
260
help of an operating subsidy. The Minister must help to keep going viable industries in concentrated, efficient ports such as Grimsby.
11.23 pm
Mr. Michael Howard: Unlike my hon. Friends the Members for Wyre (Sir W. Clegg) and for Banff and Buchan (Mr. McQuarrie), and unlike the hon. Member for Great Grimsby (Mr. Mitchell), who have made distinguished contributions to debates on this topic in the House, this is the first time that I have had the opportunity to participate in such a debate. I shall take a moment or two—I shall try to be brief—to describe the nature of my interest.
In my contituency, commercial fishing takes place from Folkestone, Hythe and Dungeness. It is a significant activity in an area where unemployment is above the national average. It is important that it should prosper. Its prosperity is far from assured and I regret to say that the agreements contained in the documents before the House this evening are far from assuring that prosperity, even if they are not in themselves objectionable.
The first reason for that less than satisfactory situation is that which has been touched upon by several hon. Members who have already spoken, and that is the inadequacy of the arrangments for inspection and enforcement. The evolution of ministerial attitudes to that matter is not altogether encouraging. In January 1973, when my right hon. Friend the Member for Worcester (Mr. Walker), who then had responsibility for these matters, participated in the debate on the agreement on the common fisheries policy he assured the House that a proper system of enforcement would apply to all countries in the Community, not only to the United Kingdom. He said that we would ensure that the enforcement was carried out well and effectively.
By the time we reached last December, my right hon. Friend the Minister of Agriculture, Fisheries and Food was less sure about the effectiveness of the arrangements. He said that he had maintained regular pressure on the Commission and that he had been assured that the full complement of 13 inspectors would be in place by the end of the year and that he preferred to reserve judgment on the need for an increase in the complement.
The fishermen whom I represent are in no doubt about the inadequacy of that number. They are in no doubt about the inadequacy of the present arrangements. They say that it is no use having a common fisheries policy unless it is enforced effectively and uniformly throughout the Community. I urge my hon. Friend the Minister of State to look again at that aspec of the matter. It goes to the very heart of the policy. Without effective enforcement, all the weary hours that he has spent on th negotiations will have been wasted. I have far too high a regard for the abilities of my hon. Friend, and I hope some understanding of the other calls on his time, to wish those hours to be wasted in that way.
Mr. Gerald Malone: Is my hon. Friend aware that the Member of the European Parliament for the north-east of Scotland, James Provan, recently secured an initiative to control over-fishing from the Netherlands? He managed to secure an action which required the books of fish processors in the Netherlands to be examined. They were impounded and examined. Is that not one aspect of the way in which we can obtain control?

261
Unless fish processors in some of the countries where catches are being landed are controlled, we shall never reach a satisfactory solution.
Mr. Howard: Every small step forward is welcome, but I fear that we need a leap or two. I urge my hon. Friend the Minister to do what he can to secure such leaps.
Even enforcement will not in itself be sufficient. My hon. Friend will know that the fishermen whom I represent suffer greatly from the inshore activities of the large beam trawlers. They regard it as profoundly unsatisfactory that the restriction on the activities of those beam trawlers should be expressed in terms of engine power. I fear that they will not be greatly mollified by the substitution of kilowattage for horsepower, which is what the agreements in the documents before the House secure. They want a limit expressed in terms of vessel or beam length. I was greatly encouraged by my hon. Friend's remarks. I urge him to press with urgency and determination for limits expressed in those terms.
The final point that I wish to make relates to the subsidy on fuel which is presently enjoyed by French fishermen. I had occasion recently to visit Boulogne and Calais in order to make common cause with representatives of those communities on a matter which arose as a result of the French Government's proposal to withdraw the no passport excursion facility. That proposal will damage the economic interests of those communities at least as much, if not more than, it will harm the interests of my constituency.
I discovered during that visit that they had many interests in common with the constituency which I represent, but I fear that fishing is not an area on which our interests are common, especially so long as they enjoy a subsidy on their fuel which enables a fishing vessel from Boulogne to be viable when an exactly similar fishing vessel from Folkestone is not. That is unfair. It is unacceptable. I urge my hon. Friend to do all in his power to ensure that discriminatory measures of that kind, which I fear are all too common in other areas of Community policy pursued by other members of the Community, are stopped.
I am far from certain that all the measures to which I have referred will suffice to assure the prosperity which I should like to see accrue to the fishermen in my constituency, though I believe that they would go a considerable way towards achieving that goal. In the longer term it may be necessary to consider more fundamental measures such as the introduction of a scheme of regional management, but the measures that I have identified would be a good start, and it is in that spirit that I commend them to my hon. Friend.
11.30 pm
Dr. Norman A. Godman: I shall be brief, because I know that the hon. Member for St. Ives (Mr. Harris) wishes to contribute to what, for me, is too short a debate on a very important issue.
I want first to add a comment to the observations of the hon. Member for Wyre (Sir W. Clegg). He talked of the absence of compensation for redundant share fishermen. If he were here, I am sure that he would agree that that is a matter for deep regret but that the same applies to fishermen employed by trawler companies.
262
My brother Leslie had 19 years service with a trawler company. He received the princely sum of £385 in redundancy.
Mr. Austin Mitchell: He was lucky.
Dr. Godman: My hon. Friend says that my brother was lucky, but that was £15 less than the European grant per gross registered tonne for decommissioning the vessel on which he sailed. It is surely time that we had a pension scheme for all fishermen.
I said that it was a matter for regret that this was such a short debate. I say that especially in the light of what the Select Committee said in its 26th report concerning, for example, the proposed increase in the by-catch when fishing for Norway pout. If that comes about it will be a scandal. Sooner or later the Danes will have to face the need to seek alternative foodstuffs for their pig industry.
There is also this very important issue of beam trawling. I have argued in the past for a complete ban within a few miles of our coastline.
There are other issues raised in the documents, for example, the removal of the Community prohibitions on the use during a specified period each year of trawls, purse seines and so on in certain Scottish lochs and other related issues which are worthy of a more comprehensive debate.
Finally, I add a brief comment to the remarks of my hon. Friend the Member for Aberdeen, North (Mr. Hughes) on the safety of fishermen. In fairness to the officials of the EEC concerned with this industry, it must be said that they are deeply aware of the importance of this issue and recently organised a conference on fishing vessel safety at L'Orient, in Brittany, to examine the problems. The conference spent a great deal of time examining the design of vessels and deck machinery on the basis that the deck of a fishing vessel is a work place that needs the most stringent safety regulations. I look forward to the day when we debate the safety and training needs of our fishermen.
11.34 pm
Mr. David Harris: Having tried and failed to get into the debate on the milk industry —I I quite understand why I failed — I am grateful for, and delighted to have, the opportunity to say a few words about another important industry in the south-west, the fishing industry, and it will not surprise anyone if I confine my comments to the south-west mackerel box.
The hon. Member for Aberdeen, North (Mr. Hughes) seemed to be saying that we should have some overfishing in the mackerel box but not too much. My hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) was also not quite right in suggesting that everything was wonderful and that everyone agreed entirely about the future of the box. I shall not, however, reopen old wounds and issues that we have discussed with vigour on previous occasions.
I hope that in winding up the debate my hon. Friend the Parliamentary Under-Secretary of State for Scotland will give an assurance that the matter will be cleared up at the next Fisheries Council meeting, which I gather is not due to take place until September. The problem of the mackerel box and the need to end an extremely damaging exemption have dragged on for far too long and September is not far off the beginning of the mackerel season. it would be intolerable if the issue remained unresolved at the start of the new season. Indeed, I say without fear of

263
contradiction that if the matter is not settled by then there will be great trouble off the south-west coast of England, which the whole House should be determined to avoid.
I should mention in passing that there is a drafting defect in the regulation. I believe that my hon. Friend the Minister of State is aware of that, and I hope that he will take full account of it.
My hon. Friend the Minister of State referred in opening to the restructuring of the fleet. As he and most hon. Members involved with fishing communities know, there have been diabolical delays on the part of the Commission in Brussels in paying out FEOGA grants to our fishermen. I hope that that problem, too, will be brought to an end.
11.36 pm
The Under-Secretary of State for Scotland (Mr. John MacKay): We have had a short but most interesting debate on the European Community documents before us. As usual, hon. Members have used great ingenuity to bring in matters perhaps not entirely within the scope of the documents and you, Mr. Deputy Speaker, have allowed some latitude in that respect. I shall try to answer as many of the questions as possible, but anyone who has listened carefully to the debate will appreciate that 10 minutes is not nearly long enough to answer them all.
In the past few months, since the TACs and quotas for 1984 were decided by the Council on 31 January, the common fisheries policy has perhaps moved into a new phase. Our task now is to keep the policy in good repair, in particular by updating the various conservation rules and regulations as and when new scientific evidence becomes available, while at the same time keeping a close watch on the various markets for fish and fish products so that the industry can make the most of its fishing contribution.
My hon. Friend the Member for St. Ives (Mr. Harris) asked for an assurance that the problem of the south-west box would be resolved by September. All too many years of fisheries negotiations make it foolish for any Minister to give such an assurance, but I assure my hon. Friend that the Government are well aware of the problems and the conflicting interests involved and of the importance for a number of competing groups of getting a solution that is sensible in terms of both conservation and the livelihood of the fishermen.
Much of the debate has dealt with the issue of herring. Those who were concerned about the Council's decision unilaterally to fix this year's quota and TAC without completing negotiations with Norway should know that my hon. Friend the Minister of State expressed reservations about that decision in the Council and made it very clear that we were extremely concerned lest the Norwegians take action against us or drag their heels in future negotiations. We made our view very clear at the Council, but that view did not prevail. As hon. Members know, the Norwegians, as we expected and forecast have shown their disapproval of our decision, but I believe that we still can, and will, get round the table with Norway. I can assure my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) that we are doing our very best to make sure that the Community and Norway can soon negotiate on the herring stocks in the North sea.
264
We have no evidence at the moment—I repeat this for the hon. Member for Orkney and Shetland (Mr. Wallace) and my hon. Friend the Member for Banff and Buchan—that the Norwegians are breaking the rules in fishing in their zones. Indeed, I understand that they have closed certain areas of their sector because of the high percentage of small herring in their catch. I hope that we can reach a sensible agreement with the Norwegians. We have a joint interest, in the Community and especially in Britain, with the Norwegians, in making sure that the work that has gone into conserving and bringing back the herring stocks to the North sea is not thrown away just because we cannot come to an agreement.
I move on from herring to the question of cod and haddock. They are not unrelated, as the hon. Member for Great Grimsby (Mr. Mitchell) pointed out in his speech. The hon. Member for Aberdeen, North (Mr. Hughes), my hon. Friend the Member for Banff and Buchan and the hon. Member for Great Grimsby were pressing for higher quotas for those species. Unfortunately, in reality we must take into account the scientific advice that the biomass in those species is going down. We must not allow cod and herring stocks to decline in the same way as herring in the North sea.
The hon. Member for Great Grimsby is quite right to say that it is important for us, and for cod, to have sensible negotiations with the Norwegians in order to get reciprocal agreements, and to fish for more cod in their sector. I assure the House that my hon. Friend is doing his best to resurrect the negotiations. He warned the Council of Ministers that those were in danger at the Council in May.
Still on the subject of the Council meeting in May, I shall deal with the question of Norway pout fishing. My hon. Friend said, and I can underline it, having sat beside him at the Council that we are very much alone in pushing the case that we believe in the well-founded scientific case against an increase in the by-catch. We believe that all of those factors are related. We are talking of the biomass of cod and haddock. Perhaps whiting is not endangered yet, but the point is that if we take too many of the small, juvenile fish then we shall have, so to speak, burnt our boats for the future.
I can assure the House that we are taking a very firm view of the matter, as did my hon. Friend at the previous Council meeting. We are basing our case firmly on the scientific evidence. As I said, and as he said, we were not getting many supporters in the Council of Ministers.
I shall deal with one or two points briefly. The hon. Member for Orkney and Shetland asked a question about the north of Scotland box. I cannot confirm his understanding of the number of vessels that may fish in the box. The number of large vessels that may come in at any time is 128, but that total has never been approached. There are rules for reporting in and out of the box that enable us to monitor what is happening there. The box rules also apply to other vessels and we watch them from aircraft as well as from the Department of Agriculture and Fisheries for Scotland's fishery protection vessels.
It is true that there is no limit to the number of smaller vessels that may fish in the box. So far, there is no evidence that that is preventing the Shetlanders from taking their catches and increasing their incomes, as they did last year.
My hon. Friend the Member for Wyre (Sir W. Clegg) told us about the problems of Fleetwood, which we appreciate very much. My hon. Friend's Department has

265
received a copy of the report commissioned by the Fleetwood Inshore Fishermen's Association and it will be replying shortly to the letter that my hon. Friend the Minister received from my hon. Friend the Member for Wyre.
The report is an interesting and thorough study of the problem facing Fleetwood. I know that my hon. Friend the Minister is well seized of those problems. At the same time, as my hon. Friend recognised, there are very real difficulties in providing special subsidies for particular ports and, indeed, any operating subsidy would be open to challenge under the Community's state aid rules. Thus, we shall study the report, and I hope that we shall be in a position to respond to it before too long.
The hon. Member for Orkney and Shetland asked about sprats, and sprat fishing in the Moray Firth and Firth of Forth. Scientific advice still support closure, but research voyages have been authorised to the places and at the times suggested by fishermen in order to test our scientific advice. But, as with other species, although it would often be nice to ignore the scientific advice and to allow the catches that the industry would like, such a policy would be very shortsighted. We must be responsible. However, we shall attempt to check on the scientific advice that we have received.
The hon. Members for Aberdeen, North and for Greenock and Port Glasgow (Dr. Godman) mentioned the safety of fishermen. As I have said in Committee with the hon. Member for Greenock and Port Glasgow, fishing is, indeed, a hazardous occupation. The report from, I believe, Dundee univerity is with my right hon. Friend the Secretary of State for Transport. I have already drawn attention to that matter, as it came up in Committee on the Inshore Fishing (Scotland) Bill. I very much hope that the industry will make greater use of the open line that is available to improve and help safety at sea.
I turn to the all important question of policing the common fisheries policy that every hon. Member has
266
dwelt on. After a very long clay, night and bit of a morning at the last Fisheries Council, my hon. Friend the Minister raised once again the subject of log books and policing. He underlined the importance that the United Kingdom places on that. The Commission recently announced that log book printing had gone to tender. Obviously, we hope that that will proceed. On policing in general, we agree that there is room for substantial improvement in reporting and enforcing catches, and we are continuing to press the Commission on that.
There are signs that the inspectors are tackling the task sensibly, and I think that we can look forward to improvements. However, I can assure the House that 'we shall continue to urge effective policing. I have noted the point about the need for more inspectors, but we should allow the system to have a chance to work before——
It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
Question agreed to.
Resolved,
That this House takes note of European Community Documents Nos. 11209/83, 11209/83 Amdt. 1, 5390/84, 7248/84 and 7286/84 on total allowable catches and quotas for 1984, European Community Document No. 4969/84 on interim arrangements for Norwegian fishing for herring in the North Sea, the Ministry of Agriculture, Fisheries and Food's unnumbered explanatory memorandum of 24th January 1984 on interim arrangements for Member States' fishing for herring in the North Sea and European Community Document No. 7250/84 on technical conservation measures; welcomes the timely adoption of the total allowable catches and quotas for 1984 with the improvements secured for the benefits of the United Kingdom fishing industry, and the subsequent amendments to total allowable catches and quotas, including the quotas for North Sea herring; and urges the Government to ensure that any further decisions on total allowable catches and quotas for 1984 and on technical conservation measures also meet the needs of the United Kingdom industry.

Discipline Acts
11.47 pm
The Minister of State for the Armed Forces (Mr. John Stanley): I beg to move,
That the draft Army, Air Force and Naval Discipline Acts (Continuation) Order 1984, which was laid before this House on 19th June, be approved.
The purpose of this order is to continue in force for a further year the Army and Air Force Acts 1955 and the Naval Discipline Act 1957. The House will be aware that the practice of giving annual parliamentary consideration and approval to the legal basis for the service man's special position in law is long-established. A new Armed Forces Act is required every five years and the present one expires on 31 December 1986. In the intervening years a continuation order, such as the one I am moving tonight, is introduced. The last Armed Forces Act was passed in 1981 when the Select Committee considering it said that it was satisfied that these procedures, providing for quinquennial Bills and annual continuation orders in the interim, were satisfactory to ensure parliamentary oversight of the working of the service discipline Acts.
We are of course giving further consideration to the points made by the 1981 Select Committee in considering proposals for the next quinquennial Bill. The House will, I am sure, understand that I am not able to anticipate the provisions of that Bill tonight.
However, I am glad to be able to announce that we have accepted the recommendation of the Select Committee in respect of the provisions of the 1981 Act which cover the detention and treatment of persons subject to service law overseas who are certified to be suffering from mental disorders. An order to detain an individual for treatment is made by his or her commanding officer on the recommendation of two doctors. The Select Committee recommended that, as a matter of administrative practice and where circumstances permit, one of the two certifying doctors should be a civilian, preferably with specialised psychiatric knowledge. Of course, although some of the doctors employed by the services overseas are civilians, it may not always be possible in some areas to ensure the participation of a civilian doctor. This was recognised by the Select Committee, but we are content to accept the recommendation in principle and we shall apply it wherever possible.
The services' disciplinary system plays a significant part in contributing to the extremely high standards displayed by the services both in peacetime and in fighting roles, and I invite the House to approve the order.
11.50 pm
Mr. Denzil Davies: As the Minister explained, the order keeps in being the Army and Air Force Acts 1955 and the Naval Discipline Act 1957. Those Acts are revised every five years, and changes are incorporated into a new Armed Forces Act. The last Act was in 1981. After new legislation has been brought before the House, the Select Committee on Defence studies the Bill and makes its recommendations. We are grateful to the Minister for accepting one of those recommendations in relation to psychiatric medical advice in respect of the certification of members of the armed forces.
However, the Minister did not tell us about anything else. That is not a complaint, but we are reaching the point
268
when the Ministry of Defence will be beginning to consider the next five-year Bill. I note from the Select Committee's report that it takes about two years for new legislation to be produced, for the consultations to be carried out between Government Departments, and for it to be drafted and presented. When the Minister replies, perhaps he will tell the House whether consultations have started about changes that may be made in the next quinquennial Bill.
Some hon. Members may feel that it is a waste of time to debate the order every year. It is not, because it enables the House to bring the Select Committee's recommendations to the attention of the Ministry of Defence. As we move from the old legislation towards the new legislation, we can draw the attention of the Ministry of Defence to various changes that may be necessary. Even a professional army, which is more immune to changes in society than a conscript army, is subject to social pressures and changes. One of the purposes of the order is to draw attention to the Select Committee's recommendations. The other is to draw to the attention of the Ministry of Defence any changes that occur in society as they impinge upon the armed forces to ensure that the changes are included in the new Bill.
The Select Committee made recommendations on three points and touched upon a fourth. I hope that the Minister will give some answers when he replies, because these questions have been asked in the past and answered in letters to Opposition spokesmen. They are sometimes not answered on the Floor of the House and are not incorporated in Hansard so that hon. Members can know what is going on. The trial of young service offenders, the death penalty and the composition of courts martial were the subject of recommendations by the Select Committee. The fourth subject, which was discussed at great length but without specific recommendations because it did not seem to be a major problem at the time, was drug abuse.
The Minister and the House will be aware that section 2 of the Armed Forces Act 1981—I shall call it the last Act—made various changes to custodial sentences that could be imposed by a court martial on young service offenders. There are two matters about which I should like the Minister to give an answer, if possible, this evening. The point was dealt with in the Select Committee's report at paragraph 6 which was headed, "Young service offenders." It stated:
"The number of Servicemen who might be expected to receive such a sentence"—
that is a sentence for detention in a civilian corrective institution for up to two years—
"in any one year would be small".
I believe that the Government's estimate was fewer than 25.
The point has been made in previous debates that with the youth training scheme, and so on, there are more young people in the armed forces. That figure was for 1981. Perhaps the Minister could estimate the figure of young offenders now dealt with under section 2 of the Armed Forces Act 1981.
The next point about young offenders relates to paragraph 7 of the Select Committee report. The Select Committee recommended that
"consideration be given before the 1986 Armed Forces Bill is introduced to the evolution of a system under which social inquiry reports on young Service offenders could be made more readily available to courts-martial. We note that the Navy is already moving in this direction."

269
In last year's debate the Minister dealt with this point in reply to my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara), but he did not give a clear answer. The Minister said:
"we should like to assure the Select Committee that considers the next five-year Bill that adequate safeguards exist"—
that relates to social inquiry reports into the background and problems of young offenders—
"and that we shall continue to look at the recommendations made last time by the Select Committee."—[Official Report, 14 July 1983; Vol. 45, c. 1079.]
If the Government are saying that safeguards exist, why do they believe that a change is necessary, or is the Minister saying, as he said last year, that adequate safeguards exist, that that will be the end of the matter, and that the Government will not try to move towards the recommendation of the Select Committee?
I deal next with the vexed question of the death penalty. Punishment by death is discretionary in all but one case, and the death penalty can still apply in respect of various offences. The Select Committee considered this matter in paragraph 11 of its recommendations. While it did not recommend that the death penalty be abolished in respect of these offences—and I do not wish to go down that road now, although it was touched on in a previous debate —the Committee recommended that the definition of the word enemy should be reconsidered in respect of the discretionary punishment in all cases but one by death in respect of such offences.
The Government's assertion for the retention of the death penalty is given in paragraph 11:
"Retention of the death penalty is necessary as a deterrent given that a potential offender on the battlefield, where death may result from obeying orders, is unlikely to be deterred from assisting the enemy by no more than the possibility of imprisonment."
Like all theories of deterrence, once one tries to define them, one gets into considerable difficulties. Indeed, that attempt to explain what deterrence means gets into the same difficulties that one encounters in other spheres.
The Select Committee continued in paragraph 11:
"We did feel, however, that there was room for a clearer definition of the phrase 'the enemy' which is crucial in this context."
The existing definition of the "enemy" apparently means
"all persons engaged in armed operations against any of Her Majesty's forces, including … mutineers."
That is a wide definition. It goes further than battlefield. In the Select Committee report, there is a memorandum prepared by the Ministry of Defence on the matter. In regard to offences in which there is discretionary death penalty, at page 60, paragraph 5, it says:
"The consequence of these offences may be greater than any crime of murder in civil life, in that they could imperil the force to which the offender belongs and threaten the outcome of a battle or campaign thus ultimately jeopardising not only the lives of individual servicemen, possibly in very large numbers, but also the collective existence of the country as a whole through increasing the chances of defeat in war."
The person who wrote that clearly had in mind the concept of enemy as the traditional enemy in time of war or armed conflict. However, the original definition talks only about
"all persons engaged in armed operations against Her Majesty's forces."
In the case of the siege of an embassy, the people inside could be engaged in armed operations against Her Majesty's forces. That, of course, goes much wider than battlefield, and does not imperil the nation or the country or, indeed, other members of the armed forces. There is a case for considering the definition.
270
When one begins to reconsider these matters, as many difficulties may arise as are likely to be solved. The element of discretion in some ways only makes the position worse, and in view of the large numbers of offences involved, I think that the definition should be reconsidered with the aim of narrowing it down.
The Ministry of Defence memorandum shows that what is in mind is an enemy on a battlefield or in a minor conflict in time of war or armed operations. I hope that the Ministry's thinking can be explained to us. The Select Committee was specific about the desirability of considering the definition again.
The Select Committee also dealt with the question of the composition of courts martial. This question was dealt with in paragraph 16, in which the Select Committee commented on the idea—extraordinary in this day and age —that only officers are thought good enough, or clever enough, to sit on courts martial. The Select Committee states:
"we believe that such a review"—
apparently there were two such reviews in the 1940s, the Lewis Committee and the Pitcher Committee—
"is now due and ought to be conducted before the introduction of the 1986 Armed Forces Bill."
The Minister of State should tell us whether a review is in progress, even if the Ministry has not yet reached a conclusion. In this day and age, it is not good enough lo trot out the somewhat artificial reasons given for excluding non-commissioned officers from courts martial which were given in the Lewis and Pilcher reports. The Pilcher report, I believe, dealt with the Navy.
I should like to quote from page 82 of the Select Committee's minutes of evidence. I refer to paragraph 3 of the Ministry of Defence memorandum of evidence on the composition of courts martial. It states:
"The conclusions of the Lewis Committee and the Pilcher Committee are considered to remain valid today … The members of a court-martial are required to be judges of law as well as of fact and also to determine sentence in the event of a conviction. There is thus a requirement to have knowledge of Service law, which forms part of the training syllabus of officers"—
I do not know how much training is given. Perhaps a couple of hours are spent on the manual of military law.
There is also a requirement—
"for a high educational level"—
No doubt all officers have a high educational level, but so do many NCOs—
"and for experience and understanding of the difficulties and exigencies of life in a Service community."
That is not confined to officers. Those reasons must have seemed pretty contrived in 1949, and they seem totally out of date in 1984.
"A number of further problems would arise if other ranks were allowed to sit on courts-martial. Such a change might be interpreted as giving the court-martial, and in particular the other rank(s) selected, a representative rather than a judicial function."
That is complete nonsense. One is merely saying that the choice should be there. One is not talking about an obligation to choose representatives of a definite constituency.
Is the Ministry of Defence taking seriously the recommendation for a review? A case can be made for change, because circumstances have changed. This matter could be looked at again.
I must make it clear that the Select Committee did not find evidence of drug abuse within the armed forces, and no one is suggesting that that is a major problem. We should be told about the present position, because,

271
unfortunately, changes occur rapidly. As a professional body the armed forces do not have the same problems that society in general and other armies have. It seems that the United States army is experiencing a major problem. I do not know about the position of the army of the Federal Republic of Germany in that respect.
In paragraph 15 the Select Committee drew attention to this fact:
"The number of drug offences committed is well below one per thousand Servicemen a year'.
What are the latest available figures? Apparently most offences were committed with soft rather than hard drugs.
On page 81 the Select Committee touched on the sharp increase—this was from a low base—in the Navy, for reasons about which no one was entirely clear, from 73 convicted offenders in 1979 to 154 in 1980. That is perhaps a greater variation than one might expect in a year. The Select Committee commended the Navy on the way in which it was dealing with the problem. No one is suggesting that it is a major problem. Is there still an upward trend? Have the figures stabilised? Was 1980 an aberration? We have not been given that information.
In 1980, most cases of drug abuse in the Navy, and, I take it, in the other two forces, related to cannabis, which is called a soft drug, and very few to heroin. Unfortunately, there seems to have been a heroin epidemic in Britain, although not in the armed forces. Will the Minister provide the latest available figures for convictions, so that we can ascertain whether the hard drug element has increased from its negligible level in 1980?
Page 113 of the Select Committee's report shows that drug offences in BAOR appear to be higher—again this is from a low base—than in the United Kingdom. For these purposes, the United Kingdom includes Hong Kong, Cyprus, Malta and Gibraltar. In 1980 there were five such offences among the United Kingdom land forces and 22 among BAOR forces. It was suggested in the evidence to the Select Committee that that may be because of the proximity of BAOR forces to the forces of the United States and, perhaps, of the Federal Republic of Germany whose army to a great extent comprises conscripts and not professional volunteers. This is an important matter, about which I hope the Minister can provide some information.
This is an important debate and we shall need to know, certainly next year, much more about the Government's plans for their new Armed Forces Bill. If the Minister is able to catch your eye, Mr. Deputy Speaker, and is given leave to reply to the debate, I think that he owes it to the House to tell us about the thinking of the Ministry of Defence on the Bill to be introduced in two years time and to say what it should cover.
12.15 am
Sir Antony Buck: I welcome the opportunity to make a short contribution to the debate. It is right that we should bring under routine scrutiny disciplinary matters in the armed forces. It is one of the features which distinguishes Britain from less happy lands.
On the whole, there is an harmonious relationship between our armed forces and the civilian population. I once made a speech to that effect in my constituency. I spoke about the splendid relationship between the Army and Colchester generally. A report of my speech was headlined in the local press, but an adjoining heading
272
stated: "Jocks do over Bull and Bush". It appeared that there had been a small riot in one of the local pubs, but that happened several years ago. A Scottish regiment was involved which was much welcomed in the town in other respects. Perhaps it was the imbibing of the spirits which are associated with Scotland which caused a breach of discipline to occur on that occasion. It was a very rare lapse.
We should put on record our appreciation of the strong discipline in the armed forces and the harmonious relationship which exists on the whole between the civilian population and the armed forces. That reflects on our basic system and, more than that, on the calibre of the armed forces.
Arising from this measure is the issue of discipline in the armed forces. Those who contravene Army, Navy or Air Force discipline, but Army discipline especially, tend to end up at the military corrective training centre at Colchester. I am on the board of visitors of that establishment and it is a good thing that there is a civilian board, as it is protective, too, of the military. I introduced the concept of civilian boards when I had ministerial responsibilities for the Navy and I am glad that it has been extended to all types of corrective establishments and glasshouses, as they used to be called, in the armed forces. It is important that a visiting board of civilians should know what goes on at these establishments.
If my right hon. Friend is given the leave of the House to reply to the debate, I hope that he will refer to the rebuilding which is taking place, at long last, at Colchester. When the rebuilding is completed, those who come within the armed forces' disciplinary procedures will be able to be placed in corrective training in sensible conditions instead of the extremely adverse conditions which have existed. It seems that we are now to see the last of the Nissan huts. I hope that my right hon. Friend will summarise the progress that has been made. The establishment is intended to provide mild punishment and, more importantly, the rehabilitation of those who are disciplined.
I had the privilege of leading the first parliamentary delegation to the Falkland Islands after the confrontation with the Argentines. I was vastly impressed by what I saw. We have a moderately large military force stationed on the Falklands. The members of the force are kept extraordinarily busy and I understand that there is a low rate of crime, so called, among our forces and little contravention of military discipline. I understand that the less serious matters are dealt with on the spot. If there are more serious contraventions, are those concerned sent back to Britain for a court martial? What system is applied for our forces in that remote part of the south Atlantic?
I conclude as I began by saying that we are very lucky that the number of cases in the armed forces which have to be brought within the ambit of the measure that we are considering is remarkably low. We are very lucky in the quality of our armed forces, and that statement cannot be expressed too often in this House.
12.20 am
Mr. Tony Benn: This is a disciplinary order and most of the debate has been about the important details of discipline, but perhaps I might remind the House why we have this order and procedure, and refer to what would happen if we did not pass the order.

273
The order says very clearly in article 1 that, unless the order is passed, the discipline of the armed forces will expire on 31 August 1984; in other words, on 1 September other ranks would not have to obey the non-commissioned officers, non-commissioned officers would not have to obey their officers, and officers would have no power whatever. It is against that background that I want to discuss the order.
Going back over the history—the clock is being put back so quickly that it is perhaps worth while reminding ourselves of it—this House had many conflicts about the desire of the Executive to maintain a standing Army. Some of the earlier conflicts—we remind schoolchildren of them when they come to the House—were about the struggles of Parliament not to pay for wars that the King wanted. Indeed, the first power and control of the armed forces was a power and control exercised by the purse, by refusing to vote Supply.
The first standing Army was established by Oliver Cromwell, whose statue stands outside the House, and Oliver Cromwell's New Model Army played a notable part in a particular period of our history. After the end of the Commonwealth period, Charles II disbanded the standing Army and set up a household brigade—from which the Coldstream Guards emerged—to protect the monarch personally. After that, James II, who succeeded him, began to build up a standing Army again, and it reached the size of 20,000 before the Glorious Revolution of 1688–9. [Interruption.]Conservative Members who will celebrate the victory of William of Orange must also remember that he was a King invited by Parliament to assume the throne.
It was one of the principles of the Bill of Rights of 1689 that there would be a second control of the armed forces —not only the control of Supply but the control of the discipline of the armed forces. The reason why we have an annual order is that Parliament wants, even now, to protect itself against the possibility that there might be a resumption of military control. That is why the order is before us now.
When I was first elected to the House—I do not think I have spoken on this matter for 30 years—there was a full Act of Parliament that went through every year, called the Army and Air Force (Annual) Bill. The Bill had its First Reading, Second Reading, Committee stage and Report stage in both Houses of Parliament in order to review the discipline of the armed forces.
When they hear about Parliament, children are told that one of the great powers of the House of Commons is that it controls the purse and the sword. That is one of the bases upon which we are held to be a parliamentary democracy. Why, then, raise the matter now in a fundamental sense?
I am not disagreeing with anything that my right hon. Friend the Member for Llanelli (Mr. Davies) said about the problems of drug abuse, capital punishment, courts martial, and so on. But I am raising this question because I think the time has come when Parliament should be a bit more candid about the safeguard which it claims to have. We do have a standing Army in Britain which is not subject to annual approval by Parliament: it is the American Army. [Interruption.]Hon. Gentlemen may not like it, but the reality is that if anybody—[Interruption.] I think that I have established the validity of my point. It is that, if people go to one of the air bases which the
274
Americans occupy, they will find it surrounded by British troops, and a thin line of Army policemen, whose disciplinary code we can terminate if we wish.
But inside the bases is an army of 30,000 people whose disciplinary code and whose power to make war we in Parliament do not control. It is worthwhile when we go through the annual ritual of patting ourselves on the back to recognise that the objectives of the Glorious Revolution of 1688 have been totally neutered.
We have another army in Britain which is not subject to any form of parliamentary control over its discipline. I refer to the national police force that has been set up —[Interruption.]I must be scoring many successes if Conservative Members have so little regard for the traditional rights of Parliament that they object to a reference to the fact that we are not required to pass any instrument on an annual basis which would deal with the disciplinary powers of the police as there are for the Army.
I am coming to the relationship of the Army and the police. The police force today is much bigger than the standing army that was disbanded in 1688, they are better armed than the army of 1688 and we have no control over them. [Interruption.]Although it embarrasses Conservative Members to have it said, many of the claims that we make about parliamentary supervision of the armed forces have now been fatally eroded by the presence of a foreign army and of a domestic army not under the control of Parliament.
The Army is now being used in support of the police in the mining dispute; I wish to put that on the record because it is the crucial matter. When the dispute began, I asked the Leader of the House——
Mr. Deputy Speaker (Mr. Harold Walker): Order. The right hon. Gentleman is straying a long way from the matter before the House. We are debating whether the draft Army, Air Force and Naval Discipline Acts (Continuation) Order 1984 shall be approved. I hope that he will relate his remarks more closely to those measures.
Mr. Benn: I am relating them directly, Mr. Deputy Speaker, for I shall invite the House to oppose the continuation of those measures because the Army is now being used for intervention in a domestic industrial dispute. That is my reason for speaking, and I must be entitled to be heard on the subject.
I rehearse to the House, the history of the matter. At the beginning of the dispute, early in April, I asked the Leader of the House whether the armed forces had been alerted. The right hon. Gentleman replied no, that they had not. I then wrote to the Prime Minister, repeating the question, and I asked whether any members of the armed forces were in police uniforms, what their role was and what supporting role were they taking.
I did not receive a reply for a fortnight and I had to telephone No. 10 to remind the Prime Minister to reply. Then I received a skilfully drafted letter saying that there had been no "authorisation" for the armed forces to be used, that police did not need to display numbers on their uniforms, because that was not a statutory requirement, but that the armed forces were being used in a supporting role, I think in catering and transport. We then saw pictures in the newspapers——
Mr. Deputy Speaker: Order. I am following the right hon. Gentleman's argument closely. If he is bringing his

275
comments to the point where the question of military discipline is a factor in the situation to which he is referring, I hope that he will do that quickly.
Mr. Benn: The battle to control the armed forces by this House was one of the great conflicts of the 17th century. If you say, Mr. Deputy Speaker, that I cannot advance reasons, based on the conduct of the armed forces why their disciplinary code should not be renewed, then I must say, with great respect, that you are denying the opportunity to debate the order, the purpose of which is precisely to give Parliament a chance every year to decide whether it wants a standing Army. I am advancing in an historical way, and respectfully, an argument that the armed forces are now being used for domestic repression in respect of the mining dispute.
The Prime Minister released her letter to the press. Not a single newspaper printed it. Why? Because the letter got as near as could be to admitting that the armed forces were being used in support of the police. Photographs also exist of sergeants in Army uniform engaged in police actions vis-à-vis the miners.
I come to the reason why I raise the matter. First, we do not control the American standing army, secondly we do not control the police army through an annual disciplinary procedure. But primarily I raise the matter because the use by the Government of the armed forces in the mining dispute forces me and other hon. Members to fall back upon an ancient safeguard—we are not obliged to renew the disciplinary code for the armed forces.
If the Minister can give an absolutely clear and categorical assurance that no members of the armed forces covered by this order have been in any way involved in the dispute, either in police uniforms or in a supporting role, that is a different matter. But he will be hard put to do so, because the Prime Minister in her letter admitted the involvement. It is therefore open to me, and other hon. Members who will go along with me, to register our ancient constitutional right to say that the dangers of a standing army have reappeared, and that we are not prepared this year to renew those disciplinary codes.
12.33 am
Mr. Paddy Ashdown: It is difficult to follow the right hon. Member for Chesterfield (Mr. Benn) who took us characteristically on a history tour. He explained how the measure before us goes to the roots of our parliamentary system. He also gave a characteristically conspiratorial view of the world in which we live. I noted with interest that he recommends that we vote against the order. That would be deeply irresponsible. That is not the course recommended by his Front Bench.
The business of bringing the measure back to the House for review each year extends beyond the mere tradition which the right hon. Gentleman rightly pointed out. It has a practical significance because it ensures that the disciplinary codes keep in touch with changing circumstances.
The relationships between the armed services and the population are, at least in some measure, a direct result of the sensitivity that exists between the two. I recall when I was a young, raw marine officer having to turn up at disciplinary hearings to support marines with whom I served. I had to give character evidence on their behalf.
276
One day I was before the captain's table on board one of Her Majesty's ships. I can recall the captain sentencing the young man concerned. I think that I can quote his words exactly. He said, "Marine X, I award you 28 days' stoppage of pay and if there had been a shred of evidence against you I would have put you inside." One is glad to note that the discipline Acts within the services have moved somewhat further than that. My experience of discipline and the action of the Acts within the services now is that they are much more adequately and carefully applied. It is becaue the Acts come before us for renewal annually that that is the case.
I want to touch briefly on three subjects. The first was raised by the right hon. Member for Llanelli (Mr. Davies). We are entering the run-up now to a quinquennial Act which will come back before us. That is, as he rightly said, only two years away. If the Minister catches your eye, Mr. Deputy Speaker, and is given leave to reply, he should tell us the general outline of the reforms that the Ministry of Defence would wish to see brought into effect. We should begin to determine what changes will be made. Those recommendations should now begin to emerge.
Secondly, the right hon. Gentleman also touched on the recommendations in respect of young offenders. I shall not repeat what he said, except to say that I reinforce his point.
Lastly, I want to touch on the subject of courts martial. That was also mentioned by the right hon. Gentleman, but his point needs some reinforcement. To allow courts martial to be in the hands of only commissioned officers is an unfortunate anachronism from the past. The right hon. Gentleman particularly asked to what extent Army, Naval and Royal Air Force officers receive training in the law. As he rightly said, a courts martial determines not only matters of fact but matters of law as well. That training is quite comprehensive and in many senses adequate. The standing of many of our non-commissioned officers, in particular many of the warrant officers, in the services, is such that they can and should properly take part in those proceedings. He and other hon. Members will know as well as I that it is frequently the case that officers who sit on courts martial can have recently joined the services at the age of 20, 21 or 22 with no broad experience of life. I should have thought that the people who sit on those courts martial could as adequately have been those warrant officers and senior NCOs with a broad knowledge of service life and a capacity to participate in those equally properly.
The Select Committee has suggested a review and I hope that the Minister will be clear whether that review will go ahead and when we might see some reaction to it.
Dr. Godman: I think that the hon. Gentleman's service experience is more recent than mine, but is it not the case that an increasing number of officers in our armed forces are ex-NCOs or former senior warrant officers? If they are considered good enough to be given a commission, surely on that basis, apart from all else, they should be considered good enough to sit on courts martial?
Mr. Ashdown: I am grateful to the hon. Gentleman. He reinforces my point. I do not believe that the conferring of Her Majesty's commission upon somebody also confers upon him unique wisdom which was not there beforehand such as to qualify him to take part in a courts martial. I only wish that I could agree that there are an increasing number of promotions from the ranks of the sort that he

277
is talking about. Assuredly, the point is correct. There is a place now at courts martial for senior NCOs and particularly warrant officers. The time has come to review that rather curious anachronism which excludes them from a key process.
May I finish more or less where I began with the speech of the right hon. Member for Chesterfield? Although I disagreed with almost every word he said, one point upon which he touched does bear some reinforcement. I do not agree with him that it would be appropriate that other forces in the country should as a matter of internal discipline obey any other internal military discipline system than their own. I do not accept the right hon. Gentleman's suggestion that the American Army in Britain should in some way be answerable to the House for its internal discipline.
However, a matter of some importance is one on which I shall touch in a ten-minute Bill in a few weeks' time, so I shall not labour it now. It is that visiting forces, especially American forces in Britain, are immune not only from our own service discipline Acts but from our civil law as well. The immunities granted to them, which are unique in any NATO country, provide them with immunity while on duty based in Britain from both our civil and our criminal law. That is a matter which perhaps is not proper for us to consider now, but it will be in the very near future. It is an anachronism which must be changed.
There is no reason why we should not agree with the passage of the order. To do otherwise would be totally irresponsible. I hope that the Minister will be able to deal with the matters that I have raised, but I can assure him that my right hon. and hon. Friends and I will support the order.
12.40 am
Mr. Dave Nellist: I join my right hon. Friend the Member for Chesterfield (Mr. Benn) in opposing the continuation of these discipline Acts. I do so because I see them as an attempt to separate the armed forces from the rest of society. That will be difficult, bearing in mind the fact that the overwhelming majority of members of the rank and file of the armed forces are made up of ordinary working-class lads and lasses, in many cases escaping from the pressures of mass unemployment and seeking refuge in the permanent positions of work in the armed forces because of the actions of this Government in creating unemployment. When such young people enter the armed forces they enter a new world of discipline and a rigid, class-oriented group which these Acts are designed to bolster. They are designed to isolate and cut off those young workers from the rest of society.
We might be forgiven for asking why that is necessary if the only enemies faced by the armed forces, as the Government's representatives, were external enemies. We have seen in the last couple of years, especially during the Falklands campaign, that, with its control of all the national newspapers, the Tory party is adept at whipping up nationalism and at getting support for Britain against an external enemy. If that is possible, it should not be necessary to separate the armed forces in quite such a dramatic way.
Unfortunately, the Prime Minister does not see matters in that way. In a speech reported some months ago in a document issued by the publicity unit of the Ministry of
278
Defence, she spoke of the role of the armed forces and actually put the external enemy as the second reason why it was important to have discipline in and to maintain control of the armed forces.
We know that from practical experience. We have seen interventions not only in the miners' dispute but in that of the dustmen in Glasgow and during the Fire Brigades Union dispute in the late 1970s.
The order is designed to reinforce the discipline and isolation of ordinary working-class lads and lasses in the armed forces because of the increasing danger in the 1980s and 1990s in Britain of class solidarity between the brothers and sisters, uncles and aunts and fathers and mothers of those on picket lines outside the armed forces and those who escape massive unemployment by joining the armed forces. It raises a question about the unwillingness in the future of members of the armed forces to be used as strike breakers. That is why, in the Government's view, the order is so necessary.
If this place is designed, as I am often told it is, to uphold the democratic rights of working people—and the actions of this Government show that to be at least a questionable definition of Parliament—we should have overwhelming support for our opposition to the order and in favour of the extension of basic democratic rights to members of the armed forces.
Working people have won many rights by struggle. Later they have been legitimised by the House after those struggles. Many of those rights are under threat. But most of the democratic rights enjoyed by working people are not available to members of the armed forces because of these discipline Acts and the way in which they are upheld and enforced. There is no right to free speech. There is no right to a free press. There is no right to organise. There is no right to strike. There is no right to support the political party of their choice. Under instructions issued by the Ministry a few months ago, even the right of attendance —out of uniform and in their own time—of marches, demonstrations or political meetings held by CND and other organisations has been withdrawn by the Secretary of State. Finally, there is no right to negotiate and argue for improvements in pay and conditions in the armed forces.
The Tories do not want any extension of those rights because it would begin to break down the class system on which they rely for the maintenance of discipline in the armed forces. Any analysis of the social, educational and financial background of senior officers shows that the overwhelming majority come from public schools such as Eton and Harrow, from Oxford and Cambridge universities, and so on. [Interruption.]As the din opposite suggests that some Tory Members do not believe me, I shall illustrate my argument with examples of what has happened to pay in the armed forces since the Tories came to power.
In the past five years the pay of policemen—because they are at the sharp end of industrial disputes under the Tories—has risen by 119·6 per cent. The situation in the Army shows the class system in operation. Majors, generals, brigadiers, colonels and others right at the top have had a real increase in pay of between 8 and 12 per cent. but privates, lance-corporals and corporals—the ordinary squaddies at the bottom—have had a decrease in real pay of 5 per cent. Why has police pay increased so dramatically and why have pay differentials widened in the armed forces? It is because disciplinary orders of this kind

279
give senior officers the power to prevent discussion, negotiation or action by the rank and file to improve their pay and conditions.
If the rank and file organise or request negotiations or withdraw their labour in pursuit of better pay or conditions, they may fall foul of various sections of the Act. Section 29A, for example, provides that failure to attend for duty may lead to imprisonment for up to two years following court martial. Then there is section 31 relating to mutiny, which in Britain in 1984 still carries the death penalty. Section 33, on insubordination, includes the use of insubordinate language. Incidentally, I note that 80 per cent. of the arrests in the miners' dispute in the past 17 weeks have been for breaches of the peace, obstruction of the highway or obstruction of a police officer, and I have witnessed many instances in which insubordinate language — the use of the word "scab" or other descriptions of those who have tried to break the strike—has been used as a reason for such arrests.
In the Army that is tightened still further by section 33, under which insubordinate language used by a rank and file soldier to a senior officer can result in imprisonment. Finally, section 36, on disobedience generally, also provides for two years' imprisonment after court martial. Those sections could and would be brought into play if rank and file service men or women tried to negotiate or to withdraw their labour in pursuance of better pay and conditions. That is why the Government want these Acts to be continued.
It is an inalienable and unquestionable right in and of itself for working people in whatever sphere to be members of a trade union. If that is not sufficient argument for the Tories, I remind them that in Holland 30,000 soldiers belong to a trade union, in Germany 100,000 soldiers belong to a trade union and in Sweden there is not just a trade union organisation but a soldiers' parliament. There are plenty of precedents in Europe for extending the rights of trade union organisation. Labour Members and the Transport and General Workers Union and other trade unions argued this under the Labour Government, and I associate myself with that call.
I expect severe opposition from the Government when the vote comes tonight on the order, not for spurious or comical reasons as suggested by the jokes passing back and forth between hon. Members opposite, but because there are in the Government — this is a back-handed compliment—one or two far-sighted people who look to the next five, 10 and 15 years and have learnt the lessons of history. They think, "What will we need the armed forces for in the next 10 or 15 years?"
They know that the boom of the 1950s and the 1960s is decisively over and that the Government have destroyed one fifth of all our factories and put 5 million people on the dole and 15 million on or below supplementary benefit level. There is an unprecedented instability in British society, much evidenced by the 17 weeks during which almost 1 per cent. of the population—the miners, their wives and their children—have been prepared to defy the Coal Board and the Government. That is understood by some right hon. and hon. Gentlemen who are more frequently ex-members of the Cabinet than current members. They look into the future with a bit of acumen
280
and foresee that sharpening, and realise the need to strengthen and maintain the disciplinary codes within the armed forces.
There are the international links in terms of what happened in Greece in the 1960s, what happened in Chile in 1973 and in Latin America, Asia and Africa. In the final analysis, the armed forces have been called into play to defend private property and private profit. In the next decade and a half we shall not be immune in Britain to the social pressures that have been evidenced in other continents in the past few years. That is why Tories want disciplinary orders like this to go through. They realise increasingly that there will be a need for the armed forces to be used against the dustmen, the fire brigade or generally against working people, to maintain profit and the capitalist system, or for the purpose that they have been used in Northern Ireland. Therefore, they need that control.
I shall finish with this example. After the declaration of UDI by the then Rhodesian Government in the mid-1960s the then Labour Government considered whether to push for military intervention in Rhodesia. My right hon. Friend the Member for Leeds, East (Mr. Healey) has referred in newspaper accounts since that event to
"seditious muttering among very senior generals."
He then, apparently,
"called in the ring-leader and gave him my views of his behaviour and that was the end of that."
That may or may not have been all that happened in that example of potential mutiny at the top of the armed forces regarding the Government of the day and their decision about the use of the armed forces.
The Tory strategists, however, consider that the more likely implications for the future are of the opposite example coming about. If the Army were to be more fully used against the miners on picket lines in the next few weeks, or in other industrial disputes in future, there would be the real risk of workers within the Army seeing brothers and sisters, aunts and uncles, mothers and fathers opposite them on picket lines and refusing to carry out orders. It is for that reason that the Acts must be maintained by this Tory Government.
I would argue that the House should be looking to an extension of democratic discussion and debate, of democratic organisation and trade union rights in the armed forces. For those reasons, I shall oppose in the Lobby tonight the continuation of the Acts.
12.45 am
Mr. Tony Banks: I should like — [Interruption.] I hope that you would remind hon. Members sitting on the Cross Benches, Mr. Deputy Speaker, that they are not supposed to make comments from a sedentary position or, indeed, from any other position.
We are attempting to discuss the orders from this side against the barracking from the disciples of Onan on the Tory Benches that we have come to expect.
The disciplinary codes affect the Armed Forces very seriously indeed. My right hon. Friend the Member for Llanelli (Mr. Davies) mentioned the number of members of the Armed Forces who had unfortunately become involved in drug abuse. It is, of course, regrettable that, given the duties that many members of the Armed Forces are required to perform, the use of drugs has become almost common place. We know that the level of drug

281
abuse on American bases in this country has reached alarming proportions. I hope that the Minister will give some indication that he and the Government are aware of the level of drug abuse in the British Armed Forces. How many military personnel are involved in taking narcotics? What steps are the Government taking to cure them of those unfortunate habits, and how many disciplinary cases have there been?
That is very important for one reason, and one reason only. Given the present level of weaponry, the thought of British or American personnel being in contact with nuclear weapons—despite the necessary precautions that we are assured are taken—[Interruption.] I am sorry that Conservative Members do not find such matters particularly serious. I should not wish to detain them from a speedy return to the bars if that is where they want to go. However, some of us are rather concerned that there could be British or American personnel who have contact with nuclear weapons in this country whose minds are influenced by drugs. I believe that some sign of awareness of that problem on the part of the Government might ease the minds of many people. I hope that the Minister will direct his attention to the points raised by my right hon. Friend the Member for Llanelli.
Mr. Eric Forth (Mid-Worcestershire): What is the hon. Gentleman's estimate of the number of Soviet military personnel in control of nuclear weapons on the other side who might be affected by alcoholism due to the consumption of vodka?
Mr. Banks: There are two points to be made. First, I do not suppose that members of the Soviet Union's armed forces are any more influenced by alcoholism than many Conservative Members appear to be — [Interruption.] Secondly, as far as I am aware——
Mr. Deputy Speaker (Mr. Paul Dean): Order. I think that the hon. Gentleman will realise on reflection that he has cast aspersions on other hon. Members and that is not in order.
Mr. Banks: I am trying to take the matter seriously, but I get the distinct feeling that Conservative Members are not doing so. I am also trying to be charitable and so I conclude that their reasons for not taking it seriously are not totally disconnected from the intake of alcohol.
Mr. Deputy Speaker: Order. The hon. Gentleman must take note of what I said. It is not in order to cast aspersions on other hon. Members. I hope that he will rephrase his remarks.
Mr. Banks: I merely wish to point out that, unless Conservative Members are prepared to take the matter seriously, Opposition Members will draw their own conclusions as to why. However, in order to proceed to my next point, I shall, of course, withdraw any conclusions that the sensitive souls on the other side of the Chamber might have drawn from some of the innocent comments that I made.
The hon. Member for Mid-Worcestershire (Mr. Forth) asked about the influence of drugs or alcohol on members of the Soviet Union's armed forces. Obviously, I have very little knowledge of that. However, I am not so concerned, because as far as I am aware, Mr. Deputy Speaker—and no doubt you will correct me if I am wrong—there are not many bases in Britain that are staffed and manned by them. In those circumstances I am
282
more worried about those that are based on British soil, which is why I am directing my remarks to them. I took what the hon. Member for Mid-Worcestershire said seriously, if there was serious import in his intervention.
My next point about the use of armed services for civilian purposes was raised by my right hon. Friend the Member for Chesterfield (Mr. Benn) and my hon. Friend the Member for Coventry, South-East (Mr. Nellist). When the Minister replies, will he tell the House how the disciplinary codes apply to members of the military, w ho are being used for civilian purposes, for example, members involved in industrial disputes? There has been much speculation in the newspapers about the number of members of the armed forces who are being used in the current miners' dispute. Until we receive a categorical assurance from the Minister that under no circumstances have members of the military been used in the miners' dispute, we shall continue to make the accusation because of the prima facie evidence for it.
Mr. Rob Hayward: If the hon. Gentleman had been present in the House yesterday during Question Time on energy, he would have heard the Secretary of State for Energy give that assurance twice.
Mr. Banks: I am directing my remarks at the Minister for State for the Armed Forces, not at the Secretary of State for Energy. If he knows as little about his Department as the Secretary of State knows about his, his assurance is not worth anything.
At what level is the military involved in industrial disputes, whether the miners' dispute or another, and if they are involved, are they covered by the disciplinary codes that we are discussing? What level of training is undertaken within the armed forces now for their use in civilian disorders? I have tabled a question about that and look forward to the reply.
The Opposition feel that the military will be used increasingly to intervene in civilian matters. My hon. Friend the Member for Coventry, South-East rightly said that the greatest threat to the British ruling class does not come from the Soviet Union but from civilian disorder and our people rising up against the Government's oppression and injustice. At that point the military will be forced on to the streets, not to deal with an external aggressor but a civilian population. Will the Minister tell the House to what extent that preparation is already going ahead and to what extent he has knowledge of it?
1.3 am
Mr. Stanley: With leave of the House, I should like to reply to the points raised. I agree with the right hon. Member for Llanelli (Mr. Davies) that our annual debate on this matter is not a waste of time. Many important issues stem from the primary legislation, and it is right that we should have the opportunity to consider them once a year. He referred initially to the recommendations of the Select Committee's report about young service offenders, and asked whether we had a revised figure for the numbers of such service men. The estimate in the Select Committee's report is fewer than 25. He asked whether the introduction of the armed services youth training scheme was likely to make any significant difference to that figure.
I cannot give the right hon. Gentleman a figure different from the one contained in the Select Committee's report. Given the relatively small numbers of those under training

283
in the armed services youth training scheme and the fact that those trainees can withdraw rapidly from the scheme on 14 days' notice if they are not happy with life in the three services, I do not believe that there is any reason to think that the introduction of the scheme has altered that figure.
The right hon. Gentleman also asked what the Government's view was about the normal sources of advice given in the civilian courts when young people were before them. That matter is referred to in paragraph 7 of the Select Committee report. We take the matter seriously. He referred to the Royal Navy, which has made use of its existing welfare organisation — the naval personal and family service—to prepare social inquiry reports on all offenders appearing before courts martial where the court so desires. The Army and the Royal Air Force, having a much larger number of courts martial and no similar welfare organisations, have been considering ways of providing a like service, taking into account constraints on manpower. No final decisions have been reached. We are currently considering ways of presenting to the courts involved additional information on the background and circumstances of offenders, which is not necessarily provided under the current system. I hope that by the time we reach the next quinquennial legislation, shall be able to say in more detail how the other two services will provide the additional background information when young offenders go before the courts.
The right hon. Gentleman mentioned the death penalty and the definition of "the enemy". I assure him that we have begun a careful review of the term "the enemy" with a view to deciding whether a better and more specific definition is possible. That is a difficult task, and the right hon. Gentleman said that, when one comes to examine changes in the definition, one can create almost as many difficulties as one appears to solve.
The right hon. Gentleman and the hon. Member for Yeovil (Mr. Ashdown) spoke about the composition of courts martial. I can confirm that we have that matter under consideration. There appears to be a distinct lack of any body of opinion in the services— including noncommissioned ranks—in favour of a change from the present system.
The important subject of drug abuse was mentioned by the right hon. Gentleman and the hon. Member for Newham, North-West (Mr. Banks). The right hon. Gentleman asked whether we had figures later than the ones he quoted. I should like to refer him to the text of the letter that I wrote to the right hon. Member for Manchester, Wythenshawe (Mr. Morris) which is reproduced in a written answer that my hon. Friend the Minister of State for Defence Procurement gave on 1 May 1984. It contains a fairly full statement of our current assessment of the degree of drug abuse within the services. He will see there the figures for the years 1981, 1982 and 1983 in respect of each of the three services. In view of some of the comments that have been made about the scale of the problem, I should like to highlight them for the House.
The Royal Navy figures are 58 for 1981, 27 for 1982 and 67 for 1983. The Royal Air Forces figures are 38 for 1981, 29 for 1982 and 28 for 1983. Those figures are for investigations which have resulted in proceedings being taken. The Army's figures are on a different basis. They
284
show the total number of cases investigated, including those which do not result in proceedings. The figures are 169 for 1981, 143 for 1982 and 168 for 1983.
I quote those figures because they show two things. First, they show that over the last three years, taking the overall pattern, there has been no significant increase in the number of cases of drug abuse—which, of course, is welcome. Secondly, they show that what the hon. Member for Newham, North-West said about drug abuse being commonplace—that is the word he used—has no statistical basis. Those are microscopic figures in relation to the total number of service men involved. It is a gross misrepresentation of the services to suggest that drug abuse is in any way commonplace.
However, as I am sure both sides of the House would agree, exposure to drugs is a matter that all three services take seriously. We would wish to try to eradicate this problem as quickly as we can. Indeed, in the last few months I have asked all three services and their principal personnel officers to take a fresh look at drug abuse education to try to tackle it at the preventative end. All three services are taking that seriously, and will be making renewed efforts to draw to the attention of service men the dangers to their health and to their careers that arise from getting involved in any way in drugs.
I am grateful to my hon. and learned Friend the Member for Colchester, North (Sir A. Buck) for his comments about the importance of service discipline, and for the tribute that he rightly paid to the high standards of behaviour that exist in the services. He asked for information on the Colchester military corrective training centre. That project is well under way, and we expect it to be completed next year. I hope that that will be a significant military establishment in his constituency, and I am grateful to him for the support that he gives in his constituency capacity to the important service interests beyond the corrective training establishment in his constituency. He referred to the position in the Falklands, and I reinforce what he said. Despite the distance from home and the fact that these are unaccompanied tours, our service men have conducted themselves exceptionally well in the difficult circumstances in the Falklands. Touch wood, we have had few problems. This reflects the high standards that exist.
As to the distribution of disciplinary cases, the arrangements in the Falklands are the same as elsewhere. Normally speaking, disciplinary cases will be dealt with by those in commend on the spot, but there are certain arrangements for any particularly serious cases to be referred back to the United Kingdom and to be dealt with in this country.
The right hon. Member for Chesterfield (Mr. Benn) gave us what I might describe as an idiosyncratic but, I think, characteristic speech which started off with a history lesson. I felt, as he was reciting the origins of this order in relation to the 17th century, that that was more or less in accord with my recollection of the history of that time. I found myself agreeing with the right hon. Gentleman. However, it was too good to be true. When he switched from the 17th century to the present day, he produced a travesty of a description of the role of the Americans in this country, and of the police. He appears to think of the Americans and the police as forming an internal standing army which is subversive, out of control and about to take over the country.

285
The right hon. Gentleman asked specifically about military involvement in the miners' dispute. The position is as stated in the reply which the right hon. Gentleman received from my right hon. Friend the Prime Minister. The right hon. Gentleman tried to dress up that reply as the sensational revelation of some form of military involvement. However, he gave his position away completely when he commented that the Prime Minister's letter had been unreported. If the Prime Minister had confirmed the right hon. Gentleman's deepest prejudices and had stated that the military establishment had been brought to bear, the letter would hardly have been unreported.
The only form of military support was described in the letter. Some of the splendid members of the police force who are having to spend much time away from home—often at considerable personal inconvenience—have to be accommodated and catered for in service accommodation. That is the extent of the involvement of the services.
Mr. Robert Parry: Will the hon. Gentleman give way?
Mr. Stanley: I wish to reply to the points made in the debate, to which the hon. Gentleman did not contribute.
The hon. Member for Coventry, South-East (Mr. Nellist) said that he would vote against the order. He based his decision on a view of the armed forces which—having seen much of the armed forces myself in the past year—I found it impossible to recognise. According to the hon. Gentleman, the lads and lasses, as he terms them, of the armed forces are insular and class-ridden and a hotbed of Socialist discontent. The sharing of hardship, danger and sacrifice in the Falklands war give the lie to that view of the armed services.
Question put:—
The House divided: Ayes 82, Noes 5

Division No. 390]

[1.17 am

AYES

Amess, David

Garel-Jones, Tristan

Ashdown, Paddy

Good lad, Alastair

Atkinson, David (B'm'th E)

Gregory, Conal

Boscawen, Hon Robert

Griffiths, Peter (Portsm'th N)

Bowden, Gerald (Dulwich)

Hanley, Jeremy

Brandon-Bravo, Martin

Harvey, Robert

Buck, Sir Antony

Hawksley, Warren

Burt, Alistair

Hayes, J.

Cash, William

Hayward, Robert

Clark, Dr Michael (Rochford)

Hogg, Hon Douglas (Gr'th'm)

Cope, John

Hooson, Tom

Dover, Den

Howard, Michael

Eyre, Sir Reginald

Howarth, Alan (Stratf'd-on-A)

Forth, Eric

Howarth, Gerald (Cannock)

Fox, Marcus

Hunt, David (Wirral)

Freeman, Roger

Jones, Gwilym (Cardiff N)

Gale, Roger

King, Roger (B'ham N'field)

286

Knight, Gregory (Derby N)

Sayeed, Jonathan

Knowles, Michael

Shepherd, Colin (Hereford)

Lang, Ian

Smith, Tim (Beaconsfield)

Leigh, Edward (Gainsbor'gh)

Speller, Tony

Lester, Jim

Stanley, John

Lord, Michael

Stern, Michael

Macfarlane, Neil

Stevens, Lewis (Nuneaton)

MacKay, John (Argyll & Bute)

Stevens, Martin (Fulham)

Major, John

Taylor, Rt Hon John David

Malins, Humfrey

Thompson, Donald (Calder V)

Mather, Carol

Thompson, Patrick (N'ich N)

Maxwell-Hyslop, Robin

Thorne, Neil (Ilford S)

Mayhew, Sir Patrick

Tracey, Richard

Merchant, Piers

Trippier, David

Meyer, Sir Anthony

Wakeham, Rt Hon John

Moynihan, Hon C.

Wardle, C. (Bexhill)

Nelson, Anthony

Wheeler, John

Neubert, Michael

Whitfield, John

Newton, Tony

Whitney, Raymond

Nicholls, Patrick

Wilkinson, John

Norris, Steven

Wood, Timothy

Osborn, Sir John

Young, Sir George (Acton)

Page, Sir John (Harrow W)

Powley, John

Tellers for the Ayes:

Raffan, Keith

Mr. Tim Sainsbury and Mr. Archie Hamilton.

Robinson, Mark (N'port W)

NOES

Benn, Tony

Bermingham, Gerald

Tellers for the Noes:

Nellist, David

Mr. Eddie Loyden and Mr. Tony Banks.

Parry, Robert

Patchett, Terry

Question accordingly agreed to.
Resolved,
That the draft Army, Air Force and Naval Discipline Acts (Continuation) Order 1984, which was laid before this House on 19th June, be approved.

Business of the House
Motion made, and Question proposed,
That, at the sitting on Thursday 5th July, the Motions relating to Trade and Industry, Education, Science and Arts, Environment, Foreign Affairs, Agriculture, and Welsh Affairs may be proceeded with, though opposed, for one and a half hours after the first Motion has been entered upon, and, if proceedings on the Motions have not been disposed of by that hour, any Amendments to the first Motion which may have been selected by Mr. Speaker may be moved, the Questions thereon shall be put forthwith, and Mr. Speaker shall then put the Question upon the said Motion and any Questions necessary to dispose of the other Motions and of any Amendments moved thereto which have been selected by him; and that, notwithstanding the practice of the House, each Motion shall be regarded as a single Motion. —[Mr. Mather.]
Hon. Members: Object.
Mr. Deputy Speaker (Mr. Paul Dean): Objection taken. What day?
Mr. Mather: Today, Sir.

Industrial Grants
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mather.]
1.27 am
Mr. Derek Foster: In March, Manders and Co. of Newton Aycliffe went out of business, leaving 80 employees, mostly low-paid women workers, without jobs, and owing hundreds of pounds of wages and holiday pay. In nine short months the company notched up debts of about £250,000 despite a full order book and about £60,000-worth of help from the Aycliffe development corporation.
That was the latest crash in an astonishing three-year trail involving a network of companies and tens of thousands of pounds of public money. The two business men concerned were David Alderman and his son-in-law, Ivan Collins. They were active in three separate companies in the north-east and all of them are now in liquidation. Their debts total more than £2 million. Indeed, David Alderman is associated with at least 36 different companies.
The facts of the case have been made public by Tyne Tees Television in a very good exposé just over a week ago, and also by Roger Cook of "Checkpoint" two weeks earlier, so I do not want to delay the House by going into too many details. Suffice it to say that, having gone out of business as Fashion Industries in Hartlepool, starting up again within a week as Joanne Clare, going out of business as Joanne Clare, starting up again within two days as Manders, with help this time from British Steel Industries, they again flitted at short notice to Newton Aycliffe to enjoy approximately £60,000 worth of help from the development corporation. They were prevented from moving again to Peterborough only because the development corporation there heeded the warning from Aycliffe on this occasion.
There are several specific questions that I want to ask the Minister arising from those facts, and I want to make one or two general points.
Can the Minister tell me whether it is true that the network of companies with which Mr. Alderman and Mr. Collins are associated owe the VAT authorities about £1¼ million? If that is true, I think that he and the whole House would agree that that is a scandal which certainly needs to be investigated.
Is it also true that during the whole period of activities in Hartlepool and in Newton Aycliffe no national insurance contributions and no PAYE were paid? If that is the case, perhaps the Minister will tell me—or cause to have investigated—exactly how much that amounts to.
How true is it that Mr. Alderman and/or Mr. Collins are negotiating to start up business again in the south, perhaps in Basildon or Stevenage? Certainly the Aycliffe Development Corporation has warned all its colleagues in new towns about the activities of those companies, and it would be very disturbing if others were not heeding the warnings which Peterborough heeded.
Has the Minister's Department done any research into the size of the problem caused by these so-called "phoenix" operations? The Manders case suggests to me that there is a great rip-off of public sector job hunting agencies which may have escalated over the past four
288
years as areas such as mine have become desperate to retain any job in the teeth of the avalanche of job destruction.
Will the Minister set up an urgent inquiry into the size of the problem? When he has the results, will he tell the House frankly of its dimensions?
Now may I urge the Minister to draw the insolvency law much tighter? We cannot possibly allow directors involved in a series of voluntary liquidations or compulsory liquidations to start up again in this way with impunity. Will the Minister tell the House whether he has any plans to deal with that problem?
Is is not time that the Department compiled a national register of bad risk individuals? It could be very easily compiled and very easily made available to all the job-hunting agencies so that the sharks are at least identified and the job-hunting agencies made alert as to their activities.
Will the Department devise an agreed set of criteria which all job-hunting agencies could apply in cases such as this? At least we would then know that a model set of criteria applied thuoughout the country. There is a cast-iron case for monitoring companies enjoying grants. It was stated, with a great deal of credit, in the "Checkpoint" programme that many workers had not been aware of any monitoring taking place in the companies with which they were concerned.
Perhaps the Department should operate a ceiling net cost per job so that job-hunting agencies avoid a dutch auction. It is clear that, in the case of Manders, real jobs were not created or retained, merely shuffled from one area to another. Will the Minister institute a full departmental inquiry into the activities of Mr. Alderman and Mr. Collins to prevent further suffering by employees and further rip-offs of job-hunting agencies?
1.36 am
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. David Trippier): There are two aspects to the subject which the hon. Member for Bishop Auckland (Mr. Foster) has raised.
First, the hon. Gentleman asks whether there should not be stronger measures to deal with the so-called Phoenix companies, where directors successively close down companies and open up new ones. The issues surrounding this and the regime for disqualification of directors were addressed in the report of Sir Kenneth Cork's Review Committee on Insolvency Law and Practice.
Secondly, the hon. Gentleman asks about situations in which such companies apply for public funds and whether the monitoring arrangements applied by those responsible for disbursing public funds are sufficiently stringent.
I do not propose to discuss the specific case which the hon. Gentleman raised. My Department was not involved in being asked for or giving grants to the company. I understand that the grants which were given were made by the Ayclyffe development corporation and that, before doing so, it took references from the company's bank and principal customer.
Instead, I will deal with the broader issues of principle, and in particular the widespread concern that has been expressed about the activities of delinquent directors. The problem of abuse of limited liability has featured prominently in the Government's review of the insolvency legislation. The White Paper—"A Revised Framework

289
for Insolvency Law"—published earlier this year, set out our proposals for tackling this abuse, and two major reforms are now proposed.
First, a new civil liability for wrongful trading will be introduced. Wrongful trading will expose directors to a civil liability which may be imposed if, on winding-up, it appears that a company was allowed to trade beyond the point where a director knew, or ought to have known, that there was no reasonable prospect of the company meeting its liabilities.
Secondly, a more rigorous regime of disqualification designed to deter the dishonest and irresponsible director will be introduced. This will be to increase the power which the courts already have to disqualify directors for a specified period. This prevents them from taking on a directorship in any Companies Acts company, and a register of disqualified directors is held by the companies registration office which is available for public inspection. This is already close to the hon. Member's idea of a national register of bad risk companies. Our proposals for extending the court's powers are to provide, first, for automatic disqualification in the case of compulsory liquidations, secondly for possible disqualification in the event of wrongful trading, thirdly for liquidators to be able to apply for disqualification where a director is considered unfit to act, and fourthly for the Secretary of State to apply for disqualification in the light of an inspector's report.
These proposals will be a powerful counter to abuse of limited liability and will inhibit directors from continuing to trade when they know that their companies are insolvent. There will, of course, be flexibility to avoid unnecessary and unjust interference in the work of responsible directors. But the Government have concluded that tough new measures are now appropriate. Limited liability is a privilege which we can no longer allow to be abused.
Subject to other pressures on the parliamentary timetable, it is hoped, therefore, to introduce a Bill including the necessary reforms in the next Session of Parliament.
This range of measures will provide a powerful counter to the abuse of limited liability and will be of benefit to companies' employees and to creditors. The question of getting value for money out of grants offered to companies from taxpayers' or ratepayers' money is just one aspect of this.
The specific topic that the hon. Member raised is about grants to industrialists and how they are monitored. I have already explained that in the particular case grants from my Department and from central Government were not involved. Let me describe, however, the monitoring procedures that we operate in the Department of Trade and Industry for the assistance that we offer.
There are two stages — the appraisal stage when applications are submitted and the monitoring stage for successful applications when an offer has been made and payment is due. The appraisal stage is probably the crucial one in the context of the problem that we are discussing. Appraisal procedures differ slightly between the various schemes of assistance offered by the Department, but the same basic principles underly them all. Applicant companies are required to demonstrate that they have the managerial competence, and where appropriate the technical capability, to carry their project through and that they have the necessary resources to finance it. Applicants are required to provide details of any other applications for
290
Government assistance. Indeed, it is more usual for the Department to be criticised for requiring too much information than to be accused of handing over cash too readily.
A sensible judgment has to be made about the degree of investigation that an application requires. The appraisal officer will draw on his experience of the industrial sector and of similar cases, on feedback from the press and other organisations in the field and on his personal assessment of the individuals involved.
The larger the project, the more intensive the investigation. In regional offices it is common practice to ask for an applicant's curriculum vitae and most cases are seen by the Department's accountancy service which will subject the case to scrutiny, often including correspondence with the applicant's bank.
In larger cases more rigorous procedures are applied and cases will be closely scrutinised by the sponsoring divisions — the industry experts — the Department's accountants or the industrial development unit, which is made up of financial experts from the private sector seconded into the Department.
All applications under the support for innovation facility, in whatever part of the country they are made, and from whatever sector of industry they come, are logged and held in a central computer database. Amongst other things this holds details of the assistance sought, the grant offered and payments made.
The system is being extended to cover all selective assistance by the Department. For applications that have come through this scrutiny and are judged worthy of assistance, an offer is made and payments of grant are then subject to the monitoring procedures. The principal objectives of monitoring are to ensure that public funds are used for the purpose for which they have been made available—meeting the terms and conditions imposed—that the objectives for which assistance is granted are attained and to enable the Government to take appropriate steps, where necessary, to safeguard their position. The depth of monitoring varies according to the type of assistance given and the degree and scale of risk attached to the project concerned. Cases are classified as "low" or "high" risk and assessment is a matter of judgment based on the viability of the project, its sensitivity to market and economic change, the amount of assistance provided and the nature of the security against which assistance is given.
In all cases, however, the applicant will normally receive at least one visit from the official nominated to monitor the project. Claims for payment must be certified by an independent auditor and accompanied by a progress report and the latest audited account.
If monitoring indicates that a project is not proceeding satisfactorily or that the conditions under which assistance was offered have materially changed, there are powers to withhold payment of grant or to reclaim grant already paid.
No system is foolproof, of course, and it is probable that some spurious applications slip through the net. But it would be wrong to treat applicants for assistance as if they were potential criminals, and a balance has to be struck between caution in the use of public money and ensuring that schemes of assistance are operated efficiently and effectively. Overall I am satisfied that we have got the balance right.
The hon. Gentleman asked what lessons the story has for the effectiveness of regional policy. He may have seen

291
from the White Paper on regional industrial policy last November that when decisions have been taken on its coverage, the new regional incentives will involve more selectivity and evaluation. The proportion of discretionary regional selective assistance will rise relative to the more automatic regional development grants. That will involve more evaluation of applications. The question of displacement, which the hon. Gentleman mentioned, is one factor that will be taken into account. Where grant is paid in relation to fixed assets, arrangements will continue to apply, as at present, for clawing back grant if those
292
assets are no longer used and in future when it is linked to a cost per job ceiling so that it can be clawed back if that ceiling is breached.
Those evaluation and monitoring criteria apply to gants offered by my Department. The hon. Gentleman asked whether the various local development corporations and new towns might operate under unified guidelines. He will appreciate that this is a matter for my right hon. Friend the Secretary of State for the Environment.
I am grateful to the hon. Member for drawing this matter to the attention of the House.
Question put and agreed to.
Adjourned accordingly at fourteen minutes to Two o'clock.