Dairy Produce Quotas

HC Deb 18 July 1984 vol 64 cc439-83 11.59 pm

The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling)

I beg to move, That the draft Dairy Produce Quotas Regulations 1984, which were laid before this House on 11th July, be approved. I understand, Mr. Deputy Speaker, that the other motion may be debated at the same time: That the draft Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations 1984, which were laid before this House on 16th July, be approved.

Mr. Deputy Speaker (Mr. Harold Walker)

If that is for the convenience of the House, so be it.

Mr. Jopling

The House is familiar with the background to the regulations, because hon. Members will remember that we debated these matters on 3 July, and the reasons for the introduction of milk quotas. I do not wish tonight to repeat everything that I said then. With my right hon. and hon. Friends I have, however, been considering the many helpful points that were made in that debate. As a result of what was said, we have withdrawn the draft regulations which were laid before the House on 27 June and have laid fresh drafts instead, which are now before the House. I shall explain to the House the changes that we have introduced since that last debate.

First, with regard to special hardship cases, which were referred to by a number of hon. Members on both sides of the House, we have inserted in paragraph 17 of both schedule 1 and schedule 2 a new provision to help producers who had entered transactions or who had made arrangements before 2 April 1984, as a result of which they are now unable to obtain as much quota as they need to sustain their businesses. It is a limited provision to help those who might suffer exceptional hardship, but it is a response to the representations of several of my hon. Friends on a point on which I am enormously sympathetic. The quota to assist those cases will come not from the 2.5 per cent. reserve which is set aside already but from the quota to be bought up under the outgoers' scheme. Most of the outgoers' quota will not become available for some months, but we plan to make a small amount available for this purpose as soon as we possibly can.

Mr. Richard Needham (Wiltshire, North)

I am sorry to interrupt my right hon. Friend at the beginning of his speech, but one of my constituents was offered a new farm by the county council as a tenant dairy farmer in January this year. He has now, therefore, given up his existing farm, and the county council has re-let it. Yet because the farm that is being let to him by the county council as a dairy farm was not farmed for several years previously as a dairy farm, he has no quota whatever. Therefore, having on the advice of the county council given up the farm that he had previously, he has gone to a new farm where he has no quota, so he will be in a very difficult position. I should be grateful if my right hon. Friend will let me know whether——

Mr. Deputy Speaker

Order. Interventions must be brief.

Mr. Jopling

I know that my hon. Friend is most concerned about the case that he has explained to the House. I think that it would be foolish of me to attempt to give a firm and categorical answer about a particular case which my hon. Friend has explained to me in these circumstances. All I would say to my hon. Friend is that the key question is whether milk was being produced on the farm on 2 April 1984. If it was not, there are provisions in the regulations which I would draw to the attention of my hon. Friend and his constituent, whereby consideration could be given to the case if his constituent could prove and demonstrate that a firm commitment to produce milk was entered into. I do not think that I should go any further than that at this stage.

Many hon. Members have referred to the problem of the interplay between direct sales and wholesale sales and the position of quotas, remembering that on one farm producers can have both a direct and a wholesale quota. We have always believed that it makes no sense to impose artificial and rigid constraints upon a producer who retails direct to consumers and sells the rest of his milk to the Milk Marketing Board. We shall go on pressing in Brussels for greater flexibility between direct sales and wholesale quotas. Indeed, I spoke to the Commissioner in Brussels about it only yesterday and I shall continue to press him on the matter.

However, the new regulation 8 provides in effect that if a producer has more wholesale but less direct sales quota than he needs he may swap his spare wholesale quota with another producer who has spare direct sales quota. That is a new measure. In that way we can achieve some flexibility without breaching the principle in the Community legislation that the direct sales and wholesale quotas are distinct and cannot be merged or confused.

Mr. Ron Davies (Caerphilly)

Can the Minister envisage any set of circumstances whereby producers will have any surplus retail sales quota which they wish to get rid of?

Mr. Jopling

Yes, there are examples, particularly where people have given up direct sales in the fairly immediate past and where, because of the way that part years are treated, they find themselves with unused direct quota. In those circumstances, that would be available for a swap. I am grateful to the hon. Gentleman for allowing me to elaborate on that.

Regulation 9 in the new draft provides that where a producer moves to a new farm after the regulations come into effect he may take his quota with him provided that the MMB and all parties with an interest in the original holding agree to that change. Again, that is a matter that was drawn to our attention in the earlier debate and I am sure that the House will agree that it is another useful step that we have been able to take after listening to the views of the House.

I should like to provide even greater flexibility. However, our options are limited as long as the Community legislation makes no provision for the marketing or leasing of quotas. We are continuing to work on that and I hope that we shall be able to obtain some movement in the months ahead.

Although producers will wish to go very carefully through the explanatory material and forms that we shall be sending them, many may wish to seek advice. I have therefore amended paragraph 1 of schedules 1 and 2 to increase from four weeks to five weeks the time limit for applications in Great Britain for additional quota under the special case provisions and for registration as direct sellers. The same time limit, incidentally, will apply to the outgoers scheme. I should like to have allowed even longer, except that it would mean delaying the whole process of settling definitive quotas.

Mr. Robert Hughes (Aberdeen, North)

Is the right hon. Gentleman saying that people can apply under the outgoers scheme only five weeks after the date that he sets?

Mr. Jopling

We have increased from four weeks to five weeks the time limit for applications in Great Britain, and that will also apply to the outgoers scheme. We are giving producers an extra week in which to make their applications. In the previous debate, a number of hon. Members referred to the original proposal for four weeks, but it did not receive a volley of criticism. Despite that, we have increased the period to five weeks, which is reasonable and helpful.

Mr. Keith Best (Ynys Môn)

The outgoers scheme is principally designed to re-allocate quotas to small producers so that they can reach their 1983 levels with incurring penalties. If there are insufficient people going out to achieve that aim, will my right hon. Friend look at the matter again, to help the small producer?

Mr. Jopling

I have every hope that the outgoers scheme will give us the full 2.25 per cent. of our milk quota for redistribution. The whole purpose of it is to redistribute the quota to small producers, to bring them back to the 1983 production patterns. We are anxious to achieve that quantity of milk.

Mr. James Molyneaux (Lagan Valley)

The right hon. Gentleman has twice referred to the five-week period for Great Britain. What will be the position in Northern Ireland?

Mr. Jopling

It is intended that the period will be left at four weeks in Northern Ireland. There is a good reason for that. As a farmer, the right hon. Gentleman will know that one of the important aspects of the scheme in Northern Ireland is that it is applied under formula A and each producer is responsible for the payment of the supplementary levy at a flat rate on his own overproduction. That is not the case in Great Britain, where the levy paid by producers who exceed the quota will depend on the level of above-quota production within the milk board as a whole. Therefore, because it is important that milk producers in Northern Ireland know where they are as regards their own quota allocation, we have left the period at four weeks.

I am anxious to ensure that special case claims are dealt with speedily so that producers know where they stand. Under paragraph 1 of schedule 5 to the new draft regulations, the maximum number of members of the dairy produce quota tribunals will be increased from seven to 12 for England and Wales and for Northern Ireland. A tribunal will therefore be able to sit in two or more places at the same time, if necessary, which will mean that the work can be speeded up.

I am glad to take the opportunity to announce that, if the regulations are approved, we shall be appointing Lord Grantchester to be chairman of the tribunal for England and Wales. He is a most distinguished lawyer with experience of work on tribunals and I am most grateful to him for agreeing to serve.

The separate regulations on the definition of base year revision claims have only one purpose—to clarify, for special case claims, the point at which bad weather might be classed as a serious natural disaster. The hon. Member for Aberdeen, North (Mr. Hughes) specifically asked us to do that.

Any figure must be to some extent arbitrary, but if all claims are to be treated alike the tribunals will have to have, from the start, a rule of thumb which they can apply in each case. The figure—a reduction of 15 per cent. due solely to weather—is deliberately set fairly high and is not intended to cover ordinary bad weather.

Various aspects of the regulations are bound up with the payments to outgoers scheme, copies of which have been placed in the Vote Office and the Library. The arrangements are as I described them on 25 May. We plan to buy up to 2.25 per cent. of quota in Great Britain and up to 5 per cent. in Northern Ireland. In England and Wales, about 1.25 per cent. would be needed to bring 40 per cent. of all producers—that is, those who delivered up to 200,000 litres or had up to about 40 cows—back to their 1983 levels of sales. That would leave about 1 per cent. available for allocation to other producers.

We cannot yet decide just how this 1 per cent. should be used, but we intend to reserve part for the special hardship cases under the new provision which I have described.

Many hon. Members have shown interest in the outgoers scheme. We have been asked whether a tenant will have to obtain his landlord's consent before being admitted to the scheme. In Scotland my right hon. Friend has decided that, because of the agreement by interested parties, it is sufficient to rest upon a declaration by the tenant that he has obtained any necessary consents.

In England and Wales, However, a surrender of milk quota will be subject to the consent of both parties and not just of the one receiving the payment under the scheme. I regret that we were not able to get the same agreement between interested parties which was obtained in Scotland. I urge landlords and tenants to sit down together and to work out whether the scheme makes sense for both of them, as in many cases I am sure it will. The president of the Country Landowners Association has said that he hopes that landlords will give their consent wherever possible.

Since the last debate we have had further discussions with the Inland Revenue to clarify the tax treatment of payments to outgoers. There has been some difference of opinion within the industry, on the relative advantage of capital or income taxation. I am glad to tell the House that we have been able to frame the scheme in such a way as to provide the producer with a choice of either a capital payment or an income payment. The individual producers will obviously choose whichever option best suits his own tax liability.

I am sure that the industry will welcome this satisfactory arrangement, which was urged upon me in our last debate by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) and others.

I have made it clear to the House that the reserve and the outgoers quota are small and that there are many claims upon them. The provisions for special hardship claims, weather cases, expanders and small farmers have all been kept very restrictive, to avoid all the spare quota being consumed by any one group. I must issue the warning that, even if a claim is accepted, the regulations give no guarantee that it can be met in full.

If acceptances exceed the reserve quotas, they will be scaled down proportionately in the case of expanders and special hardship claims. Quotas can be found for one producer only at the expense of another.

Because of the safeguards built into the regulations, it may take some time to resolve every case. In the debate on 3 July my right hon. Friend the Member for Taunton (Mr. du Cann) and others were anxious that producers should not have to pay levy before their claims had been settled. I sympathise with that point of view, but I must first see how many applications come in and what progress is made by the tribunals and panels. If I can see a way of helping those whose claims have not been settled before the first payments are due, I shall certainly pursue it.

Mr. Patrick Cormack (Staffordshire, South)

How optimistic is my right hon. Friend of success?

Mr. Jopling

As I said during our last debate, I can make no estimate at this stage—nor can anyone else—about when it will be possible for everyone to have his exact quota clarified. I cannot do that without knowing how many producers will apply to be considered special cases. That is an imponderable which I cannot yet tell.

Mr. Dafydd Wigley (Caernarfon)

Will the right hon. Gentleman give way?

Mr. Jopling

No, I must go on with my speech. I have given way a great deal. Many right hon. and hon. Members wish to speak.

In passing, I should add that I have made it clear that the quota system must be applied fairly in all member states. I raised this issue once more at the Council of Ministers this week, and I shall continue to watch developments closely. The Commissioner gave me an undertaking in Brussels yesterday that he would make a comprehensive report on this matter to the Council in September.

Subject to approval of the regulations, we intend to send all producers an explanatory note and an application form for registration as a direct seller, for treatment as a special case or for admission into the outgoers scheme. The material will be dispatched as soon as the regulations come into operation and should be with producers early next week, provided that the House agrees to the regulations. I know that many fanners — and the National Farmers union—are anxious for us to go ahead and agree the regulations without further delay, and I am sure that the House will agree that we should do so.

Quotas are not popular. I have never hidden my own view about them from the House in the course of the last 12 months. We cannot expect any measure that reduces production to be popular with those who are currently producing.

I have often heard the plea that producers should have had more time to adjust. I sympathise with that, as I have said before. But if we are to reduce the milk surplus, the Community's guarantee to cover surpluses must be limited. I believe that the draft regulations provide the fairest and most rational way that we can devise within the constraints of Community legislation designed to achieve the better balance in the Community milk market which was so much needed.

In the changes that we have introduced we have responded to the views of hon. Members on both sides of the House and those of the industry. I commend the regulations to the House.

Several Hon. Members

rose——

Mr. Deputy Speaker

Order. Before I call the hon. Member for Aberdeen, North (Mr. Hughes), I should point out that it is clear that a great many right hon. and hon. Members on both sides of the House want to take part in the debate. I hope that those hon. Members who catch my eye will be fair to their colleagues still waiting to speak.

12.24 am

Mr. Robert Hughes (Aberdeen, North)

Like the Minister, I have no intention of rehearsing the arguments which I advanced in the debate on 3 July, beyond saying that I still believe. that it was a bad deal and a bungled application.

Since that debate, from the unceasing torrent of letters and telephone calls that I have received and from a visit that I paid to Wales to discuss this matter with farmers, it is clear to me that I underestimated the worries of dairy farmers facing uncertainty and great financial hardship.

Even at this late hour it is possible to have a sneaking sympathy for the Minister. He is in a quicksand. The more he struggles to get out, the deeper he sinks.

Late last week, we saw the revised draft regulations. On Monday we had the supplementary regulations dealing with base year revision. Yesterday the outgoers scheme was laid, which deals solely with payments. It is difficult to understand and to try to explain the regulations. It reminds me of the American television comedy called "Soap", which begins by explaining the plot, while the voice-over says, "Confused?—if not you will be after you have watched this episode." The more that we debate the issue, the more confused we become.

If we try to understand the regulations we find that they do not match up to what the Minister claims. He said that there are reserves of milk, but that a proportion will be set aside for outgoers, hardship cases and so on. But that is not laid down anywhere in the regulations. As I understand it, regulation 5(3)(b), in relation to schedule 2(3), shows that, initially, an estimate is made of each producer's primary quota. Once that is done, it is added together—and if the aggregate is greater than the limit set—which presumably means the wholesale quota—everyone must be scaled down pro rata. If someone was unlucky enough to have his estimates set too low, he would suffer more than the person whose estimates were set too high because he is taking a pro rata cut on the higher figure.

If, having done that, the aggregate of the estimates—I hope that the House is following this closely—comes to less than the limit, a reserve is created. The regulations explain how that initial reserve will be allocated. First, if on the estimates someone has had too much quota, and the aggregate is less than the total, the estimated quota is taken away and added to the initial reserves.

The first call on the initial reserve is to tot up those whose estimated primary quota is less than that to which they were entitled. The next call on the initial reserve is hardship cases. However, there is only a reserve for that if the topping-up leaves something spare. Once the hardship cases are disposed of, and if there is still a surplus in the initial reserve, that is made available to developers.

All the way through, the regulations say that if the claims settled are greater than the amount of milk left, everyone must be scaled down in proportion. I do not know how the Minister squares that series of events with setting aside particular proportions of quota to deal with specific hardship cases.

After all that, if anything is left over from the initial reserve, a running reserve is created—which appears to be what the Minister has been able to buy in on the outgoers scheme. Now he tells us that the application for the outgoers scheme must be in within five weeks. What is the running reserve? It is either a five-week reserve, or it is not. It does not make sense. In the running reserve there is an additional category called exceptional hardship cases, and that must be provided for out of the reserve. Frankly, it is total administrative chaos. I do not understand how anyone can make any sense of it.

I shall mention some matters in detail—for example, the mixed retail-wholesale producers. The Minister pointed to regulation 8, which is the only regulation expressed in such simple language that everyone can understand it. It firmly states that two producers within a region can get together and swap either the retail or wholesale quotas. That will reduce farming to a lottery. We will see a rash of advertisements in the farming press akin to those that appear in the personal columns of The Times.For example, on Monday 9 July, under the wanted column we see BP. Money match wanted £20,000 Left hand £10,000 Right hand. Split winnings. On Saturday 14 July we see, MOBIL SCRABBLE letters. J, B, F. C and L. Cash paid. Telephone … That will be the sort of farce to which producers will be reduced. They will have to advertise in the press for someone in the region. The chances are that more people will be looking for someone to swap a direct quota for a wholesale quota than the other way round. It may well be different, but we do not know what will happen. Nor do we know what help will be given by the Ministry to people in such difficulty. I do not know whether the scheme is based on a similar scheme that operates in Canada. If so, the Minister ought to be aware that in Canada the departments concerned take great care to try to match producers who want to change quotas.

I turn next to the outgoers' scheme. That appeared yesterday, and deals only with payments. I would like to study what the Minister says about the five weeks. At one point, it states that the scheme shall come into operation on the same day that the regulations come into operation. That is fine. It continues: Applications for any payment under the scheme shall be made during the period of five weeks immediately following the date on which the scheme comes into operation or such later date as the appropriate Minister may determine. There is a five-week period from the date that it comes into operation, or five weeks from some other date that the Minister sets. I hope that the Minister will explain what that is, and where we go from there.

Nothing in the regulations specifies how the small producer will get his claim settled in relation to the quota. The Minister said on 3 July this year that his intention is to bring small producers back to the 1983 production patterns. However, it is not stated anywhere in the regulations how someone can apply for the quota to be set on the basis of 1983.

The Minister has dealt with hardship cases on climatic grounds. As he has pointed out, the supplementary regulations say specifically that there has to be a minimum of 15 per cent. reduction in production in 1983 compared with the base year that the producer chooses—1981 or 1982—before he can apply for additional quota on hardship grounds. All the advice that I have had is that 15 per cent. is far too high a hurdle. Why did the Minister settle on the figure of 15 per cent., given that in the debate on 3 July he said that he was thinking of 10 to 15 per cent.? He has to justify why he chose the figure of 15 per cent.

One direct question has to be put to the Minister. Does this exercise—setting regional quotas, applications for hardship, revised estimates, aggregating the totals — have to be done every year? The statutory regulations say that, once all the process has been gone through, that is it until five years hence. Indeed, that cannot be so if there are to be further reductions in national quotas in the coming years. Must this whole exercise, this administrative nightmare, be conducted every year?

At column 165 on 3 July the Minister spoke of the way in which developers would be treated. I think I summarise the right hon. Gentleman correctly when I say that he said that the first 7.5 per cent. of increased production of developers would be allowed to stand and there would be no penalty; that half the increase between 7.5 and 12 per cent. would be taken into account; and that for any production over 12 per cent. there would be the full penalty.

However, that is not what the Minister said today, nor what the regulations say. What guidelines will be given to what is described in the regulations as the further examination body? Ministry officials set the quotas and then there is a further examination body and tribunals. It has been suggested that there will be flying tribunals meeting in two places at the same time. What guidelines will be given to these bodies which will determine the fate of producers? What will be their starting point or base line?

Paragraph 6(2) of schedule 2 to the regulations says that there may be circumstances in which the Minister, having heard all the objections, reaches the conclusion that an applicant's case can be met only at the expense of another producer. That refers to a producer in specific terms, not to producers generally. In other words, if the Minister tells farmer A, "I accept that you have a just claim and that you have not been given enough quota. The only way I can give you additional quota to meet your just claim is to take quota away from farmer B." That is specific, because the regulations go on to say that the Minister must inform both farmers, first to tell farmer A that he is to get additional quota and, secondly, to tell farmer B that quota is being taken from him to satisfy farmer A. Then we have all the paraphernalia of arbitration, with arbitration rules for England and Wales, and so on.

Is the Minister saying that under the regulations at the end of the day he will have to arbitrate not in relation to the totality of the scheme but in relation to individual farmers, perhaps next-door neighbours, taking quota from one to give to the other? If that happens, there will be mayhem. Apart from setting farmer against farmer, the situation will be ludicrous. I hope that the right hon. Gentleman will explain the position in more detail and will say how often he thinks that the procedures will be used. He cannot reply that, in his view, this provision will cover a minority of cases. He must have introduced that procedure because he thought there would be a significant number of cases to which it would apply.

I appreciate the difficulty in which the Minister finds himself tonight. On the one hand, he has been pressed—I accept that on 3 July I pressed him hard on the subject—to do something to get some certainty into the situation as soon as possible. On the other, there was no need for him to bring the regulations forward so quickly that there was not time for sufficient consultation, with the result that they are not right.

The right hon. Gentleman will have to return to the question of the financial problems of individuals. No matter how fairly people are treated under the regulations—even if they work perfectly and everyone gets justice — hundreds, if not thousands, of people will be in desperate financial straits. The Minister must look at this matter again and consider additional finance. He will be compelled, when he sees the hardship that will occur, to examine the finances of people who must pay interest on their overdrafts——

Mr. Nicholas Budgen (Wolverhampton, South-West)

Will the hon. Gentleman give way?

Mr. Hughes

—I shall not give way. The problems of such people will be compounded by the fact that interest rates have increased by 2.5 per cent. in the past couple of weeks.

Mr. Budgen

How much? £100 million?

Mr. Hughes

It is no use the hon. Gentleman asking how much. I am saying that the Minister is in a difficulty and must look at the matter again.

The best course is for the Minister to withdraw the regulations and give us and himself a little longer to sort the matter out. If the right hon. Gentleman cannot withdraw them, the best course is for the House to defeat the regulations and to bring back proposals of greater clarity. I advise hon. Members to join us in the Lobby.

12.41 am

Mr. Robert Harvey (Clwyd, South-West)

I think that hon. Members on both sides of the House understand the need for a substantial reduction in the dairy surplus. At a time when the Community was expected to overproduce by an estimated 70 million tonnes this year, producing 105 million tonnes, and consumption stood at only 88 million tonnes, of course cuts had to be made. It would have been unreasonable of dairy producers to have expected otherwise.

A number of aspects to the present agreement should be of serious concern to hon. Members. The first is that cuts in quotas have been imposed sharply and suddenly without the kind of transitional period that would have made the move palatable to those who, with every support and encouragement from the Government, had invested in dairy farming and equipment. Of course, that is not primarily the Government's fault. The Community is structured in such a way that the pressures for change gradually build up over years in which there is no change. That change proves much more traumatic and cathartic when it eventually occurs.

In view of the assurances given to farmers during the past few years and the encouragement to invest — I understand that when the Milk Marketing Board encouraged farmers to expand and invest, it was not its practice to advise what could be cut—it was surely the Government's duty to ensure that change was much less sudden and violent than has been the case.

There are horrifying tales in my constituency of the degree to which farmers have found themselves in financial difficulties as a consequence of the suddenness of the change. The jump in interest rates comes as a body blow to an industry that depends heavily on borrowed money for its survival. — [Interruption.]. The farming industry depends on borrowed money to a much greater degree than many other industries, and I believe that most hon. Members are aware of that fact.

The second aspect of the quota that is profoundly disturbing is the way in which we appear to have obtained one of the poorest deals in the Community, suffering a bigger cut in production than most member states, especially Ireland and France. That is a tragedy, because the reason why our milk production has increased steadily in recent years, to the point where we are more than self-sufficient in many products, is that we are much more competitive than our European partners. We have the most efficient farming in Europe, not because our producers are guaranteed markets—all our competitors benefit from that advantage—but because we produce more, better and cheaper. I see no reason why Britain should suffer from the fact that is is more competitive or why those countries that have accumulated smaller surpluses because they are less competitive should not suffer corresponding cuts.

A matter of major concern in the past two or three years has been the determined campaign by certain sections of the Left and of the conservation lobby to portray farmers as environmental vandals bent on destroying the British countryside and reaping enormous profits from guaranteed prices while the rest of the country suffers economic retrenchment. There are, of course, exceptions to any rule and there will always be a handful of farmers who provide the ammunition for such an attack, but we must acknowledge that the source of farming prosperity in this country is not guaranteed markets but the fact that we were able to corner a substantial share of the market when our less efficient competitors were unable to do so.

The concepts of competition and efficiency and the small man building up a small business into a large one are anathema to many Opposition Members, but the hard result of all this efficiency in British farming has been a stability in food prices unparalleled in earlier years. In the past few years, food price increases have been consistently below the rate of inflation and in some seasons prices have not risen at all. That is a remarkable tribute to the fact that as the market stabilised and farmers ploughed their hard-earned profits back in investment it has proved possible to keep food prices more or less under control. Between 1973 and 1980 food prices rose by 7.4 per cent. compared with 11.2 per cent. inflation. That has been the staggering achievement of our farmers and due credit should be paid to the common agricultural policy in helping to achieve that.

The second great achievement has been the great stride towards farming self-sufficiency in Britain, which has made a major contribution to our balance of payments. Stable food prices above all help the lower income groups for whom food looms large in the family budget and an improvement in our balance of trade should be especially welcomed by the Opposition, but instead the Labour party intends to slash the CAP for dogmatic reasons, at the cost of destroying food price stability and our favourable agricultural balance. There can be few spectacles so hypocritical as that of the Labour party attacking the dairy agreement when everyone in the House knows that a Labour Government would have slashed milk production to a far greater extent than is provided for in the agreement.

It must be recognised, however, that a large section of the farming community is far from prosperous, especially in my area of Wales, and will suffer greatly as a result of the agreement. I welcome the Government's measures to provide relief for the smaller producer, but there are many medium and small farmers not entitled to relief who were encouraged to go into dairy farming, whose market has now disappeared, whose stock is now worth considerably less and who face the prospect of having to switch into a potentially flooded beef or sheep market as a result. Those small producers are not so efficient as the big ones, but they form an essential part of the social fabric of Wales and other parts of these islands and they are a great deal more efficient than their counterparts in France, West Germany or Italy. The Government have a clear duty towards medium and small farmers that is no less pressing than that assumed by the Governments of France and West Germany. When it is considered that farming incomes in the hill and upland areas of Wales have fallen below the 1978 level in real terms and by almost 20 per cent. between 1982 and 1983, that duty becomes clear.

I hope that the House will recognise, thirdly, that the great majority of farmers are not spoilers of the countryside, but its natural curators. I do not propose to enlarge on that point in this debate, which is clearly about dairy farming, except to say that many of the same people who have been urging drastic changes in the CAP are those who have been character-assassinating the farming community on the environmental issue. I am convinced that the ultimate purpose of many of those engaged on that campaign is to extend the concept of the state's right to the land, to the planning and ownership of property. That call has been repeated in one Labour conference after another, with all the grim regimentation of the countryside and destruction of the farming community that that implies.

In that context, I believe that a word of warning should be addressed to farmers from the Conservative Benches. Understandably, the impact of the two dairy quotas has provoked a great deal of distress and bitterness among farmers. Yet, the spectacle of them pouring away their milk and slaughtering calves in protest will do nothing but provoke indignation among the public, which has already been subjected to this anti-farming campaign.

Fanners should set about displaying the acceptable face of British farming to the media and to the quality newspapers, and desist from the kind of action that may be persuasive in France, but which strikes a deeply repugnant chord in the British people.

Farmers, like all those who sympathise with them in the debate, must turn their minds, now that the dairy agreement has been reached, to ensuring that no such violent adjustment of dairy or any other quotas takes place in future. It would be unacceptable, after the shock that farmers have suffered, if stability were not guaranteed in the diary sector, at least for the next five years.

Further adjustment must be gradual and must reflect our own competitiveness against the inefficiency of our EEC partners. I ask for the Minister's assurance that the uncertainty is over, so that farmers can plan for the future with confidence. My right hon. Friend can still go down as the Minister of Agriculture — [Interruption.] — who took the painful decision necessary to restore the common agricultural policy to the equilibrium that will allow it to continue as a guarantee of price stability and producer security. But, if he has imposed only a first cut in the CAP at the expense of the one industry of which this country can be justifiably proud, the judgment will be otherwise.

12.53 am

Mr. Robin Corbett (Birmingham, Erdington)

If I were the Minister sitting here tonight, with so many of his right hon. and hon. Friends behind him, I would be very worried about how many of them would deserve the epithet "friends" when the Vote is taken at about 3 o'clock this morning.

The Minister is asking us to help him, through the regulations, to put flesh on the initial folly of the milk quotas. The Minister has been at the Dispatch Box twice about this piece of lunacy, and on neither occasion has he been able to give a rational explanation of why on earth he accepted this method of dealing with cuts in unwanted milk production in the European Community.

The Minister must know — it would be nice if he admitted it before the night was over—that there is a profound and important difference between the milk market in the United Kingdom and that in all the other nine member states. It is very simple; of course the right hon. Gentleman knows it. The overwhelming majority of the milk produced in this country is drunk. The problem arises only with the milk in the other nine states, which is not drunk and which then has to be turned into butter, cheese and skim. I see the Minister's sidekick looking surprised. The penny has dropped with him, and I hope that it will drop with the Minister before the night is over.

The Minister of State, Ministry of Agriculture, Fisheries and Food, (Mr. John MacGregor)

The proportion of milk produced in this country that goes into liquid milk and is drunk is about 45 to 47 per cent.

Mr. Corbett

Of course, if the hon. Gentleman tells me that, I shall take it into account— [Interruption.] Let us see whether we can get agreement this way. More of the milk produced here is drunk and is for liquid consumption than in any other Common Market country. That is the difference. That is the point that the hon. Gentleman's right hon. Friend the Minister cannot get into his skull; otherwise, he would not have accepted this sellout to Brussels.

That now having been established, what the right hon. Gentleman cannot do in the House is give an absolute guarantee to those who have daily doorstep milk deliveries that the scheme will not put those supplies in jeopardy. There is no way in which he can do so. I shall tell the House why. I shall not bore hon. Members with quotations, but the fact is that the right hon. Gentleman has admitted—he did it again tonight—that he does not have the faintest idea how many milk producers will opt to collect the money under the outgoers scheme. There is no limit on that. In that case, there is no way in which the Minister can assure the House — and, perhaps more important, the consumers—that the doorstep deliveries on which they rely will be guaranteed under the regulations. I shall go further and say that there is inherent in the regulations a real risk that once again under this Government doorstep deliveries will be in jeopardy.

It may well be that the brakes on a possible stampede out of milk have been slightly applied by the news that the National Fanners Union itself is debating a scheme to pay people not to grow cereals. That is one of the options for some of those who get out of milk. Another thing might put the brakes on. Again, the Minister cannot answer this, because he does not know. After the right hon. Gentleman has put his tiny paw up in favour of the milk quotas this year, what will he do next year when the Commission turns round and says, "What about cereal quotas?"? Will all the Conservative Members go through the Lobby and vote for that?

Mr. Andrew Rowe (Mid-Kent)

It seems that the hon. Gentleman is once again making a clear statement that is constantly made by Opposition Members, that the Government are in the business of guaranteeing people jobs for ever, regardless of how markets change.

Mr. Corbett

That was a foolish comment, and I am sorry that I gave way.

We have a right to insist that the Minister of Agriculture and his Government should give guarantees to consumers about the supplies of materials such as milk, on which they rely. However, the Minister can give us no guarantee about the future level of supplies of milk.

The Minister has made much of the question of special cases. I have heard it said that every dairy farmer can claim to be a special case. In a sense, that is true. The president of the National Farmers Union is reported in Farming News this week as saying that one dairy farmer in four is likely to claim to be a special case. Why not? If the offer is there, why not take it?

The Minister cannot know how many applications there will be under the outgoers scheme. He has admitted that he cannot know how many special cases will be allowed. Both ends of the scheme are total unknowns. He wishes the House to approve the scheme on that lunatic basis. [HON. MEMBERS: "How can one know?"] Of course we cannot know. Why does the Minister not wait until he knows the answer to those questions before he comes here with his daft and lunatic schemes? [Interruption.]

The Country Landowners Association claims that the dairy produce quota tribunals—another set of quangos which the Government are establishing—will reduce the uncertainty facing producers. With respect, the CLA is wrong. Far from ending the uncertainty, the tribunals will prolong the agony. The Minister has said today that there will be flying tribunals. No doubt they will be followed by flying pickets — [HON. MEMBERS: "Oh!"] — I mean flying pickets of dairy producers, not miners. Given that the president of the NFU has said that it is likely that one producer in four will claim to be a special case, it will take until kingdom come to resolve the applications—unless the tribunals sit round the clock.

Under the regulations, it is the direct sellers who will receive the worst treatment. We are being asked to approve an arrangement under which a producer who sells solely direct to the front door against known and regular demand is being asked to cut production. What will that do to his or her business, or to total milk production?

In many of the areas where direct sellers operate, there is no other milkman. To ask the direct seller to cut back is therefore to introduce a form of rationing. A note will be left outside the door of No. 35: "Two pints today, please". The direct seller will have to say, "I'm terribly sorry, but you can only have one pint, because I have nearly exceeded my quota." [Laughter.] I am sorry that Government Members make light of the matter. Whatever may happen to total milk production nationally, milk consumption in the areas where the direct sellers operate—the milk delivered to the doorstep and drunk in those households—will fall. There will be a form of backdoor rationing.

Mr. Hugh Dykes (Harrow, East)

If the hon. Gentleman is logical, he must be suggesting that someone who only wants one pint will be forced to take two and drink them, whether he likes it or not.

Mr. Corbett

I have done it again. I must stop giving way.

At the time when the Minister is inviting the House to approve the regulations, milk production is already falling. In April there was a fall of 4.2 per cent. In May, the figure was 5.5 per cent. largely because of the weather. We need only a further slip of less than 1 per cent. to achieve the total reduction in milk output which the regulations are designed to achieve.

What sort of contribution does the Minister believe the regulations will make to the much vaunted Food from Britain campaign? We face the certain prospect of less British butter being eaten because less of it will be made. The Milk Marketing Board decided not to sell any more butter into intervention from 1 July, and that is without the half-witted scheme that we are debating. Butter production in the United Kingdom is already on the decline, and the predicted decline in 1984–85 is 32,000 tonnes. The regulations are likely to force down the level of production even further and, presumably, to open the door to costly imports.

The regulations make no mention of the details of the outgoers scheme. Again, the Government have picked on tenant farmers. They have taken away their rights of succession and the farmers will now be left in uncertainty about their position within the quota system. The scheme makes no provision for redundant dairymen, herdsmen or creamery workers. Redundant cows can attract a cash payment from the taxpayer, but those people who are made redundant in the dairy industry cannot. Where is the justice in that? Many dairymen have given a lifetime of skill, experience and care to their herds and they will have to stand by and see the cows collect while they receive only the minimum statutory provision. No other group of workers would be expected to put up with that treatment, and it is a disgrace that the Minister expects farm workers to tolerate it.

Several Hon. Members

rose——

Mr. Deputy Speaker (Mr. Paul Dean)

Order. Before I call the next hon. Member to contribute to the debate I remind the House that less than two hours remain for this important debate. More than 20 hon. Members wish to speak and I appeal for a series of short, crisp speeches.

1.7 am

Sir Peter Mills (Torridge and Devon, West)

This is another difficult debate on the thorny problem of milk production and how to deal with the surpluses, but once again certain things must be said from the start. First, we must accept that certain things cannot be changed. One is that we are stuck with the quota system, which is something I dislike strongly.

Mr. Dykes

Change it.

Sir Peter Mills

If only some of those who shout from a sedentary position understood the subject, it would be much easier for us all.

Secondly, we must accept that my right hon. Friend the Minister of Agriculture, Fisheries and Food has to deal with the Commission and with other Agriculture Ministers. We may gain something for Britain in discussions with them, but that might open the door for further production in other countries. The situation in France is a good example of that.

Thirdly, whatever we say about quotas, the system and the regulations, it will be difficult to adapt the regulations to make them fair for each individual farm. There will be rough justice and I think that that must be accepted.

Fourthly, some of my right hon. and hon. Friends, some Labour Members and some farmers do not accept that we have a surplus and that something must be done if we are to cut back. If we do not cut back, the end price for the farmer will be considerably reduced as funds become depleted in the Community.

Against that background, I believe that my right hon. Friend has introduced changes which we can welcome. I congratulate him on making changes within the area in which he can manoeuvre. He has listened to the House, and I thank him for that. In view of those changes I am prepared to support, and to recommend my colleagues to support, the Government, but much more needs to be done, and I do not accept that these regulations are the end of the story or that we have to accept them for five years. Changes have to be made.

I hope that the Opposition, and even the few of my hon. Friends who do not support us, will support the Minister in his efforts in Brussels. I hope that the Minister will work extremely hard to get the adjustments that are needed.

Mr. Nicholas Fairbairn (Perth and Kinross)

Will my hon. Friend give way?

Sir Peter Mills

With great respect, I do not want to give way, because others want to speak. I shall be as brief as I can.

I welcome the attempt to help the exceptional hardship cases. Whatever people say, there will be some very real hardship cases and they will have to be dealt with. I hope that the Minister will bend over backwards to help in those difficult cases.

I believe that further adjustments will have to be made for the producer-retailers. I agree with the view that the position in which they find themselves is totally unfair. It is also wrong in principle. If ever there was a group of dairy farmers whom we need to encourage it is the producer-retailers, because the milk is going down the throats of the consumers and that is the end of it, unlike butter, which is put into intervention and stored. The Community must sort out that problem and there must be more flexibility.

One of the most difficult problems with which the Government have had to deal is the weather and how that should be—[Interruption.] This is a serious debate and it is very stupid of some hon. Members to laugh. The weather is crucial to hundreds of farmers who are affected by it. It affects their allocations and their quota. I can well understand——

Mr. Fairbairn

Will my hon. Friend give way?

Sir Peter Mills

I can well understand the farmers' difficulty, but I believe that the Government, in their approach to the quota problem, have just about got it right. [Interruption.] I believe that the first 10 per cent. of production can be sifted or left on one side, and that 15 per cent is about right. Most farmers expect, in the average working year, to have production at either plus 10 per cent. or minus 10 per cent. That is part of their job and part of the risk they take.

If we allow too much quota to be given to people because of the weather problem, what is to happen to all the others — to those on the farm and horticultural development schemes, for example? It must not be forgotten that there is a ceiling, and we cannot bump that ceiling. We have a ceiling nationally and in no way can we forget those who are on the various expansion schemes. Many of them will be in real trouble because of the amount of money they have borrowed and put into their businesses. Now they have been cut off and cannot achieve the increased production for which they had planned.

I ask those who are concerned about the weather issue not to think only of themselves. There are many others in other categories who need some extra milk quota. I repeat that I believe that the Government have got it about right.

With regard to timing and delay, I do not accept the argument that we have to deal with the problem as quickly as possible. It is far better to get the right solution than to get the wrong one. That is why I have been urging my right hon. Friend to try to delay things until we can get the regulations and quotas right. I was surprised at the most unhelpful article in the Financial Times today. It even raised the old hat about when the Minister went to Wales and the treatment that he had there, as if that was the most important thing. Those financial journalists could have written about a host of other problems that we have at the moment rather than raising that old hat.

I do not subscribe to the view that we must get on with the task at a tremendous speed. It is far better to get it right. No farmer has yet suffered any penalty, and at the rate things are going I cannot see that happening for some time. The Minister must try to get it right and make even further adjustments. Not one deduction from a dairy farmer in Britain should be made before Europe has got its schemes going. I do not want to see any penalty for any farmer in Britain until all the quotas are worked out. Every farmer must know exactly where he stands before the penalties start, and we must insist upon that.

The problem of the tenant farmer and the landlord is difficult and there has been no solution so far. However, the possibility of a solution can be found through what the CLA has suggested—that is to have a leasing system. That should be explored carefully and I hope that the Minister will do so. I am not prepared to see many of my small tenant farmers not able to take the outgoing scheme because the landlord refuses to allow it. Something should be done and some scheme must be found.

I am not a tax expert. I find is difficult to understand even the reply that was given to a written question today and what the Minister has said. We need far more details on how taxation will work out for each farmer and what it means. We must find a way in which virtually no tax is taken from a dairy farmer if he uses the outgoers scheme.

One could go on for much longer, but the Minister has gone a long way towards dealing with the various problems that we raised. In the interests of the farming community, I urge that we pass the regulations tonight.

1.18 am

Mr. Robert Maclennan (Caithness and Sutherland)

The hon. Member for Torridge and Devon, West (Sir P. Mills) never leaves the House in any doubt of his willingness at all costs loyally to support whichever Minister of Agriculture, Fisheries and Food his party puts forward. Some of us in the debate tonight consider that we have a higher duty, and that is to support the interests of the farming industry. The hon. Gentleman made few constructive contributions. Many in the agriculture industry in Britain feel with justification that the Conservative party has taken them for granted for too long and they will not be taken for granted in the future.

Mr. Patrick Nicholls (Teignbridge)

rose——

Mr. Maclennan

I shall not give way. The debate could be confined to the consideration of the modest amendments to the scheme that the Minister has made. I do not propose to follow that course, because the issues raised by the regulations go far wider than the Minister's speech.

The Government were unprepared to tackle the problem of surplus production. Indeed, far from being willing to give a lead in Europe in tackling this matter, the Minister and his predecessor, the right hon. Member for Worcester (Mr. Walker)—who bears a greater share of the blame for the current mess—encouraged our farmers to believe that they ought to go on producing. The former Minister went round the country trumpeting the success that he and the Government had achieved in boosting domestic output. On his return from Brussels, he boasted in the House of his success in increasing the institutional prices at a rate above the level of inflation. It is sheer hypocrisy for the Government to pretend to the House and the country that they have been endeavouring to produce order in the CAP.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the hon. Gentleman give way?

Mr. Maclennan

No.

Mr. Foulkes

On this point?

Mr. Maclennan

Not on any point. The Minister was so unprepared for the introduction of quotas, which he is now trying to sell to the farming community, that last summer he spoke in the House of his total opposition to the introduction of quotas. It was not until December that his tune began to change. It is plain that he went into the price-fixing negotiations with not the slightest idea of how he would tackle the problems faced by the Community.

Mr. Foulkes

Will the hon. Gentleman give way?

Mr. Maclennan

I admit that the Minister was left with an inadequate hand and that the Prime Minister had squandered the Government's negotiating capital by focusing exclusively on the British budgetary problem. However, if some forethought had been given to these issues before the price-fixing negotiations, Britain would not have had such a bad deal as that which the Minister brought back and which he has been trying so hopelessly to defend.

Mr. Foulkes

Will the hon. Gentleman give way?

Mr. Deputy Speaker

Order. It is clear that the hon. Member for Caithness and Sutherland (Mr. Maclennan) is not giving way. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) must not persist.

Mr. Foulkes

But this is a debate, is it not?

Mr. Maclennan

The Minister has told the House more than once that he did his best. Not many hon. Members would deny that, but his best is not good enough for the future of our farming industry. The right hon. Gentleman has created dismay, havoc and rural poverty where prosperity once existed. The Government have systematically misled the agricultural producers for five years and they will reap the whirlwind. [Interruption.] The noise that Conservative Members are making makes it abundantly clear that that charge is well based.

It was a bad deal for Britain, because we have had to accept an unfair share of the cuts in the total quota. It is a bad deal because the New Zealand quota is treated as part of our national quota. It is time that the British Government faced up to the fact that our farming industry cannot thrive if New Zealanders are given preferential treatment. If New Zealand dairy producers were asked to accept the cuts in production which our dairy producers are asked to accept the deal might be fair, but they have not been asked to do that.

Mr. Jim Spicer (Dorset, West)

Will the hon. Gentleman give way?

Hon. Members

Sit down.

Mr. Maclennan

The impact of the deal is not only upon those who produce milk, but upon manufacturers.

Mr. Teddy Taylor (Southend, East)

Will the hon. Gentleman give way?

Mr. Maclennan

No. Manufacturers of dairy parlours, and others who provide equipment for dairy farms, have experienced a 50 to 70 per cent. reduction in output—at least. The knock-on effect on suppliers is insufferable. The impact falls not only upon——

Mr. Jim Spicer

Give way.

Mr. Maclennan

Constant interruptions prolong the time that I shall be forced to take. The hon. Gentleman had better sit down. I do not intend to give way.

One of the purposes of the CAP was to foster——

Mr. Spicer

Give way.

Hon. Members

Sit down.

Mr. Deputy Speaker

Order. This is a serious debate and the hon. Member for Caithness and Sutherland (Mr. Maclennan) is entitled to be heard.

Mr. Maclennan

One of the purposes of the CAP is to foster the production of food in those parts of the Community most suited to it. There has never been any doubt that the grasslands of the west of England and of Wales are most suited to the production of milk. The Minister has succeeded in distorting the Community's production to ensure that those who want to transfer to the production of other commodities are driven out of business.

We need direct support for the incomes of those who, as a result of the quotas, will be driven out of production and who will not benefit from the outgoers' scheme. it is unacceptable that the only money which the Government are prepared to make available—in itself inadequate and lower compared with what is available in France and Germany—should be devoted to paying people to go out of production. Farmers need payments to keep them in production so that those who are able to switch from milk to some other agricultural activity and who are willing to take payments under the outgoers' scheme may see their quotas go to those who have no option but to produce milk.

The most unsatisfactory feature of the outgoers' scheme is that it is to be spread over a period of five years. In describing it the Minister did not make it clear whether he had met the request of many of his right hon. and hon. Friends in the earlier debate that these payments should be made tax-exempt. He said that those who would receive a payment would have the option either to have an income payment or a capital payment. What he did not make plain was whether an income payment would be subject to tax. It is my assumption that it will be. He did not say whether a capital payment would be subject to tax. he introduced this proposal in response to a question about tax which he did not answer.

In bringing forward his proposals the Minister has shown an administrative incompetence which is considerably greater than that of almost any other Department in Whitehall, and that is saying something. The president of the National Fanners Union, Sir Richard Butler, told me before this debate that he had returned from Belgium today and that the Belgian Government had already dealt with all the special cases which had been made and had completed them this week. The Minister has not even yet made it clear what the special cases will be. It is obvious that it will be many weeks, if not months, before those who are to be considered special cases know that that is so.

The degree of uncertainty that the Minister has induced by his lack of preparedness for this scheme is deeply damaging to fanning interests. It is intolerable that no British farmer affected by the introduction of these quotas yet knows what his quota is to be. It is quite scandalous that it will be many months——

Mr. Jim Spicer

rose——

Mr. Maclennan

It is scandalous that the levy may be raised on people who do not know what their quota is to be. The Minister said that it was impossible to tell them because he did not know how many people would apply under his scheme. It is astonishing that he is so tardy in comparison with every other European country affected.

Mr. Jopling

indicated dissent

Mr. Maclennan

Does the Minister deny that under the outgoers' scheme there have already been more than 20,000 applications in the Federal Republic of Germany and more than 30,000 in France? He has given a closing date of the end of August. The Minister and his colleagues have let the industry down appallingly by their failure to provide in time for the introduction of the scheme.

Three specific matters require further discussion in the debate. The first is to whom the quota should adhere. It has been made plain by the NFU and it was advocated by the Social Democratic party last summer that quotas should not only adhere to the producer but that they should be tradeable, though regulated. It is reasonable that when producers are required to give up production they should receive in return a nest egg that is realisable at a time of their own choosing.

The suggestion that the tenant farmers should not enjoy that right and that they should be subject to a veto from land owners is unacceptable, and the industry will certainly not accept it. It is astonishing that the Minister is not prepared to exercise his ministerial office to propose a scheme and bring it before the House tonight. He says that it is possible in Scotland because there is already some agreement, and I pay tribute to those in Scotland—not members of the Government—who came up with an agreement. In the absence of such an agreement, the Minister had a responsibility to make absolutely plain what is to happen and that the tenant farmer would not be deprived of his asset.

My second point of detail is of great importance, especially in Scotland. It is the question of the interchangeability of quota between wholesale and direct sales. It must be made plain to the Minister that his weasel words tonight do not deceive anyone who is looking to the Government to ensure that there will be full interchangeability of quota. The particular importance of that is clear in the Scottish context. As the hon. Member for Dumfries (Sir H. Monro) said, there have been particular problems with the introduction of compulsory pasteurisation in Scotland.

Mr. Foulkes

On a point of order, Mr. Deputy Speaker. In the interests of the House and all those hon. Members who wish to speak in this debate, is there no way at all that you can enforce your request for short contributions? Does that Social Democrat have no conscience? Do the Whips of that party have no power, or will this man be allowed to drivel on all night?

Mr. Deputy Speaker

Order. I get the impression that the hon. Member for Caithness and Sutherland (Mr. Maclennan) is drawing towards the close of his speech.

Mr. A. J. Beith (Berwick-upon-Tweed)

Further to that point of order, Mr. Deputy Speaker. In considering this matter, I hope that you will take due note of the time that the Labour party takes in this debate, despite the fact that it represents virtually none of the areas affected?

Mr. Deputy Speaker

Order. I hope that we can now get on with the debate.

Mr. Maclennan

The Minister, by his action, has deprived my farmers not only of their livelihoods but of the value of their capital assets. As a result of the introduction of quotas, dairy cows are being culled. In the Principality of Wales and the south-west, up to one fifth of the herds have already gone——

Mr. Ron Davies (Caerphilly)

What right does the hon. Gentleman have to speak for Wales?

Mr. Maclennan

The value of the cows retained has dropped by £100 per head. This will have a disastrous impact upon the rural areas of the country. The Government had better come forward with proposals to provide that direct income support that is needed to ensure the continuing prosperity of the rural areas of the country, which depend crucially upon the milk industry and which have been betrayed by the action of this Minister and his predecessor.

1.40 am

Mr. Eric Cockeram (Ludlow)

I shall seek to obey your request, Mr. Deputy Speaker, for short speeches and not follow the example of the hon. Member for Caithness and Sutherland (Mr. Maclennan).

First, I must protest at the fact that this important matter has been put down for debate at this hour. This matter concerns one of Britain's most vital industries. It will have long-term significance, and it merits more than a truncated debate in the small hours of the morning.

I have much sympathy with my right hon. Friend in the problem that he faces. Clearly, it had to be tackled, and it should have been tackled before now. The milk regime costs some £3 billion per annum, which is approximately one third of capital agricultural policy expenditure, yet at the end of it we have a surplus of some 20 per cent. of production. It is costing far too much money, the EEC is running out of funds, and it is in the interests of all farmers, including those who are not in the milk industry, that the problem be tackled. If the former regime had continued, the common agricultural policy would have run out of funds later this year and all farmers would have suffered. I hope that those farmers who are not involved in milk production will recognise that the problem concerns them, too, even though they are not milk producers.

I deal next with the solution that we are asked to endorse. It appears to be the very opposite of what the Common Market is supposed to be concerned with. The Common Market is supposed to be about competition, trade and a wider trading area, but Europe is now divided into a series of watertight compartments—or should I say milk tight compartments? Those watertight compartments within each country are further divided into quotas for farmers and farmland, and this goes right down to tenants. That is not the right way to tackle the problem of a production surplus.

The regulations, which are detailed and complex, have already produced many problems. One needs no great foresight to comment that it will not be very long before there are still more problems. There is the problem of direct sales versus wholesale sales—something which the Milk Marketing Board does not like. We have not been satisfied tonight on how that will be sorted out. There are hardship cases. How does one define them? There is the problem of ownership and of quota transfer—does it go with the land, or with the tenant? There is the problem of the levy—how is that to be paid, and when? There is the problem of enforcement, particularly across the Channel, and the general uncertainty.

It can be said that the regulations which the House is being asked to approve are a veritable hornet's nest, and over the coming years nobody will be satisfied. Farmers who apply for special quotas and are granted them will be the envy of neighbouring farmers who have applied but have not been successful. We are setting farmer against farmer. The more details and the more regulations we produce, the greater the anomalies.

Mr. Fairbairn

rose——

Mr. Cockeram

I would rather not give way. We have been asked to make brief speeches, which I think is the wish of the House.

The United Kingdom has a highly efficient farming industry and our milk sector is an example to the rest of Europe. About 75 per cent. of our herds are of 50 cows or more. Only 10 per cent. of French herds, and only 7 per cent. of German herds are of 50 or more cows. We in this country have a highly efficient milk industry and there is no reason why we should not be able to produce milk much more cheaply than it can be produced abroad.

France and other countries produce wine and other commodities for which their climate is well suited. Our climate is suited to milk production. As we have such an efficient industry, it seems to be against the principles of the Common Market that we should be asked tonight to pass regulations which, as I say, are a veritable hornet's nest. I hope that the Minister will work towards a scheme which enables competition to take place and enables us to get rid of all these regulations, which deal with what I regard as a most unsatisfactory scheme.

1.46 am

Mr. Denzil Davies (Llanelli)

If hon. Members accept the regulations, it will mean that the House is approving what was a disgraceful decision made by the Minister of Agriculture, Fisheries and Food in the Council of Ministers.

It is extraordinary that a Tory Government who are supposed to be in favour of a free market, who are against bureaucracy and who seek to allow people to compete, are introducing gobbledegook regulations setting up tribunals, arranging for flying tribunals, making judges decide whether the weather is too severe to act, and so on—all this from a Tory Government who are pledged to allow people to conduct their businesses in the way they choose.

The Prime Minister preaches thrift, hard work, enterprise and the values of entrepreneurship. There is no greater thrift, enterprise and hard work to be found than on the farms of Carmarthenshire, Cardiganshire and Pembrokeshire. The right hon. Lady preaches the virtues of the self-employed. These people are self-employed. They stand on their own feet, yet many of them are being virtually destroyed by the actions of a Tory Government pledged to uphold Victorian and other values about which the Prime Minister likes to preach.

Imagine the result if a Labour Government were in power and their Minister of Agriculture had introduced regulations such as these. He would not have done so. But, if he had, the complaints of Conservative Members would have been tremendous. Marx, Trotsky, Stalin and the kulaks would have been trotted out. We would have heard about the rule of law, natural justice and every other cliché with which we are familiar.

We had a statement this week about GCHQ. Apparently the court decided that what the Government did in that connection was contrary to the rules of natural justice. What the Minister is doing tonight and what he accepted in Brussels is clearly contrary to any of the rules of natural justice that I was brought up to respect, understand and believe in. The Tory Government are taking this action against people who have worked all their lives and have put all their savings into their communities and farms.

Where were the Welsh Office representatives when this matter was being decided? The Secretary of State for Wales has sat here silently throughout this debate. He told us in the Welsh Grand Committee that there was no need for him to go to Brussels, although he gets paid partly for being responsible for agriculture in Wales. He has not had the courage to answer one debate on this issue in the House. Why is he not answering this debate? His constituency is affected by the regulations.

The Secretary of State for Wales knows that Wales and particularly west Wales will suffer more than any other part of the United Kingdom from the regulations. Yet he has not had the courage to rise in this debate and even try to defend the Government's position. Did the right hon. Gentleman know that this decision was being taken? Did the Welsh Office make an assessment of the effects of these measures on west Wales and other parts of Wales? Was there a Cabinet Committee on the subject, or are we back in the pre-Falklands situation when Cabinet Committees are not called, and the Prime Minister simply tells the Minister of Agriculture to go to Brussels, to accept the regulations and not to use the veto? I suspect that is what happened. If the Secretary of State for Wales did not know about that, he is negligent and should resign. If he did know and accepted these regulations, he should resign, because he has failed in his duty not only to his constituents but all the people whom he represents and for whom he is responsible in Wales.

Perhaps the Tory party should try to understand what all this means. It means a massive fall in income for a large number of fairly small producers. That means that they cannot service their debts. Most of them have borrowed from the banks because they were encouraged to do so. They were encouraged with capital grants to build milking parlours and given tax allowances to invest in capital projects. They were encouraged to borrow from the Agricultural Mortgage Corporation, and they did. Now they find that not only their income but their capital assets have been substantially cut. The value of their farm, on which the mortgage is fixed, has been substantially cut. The value of their herds has been substantially cut. That is the position in which a Tory Government, who apparently are supposed to help people like them, have put hundreds of people in west Wales and other parts of the country.

The Secretary of State for Wales (Mr. Nicholas Edwards)

rose——

Mr. Davies

I am glad that the right hon. Gentleman has, for the first time——

Mr. Edwards

The right hon. Gentleman——

Mr. Davies

I have not yet give way. The Secretary of State has had his opportunities. There have been many debates in the House, and now he wishes to intervene. I shall give way to him. I am glad that at last he has got to his feet, perhaps to try to defend this shoddy deal.

Mr. Edwards

The right hon. Gentleman has described and attacked the bureaucracy. He has now attacked a fall in income. How does he propose to amend the common agricultural policy, which the former Secretary of State, the right hon. and learned Member for Aberavon (Mr. Morris), has described as an obscenity, without either some form of bureaucracy or a fall in income? What is the right hon. Gentleman's solution to the problem?

Mr. Davies

The right hon. Gentleman's intervention would be more credible if he had tried to do something about the problem. HON. MEMBERS: Answer. It would have been possible for the Minister of Agriculture, Fisheries and Food to have done as the Irish did—vetoed this deal and given the farmers of Wales and the rest of Britain three, four or five years of transitional time to enable them to adapt. They are enterprising people; they would be able to adapt. HON. MEMBERS: Answer. I have answered the question. This is not a reform of the common agricultural policy.

Mr. Jim Spicer

On a point of order, Mr. Deputy Speaker. Will you ask the right hon. Gentleman to explain in a little more detail why he claims that the Irish used their veto? They did not.

Mr. Deputy Speaker

Order. The hon. Member knows that that is not a point of order.

Mr. Davies

This is not a reform of the common agricultural policy. The most vulnerable section of the farming industry has been picked on. Why? That happened to enable the Prime Minister to get her budget deal next week or the week after, so that she could bring home the just about half a loaf that she had managed to get. That is what it is about. That is why the Minister of Agriculture, Fisheries and Food was not allowed—even if he had wanted to—to deliver the British veto. That would have upset the later Council of Ministers which was discussing the budgeting.

Why should the farmers of Britain pay a price just to save the Prime Minister's face because she has so often failed to get a proper deal on the budget? What will happen? The House will be asked in the autumn to increase the VAT contribution to 1.4 per cent. When that is done, the common agricultural policy will not change. More money will be spent until we get to the limit of 1.4 per cent. The beef farmers may well be next when the ceiling is reached in four or five years' time.

A case in my constituency shows the iniquity of the regulations. I do not believe that it was covered by the Minister of Agriculture. A farm which long ago had been a dairy farm but which was being used only for grazing, the then owners having grown old, was purchased by a gentleman in my constituency a few months before the Minister failed in his duty to use the veto and accepted the agreement. It is no use the Secretary of State for Wales sitting there smiling. He knows that this is a serious case because I have written to him about it. The purchaser bought the farm with a view to producing milk. It could not produce anything else in west Wales. Now he finds that the farm is valueless because he cannot milk cows on it. That is the enormity of what is being done by a Conservative Government who are supposed to respect the rule of law, to be concerned about property rights and to be against retrospection in legislation. The regulations take away people's rights in that way.

The unkindest cut of all, especially for Wales, was the fact that the Irish were prepared to use their veto as a last resort to protect their dairy industry while the British Minister of Agriculture was not prepared to do so because he had not the guts to do so and because the Prime Minister had made it clear that he should not do so.

Mr. Dykes

Will the right hon. Gentleman give way?

Mr. Davies

No, I cannot give way, because of the time.

The Minister of Agriculture then said that he would make sure that the French and the rest observed the regulations. Unfortunately, his writ does not extend to the Dordogne or the Auvergne and neither does that of the Commissioner in Brussels. Moreover, the French have no milk marketing board. We all know that at the end of the day the French will simply flout the regulations as they have flouted other EEC regulations in the past. There is no point in pretending that the French will abide by the regulations. We shall abide by them, of course. This is a lawful country and we believe in the rule of law, or at least we think that we do. The French, however, do not, and the British Government clearly do not believe in the rule of law either or they would not be supporting the regulations.

The Minister should withdraw the regulations, go back to Brussels and get a decent deal with a decent transitional period. That is the honourable, just and right thing to do. If he is not prepared to do that, we shall vote against the regulations.

1.58 am

Mr. Nicholas Baker (Dorset, North)

Despite the applause from the Strangers Gallery—I am used to applause when I start to speak — not one Opposition Member has advanced any constructive argument about the policy which they would have pursued, and our debate has been lacking as a result.

The imposition of quotas has been an ugly shock for the agriculture industry and its impact has been felt not just by farmers but by other businesses which depend on agriculture and by the rural community in general. As the agriculture industry does not control its own prices but is imprisoned by the common agricultural policy, we have an extra special responsibility towards it. It is thus perfectly reasonable for Conservative Ministers to argue, as Labour Ministers argued in the past, for a change in the system and to point out, having lost the argument with the EEC, that the system has encouraged an increase in agricultural production, because farmers do not under-stand that aspect, and we should appreciate why they do not. The suddenness of the imposition of quotas is like throwing a car that is being driven in forward gear into reverse. Only a supremely strong gear box will survive such treatment. Some cogs will fly off and others will break.

I shall comment briefly on the regulations. I congratulate my right hon. Friend the Minister on bringing forward the changed regulations so quickly, and I dissociate myself from the comments of the hon. Member for Caithness and Sutherland (Mr. Maclennan) about the Ministry of Agriculture, Fisheries and Food. On direct sales, I hope that my right hon. Friend will press for full interchangeability of direct and wholesale quotas.

One of the cases that concerns me most is that of the producer-retailer who, like many of that small band of farmers, is developing new markets by selling milk to people who otherwise would not buy it. He saw quotas coming, took evasive action and reduced the number of cows. He has increased his sales by that alternative method of sale. He has made a large investment to do so. I believe that he and others like him are a special case. I hope that we shall not ignore the good work of retailers in extending sales of milk.

On special cases, I am glad that the definition of base year revision claims regulations will allow some consideration of whether to allow a change in the base year. I hope that my right hon. Friend will examine the 15 per cent. figure carefully, as it will be unreasonably high according to the views that have been put to me.

I welcome the outgoers' scheme which was announced in reply to a question that I asked my right hon. Friend. It applies principally to farmers with fewer than 40 cows. The small farmers who will be especially endangered by the quota system, as I know from my own constituency experience, will be those with 65 to 70 cows, particularly those farming on land which cannot be used for any purpose other than dairying.

I hope that my right hon. Friend will put this point about taxation to our right hon. Friend the Chancellor. There is favourable treatment of permanent reductions in herds of 20 per cent. I believe that it would help owners of herds that are being reduced as a result of the imposition of quotas if a lesser reduction far that purpose received the same favourable tax treatment. I hope that my right hon. Friend will consider that matter.

On quotas generally, I welcome my right hon. Friend's determination that he will not collect levy if other EEC countries are not doing so. I, and certainly the farmers in Dorset, including those in my constituency of West Dorset, expect that quotas will be applied in the EEC and elsewhere in the United Kingdom. Failure to do so will mean that we must reconsider the scheme's application.

This whole episode raises the fundamental question whether the CAP can be changed gradually enough to allow our farmers to work within it. It was formed for purposes which another hon. Member has described, but which no longer exist.

I share the deep concern about the need to increase our own resources. I have to accept that the imposition of the quotas is necessary, although their sudden imposition has been a deep shock to the system. The alternative to the system that we are considering tonight is a national system of quotas, and if the system that we are debating is not imposed satisfactorily throughout Europe, my right hon. Friend will have to look for a national system.

The pain of quotas will be sustainable if this is the first step in the reform of the common agricultural policy, but the EEC has yet to develop the will to reform. It is political will, not financial insolvency, that must be the spur to reform. Only a gradual and sustained programme of reform will provide a framework in which our most efficient and important industry — agriculture — can survive and prosper.

2.5 am

Mr. James Nicholson (Newry and Armagh)

I am honoured to put forward the case again for Northern Ireland. I apologise, and crave the indulgence of hon. Members, for again taking them across the Irish sea. I listened with great interest to previous speakers relating the problems in their individual constituencies. I sympathise with those representing Wales, but I can tell them that theirs is not the worst hit region in the United Kingdom—Northern Ireland is.

I am more than disappointed at the draft regulations and how they will affect Northern Ireland. There is nothing in them to change our minds about what we thought in the debate on 3 July, so we on this Bench will vote against the regulations. Total lack of sympathy has been shown to the Northern Ireland dairy farmers by the Minister since April. It was bad enough to negotiate the disastrous deal for Northern Ireland in Brussels, but then the right hon. Gentleman returned and attempted to camouflage that deal as being good for Northern Ireland. However, we now know the truth. We were all misled into believing that the Northern Ireland quota was based on 1981 deliveries, but now we know that 1983 was the base year.

We further know about the 63.1 million litres that was awarded to Northern Ireland as a special allocation, because of our special circumstances, at the Brussels agreement. Some 52.3 million litres went to England and Wales and 5.4 million litres to Scotland, leaving Northern Ireland with 5.4 million litres. The figures that I have given are agreed upon by every organisation in Northern Ireland, from the Milk Marketing Board to the Ulster Farmers Union, as well as every farmer and dairy producer, and myself. I ask the Minister to confirm or deny that that is what happened. Will he further confirm that those involved in carving the quota into the regions had great difficulty in making the calculations look respectable?

I refer the Minister to some figures that were presented in an attempt to justify the situation in Northern Ireland by the noble Lord responsible for agriculture in Northern Ireland. The figures are for the percentage reduction, and applied to 1983 deliveries are as follows. England had a reduction of 6.25 per cent., Scotland had a reduction of 6.39 per cent. and Northern Ireland had a reduction of 10.35 per cent. over 1983 deliveries. Had Northern Ireland not received the 65,000 tonne special aid, what would the Government have done? Would the Northern Ireland reduction still have been 10.35 per cent? If that is so—I believe that it is—all the statements that the Minister and Prime Minister made, that Northern Ireland's special circumstances would be protected, were totally incorrect. The Minister speaks of equalising the grief throughout the United Kingdom. He must also be prepared to equalise the price. The situation is monstrous and must be examined and remedied by the Minister.

What about next year? Will Northern Ireland be placed in the same position again? The Minister has got the regulations wrong, and he would do the House a great service if he would withdraw them and make them more acceptable to the farmers not just of Northern Ireland but of the United Kingdom as a whole.

Can the Minister tell us what will happen to the farmers—there are about 2,500 of them—who are currently expanding and developing their farms in Northern Ireland through schemes embarked on in conjunction with the Department of Agriculture? They want to know very quickly whether they will be allowed to continue with that work.

In the regulations, the Minister has allowed farmers in Great Britain five weeks instead of four in which to apply for extra quota under the special case provisions. Will Northern Ireland be allowed five weeks too? If not, why not?

I listened with interest to the Minister's reply to my right hon. Friend the Member for Lagan Valley (Mr. Molyneaux). His argument does not hold water in relation to Northern Ireland. This is simply another attempt to make Northern Ireland different. The Minister should allow Northern Ireland the same five weeks as any other part of the United Kingdom. We will accept no less.

There are many points that I would like to make, and it is totally wrong that hon. Members should be restricted to a three-hour debate when so many of us wish to speak. I shall conclude by referring to another issue about which, it appears, the Minister is wrong.

In the headlines of the Belfast Telegraph yesterday, we read: Jopling not aware of milk smuggling". I wonder where the Minister has been. If he knew anything about Northern Ireland he would know that milk smuggling is rampant. People from the Irish Republic are buying milk at the back of the tanker at 40p a gallon. The Minister can tell Brussels that that is the situation.

We in Northern Ireland do not want milk smuggling to continue. We want our milk put to good use within Northern Ireland, where it can help to create employment. The Minister must realise that milk is being smuggled across the border to the Irish Republic, which has been given an extra 4.5 per cent. That milk will not count against the 4.5 per cent. It will be turned into butter and cheese and be sold in England and Wales where it will ruin more farmers.

Mr. Roy Beggs (Antrim, East)

The Minister said that this statement about smuggling is hearsay. Would he also say that the fact that 3,000 jobs are at stake in Northern Ireland — jobs which depend on milk processing and cheese making—is hearsay?

Mr. Nicholson

My hon. Friend has made an important point. I must agree with him. Any Minister who could bring such an agreement back from Brussels, for any part of the United Kingdom, is capable of anything.

I propose to be crisp and to the point. I end by repeating my earlier plea. I hope that, when he replies, the Minister will deal effectively with the problems of Northern Ireland. I hope that I shall not, as on other occasions, be told that I will be sent a letter answering my points. I am still waiting for the letter. We in Northern Ireland are more affected by the scheme than any other part of the United Kingdom. I believe that I speak on behalf of every Northern Ireland dairy farmer when making this plea: "Consider the scheme again because as it stands you are robbing us. You have stolen from us, for you have taken our quota. You did not get what you set out to negotiate for us and you may have been forced to accept less by Europe, but look at the proposals again. If you do not, you will ruin our dairy industry."

2.15 am

Mr. Robin Maxwell-Hyslop (Tiverton)

We should remind ourselves immediately of the piece of nonsense that came from the right hon. Member for Llanelli (Mr. Davies), who talked about a veto. No country had a veto, but if something is said often enough people tend to assume that it is true. There was no British veto and no Irish veto; no one had a veto because unanimous consent was not required.

I have been of the view for many years that we need a national quota system. It was nonsense to advocate, as some did, and as my right hon. Friend the Minister has done, that milk prices should be slashed instead of introducing a quota system.

Two large sections of the milk producing industry in Europe react to reduced prices by increasing output. Those who have a heavy load of debt which they must cover by interest payments can react only by increasing output so as to spread their overheads over a greater gallonage. Secondly, especially in Germany and to a lesser extent in France, there are many part-time producers who are not dependent on their income from their milk production for either their livelihood or for sustaining a reasonable standard of living. The theory that we can squeeze those people out of milk production by slashing the price is fallacious. It should not be within the realm of conjecture because we saw what happened in years gone by in Britain under the standard quantity system. Further, it is not a morally tenable proposition. The evidence is there for those who have eyes to see it and memories to retain what they have seen.

We should have introduced the quota system long before the massive Irish expansion and, to a lesser extent, French expansion took place. Unfortunately, that was not done. It was scandalous that in those circumstances the Republic of Ireland, which is to a large extent the author of the misfortune in which the Community as a whole finds itself, should have been rewarded with an extra quota. There can be no justification for that.

The balance of advantage lies in getting our quota regulations into force as quickly as possible so that farmers know where they are on their initial quotas and so that the settlement of all the appeals is brought as far forward as possible. No one can make rational decisions about running his farm until he knows what his quota will be. That is why the leadership of the NFU has asked us to pass the quota regulations.

There are a number of provisions in the regulations which I find intolerable. The first is the absence of any provision for making the compensation payments under the outgoers scheme tax-free. There has been a spurious attempt on the part of my right hon. Friend and others to represent going out of milk as not going out of farming. For many it is exactly that, because tenants cannot get another tenancy. In many cases it is written into the agreement—for example, in Devon county council's holdings — that the farm will be used for milk production. If farmers go out of milk production, their tenancy agreement is violated and it is no longer valid. To imagine that they can get another tenancy elsewhere not producing milk is to imagine what is known to be untrue.

In many cases to go out of milk production is to go out of farming, just as certainly as a steel worker, subjected to the only other EEC quota there has ever been, on steel, has to leave the steel industry. But somebody who leaves the steel industry does not have to give up his occupation except in producing steel. If a man has been in a steel rolling mill, he can roll aluminium instead of steel in another firm. If he is in a foundry the same thing applies. He does not have to sign an agreement to go out of that style of livelihood, as a milk producer does. It is not a matter of conjecture.

The outgoers scheme regulations are there in the Vote Office to be inspected. The farmer has to undertake never to produce milk again or to participate in the production of it as long as those milk regulations or their successors last. No such requirement applies to somebody driven out of the steel industry. A moulder in a steel foundry can be a moulder elsewhere in industry—if he can find a job. It can be in any other metal, non-ferrous or otherwise. Steel workers do not have to sign agreements of this kind, yet they get their redundancy or compensation money without the taxation which is to be imposed on people who receive the paltry sum of £650 over five years, not one year—it is £130 a year—for every 5,000 litres of quota. That is quite intolerable.

It is quite intolerable that there should be double the maximum summary penalty for fraud under this scheme in England as compared with Northern Ireland. I know that in Northern Ireland there is a limit of £1,000 on what can be imposed as a summary penalty, but there is no requirement that we should have a higher penalty in England. I have drawn this to my right hon. Friend's attention and he has done nothing about it; he has left it as it is.

Nothing has been done by my right hon. Friend to deal with the question of the tenant farmers under the outgoers scheme. He has just said, "Let the CLA and the NFU get together and work it out," but he knows perfectly well that they have not worked it out. It is his job as Minister, not their job, to make the regulations, whether they be for milk quota or for the outgoers scheme. What it means—we all know it—is that tenants will not be able to get their landlord's consent because of the value that will be knocked off the capital value of the farm; therefore they will not be able to benefit from the outgoers scheme. They will be completely trapped in many cases having just negotiated new three-year rent agreements before 1 April, only to find that they cannot now generate the cash flow to meet the increased rent because of the quota system.

If my right hon. Friend says that he has just made provision—may I have his attention, please? If my right hon. Friend says that he has just—if the Whip on duty would be good enough to allow the Minister to listen to the debate I would be much obliged. [Interruption.] It is no good my right hon. Friend saying that the regulations laid tonight make an additional provision—which they do—that quota can be brought up to the 1983 level rather than the 1981 level, for those whose output is not more than 200,000 litres a year, if, owing to weather conditions in 1983, their output in 1983 was lower than it was in 1981. Using anything bought by the outgoers scheme to bring it up to 1983 when 1983 is lower than 1981 in many cases to be found in Devon, and I do not doubt elsewhere, is no help at all.

Those are the problems that have not yet been grasped by my right hon. Friend, and which should have been grasped by him before he land the regulations before the House, which can only accept or reject them: it cannot amend them. They should have got it right before they were laid on the Table. That is why I shall not be able to support them.

2.25 am

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

First, I remind the alliance that I am a Labour Member and represent a rural constituency, and there will be a lot more of us here soon. When the hon. Member for Caithness and Sutherland (Mr. Maclennan) was apportioning blame to those who encouraged farmers to increase their production, he forgot someone. He forgot the former President of the Commission, now the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). If farmers think that they can look to the Social Democratic party for a rosy future they can think again.

Along with my hon. Friends the Members for Cunninghame, South (Mr. Lambie) and for Kilmarnock and Loudoun (Mr. McKelvey) and the hon. Member for Cunninghame, North (Mr. Come) I attended a meeting of the Ayrshire executive of the National Farmers Union last Friday. It asked me to put a number of questions to the Minister and I hope, like the hon. Member for Newry and Armagh (Mr. Nicholson), that he will answer them when he replies.

First, we know that in Scotland the tenants now, by a voluntary agreement, has to have a declaration from the landlord to be able to sell. What happens, as other hon. Members have asked, if the landlord refuses to allow a tenant to enter the outgoers scheme?

Secondly, the NFU asked about the transferability of quotas. There is great concern in Scotland that there will be a black market in quotas and that they will go to the highest bidder. As Scotland is being treated as one area, it is feared that there will be a movement from the relatively poor west of Scotland to the relatively rich east of Scotland. What will the Government do about that?

The Minister said earlier that if other member states do not adhere to their quotas he will watch developments closely. Then he said that there will be a report in September. What will he do if the report in September says that countries have not adhered to their quotas? What sanction or control will there be?

Unlike the hon. Member for Caithness and Sutherland, I shall be brief and observe your request, Mr. Deputy Speaker. What will happen about producer-retailers? They do a damn good job. We have not had a proper answer from the Minister about what special attention will be given to producer-retailers.

Finally, the farmers of Ayrshire, like the farmers of Wales and Northern Ireland, are fed up. They believe that the Minister has sold them out and that the French have got such a good deal out of it while we have had such a bad deal. They are shocked, ashamed and disgusted and next time many of them, thank goodness, will be voting Labour.

Mr. Deputy Speaker

Before I call the hon. Member for City of Durham (Mr. Hughes) I should inform the House that if there are any further disturbances in the Strangers Gallery I shall feel obliged to order the Gallery to be cleared and to suspend the sitting while that is happening. I should be most reluctant to take such action.

2.29 am

Mr. Mark Hughes (City of Durham)

The debate has demonstrated that this procedure is a most unsatisfactory way of dealing with a formidable change brought to the British dairy industry—the most important change since the war.

For 40 years our farmers, particularly the dairy farmers, have been encouraged to increase their production. They have received grants and assistance and advice on how to do that. Suddenly, that process is reversed. It was originally proposed that we would have only one and a half hours to debate the regulations, which cannot be amended. No doubt the Government are legally in order in using the European Communities Act to introduce the scheme, but they would have been better advised to do so by primary legislation, which would have been given a Second Reading and examined in detail in Committee.

There are many faults in the scheme. I doubt whether any hon. Member in any part of the House could not find some aspects that he would want to amend. No one believes that they are right. Even the hon. Member for Torridge and Devon, West (Sir P. Mills) said that he did not think that these were the final regulations and that the Government would have to come back to the House time and again to get them right. It would have been better to have this major change incorporated in primary legislation, with a Second Reading and an effective Committee stage during which hon. Members could have got the regulations right and reflected the points that constituents have put to them. Instead, we were to be allowed only one and a half hours, though it was subsequently extended to three hours.

It is an insult to the dairy industry that the debate should take place between midnight and 3 o'clock in the morning. No one in the industry can believe that our minds are at their clearest at this hour.

The regulations provide that if an entrant is to qualify, milk must have been in production on a holding on 2 April this year. My right hon. Friend the Member for Llanelli (Mr. Davies) mentioned a case that illustrated some of the problems that will arise, and I wish to draw attention to the difficulties faced by the Royal Society for the Protection of Birds which, after much consultation, bought a couple of farms on the island of Islay and turned them into a bird reserve.

In order to manage the farms as a bird reserve, the RSPB had to have dairy cows. The previous tenant was a dairy farmer, but he had moved out of milk production. The RSPB was urged to reintroduce dairy production on those holdings. It has no quota and nothing in the regulations would enable it to get a quota.

The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay)

I am happy to respond to the hon. Gentleman. The previous tenant had a quota. That is his quota, even though he has left the farms and they have been bought by the RSPB. The society has been rather dilatory in deciding whether it wishes to continue in dairying. Now that it has decided to continue, it can negotiate with the previous tenant who has a quota which is transferable.

Mr. Hughes

I am grateful to the hon. Gentleman, because he brings out the fact that there will be a market in quotas. The previous tenant can hawk his quota round to anybody. There is no security for the RSPB and if its holdings do not produce milk, the creamery on Islay will cease to be viable. If that happens, what will the other farmers on the island do with their milk?

The Under-Secretary seems to suggest that the RSPB should have done something about that in April, but it was told about the regulations only 10 days ago. How could it have done something in April when it found out about the regulations only 10 days ago? That is an absurd suggestion.

I noted that the Minister said that only a person moving into a farm after the regulations come into force can apply for an allocation de novo. What is the position of those who moved in on 1 April or on any subsequent day? If they moved in any time after 2 April they are in no man's land. If a person moves in after the regulations are approved he has a claim, but if he moves in after 2 April and before the regulations come into effect he will never have a claim.

The outgoers' scheme is unsatisfactory as drafted. I shall not repeat the arguments in today's debate, but I plead with the Minister to realise that if the regulations come into force—for argument's sake—this weekend, within five weeks the farmer must sign an undertaking to give up his entire dairy quota. That time-scale is unreasonable. Surely the Minister will not stick to the five-week stipulation. I hope that he can assure us that the scheme is ongoing and that farmers can use it for some time to come.

We could go on at length about the details and the points of importance involving Irish and Welsh interests, but the main thrust is that the scheme is bad, hook, line and sinker. The whole deal is bad. It forces upon hard-working farmers a fall in income, the prospect of loss of income and loss of capital which they cannot recoup. After years of Governments advising them to increase production, suddenly, at far too short notice, they are required to accept this woeful scheme.

I believe that a stern price policy would have brought costs down, by as much as the right hon. Member for Worcester (Mr. Walker) increased costs when he was Minister for Agriculture, Fisheries and Food and there was a structural surplus.

The dairy farmers believe, with justification, that they were sold down the river for a deal on the budget rebate. That belief is widely held. I trust that my right hon. and hon. Friends will vote against this bad deal, which is unamendable and unacceptable.

2.38 am

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor)

I shall follow the lead of my right hon. Friend the Minister and the hon. Member for Aberdeen, North (Mr. Hughes) in not going over again the many general points about the quota scheme made in other debates and in the full debate that we had on 3 July. However, the background to the quota scheme is important. I take up what my hon. Friends the Members for Torridge and Devon, West (Sir P. Mills) and for Ludlow (Mr. Cockeram) said about something positive being done to deal with the cost of disposing of the surpluses. If we had not done that no cheques would have been paid to any farmers for any purpose from September this year onwards. The debates in the House would have been very much more critical of us if we had not taken the action in March to avoid that position happening from September.

My hon. Friend the Member for Ludlow made it clear that the cost last year of some £3,000 million to dispose of the dairy surplus was one third of the total cost of the CAP and one fifth of the total cost of the Community. If we had not taken the action on quotas in March, according to current Commission estimates the cost of the dairy surplus for this year would be well over £4,000 million. That would be very difficult to justify as a sensible use of the Community's resources. I remind the hon. Member for Aberdeen, North that he has constantly criticised the cost of the CAP and said that it should be brought down and constantly complained about the cost of the surpluses. I noted carefully that the hon. Member for City of Durham (Mr. Hughes) said that he would have acted on price in a more severe way than the 12 per cent. alternative that we are discussing. Whatever action was taken, we had to face these costs and had to do something. That is a very important starting point for this debate.

Mr. Robert Hughes

The agreement reached earlier this year is not bringing down the cost of the CAP. What is more, we were told only yesterday or the day before that, unless more money was provided to the EEC, payments to farmers would stop in September.

Mr. MacGregor

The budget is being discussed in Brussels at the moment in the Budget Council. But the matter relevant to this debate is that had we not taken the action on quotas, we would have had to face costs of another £1,000 million to dispose of a dairy surplus which could not be justified in terms of a sensible use of economic resources. Had we not done that, that is what we should be facing.

Mr. Nicholas Winterton (Macclesfield)

Bearing in mind that the Prime Minister said when she opened the Royal Agricultural Show in 1981 that in the previous 25 years agriculture had increased production, saving the country £1.5 billion in imports, and that there was still room for a lot more production, how does my hon. Friend square that with what he has just said to the hon. Member for Aberdeen, North (Mr. Hughes)? I speak as one who is totally and implacably opposed to this package.

Mr. MacGregor

I was well aware of my hon. Friend's position on this, and I gave way to him to enable him to make it clear once again. I yield to no one in my admiration of what our farmers have achieved over the last 25 years and their balance of payments achievements for us, but that has nothing to do with the fact that since 1981 we have seen big increases in dairy production. We are now more than self-sufficient. We see the huge surpluses in the Community, and this matter has to be tackled.

I have been asked many questions. I shall not be able to respond to all of them, but I shall endeavour to write to those hon. Members who raised specific points if I have not the time to deal with them. I hope that the House will allow me to try to answer as many of them as I can without interruption.

The hon. Members for Aberdeen, North and for city of Durham asked about the time limit on the outgoers scheme. There is a problem here. Obviously we want to get the scheme going as quickly as possible, and get the quotas released from the scheme so that we can reallocate them to all those cases that we have discussed. The sooner that we can achieve that, the better for the dairy producers who remain. We believe that five weeks is sufficient, because many dairy farmers will have been thinking about their position in recent weeks. But we have allowed some flexibility in the regulations if it should prove necessary.

The hon. Member for Aberdeen, North referred to weather difficulties and asked me to justify the 15 per cent. Although we asked for comments on this in the debate on 3 July, not many hon. Members commented on it, so we did a trawl of as many opinions as we could following that debate, which perhaps explains why this regulation was tabled rather later than the first one. As my hon. Friend the Member for Devon, West pointed out, the problem is that, if we had allowed too low a filter through which to go on the weather point, it would have been up to panels and tribunals to decide how they wanted to define a serious natural disaster. If it had been too low, the expanders—who have put their money up front—might have had no additional quota allocation. Therefore, it is right to define "serious natural disaster" at about 15 per cent. We have consulted many of my hon. Friends on this point, and I believe that that figure is about right.

The purpose of paragraph 6(2) of schedule 2 is to cover the position where the Milk Marketing Board has allocated a quota to a producer not knowing that he has given up some of the land that he was farming on 2 April 1984. The producer who took over the land might have a valid claim to a share of the quota. It is entirely reasonable to provide for both parties to be notified when the position arises, and for them to be given the opportunity to reach an agreement or to go to arbitration. There is nothing sinister in all that—it is a sensible arrangemet for ensuring fairness. The hon. Gentleman asked that there should be widespread consultation on the regulations. I assure him that there has been intensive consultation, both before and after April.

My hon. Friend the Member for Clwyd, South-West (Mr. Harvey) called for a transition period — a point made in our previous debates. I shall repeat the point that I made then. We have allowed for a transitional period of 1 million tonnes, which must be paid for by the additional co-responsibility levy. That was done at the request of much of our farming industry. My hon. Friend was right to say that we could have had a longer transitional period if the whole problem of the costs of disposing of the dairy surplus had been tackled earlier. Alas, from the figure I have already quoted, he will note the enormous financial problems facing the Community. Frankly, that is why the transitional period had to be so short.

My hon. Friend said that we have a clear duty to small farmers, and I agree with him. I am sure that he will welcome the relief for the small producer that we are introducing in the outgoers scheme. Many farmers still have not taken fully on board that one of the main objectives of the outgoers scheme is to release quota, rather than to help people getting out, so that we can put the small producers back to their 1983 position.

The changes that my right hon. Friend has secured after many months of hard negotiation on the extension of the less-favoured areas, bring benefits to some 9,000 small producers in Wales alone. I am sure that he will welcome that and recognise the efforts that have been made to assist the small farmers.

The hon. member for Birmingham, Erdington (Mr. Corbett) must concede that we do not drink all the milk that we produce in this country, and therein lies our problem. He said that more milk is drunk in this country. I ask him to reflect on the fact that in our intervention stores—both in butter where we have about 180 to 190 days supply, and in skimmed milk powder where we have more than 620 days supply — is evidence that we are contributing considerably to the cost of disposing of the surplus. The problem is that we may not have been as successful in the past in marketing to the market a lot of the manufactured milk products to which the other half of our milk production goes. If he reflects on that point, he will see that we are contributing considerably to the problems that the Community faces.

The hon. Member asked also about doorstep delivery, and for an assurance about supplies of liquid milk. The very fact that less than half of our total milk production goes to liquid milk consumption shows that there is a great deal of leeway. He may know that in the seasonal trough in August and September there is often a problem of regional distribution of liquid milk supplies. That has been the case in the past, and it may be the case in the future. In itself, it has not anything to do with quotas, I think.

The problem lies in the fact that a cut in production means that some of the outlets for milk that have been used in the past will be cut back. Here I am thinking of manufactured milk outlets. I am pleased, having described the contribution that we have already made to intervention stores, to note that the amount of butter and skimmed milk powder being offered for intervention has now fallen. Indeed, in June about 45,000 tonnes of butter and 8,000 tonnes of skimmed milk powder were offered, compared with 12,900 tonnes of butter and 29,000 tonnes of skimmed milk powder in June last year. That shows that quite a bit of quota operation is having its effect in the right direction, and the one that we want to achieve.

It is up to industry to decide on the priority to be given to the various outlets for milk. In practice, it gives first priority to the liquid market, and I believe that it is alarmist to suggest that there will be a shortage of drinking milk. As I said, there may be regional variations in the supply of milk. Our marketing system is well used to coping with these, and moving milk supplies to areas that need them.

I am grateful for the comments of my hon. Friend the Member for Torridge and Devon, West about the attention that we have given to all the points made in debate on 3 July. I assure the House that we spent a great deal of time poring over all the comments that were being made in that debate, and doing all that we could to meet them. My hon. Friend said that more needs to be done, and I agree. He will know that there is a review after three years of the quota system.

Even before then, I agree with him that we ought to be pursuing in the Council of Ministers and with the Commission a number of other matters. I assure him that we will do so. Among the most prominent in our minds at present of the points raised by him and others of my hon. Friends is the need for greater flexibility between wholesale and direct sales. I have much sympathy with the points made about producer — retailers and producer-processors who are, after all, serving directly the needs of a market, and not intervention. We are continuing to press for greater flexibility through this area in the Commission regulations.

In the changes put before the House, we have introduced one regulation that gives greater flexibility. I also agree with my hon. Friend that we need to pursue the matter of transfer, leasing and marketability of quotas. There are limits to what we can do in the Commission regulations, but that will be our endeavour in the coming months.

My hon. Friend referred again to the exceptional hardship cases, the point that he raised so much in the last debate. I am sure that he will be pleased to see the new amendment put into the regulations to meet this point. My right hon. Friend explained that he was enormously sympathetic to this group. On the point about implementation in other countries, we explained in the debate on 3 July that we had already raised this point in one Council of Ministers meeting. Earlier this week in the latest Council meeting, as my right hon. Friend said, we again made clear that we believe that it is said, we again made clear that we believe that it is essential that all member states are implementing the arrangements together and effectively.

It will be impossible to defend imposing the levy on producers in some member states in the autumn if it is evident that in other member states the measures are not ready for full implementation. That is why my right hon. Friend secured this pledge of a full report on progress from the commission at the next Council of Ministers meeting, which will be before the end of September, and will give us good time to note how well it is being implemented.

The question of tax was raised by my hon. Friends the Members for Torridge and Devon, West and for Tiverton (Mr. Maxwell-Hyslop). On the general point about whether the tax treatment of the outgoers scheme is more or less favourable than the tax treatment of redundant steelworkers and so on, I wish that I had more time in this wind-up speech to devote to the matter, because there is rather a lot to be said about tax. I am afraid that I will have to truncate my remarks somewhat.

I think that there are differences in the position of a fanner who opts for the outgoers scheme who will, after all, still be able to farm on his farm, although not in dairy. If he opts for the outgoers scheme, he will be able to turn to other farming activities if it is possible for him to do so. Where redundancy payments are made to workers who are made redundant, there is the general rule that lump sum redundancy payments have tax exemption for the first £25,000, but the balance thereafter is charged to income tax.

A particularly important point in relation to the steel workers paid under the Community and British Steel Corporation schemes is that, where the benefit is paid in the form of periodic payments, the payments are liable to tax as earned income under the normal PAYE rules. Under the outgoers scheme, we have secured the provision that the farmer has the option of being taxed either on capital gains or income tax, depending on which method under the outgoers scheme he chooses.

That is favourable tax treatment, especially when one takes into account the fact that these fanners will, of course, be giving up their herds and so will be able to take advantage of the herd basis of taxation, which means that they will pay no tax on the proceeds of their herds. Overall, that is favourable tax treatment to encourage farmers to take advantage of the outgoers scheme.

The speech of the hon. Member for Caithness and Sutherland (Mr. Maclennan) was so riddled with inaccuracies that it is difficult even to begin to comment on it. He talked about the impact on ancillary industries, and one understands that. There is always an impact in any industry when one is trying to bring supply and demand into closer balance. But I thought that it came rather rich from him, when one bears in mind that for a long time he has been calling for quotas in the dairy sector, and the same implications for some of the ancillary industries would be bound to flow from his policies. He was, therefore, shedding crocodile tears.

I had much sympathy for many of the points made by my hon. Friend the Member for Ludlow. He rightly drew attention to the need to contain the cost of disposing of the surpluses. Frankly, this was, in the end, the only way of gaining agreement in the Council of Ministers to achieve that. My hon. Friend made a number of fair points, but inevitably, in such a situation, where the overriding need was to get the costs down, we had to make certain compromises. I believe that the quota scheme was fair to Britain in its general outcome.

I come to the remarks of the hon. Member for Newry and Armagh (Mr. Nicholson) and in particular the question which he raised in the previous debate about the Northern Ireland quota share. Account was taken of the substantial increases between 1981 and 1983 in deliveries to dairies, which rose by nearly 20 per cent., as we are permitted to do under the Community regulations.

In arriving at the Northern Ireland share of the wholesale quota, that was taken into account, and the basic Northern Ireland share is 7 per cent. higher than the 1981 deliveries, or 12.5 per cent. higher taking account of the extra 65,000 tonnes. In contrast, for the United Kingdom generally, the increase over 1981 is about 2 per cent., so it is clear that there has not been unfavourable treatment. As the hon. Gentleman knows, there is favourable treatment for Northern Ireland in the outgoers scheme in that the allocation there is more than twice the United Kingdom general level.

To summarise, there are four key points before us in facing the regulations. First, restraint on costs is necessary; otherwise the costs of disposing, of the surpluses would soar beyond all economic reason, and, as a major net contributor to the CAP, we would be one of the biggest losers. Secondly, we have responded to the request of the House on all points relevant to the regulations so far as we possibly could within the EEC rules.

Thirdly, we have made our position absolutely clear on non-compliance by other member states. Fourthly, and above all, what our producers now want is to get on with knowing where they stand, to get the production quotas made firm, and to set in hand the procedures for special cases, exceptional hardship and the outgoers scheme. That is what the hon. Member for Aberdeen, North meant when he talked about uncertainty. That is why the NFU and the CLA have made the remarks that they have in their briefs to hon. Members. The NFU says: It is hoped that Parliament will approve the regulations without delay. The CLA says that it supports the passage of this Statutory Instrument through Parliament. We agree. We want——

It being three hours after the commencement of proceedings on the Motion, MR. DEPUTY SPEAKER put the Question thereon pursuant to the Order [17 July].

The House divided: Ayes 284, Noes 160.

Division No. 415]	[2.59 am
AYES
Adley, Robert	Brandon-Bravo, Martin
Alexander, Richard	Bright, Graham
Amess, David	Brinton, Tim
Ancram, Michael	Brown, M. (Brigg & Cl'thpes)
Arnold, Tom	Browne, John
Ashby, David	Bruinvels, Peter
Atkins, Robert (South Ribble)	Buchanan-Smith, Rt Hon A.
Atkinson, David (B'm'th E)	Bulmer, Esmond
Baker, Rt Hon K. (Mole Vall'y)	Burt, Alistair
Baker, Nicholas (N Dorset)	Butcher, John
Baldry, Tony	Butterfill, John
Banks, Robert (Harrogate)	Carlisle, John (N Luton)
Batiste, Spencer	Carlisle, Kenneth (Lincoln)
Beaumont-Dark, Anthony	Carttiss, Michael
Bendall, Vivian	Cash, William
Benyon, William	Channon, Rt Hon Paul
Best, Keith	Chapman, Sydney
Biffen, Rt Hon John	Chope, Christopher
Biggs-Davison, Sir John	Clark, Hon A. (Plym'th S'n)
Blaker, Rt Hon Sir Peter	Clark, Dr Michael (Rochford)
Bonsor, Sir Nicholas	Clark, Sir W. (Croydon S)
Bottomley, Peter	Clarke, Rt Hon K. (Rushcliffe)
Bottomley, Mrs Virginia	Colvin, Michael
Bowden, A. (Brighton K'to'n)	Cope, John
Bowden, Gerald (Dulwich)	Cormack, Patrick
Boyson, Dr Rhodes	Corrie, John

Couchman, James	Knowles, Michael
Cranborne, Viscount	Knox, David
Crouch, David	Lamont, Norman
Currie, Mrs Edwina	Lang, Ian
Dicks, Terry	Latham, Michael
Dorrell, Stephen	Lawler, Geoffrey
Douglas-Hamilton, Lord J.	Lawrence, Ivan
Dover, Den	Lee, John (Pendle)
Durant, Tony	Leigh, Edward (Gainsbor'gh)
Dykes, Hugh	Lennox-Boyd, Hon Mark
Edwards, Rt Hon N. (P'broke)	Lewis, Sir Kenneth (Stamf'd)
Eggar, Tim	Lightbown, David
Emery, Sir Peter	Lilley, Peter
Evennett, David	Lloyd, Peter, (Fareham)
Fairbairn, Nicholas	Lord, Michael
Farr, Sir John	Luce, Richard
Favell, Anthony	McCrindle, Robert
Fenner, Mrs Peggy	McCurley, Mrs Anna
Finsberg, Sir Geoffrey	Macfarlane, Neil
Fletcher, Alexander	MacGregor, John
Forman, Nigel	MacKay, Andrew (Berkshire)
Forsyth, Michael (Stirling)	MacKay, John (Argyll & Bute)
Forth, Eric	McNair-Wilson, P. (New F'st)
Fox, Marcus	Madel, David
Franks, Cecil	Major, John
Fraser, Peter (Angus East)	Malins, Humfrey
Freeman, Roger	Malone, Gerald
Gale, Roger	Maples, John
Galley, Roy	Marland, Paul
Gardiner, George (Reigate)	Mates, Michael
Garel-Jones, Tristan	Maude, Hon Francis
Glyn, Dr Alan	Mawhinney, Dr Brian
Goodhart, Sir Philip	Mayhew, Sir Patrick
Goodlad, Alastair	Mellor, David
Gorst, John	Meyer, Sir Anthony
Gow, Ian	Miller, Hal (B'grove)
Gower, Sir Raymond	Mills, lain (Meriden)
Grant, Sir Anthony	Mills, Sir Peter (West Devon)
Greenway, Harry	Miscampbell, Norman
Gregory, Conal	Mitchell, David (NW Hants)
Griffiths, Peter (Portsm'th N)	Moate, Roger
Grist, Ian	Monro, Sir Hector
Ground, Patrick	Montgomery, Fergus
Grylls, Michael	Moore, John
Hamilton, Hon A. (Epsom)	Morris, M. (N'hampton, S)
Hanley, Jeremy	Morrison, Hon C. (Devizes)
Hannam, John	Morrison, Hon P. (Chester)
Harris, David	Mudd, David
Haselhurst, Alan	Murphy, Christopher
Hawkins, C. (High Peak)	Neale, Gerrard
Hawkins, Sir Paul (SW N'folk)	Needham, Richard
Hayes, J.	Nelson, Anthony
Hayward, Robert	Neubert, Michael
Heathcoat-Amory, David	Nicholls, Patrick
Heddle, John	Norris, Steven
Hickmet, Richard	Onslow, Cranley
Hicks, Robert	Ottaway, Richard
Higgins, Rt Hon Terence L.	Page, Sir John (Harrow W)
Hind, Kenneth	Page, Richard (Herts SW)
Hirst, Michael	Parris, Matthew
Hogg, Hon Douglas (Gr'th'm)	Patten, Christopher (Bath)
Holland, Sir Philip (Gedling)	Patten, John (Oxford)
Holt, Richard	Pattie, Geoffrey
Hooson, Tom	Pawsey, James
Howard, Michael	Percival, Rt Hon Sir Ian
Howarth, Alan (Stratf'd-on-A)	Porter, Barry
Howarth, Gerald (Cannock)	Powell, William (Corby)
Hubbard-Miles, Peter	Powley, John
Hunt, David (Wirral)	Prentice, Rt Hon Reg
Hunt, John (Ravensbourne)	Raffan, Keith
Hurd, Rt Hon Douglas	Rathbone, Tim
Jessel, Toby	Rees, Rt Hon Peter (Dover)
Johnson Smith, Sir Geoffrey	Renton, Tim
Jones, Robert W Herts)	Rhodes James, Robert
Jopling, Rt Hon Michael	Rhys Williams, Sir Brandon
Kershaw, Sir Anthony	Ridsdale, Sir Julian
King, Roger (B'ham N'field)	Roberts, Wyn (Conwy)
King, Rt Hon Tom	Robinson, Mark (N'port W)
Knight, Gregory (Derby N)	Roe, Mrs Marion
Knight, Mrs Jill (Edgbaston)	Rossi, Sir Hugh

Rowe, Andrew	Thompson, Patrick (N'ich N)
Rumbold, Mrs Angela	Thorne, Neil (Ilford S)
Ryder, Richard	Thornton, Malcolm
Sackville, Hon Thomas	Thurnham, Peter
Sainsbury, Hon Timothy	Townend, John (Bridlington)
Sayeed, Jonathan	Townsend, Cyril D. (B'heath)
Scott, Nicholas	Tracey, Richard
Shaw, Giles (Pudsey)	Trippier, David
Shaw, Sir Michael (Scarb')	Trotter, Neville
Shelton, William (Streatham)	Twinn, Dr Ian
Shepherd, Colin (Hereford)	van Straubenzee, Sir W.
Shersby, Michael	Vaughan, Sir Gerard
Silvester, Fred	Viggers, Peter
Sims, Roger	Waddington, David
Skeet, T. H. H.	Wakeham, Rt Hon John
Smith, Sir Dudley (Warwick)	Walden, George
Smith, Tim (Beaconsfield)	Wall, Sir Patrick
Soames, Hon Nicholas	Waller, Gary
Spencer, Derek	Ward, John
Spicer, Jim (W Dorset)	Wardle, C. (Bexhill)
Spicer, Michael (S Worcs)	Warren, Kenneth
Squire, Robin	Watson, John
Stanbrook, Ivor	Watts, John
Stanley, John	Wells, Bowen (Hertford)
Steen, Anthony	Wells, Sir John (Maidstone)
Stern, Michael	Wheeler, John
Stevens, Lewis (Nuneaton)	Whitfield, John
Stevens, Martin (Fulham)	Whitney, Raymond
Stewart, Allan (Eastwood)	Wiggin, Jerry
Stewart, Andrew (Sherwood)	Wolfson, Mark
Stokes, John	Wood, Timothy
Stradling Thomas, J.	Woodcock, Michael
Sumberg, David	Yeo, Tim
Tapsell, Peter	Younger, Rt Hon George
Taylor, John (Solihull)
Taylor, Teddy (S'end E)	Tellers for the Ayes:
Thomas, Rt Hon Peter	Mr. Robert Boscawen and Mr. Carol Mather.
Thompson, Donald (Calder V)

NOES
Adams, Allen (Paisley N)	Dewar, Donald
Anderson, Donald	Dixon, Donald
Archer, Rt Hon Peter	Dobson, Frank
Ashdown, Paddy	Dormand, Jack
Atkinson, N. (Tottenham)	Dubs, Alfred
Barron, Kevin	Dunwoody, Hon Mrs G.
Beckett, Mrs Margaret	Eadie, Alex
Beggs, Roy	Eastham, Ken
Beith, A. J.	Ellis, Raymond
Bennett, A. (Dent'n & Red'sh)	Evans, John (St. Helens N)
Bermingham, Gerald	Ewing, Harry
Blair, Anthony	Fatchett, Derek
Boyes, Roland	Faulds, Andrew
Bray, Dr Jeremy	Fields, T. (L'pool Broad Gn)
Brown, N. (N'c'tle-u-Tyne E)	Fisher, Mark
Brown, R. (N'c'tle-u-Tyne N)	Forrester, John
Bruce, Malcolm	Forsythe, Clifford (S Antrim)
Caborn, Richard	Foster, Derek
Callaghan, Jim (Heyw'd & M)	Foulkes, George
Campbell-Savours, Dale	Fraser, J. (Norwood)
Carlile, Alexander (Montg'y)	Freeson, Rt Hon Reginald
Cartwright, John	George, Bruce
Clark, Dr David (S Shields)	Godman, Dr Norman
Clarke, Thomas	Golding, John
Clay, Robert	Gould, Bryan
Clwyd, Mrs Ann	Hamilton, James (M'well N)
Cocks, Rt Hon M. (Bristol S.)	Hamilton, W. W. (Central Fife)
Coleman, Donald	Hancock, Mr. Michael
Conlan, Bernard	Hardy, Peter
Cook, Robin F. (Livingston)	Hogg, N. (C'nauld & Kilsyth)
Corbett, Robin	Holland, Stuart (Vauxhall)
Corbyn, Jeremy	Howells, Geraint
Cowans, Harry	Hoyle, Douglas
Cox, Thomas (Tooting)	Hughes, Dr. Mark (Durham)
Crowther, Stan	Hughes, Robert (Aberdeen N)
Cunliffe, Lawrence	Hughes, Roy (Newport East)
Davies, Rt Hon Denzil (L'lli)	Hughes, Sean (Knowsley S)
Davies, Ronald (Caerphilly)	Hughes, Simon (Southwark)
Davis, Terry (B'ham, H'ge H'l)	John, Brynmor
Deakins, Eric	Jones, Barry (Alyn & Deeside)

Kaufman, Rt Hon Gerald	Penhaligon, David
Kennedy, Charles	Pike, Peter
Kilfedder, James A.	Powell, Rt Hon J. E. (S Down)
Kirkwood, Archy	Powell, Raymond (Ogmore)
Lamond, James	Prescott, John
Leadbitter, Ted	Randall, Stuart
Lewis, Ron (Carlisle)	Redmond, M.
Lewis, Terence (Worsley)	Robertson, George
Litherland, Robert	Robinson, P. (Belfast E)
Lloyd, Tony (Stretford)	Ross, Stephen (Isle of Wight)
Lofthouse, Geoffrey	Ross, Wm. (Londonderry)
McCartney, Hugh	Rowlands, Ted
McCrea, Rev William	Sedgemore, Brian
McDonald, Dr Oonagh	Sheerman, Barry
McKelvey, William	Shore, Rt Hon Peter
Maclennan, Robert	Short, Ms Clare (Ladywood)
McNamara, Kevin	Smith, C.(Isl'ton S & F'bury)
McTaggart, Robert	Smith, Rt Hon J. (M'kl'ds E)
McWilliam, John	Smyth, Rev W. M. (Belfast S)
Madden, Max	Snape, Peter
Maginnis, Ken	Soley, Clive
Marek, Dr John	Spearing, Nigel
Marshall, David (Shettleston)	Strang, Gavin
Maxton, John	Straw, Jack
Maynard, Miss Joan	Thomas, Dafydd (Merioneth)
Meacher, Michael	Thomas, Dr R. (Carmarthen)
Meadowcroft, Michael	Thompson, J. (Wansbeck)
Michie, William	Wallace, James
Mikardo, Ian	Wardell, Gareth (Gower)
Millan, Rt Hon Bruce	Wareing, Robert
Miller, Dr M. S. (E Kilbride)	Welsh, Michael
Mitchell, Austin (G't Grimsby)	Wigley, Dafydd
Molyneaux, Rt Hon James	Williams, Rt Hon A.
Morris, Rt Hon J. (Aberavon)	Winnick, David
Nellist, David	Winterton, Mrs Ann
Nicholson, J.	Winterton, Nicholas
O'Brien, William	Woodall, Alec
O'Neill, Martin	Young, David (Bolton SE)
Owen, Rt Hon Dr David
Park, George	Tellers for the Noes:
Patchett, Terry	Mr. Frank Haynes and Mr. Allen McKay.
Pavitt, Laurie

Question accordingly agreed to.

Resolved That the draft Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations 1984, Which were laid before this House on 16th July, be approved.

Motion made, That the draft Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations 1984, which were laid before this House on 16th July, be approved.—[Mr.Jopling]

Question put forthwith, pursuant to the Order [17 July]:—

The House divided: Ayes 269, Noes 149.

Division No. 416]	[3.11 am
AYES
Alexander, Richard	Bowden, A. (Brighton K'to'n)
Amess, David	Bowden, Gerald (Dulwich)
Ancram, Michael	Boyson, Dr Rhodes
Arnold, Tom	Brandon-Bravo, Martin
Ashby, David	Bright, Graham
Atkinson, David (B'm'th E)	Brinton, Tim
Baker, Rt Hon K. (Mole Vall'y)	Browne, John
Baker, Nicholas (N Dorset)	Bruinvels, Peter
Baldry, Tony	Buchanan-Smith, Rt Hon A.
Banks, Robert (Harrogate)	Bulmer, Esmond
Batiste, Spencer	Burt, Alistair
Beaumont-Dark, Anthony	Butcher, John
Bendall, Vivian	Butterfill, John
Best, Keith	Carlisle, John (N Luton)
Biffen, Rt Hon John	Carlisle, Kenneth (Lincoln)
Biggs-Davison, Sir John	Carttiss, Michael
Blaker, Rt Hon Sir Peter	Cash, William
Bonsor, Sir Nicholas	Channon, Rt Hon Paul
Bottomley, Peter	Chapman, Sydney
Bottomley, Mrs Virginia	Chope, Christopher

Clark, Hon A. (Plym'th S'n)	Knight, Gregory (Derby N)
Clark, Sir W. (Croydon S)	Knight, Mrs Jill (Edgbaston)
Clarke, Rt Hon K. (Rushcliffe)	Knox, David
Colvin, Michael	Lamont, Norman
Cope, John	Lang, Ian
Corrie, John	Latham, Michael
Couchman, James	Lawler, Geoffrey
Cranborne, Viscount	Lawrence, Ivan
Crouch, David	Lee, John (Pendle)
Currie, Mrs Edwina	Leigh, Edward (Gainsbor'gh)
Dorrell, Stephen	Lennox-Boyd, Hon Mark
Douglas-Hamilton, Lord J.	Lewis, Sir Kenneth (Stamf'd)
Durant, Tony	Lightbown, David
Dykes, Hugh	Lilley, Peter
Edwards, Rt Hon N. (P'broke)	Lloyd, Peter, (Fareham)
Eggar, Tim	Lord, Michael
Emery, Sir Peter	Luce, Richard
Evennett, David	McCrindle, Robert
Fairbairn, Nicholas	McCurley, Mrs Anna
Farr, Sir John	Macfarlane, Neil
Favell, Anthony	MacGregor, John
Fenner, Mrs Peggy	MacKay, Andrew (Berkshire)
Finsberg, Sir Geoffrey	MacKay, John (Argyll & Bute)
Fletcher, Alexander	McNair-Wilson, P. (New F'st)
Forman, Nigel	Madel, David
Forsyth, Michael (Stirling)	Major, John
Forth, Eric	Malins, Humfrey
Fox, Marcus	Malone, Gerald
Franks, Cecil	Maples, John
Fraser, Peter (Angus East)	Marland, Paul
Freeman, Roger	Mates, Michael
Gale, Roger	Maude, Hon Francis
Galley, Roy	Mawhinney, Dr Brian
Gardiner, George (Reigate)	Mayhew, Sir Patrick
Garel-Jones, Tristan	Mellor, David
Glyn, Dr Alan	Meyer, Sir Anthony
Goodhart, Sir Philip	Miller, Hal (B'grove)
Goodlad, Alastair	Mills, Iain (Meriden)
Gorst, John	Mills, Sir Peter (West Devon)
Gow, Ian	Miscampbell, Norman
Gower, Sir Raymond	Mitchell, David (NW Hants)
Grant, Sir Anthony	Monro, Sir Hector
Greenway, Harry	Montgomery, Fergus
Gregory, Conal	Moore, John
Griffiths, Peter (Portsm'th N)	Morris, M. (N'hampton, S)
Grist, Ian	Morrison, Hon C. (Devizes)
Ground, Patrick	Morrison, Hon P. (Chester)
Grylls, Michael	Murphy, Christopher
Hamilton, Hon A. (Epsom)	Neale, Gerrard
Hanley, Jeremy	Needham, Richard
Hannam, John	Nelson, Anthony
Harris, David	Neubert, Michael
Haselhurst, Alan	Nicholls, Patrick
Hawkins, C. (High Peak)	Norris, Steven
Hawkins, Sir Paul (SW N'folk)	Onslow, Cranley
Hayes, J.	Ottaway, Richard
Hayward, Robert	Page, Sir John (Harrow W)
Heathcoat-Amory, David	Page, Richard (Herts SW)
Heddle, John	Parris, Matthew
Hicks, Robert	Patten, Christopher (Bath)
Higgins, Rt Hon Terence L	Patten, John (Oxford)
Hind, Kenneth	Pattie, Geoffrey
Hirst, Michael	Pawsey, James
Hogg, Hon Douglas (Gr'th'm)	Percival, Rt Hon Sir Ian
Holland, Sir Philip (Gedling)	Porter, Barry
Holt, Richard	Powell, William (Corby)
Hooson, Tom	Powley, John
Howard, Michael	Prentice, Rt Hon Reg
Howarth, Alan (Stratf'd-on-A)	Raffan, Keith
Howarth, Gerald (Cannock)	Rathbone, Tim
Hubbard-Miles, Peter	flees, Rt Hon Peter (Dover)
Hunt, David (Wirral)	Renton, Tim
Hunt, John (Ravensbourne)	Rhodes James, Robert
Hurd, Rt Hon Douglas	Rhys Williams, Sir Brandon
Jessel, Toby	Ridsdale, Sir Julian
Johnson Smith, Sir Geoffrey	Roberts, Wyn (Conwy)
Jopling, Rt Hon Michael	Robinson, Mark (N'port W)
Kershaw, Sir Anthony	Roe, Mrs Marion
King, Roger (B'ham N'field)	Rossi, Sir Hugh
King, Rt Hon Tom	Rowe, Andrew

Rumbold, Mrs Angela	Thorne, Neil (Ilford S)
Ryder, Richard	Thornton, Malcolm
Sackville, Hon Thomas	Thurnham, Peter
Sainsbury, Hon Timothy	Townend, John (Bridlington)
Sayeed, Jonathan	Townsend, Cyril D. (B'heath)
Scott, Nicholas	Tracey, Richard
Shaw, Giles (Pudsey)	Trippier, David
Shaw, Sir Michael (Scarb')	Trotter, Neville
Shelton, William (Streatham)	Twinn, Dr Ian
Shepherd, Colin (Hereford)	van Straubenzee, Sir W.
Shersby, Michael	Vaughan, Sir Gerard
Silvester, Fred	Viggers, Peter
Sims, Roger	Waddington, David
Skeet, T. H. H.	Wakeham, Rt Hon John
Smith, Sir Dudley (Warwick)	Walden, George
Smith, Tim (Beaconsfield)	Wall, Sir Patrick
Soames, Hon Nicholas	Waller, Gary
Spencer, Derek	Ward, John
Spicer, Jim (W Dorset)	Wardle, C. (Bexhill)
Spicer, Michael (S Worcs)	Warren, Kenneth
Squire, Robin	Watson, John
Stanbrook, Ivor	Watts, John
Stanley, John	Wells, Bowen (Hertford)
Steen, Anthony	Wells, Sir John (Maidstone)
Stern, Michael	Wheeler, John
Stevens, Lewis (Nuneaton)	Whitfield, John
Stevens, Martin (Fulham)	Whitney, Raymond
Stewart, Allan (Eastwood)	Wiggin, Jerry
Stewart, Andrew (Sherwood)	Wolfson, Mark
Stokes, John	Wood, Timothy
Stradling Thomas, J.	Woodcock, Michael
Sumberg, David	Yeo, Tim
Tapsell, Peter	Younger, Rt Hon George
Taylor, John (Solihull)
Taylor, Teddy (S'end E)	Tellers for the Ayes:
Thomas, Rt Hon Peter	Mr. Robert Boscawen and Mr. Carol Mather.
Thompson, Donald (Calder V)
Thompson, Patrick (N'ich N)

NOES
Adams, Allen (Paisley N)	Dubs, Alfred
Anderson, Donald	Dunwoody, Hon Mrs G.
Archer, Rt Hon Peter	Eadie, Alex
Ashdown, Paddy	Eastham, Ken
Barron, Kevin	Ellis, Raymond
Beckett, Mrs Margaret	Evans, John (St. Helens N)
Beggs, Roy	Ewing, Harry
Beith, A. J.	Fatchett, Derek
Bennett, A. (Dent'n & Red'sh)	Faulds, Andrew
Bermingham, Gerald	Fields, T. (L'pool Broad Gn)
Blair, Anthony	Fisher, Mark
Boyes, Roland	Forrester, John
Bray, Dr Jeremy	Forsythe, Clifford (S Antrim)
Brown, N. (N'c'tle-u-Tyne E)	Foster, Derek
Brown, R. (N'c'tle-u-Tyne N)	Foulkes, George
Bruce, Malcolm	Fraser, J. (Norwood)
Caborn, Richard	George, Bruce
Callaghan, Jim (Heyw'd & M)	Godman, Dr Norman
Campbell-Savours, Dale	Golding, John
Carlile, Alexander (Montg'y)	Gould, Bryan
Cartwright, John	Hancock, Mr. Michael
Clark, Dr David (S Shields)	Hardy, Peter
Clarke, Thomas	Hogg, N. (C'nauld & Kilsyth)
Clay, Robert	Holland, Stuart (Vauxhall)
Clwyd, Mrs Ann	Howells, Geraint
Cocks, Rt Hon M. (Bristol S.)	Hoyle, Douglas
Conlan, Bernard	Hughes, Dr. Mark (Durham)
Cook, Robin F. (Livingston)	Hughes, Robert (Aberdeen N)
Corbett, Robin	Hughes, Sean (Knowsley S)
Corbyn, Jeremy	Hughes, Simon (Southwark)
Cowans, Harry	John, Brynmor
Crowther, Stan	Jones, Barry (Alyn & Deeside)
Cunliffe, Lawrence	Kaufman, Rt Hon Gerald
Davies, Rt Hon Denzil (L'lli)	Kennedy, Charles
Davies, Ronald (Caerphilly)	Kilfedder, James A.
Davis, Terry (B'ham, H'ge H'l)	Kirkwood, Archy
Deakins, Eric	Lewis, Ron (Carlisle)
Dewar, Donald	Lewis, Terence (Worsley)
Dixon, Donald	Litherland, Robert
Dobson, Frank	Lloyd, Tony (Stretford)

Lofthouse, Geoffrey	Randall, Stuart
McCartney, Hugh	Robertson, George
McCrea, Rev William	Robinson, P. (Belfast E)
McDonald, Dr Oonagh	Ross, Stephen (Isle of Wight)
McKelvey, William	Ross, Wm. (Londonderry)
Maclennan, Robert	Rowlands, Ted
McNamara, Kevin	Sedgemore, Brian
McTaggart, Robert	Sheerman, Barry
McWilliam, John	Shore, Rt Hon Peter
Madden, Max	Short, Ms Clare (Ladywood)
Maginnis, Ken	Smith, C.(Isl'ton S & F'bury)
Marek, Dr John	Smith, Rt Hon J. (M'kl'ds E)
Marshall, David (Shettleston)	Smyth, Rev W. M. (Belfast S)
Maxton, John	Snape, Peter
Maynard, Miss Joan	Soley, Clive
Meacher, Michael	Spearing, Nigel
Meadowcroft, Michael	Strang, Gavin
Michie, William	Straw, Jack
Mikardo, Ian	Thomas, Dafydd (Merioneth)
Millan, Rt Hon Bruce	Thomas, Dr R. (Carmarthen)
Miller, Dr M. S. (E Kilbride)	Thompson, J. (Wansbeck)
Mitchell, Austin (G't Grimsby)	Wallace, James
Molyneaux, Rt Hon James	Wardell, Gareth (Gower)
Morris, Rt Hon J. (Aberavon)	Wareing, Robert
Nellist, David	Welsh, Michael
Nicholson, J.	Wigley, Dafydd
O'Brien, William	Williams, Rt Hon A.
O'Neill, Martin	Winnick, David
Owen, Rt Hon Dr David	Winterton, Mrs Ann
Park, George	Winterton, Nicholas
Patchett, Terry	Woodall, Alec
Pavitt, Laurie	Young, David (Bolton SE)
Penhaligon, David
Pike, Peter	Tellers for the Noes:
Powell, Rt Hon J. E. (S Down)	Mr. Frank Haynes and Mr. Allen McKay.
Powell, Raymond (Ogmore)
Prescott, John

Question accordingly agreed to.

cc482-3
1. BUSINESS OF THE HOUSE 268 words