HC Deb 08 July 1986 vol 101 cc267-81 10.21 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner)

I beg to move, That this House takes note of European Community Documents Nos. 6466/86, draft Regulation amending Regulations 797/85, 270/79, 1360/78 and 355/77 on agricultural structures in order to adjust agriculture to the new market situation and maintain rural areas and draft Decision amending Decision 83/641 on joint research programmes and programmes for co-ordinating agricultural research, and 7126/86, draft Regulation amending Regulations 797/85, 355/77 and 1360/78 on agricultural structures to take account of the accession of Spain; and supports the Government's view that these measures should have as a primary aim the closer alignment of agricultural production to the requirements of the market and that the measures must be both cost-effective and containable within existing expenditure ceilings. With the leave of the House, we shall tonight consider principally the package of socio-structural measures contained in European Community document 6466/86, but it will be convenient to take with it European Community document 7126/86, which extends to Spain the provisions of Council regulation 797/85.

The proposals in document 6466/86 are designed to complement the agricultural price measures agreed by the Council of Ministers at the end of April. They seek to assist farmers to adjust to price restraint but they also seek to achieve a measure of progress towards diverting agricultural land to alternative uses.

We welcome the attempt by the Commission to complement price measures with structural measures to achieve a better orientation of agricultural production within the Community in order to reduce surpluses. As the House is well aware, we have fought long and hard to try to get agricultural production in the Community into a better balance and reduce the burden of supporting surplus production.

Against that background we shall be examining very closely the consequences of the proposals for the Community budget. The Commission had estimated that the package would cost about 900 million ecu over the period to 1991. The expenditure up to 1989 would fall within the current five-year financial framework for the European agricultural guidance and guarantee fund guidance section as a whole. The Commission has stated that the present five-year framework figure would be sufficient to accommodate this expenditure.

We also welcome the Commission's recognition that environmental concerns must be given due priority in any consideration of the future direction of the common agricultural policy. That is reflected in certain of the measures proposed in the socio-structures package, notably the proposals relating to environmentally sensitive areas.

I would like now to deal in a little more detail with the substance of the package. First, under the pre-pension scheme, farmers aged 55 or over who took their holdings out of production or handed them over to young relatives would be eligible for an annual payment attracting an EAGGF contribution of 25 per cent., 50 per cent. in certain less favoured areas, to a maximum of 4,000 ecu for married farmers and 2,500 ecu for single farmers. The precise level of pre-pension payable, for a minimum of five years and a maximum of 10 years, would be left to member states to determine in the context of their own socioeconomic conditions. Where land was fallowed or put to non-agricultural use such as forestry, the pre-pension would be supplemented by an annual hectarage payment, payable, in the case of forestry, over the period of establishment. There would also be provision for agricultural workers aged 55 or over, displaced as a result of the scheme, to receive a pre-pension.

The likely effectiveness of a general age-related outgoers scheme, such as the proposed pre-pension arrangements, in reducing surplus production will need to be carefully considered, but we are worried that its effectiveness in that respect will be limited not least because it provides for succession by a younger relative. So we shall be looking for further justification for adopting the approach that the Commission has suggested.

Beneficiaries of the pre-pension scheme would also be eligible for capital grants towards the cost of adapting their holdings to non-farming functions, providing they were environmentally acceptable.

We have some reservations about that radical step. The proposal could cover such things as racecourses, golf courses and so on. There is no requirement that the owner demonstrate that the investment is sound or what benefits will accrue. That provision, therefore, needs much more examination.

As regards pensions for farm workers, we already have a well-established social security system in the United Kingdom, which includes provisions for redundancy payments and for unemployment benefit. I do not believe that an additional measure such as this is required or that it would be helpful.

It is proposed that member states may pay an annual premium to young farmers who reduce production either by farming their holding more extensively or by producing for quality rather than quantity. We shall clearly want to consider the proposal in much more detail than it has been possible to do so far. But we doubt that the proposed arrangements would provide sufficient inducement to restrain production and whether they would therefore be cost-effective. Their administration would also be extremely complex and at first sight there would appear to be major problems of enforcement.

I now refer to the proposals on environmentally sensitive areas. When regulation 797/85 was agreed in March of last year, we successfully negotiated provision for designation of environmentally sensitive areas. Then the Commission also committed itself to making further proposals to provide for EC funding of the measures, and it has now done that. However, to safeguard EC funding, more specific conditions are proposed, including a maximum payment against which reimbursement would be paid, and a requirement that payments be made annually on a hectarage basis and that each ESA agreement must run for at least five years. I can appreciate the Commission's concerns, but the proposals are disappointing. They introduce an unnecessary degree of inflexibility, which we shall seek to have removed, although obviously at this stage I cannot predict our chances of success.

The package contains a number of proposals relating to the payment of compensatory allowances in the less favoured areas. They include amendments to the framework under which hill livestock compensatory allowances are payable.

First, it is proposed to vary the present range within which HLCAs have to be paid—that is, from 20.3 to 101 ecu per livestock unit, up to a maximum of 101 ecu, or around £64, per hectare. The Commission proposed a minimum allowance of 30 ecu per livestock unit and a new maximum of 120 ecu per hectare of livestock unit in areas where the severity of the permanent natural handicap justified it. Secondly, it is proposed to increase HLCA allowances by 50 per cent. where producers undertake to improve quality or to change production to meet market needs, or significantly reduce the intensity of production for five years. Thirdly, it is proposed that the maximum allowance attracting EAGGF contributions should be set at 3,000 ecu, or around £1,900, per labour unit.

Fourthly, it is proposed that, where land goes out of agriculture under the pre-pension arrangements, HLCAs would continue to be paid for the duration of those arrangements. Fifthly, it is proposed to amend the provision relating to the afforestation of HLCA land by extending the period during which producers who afforest all or part of their HLCA land may have such land taken into account in their HLCA calculations from 15 years to 20 years.

If adopted, these proposals could have a significant effect on the existing arrangements for paying HLCAs in this country; and, in general, we can give them a cautious welcome. However, there are aspects that are not entirely clear, and in negotiations in Brussels we shall seek to secure improvements. But the proposals are framed so that member states will have a good deal of discretion on the actual implementation. Decisions on the precise nature of any changes in the HLCA arrangements as a result of the new EC proposals would be taken in the context of the review of economic conditions in the hills and uplands which we conduct each autumn. I am not, therefore, in a position at the moment to spell out the full opportunities that might be available to less favoured area producers — or to give a realistic indication of the cost implications.

It is also proposed to extend the system of compensatory allowances to other farmers in the less favoured areas, though a range of commodities would be specifically excluded from coverage. The objective of this proposal is not entirely clear. It seems to us unlikely to control surpluses and is therefore unattractive, even as an optional measure. Moreover, given that compensatory allowances are restricted to the less favoured areas, it is questionable how much scope there is for encouraging non-livestock production here in the United Kingdom.

I now turn to the measures proposed on forestry and farm woodlands. These are of course areas which will need particularly careful attention as we consider ideas for alternative uses for land now producing agricultural surpluses. The Commission has proposed certain changes to the existing provisions on farm forestry in regulation 797/85, which we have not so far implemented in the United Kingdom because we have considered our national grant schemes to be more favourable. It has also included in the pre-pension proposals provisions which could lead to the afforestation of land taken out of agriculture by those qualifying for the pre-pension. Both these sets of proposals will need careful examination. They will also require to be considered against the background of the proposals which will flow from the EC Commissions consultations on forestry, which we expect to see later this year.

The proposals on training would specifically include three areas of training within those which are eligible for EAGGF reimbursement — training in production of quality lines, in the application of production methods compatible with environmental protection and in forestry skills for farmers. The proposals are a small though welcome addition to a wider regulation covering vocational training. They would be expected only to have a minor effect in the United Kingdom if the regulation on training is implemented.

The Commission has also proposed two measures in the marketing area. They modify regulation 1360/78 on launching aid to producer groups and regulation 355/77 on grant to projects involving investment in marketing and processing. The first proposal, the extension of the life of regulation 1360/76, would apply only to Belgium and the Mediterranean regions. It therefore brings no benefit to the United Kingdom, where we have our own system of formation grants for co-operatives under the agricultural and horticultural co-operation scheme. The Government will therefore be particularly concerned about the financial implication of the proposal. There is little doubt that agricultural structures in the Mediterranean member states need improving but we would need to be satisfied about how useful the proposal is likely to be given that there has been no expenditure under it in recent years.

The second proposal on marketing would amend regulation 355/77 to enable encouragement to be given to investment in the marketing and processing of "alternative crops". The Commission has organically grown products particularly in mind. The maximum grant would be increased by five percentage points. Individual projects riot falling within an investment programme could also be aided at the basic rate. We accept that the possibility that individual projects may be aided may be useful, but may be unnecessary where member states already have investment programmes for the sectors concerned. We will be investigating the proposed higher rates of grant because there are restricted funds available for this regulation. We will need to be satisfied that they are really necessary, even though the Commission expects to contain expenditure within the existing provision.

Provisions for modifying the Community's agricultural research and development programme are included in the package. These are intended to redirect the programme to take account of recent developments affecting agriculture.

Our objectives will be to ensure that the changes proposed to the programme are justified in their own right and do not overlap with other Community initiatives in this area. We will also seek to ensure that such work is most appropriately dealt with on a Community rather than a national basis and represents value for money. We will also bear in mind that concerted action between scientists in the Community, in the form of seminars and information exchanges, can be a quicker and cheaper way of advancing scientific thinking than shared cost research. In a process of adjustment we clearly need to ensure that we have wide and rapid access to results which will be of assistance to agriculture.

In conclusion, our overall attitude towards the sociostructures package is to welcome it as an expression of the Commission's intention to assist the reorientation of agricultural production within the Community in the face of price restraint. But we are not yet convinced that it is the right way to proceed. There are elements contained in it which we support, but as I have mentioned, there are also elements which will require a great deal of further consideration. We shall also be paying particular attention to the financial implications of the package in terms of cost effectiveness. I shall listen with great attention to the view of hon. Members on the package as a whole and on its constituent parts. I can assure the House that these will be fully taken into account during the course of the discussions on the package within the Community.

Document 7126/86 amends regulation 797/85 on agricultural structures to take account of Spain's accession to the Community. It was discussed by the Council of Agriculture Ministers at the end of May and was agreed in principle, subject to the approval of the European Parliament.

The proposal stems from a statement issued by the Community on 18 April 1985 during the Spanish accession negotiations. The statement acknowledged the structural shortcomings in certain areas of Spain, and confirmed the Community's readiness to make provision for certain favourable conditions under the existing structures legislation. Although the proposal goes further than the statement, all the proposed measures are well precedented elsewhere. The measures provide for some easing of the eligibility conditions for compensatory allowances and capital grants. They also provide for a temporary increase in the maximum rate of capital grant which may be paid and for an increase in EAGGF reimbursement for aids to investments on holdings, compensatory allowances and for aids to joint investment schemes in the least favoured of the less favoured areas.

The Commission has also proposed changes to regulations 355/77 and 1360/78 to take account of Spanish accession. Under regulation 355/77, investment projects in the more disadvantaged regions of the Community receive 50 per cent. or 35 per cent. FEOGA grant rather than the usual 25 per cent. The proposal is to include Spain in the countries eligible for the higher rates of grant and to define the regions to which the rates apply. As regards regulation 1360/78, the proposal is merely to include Spain in the list of member states to which it applies. The Commission has said that the expenditure will be met from within existing financial provisions. The proposals were both agreed by the Council of Agriculture Ministers in May.

10.45 pm
Mr. John Home Robertson (East Lothian)

I was about to thank the Parliamentary Secretary for her lucid explanation of the documents, but I am not sure whether such thanks would be very convincing. I wish that the hon. Lady could have seen the expression on the faces of her officials in the Box when she undertook to give detailed consideration to all the points raised in the debate.

The term "socio-structural policy" could only have come from Brussels. However, it appears to be a first timid step in the direction of a comprehensive policy for the benefit of rural areas. The Labour party has been calling for such an approach for some time, and welcomes the fact that it may be on the agenda at last.

I must express a fundamental doubt whether the basic objectives of a rural policy can possibly be dealt with within any comprehensive European framework. The patterns of rural communities, farms and the natural environment of the countryside are subject to so many essentially local variations that it seems to us that it would be more sensible to deal with such local affairs at a national level. My hon. Friend the Member for Pontypridd (Mr. John) has repeatedly called for the repatriation of national aspects of the common agricultural policy, and any proposals for structural reform seem to be obvious candidates for national decisions and initiatives within a framework of European priorities.

What the CAP lacks in logic it makes up for in momentum. We have known for years that the system of unrestricted market support through intervention was distorting agriculture, penalising the consumer and fleecing the taxpayer, but the juggernaut is still rolling on, and this year will probably bring even more intervention stores for junk cereal surpluses that no one would want even if they could afford to buy them. The system should go bust, but it will probably not be allowed to. What we need now are policies to restrict output, encourage better types of farming and protect rural communities. My party has made a range of suggestions including disincentives for the production of surplus commodities and incentives for the production of things that we need more of, especially timber.

Such a major shift of direction will require carrot as well as stick. We have had some stick in the form of milk quotas, the co-responsibility levy and higher intervention standards. I take it that the documents before us are supposed to offer a somewhat diminutive carrot to encourage farmers to produce less of the surplus commodities and to do so in a more sensitive manner.

One cannot turn a barley baron into a fully-fledged Friend of the Earth overnight, and the Minister knows that many people in the industry are facing a culture shock. I speak not just for myself but for a number of farmers in my constituency. However, in the past, agriculture has responded spectacularly to incentives and guidance from Governments and from the Community. Just as the industry has responded to production incentives, I have no doubt that it can work within a different set of priorities in future.

The trouble is that the industry has been adrift in a sea of indecision for a number of years. The word "Jopling" has passed into the farming vocabulary as a term for prevarication, confusion and muddle. The prospect of the Minister taking over the Presidency of the Council of Agriculture Ministers at this critical stage is causing some alarm and despondency. But never mind, we have here some new ideas so it is fair enough that we should have a look at them.

The first heading that we are discussing is this so-called pre-pension scheme, which seems to be another way of saying early retirement. I welcome any initiative which could start to establish a career structure in agriculture. It would let older farmers retire and young entrants into the industry. But I question whether a pension of £2,547 a year, less than £50 a week, would be enough of an incentive to persuade many 55-year-old British farmers to retire. Indeed, it is not entirely clear to me why we should want 55-year-old farmers to retire anyway.

Mr. Andy Stewart (Sherwood)

Is not the £2,500 that is being offered as a pension about the net farm income that most farmers of 55 are receiving at the moment anyway?

Mr. Home Robertson

I rather doubt that. The average British farmer could expect a considerably higher return than that, although there have obviously been particular problems in particular sectors, of which the hon. Gentleman is as well aware as I am.

The other question which should be raised is why a beneficiary will be allowed to relinquish his farm only to a close relative. Is there not a strong case for encouraging farmers to relinquish land to some appropriate local agency, such as a county council smallholding scheme, which could let the land to a suitably qualified young person who wants to start a career in farming? We have proposed a land bank for that sort of purpose which would fit well with such a publicly funded early retirement scheme.

The other alternative in the pre-pension proposal seems downright bizarre to many of us. Article 1(c) provides for the abandonment of farms which includes simple abandonment of the land without allocation for any other utilization", although the farmer might be required to "maintain" the land, for which he would be paid £95 per hectare per year.

I would reject that idea out of hand. I doubt whether it would work. For a start, £95 per hectare would not cover the basic cost of maintaining a farm and its steading. Obviously jobs would be destroyed and the resulting rural dereliction would be fully as ugly as urban dereliction can be.

I can easily anticipate the sort of complaints about weed seeds blowing around from officially abandoned farms, and that would be the least of the problems. If the Minister will not take that from me, perhaps I may refer her to the speech made by the Minister of State, Department of the Environment, to the Oxford farming conference in January this year, if that would not be too painful. We for our part do not want to see any such abandonment of farms.

I want to raise one or two detailed points about the pre-pension proposal. The principal one is whether a landlord's consent will be required for a tenant to enter the scheme. That point should be cleared up. While I am on the general subject, may I ask how the great set-aside debate is progressing in her Department? This sounds like some kind of variation on the theme of quotas, but if it could encourage farmers to bring fallowing back into their cropping system, it could be useful from all points of view. There is a world of difference between "abandonment", as referred to in the documents, and incentives for managed fallowing, which is good husbandry and good for the environment, quite apart from its effect of reducing production.

The second point covered in the documents is the question of helping young farmers to adopt less intensive husbandry techniques. The specific question that I want to ask is why is it necessary to encourage only young farmers to adopt such methods? Surely if that is a worthwhile objective it is a worthwhile objective right across the board.

The next question that must be put is: how can it work? All of us are now supposed to be in favour of the idea of less intensive farming—it is rather like being against sin —but how precisely can the Minister define "less intensive practices" for the purposes of operating a package of incentives? I warn her that there is an underworld of agricultural consultants out there waiting to take advantage of any loopholes in any grant scheme.

The third section relates to the less-favoured areas. I am intrigued by the possibility of compensatory allowances being paid for crops and produce other than cattle and sheep. I doubt whether there is is scope for such diversification in the British upland areas, but I should be interested to know whether and how the Government propose to implement the suggestion in Britain, or whether it is entirely for the benefit of Herr Kiechle in Gennany. The Royal Society for the Protection of Birds has raised the question of the damaging effect of overstocking, which is positively encouraged by HLCAs at present. It is a fair point. Might it be better to operate the scheme on the basis of area rather than headage? The Minister said that that was possible. Will she consider the point further? I stress that the Opposition strongly support the principle of more effective assistance in less-favoured areas.

The fourth point relates to environmental grants. The Opposition welcome the principle of incentives for farming practices which enhance or protect the rural environment. The Minister acknowledged that the Government have already made a token gesture in that direction with the six environmentally sensitive areas, which are yet to be selected. Indeed, we are still waiting for the legislation to return from the House of Lords. We welcomed the initiative, but it must be greatly expanded if it is to have a significant effect. The Government have earmarked £6 million for the pilot scheme of six sites, and the proposals that we are debating tonight could provide a further 25 per cent., or £1.5 million, from European funds. Will the Minister treat that extra money as extra cash for this purpose, and take advantage of it by designating another two environmentally sensitive areas, or will the money simply follow so much European money into the maw of the Treasury? I hope that we can have a specific answer from the Minister this evening.

The Minister also mentioned afforestation. The incentives that are suggested appear to be consistent with the proposals made by my hon. Friend the Member for Pontypridd a year ago, so we support them. But I must press the Government on this issue, because we are still waiting for them to implement article 20 of the previous structures directive, which would have provided much more generous and appropriate incentives for small-scale tree-planting on farms than is available through the Forestry Commission's planting grant scheme. How long must we wait before that is implemented, let alone any fresh proposals under this directive?

The documents also deal with research and training. The draft Council regulation states: Existing agricultural training schemes should be stepped up so that farmers can receive the services they require if they are to reorient their production, apply production methods compatible with protection of the countryside and afforest agricultural areas. Amen to that.

Since the Minister of Agriculture, Fisheries and Food will be the President of the Council that considers that draft, he will have some explaining to do to his colleagues about what he has done to our agricultural advisory, research and development services in recent years and months. Only last week, the Ministry announced that it would slash another £4.1 million off the Agriculture and Food Research Council's research and development budget, and a further £2.8 million off the Agricultural Development and Advisory Service's research and development budget. We oppose that attack on ADAS, the AFRC and the Scottish agricultural colleges. We recognise the vital role of research, advice and training in such difficult times for farming, so on this occasion we must support the Commission, not the British Minister.

May I conclude on the vexed question of funding. It was originally intended that the guidance section of the common agricultral policy, which deals with structures, would account for 25 per cent. of European agricultural spending. It still accounts for less than 4 per cent. If we want the radical restructuring which the industry requires, and if we want to protect rural communities from the worst effects of that restructuring, we shall need realistic funding from the European Community and from the national Governments. Anyone who reads the publication Agra Europe will have been disturbed to see in the April edition this year the following statement: Although there was broad agreement on the content of the proposals in the Commission, discussion centred on the difficulties of financing the measure. It seems unlikely that they will be implemented this year in view of the Community's budgetary difficulties, and there is even doubt as to whether there will be enough cash available to introduce them in 1987. All this talk about a socio-structural package—I would prefer to call it a rural policy—will be so much hot air if it is not backed up by the resources that are required to make it work.

What are the prospects of getting the national back-up funding that will be necessary to make it possible to implement these proposals in Britain? Since the British Minister of Agriculture, Fisheries and Food is now going to be the President of the Council of Agricultural Ministers, will he have either the clout or the ability to persuade his colleagues to begin to shift resources away from the bottomless pit of intervention buying, and to divert appropriate funding into a more constructive, comprehensive rural policy? That is the question that has to be answered.

10.55 pm
Mr. David Harris (St. Ives)

Despite the valiant attempts of my hon. Friend the Minister to make some sense of this rather woolly document, I could not help wondering in the course of her speech what an upland farmer, say, from Bodmin moor would have thought about the start of the debate if by chance he had strayed into the Strangers' Gallery. These matters are complicated and woolly, and we all wrestle with them and wonder what they really mean.

I echo the question posed to my hon. Friend by the hon. Member for East Lothian (Mr. Home Robertson). What, for example, are the prospects of bringing in the pre-pension scheme? There is a great deal of interest among farmers on this matter. What is the attitude of Her Majesty's Government to the scheme? Are they really enthusiastic about it? Will they push it in the term of the United Kingdom presidency?

I want to concentrate on one aspect of the documents, the section dealing with compensatory allowances for less favoured areas. My hon. Friend was rather baffled when she touched on this part of the documents about the scope for extending the allowances to other types of production. So indeed was the hon. Member for East Lothian. I wonder, therefore, whether I could direct my hon. Friend's attention to a unique less favoured area in the country, the Isles of Scilly, which form the only less favoured area that is not a hill area. She will be aware that the designation of the Isles of Scilly came about some four years ago, and, as the then Member of the European Parliament for Cornwall and Plymouth, I had a small hand in winning that designation. It has meant very little to the farmers and, particularly, the growers on the Isles of Scilly simply because the animal population of the Isles of Scilly is very low. There are no upland farms. Our whole approach in this country to the less favoured areas is based on compensatory allowances for hill farmers.

My hon. Friend will know that the Isles of Scilly National Farmers Union has been pressing strongly in the intervening years to persuade the Government to institute a scheme in which designation of the islands as a less favoured area really means something to horticulture, in particular, on the islands. So far, I am afraid, the union and I have failed in our objective to persuade the Government to come forward with some such scheme. We have received a lot of sympathy from the Ministry. Indeed, the Minister's noble Friend Lord Belstead met me last year on this question. The upshot of our talks was that the Government were sympathetic, but unfortunately a suitable vehicle has not yet arrived by which the change could be made. I am wondering whether the suitable vehicle has arrived tonight in this House.

May I ask my hon. Friend the Parliamentary Secretary to examine, in particular, paragraph 2 of the document, on page 15, which refers to the possibility of an extension, and consider whether that would be a suitable vehicle for the extension of compensatory allowances to other forms of production, particularly horticulture, on the Isles of Scilly. If my hon. Friend were to do that, she would not be opening the door to a great increase in public expenditure. I have already said that the Isles of Scilly are unique. It is the only non-hill area to be designated as a less favoured area.

By happy chance, my attention was drawn to this matter today by the secretary of the Isles of Scilly branch of the National Farmers Union, Mrs. Penny Rogers, who has written to me about it. I shall be writing to my right hon. Friend the Minister of State. In the meantime, however, I should be most grateful if she would ensure that her officials looked into the matter. I shall be pressing them upon it.

11 pm

Mr. Robert Maclennan (Caithness and Sutherland)

The draft regulations are in principle exceedingly important. During the price-fixing debate that was held earlier this year some hon. Members took the view that the deal that the Government had brought home from Brussels was so bad for British farmers that only the structures package, which was considered to be complementary to the prices package, might help to retrieve the situation. Alas, the Minister has said nothing tonight to comfort those farmers whose incomes were shattered last year, partly by the appalling harvesting conditions and partly by the systematic and deliberate downward pressure that has been exerted on farmers by this Administration.

The Minister's speech will probably read better than it sounded in the House. She took the trouble to explain the provisions of the draft regulations and in some cases gave the Government's view on the principles, but her speech will convey almost nothing to the farming community about what the Government intend British farmers to derive from the package. She said nothing about money, although that is what we wished to hear about. I hope that the Minister will say more about it.

If adequately financed, this series of proposals could achieve some of the objectives that the Commission, the Government and other parties in the House support. They would redirect agricultural production to commodities that are not in surplus, encourage the diversification of land use and help to ease out of agriculture those who wish to leave the industry. These are meritorious objectives. However, when they are set against the Commission's budgetary proposals it appears that very little is likely to be achieved.

The Commission has costed this package at 896 million ecu over a period of five years. To illustrate how little this is, I reckon that there are 45 million hectares of less favoured area land in the Community. All these funds will not be directed towards the less favoured areas, but if, for the sake of argument, that sum of money were to be concentrated on the less favoured areas alone, it would work out at about £13 per hectare over the five-year period. The farmers will not hang out their flags in jubilation if the Community's proposals are implemented. They will be even less enthusiastic about the proposals because there is no price tag from the Government.

The Commission's document that the Government have put before us shows that the package is almost valueless and contains no major commitment by Governments. What the Commission says bears repeating. It says: it will only be possible to put the measures into practice from 1987 at the earliest,… the new measures will be put into effect only gradually as and when administrative and budgetary measures are taken at national level. We have heard almost nothing from the Government about what they intend to do in that respect. We cannot regard this as the end of the matter and we shall have to question the Government about the progress of their thinking.

Mr. Ivan Lawrence (Burton)

We will.

Mr. Maclennan

I am glad that the hon. and learned Member for Burton (Mr. Lawrence) shares my views on these matters. We have a long history of agreeing about many things. I should like to raise a couple of important issues of principle with the Government. Do they intend to offer any new research or advisory back-up money to assist and facilitate some of the transformations that are taking place? Will they look again at the proposals to reduce ADAS funding and to cut experimental husbandry farm schemes and expenditure on the Scottish colleges of agriculture?

It is nonsense on the one hand to produce a package for far-reaching structural change and on the other to cut the advice about how to make it work effectively. The hon. Member for East Lothian (Mr. Home Robertson) spoke about the most recent announcements of Government cuts in this field, but it is never too late to ask the Government to think again. If they are serious in wanting the kind of adaptations that the Minister spoke about, they ought to reconsider.

I notice that the proposals about hill livestock compensatory allowances call for more flexible headage payments. There is some merit in that proposal and it is one that the alliance put forward at an earlier stage. The Minister did not make it clear how the Government see these variations being made. There is a great deal to be said for local and regional determination of these varying rates, and we would like to see some movement in that direction. Regrettably, such movement is not apparent.

The weakness of the proposals is that there is no direct recognition of the potential importance of these schemes concerning the need to reduce surplus production. The proposals smack too much of tokenism. They are all worthy objectives, but the pre-pension scheme is probably set too low to offer any real inducement. As the Minister said, it is likely that, because the farm can be taken up by a close relative, people will not be taken out of agricultural production. In itself, it is a meritorious scheme and will help to provide a sensible career structure for farmers, but it does not have much to do with the central core of thinking about the agricultural problems of the Community.

Above all, this package does not recognise that the problem of massive overproduction, especially of cereals, will not be solved by taking a few marginal farmers out of cereal growing. The major problems are created by the extremely efficient, large farms whose owners have been encouraged over the years by an absurd open-ended system of price support hugely to intensify their production. None of the measures will touch these people. They will affect—or or might beneficially affect—those at the margin who are under enormous pressure because of the policy being pursued on price support. It is not a sensible way to contribute to the reduction of production on a large scale.

The Minister looked to the House for suggestions as to what might be done and I have mentioned a few points in that respect. However, a Minister in opening a debate of this kind has a duty to tell the House and the industry what the Government have in mind and not simply to come along with an open mind and describe the regulations in a generalised way, and say nothing about the money that the Government propose to put into the proposals to make them work.

I believe that the regulations represent a token of good intentions put forward by the Commission under considerable financial pressure because the budget on the Community's agricultural fund is so heavily canted towards the price regime and therefore inadequately directed towards the structural side. Although this is a step forward in that context, no one in the farming industry will believe that it will mark the difference between bankruptcy and profitability within the foreseeable future.

The impact of the proposals on farmers in this country as opposed to their impact on farmers in other countries, appears to raise the possibility that there might be discrimination here arising from the proposal to place ceilings on the payments per farm in the less-favoured areas. I hope that the Minister and those who negotiate in Brussels will pay close attention to that possibility.

In conclusion, I must state that I do not agree with the hon. Member for Pontypridd (Mr. John), who said that the structural measures of the European Community should be repatriated. We pay a lot into the Community budget in support of farming and we ought to get a lot out of it. We do not get as much out of it as we might and that is largely due to the misdirection into open-ended price support. If we tried to match consumer needs to output and supported that amount of commodities which the Community needed, there would be a substantial amount of Community money available for suitable structural schemes. However, it would never be right that the full burden of that should be borne by Brussels. The proposed proportions in the package are probably about right. However, they are far too low and we look to the Government to say at least something tonight about the order of magnitude of the amount of money that they propose to make available under these schemes over the proposed five-year period.

11.15 pm
Mrs. Fenner

Many matters have been raised and I hope that I shall be able to cover them all. The hon. Member for East Lothian (Mr. Home Robertson) raised a number of general points and I take issue with him over his remarks about penalising the consumer. We are doing all that we can—this we have done over many years— to curb surpluses in the CAP. I do not take kindly from the hon. Gentleman his comments about the consumer being penalised when I recall that food prices rose by 25.6 per cent. a year when the previous Labour Government were in power. The House will know that food prices have risen by 3.1 per cent. this year. This Government know a good deal about protecting the consumer.

The hon. Member asked about young farmers and wanted to know how the Government defined "less intensive production". As I explained in my earlier remarks, we see difficulties in administering and enforcing the proposed measures. We shall be probing the proposals in our discussions in Brussels on the package. The hon. Gentleman talked about the damaging effects of overstocking, about which the Royal Society for the Protection of Birds is concerned. We are aware of concerns about overstocking, but it is not a general problem in the United Kingdom. There are isolated examples, but United Kingdom rules provide safeguards against overstocking. We are always willing to consider new ideas on improving the rules. We shall consider extremely carefully the scope offered by the new package.

The hon. Member suggested that we should pay by area rather than by headage rates. EC rules do not allow for hectarage payments on livestock and the package does not amend that. The hon. Gentleman commented on our set-aside scheme. We are considering ideas for a voluntary set-aside scheme for cereals, which could apply Communitywide. The scheme concentrates on cereals because that is where the greatest problem lies. The Commission estimates that by 1991 grain stocks in the Community could reach 80 million tonnes if nothing is done. They now stand at 15 million tonnes.

The hon. Member asked specifically about the pre-pension scheme and landlord's consent. There is no specific requirement for a tenant to obtain his landlord's consent. The pre-pension scheme is voluntary, and if a tenant chooses to take advantage of it he must comply with the terms of his tenancy agreement. Normally that contains provisions on good husbandry, which could well preclude the abandonment of agriculture without the landlord's consent. We are well aware of the implications of the pre-pension scheme for relations between landlords and tenants. We shall want to ensure that the Commission's proposals are fair to both parties.

The hon. Member commented on the non-implementation of article 20 of the existing structures regulation on forestry. As I said earlier, the article was not implemented because our forestry grant and broadleaf woodland grant schemes are more attractive. The implementation of the article in the United Kingdom can be reconsidered in the light of the proposed amendments that are contained in the package, which are designed to make the article more attractive. That is something that can be reconsidered.

My hon. Friend the Member for St. Ives (Mr. Harris) asked, among other things, about the pre-pension scheme. We have already expressed our reservations about the pre-pension scheme proposals as we are not convinced that they will be cost-effective in reducing the surplus production. The hon. Member for Caithness and Sutherland (Mr. Maclennan) said a number of times that the Government should say exactly what we shall do, but this is an opportunity for the House to debate the issues. When we go to Brussels we shall be able to discuss the scheme and draw attention to the matters about which individual Members are concerned. As I have said, there are matters about which we, the Government, are concerned. In some instances we feel that the proposals are ambiguous or are not likely to work and will not, therefore, be cost-effective.

The hon. Member for Caithness and Sutherland said that the package will be ineffective in reducing surplus production. We tend to agree with him. That is why we are considering ideas for cereal set-aside, which we believe are designed to tackle the roots of the over-production problem.

The hon. Member for East Lothian mentioned environmentally sensitive areas. We are not very satisfied with the proposals that have been put forward, as they lack the flexibility that we would wish. For instance, they have specific conditions attached to them which we would not have found helpful in the work that we have done in connection with the Norfolk Broads. We want to see a slightly more flexible arrangement for ESAs.

Mr. Home Robertson

We are not terribly satisfied with the level of funding or the scope of the environmentally sensitive areas scheme. I should be grateful to the Minister if she would say whether the additional £1.5 million that will become available for ESAs in Britain as a result of the additional grant will be treated as extra money which could extend the scope of the scheme in the first year, or whether the money will simply be swallowed up.

Mrs. Fenner

The present schemes that are already listed for this year and which form part of the proposals in the Agriculture Bill will continue. The others will be additional. The ESAs that are being introduced are funded nationally under an article already provided.

Mr. Home Robertson

Is the amount of £ 1.5 million that is to be provided in the first year additional to the £6 million that is already budgeted?

Mrs. Fenner

Until the EC legislation is amended, the existing text of the article permitting ESAs is the law. It is under that article that the present ESAs are conducted.

This is a complicated package. We have deep reservations about many parts of it. There are many parts to which we give a cautious welcome. I hope that hon. Members will feel that they have had an opportunity tonight to discuss the matter before it is settled in Brussels.

Mr. Harris

Can my hon. Friend say that the points I raised about the isles of Scilly will be considered by her Department?

Mrs. Fenner

Yes, indeed. The point that farmers other than livestock farmers could be in receipt of hill livestock compensatory allowance is raised by the new proposals. It is a matter that we shall consider.

Question put and agreed to.

Resolved, That this House takes note of European Community Documents Nos. 6466/86, draft Regulation amending Regulations 797/85, 270/79, 1360/78 and 355/77 on agricultural structures in order to adjust agriculture to the new market situation and maintain rural areas and draft Decision amending Decision 83/641 on joint research programmes and programmes for co-ordinating agricultural research, and 7126/86, draft Regulation amending Regulations 797/85, 355/77 and 1360/78 on agricultural structures to take account of the accession of Spain; and supports the Government's view that these measures should have as a primary aim the closer alignment of agricultural production to the requirements of the market and that the measures must be both cost-effective and containable within existing expenditure ceilings.