HC Deb 04 June 1998 vol 313 cc492-3
7. Mrs. Caroline Spelman (Meriden)

What assessment he has made of the impact of the level of the pound on the ancillary services in agriculture. [42728]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley)

We fully recognise and understand the concerns of those industries providing ancillary services in the agricultural sector about the recent level of the sterling exchange rate.

Mrs. Spelman

The chamber of commerce in Hereford and Worcester estimates that for every job in agriculture there are 15 in ancillary industries, so does the Minister accept that today's announcement of an increase in interest rates is a bitter blow not only for agriculture but for the wide range of industries that serve it?

Mr. Morley

There is no denying that an increase in interest rates is bad news for many sectors, particularly those involved in manufacturing and export. However, we should remember that an increase in inflation or a challenge to the strength and well-managed stewardship of the economy would be even worse news. The economy is being managed for the long term, not—as happened under the previous Administration—for the short term.

Mr. Ben Bradshaw (Exeter)

Will my hon. Friend join me in welcoming the dramatic fall in sterling since the successful launch of the euro—in stark contrast to the predictions of most Conservative Members—which has been welcomed across the whole of the agricultural industry? Does he agree that we can achieve a realistic and stable exchange rate only by being in the euro, which is why the National Farmers Union and now the Country Landowners Association support the Government's policy on the single currency?

Mr. Morley

It is true that there has been a welcome decline in the pound in recent months. In relation to Opposition Members' criticism, membership of the euro is one of the ways to stop the swings in currency exchanges which damage many sectors of industry, including agriculture. Unlike the Conservative party, we judge membership of the euro by only one criterion—whether it is in the best interests of our country and not whether or not it should be ruled out for purely ideological reasons.

Mrs. Ann Winterton (Congleton)

When agriculture is doing well, the whole rural community is doing well—which is exactly the opposite of the present situation, as there has been a 43 per cent. drop in farming incomes. Is the Minister aware of the problems facing agricultural ancillary industries—the feed merchants, the markets, the machinery merchants and the haulage industry, to name a few? What does he propose to do about them?

Mr. Morley

First, it should be remembered that two thirds of the rise in the level of the pound took place under the previous Government. Secondly, agriculture and ancillary industries have been hit—no one is denying that. However, it is worth pointing out that rural unemployment has fallen by 4 per cent. in the past year.

Mr. Dale Campbell-Savours (Workington)

Does my hon. Friend recall that interest rates were nearly 15 per cent. under the Tories? Does he also recall that when he and I spoke from the Opposition Front Bench on agriculture in the early 1990s, we saw a steady stream of farmers complaining about very high interest rates under the Tories—rates which are double those of today?

Mr. Morley

I do recall that, and I am confident that the management of the economy under the Government is in the best long-term interests of agriculture and industry in general.