Rural Development

HC Deb 07 December 1999 vol 340 cc701-12 3.48 pm

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown)

With permission, Madam Speaker, I am this afternoon announcing a radical redirection of support for agriculture and a significant increase in expenditure on rural development measures under the European Union rural development regulation—the second pillar of the common agricultural policy.

My decisions follow the comprehensive consultation launched in January with farming, rural, environmental and other interests over how to implement in the United Kingdom the common agricultural policy reforms then under negotiation. The Government are committed to reforming agricultural supports so that they are less distortionary and more closely reflect the public benefits that agriculture provides. We want to offer farmers constructive help to enhance and diversify their businesses in response to changing market circumstances.

The new rural development regulation, promoted under the United Kingdom presidency, provides member states with a range of measures, jointly funded with the European Union, to advance environmentally beneficial farming practices, to modernise and restructure their farming industries and to support off-farm rural development. That is an important part of the Government's rural policy, and has been developed in collaboration with the Department of the Environment, Transport and the Regions, and the environment and countryside agencies.

Our plans for the seven-year period are ambitious. For England it will mean a total of £1.6 billion in expenditure, a 60 per cent. increase over seven years. We have given priority to involving our English regional partners, and the plan will include a separate section for each region, setting out locally identified priorities. The devolved Administrations will set out their own plans for Scotland, Wales and Northern Ireland.

Four sources of revenue will cover the increased expenditure. The first source is the funding that my Department already allocates to existing schemes that will become part of the rural development regulation. Similar budgets are held in Scotland, Wales and Northern Ireland.

The second source will be the European Union's allocation of funds for the rural development regulation. The EU's initial contribution to the United Kingdom amounts to some £100 million a year. That figure disappointingly reflects the low historic level of expenditure on rural development inherited from the previous Government. I achieved, through negotiation, a 30 per cent. increase, and intend to press for a further increase for the UK when the allocations of EU rural development funding are reviewed in 2002.

The third source of funding will be the redirection, or modulation, into the RDR of a small percentage of the £1.6 billion in direct production subsidies paid to UK farmers under the CAP commodity regimes. In 2001, 2.5 per cent. of payments will be modulated; that will rise to 3 per cent. in 2002, 3.5 per cent. in 2003 and 2004, and 4.5 per cent. in 2005 and 2006. Modulation will apply at a flat rate and to all direct subsidies to farmers under the CAP. All of that money will be redirected to expenditure through the rural development regulation.

The fourth source of funding will be the full match funding by the Government of the modulated element. In other words, each £1 redirected, or modulated, to the rural development regulation will be matched by an additional £1 of new expenditure from the Government.

Together, those four sources will result in substantial extra funds for environmental benefits and farm diversification. Total expenditure on rural development will rise to £295 million for England in 2006–07, and over the whole seven-year period will be around £1.6 billion.

Expenditure plans for England have yet to be finalised and there is of course room for some flexibility. However, the House will want to know that I plan to allocate over the lifetime of the plan the following indicative amounts, starting with £1 billion for agri-environmental schemes. By 2006–07, spending on agri-environment will be double the current level. Of that £1 billion, I plan to allocate around £500 million for the countryside stewardship scheme, a scheme open across England that pays farmers to bring about environmental improvements. I plan to allocate around £140 million for organic farm conversion.

In addition, I plan to allocate £85 million for woodlands on farms, and a £22 million increase in the woodland grant scheme; more than £40 million to encourage better marketing and processing of agricultural products; around £30 million for the growing of energy crops; and more than £20 million in aid for training to improve the skills of farmers and farm workers relating to environmental land management and other aspects of diversification

I also plan to allocate around £150 million for a new rural enterprise scheme to promote rural development on and off the farm. The rural enterprise scheme will complement the new enterprise grants scheme, which was announced in July by my right hon. Friends the Deputy Prime Minister and the Secretary of State for Trade and Industry, although the rural enterprise scheme is not confined to assisted areas.

There will be a successor scheme to the hill livestock compensatory allowance to help hill farmers in less-favoured areas, and a consultation on the arrangements for the new scheme is under way. The normal annual review of hill farmer support will take place in the autumn and will include, among other factors, the impact of today's announcement.

The rural development regulation will include policy instruments to help farmers to enhance their farm businesses. The rural enterprise scheme, processing and marketing grants and aid for training will complement my Department's existing policies to promote farm diversification, and to encourage collaboration and innovation across the agri-food chain. All that will be of real help to new entrants, including young farmers, as they work to develop entrepreneurial farm businesses.

Further to this statement, I shall announce in a parliamentary answer the detail of changes to the administration of certain CAP commodity regimes resulting from Agenda 2000.

The rural development regulation represents the long-term future of public supports for farm businesses and the rural economy. It presents a significant opportunity for improvement of the rural environment and the countryside landscape. It demonstrates the Government's commitment to rural communities, and it will set the agenda for further reform of the CAP in years to come.

Mr. Tim Yeo (South Suffolk)

I thank the Minister for making his statement available to me a little while before he made it here. It presents a complex package, which I hope the House will have an early opportunity to debate.

Many of the long-term aims to which the statement refers will command widespread support, but I want to ask four questions. I want to ask about the amount of money involved, the type of scheme that will be supported, the timing of the changes, and their effects on British farmers.

First, will the Minister explain more clearly than he did in his statement exactly how much new money will be involved, as opposed to cash that is moved from one pocket to another? In September, he claimed that a package was worth half a billion pounds; on examination, it turned out to contain only £1 million of new money. Following that claim, there is some cynicism in rural communities. A farmer who filled out his IACS form—the integrated administration and control system form—on the basis that Labour Ministers use for announcing spending programmes would soon find himself in jail.

Secondly, how much of the new money to be spent under the rural development regulation will actually reach farmers? How much of the total package has been funded by cuts in payments already being made to farmers? Will the Minister guarantee that other existing spending on the countryside will not be reduced when the new measures are introduced? Will the new rural enterprise scheme be controlled by the Ministry? If not, by whom will it be controlled? What proportion of the new money can be spent on article 33 measures? Is there any guarantee that support for hill farmers will at least be maintained? How many more bureaucrats will be employed to administer these schemes?

Thirdly, although we support a move towards more environmental schemes, I should like to know why the Government think that the right time to cut production payments is when farm incomes have just suffered three years of crippling falls.

Fourthly, and finally, this package does nothing to address the crisis that is destroying British livestock farming today. It does nothing for pig farmers who are wondering whether their businesses can survive beyond Christmas. It does nothing for dairy farmers who have been hit by falling prices and by a Government who let their competitors abroad have a higher milk quota when they cannot even meet home demand. It does nothing for beef farmers whose hopes of rebuilding export markets have been undermined by one Government blunder after another. It does nothing for sheep farmers on the hills whose incomes are down to £2,000 a year, and who now face more uncertainty in regard to their support payments. Does the Minister realise that unless he acts today to help Britain's livestock farmers, few of them will be around to take part in the new schemes that he has just announced?

Mr. Brown

As usual, I thank the hon. Gentleman for his general welcome for the announcement before turning to his long list of specific complaints. I tried to help him by giving him the statement in advance, and many of his questions have been answered by the statement. I shall try to do his points justice, however.

The hon. Gentleman referred to difficulties in the livestock sector. Those difficulties stem from the BSE problems that resulted in a national tragedy. As I have said before, a little humility from the party that presided over that crisis would be welcome. The livestock sector, more than any other, stands to benefit from the measures that I have announced. Even pig farmers cannot but benefit. Although they can apply for the schemes that have been announced, they are not the recipients of the payments that are being modulated.

The hon. Gentleman asked about sums for the use of article 33—I gave those figures in my statement. He also asked about control of specific schemes. I intend to involve our regional partners in the administration of the schemes. In England, the boundaries will parallel the boundaries of the Government offices for the regions. There was detailed consultation on the measures before they were drawn together for the statement.

The hon. Gentleman asked which budgets are being cut. There is no proposal in today's statement to cut any budget. The situation is quite the reverse. I have announced new money and a significant expansion of a range of regimes. The departmental element is subject to the comprehensive spending review round, but we are submitting the whole prospectus to the European Union in good faith. It is our seven-year plan.

I totally reject what the hon. Gentleman said about the farm aid package announced earlier this year. He asked how much new money was in today's statement. For every pound modulated in England, the Treasury will provide another pound of new money from new funds specifically for this scheme. The moneys for England will be spent in England; the moneys for Scotland will be spent in Scotland; the moneys for Wales will be spent in Wales; and, the moneys for Northern Ireland will be spent in Northern Ireland. Each pound modulating on a rising profile of expenditure will be matched pound for pound.

The hon. Gentleman referred to a false prospectus and Ministers in jail. In fact, a former Cabinet Minister is in jail. Another former Minister is currently before the courts in a very entertaining libel action. A political party exists that is funded by the ambassador of a foreign Government. Recently, a candidate withdrew in disgraceful circumstances from the forthcoming election for a mayor of London. None of those individuals has anything to do with the governing party.

Mr. Hilton Dawson (Lancaster and Wyre)

I welcome absolutely everything that my right hon. Friend has said. He is clearly listening to the true voice of the countryside. Does he agree that rural parish and town councils have a crucial role to play in assessing and developing the needs of their local communities in order to produce plans that can be funded under these excellent initiatives?

Mr. Brown

That is true. I am keen to ensure that schemes and regional priorities, which will differ in different parts of the country, reflect the ambitions of individual communities, particularly the agricultural communities most closely affected. I thank my hon. Friend for his welcome for today's announcement.

Mr. Colin Breed (South-East Cornwall)

I, too, broadly welcome the proposals. Of course, the Liberal Democrats have been advocating many of them for some time. Nevertheless, we have two concerns. First, we are concerned that the administrative systems often become very bureaucratic. We would not want more civil servants operating or administering the system in Whitehall than there are farmers implementing it on the ground. The proposals need to be user friendly, openly acceptable and understandable; and the decision making will, we hope, be swift.

Secondly, we are a little surprised that there is no mention of an early retirement scheme. We applaud the Minister's view that there need to be fresh faces and fresh thinking in farming at this time. We would have liked some proposal for such a scheme. Will the Minister consider that and come back at some stage during this Session to find out whether an early retirement scheme for farmers may be possible?

Mr. Brown

What the hon. Gentleman says about the Liberal Democrat party having advocated these measures for some time is right. Previous Liberal Democrat agriculture spokesmen have advanced those arguments to me. I have given the indicative figures for the scheme spend. Of course, I hope to keep the administration as accessible as possible and the costs to a minimum.

The hon. Gentleman rightly asks about an early retirement scheme. As he and others who have followed these debates will know, I am a strong supporter of such a scheme, if we can get one to work and to be value for money. We have tried hard to shape such a scheme, but we have not succeeded. Therefore, it is not part of the package that I have announced and I cannot hold out any prospects for it, for England at any rate. It is better to say so clearly now so that there will be no expectations about such a scheme in the future, as I do not think that it will be possible.

Dr. George Turner (North-West Norfolk)

I welcome today's announcement, but will my right hon. Friend say a little more about the development of the countryside stewardship scheme? I know from experience in my constituency that the scheme is welcomed not only by the farming community but much more widely. It represents a partnership between the farming community and people who, in many cases, used to work on farms. Can he give us any hope that that type of activity will be expanded in years to come? It is particularly welcomed by tourists and everyone who can benefit from it.

Mr. Brown

I am doubling expenditure on the scheme, and that announcement will be welcome to the farming community. The scheme is oversubscribed, which demonstrates how popular it is, and it provides farm businesses with a steady and fixed income stream. They are working in partnership with the Government to provide goods that are easily defended to the electorate—the environmental benefits that we know our citizens want.

Mr. Peter Luff (Mid-Worcestershire)

Does the Minister understand—I have a sneaking suspicion that he might—that the proposals that he has announced will generally be welcomed? They are a significant step in the right direction. However, I am not sure whether they are as radical as he thought. I enter two caveats.

First, when the Minister makes his announcement, will he please try to give the information on an annual, financial year basis? It is difficult to absorb the figures. As I understand it, they run for not only the next Parliament but the one after that, so the £500 million for the countryside stewardship scheme is over seven years and amounts to about £60 million or £70 million a year. Undoubtedly, that scheme is good in principle, but—this is my second caveat—before the Minister commits large additional sums to it, I urge him to look into the bureaucracy of administering and monitoring it. I think that something like a quarter of the money that is spent on countryside stewardship goes on monitoring. Could we see more of it going into bringing more benefits for the environment and farmers?

Mr. Brown

I do not want to overburden all these excellent schemes with administrative costs and I will be taking a hard look at those. However, we must ensure that the schemes are being implemented properly and that they represent good value for money. I do not propose the expenditure of the same figure year on year. The hon. Gentleman is the Chairman of the Select Committee on Agriculture and I know that he fully understands that the European moneys effectively come on a flat profile—the same sum, with some small allowance for inflation, each year. The expenditure in my Department is profiled similarly and is, in any event, subject to the normal public spending rounds. The two new figures—the sums modulated and the match funding that accompanies the modulation—are on a rising profile. The schemes will therefore steadily expand over the period. It is my intention to publish an explanatory booklet setting all that out, with the indicative figures, so that everyone can see the rising profile of expenditure year on year.

The hon. Gentleman asked about the countryside stewardship scheme. Farmers are enthusiastic about the schemes and, as I know that he understands, they are oversubscribed. Today's statement is significant for two reasons. It provides new money in an intelligent way that supports farm businesses without coupling the payments to production and, every bit as significant, it points the way forward for reform of the CAP.

Mr. John McFall (Dumbarton)

I assure my right hon. Friend that the offer of new money will go down well with Scottish farmers. Will match funding be available to Scottish farmers and will it be ring-fenced so that it is spent entirely on agriculture?

Mr. Brown

The schemes are shaped in such a way that they are almost entirely focused on farm-based businesses. The money that will be spent in Scotland is ring-fenced for Scotland. Of course, the expenditure heads are devolved now to the Scottish Executive and the Scottish Parliament, but every pound modulated in Scotland will be matched by a further pound from the UK Exchequer. That must be welcome news for farmers in Scotland, as it will be throughout the United Kingdom.

Mr. Tom King (Bridgwater)

Is the right hon. Gentleman aware that the more he seeks to make the figures sound very big by adding together seven years of expenditure, the more I form the impression that the figures are probably not as big as he would like some of his hon. Friends to believe? In view of the catastrophic situation of so many in the farming industry, what is the right hon. Gentleman's best estimate of new money for year 1?

Mr. Brown

I intend to publish the figures rather than give an estimate. I am trying to explain to the House that the profile rises over the period as a result of the way in which modulation works. The total sums, including the modulated amounts and the match funding, represent over the period a 60 per cent. increase on what would have been spent had we not made use of modulation and match funding. The amount that we will spend at the end of the period compared with the amount at the beginning of the period represents a more than doubling of current expenditure.

Mr. Paul Marsden (Shrewsbury and Atcham)

I know that struggling farmers in Shropshire will warmly welcome the announcement. I congratulate my right hon. Friend the Minister on all his endeavours in the past few months. I welcome the new money for organic conversion. Will he reaffirm the Government's long-term commitment to improving the lot of organic farmers and making money more widely available for conversion?

Mr. Brown

I am grateful to my hon. Friend for welcoming the extra sums that we intend to spend on the organic farm conversion scheme. Although I have given the House the total figure, my hon. Friend will realise that it will cover more organic farmers as the scheme develops. As it is a conversion scheme, as farmers leave the scheme, new farmers will be able to come in so the impact will be bigger than the figures might at first sight suggest.

Rev. Ian Paisley (North Antrim)

The Minister is well aware of the state of the farming industry in Northern Ireland, and he knows that any money, especially new money, is invaluable to farming. The Minister said: The third source … will be the redirection, or modulation, into the RDR of a small percentage of £1.6 billion in direct production subsidies paid to UK farmers". Does that mean that money will immediately cease being paid to farmers who are currently receiving it? That has caused an uproar this afternoon in my country. As the Minister knows, I now have some responsibilities as Chairman of the Northern Ireland Committee on Agriculture and Rural Development. There are serious fears that the farmers who are in most need of money will have money removed from them in the short term as a result of the announcement today.

Mr. Brown

I welcome the hon. Gentleman to his new responsibilities.

I understand what the hon. Gentleman says. Every pound modulated in Northern Ireland will be spent in Northern Ireland and will be matched by an extra pound from the United Kingdom Treasury. In other words, it is impossible for farming, collectively, in the Province to lose out under the scheme. That is the crucial point. How the money is to be spent on schemes or allocated between different interests in the farm sector in Northern Ireland is now a devolved matter, in which I know that the hon. Gentleman will take a particular interest.

Mr. Peter Bradley (The Wrekin)

Has my right hon. Friend noticed the glum faces among Opposition Members, who have become used to exploiting the hardship in which farmers have recently found themselves? I very much welcome my right hon. Friend's announcement and his personal efforts—as well as those of his team—in securing greater investment from Europe. The statement and the new set of arrangements will help farmers to see beyond the immediate crisis to the future; it will give them the opportunity to take part in that future. Will my right hon. Friend pass a message to the regional development agencies about the role that they can play in rewarding and promoting entrepreneurship in the rural economy?

Mr. Brown

My hon. Friend is on to the right point. In my statement, I indicated the way forward and I want to involve the regional partners fully in what is being done. We are trying to show the way forward for rural farm businesses and to provide supports that are decoupled from production. The scheme is funded partly through modulation, but it attracts match funding from the Treasury. It is impossible for any region not to be a beneficiary of the announcement.

Mr. Peter Atkinson (Hexham)

Many Opposition Members would welcome the scheme if we could properly understand it. The difficulty is that modulation of direct grants means a cut in direct grants and a recycling of that money to other pockets. That is not new money. Will the Minister help me and Britain's farmers by telling us how much new money will go into the scheme, either in year 1 or year 7? Just give us a figure.

Mr. Brown

The sums that are being modulated rise over the period. At the end of the scheme, we estimate that the sum being spent will be £100 million in England. That will be matched by £100 million of new money. It will be a rising profile of expenditure over the period. In the final year, 2006–07, the outturn will be £295 million, which is an extremely large sum of money.

Mr. Mark Todd (South Derbyshire)

I join colleagues in welcoming the statement, but want to draw attention to the concerns that have been expressed about the delivery of the schemes. First, it is important that they should be integrated with other farm-targeted business assistance run by other Departments and also with the work of the regional development agencies.

Secondly, I share the concern that early retirement schemes have been firmly banged on the head. I am aware that several farmers in my area would welcome some way of moving out of the farm sector, and had thought that the scheme might provide a route. Thirdly, will my right hon. Friend give some indication of the balance of opinion on the means of modulation in the consultation exercise? From the parts of the process that I have seen, my impression is that there was a strong feeling that larger farmers and greater beneficiaries of aid schemes should suffer more than smaller farmers from any modulation.

Mr. Brown

In response to the consultation exercise, a numerical majority of farmers in England—I was responsible only for the consultation in England—were in favour of modulation in principle. The farming unions are cautious about modulation and have made two points to me: they want to know how the fruits of modulation will be spent and they want an assurance that the money will be spent on farm businesses, or matters of importance to such businesses. I can give the House that assurance today.

The National Farmers Union has made it very clear to me that it would consider modulation to be reasonable only if it were a lever for match funding. I can give the House the assurance that, for every pound modulated, there is another pound from the Exchequer, so this is match funding and new money.

I accept what my hon. Friend says about the early retirement scheme. I have tried very hard to make it work, but we cannot do so in a way that would represent value for money, so it is better to say, candidly, that there will be no such scheme.

Mr. Christopher Gill (Ludlow)

The Minister will be aware of the severe difficulties that livestock farmers in upland areas are facing. Will he give the House the assurance that, when his study of the hill livestock compensatory allowances is completed, whatever money it indicates as necessary for the payments of future HLCAs will not be top sliced from the money that he has spoken of this afternoon?

Mr. Brown

The enhancement of the less-favoured areas regime, which the Government have carried out for the past two years, has for each year been a stand-alone announcement as part of an aid package to help the uplands through difficult times. There is much in this package that will help the upland farmers. The LFAs—some of them, at any rate—are in some of the most outstandingly beautiful parts of the countryside. It should be possible to draw on the countryside stewardship schemes, the farm diversification programme and the other measures that I have announced today to enhance farm incomes in the less-favoured areas.

There will be an annual review of the hill livestock compensatory allowances at the end of the summer, as there is every year, except that, this year, such a review was pre-empted by my announcement of the extra £60 million—an announcement that was widely welcomed by hard-pressed hill farmers.

Mr. Derek Wyatt (Sittingbourne and Sheppey)

I thank my right hon. Friend for his statement. Having been a recent visitor to my constituency, he knows that it has 300 farms. May I ask him, in the cause of joined-up government, to consider the university for industry for the reskilling and retraining element of the rural package? As it is impossible to have a university for industry hub in a rural area, he might consider using Wye college—which has an astonishing IT background—for retraining and reskilling. The college is not in my constituency, but I have a very warm feeling for it.

Mr. Brown

I will take that as an early representation on the shape of the schemes, region by region. I want to ensure that, as far as possible, we focus the training moneys, the marketing grants and the farm enterprise scheme on young and innovative entrants to agriculture, so that we really can reshape farm businesses so that they are more market oriented and look to the future rather than back to circumstances that pertained 50 years ago.

Mr. Paul Tyler (North Cornwall)

Does the Minister accept that the failure to reverse the disastrous legacy of the previous Government has meant that there is a cumulative effect on farmers, especially livestock farmers? This week, this month, this winter, they are facing their bank managers and simply do not know whether they can survive. How quickly does the Minister estimate that his package will kick in to reverse the disastrous decline in farm incomes, especially in the less-favoured areas—and will he please tell the banks?

Mr. Brown

The modulation receipts come on stream in the year 2001–02. We shall submit our proposals to the European Union at the end of this year. Funding will continue for the existing schemes, but we anticipate a six-month pause as the old schemes are wound up and the new schemes are put in place. We hope to be able to make a start, later on next year, on the new package of measures that I have announced today.

Mr. Lindsay Hoyle (Chorley)

Obviously, the farmers of Lancashire will welcome this good news today, and I am sure that the NFU in the north-west will fully support the proposals that have been laid before the House. There is a great danger that my right hon. Friend may become the patron saint of farming if he is not careful, because he seems to be coming regularly to the Chamber with very good news which is much welcomed. As my constituency encompasses a variety of farmers, from the arable farmers on the Lancashire plain right up to the hill farmers on the moors, many farmers in my constituency will be very pleased with today's announcement.

Will my right hon. Friend reiterate for the benefit of the Opposition that there is new money for fanning and that it will go some way towards ending postcode farming grants? I am worried because my area has no objective assistance status. However, if I have understood my right hon. Friend's announcement correctly, farmers will be able to apply for new money whereas previously they were not able to do so. That will be welcome if it is true.

Mr. Brown

As for the danger that my hon. Friend alerts me to, it is not the biggest one that I face. I shall live with it.

My hon. Friend is right: this is new money to extend across the United Kingdom. Because the payments are decoupled from production—

Mr. Yeo

How much?

Mr. Brown

I have just explained that the figure will be on a rising profile. I have said that I will publish a table setting out how the profile will rise and I have said that, at the end of the period, total spend will be £295 million per year. I have tried to explain the figure in a number of different ways, but the hon. Gentleman does not seem to be able to comprehend it, but that might be because he does not want to. In any event, I can do more than say that I shall put into the public domain a table setting everything out, so that even Conservative Members can discern it.

Madam Speaker

Order. I do not look favourably upon repetition.

Mrs. Jacqui Lait (Beckenham)

Will the right hon. Gentleman's announcement about funds for diversification have any implications for the planning system? If it does, will it affect designation for areas of outstanding natural beauty or conflict with county structure plans? If so, what advice will he give to local government, or are the Government planning to take more powers unto themselves?

Mr. Brown

The hon. Lady is on to a good point. Clearly, farm diversifications that involve structural change to farm businesses, which is a perfectly good way for farm businesses to reshape and to become more market-oriented, have to be compatible with the planning system. I hope that the planning system will also shape itself to become more compatible with my ambitions for the successor scheme to the objective 5b scheme and the article 33 scheme—or the rural enterprise scheme, as it is now called.

Mr. Ian Bruce (South Dorset)

The Minister is being unduly modest about early retirements. In Dorset, farmers are taking early retirement at an enormous rate under his present policies. Will he consider carefully the effect of the over-30-months scheme on extensification of cattle? In Dorset, before BSE, many farmers in areas of outstanding natural beauty and on heath land fattened cattle for a long time without using concentrates. That was exactly the best thing to do to avoid BSE. However, unless the over-30-months scheme is relaxed, they will not be able to do that. When will the scheme be relaxed?

Mr. Brown

I accept that the hon. Gentleman is trying, in his mild-mannered way, to make a political point about the early retirement scheme. I have considered it carefully and we cannot make it work in a way that is good value for public money. It is better to say that now, so that we do not get behavioural change and so that people do not wait for a scheme that will not come on stream.

The average age of farmers in the United Kingdom is 57, which is the same as across the European Union. Behind that figure are many farmers in their early 60s who will want to think carefully about how long they will stay in farming and about the arrangements that they need to make for retirement and for their succession. That is why I have made this statement as clearly as I have today.

The hon. Gentleman asked about the future of the over-30-months scheme. As he knows, it is a very powerful public protection measure in this country and the Government are professionally advised by the Spongiform Encephalopathy Advisory Committee about it. I am awaiting advice from that committee.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

I apologise if the Minister thinks that he has already answered this question, but can I check whether the new match funding for Scotland will be in addition to the entire existing Scottish block?

Mr. Brown

The match funding is in addition to the sum modulated from the current compensation payments for price cuts. The sum across the United Kingdom is £1.6 billion. Match funding applies to the modulated amount alone; it does not apply to what is currently spent in the Scotland Office's block grant on agriculture, nor does it apply to Scotland's share of the money from the European Union.

Sir Robert Smith (West Aberdeenshire and Kincardine)

The Minister said in his statement that the review of hill livestock compensatory allowances would be made in the autumn. My calendar shows that we are in December and, thus, in the winter months—so will he tell farmers who rely on those payments when they will have a concrete idea of what to expect?

Mr. Brown

The payments are made in January, and of course this January they will be made at the enhanced rates because last autumn's review was pre-empted by my aid package. The 55 per cent. increase, which was an extra £60 million, was widely welcomed by hard-pressed hill farmers.

Mr. Michael Fabricant (Lichfield)

As I understand it, the match funding is new money from the Treasury—yes? Is it also correct that one Parliament cannot commit another Parliament? Yes. Will the Minister now say exactly how much he has negotiated from the Treasury, as he will have had to do, to provide match funding for that first year? How much in pounds sterling?

Mr. Brown

I am not sure what the question is. If the hon. Gentleman is asking me how much comes on stream in the first year of modulation, I can tell him that the year will be 2001–02 and the sum will be about £34 million.

Mr. Fabricant

Thirty-four million!

Mr. Brown

That is doubled—[Interruption.] The hon. Gentleman is trying to shout out the answers.

Madam Speaker

Order. When hon. Members have asked questions, they ought to listen to the answers.

Mr. Brown

We anticipate the fruits of modulation to be £34 million, and therefore the match funding for the United Kingdom will be £34 million. There is match funding, pound for pound, so £34 million from modulation in the first year, 2001–02, will be matched by £34 million from the Treasury. That is a profile of expenditure rising to the figures that I gave the hon. Member for South Suffolk (Mr. Yeo) earlier.