§ 11 am
§ The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown)
In the early hours of yesterday morning, the European Union Agriculture Council provisionally agreed a package of reforms to the common agricultural policy. These will be passed to the Heads of Government meeting in Berlin later this month for consideration as part of the overall package of European Union reforms known as Agenda 2000.
The outcome of the Agriculture Council represents a radical change in the direction of the common agricultural policy. It is a change in direction for which the British Government have been pressing strongly, and it has been achieved despite a reluctance to reform on the part of several countries. We have, however, worked closely with like-minded member states to ensure that the case for reform is fully taken into account. The deal is a very good outcome for British consumers, for our farmers and for the environment. It is also a good deal for the European Union as a whole.
The heart of the reforms is a further shift away from supporting farmers' incomes through keeping food prices artificially high. Cereals support prices will fall by 20 per cent. in two steps. The basic price for beef will fall by 20 per cent. in three steps, and the intervention price by 25 per cent. Dairy support prices will fall by 15 per cent. in three steps, beginning in 2003. Direct payments to farmers are being increased to help compensate them for the price cuts.
These cuts in price support will help bring Europe's farming industry closer to market forces and improve farmers' responsiveness to consumer wishes. Once fully implemented, they will benefit British consumers by £1 billion a year. That is equivalent to a saving of up to £70 a year for a family of four if the effect of the price cuts feeds through fully.
The changes in direction will also benefit farmers in several important respects. The cereals price cut will enable the normal rate of compulsory set-aside to be zero as from the 2002–03 marketing year. It should also normally permit wheat exports to take place without export refunds, thereby removing the World Trade Organisation restrictions on our farmers' capacity to export. The cut in oilseeds aid will safeguard British oilseeds growers from ever-increasing penalties arising from the application of the Blair House agreement.
In the case of beef, the price cut of 20 to 25 per cent. is significant, even though it will not quite take European Union beef prices to world levels. The negotiations on the direct subsidy schemes were particularly difficult. A majority of member states whose beef is reared mainly under intensive systems wanted to correct what they perceived as a bias towards extensive grass-based systems—such as characterise much of British production—introduced in the last set of reforms in 1992.
Despite that, I was able to secure a good deal for our producers, especially those from the hills. That included an increase in the suckler cow premium to 200 ecu per cow and a 100,000 head increase in our beef special premium regional ceiling. Changes to the proposed beef extensification rules will better meet our farmers' needs as well as benefit the environment. The cut in the 627 minimum age for payment of beef special premium will help hill farmers gain access to the premium and encourage quality beef production.
The negotiations on dairy reform were also difficult. Several member states considered that the regime should not be reformed at all and others wanted to enshrine milk quotas as a fundamental element of farm support. My own view, and that of three other member states, was that dairy price support should be reduced to world levels over six years, allowing milk quotas eventually to be removed. The eventual compromise between those positions was that support prices will be cut by 15 per cent.—taking them halfway to world prices—beginning in 2003. In that year, there will be a review of the regime, with the express aim of allowing the present quota arrangements to run out after 2006. The United Kingdom will receive a very welcome increase in its milk quota of nearly 240,000 tonnes, some of which is specifically earmarked for Northern Ireland.
Clearly, I would have preferred an agreement that led automatically to the ending of milk quotas in 2006, because they impose major costs on our industry and limit its development. However, given the balance of opinion in the Council, I believe that the outcome was extremely good. I am confident that, by 2003, the balance of interests in the Council will have shifted significantly in our direction and we will be able to ensure a definite end to quotas.
A key element of the reforms is the creation of an integrated rural development policy, including agri-environment measures. This will provide the basis for a welcome shift of emphasis from production support towards environmental and rural economy measures in the future. It also provides for less-favoured areas compensation to be replaced by area payments with a more environmental focus. Furthermore, the reforms include new environmental protection requirements—[Interruption.]
§ Mr. Brown
That comment is actually very helpful.
The reforms include the new environmental protection requirements to be applied by member states where they consider it appropriate.
The proposal to impose a European Union-wide ceiling—I would have thought that Opposition Members would be particularly interested in this, as it is the point on which the Leader of Opposition decided to condemn me before the negotiations had even started—on individual farmers' direct payments created particular difficulties for the United Kingdom. It would have discriminated strongly against our farmers because of our more efficient farm structure. I am therefore extremely pleased that the proposal was removed entirely from the package. This was a very important gain for the United Kingdom and for our farmers.
The eventual deal did not provide for direct farm payments to be made degressive over time. The United Kingdom has strongly advocated the introduction of degressivity of payments as a means of bringing down the cost of the common agricultural policy over time to the benefit of taxpayers. That would put us in a stronger position before the start of the next World Trade 628 Organisation round and it would help with our ambitions for European Union enlargement. It would also enable a further transfer of funds to rural development measures to take place.
However, despite pressure from several member states—notably the United Kingdom and France—the Commission refused to put degressivity on the table as a proposal. This meant that the Council could have introduced degressivity to the package only if it had acted unanimously. A majority of Ministers in the Agriculture Council were strongly opposed to the introduction of degressivity. My right hon. Friends will therefore be pursuing this issue, and the question of co-financing common agricultural policy payments, in other EU Councils following the guidance on budget stabilisation given on 26 February by Heads of Government at Petersberg. Heads of Government will be considering the package as a whole in Berlin later this month.
I believe the Agriculture Council has constructed a very good set of reforms that will bring substantial benefits to the United Kingdom and to the European Union as a whole. It is not the end of the reform road for the common agricultural policy. In particular, further consideration will have to be given to the financing arrangements. However, a major and most welcome step forward has been taken.
§ Mr. Yeo
I welcome the Minister back to the House. I hope that he has had a chance to recover from a gruelling negotiation, and I hope that his civil servants will be able to get his papers in order for his next contribution. I also thank the Minister for his courtesy in making the statement available to me about 15 minutes before he delivered it.
However, despite his optimistic tone and rather extravagant claims, is it not the case that this deal is simply "not satisfactory"? In case the Minister does not agree with that statement, may I point out that those were the words of the Prime Minister's spokesman, which were quoted in The Times this morning?
Has the deal not failed to reform the common agricultural policy as promised? Will the Minister confirm that the cost of the CAP to the taxpayer will now rise even further than originally feared? Will the original and very modest aim of getting the total cost of the CAP back down to present levels by 2006 now be met?
Will the right hon. Gentleman confirm that consumers will not benefit from this deal, because there will be no fall in food prices for many years? Are not his claims today of a windfall for consumers hopelessly premature? Will it not be at least seven years before the package is fully implemented, thus meeting the conditions that he says are necessary to get prices down at all?
Does the Minister recognise that his failure to secure an immediate increase in milk quota leaves Britain in the absurd position of importing much of its dairy produce, while British dairy farmers are still prevented from increasing their output? Is that not rather a humiliating retreat after all the tough talking of a few weeks ago? Is not a four-year wait for an increase in Britain's milk quota far too long? What are the prospects for ending milk quotas altogether in 2006?
Also, will the Minister explain how the national envelope for beef will work? Will he assure us that the Treasury will not divert elsewhere funds from that national envelope, which in other countries will be 629 reserved for beef farmers? How many British beef farmers will be able to meet the extensification requirements? When will the Minister be able to explain in more detail how the promised support for environmental and rural economy measures works? Although that support is welcome, is he aware of fears that it will introduce yet more bureaucracy into the countryside?
Does the Minister agree that many people in Britain will be astonished that the European Union continues to subsidise tobacco farmers? Will he confirm that the latest talks leave the growers of a product so dangerous that the EU wants to ban it from being advertised, still receiving more than £500 million a year from taxpayers in the form of subsidies?
Does the Minister agree that the whole package is in danger of being overturned by the Finance Ministers or the Heads of Government in a few days' time? What has the deal done for Britain's chance of keeping the budget rebate that was won by the previous Government? I acknowledge that the threat of ceilings on individual payments to farmers has been temporarily averted, and I welcome that, but is there a risk that the Finance Ministers will reopen the deal and try to impose caps on payments to efficient British farmers or a floor to payments to inefficient continental farmers? No amount of jargon, such as "modulation" or "degressivity", can hide the fact that Britain's interests may still suffer when the Finance Ministers get their hands on the package.
In summary, will the Minister tell us whether anyone in Britain will benefit from this deal in the next four years? Is this not merely a no-win deal—a deal that is the result of going into talks without clear aims and without enough determination to achieve them? Is not the deal bad for taxpayers, who will have to foot an even bigger bill; bad for consumers, for whom the prospect of lower food prices is even more remote; and bad for many farmers, who will still not be competing on level terms?
§ Mr. Brown
I thank the hon. Member for South Suffolk (Mr. Yeo) for his comments about my personal well-being. His questions fell away from there on in. He made a jibe about civil servants and the papers—yes, the papers were out of order, but it is unfair to criticise civil servants. Throughout the negotiations, I was well supported by civil servants from my Department. As a politician, one could say that I volunteer to go through all this; civil servants do it because it is their job. They have put in long hours and an enormous amount of work, which has gone well beyond what would normally be expected of them. I put on record my thanks for the work that the Department has put in.
The hon. Gentleman concentrated on the disappointments. As he is the Opposition spokesman, that was to be expected, but he was right to refer to two. The package holds two major disappointments. The first was the failure to get Agriculture Ministers to agree to the introduction of degressivity in the compensation payments. That is a clear aim of the British Government, and the Chancellor of the Exchequer and the Prime Minister will pursue it at Berlin. We will continue to press on that point and, for the avoidance of any doubt, when the final compromise package was settled, I made it clear that we stood by our policy on degressivity and would 630 continue to pursue it. There is no doubt among the representatives of other Governments about the British position.
On milk reform, I share the hon. Gentleman's disappointment that the reform will start only in 2003. However, the negotiations involved 15 member states, some of which were bitterly opposed to milk reform and some of which had the idea that we should keep the quota for ever and enshrine it in the agreement. That is a hopeless position for the European dairy industry. Four countries advocated reform and 11 opposed it, so to have secured reform in such circumstances is a good deal for the supporters of reform. I have had to accept delay, which was my contribution to the compromise, but the opponents of reform have had to accept reform, which was their contribution. Given that there were four of us on my side and 11 on the other, that is a pretty good deal to have secured.
Although the Conservatives call for that policy now, they have also been through negotiating rounds on the CAP and have not secured reform of the dairy regime. Indeed, successive Conservative Governments renewed the quota regime without any suggestion of its ever being reformed.
On food prices, there are price cuts in each of the different sectors. No sector was taken out, put to one side or shielded from necessary reform. Those cuts should feed through into the shops and to consumers. The hon. Gentleman said that the cuts would not come in until 2007, putting the date as far away as he plausibly could; but, because they will be phased in over time, so will the benefits to consumers. I accept that we will not feel the full effects of the cuts until the end of the period, but they will be felt remorselessly year by year. The most significant part of the package is that we are moving in the direction of world market prices, price cuts in CAP and reform. That is the path on which we are set, and it ought to be a good thing.
The hon. Gentleman asked about the national envelope. The National Farmers Union view is that I should use it to support the Buckler cow premium. I have already received its representations and I am considering them. Before the negotiations started, I promised that, where I had scope to exercise discretion at a national level, I would consult first before making any final decisions. That is what I intend to do on the national envelope and, to answer another of the hon. Gentleman's questions, where there is scope for discretion on rural support measures. I will consult before making a final decision and, if the hon. Gentleman wishes to submit views on how I should apply the national envelope, I will be more than willing to consider his views, as well as others.
The hon. Gentleman asked about the tobacco regime. Yes, there is still such a regime in the CAP. It was not part of this table round. Indeed, other more significant areas were not a part of it. The sheep sector was the big omission. The proposal to make direct support payments degressive over time on the UK model would cover all direct support payments, including the tobacco industry. That means that payments would reduce over time, which to some extent meets the thrust of the hon. Gentleman's point. If he is saying that we should not pay agricultural support to tobacco at all, he makes a persuasive case. One wonders why the previous Government did not obliterate the payments when they were in charge.
631 The hon. Gentleman asked about ceilings. When this round started, and as I was on the train out all those weeks ago, the Leader of the Opposition condemned me in south-west England for having already given away our negotiating position on ceilings. I had done no such thing. He was completely wrong. As we can all see from the eventual outcome of the agreement, the United Kingdom negotiating position on ceilings has been obtained 100 per cent. It is not qualified at all. As the Leader of the Opposition accused me personally of having sold us out on this, and as I have obtained our objectives completely—as I said that I was setting out to do—I think that I am entitled to an apology. I am surprised that the hon. Gentleman, on behalf of the Leader of the Opposition, did not offer me one.
The hon. Gentleman mentioned Finance Ministers and Heads of Government scrutinising the package and seeking further changes. I have already made it clear to the House that it is an objective of the UK Government to introduce an element of degressivity into direct payments. I tried to do that at the Agriculture Council, but, if the Commission will not put it on the table, I do not have much chance. A majority of delegations were against it and it requires unanimity to achieve, so it was always likely that this area of the negotiations would have to go to Heads of Government, and so it will.
The hon. Gentleman's final point was that we lacked clear aims going into the negotiations. I have set out beyond any ambiguity the principal aims of the British Government in the negotiations. More than that, I consulted widely on them. I met the leaders of the farm organisations and individual farmers to ask them what I should be pressing for—not on the broad aims, because the Government's view is clear, but on matters of detail. I am grateful to the farmers who took time to discuss matters with me. Their detailed points informed the negotiations, and in areas, particularly on the arable side, I was able, because of those discussions, to achieve extra things for the UK.
The principal benefit is that the common agricultural policy is set on the road for reform—not as much reform as I wanted, but reform it is most certainly getting.
§ Dr. Gavin Strang (Edinburgh, East and Musselburgh)
Does my right hon. Friend agree that the livelihoods of our farmers and farm workers are vital to this country? The crucial economic significance of the agriculture industry lies in the fact that it produces the raw material for our food manufacturing and processing industry in which hundreds of millions of pounds have been invested and thousands of jobs are at stake. Will he continue to ensure in the negotiations that we make certain that no policies develop that put our producers at a disadvantage to producers in other parts of the European Union? The agriculture industry is as important to this country as it is to France and Germany. It is vital that we have policies in place that enable our producers to compete on equal terms. He acknowledged that we are almost certainly being constrained by milk quotas, but there are other commodities in respect of which we are relatively efficient and in which we should have the chance to maintain, if not increase, our jobs and production.
§ Mr. Brown
As I would have expected, my right hon. Friend touches on the two most important points in the negotiations. Yes, I have a responsibility to protect the 632 national interest, and that means the interests of producers as well as those of consumers. I have done that. He is right to press me to ensure that the United Kingdom is not uniquely disadvantaged in the outcome. The ceilings proposal would have uniquely disadvantaged the UK. That is why I am so pleased that I was able to fight it off in its entirety.
§ Mr. Charles Kennedy (Ross, Skye and Inverness, West)
As the Minister rightly said, the interim outcome is part of a process that will include the Chancellor, the Prime Minister and, further down the route, the WTO. Does he agree that perhaps the most useful thing for hon. Members of all parties to do is to send signals to him, and through him to the Chancellor, about the matters that will be returned to? Specifically, we must ensure that the Finance Ministers do not reconsider some of them in a way that turns out to be disadvantageous to UK agriculture.
In that context, given that the Commission did not table the degressivity measures, for the reasons that he gave, and that Finance Ministers want to reconsider the matter, will he ensure that the British Chancellor's contribution is based on the original degressivity measures, which would have released extra funds in the context of Agenda 2000 for rural development, agri-environment and desperately underfunded schemes, such as countryside stewardship? They must not simply return to the issue as a means of reducing the growth of the further costs involved at this stage in the reform.
Will the right hon. Gentleman be more specific about the United Kingdom farmers who have already successfully pursued extensification? There will be some national leeway, or subsidiarity, to use another incomprehensible Euro-speak word. Will he ensure, for those UK farmers who do not fit the current Commission formula, that our Treasury uses the national leeway to increase considerably the uptake in the application of the all-important schemes that go to the long-term heart of CAP reform? That means wider rural development generally. In considering what lies ahead, will he be more specific about how Finance Ministers will pursue this matter in the context of the future of the UK rebate?
§ Mr. Brown
It was always the case that overshadowing the negotiations were the financial framework, the discussions between Heads of Government and Finance Ministers about the different methods of funding and the pressure that the UK was coming under on the rebate. I had to secure for the UK a decent agricultural component in what the hon. Gentleman rightly described as a much larger package. I have no doubt that the Prime Minister and the Chancellor of the Exchequer will continue to defend the British rebate vigorously. They will be able to do so because it is justified. We are still net contributors to the arrangements, and I am afraid that nothing that happened at the Agriculture Council has changed that.
The hon. Gentleman asked about extensification. That was a particularly difficult part of the negotiations, as I am sure all who follow such matters realise. The countries with extensive production systems are, essentially, ourselves, France and Ireland. Other countries have an interest in intensive production systems. They felt that the 1992 reforms shifted the balance too far in favour of extensification. My responsibility was to ensure that we were not disproportionately disadvantaged in the 633 negotiations. Price cuts from the producer point of view affect everyone. We managed to safeguard the United Kingdom position. More than that, several elements in the package improve on the present position, including the increase in the regional ceiling.
I have some room for manoeuvre on the national envelope. It is much diminished from the original Commission proposal because it has been used in part for the introduction of the new slaughter premium. Where I have discretion on the national envelope, I intend to consult. The hon. Gentleman is right that many farmers will look to me to use it to protect extensification and extensive production systems. That is the thrust of the representations that the NFU has already made to me.
On rural development, I am very keen both on the agri-environment part of the package and on strengthening the second pillar of the CAP more generally; so I welcome the thrust of the hon. Gentleman's question. I have to say that the time to do that was in the Agriculture Council round of the negotiations, rather than the Finance Ministers or Heads of Government meetings. We have achieved something for the rural development measure, but not the extra contribution that degressivity could have made had it been negotiated in the Agriculture Council. I regret that, and it would be unreasonable for me to hold out prospects that we could return to it. Finance Ministers and Heads of Government will want to consider the budgetary constraints, rather than reopen the agricultural part of the package. I think that it is those two different components that have led to some confusion in this morning's press.
§ Mr. Dennis Skinner (Bolsover)
Is my right hon. Friend aware that, for the past 18 years, the Tories have been talking about reforming the CAP? I always took the view that, if anyone—especially a Labour Government—dared to reform it, they would play merry hell. Already this morning we have seen Tory spokesmen making it clear that even this marginal decision is not satisfactory to them. I rather suspect that that will be the attitude from here on in. [Interruption.] It is the farmers talking over there.
What concerns me, however, is that the newspaper reports have been suggesting that Britain's rebate will be affected as a result of the negotiations. I know that the Liberals made a reference to that, but, before the Tories start, may we have a categorical assurance that the rebate was never discussed in the negotiations this week and that the rebate in total is still on the table?
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. Before the Minister replies, I remind the House that today is a private Member's Bill day. May I have brief questions and, of course, brief answers?
§ Mr. Brown
That is a fair point, Mr. Deputy Speaker, but these are complex issues and, although the questions seem general, they require detailed and specific responses.
I assure my hon. Friend that the British rebate was not under discussion at the Agriculture Council. No delegation ever raised it. The British Government intend to fight to protect the rebate.
My hon. Friend is right to point out one further matter. Those who advocate reform confuse reform with the immediate imposition of budget savings. The two things 634 are incompatible. In the short term, if we want reform, the budget will have to rise. The previous Government always fell at that hurdle. They put the short-term budgetary interests before the medium-term interests of reform. They always failed. This is the most significant reform of the CAP ever, and the United Kingdom Government have been in the vanguard pressing for it.
§ Mr. Douglas Hogg (Sleaford and North Hykeham)
I acknowledge the difficulties that the right hon. Gentleman met at the Council. None the less, does he accept that the outcome represents a substantial shortfall on our long-term objectives? Does he accept that one of the major problems lies in the compensation payments—the direct payments? Does he accept that they are properly to be regarded as transitional payments which will taper away into nothingness over a period?
Does the right hon. Gentleman accept that one of the fundamental problems is that there is not a majority within the Council for fundamental reform and that, if many of the Council members had to choose between forgoing an enlargement and forgoing fundamental reform, they would choose to forgo enlargement? Does he accept that, in the absence of an appetite for fundamental reform within the Council, we are likely to see reform only if Heads of Government give very clear and tight riding instructions and, if necessary, take policy responsibility for the process?
§ Mr. Brown
The right hon. and learned Gentleman's point that Heads of Government have to take final responsibility is right. Both the Agriculture Council and the separate discussions about the structural funds will go as two separate components of Agenda 2000 to the Heads of Government for final discussion and decision.
On fundamental reform of the CAP, the right hon. and learned Gentleman is right to say that a majority of Farming Ministers still oppose what he and I would describe as fundamental reform. There is a philosophical difference between those who want radical reform of the CAP, encouraged and led in part by the United Kingdom, and those who still adhere to the European model of agriculture, which involves price supports, export refunds and protectionist measures, which I believe are fundamentally the wrong way forward.
The right hon. and learned Gentleman accurately describes our proposals for degressivity. A majority of Agriculture Ministers were not willing to accept it. The mechanism of degressivity makes the direct support payments reduce in value over time, as the right hon. and learned Gentleman correctly described. He described the package as a shortfall. I prefer to describe it as a start, but I fully accept that it does not start quickly enough.
§ Mr. Harry Barnes (North-East Derbyshire)
If the Opposition will not apologise to my right hon. Friend, I will apologise because he has achieved far more than I imagined possible, given the vested interests in the European Union that make the negotiations tremendously difficult. One argument about the possibility of achieving reform was that, unless there was reform, we would not be able to achieve expansion of the EU because the terms and conditions of the common market CAP would be 635 unacceptable to applicants. Will the arrangements facilitate the possibility of enlargement, or do we still have to wait for further reforms?
§ Mr. Brown
I am grateful to my hon. Friend for his remarks. He has put his finger on an important point. The reform package still makes enlargement of the EU difficult. It marches in the right direction, but it does not get there quickly enough to facilitate enlargement on the present timetable. It would not surprise me if we returned to these matters again before the end of the six-year period.
§ Mr. David Maclean (Penrith and The Border)
Who are we to believe this morning—the Minister, who tells us that this is the most radical deal in his generation, or the Prime Minister's spokesman, who says that it is just not satisfactory? On this occasion, I prefer to believe the No. 10 spokesman.
Does the right hon. Gentleman accept that the British public will not find it satisfactory when the issues discussed at the Agriculture Council have resulted in cuts for northern European farm produce and farmers in Britain, but an overall budget that will increase by £1 billion, while the wine lake, the olive oil sludge pond and the obscenity of the £500 million taxpayers' subsidy to tobacco were not on the agenda? Does he understand that British farmers will think that he has been suckered into a deal that cuts their prices while paying no attention to the scandal of the CAP in southern Europe?
§ Mr. Brown
I think the right hon. Gentleman has slightly lost the plot. Olive oil and tobacco were never part of this negotiating round, although of course the direct payments would have been affected had the British idea of degressivity been accepted.
The right hon. Gentleman asks whom he should believe—the Prime Minister's spokesman or me. I have good news for him: he can believe both of us. The CAP reform package does not go far enough for me or for the United Kingdom, but it is still the most radical shake-up the CAP has ever had. It is certainly much better than anything achieved by the right hon. Gentleman's party when it was in government. The right hon. Gentleman says that we have described it is as not acceptable. Of course it is not acceptable that there is not some limit of degressivity in the direct payments. I have always made that clear. I made it clear at the conclusion of the Council in the early hours yesterday by reading a statement on to the record on behalf of the Government. We have made it clear that we intend to pursue the matter at Heads of Government level.
§ Mr. Kelvin Hopkins (Luton, North)
I welcome my right hon. Friend's statement and applaud his efforts in what were obviously very difficult negotiations. I believe that there is broad agreement that the common agricultural policy is a very bad system of agricultural subsidy and has always been specifically disadvantageous to Britain. Does my right hon. Friend think that, taken together, these reforms will diminish Britain's relative disadvantage compared with other EU states? Will these reforms, taken together, make a difference and improve the malign redistribution effects between member states?
§ Mr. Brown
The question of the balances between member states is very complex. There is a north-south 636 balance, to which the Mediterranean countries draw attention—from their viewpoint, one can understand why—and there are differences in the balance caused by the relative incomes in different countries and differences in the balance resulting from the different agricultural structures in the different countries. I believe that the outcome represents a fair compromise between these different interests. However, by far and away the best way to secure the United Kingdom's long-term advantage would be to press on with radical reform so that our efficient farm structures can benefit from access without penalty to world markets, and gain the advantages that accrue to efficient agricultural production systems.
§ Mr. Tony Baldry (Banbury)
Does the Minister agree on the direction in which we are meant to be going? Consumers want to know that prices will fall, and the reduction in price support will be worth while only if there is a reduction in prices in supermarkets. What has been really frustrating for farmers—indeed, for everyone—is the fact that the substantial falls in farmgate prices have not been passed on to consumers. I do not blame the Minister for that, but may we have some discussions with the supermarket chains to ensure that consumers have some benefit from the reforms?
Does the Minister agree that we all acknowledge that an objective of UK policy must be to ensure that eventual common agricultural policy reforms reward efficient UK producers? If we can at least all agree the objectives, there may not be as much accusation and counter-accusation.
§ Mr. Brown
We have made a substantial move in the direction of the point that the hon. Gentleman makes about producers. We have not got there as fast as I would like, but at least I have got the common agricultural policy to go in the direction that I want it to go.
We did not specifically discuss retail prices because that is beyond the competence—the scope—of the Agriculture Council. I am certain, though, that if producer prices are reduced, that must feed through into benefits to consumers.
§ Ms Joan Ryan (Enfield, North)
I congratulate my right hon. Friend on negotiating this reform. I am certain that it will be good news for consumers; it will certainly be welcomed by my constituents.
Does my right hon. Friend agree that this reform is clear evidence that the Government's positive approach of working in co-operation with our European partners is best for Britain and brings benefits for Britain, and is in marked contrast to the approach of, and the outcomes achieved by, the Conservatives when they were in power?
§ Mr. Brown
My approach to these negotiations was to make sure that I kept the United Kingdom at the heart of the negotiations on the Commission's proposals, and that I did not allow the United Kingdom to be marginalised in such a way that the other Ministers would gang up on us and introduce a measure that specifically disadvantaged the United Kingdom. In particular, I was thinking about the possibility of ceilings being imposed on these payments, which would have meant that the United Kingdom would pay disproportionately for support measures that we did not welcome.
If we had left ourselves out of the debate about reform, there would have been substantially less reform, but I am not sure that there would have been substantially 637 less expenditure. I believe that it is right that the United Kingdom co-operates with our European partners—instead of perpetually lecturing them and telling them that they are wrong, even when they suggest things that are in our interests, which was the previous Government's approach.
§ Mr. John Greenway (Ryedale)
Judged by what most of us thought possible, the Minister has probably not done that badly, but, judged by what Labour promised in opposition and in its manifesto, this deal is a complete flop. How can it be radical progress when the budget will be 2.5 per cent. above what was agreed in Germany only weeks ago? How can we talk about substantial progress when it will take longer to reform the dairy regime than the period in which the Government think it is possible for us to join the euro? In the meantime, dairy farmers and farmers in other sectors will see their incomes fall. They are already bleeding to death, and there will be an even worse haemorrhage as a result of this shambles.
§ Mr. Brown
The immediate effect of the package on farm incomes is relatively modest. As for the point about dairy reform, no other Government have managed even to make a start on the issue. As I said, 11 countries are opposed to reform, four are in favour, and I managed to secure reform, although it was delayed. I am grateful to the hon. Gentleman for his rather more generous introductory remarks.
§ Dr. Alan Whitehead (Southampton, Test)
I congratulate the Minister on what he has achieved in these negotiations and on what I understand is progress on environmental stewardship as part of the negotiations. Do the negotiations include discussion and/or agreement on support for the production of biomass feedstock for alternative energy production? Does the Minister intend to discuss the consequences of these moves forward on environmental stewardship with English Nature and the new Countryside Agency?
§ Mr. Brown
I do intend to consult on the rural development measures and yes, there is scope within the regime for environmental measures of the type that my hon. Friend describes, and he and I both support. Right up to the end of the negotiations, I was pressing for a stronger regime on non-food crops. I consider that this is an important area, in which this country could make substantial progress. The regime is permissive, but there is not as much in it as I wanted. We have made an amendment to the text, which goes some way towards achieving what we want, but does not go far enough.
§ Mr. Alasdair Morgan (Galloway and Upper Nithsdale)
In relation to the application of the national envelope, the Secretary of State said that he would consult. In respect of Scotland, will he confirm that it will be up to the new Scottish Parliament to undertake those consultations and, more particularly, that the new Scottish Parliament will be in charge of deciding how those funds will be allocated?
§ Mr. Brown
There is not a separate Scottish national envelope, I am afraid. The United Kingdom negotiates in 638 the European Union at United Kingdom level, but, where there is room for devolved discretion, I am willing to consider any sensible proposal, as long as it does not introduce market distortions. Remember that the common agricultural policy is a common agricultural policy for the whole European Union. There is not a separate Scottish version of it, I am afraid.
Consultations will be done, as they would have been done anyway, by the Scottish Office in Scotland, by the Welsh Office in Wales, by the Northern Ireland Office in Northern Ireland and by the Ministry of Agriculture, Fisheries and Food in England. The hon. Gentleman is right to say that, post-devolution, the Scottish Parliament will have a role. I am now discussing—although, of course, we cannot reach a final conclusion until after the elections—ways in which the new Scottish Agriculture Minister can play a full part in the UK delegation to the European Agriculture Council.
§ Dr. Norman A. Godman (Greenock and Inverclyde)
I have long argued that the failure to reform the common agricultural policy will have harmful consequences for the applicant states. Is it not likely that applicant states will demand full implementation of all agricultural benefits—or, if we are to stick to the timetable, are we going to finish up with two classes of member states in relation to the CAP?
§ Mr. Brown
My hon. Friend is on a very good point. It would be completely unfair to devise a two-tier CAP and a two-tier European Union where some people were fully in and others were only half in and were a second type of member. If countries are going to join, they should join fully and their joining should be facilitated fully.
§ Mr. Roger Gale (North Thanet)
Thanet's farmers produce some of the finest cauliflowers in the world. It is a high-risk crop, requiring high investment and providing a low price to the farmer. The supermarket price to the consumer is very high and the farmgate price is very low; that is at today's prices. Given the track record of retailers, if there are to be any pig farmers left in business in this country, their livestock will fly before supermarkets reduce their prices to the consumer. The Minister has made great play of the fact that real savings will be made and will be passed on to the consumer. What possible justification does he have for that claim?
§ Mr. Brown
If prices come down at producer level, that feeds through at the retail level; it is as simple and straightforward as that. That is a market economy—a concept that used to be pretty well understood by Conservative Members. Neither cauliflowers nor pigs were part of the negotiations or the Agenda 2000 package.
§ Mr. Gareth R. Thomas (Harrow, West)
I join my hon. Friends in congratulating my right hon. Friend on securing a hard-won but substantial agreement, albeit not a perfect one. This deal benefits farmers and consumers, such as those in my constituency. Given the negative and nit-picking attitude of the Conservative party, does my right hon. Friend believe that farmers and consumers will be relieved that it is new Labour negotiating in Brussels, and not the Conservatives?
§ Mr. Brown
I am certain that that is true. The Conservative party's negotiating approach is to tell 639 everyone else that they are wrong and then wonder why the others have ganged up on this country. It could not have secured this agreement.
I welcome what my hon. Friend said about farmers. At the end of the negotiations, in the early hours of yesterday morning, I explained the outcome to the leaders of the United Kingdom farming unions who were out there. They all, without exception, congratulated me on what I had secured for the United Kingdom. They shook my hand and said, "Well done."
§ Mr. David Heath (Somerton and Frome)
Although I recognise the difficult job that the right hon. Gentleman has had to do, does he accept that we have ended up with fudged proposals that are not sustainable in the long term? Does this agreement not extend the period of uncertainty for dairy farmers? Has he confidence that the WTO talks will not intervene during the currency of these proposals? After 2003, there will be a 1.5 per cent. increase in milk quotas for Britain and the other member states. Why will Italy, Greece, Spain and Ireland have those increases in quota earlier? Why are they to get a competitive advantage over our farmers?
§ Mr. Brown
Because our increase in quota is part of a general linear distribution of quota, which it was agreed would come later. It comes later for all the countries. Special requests were negotiated for some countries, and I was able to secure an extra allocation for the United Kingdom in respect of Northern Ireland.
There is some truth in what the hon. Gentleman said about uncertainty in the dairy regime. I should not be surprised if we had to return to these issues when we know the outcome of the agricultural component of the WTO discussions. I regret the fact that we could not start on dairy reform earlier. As I said, 11 countries were against it and four were in favour, so the fact that we have got any reform at all is an achievement. The hon. Gentleman described the deal as a fudge: I would describe it as a start in the right direction.
§ Mr. Patrick McLoughlin (West Derbyshire)
Farmers' incomes have seen a dramatic decline in the past couple of years. The president of the NFU said this morning that the next few years would be exceedingly difficult for farmers. Will the Minister give us an assurance that the Government will not take any measures that will put in danger the future of Milk Marque, which gives security to many milk farmers?
§ Mr. Brown
The Government have in front of them the Monopolies and Mergers Commission report on Milk Marque, and I do not think that I should say anything to 640 the House until they have considered their position and a formal statement has been made. As the hon. Gentleman knows, the Department of Trade and Industry has the lead responsibility for that area.
§ Dr. Julian Lewis (New Forest, East)
If, as the Minister says, all the farmers' leaders have been falling over themselves to congratulate him on the CAP compromise, why has Mr. Ben Gill, the president of NFU, been quoted as saying that it will not solve the financial problems of Britain's farmers and that the next few years will still be very difficult?
§ Mr. Brown
Mr. Ben Gill was not falling over himself, and I did not say that he was. He shook my hand and said, "Well done." That does not mean that all the problems facing farmers have been resolved in this round of negotiations. He was right to say that times would still be difficult for UK farmers in the future, as they will be for EU farmers. My job is to stay as close as I can to producers and to others, to ensure that we have a continuing dialogue and to do what the Government reasonably can to help.
§ Mrs. Ray Michie (Argyll and Bute)
I understand that there is to be a shift from headage to area payments. How will that affect hill livestock compensatory allowances, which are vital, particularly to family farms in the severely disadvantaged areas of the highlands and islands? Who will be the winners and losers? I do not share the Minister's confidence that the consumer will benefit. After all, the supermarkets did not significantly lower their prices when the beef and lamb markets collapsed in Scotland last October.
§ Mr. Brown
I shall not go over again what I said about cuts in producer prices feeding through in the marketplace to retail prices. I shall respond to the hon. Lady's very good question about the future for the HLCAs. The new proposals take the system from the current headage arrangements to an area-based arrangement. There are a number of advantages to that, and I welcome the change. We have consulted on the matter, but we cannot give a final view until we see how it will work out in terms of real money. The extra payments on the HLCAs that I secured for farmers—a 55 per cent. increase for this year—have been widely welcomed. The change in regime will be subject to consultation throughout the United Kingdom on precisely how to make the transition. I intend to implement the changes in a fair and even-handed way, ensuring that there are no spectacular losers. It is possible to envisage how they might occur, and I am mindful of the difficulties faced by people who are livestock farming in less-favoured areas.