HC Deb 27 January 2000 vol 343 cc570-2
11. Mrs. Ann Winterton (Congleton)

If he will make a statement about competition in the dairy industry. [105759]

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

The members of Milk Marque have agreed to a voluntary separation into three independent successor bodies. I welcome that decision.

Mrs. Winterton

What research did the Department undertake into the impact of the break-up? It should be borne in mind that, by the time the decision was made, Milk Marque's share of the market had dropped considerably, and the statistics used were therefore out of date.

Mr. Byers

It would have been wholly inappropriate for my Department to intervene or to instruct a voluntary organisation such as Milk Marque. It was the members of Milk Marque who decided, voluntarily, to break into three successor bodies, in the light of the report by the Monopolies and Mergers Commission. I welcome that voluntary decision. I rejected the commission's recommendation for a break-up to be imposed on Milk Marque: I thought that it would be far better to leave the decision to its members. They have made their decision, and I look forward to healthy competition in the milk industry—and also to allowing processing in due course.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

The recent report caused great dismay. At present there is no real competition; the only competition seems to be competition to offer farmers the lowest possible prices. The market is depressed, as the right hon. Gentleman knows. Something must be done: we are losing hundreds of farmers a year in places like Ceredigion. I urge the Secretary of State to speak to his right hon. Friend the Minister of Agriculture, Fisheries and Food.

Mr. Byers

I will certainly do that, but the MMC report was such that the Government could not ignore it. I had to seek a remedy that was appropriate to the circumstances. I disagreed with the commission's recommendation for a compulsory break-up, but I am pleased that the members of Milk Marque considered the situation carefully and, on a voluntary basis, agreed to form three independent successor bodies. When they are competing effectively—I hope that there will be clear indications of that by April—I shall be able to allow them to start processing. That will enable them to produce products with a higher added value, which I think will make a real difference to the industry.

Mr. David Heath (Somerton and Frome)

The agreement was voluntary only in the sense that the action of someone with a shotgun pointed at his head is voluntary. Does the right hon. Gentleman realise that the long delay before his decision, and the disastrous effects on milk processing, are much resented in the dairy industry? Next time he considers it necessary to meddle in agriculture, will he talk to the primary producers—the people who get up at 5 am to milk the cows, who are losing money hand over fist?

Mr. Byers

The hon. Gentleman talks of meddling in agriculture. What I did as Secretary of State for Trade and Industry was disagree with the MMC's proposal for a compulsory break-up, because I did not think that it was in the industry's best interests. Farmers have told me that that was absolutely the right decision. If the hon. Gentleman disagrees and thinks that I should have rubber-stamped the commission's report, let me tell him that I could easily have done that, but I did not; I put the industry's interests first.

Mrs. Angela Browning (Tiverton and Honiton)

The Secretary of State has repeated today things that he said at our last Trade and Industry Question Time. On 9 December 1999, he told me—and my hon. Friend the Member for North Shropshire (Mr. Paterson), who is present— It is the members of Milk Marque who have voluntarily agreed to break it up into three successor bodies."—[Official Report, 9 December 1999; Vol. 340, c. 982.] The right hon. Gentleman must know that, with viability in mind, the industry pressed repeatedly to be allowed to form two bodies, not three.

Mr. Byers

All I know is that the members of Milk Marque voted for three independent successor bodies. That is exactly what I said on 9 December, and have said again today.

Mrs. Browning

The members of Milk Marque were finally forced to accept that arrangement. After our last Question Time I wrote to the chairman of Milk Marque, who wrote back saying: Contrary to the impression given by your letter, Milk Marque did not press for three regions rather than two; indeed when it became obvious that the way forward was for Milk Marque to split, our first proposal was a two-way split … the competition authorities insisted that three was the minimum acceptable number". The Secretary of State will know that the matter is now the subject of a judicial review. Why did he not use his powers to help the industry, and why does he not give answers at the Dispatch Box that tell Members exactly what is behind the decision making?

Mr. Byers

The hon. Lady needs to be aware of the different responsibilities of the Secretary of State for Trade and Industry and the Competition Commission. I would be justifiably criticised if I intervened with the Competition Commission. I do not do that—perhaps the previous Government to which the hon. Lady belonged used to.

The correspondence between the Competition Commission and Milk Marque is a matter for those two bodies. I act in an independent capacity. But it is no secret that the MMC report said that between three and five would be an appropriate division. I decided that there will not be a compulsory break-up of Milk Marque, and that has been welcomed by the industry.