CAP Reform

HC Deb 26 June 2003 vol 407 cc1220-36 1.34 pm

Margaret Beckett

With permission, Mr. Speaker, I wish to make a statement on the outcome of the final negotiations on the reform of the common agricultural policy, which concluded in Luxembourg at 6.35 am, UK time. [Laughter.] Yes, quite.

We approached the negotiations with two clear objectives: first, to get the best settlement that we could for UK farmers, consumers, taxpayers and the environment; and, secondly, to get an agreement that could lay the foundations for a successful outcome at the World Trade Organisation negotiations in Mexico later this year.

In pursuit of those objectives, we set negotiating goals: to simplify the CAP, reducing the burden on farmers; to provide for a substantial shift of support from production to a wider range of rural and environmental activities; and to give the European Union a strong negotiating stance in the WTO negotiations, which reach a key point in Cancun in September.

I am happy to say that today's agreement delivers what we wanted, as well as real change. The key points are: breaking the link between farm subsidies and production in order to reconnect farmers to their markets, reduce damaging environmental impacts and reduce bureaucracy, which is at the heart of our approach to sustainable food and farming; cross-compliance to make subsidies dependent on meeting standards in key areas such as the environment and animal health and welfare; reducing support prices for butter and rice, bringing them closer to world prices to the benefit of consumers; and a new financial discipline that will trigger action to reduce subsidies if CAP expenditure looks to be in danger of exceeding the agreed ceilings.

The settlement includes elements that were not on the table in the January package put forward by the European Commissioner. In other words, in some respects it goes beyond those initial proposals. First, national envelopes will allow us to develop targeted schemes to promote sustainable and environmentally friendly farming. Secondly, we have secured a further switch of resources to the second pillar and an earlier start date for modulation. The second pillar funding package that we have secured is more than a third larger than that which was available in the January proposal. For the first time, modulation applies on an EU-wide basis, switching support from production subsidies to targeted support for environmental and rural development objectives across the European Union. Thirdly, we have succeeded in protecting UK farmers from the immediate threat of an unfair settlement as part of the financial discipline process. I will place a detailed summary of the agreement in the Library; I wish Members happy reading.

The most radical and important element in the package is the new single farm payment, which we can use to replace the plethora of existing direct payment schemes such as arable aid, suckler cow premium, beef special premium, slaughter premium, extensification premium and sheep annual payment, to name but a few. Not only will that greatly simplify the bureaucracy associated with all those schemes, but, more importantly, because the payment is no longer linked to production, farmers will be free to produce for the market rather than for the subsidy. Farming, consumer and environmental interests all strongly supported such a move. We will, of course, consult on the detail of how to proceed, especially as regards use of the national envelopes and the important new provisions for cross-compliance.

Decoupling is particularly important in the WTO context. This deal enables the EU not only to meet, but to better, the domestic support targets that have been proposed in the WTO negotiations. The reforms should reduce the distortions in world markets that the CAP has caused, and will accordingly contribute to a successful conclusion of the Doha development agenda. I hope that our trading partners will recognise the scale and importance of the change and respond positively to it.

Reaching the agreement required an immense and a united effort. I want especially to thank our dedicated team of officials; my many Cabinet colleagues who actively engaged in support of our discussions, including the Prime Minister; and, of course, our colleagues in the devolved Administrations, who were closely involved throughout. It shows what we can achieve by working constructively with colleagues in the Agriculture Council. I want to pay special tribute to Commissioner Fischler, who showed considerable courage and tenacity in helping to pilot the agreement.

It is hard to overstate the importance of this morning's agreement in transforming the core elements of the common agricultural policy and laying down a new direction for its future evolution. Giorgios Drys, the Greek Minister, who did an excellent job of piloting the Council through the negotiations, said that we needed to get agreement for a new CAP. We have done that.

Mr. David Lidington (Aylesbury)

May I begin by offering more than the routine thanks to the Secretary of State for the statement? Conservative Members greatly appreciate the fact that she has come straight from the Luxembourg negotiations to report directly to the House of Commons. She sets an example that, we hope, will inspire some of her Cabinet colleagues.

As the Secretary of State said, the agreement is detailed and complicated. We will want to study carefully its impact on different agriculture sectors and parts of this country. I hope that the right hon. Lady can do a couple of things that will assist not only the Opposition but all Members of Parliament in the process of analysis. First, I hope that she will allow us time for debate to put the many detailed questions that need to be asked about the agreement. Secondly, I hope that she will publish a detailed assessment of the likely impact of the proposed changes on various types of farm businesses. It is not good enough that we should have to rely on outside bodies such as the Royal Institution of Chartered Surveyors, however expert they are in their field. The Government owe it to Parliament to publish their detailed account of the likely impact.

Conservative Members welcome some aspects of the package. The most obvious is that decoupling—at least of a sort—will take place. I welcome the list of the multiplicity of schemes that could be scrapped in the wake of the agreement. We shall look to the Government to make certain that scrapping the schemes, albeit welcome, is not immediately used as an opportunity in Brussels or Whitehall to deluge farmers with substitute brand new sets of regulations and red tape.

The reality, however, is that the deal constitutes a botched compromise that falls far short of the radical changes that are needed. British farmers will have to bear more than their fair share of the costs of reform. The leader of the German farmers union said, in reaction to this morning's announcement, that the agreement was a typical EU compromise which gives and takes a little from everyone and creates terrible difficulties for those who have to implement it". We hoped for a fair deal for British farmers. However, the agreement carries with it an undoubted risk of big market distortions and unfair competition, especially in the beef and sheep sectors.

Will the Secretary of State confirm that France and other countries can continue under the terms of the agreement to pay full production subsidies until 2007, and that even afterwards they will be free to link a considerable proportion of their farm support payments not to environmental or rural development schemes but directly to production subsidy? Will she also confirm that the modulation arrangements for transferring money from farm support to environmental or rural development projects discriminate blatantly against British agriculture? Will she further confirm that not only is the system weighted against larger farms—holdings in this country are on average significantly larger than those in the rest of the EU—but that up to one fifth of the money taken from farmers through modulation may be spent elsewhere in the EU on the schemes and under the framework of rules that the European Commission devises?

We hoped for a fair deal on the environment. Although it is true, as the right hon. Lady said, that today's agreement marks some advance on the previous position, I hope that she will take seriously the World Wide Fund for Nature's description of the deal as "an exercise in cosmetics." The head of agricultural policy at the Royal Society for the Protection of Birds told the BBC that the Government have talked a good game on CAP reform. But internationally it appears to have lost out in securing major reforms. Revenue from the modulation scheme is supposed to help fund the environmental payments system that was recommended by Sir Don Curry and that the Government promised for 2005 onwards.

Will the Secretary of State confirm that the arithmetic no longer adds up? The revenue that DEFRA stands to receive from the EU-wide modulation scheme will not be sufficient to cover the sums that had been provisionally budgeted for the entry level environmental scheme. The only way in which she can deliver the environmental improvements that the Government have pledged is through imposing a new, national modulation scheme on top of the Community scheme. That will carry the risk of further market distortion and harming the competitiveness of British farmers when compared with those elsewhere in Europe.

We hoped that the agreement would mean a fair deal for the developing world through the forthcoming international trade negotiations. It is trade justice week, yet the Secretary of State tells us of her delight in an agreement that will allow production subsidies in some form to continue indefinitely in the EU, despite all the pledges that the Government and other European Governments made at Doha and have subsequently repeated. Neither the Secretary of State nor the presidency conclusions mentioned the need for action to tackle export subsidies, which, as Ministers have admitted, cripple the ability of some of the poorest nations in the world to prosper through trade. I hope that the Secretary of State will be able to say whether the detail of the agreement includes some planned action on that.

The French agriculture ministry gave the game away in a statement this morning. It said, with some satisfaction: This reform preserves—as was France's position all through the negotiations—the essential principles of the Common Agricultural Policy". That was France's position throughout the negotiations. The Government promised repeatedly that they would use their influence in Europe to deliver agreements that would serve the interests of British agriculture, the environment and the developing world. However, they have been stitched up yet again by a Franco-German alliance that gives precious little credit for the concessions on so many European issues that the Government and the Prime Minister have been ready to make.

Again, the Government have failed to deliver on their promises. The gap between promise and delivery explains why so many people in this country are ceasing to believe anything that the Government tell them.

Margaret Beckett

The most evident gap was between reality and the rhetoric of the hon. Member for Aylesbury (Mr. Lidington). I hope that I have not lost track of all his questions.

Sir Robert Smith (West Aberdeenshire and Kincardine)

It was a speech.

Margaret Beckett

All right, it was a speech. The hon. Member for Aylesbury should ask my right hon. Friend the Leader of the House for a debate, but I assure him that we shall do everything that we can to publish material that is as detailed as possible to assist hon. Members to assess the impact of the package. Consequently, he may find that he regrets some of his remarks.

I shall not bother to go into the list of quotes from people who said that the agreement does not go far enough. Many of us would have liked to go further, but pretending that the agreement is a bad result simply because we did not get everything that we wanted out of the negotiations shows the hon. Gentleman's total lack of experience in negotiating.

On the issue of unfair competition, it is correct that other member states will be able to keep production subsidies until 2007, should they choose to do so. It is also correct that, beyond that, they will have the option to keep a restricted range of subsidies—I will not bother to go into the technicalities unless someone particularly wants me to. A certain number of premiums will be available, but they will obviously be much more restricted than hitherto. Member states will be able to keep coupled only a minority of the payments available.

The point that the hon. Gentleman has totally missed is that we do not consider this to be an advantage. Indeed, when he said that we all thought that decoupling was a good thing and that we wished that we had had more of it, he seemed not to notice that he was shooting his own argument in the foot. If others wish to keep bureaucratic schemes that are, in many cases, very unpopular with their own farmers, it is no part of my plan to stand in their way. However, I believe that many farmers in Britain and across the rest of Europe—clearly, the German farmer whom the hon. Gentleman mentioned was not one of them—are fast coming round to the idea that they would like to have the advantage of total decoupling. We believe that it would give British farmers a competitive advantage, which is one of the reasons why we support it.

The hon. Gentleman also asked how the money would be worked out in terms of UK agriculture. As everyone knows from the January proposals, the initial package from the Commission contained quite a large gap between the funding that was raised in the United Kingdom for modulation and the money that could be spent here—not least, I am afraid, because of the appalling deal that was made by the previous Conservative Government when the basic agreement was reached on rural funding. We have made strides towards redressing that, however, and we hope to make further strides. At least we now have, potentially, some impartial criteria, rather than just an historic spend against which this can be judged. In consequence, we have massively improved the options available to UK farmers.

The hon. Gentleman asked whether there would be insufficient revenues to cover the scheme proposed by Sir Don Curry. That is not the case. The details are buried in annexe something or other—I think that it is annexe 7, but I would not swear to it. The text that I saw this morning was literally hot off the photocopier at about 4 am, and I have lost track of what the number is, but there is a special annexe dealing with that issue, which we believe covers us completely for transitional arrangements.

The hon. Gentleman then asked about the possibility of the UK voluntarily modulating on top of the EU scheme. Given that the EU proposal—although larger than the original—is not for the 10 per cent. modulation proposed in Sir Don Curry's recommendation, we shall clearly be looking to address that issue. We shall have to consult on how we do that, but my impression was that both sides of the House welcomed Sir Don's report. If this represents a change of heart on the part of the Conservative party, it is interesting to note it.

Finally, the hon. Gentleman asked whether this represented a fair deal for the developing world, because some form of subsidy would continue. Sadly, perhaps, nobody has ever said that we could get a better deal and better market access for the developing world only if all subsidies that had been put in place by the developed world were abolished. Personally, I could 601live very happily with that happening, but no one has claimed that it was likely, or, indeed, part of the negotiating stance. It is not part of the package that has come of Geneva, which is intended to lay the basis for a sound foundation for the Doha discussions. I welcome the hon. Gentleman's ambition in that respect, but he is wrong to suggest that the package does not meet this requirement.

As for other remarks that other member states have made on these issues, this outcome was one of the goals that the Agriculture Council set itself. The atmosphere inside the Council was extremely constructive, helpful and co-operative, with all member states willing to try to help solve the specific problems that had arisen in other member states. One of the criteria that we set ourselves when we embarked on this final stage was that, if at all possible, there should be no specific winners, and no losers. That is the case.

Mr. Roger Williams (Brecon and Radnorshire)

May I first draw the attention of hon. Members to my entry in the Register of Members' Interests in relation to agriculture?

The Liberal Democrats broadly welcome the move from support for European agriculture that is linked to production, but this has certainly not happened in the decisive way that the trade justice campaign would have wanted. It remains to be seen how the reforms will be viewed at the WTO negotiations later in the year. Indeed, the French ministry of agriculture was boasting on its website this morning that it had retained all its protection and all the ramifications of the CAP, in terms of support for production.

The reforms seem to amount to a virtual repatriation of agricultural policy, with all the dangers of trade distortion that that entails. There is also the danger of nations that are not as scrupulous as us in using state aid introducing such aid under the camouflage of the various options for decoupling and the implementation times. We will press the Government to design the scheme for this country in the best interests of the British farmer, and to allow for distinct solutions to be reached for the devolved nations.

We welcome a number of the announcements that have been made, in particular the commitment to retain at least 80 per cent. of the modulated money to be used in its country of origin. That is a great improvement on the first proposals, which limited us to less than 20 per cent., as a result of the Tories' reticence in claiming support for pillar 2 money in previous years. We also welcome the fact that the advisory service will no longer be compulsory, and that it will be a voluntary service that farmers can make use of, rather than being a requirement of the scheme.

We also welcome the ability of countries to decouple by 100 per cent. It was not clear from the right hon. Lady's speech whether it was her intention to introduce a scheme of that nature in this country. Perhaps she could let us know whether that is the case. We understand that the French expressed concern about the possibility of the abandonment and dereliction of land. In the peripheral areas of this country, too, there is concern that land could go out of agricultural production altogether. Will the Secretary of State tell us how the Government are going to tackle that issue? We also welcome the support for new entrants and young farmers, but it has not been spelled out in detail. It would be much appreciated if the Secretary of State could help us on that.

We are concerned about trade distortion, and I am not satisfied that the Secretary of State has given a clear indication of how the Government are going to ensure that farmers are supported in that regard. We have campaigned for a long time for a level playing field in terms of agricultural support, but this morning's announcement seems to leave us with a rather mountainous landscape, with hidden valleys, and peaks clouded in mist, because of the uncertainty over how other countries will implement the reforms, and the effect that that will have on British agriculture.

We are also worried about how the entitlements are going to work, especially for new entrants and for people who are taking up new tenancies. Will people who are giving up tenancies have ownership of the entitlements, or will those entitlements go back to the landlord? How will these provisions be applied when splitting land for sale?

Uncertainty is the greatest problem for any business, and that applies to farming, too. We are pleased that this announcement has been made. It takes us some way along the line, but I believe that it has still to be agreed by the Heads of Government meeting. If that is not the case, perhaps the Secretary of State could let us know. Farmers will want to make their business decisions shortly, and certainty is the key to their being able to do so.

Margaret Beckett

Like the hon. Member for Aylesbury (Mr. Lidington), the hon. Gentleman says that this will not be enough for the Trade Justice Movement. Let us show some common sense; it is not the job of organisations such as the Trade Justice Movement to be satisfied with whatever Governments achieve. Their job is always to be prodding us on. If they were not doing so, they would not be doing their job. I do not find it the slightest bit surprising that this will not be enough for such organisations, but it is an awful lot more than either they or anyone else—including me—thought we would get not so long ago. We must take these things with a pinch of salt.

I am mindful of the fact that every member state needs opportunities to provide prosperity for their work force and their farmers out of the package. I would simply and gently ask Opposition Members to cast their minds back—or just look through the press cuttings—to what some of my colleagues were saying some weeks or months ago and then reread what they are saying today. I say nothing more than that.

On trade distortion and abandonment, we recognise that there are dangers and we will discuss how those can best be overcome. But all these issues, such as the potential for the abandonment of land, were a real threat in the past. We believe that we now have a more constructive structure that will enable us to address them.

If the hon. Gentleman will forgive me, I shall not attempt to go into the whole issue of entitlement; it is a complex matter. The agreement contains a special section dealing with the issue of how entitlement arises and how it can be transferred where land is sold, rented and so on. We are mindful that there was a good deal of justified concern about that. We believe that the package has addressed that concern, but it is a little complex.

Paddy Tipping (Sherwood)

This is a significant achievement that has long been sought, and my right hon. Friend the Secretary of State has shown remarkable negotiating skills to belie those critics who said that the Fischler reforms would never happen. The important thing now is to work through the detail for British stakeholders. Will my right hon. Friend confirm that she intends to move forward quickly with environment schemes, particularly the entry scheme and with a review of the agri-environment schemes? If we can achieve that, and achieve a simpler way into those schemes, it will help us to argue against the critics in the Chamber who will complain that other countries' ability to continue production payments until 2007 is anti-competitive. A new environment scheme must be the way forward.

Margaret Beckett

I thank my hon. Friend for his remarks. A couple of things strike me from what he says. First, we intend to press forward with the pilots for our entry-level scheme and with the or going work on agri-environment projects. My hon. Friend will not have had time to discover that there are a variety of other smallish but useful ways in which the overall settlement will be of assistance to the environment. For example, although we would have liked very much to get rid of set-aside altogether, we have obtained in the continued system the freedom to use land margins and so on—something that organisations such as the Royal Society for the Protection of Birds have wanted for a long time. There are lots of minor improvements along those lines.

My hon. Friend is right to draw attention to the fact that, although we want improvements to the environment, we believe that they can go hand in hand with continued and strengthened prosperity for farmers. Critics looking at the ability to continue production subsidy payments overlook the fact that every single economic analysis, of which I am aware, of the impact of decoupling suggests that it would make farmers better off. For that reason, although this is not generally in the public domain, there is increasing pressure, interest and comment from farming organisations in other member states—including some of those who were not too enthusiastic about these proposals—who realise the potential attractiveness to them. It has been said on behalf of one member state that the farmers there had a soul above having a higher income. I will believe that when I see it.

Mrs. Angela Browning (Tiverton and Honiton)

The key to removing subsidies in a so-called single market is the timetable for implementation. My hon. Friend the Member for Aylesbury (Mr. Lidington) raised with the Secretary of State the question of the differential time scales to be applied by different countries. The potential downside to that is that market share will be taken by those countries in those commodities that retain subsidies over a period in which they will see off the competition. What analysis has the Secretary of State made of the impact of that process on the British market?

Margaret Beckett

With great respect to the hon. Lady, who has experience in the Department, her observations are misconceived. Only time will tell how people will use the freedoms that are now available to them, but there was very little demand for anything other than a general, broad common time scale for implementation of the package. Most member states were anticipating implementing at the same time and as early as they were free to do so. One feature of the way in which we strove to reach agreement—and one of the reasons why we got such a broad agreement—was people's willingness to allow freedom and room for manoeuvre to member states who had particular concerns, whether one thought that those concerns were necessarily as big a problem as they thought or not.

The hon. Lady spoke about market share. When I said that her comments were not right or germane, I meant that she was overlooking the fact that farmers will continue to receive a payment; it simply will not be geared to the level of production. That means that they will be able to produce for the market. One facet of the economic analysis of decoupling is that there is a strong suspicion that, in many cases, it will lead to a higher return precisely for that reason.

Mr. John Battle (Leeds, West)

My right hon. Friend deserves our thanks and congratulations for her tireless, detailed and sustained negotiating efforts—often out of the public eye—to bring about the achievement of real reform of the CAP. She will agree that general subsidies and, perhaps more importantly, dumping massively undermine developing countries' capacity to develop their own agriculture. Are any positive, alternative and supportive proposals to help small farming businesses in Britain, the EU and developing countries part of the new package? Such a strategic approach might help to create a new CAP that would contribute to the delivery of international trade justice.

Margaret Beckett

One of the things that we hope to do—we have begun this already in the UK on the back of the Curry commission proposals—is to offer marketing advice and support, as well as more general advice and support for people working together, whether in formal co-operatives or otherwise, to maximise their market opportunities. Such help and support is valued more widely.

My hon. Friend asked about general subsidies and dumping. He is right; this is a matter of great concern. I hope Opposition Members will not mind me saying, in all sincerity, that no matter how great their wish is to kick the Government by saying that this is not much of a deal, I hope that when they leave here they will say that the EU has moved a long way, even though they think it has not done nearly enough. It is now up to others. If we are honest, the EU has taken a much bolder stance in the negotiations than anyone would have anticipated. There is little point in doing that if it does not force others participating in the development round on to the back foot, forcing them to look again at what they do. There is perhaps not as fair a balance as there should be in some of the existing Harbinson proposals. It is time for those such as the Cairns group and the United States—they will be absolutely astonished at this package—to realise that it is up to them to look at what they do, as well. If we all move together, that will be of real benefit to the developing world.

Mr. Patrick McLoughlin (West Derbyshire)

The Secretary of State, in her previous job as Leader of the House, introduced the timetabling of all Bills, so perhaps there is some rough justice in her now being subject to a procedure that allows no timetabling at all in respect of these negotiations.

The Secretary of State said a little earlier in answer to my hon. Friend the Member for Aylesbury (Mr. Lidington) that the question of a debate was a matter for the Leader of the House. I accept that that is true, but as she rightly acknowledged, there is no way that we can know all the details of the negotiations at this early stage. I am grateful for her statement, but it is important that a further debate be had in Government time, so that she can explain matters more fully. That would also give us a chance to examine the papers and end documents relating to the negotiations, so that we can find out how our constituencies will be affected. I am thinking in particular of small farmers in my constituency, who farm some very rough terrain indeed.

Margaret Beckett

Of course I take the hon. Gentleman's point, but having been Leader of the House, as he rightly says, I am mindful of my duty not to promise a debate, and even more mindful of my duty not to promise one in Government time.

Mr. Wayne David (Caerphilly)

Like other Members, I welcome this historic achievement. It will certainly be welcomed by many others, not least by the United Nations, which suggested such reform only a few days ago in the world economic survey. However, will my right hon. Friend use her good offices to help ensure that the United States of America follows the European Union's very good example?

Margaret Beckett

I can assure my hon. Friend that I have had many interesting discussions with the Secretary for Agriculture in the US, and with the US trade representative. I look forward to having more, not least in Mexico in September. My hon. Friend is right: the entire developed world has signed up to this. We have reached agreement on the question of trying to reduce subsidies. We have agreed that we should open up access to our markets and that we should strive for a successful development round, of which the next stage is Mexico in September. Of course, even a very good deal on agriculture is not sufficient for the Doha round as a whole, but it is equally true that without a decent deal, it would have been a stumbling block.

Ann Winterton (Congleton)

The EU is a rigid institution through which it is very difficult, if not impossible, to achieve change. The Commission is in the driving seat, and the Council of Ministers must negotiate on what is proposed. I say genuinely to the right hon. Lady, who claims that this is a new dawn for the common agricultural policy, that the proof of the pudding will be in the eating. We have a temperate climate, we grow grass and therefore produce milk, and we have good cereal-growing areas in the eastern regions. Yet British agriculture is currently at the lowest possible ebb. Does she believe that it will benefit from the negotiations? Might not the opposite be true?

Margaret Beckett

I respect the hon. Lady's expertise in these matters, but I believe that this genuinely is a whole new settlement for British agriculture that will be very much to the benefit of consumers and taxpayers, as well as to agriculture practitioners. I gently remind her that that is not my view alone. The proposals that we sought to secure—such as the freedom to decouple payments from production—were urged on us by consumer organisations, by those concerned about spending and the economy, and by farming organisations in the UK and elsewhere. Moreover, they were very much the thrust of the Curry commission proposals, which were widely welcomed in this House not so very long ago. So it is not only the Government who think that this is a dramatic new opportunity for British agriculture; so do many practitioners. But it is between all of us that we have a chance to deliver on that.

Mrs. Betty Williams (Conwy)

May I add my thanks and congratulations to my right hon. Friend for her hard work? No one in this House should underestimate the hard work that she has put in. She will be aware that the majority of farms in Wales are small farms. Can she highlight a couple of points that will persuade Welsh farmers to tell us, when we return to our constituencies tonight, that there is a welcome in the hillside and that this is a very good settlement indeed for them?

Margaret Beckett

First, I am grateful to my hon. Friend for her kind remarks; I know that she appreciates just how much effort—effort on the part of many dozens of people, and down the years—goes into securing such an agreement. I take her point entirely about the structure of farming in Wales. Two points are germane to her remarks, and they will probably lead to a response from my hon. Friend the Minister with responsibility for devolved agriculture matters in the Welsh Assembly. We have secured the freedom for Wales to take decisions on its own about how it wishes to operate under these circumstances and rules. And because we have secured the national envelope, we have of course given ourselves freedom and resources that we can use. We work very closely with our colleagues in all three devolved bodies. They conveyed to us the flexibility that they would like to be able to use, should they need to do so, and we were able to secure it in the negotiations. So on the whole, we all feel that we have had a successful few days.

Mr. Simon Thomas (Ceredigion)

One thing that farmers in Wales and Scotland will welcome is the sweeping away of the plethora of farm payments, and the institution of a single payment. Many farmers will want to use that as a springboard for entrepreneurship and as a springboard into the market. Of course, we need to wait a little to consider the detail of the agreement, but perhaps the Secretary of State could confirm a couple of points now. On the national envelope to which she refers, will she confirm that the National Assembly for Wales will have complete freedom to run its own programmes and support mechanisms so far as the national envelope in Wales is concerned? Will she also confirm that the payments that she envisages are still farming money that will go to farming communities, not to a new plethora of project officers or to some form of rural development agency?

Finally, in saying that things could be better for British farmers, the Secretary of State seemed to acknowledge that there could be market distortion—albeit that she thinks that it will be in our favour. Nevertheless, market distortion in a single market is a serious issue that needs to be addressed. What will she do to ensure that it does not destabilise the market for British farmers?

Margaret Beckett

I would be very surprised indeed if the arrangements operated in such a way as to destabilise the market. I do not want to be over-optimistic, but I should not be too surprised to discover that, between us all, we are able to get our approach right and to take sensible and far-sighted decisions on how we use the opportunities before us. I should not be at all surprised to see other member states make much swifter moves in the same direction than are currently being anticipated. Indeed, there is widespread suspicion that that might be so.

The hon. Gentleman also talked about encouraging entrepreneurship, and he is absolutely right. I am told that one feature of the discussions that have taken place throughout the United Kingdom in the run-up to the negotiations has been that conversations with older farmers about the potential package tend to involve reference to the problems that such changes will create. However, discussions with younger farmers tend to turn very quickly to the opportunities that such changes will create, which I find one of the most encouraging signs.

The hon. Gentleman asked about the freedom within Wales. As I said, this is a devolved responsibility. He also asked me to confirm where and how such flexibility should be used. If he will forgive me for saying so, he seemed to ask me two somewhat contradictory questions.

Mr. Brian Jenkins (Tamworth)

I congratulate my right hon. Friend, first, on completion of the long, frustrating negotiations and, secondly, on the degree of success that she has achieved. We may not have gone all the way, but we have gone at least part of the way. I am particularly pleased with the reduction of support prices for butter and rice, which brings them closer to world prices. However, did the sugar regime stay intact? If the Secretary of State wishes to make a statement on the website, will she ask the French Government if she can use theirs because, apparently, the Opposition buy every single word on that site.

Margaret Beckett

I take my hon. Friend's point entirely. I am grateful for his welcoming of the reduction of support prices, and I would not disguise from him or the House the fact that we would have liked to see them go deeper and further. The sugar regime was not discussed at all in the negotiations and therefore remains as it is, but that does not mean that it is set in stone for ever. We anticipate discussions on outstanding regimes such as sugar starting around September. The Commission will bring forward proposals about that time.

Tony Baldry (Banbury)

At present, every cow in Europe receives about $2 a day in subsidy; what will be the subsidy for each cow following the agreement? What in the deal is less trade distorting, and what will give developing countries an incentive at Cancun to sign up to the Government's agenda on new issues and to the general agreement on trade in services? Unless we can deliver on agricultural reform, there is no incentive for developing countries to sign up to the developed world's agenda at the World Trade Organisation conference. Unless we can secure a significant reduction in subsidies for such things as EU cows, there is no reason why the developing world should co-operate with the World Trade Organisation.

Margaret Beckett

First, it will soon be impossible to answer the hon. Gentleman's question about the average subsidy per cow in the European Union, because once payment is no longer linked to production, it will not be as relevant. It will be for the individual farmer to decide how to optimise market opportunities and what that means for the balance of livestock. The hon. Member for Brecon and Radnorshire (Mr. Williams) raised the issue of abandonment—he asked so many questions that I fear I may not have answered that one. We are all conscious of the fact that, once payments are decoupled from production levels, the question of abandonment may arise in some areas of some member states. However, we believe that the flexibilities allowed through the national envelope will enable countries, including ourselves, to address that problem if need be.

It is entirely right to recognise these as important issues to be set alongside other new issues at the trade talks. Discussions on matters other than agriculture are in the pipeline, and we retain the hope that agreement will be reached before Cancun, which will help to move things forward. The issues of market access, how we handle exports and so forth will come up in Cancun—and quite rightly so.

Mr. Ian Cawsey (Brigg and Goole)

May I add my congratulations to my right hon. Friend on the huge effort that she has put into these matters? In common with other hon. Members, I hope that this will be a new dawn for agriculture—that would be appropriate because it seemed to take until dawn to reach agreement. The move away from production subsidies is welcome, but does the agreement allow—as did the initial proposals—for subsidy on land to remain, dependent on its historic use based on a three-year time frame? If so, what steps can the Secretary of State take to assist the many farmers in my constituency who farm unsupported crops and now fear that they may be undercut by other farmers who may switch to their crop and keep an historic subsidy?

Margaret Beckett

I am grateful to my hon. Friend for raising that point, which I know is a source of anxiety. In fact, I can tell him that there will be an EU-wide ban on people taking such steps, so I hope that that reassures him. We had some reservations about whether it was the best method to tackle what is unquestionably a problem that needed to be addressed. It may appear to be a more minor matter for negotiation, but it is very important for those concerned.

Sir Archy Kirkwood (Brecon and Radnorshire)

The statement is important and welcome, and the Secretary of State was generous enough to acknowledge that it was a team effort. It is good to know that the constituent nations and legislatures can work so well together. I should like to ask two brief questions. First, is the 80 per cent. modulation payback guaranteed, because some voices were raised late last night that the 80 per cent. is not all that it seems to be? Is it an unqualified return figure of 80 per cent.?

On degressivity post-2007, some people are slightly concerned that the EU Commission has a unilateral right to fix the rate and increase the degressivity. If that is not the case, it would greatly help some of the farmers in my constituency if the Secretary of State could make that clear.

Margaret Beckett

First, I am grateful to the hon. Gentleman for his remarks. Secondly, how the 80 per cent. figure was arrived at is a little complicated, but as far as I am aware, there is no substance in suggestions that that will not be the net effect and outcome of the package. Finally, on degressivity and financial discipline, agreement was reached between member states and the Commission that strong financial disciplines were necessary and that some broad guidelines should be set down. As and when such trigger mechanisms should arise, further discussions are necessary on the matter.

Mr. Michael Jabez Foster (Hastings and Rye)

May I congratulate my right hon. Friend on achieving for the first time for a long time a level playing field—at least in the medium term—for British farmers? Some member states might use national envelopes to provide unfair competition. If it became necessary, would the Secretary of State find something for our own national envelope?

Margaret Beckett

As always, there are restrictions on what use can be made of national envelopes. Throughout the working out of the agreement, the Commission tried to ensure—it will be considered in the legal text—that people do not use the freedoms and flexibilities available to them to create an uncompetitive environment or to undermine competition across the single market.

What often does not come through clearly enough when we get embroiled in the detail is the fact that we have secured a totally new structure for the CAP where the default option is that the support available is not coupled to production levels. The hon. Member for Brecon and Radnorshire raised the issue of abandonment. It is a matter of genuine concern for every member state—albeit slightly different concerns for each member state—but we have sought to build in enough flexibility to enable all to tackle those problems. The core of the new CAP is now different—totally different—from what it was before.

Mr. Mark Francois (Rayleigh)

I appreciate the fact that agreement was struck only in the early hours of this morning, but I want to ask the Secretary of State what plans the Government have to communicate the details of the agreement to individual farmers—ideally, in a format that would allow them fairly quickly to work out what the precise implications will be for their individual businesses. I am sure that she will appreciate that farmers, including those in my constituency, will be anxious to know what it really means for their bottom line. How do the Government intend to provide the information to enable them to work out the implications in as timely a manner as possible?

Margaret Beckett

The hon. Gentleman makes an important and valid point, for which I am grateful. I can tell him that a great amount of work is now going on about how precisely to do so. He might like to ensure that the farmers in his constituency realise that nothing will happen before the end of 2004 or the beginning of 2005. Some may have preferred us to go a little earlier, but at least it gives us more time to get all the substantial administrative changes in place and to get the detail right. Farmers have time to assess their own options and to take their own decisions. One objective that we hope to achieve is stability for long-term planning for farmers and for their investment.

Geraint Davies (Croydon, Central)

I give my right hon. Friend my complete congratulations on the considerable progress that has been made. However, will she make clear in Mexico in September what the real prize of decoupling subsidies from production is? Apart from the benefits that will be felt by consumers, small farmers and the environment, the real prize is that countless thousands of lives in the developing world will be saved as millions of people are lifted out of abject poverty. The decoupling will also remove a breeding ground for resentment that is being exploited by the proponents of terror. Will she make it clear in Mexico that the aim is not simply to create a fairer world by removing appalling trade distortions but that it is in everyone's long-term interest that we achieve a harmonious world by securing collective success and pushing forward relentlessly on this agenda?

Margaret Beckett

My hon. Friend is entirely right, and I wholly share his view. I attended the meeting in Indonesia in the run-up to the Johannesburg summit on sustainable development, and then that summit itself. I witnessed the wrath of people from the developing world at the way in which the developed world exploited matters such as agricultural subsidies. I am therefore under no illusion as to how important they consider the matter to be. Indeed, I will not disguise from the House that I have bored stiff my colleagues in the Agriculture Council for the past 18 months by reminding them of the experiences of those of us who attended those summits, and of their duty to the outside world. I sincerely hope that that helped us get agreement last night.

Mr. Mark Hoban (Fareham)

In her statement, the Secretary of State said that there was a need to get the best possible settlement for taxpayers and consumers. Can she be a bit more specific about the deal's financial implications for those two groups?

Margaret Beckett

I cannot do so off hand, and certainly not after having been up all night. However, I mentioned in my statement the price cuts that will be of some assistance to consumers. Those are the sort of implications that we and everyone else will be trying to work through, as we assess the fine detail of the package.

Miss Anne McIntosh (Vale of York)

I congratulate the Secretary of State on reaching an historic agreement, but I remind her of the expression about being wary of Greeks bearing gifts. Will she give urgent attention to the vexed question of succession for tenant farmers? The matter is causing great anxiety to small tenant farmers in north Yorkshire and elsewhere in the country. She will be aware that a turkey factory in the Vale of York closed recently, with the loss of 300 jobs. As turkey is not a supported regime, will she raise with her EU partners the possibility that potentially fraudulent tariffs could be charged on turkey imported from Brazil, and the fact that those imports may be treated with illegal drugs? Clearly, that treatment is unacceptable, as is the fact that treated meat could be consumed by people in this country.

Margaret Beckett

I am grateful to the hon. Lady for that question. If she would be kind enough to write to me about the matters that she has raised, I shall certainly look into them and see what can be done.

Sir Robert Smith

I welcome the fact that the Secretary of State has come to the House so soon after completing the negotiations, but I hope that she will be able to reassure farmers in my constituency on a certain point. The French are notorious in this country for standing up for their farmers at every opportunity. There is real concern that they have signed up to a deal that allows them to opt to do something different that will benefit their farmers. If a debate on the matter is not possible soon, will she at least make sure that documents are placed in the Library that show her Department's analysis of how competition will be affected by the differential arrangements? Also, she began her statement by describing how bureaucracy would be swept away, but questions from hon. Members about substitution, abandonment and unfair competition make it clear that, if she is not careful, bureaucracy will creep back in to govern the way that farmers use their land.

Margaret Beckett

The hon. Gentleman's final point is perfectly fair. We are very mindful of that danger. I hope that he will recall that I said that we had hoped to find a better way to deal with the issue of unsupported crops, for example. Even so, there is no doubt that the deal represents a massive change in terms of bureaucracy.

The hon. Gentleman mentioned the record of the French Government, who are rightly proud of the way that they defend the interests of their farmers and others at Agriculture Councils and on other occasions. However, I remind the House of the policies pursued by the Government. The negotiating stance on which we sought agreement was pretty well the stance that all the relevant interests in this country wanted. They believe that it is in their interests to move to this new structure for the CAP, and I share that view.

One of the key differences between the UK and other EU countries is that we have suffered such terrible experiences in recent years. That has forced almost all—certainly great swathes—of the farming community here to think very hard about where the future of farming lies. People in farming in this country have thought very hard about how best to transform their lives and their prosperity. They have considered the future of European farming in a way that has not happened to the same extent in other member states. I repeat what I have said before: had—heaven forfend—the negotiations been put off for a few more weeks, it is possible that there would have been a notable shift in attitude. Privately and behind the scenes, farming organisations across Europe are beginning to say, "Well, actually, maybe this is something we want to do too."