HL Deb 28 March 1973 vol 340 cc1071-8

3.50 p.m.

EARL FERRERS

My Lords, with the leave of the House I should like to repeat a Statement which my right honourable friend the Minister of Agriculture is making in another place on the meeting of the Council of Agricultural Ministers in Brussels this week. The Statement is as follows:

"The Council had a preliminary discussion at their meeting in Brussels yesterday on the Commission's proposals for farm prices for 1973-4. These proposals, full details of which are being made available to the House in the normal way, include an increase in the price of beef, and smaller increases for pigmeat, rye and milk. It is also proposed that the prices of almost all products should be raised by a margin of 2.76 per cent., representing the amount by which the currencies of the Benelux countries have appreciated in relation to the Community's unit of account. By adding this amount to the price proposals and by adjusting by a similar percentage the rates of exchange used by Benelux and Germany in converting their currencies for CAP purposes, it is proposed to eliminate for Benelux, and substantially reduce for Germany, the need to compensate for the present disparities between their actual rates of exchange and their official rates. Although the immediate effect of these proposals on United Kingdom consumer prices would be very limited, the longer-term effects on our prices could be serious.

"In putting the British point of view I stressed the importance of avoiding anything that could lead to further increases in prices for consumers even in the longer run, and of looking to means of support other than raising end prices in order to make any necessary adjustments between commodities. I acknowledged the need to find a solution to the difficulties which currency differences create. But I urged that it would be wrong to seek to overcome the problems, which such differences make for the CAP, by raising prices; to attempt to do so would greatly add to the difficulties of settling the Community's agricultural prices policy for the coming year.

"In the course of a preliminary exchange of views it became clear that opinions on the Commission's proposals differ widely among Member States. The Council will resume consideration of the proposals at its meeting in Luxembourg on April 9 and 10.

"The Council agreed to suspend the common tariff on imports of old crop potatoes until June 1, and we shall take corresponding action to suspend our own small tariff of £1 per ton as soon as practicable. Further consideration is being given to a Commission proposal to suspend the common tariff on new potatoes until May 1.

"I also raised in the Council the question of the refining margin for Commonwealth sugar.

"As I said in my reply to my honourable friend the Member for West Derbyshire on March 23, the refining margin resulting from the arrangements agreed by the Community in January is not currently adequate to ensure the refining and marketing of the sugar we are committed to take under the Commonwealth Sugar Agreement. I reminded the Council that I had told them in January that, if this happened, measures would have to be taken to rectify the situation. I informed them that I would be making supplementary payments to refiners in the United Kingdom. In my view, these payments could not be regarded as contrary to Article 92 of the Treaty of Rome, since they could not bring about distortion of trade between Member States.

"In respect of the period February 1 to June 30, these payments are expected to total around £3.5 million. This will not represent extra cost to the Exchequer because they will be more than offset by receipts of import levy on the sugar concerned. A supplementary estimate will, however, be necessary and will be presented in due course. Pending approval of this, recourse will be had to the Contingencies Fund. The payments will be designed to bring the margin up to £17 per ton, on the basis of a yield of 95.6 per cent. I am discussing with the refiners the precise arrangements involved. I will be considering later what may be necessary to meet the continuing requirement after June 30."

My Lords, that concludes the Statement.

3.56 p.m.

LORD BESWICK

My Lords, we are grateful to the noble Earl for repeating this Statement. I have one or two questions to ask of him. First, could he explain what he meant when at the beginning of the Statement he said that details will be given to the House in the normal way? What is meant by "normal way" in this context? For how long have there been made Statements about the Commission's decisions on agricultural prices? Secondly, may I ask the noble Earl whether he can give a quite categorical assurance that, in so far as these substantial increases to which he refers in the CAP prices are above the market prices now ruling, his right honourable friend will use his power of veto? Thirdly, will he confirm that in so far as it is possible to say that these substantial increases will not put up significantly the prices in the shops to the housewife, what they will do is to make it absolutely certain that they will never come down again—even though market prices in the future may come down?

May I also ask about the significance of the 2.6 per cent. increase in the marginal prices? Does this mean that the point made so strongly by the Prime Minister weeks ago that certain Community members were subsidising or off. setting the effect of the floating of the pound will no longer be true to the extent of this 2.6 per cent. increase in the margins? May I further ask the noble Earl whether he can say why there is no reference in the Statement to butter? Was butter not discussed? Can he say whether it is to be discussed in the future and why it was left out of these discussions?

Finally, on the point about the refining margin on sugar, could the noble Earl give any assurance that the reluctance or refusal of the Community to allow a sufficient refining margin for cane sugar is not to be taken as an indication of how they are going to construe the undertaking given at the time of the discussions of our entry into the Community that they would have close to their hearts the problems and difficulties of the Commonwealth sugar producers?

LORD WADE

My Lords, I should like to join in thanking the noble Earl for repeating this rather lengthy Statement. I think that its most disturbing feature is the information that the Commission's proposals would include a substantial increase in the price of beef as well as smaller increases in other commodities, and that on top of these increases it is proposed that the prices of almost all products be raised by a margin of 2.76 per cent. I think that what the general public would wish to know, in the simplest possible terms, is what is to be done to minimise these increases both in the long term and in the short term.

I am sure that noble Lords will agree that the British representative was right to stress the importance of avoiding anything that would lead to higher food prices for consumers; but I gather from what the noble Earl ahas said and from some of the comments in the Press that Britain did not carry the day at the meeting at Brussels. That leads me to one question, a very innocent question, to which I have no doubt I ought to know the answer. It has often been pointed out that one of the safeguards of membership of the E.E.C. is to be found in the unanimity rule. Does that apply to decisions of the Council of Agricultural Ministers? If the majority of Ministers reach a conclusion with which Britain disagrees, and Britain objects, what happens?

4.0 p.m.

EARL FERRERS

My Lords, I am grateful for the remarks made by the noble Lords, Lord Beswick and Lord Wade. The object of this Statement was really to give an interim report of what has been happening in Brussels. There will be further and more detailed discussions which will take place in Luxembourg in a fortnight's time. The noble Lord, Lord Beswick, asked what was the normal way in which these documents will be produced. The document to which the Statement refers is one which is put out by the Council of Ministers from the Commission and it includes the CAP price proposals. It will be placed in the Printed Paper Office in your Lordships' House.

The noble Lord, Lord Beswick, asked whether I would give a categorical assurance that, if the Commission's prices were to be raised, the Government would use their veto. My Lords, I do not believe that the noble Lord really expected me to give such a categorical assurance because, as he will know, the veto is a last resort and the whole point of the discussions is not to use the veto but to come to some form of common agreement. The noble Lord said that the substantial increases will not enable prices to go down and he also referred, by implication I think, to the fact that these were prices for intervention purposes. Of course these are intervention prices, and it is those and the target prices which will go up and not necessarily the market prices. In the long term these higher intervention prices will affect the price of commodities in this country, but in the short term the effect will not be so noticeable.

The noble Lord, Lord Beswick, referred to the Sugar Agreement regarding sugar taken from the Commonwealth. We have arrangements with the Common Market and with our Commonwealth sugar producers that sugar quantities coming from the Commonwealth are fixed and agreed up to the end of 1974. It is in order to enable the refiners to process this material that the alterations to which the Statement refers have had to be made. The noble Lord, Lord Wade, asked rightly what Government are going to do to minimise the price increases. My Lords, we are desperately concerned to ensure that price increases are kept to an absolute minimum. There is only one real way to effect this; that is, to ensure that the output from farms meets the demand. That is what this Government are trying to do, and is what we are attempting to do over the whole output of British agriculture—to increase it so as to enable the increased supply to meet the demand. I should not be prepared to give—and nor would the noble Lord, Lord Wade, expect—an assurance that prices would not increase when there are world shortages. But we are very concerned about this and that is the reason why my right honourable friend has done, and is doing, all he can in Brussels to ensure that the price increases proposed by the Commission should be as small as possible.

LORD SHINWELL

My Lords, may I ask whether the noble Earl is aware that the attitude adopted by his right honourable friend the Minister of Agriculture, Fisheries and Food has the approval of a large section of the people in the United Kingdom who are concerned about the rising prices of food and also the inflationary effects? May I have an assurance from the noble Earl that the attitude adopted by his right honourable friend, of resisting the efforts of the French to maintain a very high level of food prices in order to satisfy the peasantry of France, will be resisted at the next meeting in Brussels or Luxembourg, or wherever the meeting is to take place? In other words, may we have an assurance that the Government will stand by his right honourable friend the Minister of Agriculture, Fisheries and Food in the attitude that he has adopted? Lastly, because this is not the occasion—at least, from my point of view—to enter into detail, ought not we to have a debate before the next meeting takes place so that the Minister of Agriculture, Fisheries and Food should have the backing not only of those in the other place but also of Members of your Lordships' House?

EARL FERRERS

My Lords, with regard to the latter point made by the noble Lord, Lord Shinwell, I think that is a matter which might well be discussed through the usual channels. I fully recognise the concern which he and the others have—and indeed the whole country has—with regard to the increase in food prices, and I think that this may well be a matter which the usual channels might consider. The noble Lord, Lord Shinwell, asked me to give a categorical assurance that my right honourable friend would not change his attitude at the next meeting. The Government have not and do not intend to change their attitude and their determination to halt inflation and to keep the increase in food prices as low as possible. It would be beyond my expectation to think that my right honourable friend, who has taken such a rigid stand this week, would take a contrary stand in two weeks' time.

LORD BESWICK

My Lords, the noble Earl did not reply to my question about butter. I asked why there was no reference to butter in the Statement, as butter is one commodity of which there is a world surplus, and a surplus in Europe, and it would interest housewives to know why butter prices should not cone down rather than go up.

May I also ask whether the noble Earl is quite certain that he is interpreting correctly what is said in that part of the Statement where reference is made to the need for looking to means of support other than raising end prices in order to make the necessary adjustment between commodities. Is he absolutely certain that all the Government had in mind was the matter of raising production in this country? Have they not in mind something of the sort of approach that M. Spénale has of giving support to the consumer rather than relying entirely on the intervention price?

Would the noble Earl give me a little more information about what he meant regarding sugar? I am perfectly well aware that we have made arrangements up to the end of 1974 on sugar prices, but I was asking whether the refusal of the Community to agree to a reasonable margin for the refinement of cane sugar meant that we were no longer able to rely on them for—as they put it—having this problem close to the heart when it came to making arrangements after the ending of the present temporary arrangements.

EARL FERRERS

My Lords, I do not think that the conclusion which the noble Lord, Lord Beswick, drew from those remarks is correct—that neither the Government nor the Common Market have the problem of the Commonwealth Sugar Agreement close to their hearts at the conclusion of the present Agreement. I think that they have; but I believe this is a totally different point. The point at issue at the moment is the fact that sugar is to come in under agreement and the current refining margins simply are not adequate to enable this to be done. That is why the Government have decided to make supplementary payments. They do not believe that this is contravening Article 92 of the Treaty of Rome.

My Lords, the noble Lord referred to the support of other than end prices. I think that one of the things which we in this Government believe very strongly is that there is room for change and alteration in the common agricultural system. This could be by methods other than by just putting up end prices. In this country, we have adopted different systems in the past which we have found to be successful and our idea, and our hope, would be to encourage possibly more of the systems we have found to be useful to be used in the Common Market. The noble Lord also asked why no reference was made to butter. There was no reference made to butter in this particular Statement, but I can tell the noble Lord that if he looks at the documents he will find some considerable changes in the prices of milk and milk products. For instance, the price of milk is likely to go up under the CAP proposals by 2.72 per cent., and this would be achieved by reducing the butter price by nearly 11 per cent., but increasing the skimmed milk powder price by over 26 per cent. It is complicated, but the noble Lord will find that there is reference to that in the Community's proposals.