HL Deb 21 November 1974 vol 354 cc1140-51

4.15 p.m.

LORD BESWICK

My Lords, with permission I now repeat a Statement made in the other place by the Minister of Agriculture. The Statement is as follows:

"The Council of Ministers (Agriculture) met in Brussels on November 18–19. The main decisions were to increase the New Zealand butter and cheese prices under Protocol 18; to provide for a guaranteed return to our beef producers; and to settle the duration and price elements in the mandate for sugar negotiations under Protocol 22.

"The Council decided on an increase of 18 per cent. in the c.i.f. prices for New Zealand butter and cheese imported under Protocol 18, with effect from January 1, 1975. I consulted Mr. Walding, New Zealand's Minister of Trade, throughout the negotiations. He has warmly welcomed the outcome and has been generous in his recognition of the help given by this country. The increase will not affect retail prices.

"On beef, the Council accepted the need to provide an assurance of firm returns to beef producers in the United Kingdom. As from the beginning of this week we shall provide from our own funds supplementary premium payments as necessary to provide an assured return of £18 per cwt. live-weight, for the week beginning November 18, increasing week by week to a level of £21.81 at the end of January. I am arranging for a Supplementary Estimate to be submitted, but in the meantime I will have recourse to the Contingencies Fund. Certain limits are set to the maximum subsidies payable under this scheme, but with the degree of flexibility that will be available I am satisfied that we shall be able to ensure that producers actually receive on average the full target prices.

"Similar supplementary premiums will be paid on cattle and beef imported from the Irish Republic; and there will be equivalent export levies on beef exports to other Member States.

"The beef market will also be supported by a limited form of support buying at relatively low price levels, beginning at £14.18 per cwt. at the end of November, and rising gradually to £18.54 at the end of January. The basic beef premium will not be paid on any beef sold into intervention.

"We shall not, therefore, be applying intervention either at the full level or as a permanent and continuous method of support; but rather as a way of protecting the market (and incidentally the Exchequer) against the sort of price falls seen in some recent weeks. The guarantee to producers will come essentially from their variable premium payments. There is no question of a ' beef mountain ' being accumulated in the United Kingdom. Any beef taken into intervention will be canned as cuts or kept in frozen carcase form, with the intention of phasing it back later on to our own market through normal commercial outlets.

"This combination of measures gives beef producers the firm guarantee of returns for which they have asked, coupled with modest support buying which should have no significant effect on retail prices.

"The arrangements will last until January. Those operating from February will be decided in the context of next year's CAP prices. I intend to ensure that they give equivalent support to our beef industry.

"On Protocol 22 sugar, the two outstanding questions were duration and price.

"On duration, the Council agreed that the principle of the guarantee to buy sugar from the developing countries will be valid for an indefinite period. The procedures for implementing it will be open to review if necessary and will in any event be reviewed before the end of the seventh year of the agreement. No amendments, other than quota adjustments in the event of shortfalls, will be made with less than five years' notice. These provisions are very satisfactory and give firm long-term assurances to the developing Commonwealth.

"On price, the Council drew a distinction between the price guaranteed on a long-term basis, and the price actually paid while world prices remain high. The guaranteed price will be negotiated within the prices applicable in the Community. But the Council recognised that in the exceptional circumstances of high world prices the price actually paid may exceed the guaranteed basic price by amounts to be negotiated between the sellers and the buyers. It also agreed that if necessary State guarantees may be given to the buyers in accordance with the opinion of the Commission. This should make it possible for prices to be paid which will bring the sugar to this country.

"The combination of these measures, together with the Statement of the Council secured last week by my right honourable friend the Secretary of State for Foreign Affairs, is sufficient to give our refineries the assurances they are seeking about supplies of cane raws to our factories. Clearly in 1975 (and in 1976 if still necessary) the supplementary payments would automatically bring such sugar to the paying countries. There is thus no need to insist on quotas at this stage. Should the situation change later we have the Council Declaration to the effect that the bulk of the cane raws will come in here in accordance with the traditional flows of trade.

"I made my agreement to these arrangements for beef and sugar ad referendum, so as to enable my colleagues to consider them thoroughly. This has been done and the Government have decided to accept the agreement. If the Dutch Government, which also agreed ad referendum, takes the same course, the agreement reached will become definitive on Friday. I hope that this will be done, for I regard the agreements on sugar and beef as satisfactory both for the developing Commonwealth and for this country."

My Lords, that is the end of the Statement.

4.21 p.m.

EARL FERRERS

My Lords, the House will be very grateful to the noble Lord, Lord Beswick, for repeating this Statement, which is fairly long, is extremely complicated but nevertheless extremely important. The eyes of many have been on the Minister of Agriculture while he has been in Brussels these last few days, and with some sympathy, because the problems of beef and of sugar were both difficult. I would start by congratulating the Minister of Agriculture on having put a floor into the beef market. This is what has been required; it is what has been urged, and the Minister has achieved this. This, I think, is right and it can only benefit beef farmers and also housewives.

The Statement says that the Minister is in fact going to use as one of the methods the intervention system. I am bound to say to the noble Lord that if the Minister of Agriculture is going back to intervention now, albeit on a small scale, I wonder why he ever did away with it in March of this year. We warned him at the time that it was wrong; we warned him that it was removing a floor from a commodity which has had a floor for 25 years, and since then the market has gone down and down. I believe the Minister was right to retrieve the situation and to put back the floor, but I believe he was quite wrong in March to have removed it. He must, therefore, accept the major responsibility for a disastrous error of judgment then, and for the disastrous beef market which has resulted from that action.

The Statement which he has made to-day on beef is welcome, but it has, of course, come too late to stop calf slaughterings running at five times their normal rate, and it has come too late to stop the shortage of beef in 1976 which must result from these calf slaughterings. However, I am glad that the right honourable gentleman has, as they say, made a meal of his own words, I think it was Winston Churchill who said, "What an unwholesome diet that is sometimes".

Can the noble Lord say what will be the cost to the Exchequer of the supplementary premium payments referred to in the Statement, first as regards the beef production by United Kingdom producers, and also the beef produced by the Irish Republic? If I may ask the noble Lord one item of detail, page 2 of the Statement says that we shall provide from our own funds supplementary premium payments as necessary to provide an assured return of £18. At the last line on that page, the Minister says: I am satisfied that we shall be able to ensure that producers actually receive on average the full target prices". I assume that means that although the £18 is guaranteed the full target price may not be guaranteed.

With regard to sugar, the Statement is silent on the fact of the 1.4 million tons which is produced from the developing countries, and it says that quotas are not necessary because sugar will come to the paying countries. As I understand it, the Community will fix a price; any member country may thereafter negotiate its own arrangements and its own price with the suppliers, and the Government may pay a subsidy on the difference between the EEC price and that made by the suppliers. If that is so, who actually negotiates the price with the suppliers? Is that the British Government or is it the traders? Are the Government prepared to give a subsidy for the whole of the difference between the EEC price and that negotiated by the traders?

Can the noble Lord give an assurance that the sugar will be available in refineries by February 1, when the Commonwealth Sugar Agreement shipments end, and can he give an assurance that under these arrangements there will be sufficient supplies of sugar in 1975? I hope he will be able to give these assurances. If the outcome of these negotiations has been satisfactory for this country, I would hope we can take it that that is because the European Community, although not necessarily anxious to retain Britain as a member, is prepared to accept the difficulties which obtain in this country and is prepared to adapt its own rules and guidelines to meet these difficulties.

LORD WIGG

My Lords, before the Minister replies, would he be good enough to take a question of procedure? As I understand it, following a Statement questions should be put in interrogatory form. So long as the rules which are open to me are the same rules that apply to the noble Earl who has just spoken, I do not mind. As he has made a short speech, I assume I can do the same?

LORD BESWICK

My Lords, there are some words in the guidance which would counsel my noble friend not to make a speech.

LORD WIGG

My Lords, if the noble Earl can do it, I can do it.

LORD BESWICK

My Lords, my noble friend can certainly couch his questions in a way which matches those put by the noble Earl opposite.

4.28 p.m.

LORD MACKIE OF BENSHIE

My Lords, if it is now convenient, I should like to add some remarks from these Benches on the Statement the Minister has made. We also welcome the floor which the Minister has put in the price of beef. I should like, first of all, to ask a simple question about the rather involved sugar arrangements which have already been mentioned. Does it simply mean that for the next two years, 1975 and 1976, this country from its own funds will be allowed to pay the world price in order to ensure sugar supplies for our refineries? This is what it appears to me to mean, and I should like to know whether this is so.

On the question of the guarantee for beef, this is, of course, long overdue. The Minister, and indeed the last Government, were warned on all sides that if we were to have a reasonable supply of long-term beef in this country then we had to have a bottom in the market. The bottom of £18 to-day and £21.81 in January is not at all generous. In fact, the costings produced by the colleges in Scotland and by the Meat and Livestock Commission show that at present-day prices, and with costs still rising, farmers will actually be losing money at this figure. As until now they have been losing a great deal of money, of course they are grateful for small mercies. We have always said that, although the Goverment insisted that intervention was a bad method and we agreed with this point, the fact is that now and over the past year the European farmer has had the proper bottom in the market; whereas this Government and this Minister have until now entirely rejected intervention buying, at the expense of the farmers in this country. I would agree that this will make a terrific difference to the plans for farmers and for the supply of beef to the consumer, but, as the noble Lord mentioned in his first reply, it is now certain that we shall suffer in 1976 from a shortage of beef.

One question I should like to ask the Minister is whether the Minister of Agriculture realises that further measures are needed for direct support to the hill farmers and breeders of cattle in the uplands of this country? All they have had until now—in a disastrous year—is a promise of an advance of subsidy. It is absolutely vital, if these men are not to go out of cattle in large numbers and, indeed, to go bankrupt, that this subsidy is made an emergency payment and not only an advance. Will the Minister be considering further measures to help the hill farmers of the country? This is absolutely vital to the future supply of beef to the consumer in this country.

With regard to the Statement, is the Minister sure that he will be able to pay, I presume, a supplementary allowance on the beef, to bring the price up to £18.54 now and £21 in January? What kind of beef will he buy at £14 and £18 through intervention buying? Will he buy inferior beef, unfinished beef, at this rate, or does he envisage that the Supplementary Estimates will be insufficient to cover the fall in price? Furthermore, does the noble Lord think that the cold stores in this country will be able to take the surplus he envisages buying?

LORD BESWICK

My Lords, I thank the two noble Lords for the qualified congratulations which they offered, and I shall do my best to answer the questions which they posed. The first question, or assertion, of the noble Earl, Lord Ferrers, related to intervention, and he made a great issue about going back to the intervention policy. I do not think that it is true to say that we are going back to the intervention policy. If the noble Earl reads the small print, as I hope he will eventually, he will see what I mean. Further, I am satisfied that when we obtain a new régime for beef in February it will be a better régime because we did not accept the intervention policy in the beginning.

The noble Lord, Lord Mackie of Benshie, asked where we were going to buy the cattle at £14 or £15 a live cwt. The fact is that the Government are not going to buy any cattle at those prices. The cattle will be bought at the auctions at the market price which, as noble Lords know, is now rising. There will be on that price the basic headage payment to the producer; on top of that there will now be the supplementary payment. That animal—later beef in the hands of the trader or the butcher—can then be offered back to the Government at the intervention price, which, as the noble Lord said, is very low. If any butcher or wholesaler offers the beef at that price, he will be unlikely to make much of a profit; he will, in fact, be making a loss, which is one reason why the intervention price is somewhat different from that which was suggested at the beginning. Moreover, it will be on the basis of 85 per cent. instead of 93 per cent. which is payable on the continent. Therefore, there is a difference, and I think that it is a difference which will be to our advantage so far as the later scheme is concerned.

EARL FERRERS

But it is intervention?

LORD BESWICK

My Lords, it is a more sophisticated form of intervention which will be for a temporary period until February. I repeat again that I think the new régime which we hope to negotiate will be all the better because we have held out on this up to now. Although I do not wish to make a speech on this point, the fact of the matter is that had we adopted the intervention price at the beginning we should not have had the storage space to hold all the animals that would have been offered. The answer to the noble Lord, Lord Mackie, on whether we have the storage space now is that it is expected that we shall have, but that it will be on the basis of there being a very limited amount of beef offered on intervention.

I was asked the estimated cost. The answer is that it would be of the order of £20 million. On the sugar price, I was asked whether I could give a copper-bottomed guarantee that we should have all the sugar that was needed. I should be foolish if I tried to give that guarantee, but quite clearly the situation now is much better than it was before we secured this arrangement. I was asked about fodder. I am afraid that I can add nothing more about fodder to what I said in the debate a week ago. Certainly, I accept what the noble Lord said. It is an important matter, and it is one that the Government are now considering.

I was asked about the difference between the target price and the average price. Of course the fact is that there are different prices for different grades at the same market on the same day. The average will, in fact, be the average as between the various grades. Some will get a little more and some a little less. I was asked whether I could split the separate costs for Irish cattle, and the answer is that I cannot.

LORD WIGG

My Lords, would the noble Lord be good enough to consider the possibility, once a Statement has been made in another place, of having copies available in the Printed Paper Office, so that when he invites the noble Earl opposite speaking for the Opposition to read the small print, it will give that marked advantage to those who at the moment are faced with the choice of reading no print? If Statements can quite properly be made available to the Leader of the Opposition and the Leader of the Liberal rump below the gangway, I think that other Members of the House are entitled to be put in a position to ask questions which have some relevance to the matter before the House.

The noble Earl who spoke from the Conservative Benches said that this is a very complicated Statement, as it obviously is. He then commenced to dance what amounted to a fandango on the political grave of the Minister of Agriculture. That is what it is if in fact he has sold the interests of the country down the river to the extent of accepting the policies of the previous Administration. If we had copies of the Statement we should then all be in a position to realise what nonsense the noble Earl was speaking, as has been made palpably clear in the light of what my noble friend has said.

Turning to sugar, would not my noble friend agree that on a Statement of this kind the normal rules of the House are that you should not indulge in a speech? We have now had four speeches, but they were put in interrogative form. Would not my noble friend agree that the situation that has risen about sugar, both as to price and shortage, is wholly due to the fact that the Conservative Administration sold the interests of this country and of the Commonwealth down the river? Three years ago the price of sugar was of the order of £100 a ton, and it has now gone to £600 a ton, with the price still rising and the prospect of there being no sugar. As I understand it, under the "deal" that the Minister of Agriculture has "negotiated", if again that is the right word, what we are now committed to is to get what sugar we can at what price we can pay, and that any purchase we make over and beyond the EEC price of approximately £130 a ton will come out of the taxpayers' pocket, or out of the pocket of the consumer. In addition, the Government are in no position to give any guarantee about the quantities of sugar which will be required to keep going the cane refining industry. I should like specifically to ask the noble Lord whether the offer of the Australian Government to supply this country with all the sugar that Australia can supply on a long-term basis has or has not been turned down? Or is it the case that under French pressure we have once again sold out the interests of the British taxpayer, the British nation and the British consumer and members of our Commonwealth family as well?

LORD BESWICK

My Lords, I am sure my noble friend Lord Wigg has sufficient experience in Parliamentary affairs to know that it would not be feasible to distribute Statements of this kind to every Member of the House. I had my copy only a few minutes before I entered the Chamber, and even then some of the script is in handwriting, having been changed in the course of the last few minutes. What he suggests is not feasible, of course. When I referred to the small print, I was using the expression figuratively. There are in fact no small printed words on that piece of paper from which the noble Earl, Lord Ferrers, was speaking.

On the question of the sugar situation, if my noble friend is saying that all the present complications stem from the fact that this House did not accept the advice which he and I offered when discussing the Treaty of Accession, I absolutely agree with him. It is, however, now a fact that as a result of quite a struggle we, as a country, are in a position to make a contract with the Commonwealth producer for an indefinite period. I am hoping that because we can offer some security of contract over a period of years that the price will be suitably lower than it would be if we had to buy in the manner which existed before this agreement was reached. I was asked about the Australian supply. The fact is that Australia did not offer us any sugar. Very sensibly, the Australians said that if they were to make a contract it must be with the Community as a whole, and the Community were not prepared to make the sort of contract which the Australians required.

LORD BURTON

My Lords, I am sure that we all welcome the Statement about the floor being put into the beef market, even if a low-level, creaking floor. However, is the Minister aware that there will be further problems with the meat trade in the early spring when the EEC countries introduce health regulations which will stop us exporting to them? Is he further aware that some of these problems could be overcome should we be able to export on the hoof?

LORD BESWICK

My Lords, I have no doubt that there will be other problems, but they do not arise out of the Statement which I have just made.

LORD HAWKE

My Lords, are Her Majesty's Government aware that, even if we succeed in buying cane sugar at half the world cost, it will still be a vastly bigger sum in foreign exchange than we can possibly afford? Even then sugar will be very expensive—about 30p per kilo for raws; I am not sure what that will amount to in the shops. Will the price be averaged with our own beet crop, which is a considerable failure? How is that going to work? I wish that the noble Lord, Lord Wigg, would have a chat with a sugar broker who would put him wise to some of the facts of life about sugar.

LORD WIGG

My Lords, as my name has been mentioned, may I say that two years ago I was in Jamaica, which is a prime sugar producer, and the result of the policies then put forward by Her Majesty's Government had the effect there of making sugar vanish completely. I do not go to a sugar broker for my information; I go to the spot.

LORD BESWICK

My Lords, I am not sure which question the noble Lord, Lord Hawke, posed, but if he is saying that sugar will be very expensive, of course I agree with him. I also add, again not provocatively, that I wish some of the doubts which noble Lords now express about this situation had been taken more into account when we were discussing the question of the whole Treaty of Accession.