HL Deb 30 March 1977 vol 381 cc911-5

3.52 p.m.

Lord STRABOLGI

My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food. The Statement is as follows:

"The Council of Agriculture Ministers met in Brussels from 25th to 29th March. My honourable friend the Parliamentary Secretary represented the United Kingdom.

"The Council did not reach agreement on Community agricultural support prices for 1977/78 and discussion will be resumed at the next meeting in Luxembourg on 25th/26th April. The consequence is that the EEC common support prices and the United Kingdom's guaranteed price for milk and the target price for beef under the beef premium scheme remain unchanged for the present. At the request of France, Ireland and Italy the Council accepted changes in the green currencies of those countries.

"Eight Member States would have been able to agree on a final package of changes from the Commission's original proposal, including slightly bigger price increases. In a long and hard session my honourable friend maintained that we would only be prepared to accept the changes in common prices and a small devaluation of the green pound if there were adequate compensating action of food prices in the United Kingdom. In this connection the United Kingdom put forward proposals for a butter subsidy which would have achieved this, and also helped to dispose of part of the Community's expensive butter surplus.

"Unfortunately the final package did not offer sufficient advantages to the United Kingdom and we were therefore not prepared to accept it.

"The Council also considered measures for the establishment of catch quotas for fish and other control measures in certain areas of the waters of Member States. As my honourable friend the Minister of State explained to the House on Monday evening, the United Kingdom could not agree to these measures which would have adversely affected our rights in United Kingdom waters."

My Lords, that concludes the Statement.

3.56 p.m.

Lord SANDYS

My Lords, I expect many noble Lords in most parts of the House will agree that we share a degree of mystification at the Government's stance on the situation at the moment, and my first question is to ask the Government what is the result of the present negotiations; what is the result of this present exercise? My second question concerns the difficulty we experience in discerning the difference in price between the butter subsidy which was sought and that which was finally offered by the Commission. Would the Minister be able to tell us a little about the consequences for both pig producers and beef producers?

With regard to the MCAs for pigs, concern has been expressed, and so far as beef prices are concerned a special anxiety has been expressed in regard to the devaluation of the Irish green pound and its effect on Irish beef in this country. We have a particular concern as to the stance adopted by Her Majesty's Government, because this appears to have been a negotiation which may well prejudice negotiations in future years.

Lord BANKS

My Lords, I should like to thank the noble Lord, Lord Strabolgi, for repeating the Statement made in another place. We on these Benches are well aware that protracted all-night negotiations are part of the routine way in which these matters are settled. Nevertheless we regret the acrimonious note which appears to have crept into the meeting of the Council on Monday night. Of course we sympathise with the efforts of the Government to keep down food prices in this country. However, inevitably, as the Statement implies, we have to accept some devaluation of the green pound. This is a problem for which the Community was not responsible in the first place. The Government are right, in the face of surpluses, to want to keep price rises down as far as possible, but there will have to be a compromise and there must be limits to the extent to which we as a nation can expect to be protected against the effects of the devaluation of the green pound and the effects of such price rises as may be agreed. However, I very much hope that a satisfactory compromise solution will be arrived at in a month's time.

3.58 p.m.

Lord STRABOLGI

My Lords, I am grateful to both noble Lords, and particularly to the noble Lord, Lord Banks, for what he has said, and I shall do my best to answer the various questions that have been raised.

The noble Lord, Lord Sandys, asked what was the result of the present negotiations. There have of course been various decisions: the Italian green lira has been devalued by 6.5 per cent., giving an MCA change of 8 points; the French green franc has been devalued by 2.55 per cent., giving an MCA change of 3 points, and the Irish green pound has been devalued by 6.26 per cent., giving an MCA cut of 7 points. All these changes will take effect from 1st April for milk, pigmeat and beef, and the beginning of the marketing year for all other commodities. The marketing years for beef and milk will each be extended until 30th April with, of course, no change in prices in the meantime.

The noble Lord, Lord Sandys, asked about the effect of the changes in the Irish green pound. This will increase the gap between Irish and United Kingdom prices. My right honourable friend the Secretary of State for Northern Ireland has announced an increase in the payments under the meat industry employment scheme. We do not expect the differential to have any major impact on Great Britain prices. The Irish/United Kingdom green rate differential is naturally a factor in considering the need for a change in the United Kingdom green pound, but obviously it is not the only factor.

With regard to the butter subsidy, the Commission's compromise proposal was for a subsidy of 30 units of account per 100 kg. (about 8p per lb.) for the rest of this year, falling to 25 units of account per 100 kg. (about 6½ip per lb.) for the first quarter of 1978. The proposed increase in Community prices, plus the proposed green pound changes and first transitional steps, would have added about lop per lb. to the price. The next transitional step would add another 6½p per lb. We cannot say what minimum butter subsidy would be acceptable, but I am sure the noble Lord would agree that the final package must be considered as a whole.

With regard to beef, the compromise proposal is for 3.5 per cent. increases in target and intervention prices. The present system both of intervention and of variable premia will continue for the whole of the coming marketing year. This, of course, was not agreed. The proposal to continue premia for a full year is an important advance on the Commission's original proposals. Pending further Council discussion, current intervention price and United Kingdom target price will be unchanged, giving a United Kingdom target price for April of 52.12p per kilo.

With regard to pigmeat, the basic price will increase by 5 per cent. from 1st November. No Commission proposal has been made on pigmeat MCAs, but we will continue to press for change in the method of calculation. The negotiations have shown, I think, that simply changing the green pound would not in itself secure this change. The subsidy, I am glad to say, will continue for the time being. We recognise that the increase in basic price will increase pigmeat MCAs unless the method of calculation is changed.

My Lords, I may say in conclusion that of course the other Member States could have agreed on a compromise package. We recognise the difficulties of those Member States resulting from failure to agree; but we consider that the effect on food prices and counter-inflation policies is a vital issue for the Community as a whole. The European consumers also have an interest in the stand taken by the British Government. Other Member States underestimated the value to the Community, through offsetting savings in the cost of the surplus disposal, particularly of the butter subsidy, as the noble Lord, Lord Sandys, said. We should not only look, I suggest, at the short-term budgetary cost, but at the need to give some priority to consumers and to avoid heavy cost of sales to third countries which would otherwise appear inevitable.

Lord GLADWYN

My Lords, when the forthcoming by-election at Stechford is over, will the Government give serious consideration to the constructive, if qualified, criticism of the Agriculture Ministers' recent policy as advanced in a leading article in today's Financial Times?

Lord STRABOLGI

My Lords, I am afraid I had forgotten there was a by-election at Stetchford. I have been too busy today answering questions in your Lordships' House.