Lords Sitting of 17 April 1980

Preamble
The House met at Three of the clock: The LORD CHANCELLOR 011 the Woolsack.
Prayers—Read by the Lord Bishop of Chelmsford.

THE CIVIL AVIATION AUTHORITY: NEW RADARS
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement about the new radars to be purchased for the Civil Aviation Authority.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, the CAA needs to buy new radars for use in the national air traffic services. It is for the authority to choose its own suppliers. They have received offers but I understand that the main orders have still to be placed.
Lord ORR-EWING: My Lords, I thank my noble friend for that reply. In making the decision, will Her Majesty's Government bear in mind that the electronics industry, making capital goods, exported some £500 million worth last year. This British industry does not ask for any special concessions. It just wants the same consideration by the Government here as is given by the Governments of the United States, France and Germany, where its competitors come from.
Viscount TRENCHARD: Yes, my Lords, the Government and the CAA are aware of the export performance of this industry as a whole and of the ground radar section of it, whose record is impressive. An important consideration is the practice of other countries in relation to these high technology industries, and both the CAA and the Government are aware of that.
Lord LEATHERLAND: My Lords, are the Government aware of the fact
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that some of the reputable newspapers have indicated that this contract is likely to be placed abroad? Would not that be a great pity both for the people working in the industry in this country and for the export possibilities?
Viscount TRENCHARD: My Lords, I do not really want to add to what I have already said, in view of the fact that the main orders have still to be placed.
Lord WYNNE-JONES: My Lords, is it the intention of Her Majesty's Government always to ensure that foreign companies have an advantage over this country?
Viscount TRENCHARD: No, my Lords.
Lord HANKEY: My Lords, in considering this problem, will the Government bear in mind that it is very difficult to sell this sort of equipment abroad unless we are known to buy it ourselves? Therefore the effect on employment is many times greater than that represented by the orders which the Government will place, important as those are.
Viscount TRENCHARD: My Lords, certainly that consideration is in the minds of the Government and, once again, of the CAA. This is a Government, so far as possible, of non-interference and of allowing major purchasing authorities to exercise their own correct discretion in areas about which they know a great deal. Nevertheless, it is in their interests to have strong home industries in any longterm sense. It is certainly the view of Her Majesty's Government that public purchasing authorities will take that long-term interest into account.
Lord SHINWELL: My Lords, on the original Question, which I know the Minister prefers, can he say whether there is any military connotation? If so, why the delay in placing the orders?
Viscount TRENCHARD: My Lords, there is a connection with the MoD radars because the existing system uses part of the same defence radars, but the future plan for these radar orders is based, virtually exclusively, on civil air traffic.
Lord ORR-EWING: My Lords, will my noble friend study the memorandum which has been sent to him from the Electronic Engineering Association which underlines very clearly the dangers which have been voiced in other parts of the House, that we may be moving towards a de-industrialised Britain if we always buy foreign goods at the cheapest possible rate?
Viscount TRENCHARD: Yes, my Lords.
Lord WHADDON: My Lords, is the noble Viscount aware that when civil aircraft become lost, as they occasionally do, it takes anything from 10 to 20 minutes to locate them in the absence of automatic fixing apparatus working on the VHF frequencies? Will this new radar apparatus speed up the process, which is vitally needed, or shall we still need automatic location equipment, working on VHF frequencies?
Viscount TRENCHARD: My Lords, the noble Lord has me out of my depth, but I am quite clear that the CAA intends the radar system to be among the most advanced possible with modern technology.

THE WATER INDUSTRY: CONSUMER REPRESENTATION
3.12 p.m.
Lord BOYD-CARPENTER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are considering the introduction of machinery for consumer representation and for the settlement of disputes with consumers in the water industry.
Lord MOWBRAY and STOURTON: My Lords, a measure of accountability by water authorities to consumers already exists. The majority of their members are appointed by local government and these members, invariably councillors, can and should provide a channel for customers; their meetings are open to the public; they come within the jurisdiction
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of the Commissioner for Local Administration; they are subject to audit; they are answerable to Parliament through Ministers; and, lastly, they are subject to the provisions of the Competition Act.
The future of the consumer bodies for all the nationalised industries is however at present under review and we will be considering the position of the water industry in relation to that review in due course.
Lord BOYD-CARPENTER: My Lords, while thanking my noble friend for that extremely interesting reply, may I ask him whether the Consumer Council has made representations to the Government on the subject of consumer representation in respect of water authorities?
Lord MOWBRAY and STOURTON: Yes, my Lords, that is true; they have.
Lord DAVIES of LEEK: My Lords, is the noble Lord aware that it was a joy to hear that comprehensive Answer as to how the consumer will ultimately be protected? Is he aware that the passing of the buck and telephone calls creates frustration, speculation, intimidation and complete inattention to masses of consumers year in and year out, and will he do something about it?
Lord MOWBRAY and STOURTON: My Lords, it will always be a pleasure to have the noble Lord, Lord Davies of Leek, as a customer.
Baroness BURTON of COVENTRY: My Lords, leaving aside the water industry, but dealing with the reply given by the noble Lord, am I correct in thinking that the Government are contemplating forming a committee by which representation for all the nationalised industries, in so far as consumers are concerned, might be brought together; and if that is the case, does he have in mind a very large committee?
Lord MOWBRAY and STOURTON: My Lords, perish the thought that we should be forming more committees than are necessary. As I said in my initial Answer, we are having a review of consumer interests, but what form it will take I cannot prejudge.
Baroness BURTON of COVENTRY: My Lords, if I may ask one further very brief question, can the noble Lord say whether it is the intention of the Government to publish—I suppose it would be a Green Paper—for possible discussion on the general reorganisation of consumer representation?
Lord MOWBRAY and STOURTON: My Lords, when we have done our review and considered it we shall make our intentions known.

THE LICENSING COMPENSATION FUND
3.15 p.m.
The Earl of KIMBERLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
.To ask Her Majesty's Government whether they are aware that there have been 14 inconclusive Answers to Questions on the Licensing Compensation Fund in the last five years and when they hope to be able to give a positive Answer on this subject.
Lord SANDYS: My Lords, I am aware that the noble Earl and other noble Lords have asked a number of Questions on this matter, including four since the present Administration took Office. As my noble friend Lord Belstead said in reply to a Question by the noble Lord, Lord Janner, on 31st March, good progress is being made in reaching decisions on how the Licensing Compensation Fund might be wound up and the proceeds disposed of.
The Earl of KIMBERLEY: My Lords, while I thank my noble friend for that Answer, may I ask whether he can say if talks are still proceeding with the brewers society? If that is so, when they cease will there perhaps be talks at ministerial level? Can he further say whether any money has been paid out of the Compensation Fund in the last year or two years?
Lord SANDYS: My Lords, yes; the discussions have been proceeding very well and there are good prospects of arriving at a scheme for winding up the
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fund which will be acceptable to the National Council on Alcoholism, of which the noble Earl is the vice-president, as well as to the drink industry. Secondly, in regard to the question of the use of the fund, for the year to the 31st December 1978 I can give the following figures: Derbyshire used it to the extent of £277; the West Midlands to the extent of £88,000; West Yorkshire to the extent of £18,500, making a total of £106,777.
Lord WELLS-PESTELL: My Lords, may I ask the Minister whether the Government are aware that there is an increasing problem of alcoholism in the country at present and that a good deal of remedial work is being done by a number of outstanding voluntary organisations in the field of treatment? As it is expected that a substantial sum of money will be put aside for both research and treatment, are the Government also aware that it is urgent that this fund should be wound up so that money may be released on a generous scale to help both projects?
Lord SANDYS: My Lords, the Government are indeed aware of all the matters raised by the noble Lord, and as the noble Lord himself replied to a Question on this subject on 20th July, 1978, I can confirm that all that he said at that time is shared by this Government.
Lord JANNER: My Lords, after his reply to the noble Earl and myself, may I ask the noble Lord whether he does not think that after 30 years somewhere something is remiss when this matter has not been dealt with? When he says that it will be dealt with soon, what does he mean by "soon"? Is it not essential that something should be done with only a very little delay? Why have not any Government at all—because I am not talking entirely against the present Government—taken notice of what the licensing people themselves want done with moneys which they have produced?
Lord SANDYS: My Lords, I am glad that the noble Lord, Lord Janner, agrees that this is an entirely non-political matter over a very long period. It is perfectly true that the licensing justices have a responsibility in this regard, and of course there are 58 committees which handle it, which adds to the complexity

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of the problem. I do not think I need add anything further to what I have already said.
Lord WELLS-PESTELL: My Lords, may I ask the noble Lord whether it is not a fact that I answered more than once on this particular matter, and does that not indicate that really the time has come when a final decision should be made?
Lord SANDYS: My Lords, if I may refer to what I said initially, very good progress is being made and the matter is at present under ministerial level consultation.
Lord SEGAL: My Lords, would it not be possible for some distribution to be made to various deserving causes before this fund is actually wound up?
Lord SANDYS: My Lords, I regret that it would be impossible to do that because the whole matter requires primary legislation.

GIBRALTAR: AIR TRAFFIC
3.20 p.m.
Lord BALFOUR of INCHRYE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the opening of the Gibraltar-Spanish frontier includes the lifting of all aerial navigational restrictions on landings and taking off from Gibraltar airfield imposed by the Spanish authorities.
Viscount TRENCHARD: My Lords, it was clearly understood when my noble friend met the Spanish Foreign Minister in Lisbon that all such restrictions would be lifted.
Lord BALFOUR of INCHRYE: My Lords, may I thank the Minister for his reply, and ask him whether he is aware that this decision will bring great relief to air crews? They have for many years had to operate in and out of Gibraltar under severe Spanish restrictions, and often
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in deteriorating weather, which, to use a rather graphic air crew parlance, they describe as "visibility nil and even the birds are walking".
Viscount TRENCHARD: My Lords, I will convey to my noble friend those interesting comments which we, I think, entirely endorse.
Lord ELWYN-JONES: My Lords, is the Minister aware that this decision is also welcomed on this side of the House? These restrictions have placed pilots, and indeed passengers, in grave peril over the years. Governments of both parties have endeavoured to have the restrictions lifted. It is a great relief that at last something sensible is being done by the Spanish authorities.
Viscount TRENCHARD: My Lords, I hope that the noble and learned Lord is not in any way taking a share of the credit away from my noble friend who is at the moment in Rhodesia.

COUNTY OF KENT BILL [H.L.]
Examiners Certificate that the further Standing Orders applicable have been complied with: Ordered to lie on the Table.
GREATER MANCHESTER PASSENGER TRANSPORT BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

COUNTY OF KENT BILL [H.L.]
DERBYSHIRE BILL [H.L.]
EAST SUSSEX BILL [H.L.]
HUMBERSIDE BILL [H.L.]
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper. These four Bills are county council Bills that follow on the 1972 Local Government Act. They have all received Second Reading in this House, and following precedent I am

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suggesting that the unopposed clauses of the Bills should be referred to a Select Committee. If your Lordships agree, I am happy to say that the noble Lord, Lord Aylestone, and the noble Lord, Lord Murton of Lindisfarne, have agreed to serve with me on this committee. I beg to move.
Moved, That those provisions in the Bills against which no petition has been presented, or if presented has been withdrawn in whole or in part, or which become unopposed by reason of any of the provisions of Standing Order No. 113 be committed to a Select Committee and that the quorum of the Select Committee be two.—(Lord Aberdare.)
On Question, Motion agreed to.

ECC REPORTS: AGRICULTURE AND SUGAR
3.24 p.m.
Lord WALSTON: My Lords, I beg to move that this House takes note of the Reports of the European Communities Committee on the Common Agricultural Policy, EEC Sugar Policy and EEC Agricultural Cost-cutting and Price Proposals (32nd Report, H.L. 156; 44th Report, H.L. 207; 46th Report, H.L. 220). That, my Lords, is quite a mouthful, and it is quite a lot for your Lordships to discuss all at one time. But clearly all these problems are closely interrelated, and I think your Lordships will agree that it is more sensible to have one debate embracing all these three reports than to have three separate debates on three separate occasions.
Before proceeding to the actual discussion of the reports I should like, in the first instance, to thank all those who have been concerned in their preparation; in particular the clerk of our committee, our two very able specialist advisers, and, of course, my own colleagues on the committee. We are a somewhat variegated group of people with one thing in common, which is a very great degree of expertise in one or more of the aspects of the subjects we have been discussing and still do discuss. We have not always agreed completely with each other; that is not to be wondered at, and it is far more healthy that it should be so—that there should be an exchange of opinions and
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of views. But I am glad to say that in coming to the conclusions that we have reached in this report there has been complete unanimity on the report itself, although I think it may be that during the course of this debate there will be some differences of emphasis between different speakers.
I propose to deal principally with the report entitled The Common Agricultural Policy, which was produced first, and to a lesser extent, with the report entitled EEC Sugar Policy. I shall leave to other speakers, and in particular my noble friend Lord Cledwyn, the discussion of the report entitled EEC Agricultural Cost-Cutting and Price Proposals. I would particularly like to thank my noble friend for his valiant work in chairing the committee when it was dealing with that particular problem, and when I was out of the country.
In our discussions and in the evidence we received we found that there was virtual unanimity among all those who gave evidence as to what the problem of the Common Agricultural Policy actually is, and a very large measure of agreement among our witnesses as to what the causes of this problem are. Unfortunately, there was no consensus as to what should be done in order to make things better than they are at the present time, to remove the problem, and indeed I may say, without any offence, I hope, to those who were good enough to give evidence before us, that there were very few proposals put forward which really would solve the problem as a whole, even though there were certain very valuable ideas for dealing with specific commodities.
The problem is a very simple one. It is merely that too much food is produced within the Community. The cost of that food is too great from the point of view of the consumer; not only is the cost to the Community taxpayer at the moment extremely high, but it is very shortly going to reach the stage where the Community budget will be unable to meet the costs. Whether that will take place during the current year, 1980–81, or whether it will be postponed for another 12 months is open to question. But time is running out, and, whatever other reasons may be advanced for a very drastic reappraisal of the Common Agricultural Policy, we

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cannot escape the fact that as things are at the present time with regard to the financial and budgetary implications action must be taken very rapidly, simply on the ground that there will be no money to meet all the commitments unless this is done.
So far as the cause of the problem is concerned, we have to go back to the Treaty of Rome, which stipulated, among many other things, that farmers should receive for their produce incomes which would be commensurate with the incomes of those engaged at similar levels in other industrial and commercial undertakings. This obviously led to a very high degree of protection which was not in any way foreign to our partners in the Community who, over the centuries—one can say certainly since the time of the Napoleonic War—had developed their agricultures on the basis of self-sufficiency and protection. However, that of course is very foreign to the traditions of this country. The result was that it kept in production high-cost producers who otherwise might have been forced out by economic circumstances, and it encouraged the low-cost and more efficient producers to increase their production still further.
I should like to make a point at this stage which I believe to be of significance, although I am sure that some of your Lordships will not go along with me entirely. Farmers are not the classic economic animal: they do not respond to higher prices immediately by producing more, and lower prices by producing less. They have a very unfortunate habit of producing more when the profit is good, but when prices are squeezed, because it is essential for them to keep their total spendable income up, they are also very liable to produce more—if only in the short-term. That clearly exacerbates any problems that one might have in dealing with over-production. It means that the simple answer of, shall I say, the economist—although we all know that economists do not always give the same answer to the same question—is that we have over-production due, in large measure, to prices being too high and certainly above world levels, and therefore if we reduce prices and use the price mechanism, we shall have no more problems.
Quite apart from the reaction of farmers, which I have suggested is one
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that must not be entirely ignored—although I do not want to over-emphasise it—there is the fact, which was amply attested to in the evidence which we received, that in order to bring about the type of reduction that was needed in the case of milk, which is one of the major commodities in surplus production at present, any price reduction which was in any way politically feasible (and remember the importance of the farming vote not so much in this country but in France, Germany and in many other countries of the Community) would probably take at least 10 years in order to bring balance between the production of milk and the consumption of milk. Therefore, to rely solely on the price mechanism in view particularly of the financial stringencies arising this year and next year, to which I have already referred, would not be the only way of doing this.
I think that at this stage it is worth making two points. The first is that we have regrettably little information concerning the overall reaction of farm production to price changes. There is some slight evidence that when in 1921 the Corn Production Act, brought in during the First World War, was repealed, there was nothing like the reduction in production that one would have expected, even though the price of corn dropped to very nearly half of what it was in 1920, and in certain cases there was, in fact, somewhat of an increase over a short period.
There is a further factor which must be borne in mind when one is dealing with the price mechanism as a solution to this problem, and that is, that farmers, in spite of their traditional grumblings, are almost by definition optimists. No one would be or would remain a farmer unless he thought things were going to get better one day. If prices are reduced in a current year, farmers will almost universally say, "Let's hope that next year prices will get better". Therefore, they will not alter their farming pattern, which is today, particularly with the specialisation in farming, a very difficult thing to do, because they hope and believe that within a few years things will get better.
The alternative to the price mechanism is quantitative restrictions. That in many circles is a rather dirty word. Another way or form of expressing it is "quotas",

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which is a very dirty word indeed. One cannot use it with impunity even in these circles, let alone in Brussels. There are undoubtedly many objections to anything of this sort. There will be a tendency, if there is anything approaching a quota, to a freezing of a pattern of production so that those who, as in the case of hops in this country, are lucky enough to be growing hops in a certain period will always be able to go on growing them; but those who are not growing hops will find it very difficult to come into hop production. That can, to some extent, be overcome by having transferable quotas, but it is undoubtedly a very grave drawback of anything approaching a quota system.
Thirdly, there is in many ways a more significant objection to it, and that is the bureaucracy which is entailed in the allocation of quotas, the distribution of them, the alteration of them, and so on. But there are less drastic means of achieving this end which, putting it in very broad terms, involve laying down certain standard quantities—those of your Lordships who were concerned with agriculture in the days before we joined the Common Market will know precisely what is meant by that—and making it clear that the guaranteed price, the intervention price, will apply solely to the specified quantities that are laid down.
I turn to the proposals of our committee. First, we believe that the Common Agricultural Policy should be maintained in its present general form, but that it should change its emphasis and, in fact, become a common food policy. In other words, it should be directed towards the consumer and not towards the producer, and the Community should work out, on a five-year rolling basis, the requirements of food within the Community; how much of that can reasonably and properly be brought in from overseas, and how much of it should be produced at home within the Community's boundaries. That should form the basis of the policy, and intervention should apply only to those actual quantities that are produced in accordance with the five-year common food policy. Anything in excess of that, of course, farmers would be free to grow, but they would have to find their own markets which, in many cases, would be a very difficult thing for them to do.
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With that five-year plan there should be a firm undertaking that the price to the producer of any commodity that is in excess of that laid down in the five-year plan, should be reduced in real terms annually until production and consumption come into relative approximate balance. I should make it clear that, given inflation, even though there is a reduction in real terms, it may well mean a rise in money terms as paid to the farmers: it does not mean that they will be getting less in pounds or in whatever other currency it may be. But there should in real terms be this reduction.
Reinforcing that approach there should be quantitative restrictions for milk and sugar—the two commodities which are causing the greatest headaches and the greatest cost within the Community. I think that the milk problem, which is very complex, is probably better left to my noble friend Lord Cledwyn of Penrhos, who is a great expert on these matters and has great experience. I would merely say that the general principle of a co-responsibility levy—by which, if farmers collectively produce more than the appropriate quantity, they are penalised in price by paying a levy on the surplus production—is one that meets with our general approval.
Turning to sugar, there are certain facts—perhaps unpalatable facts—which we must face. First, the Community production as a whole is rising very steadily. In 1973–74 the total Community production was 92 million tonnes of sugar. In 1979–80 it was 12½ million tonnes. Broadly speaking, there has been a steady rise year by year. On the other hand, consumption is static at approximately 9½ million tonnes. Of course, in addition to that are the imports of 1·3 million tonnes—a very important factor—from the Lomé countries, formerly, very largely, the Commonwealth Sugar Agreement countries, for whom we have a very special responsibility. It is, therefore, quite clear that given present levels of production we have a surplus within the Community of about 2 million tonnes.
It is perfectly true that we could halve that surplus overnight by going back on our commitment to the Lomé countries and to the former Commonwealth Sugar Agreement countries, by refusing to take their sugar. But I am glad to say that I

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found complete and unanimous agreement among all our witnesses—and certainly within the committee—that there should be no question of that. Therefore, it can only mean that there must be a reduction in the amount of sugar which is produced within the Community itself; because, first, there is a surplus and also and I do not want to go into the complexities of this too much—because we in the Community, as a Community, are the largest exporters of sugar on the world market. If I were to use the phrase "free world", I would mean the free market of the world, as opposed to any political connotation that that phrase may have. As such, we should be members of the International Sugar Agreement. At the moment we are not because we have far too big a surplus. They wish us to become members, and most of our witnesses felt that it was a good idea that we should come in, but we can only come in if we take steps to reduce this inordinate surplus which we are at present producing.
So I return to the fact that there must be a very significant reduction in the total amount that is produced within the Community. The question is, how should that be allocated? The Commission has put forward certain proposals which have met with very great opposition from the sugar-producing interests within this country; in other words, from the British Sugar Corporation and from the National Farmers' Union representing sugar beet growers. In spite of what I am about to say, perhaps I should declare an interest here as a substantial grower of sugar beet myself. According to, for instance, the British Sugar Corporation, the reduction proposed by the Commission is of the order of 27 per cent., which is very much heavier than that proposed for any other country. According to the Commission, it is a reduction of just over 7 per cent.
The reason for this disagreement is that in 1974 sugar quotas were allocated throughout the whole of the Community, and the one that we were given was pretty high, and one which, in fact, we have never reached. It is perfectly true that the new proposals for our quota show a 27 per cent. reduction over the original quota. However, they do not show a 27 per cent. reduction over our actual production. In fact, they show a 7·2 per
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cent. reduction over the two best years of the last five. If we go back further and take a 10-year period, which is not unreasonable considering the climatic variations which have such an effect upon the amount of sugar beet grown, it seems that we are to be allowed a 15 per cent. increase over the average production during the last 10 years.
I am tempted to go into this argument at greater length, but I have already spoken a long time, and must not do so. Within the committee we have come very firmly to the conclusion that by and large the Commission's proposals are right. If in negotiations we can obtain slightly more favourable terms, so much the better; we would be happy. But we do not think that as members of the Community we are justified in demanding very special extra treatment in order to go on producing still more, when other countries undoubtedly will have to pay the price, and when there is universal agreement that there must be an overall reduction in the total amount of sugar that is produced. Nor must we forget that the amount spent on sugar within the Community at present, or in the last year, accounted for approximately 10 per cent. of the total Community budget on agriculture.
These proposals—if acted upon, as I hope they will be—inevitably mean that in the years ahead progressively fewer people will be working on the land. Undoubtedly this raises very serious problems indeed. It raises problems of social significance, of regional significance and of environmental significance. These problems must be faced, but they must be faced not as economic or agricultural problems, but as what they are—as essentially social problems. Your Lordships will remember that the sub-committee under the chairmanship of the noble Lord, Lord Sandford, in fact produced a report dealing with this problem. However, in order to get a true, a proper and a good agricultural policy, we must, in our own minds and in our actions, divorce the social problems from the economic problems.
Throughout their work your committee's objectives have been, first, to ensure that food supplies of good quality and reasonable prices are available to all Community consumers; secondly, to ensure that all those who produce this food will have a

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fair reward for their efforts and will be able, year by year, through their own profits, to increase their efficiency, so that in the years ahead there will be an even more efficient agricultural industry in this country and throughout the Community than there is at present; thirdly, to maintain the overall concept of Community co-operation in general and in the Common Agricultural Policy in particular. In other words, we have turned our back upon each country having its own individual agricultural policy to suit its own needs. At the same time, we must minimise the cost to the Community taxpayer. I believe that, if followed, the recommendations which are contained in these reports will lead—admittedly slowly but certainly surely—in this direction. I beg to move.
Moved, That this House takes note of the Reports of the European Communities Committee on the Common Agricultural Policy, EEC Sugar Policy and EEC agricultural cost-cutting and price proposals (32nd Report, H.L. 156; 44th Report, H.L. 207; 46th Report, H.L. 220).—(Lord Walston.)
3.49 p.m.
Lord MACKIE of BENSHIE: My Lords, may I begin by apologising. I had no idea that so many noble Lords would speak on this important report, but I am glad to see that they are to do so. It is possible that because I have to leave at 6.30 p.m. to catch the 7.40 p.m. train to Scotland, in order to see to the practical matters pertaining to the planting of potatoes and the selling of cattle, I shall not be present at the end of the debate; for which I apologise. I hereby declare a great personal interest in this report and in the proposals of the Commission. I was very glad to hear our chairman assure the House of the sweetness and light which existed in his committee. Personally, I have found several Members extremely offensive about farmers; they seem to think that every farmer should be totally devoid of any excess fat; that he should spend his time working extraordinarily hard, chewing the straw and getting to bed early in order to produce more food cheaply for the industrialists and the great merchants of this country—and I mention no names whatever. We came to a certain unanimity and, aided
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by the practical noble Baroness, Lady Elliot of Harwood, and others, we managed to keep at bay the more rabid signs of the 19th century among our committee.
This attitude still pertains. People keep harking back to the days when, because we produced only half our food in this country, we could afford to pay a pittance to the farmers for half the food and buy the other half at a price which did not afford the farmers on the pampas and so on a decent living. People are reluctant to believe that those days are gone. It is important in the context of these Commission proposals that the House and the country understand that the six countries are quite happy to accede to one of the proposals in the Treaty of Rome, and that is that a reasonably efficient farmer should enjoy the same standard of living in his place as those in industry. In these countries it is a genuine objective. I see no reason why we should not accept this. It is a good point of policy in the Common Agricultural Policy that this is so.
There is no reason at all why we should not be paying more than the so-called world price to the farmers of the Community. It makes a tremendous difference to be assured, as the noble Lord, Lord Walston, said, of a long-term future and thereby to assure the food supplies of the Community. What we have no right to do in the Community is to act as we are doing in sugar. In the last accounting year we exported at a subsidised price—in other words, we dumped on the world market—3·32 million tons of sugar. It is absolutely disgraceful that the rich Community should do this sort of thing. There is no question at all that the present slight shortage of sugar is entirely caused by the lack of confidence among the cane producers in the Third World, which is caused by the rich EEC dumping sugar on the world market. We have a right to produce what we can eat, but we really must tune the policy so that we do not have these enormous surpluses. We must tune it so that the surplus is a reasonable carry-over, and for example enough to supply the Third World in times of famine and crisis. That is what we must aim at.
In sugar the Commission are making a bold attempt to do this. They are up

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against powerful forces in the other Common Market countries—where, I am happy to say, the German Liberals, for example, have an enormous influence on agricultural policy, and so on. But, quite seriously, the Council of Ministers time and again have, for purely political and selfish reasons, overturned sensible proposals of the Commission who have been trying to tune what is the only acceptable policy so that we try to get within a reasonable balance of surplus. Surplus we must have, but we cannot go on producing these enormous excesses. Otherwise without any doubt the whole thing will come into disrepute.
I do not think that the consumers on the Continent mind paying the prices at all. What they object to is when they read in the papers of butter being sold to the Russians at a throw-away price where they are paying the full price. Taken in the main, the only possible policy for any form of agricultural support in the Community must be intervention buying. It is impossible for us in the Community to have payments direct to farmers. It would be infinitely more expensive, and it does not work where you are producing the bulk of your food. It only works where you are producing about half, as we were doing here.
The second of the Commission's proposals that we accept broadly is that it is going to mean an extremely rough ride for the farmers of this country. But it is worth it, and as a farmer I say to my fellow farmers that it is worth having a rough ride for a couple of years if we can make the agricultural policy of the Community once again logical and respectable. It cannot be so while we are over-producing milk and sugar to the extent that we are doing.
In this country particularly it is important that we get inflation under some form of control, because farmers' prices are going to be fixed. There is no longer any room because of North Sea oil. Farmers' prices are going to be fixed at Community prices. There is no room for manoeuvring on the value of the green pound. Therefore we have to live with somewhere near 20 per cent. inflation and a very small increase, in real terms, in our prices.
Various figures have been produced for the fall in agricultural income. The
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European Organisation of Farmers are correct when they say that over the whole of the Community in 1979 there was a fall of over 7 per cent, in farmers' incomes, whereas the other figure is one point something, but that does not take into account the rise in wages and the rise in interest payments. This being so, we have to ensure that the policy does start to work. When we look at the individual—
Lord DONALDSON of KINGS-BRIDGE: My Lords, before the noble Lord leaves the subject of sugar, may I ask him for one clarification? He spoke of exports from the Community to the outside world and deplored the practice, and I entirely agree. But to what extent are those exports produced in this country and to what extent in the Community apart from this country? Does he know the answer?—I do not.
Lord MACKIE of BENSHIE: My Lords, of course I know the answer. They are not produced in this country, they are produced in the rest of the Community. In this country we produce just about half, and we import some sugar from the Community—200,000 or 300,000 tons—and we take 95 per cent. of the Lomé quota in this country because it is traditional and we have the refineries at the ports to refine it. Nevertheless, we have to think in Community terms. The noble Lord will forgive me if I say that he is perhaps being a little parochial in these matters. We have to think in Community terms.
Coming to milk, there is no question that we again have no surplus in this country. We import large amounts of butter and cheese, and we are among the most efficient milk producers. But it is true that we cannot expect in this country to have any increase in the price to our efficient dairy farmers until the Community problem of surplus has been disposed of. What we must not have is discrimination. I approve the proposal to have a super-levy on surplus milk amounting to anything up to 80 per cent. of the amount of surplus produced, but what we cannot accept in this country is that the exceptions proposed by the Commission would in fact rule out about 60 per cent. of the producers in continental countries, and the whole of the

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extra levy would fall on the farmers of this country who are producing in larger herds. It is this sort of thing which is illogical in milk.
I now come to detail. The rise of 2.8 per cent. in the price of skim milk powder is ludicrous. Although skim milk powder is being disposed of now, it is being disposed of at a tremendous subsidy. What really should happen is that we should go back to the old days when they separated the cream, sent the cream to the creamery and fed the milk on the farm, and they did not have to put it through expensive machinery to make it into milk powder and then pay a tremendous subsidy on it, and then sell it back to the farmer at a reduced price.
There are a number of illogicalities, and certainly milk is one of the main commodities that we must get under control. Another illogicality which we in this country must examine very closely is the importation of manioc and other substitutes for carbohydrates and barley. This commodity is being imported without the imposition of any great levy. It has now reached the stage when about 12 million tons of this substitute are being imported into the Netherlands and Belgium, and to a certain extent into Denmark and West Germany. This is causing an enormous surplus of cereals in the EEC, which we are then exporting at a subsidised price on to the world market. That surely is wrong and it is a major problem which must be examined.
The two great surpluses that exist are in milk and sugar. There is a quota system for sugar, which ultimately should be a price system. It is right to use such a system, and to use it now, to reduce the acreage. We can fight for our own proper acreage in this country, but a reduction in quotas must be the course to follow. There is only one answer in respect of milk. I believe that the proposals for payments in respect of the rearing of calves and beef are on the right lines, because they will encourage farmers to go out of milk. The process should not be limited to 15 cows, for such a process cannot be followed in an all-over economy. A levy is a politically acceptable way to get the price down. I believe that the premium payments for farmers to go out of milk should be allowed to continue.
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If we tackle those two matters and re-examine the cereal substitutes, I believe that on the whole the proposals are sensible. We know the matters that effect this country against which we must fight. I hope that the Council of Ministers will be sensible and will back the Commission in its endeavours to produce a sensible, price-conscious policy for the CAP which will be acceptable to the people as a whole.
4.2 p.m.
Baroness ELLIOT of HARWOOD: My Lords, as a very enthusiastic supporter of the committee whose reports are now before the House, I wish to begin by thanking the noble Lord, Lord Walston, for the way in which he conducts our meetings and the enthusiasm which he displays. I also wish to thank the noble Lord, Lord Cledwyn of Penrhos, who, during Lord Walston's absence, took his place as our chairman. I thought the noble Lord, Lord Cledwyn, was first-class in his chairmanship, flowing from his great experience as a former Minister of Agriculture; he knows a very great deal about the subject.
I do not often find myself speaking third in a debate of this importance. I generally begin every speech by saying that the previous speakers have said all I want to say and that my remarks will be very short. Certainly the noble Lord, Lord Mackie, made a number of points with which I entirely agree, as did the noble Lord, Lord Walston. However, I should like to make one or two comments of my own which I hope will not delay your Lordships too long, speaking as somebody who has had long experience—no longer perhaps than the two noble Lords to whom I have just referred—of the farming community.
We must recognise the fact that at present agriculture is at a rather low ebb. Since 1978 the returns have dropped by 17 per cent. That figure is 26·5 per cent. lower than it was in 1977, and about 40 per cent. lower than in the period 1971 to 1973 taken as an average. The drop in returns has been caused by many factors. Any of your Lordships who know anything about farming will know that, outside of Monte Carlo, farming is one of the biggest gambles in which one can engage. First, farmers have to contend with bad weather. The weather in

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1979 was appalling and inflicted a great deal of harm on farms, for which only the Almighty was responsible. We also had to face the increasing costs flowing from inflation. Farmers also had to face the problem of rising wages—which I do not grudge, but merely wish to emphasise that they add greatly to production costs. There was also the increase in bank rate with which farmers had to contend. Nearly every farmer has had to borrow a certain amount of money to meet the deficit caused by the bad weather.
All these factors have brought disappointment because they have taken place within the last three or four years. Since the war agriculture had increased its production by 70 per cent., of our needs, whereas in earlier times we were lucky if we produced 50 per cent. Therefore, it is on that basis that some of us review—perhaps a little less generously than we should do—the policies of the CAP.
We all know from the debate in the House yesterday that inflation is the most damaging of all the problems, whether in agriculture or anywhere else. Inflation is certainly causing agriculture a great deal of trouble. It is estimated that this year costs will rise by 15 per cent. compared with the situation last year. Therefore, we are facing an acute situation. At the same time our contribution to the Common Market is very great indeed. Those of us who are engaged in farming and who are responsible for the employment of a considerable number of people in that great industry must be realistic in deciding what action we must take. I do not disagree with the remarks of the noble Lord, Lord Mackie, who made a number of admirable suggestions which I do not contradict, but certainly the present situation is not particularly happy.
I do not know how many of your Lordships were brave enough to tackle any of these reports which are now before the House, but in the last three or four months your Lordships' committee has produced four reports on agriculture. I regard this as a noble undertaking since the committee meets on Wednesday mornings, its members have piles of papers to get through, and we interview a great many people, all of whom are great experts in their different spheres. The reports contain verbatim records of
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the evidence which we have gathered from many different sides of the industry. On the basis of those reports our committee has made one or two suggestions.
I wish to deal with three aspects covered by the reports—namely, milk, beef and sheepmeat. Milk surplus is caused, as we know, largely by over-production in Germany and France. There is now a total surplus of 17 per cent. in terms of milk production, and it is costing the population £15 per head. That figure appears to me to be excessive. The Community has been trying hard to persuade farmers to go out of milk and a great number of farmers have taken that advice. I do not share the optimism of Lord Mackie that the levy will be a successful operation. I think that it will hit our milk farmers who do not produce a surplus harder than is necessary, whereas it should hit those farmers in Europe who are over-producing.
I believe that we should encourage more farmers to go out of milk. This process has already begun in this country. In Britain, 10 or 15 years ago a total of 150,000 farmers were engaged in milk production. Today, the figure is only 45,000. That shows that in the farming world people are taking time by the forelock and are going out of milk and into beef production and suckler herds. I believe that is a good move, because there are not the same surpluses in those commodities.
I am sure we could do more about selling milk. I never was in favour of doing away with the milk in schools scheme. On page 115 we have the evidence of the Dairy Trade Federation to our committee and it is clear from reading that, that doing away with the milk in schools scheme has been a severe blow to our milk industry. Milk producers will lose the sale of 90 million litres of milk a year, which would give them a premium of £3 million over the price of milk for manufacture. The dairies will lose a further 1½ per cent. of total liquid sales and their unit costs of processing and distributing will increase further. Children will lose a valuable source of nutrition, especially as those, and there are many of them, who do not have breakfast, will lose their 11 o'clock milk. Further, the United Kingdom will lose an EEC subsidy of £60 million a year. That is no mean

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amount to get back from some of the money we pay over to the EEC. In return we shall have to give a small subsidy, of 2p per pint, for milk, and in return we will get 8p per pint in subsidy.
This is something we might think about before we rule the whole thing out altogether, for we would get a lot of money from the EEC for our milk sales to schools, just as they do in Denmark and, I believe, in Holland. Two-thirds of all children in Denmark get milk and two-thirds of it is subsidised by the EEC. I will not bore your Lordships with quotations; all of this is quoted in a letter from the Dairy Trade Federation to the Minister of Agriculture, Fisheries and Food and is published in the volume in which we comment on the proposals.
I am sure we could sell more milk. We in the United Kingdom have a very efficient dairy industry and, above all, we have a most efficient selling industry. If one listened, as I did, to the evidence given by the Milk Marketing Board and the Dairy Trade Federation—which is in our report—and noted the fact that we are still the only country in the world with a daily milk delivery where it is required in the country districts, one would see that it is an excellent way of selling milk. We also of course have the question of cheese, butter and so on, although I agree that we can import butter, and I am sure that is the right thing to do. Certainly in regard to the consumption of milk and cheese, I would back the Dairy Trade Federation, the Milk Marketing Board and all the other people who are selling for us.
Whenever I go to Brussels with our committee, led by the noble Lord, Lord Walston, to discuss these matters with the EEC, my question is always the same: "What are you doing about selling?" In fact, they do absolutely nothing. They have no selling agencies. We have an excellent one in the Milk Marketing Board and, with the Dairy Trade Federation, I am sure we are very well served, and we should do as much as we possibly can to help them because they are actually selling milk. That does not overcome the fact that there is too much milk production in the EEC. But there is not too much production in this country and we do not have enormous surpluses. Of course, we
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do not want to import long-life milk or whatever it is the French want to export to us. That is different however; it is not the sort of milk people here like to drink.
Regarding beef, in the United Kingdom we have no over-production, whereas in Europe there is a certain amount of overproduction which goes into intervention, but not an enormous amount. I believe it is comparable to the milk or wine lake, which of course does not affect us—we do not produce wine—but it affects some European countries. We must keep the variable premium for our beef sales and production now that we have no deficiency payments system. Our deficiency payments system worked extremely well, as noble Lords who know about the production of beef will be aware, but it does not exist any more and, while I am not complaining about that, we must keep the variable premium on beef because it is the only way in which we can balance out sales of beef and the price we get for our cattle. This too is in one of our reports and the noble Lord, Lord Cledwyn of Penrhos, will no doubt quote from it because it is the evidence given by the Welsh farmers, who produce excellent beef, just as I am glad to say Scottish farmers do, and as I am one of them I should declare my interest.
It is important that we keep the variable premium and, although it is something about which the EEC are not keen, we should stand up for our views in this matter. I also welcome, as did the noble Lord, Lord Mackie of Benshie, the subsidy on the suckler cow herds because it is another way of taking people out of milk and into beef production, and the suckler cow subsidy is a good one to back. Incidentally, that is something which the EEC is today putting in its policy.
Regarding sheepmeat, again I must declare my interest as a large producer of mutton and lamb, and while at the moment we have no EEC policy for mutton and lamb, like many others I take a very dim view of the way in which the French are treating our exports of lamb. It is quite disgraceful, since they have twice been before the International Court on this matter; but as the French have a way of getting away with almost anything, so far they have succeeded in getting away with this. However, from time to time they lift the door to allow us to get our

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mutton into France, but the moment it reaches a point when we have a little more than they think they want, down comes the door and it is shut out, and noble Lords may not believe the difference that makes to the price.
Lord MACKIE of BENSHIE: My Lords, would the noble Baroness agree that if our Government looked after our hill farmers as well as the French Government look after theirs, she would be a very rich lady?
Baroness ELLIOT of HARWOOD: I fear I did not hear all of the noble Lord's question, my Lords, but I am sure he would not disagree with my views on the behaviour of the French over sheepmeat. He is a producer of sheep, but not to the extent I am, and I live in the borders of Scotland where the production of sheep is a vital matter for the farming community. We in this country are in fact the biggest producers of sheep and lamb in the EEC and, as such, can produce better mutton and lamb than any other country, and we should be allowed to sell it where the demand comes from, whether it comes from different countries in Europe or not. On this matter I take a dim view of the way in which the French are behaving.
Equally, we must remember the importance of the New Zealand sheep and lamb industry. For the United Kingdom, New Zealand lamb comes in at a time when our lamb is not available; it arrives in the winter, whereas ours is available in the summertime and it therefore fits well into the scheme of things. I should not like us to do anything to deter New Zealand sheep production.
Finally, I should like to add a few words about the Commission in Brussels and the way in which the CAP and the prices are organised. Last time we were in Europe we were given an admirable paper written by Mr. Christopher Tugendhat, the commissioner for the Community on economics and similar matters. He produced a most excellent paper, which I have here in my hand, and he made one or two suggestions with which I entirely agree.
First, it is suggested that decisions about agricultural prices which are taken by the Commission and by the agricultural people only should be taken at the end of each calendar year. What happens is that the Commission has to bring out its
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budget, presumably at the beginning of each calendar year, in January, but the agricultural prices do not come out until about April or May. That is hopeless, because one cannot in April or May alter one's policy for farming. One can alter it only when one is planning it, in November, December, or January; so one is then ready for whatever changes one is going to make, whether in connection with the breeding of animals or the producing of cereals. But to produce in April and May a plan which farmers all over Europe have to undertake simply means that one does nothing until the following year.
I very much hope that the commissioners, when discussing their budget, will at the same time discuss the agricultural budget, because I am sure that that would make a difference. Furthermore, we should ask them to review the unequal way in which budget costs are allocated. These costs are allocated by the commissioners and at the moment they are very detrimental to the British in the review which they are making. I suggest that we ask the Commission to do something which is not unfair to British agriculture; at the moment it is unfair to British agriculture.
I also believe that there is much to be said for not treating agriculture in the Commission as an entirely separate subject. It is part of the whole EEC expenditure, and it should be brought into the entire picture. That would answer some of the criticisms, which I consider are justified, arising from the fact that a certain percentage—I think it is 72 per cent., or even more—of the EEC budget is spent on agriculture. Of course, I am delighted that we should have as much as possible for agriculture, but it is not fair to the other countries and to the other contributors to the EEC that so much of the spending should be on agriculture without having any relation to the rest of the EEC.
There are items in the EEC which could be excluded from an agricultural payment and put into a payment for social services, regional development, or something of that kind, which in a sense are not part of pure agriculture, yet are linked to agriculture. All these items are thrown into the one area, that of agriculture, and of course people are very critical about agriculture being so expensive. In his admirable

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paper Mr. Tugendhat says that he would like to see agriculture linked up as part of the whole EEC economy, and I should, too.
There should be a closer working between the European Parliament and the EEC commissioners and the Council. It is very important for European MPs to pursue a policy which is not hostile to the Commission, but which means that they are more part of the set-up than they are at present, though I know that they are brought in now. That could be done with a little reorganisation and a little care. I should like to see the co-ordination of the whole consumer policies at the same time as we are dealing with agriculture, and that would prevent a conflict between the European Parliament and the EEC Commission, which would really be fatal. I have spoken for longer than I intended, and I apologise for this, but these matters are of enormous interest to everybody, and I hope your Lordships will agree that the reports that we are discussing today are well worth reading.
4.25 p.m.
Lord CLEDWYN of PENRHOS: My Lords, first, may I thank the noble Baroness, Lady Elliot of Harwood, for a thoughtful and well argued speech, which I am sure the House enjoyed very much, and for her kind references to me, which I greatly appreciated. During the short period that I was in the chair, in the absence of my noble friend Lord Walston, it was a pleasure to work with the noble Baroness and with other noble Lords, and, if I may say so, it is the general view of the committee that the noble Baroness brings to the committee a wealth of practical knowledge, a great understanding, and great compassion, and we much enjoyed her company there.
I was aware of the reputation of the European Communities Committee, and of the sub-committee on food and agriculture, before I became a Member of this House. I have now seen both committees at work, and I can testify that their high reputation is very well deserved. They work hard and thoroughly, they are able to take time, and they produce objective reports which demand attention.
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I am grateful to my noble friend Lord Walston for his work in the chair and for the way in which he opened our debate today. He dealt fully with all the reports and made our task that much lighter.
The report on the CAP is, I think, a workmanlike document. It would be easy to criticise it on the grounds that it is insufficiently radical in its analysis and its recommendations; that it does not put the axe to the root of the tree; that it is, to use a word that is in popular usage at the moment, rather "wet". It would, in the present climate, have been simple to produce a highly charged, polemical document blasting the CAP to outer space; that would not have been difficult.
The sub-committee rightly decided that that is not its function and that it would be better occupied to look at the practicalities and to recommend improvements which have some hope of acceptance and early implementation. That is what the committee has done. The report should therefore be read with that kind of expectation in mind. This does not mean that the weaknesses of the CAP are overlooked or played down. As the House will have noted, the inequities are listed in paragraphs 39 to 41, and proposals for reform are in fact discussed in the report.
The report says in paragraph 63 that the most pressing, and perhaps the most fundamental problem, lies in the demands of the CAP on the EEC budget. It goes on to say that the committee
"consider that urgent measures should be taken to set a definite limit on the CAP cost and to review the open-ended nature of many CAP commitments".
This is what most of us in this country believe. In fact the CAP is crystallising the views of the Government, the Opposition, and all of us in this country.
Paragraph 65 of the report may be criticised on the grounds which I have already mentioned, but the Committee give its reason for not proposing radical changes at this time. Many noble Lords would have liked to go much further, but as the report says,
"They are aware that any such change such as the introduction of deficiency payments"—
to which the noble Baroness referred—

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"would have to be acceptable to the other Member States, and that any new policy would have to be administratively feasible".
The deficiency payments system worked well in this country over a long period, as I know from personal experience as Minister of Agriculture, and as my noble friend Lord Peart knows only too well. I remember how we used to argue in Committee and in Cabinet about sums of £2 million or £3 million. We would argue for days about these sums, but today the sums would not be £2 million or £3 million. The mind boggles when one thinks what it might cost this country alone if we were today operating a deficiency payments system, let alone the sum which would be involved for the nine countries of the Community. This is the point which the committee very properly underline in paragraph 65.
The practical proposals made by the committee will, I hope, be considered by the Commission in Brussels as a matter of urgency. This is why we have been working and why we have made the recommendations. Medium-term production programmes would enable the farming community to plan ahead and help to diminish surplus production.
The report is I think a thoughtful contribution which, if implemented, will make the CAP more tolerable to us and more successful within the Community as a whole. We must of course consider the implications for our partners in the Community of the recommendations that we make here. What will they think about them? What will be their reactions? In particular, what will be the reactions of the French Government? The noble Baroness, Lady Elliot, was quite right to put the question, because I think the proposals are reasonable and one hopes that the reactions will be reasonable throughout the Community. But what is both serious and sad is that we have come to expect as a matter of course that the French Government's reactions to any proposals made by us for change or reform will be unfavourable. The British and French Governments have come to take a mutually jaundiced view of each other, and to act accordingly. This is bad for Europe, it is bad for Britain and it is bad for France. It so happens that at this moment in history we can do with a little help and understanding, and it would not come amiss if France held out a
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hand of friendship to us now. We have at certain times held out a hand of friendship to France, when she needed a hand of friendship. We can do with friendship and a little understanding from France at the present time, and a sympathetic consideration of these recommendations would be a helpful start to a much needed détente.
My Lords, this leads me to the committee's second major report upon current EEC farm price proposals, when I had the privilege of acting as chairman. I will try to summarise the main recommendations as briefly as I can. The House will have noted that we in the committee are deeply concerned about the timing of the proposals. The procedure of the review does not match the needs of the farming year. One would have thought that it would have been a first consideration of those engaged in agriculture to ensure that the procedures of the Commission and the farming year are taken into acount; but this, unfortunately, has not been done. Farmers' plans on planting, and so on, must be taken before the proposals are concluded, and this is really not good enough. Immediate steps should be taken to advance the process in time for next year's proposals. This point should be taken side by side with the recommendation of the committee for the five-year rolling programme, to which my noble friend Lord Walston referred.
The House will also note the committee's view about the need to accept real price cuts if surplus production is ever to be controlled, and its criticism about the lack of reliable information about the income of full-time farmers in the Community. We felt that this was a grave deficiency. We take the view that it is impossible to discuss levels of farm price support intelligently unless we have accurate data on this central point; and I think the committee will wish to come back to this in some detail in the next session. We support the retention of the existing butter subsidy and the variable beef premium, to which reference has already been made; and, on the dairy side, the committee appreciates the acute problems of the milk sector, and would in fact like to see a cut in support prices. Short of that, we see no alternative but to support the proposed levies. We see that there is no other avenue for us at the present time. However, we draw atten-

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tion to the exemptions which are proposed in the document. We point out that they would discriminate in favour of small producers, and would not therefore have a significant effect on production. The committee concluded that there is no justification for these exemptions.
My Lords, this lies pretty near the core of the problem of the Common Agricultural Policy, and it is, in the main, a political problem. If substantial support for non-viable farms is continued in this fashion, then we will never get the Common Agricultural Policy right. If the policy is to retain non-viable farms (and I can see the justification for that, and would certainly agree with it; there are non-viable farms in Wales, part-time farms, which must be retained if the countryside, especially the uplands, is to be kept in some sort of cultivation, but this should not be central to agricultural policy) then they should be helped to survive in some other fashion. To help them in this way will in fact be to keep prices up artificially for an indefinite period. It is really not tackling the true problem; and this is at the root, I think, of the great criticisms of the Common Agricultural Policy. This is why it is so essential to obtain accurate, up-to-date figures about farm incomes.
Again, the committee was not too happy about the Commission's treatment of the cereals sector, mainly because it would involve a differentially adverse treatment of imports. We in this country, as your Lordships know, come out of it badly because we import more cereals; and the committee also stresses that this would mean penalising the consumer throughout the nine countries of the Community. The House will note the committee's observations on other commodities—on starch, on rice and on processed fruit and vegetables, in paragraphs 43 to 45—but I do not propose to deal with those at this time. On the question of the report on sugar, I think my noble friend Lord Walston dealt admirably with that at considerable length, and I agree with all that he said.
Finally, my Lords, the committee's general recommendation is that the Commission should be supported in broad terms. We have our reservations, both as a committee and as individuals, but we
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recognise these proposals as a first step, albeit not a giant stride, towards bringing the Community budget spending on agriculture under firmer control. That is what is needed as a matter of urgency. Let us hope, therefore, that this process will be continued next year. One small step is not enough; there have to be substantial steps year by year until this is brought finally under control. if it is not brought under control then the CAP will collapse, and the danger is that, if the CAP collapses, then the Community as we know it will collapse as well. My Lords, I warmly commend these reports to the House and to Her Majesty's Government.
4.37 p.m.
Lord ROBERTHALL: My Lords, I think I am right in saying that I am the first speaker who is not actually a member of the committee, and therefore I feel freer than the previous speakers have been, perhaps, to say what a very good set of reports has been produced. They are very substantial (though I cannot say I have read every word of them) and, indeed, I think that the summary and conclusions are very helpful to anybody who knows even only a small amount about the subject. I think the House ought to be grateful to both Lord Walston and his committee for all the hard work that they have obviously done. I sit on another sub-committee, and there I feel that we ought to be very grateful for the great trouble that all the witnesses take. They are all willing to come and to answer questions; and it is quite clear that these reports from your Lordships' House are documents which are very highly considered and authoritative, if not in this country then in Community circles.
My Lords, I am not an agricultural expert—I have been forced to think about these problems in connection with the other sub-committee—and I propose to make only a few rather general remarks about the Common Agricultural Policy as a whole. This is a very important subject, and is one that we need to take extremely carefully and thoroughly. Our friends on the continent often tell us that the CAP is the only constructive and working part of the Community, and that we ought to be very proud of it. I do not altogether share that view myself. I think there are aspects of it of which we

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cannot be proud and which have in them the seeds of great trouble in the future, particularly for this country, and that unless some way can be found to reform the objectionable aspects of the CAP we may very well find ourselves out of the Community, which I, and I am sure most of your Lordships, would think was a great tragedy.
The first consequence of our joining the Community was a substantial increase in the price of food. I do not think that we can complain about that; we knew well that that was going to happen and we joined with our eyes open. Although, in many respects, I was, and still am, a free trader, I think there is a good deal to be said for a reasonable degree of self-sufficiency in the production of food. Next to air and water, it is perhaps the most basic essential of life. Living, as most of us did, through the last World War, I can remember how grateful we were to feel that we still had enough agriculture in this country to ease the shipping problem.
I think also that the case for being self-sufficient in agriculture is getting steadily stronger. The reason for that is that the world population is growing extremely fast. Food and raw materials are going to be very much shorter in the next 25 years than they are now and the favourable position which developed countries (and, particularly, perhaps, this country) have enjoyed because these primary products were obtainable cheaply from all over the world is going to go. Therefore, I am in favour of self-sufficiency and, as I conceived the object of the CAP, I thought that it was that to a large extent. From that point of view, I thought that the suggestion that the committee made, and which was elaborated by the noble Lord, Lord Walston, that we ought to move towards having a designed and planned food and agriculture policy—and planning is certainly what is done in a very queer way by the Commission and the Community—would be very much more defensible than the present situation. It would give it the sort of appeal which we used to have, with the Ministry of Food, and perhaps still have; that is to say, it would be a policy where the interests of the consumer were given a good deal of weight. Looking at the CAP now, it is not the
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interests of the consumer that are given weight and, in some respect, it is not even the interest of the farmers. Distortions arise from the political considerations which affect a rather small number of farmers.
From the political point of view, it is the surpluses (as has already been pointed out by previous speakers) which are the problem. The agricultural policy takes by far the largest part of the whole income of the Community and a very large part of that income is devoted to the intervention policy, for buying things in surplus, and for storing them at great expense and disposing of them—certainly in the case of milk products—at a discount. This is the sort of thing that I think is hard to defend if one has to do so. I think that people in this country who want to attack our membership of the Community have in that something which appeals to the housewife. She does not like spending money on storing things and then giving them away cheaply to other people. That is the main point that I want to make: that this is tremendously important and that something needs to be done about it.
Besides being very good and very extensive, I thought that, as the noble Lord who has just sat down has said, the report had the great merit of being a sensible and practical report. Being an economist, I am only too used to reading prescriptions which have no chance of getting off the ground. It is a great pleasure when one is reading something in this field to see that the people who drafted it are practical people with a knowledge of the political dimension concerned. But the basic difficulty is that you are not only going to have a Community which tries to give people incomes but also that they should be able, in certain cases, not only to demand the incomes but to demand the work they should be in and the products that they should produce. That is a thing which cannot be defended over a long period.
The United States tried for a long time to implement a somewhat similar policy, a parity policy. They had a law which said that the Federal Government had to provide that farmers' incomes kept pace with the incomes of other people. The United States—then, as now, the richest

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country in the world—spent enormous sums as a result of being driven to do so, as has the Community been driven over milk and sugar, and will be driven over other commodities. I had intended to mention earlier, when talking about the growing burdens involved, that I do not think that the report has had the time to go into the problem of Community enlargement; but if, by the time we have Spain, Portugal and Greece as members, all poor agricultural countries, we have not got the CAP on to a more sensible basis, we will have great trouble. Coming back to the United States, they bought and stored at great expense all sorts of commodities in an attempt to keep the incomes of the farmers at parity at a time when less and less people were required in agriculture because it was so efficient. The movement of people to other industries is what gave us our prosperity. We must face it that that has to be done.
4.47 p.m.
Lord MOTTISTONE: My Lords, I should like to start by thanking the noble Lord, Lord Walston, very much for putting down this debate and, as other speakers have said, for chairing our committee so ably—not forgetting to thank also Lord Cledwyn of Penrhos for his excellent chairmanship at its time. I should like also to add to the remarks of the noble Lord, Lord Walston, in thanking the technical adviser and the clerk to the committee. I think that their work, particularly under a certain amount of pressure from certain members of the committee who were keen to have alterations made at short notice, and the way they tackled it all and the fact that we were able finally to get little red books on time for everyone to look at strikes me as a masterly achievement for which we shall be eternally grateful.
There is much to be said for taking all three reports together in view of their topicality, but it is difficult to select the most important area, although other noble Lords have done so. But I think that I must concentrate on the 32nd Report, for that is the most far-reaching. Before I go on, perhaps this would be a suitable point at which to declare an interest. As noble Lords will know, I am the director of the Cake & Biscuit Alliance
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and, therefore, speak mainly from the point of view of food processing rather than primary processing. In fact, I suspect that I am one of the "wicked members of the committee" about whom the noble Lord, Lord Mackie of Benshie, warned the House. There might be other "wicked members", in Lord Mackie's eyes, but that would be for him to say.
In paragraphs 20 and 21 of the 32nd Report are set out the achievements and criticisms of the CAP. I do not propose to read them out to your Lordships. I am sure that those who are interested can look at them separately. They are very important because the achievements as set out there are genuine achievements and ones of which the founders of the Common Agricultural Policy—not to mention the people who have been trying to make it work—should be proud. But also the criticisms must not be overlooked. I shall touch on those later.
I should like to suggest that the CAP has had other achievements, though perhaps at first sight we would not think they were achievements. It has shown the Community clearly where the difficulties of co-operation between sovereign nations lie. Before people tried to make something like the CAP work they did not have the first idea of how differently people would view the same subject, and how difficult it would be to get agreement on simple matters. Those of us who had the good fortune to serve in NATO in earlier years had some indication of these things; but it is a perpetual surprise to people who are not close up against it, people who have not had to try to negotiate a harmonisation Directive, et cetera, that the others do not see matters the way the British do. The British point of view is always that we are so obviously right—certainly in NATO that was the trouble, and I suspect that it is still.
The second achievement is that it has shown the Commission where the strongest—not necessarily the most deserving—lobbies are. That, over the years, is going to be helpful to them. It has shown all of us—though this has caused a lot of people great disappointment—that there was an unwisdom in expecting rapid changes in national attitudes, and an unwisdom in expecting

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short-term general benefits. All those are achievements of the CAP if we treat them as such and use them to build on for the future. Because there are so many very difficult differences both between nations and between interest groups, as is shown up so well in the 44th and 46th Reports, it is best to face the fact that they cannot be solved quickly. Neither can they be solved in a framework where the Council of Ministers have in many respects to deal fundamentally with serious problems on an annual basis. Finally, I do not think that it helps when the nation leading the discussions changes every six months. That is an administrative nonsense. I know that it has nothing to do with the CAP as such, but it is something which from an organisational point of view the EEC should set their heart on.
Therefore a long-term approach to the problem needs to be built more positively into the system. I propose to devote a few more minutes to that than to other subjects. Before doing so, I should like to divert back towards the criticisms which I mentioned in paragraph 21 of the 32nd Report. The fourth criticism, as I call it, draws attention to the problem of the burdens that the CAP casts on other countries in the world. It seems to me that this is a fundamental mistake on the part of the Community as a whole. I hope that what I have to say, both here and at other points in this speech, will not be seen as being nationalistic in any sense. I am trying to concentrate on how the Community looks to others and how it should consider that.
The first point to make is to draw attention to paragraphs 18 and 19 of the 44th Report, on sugar, where it talks about non-membership of the international sugar agreement. It goes on to say that the Community can be accused of selfishness and cynicism towards other sugar exporters. That is a very strong phrase, and one which I personally was right behind when it was agreed to because I think that is what it does demonstrate. The people who argue that we should be producing more sugar, or that somebody should be, need to think hard about what the picture looks like in the rest of the world, where there are countries in the tropics producing cane sugar who may find that they cannot get a living out of it because of a selfish attitude by the Community.
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I should have thought that the Brandt Report deserves a read. I am in the middle of it. It is a great pity that your Lordships debated the Brandt Report before one could get a copy of it. There were one or two real experts who dragged copies from some hidden source. I hope that we might debate the report again when we have all had a chance to read it. I noted that it said that a global food programme was recommended for the period 1980 to 1985. I should have thought that was something that should be set up and, furthermore, it is something of which the CAP, amended in the ways that we proposed its management should be—and I shall come to that later—could well form a part.
There is no need for us to provide and stock food for a long war. It is important that when we are considering that we need to be self-sufficient, as the noble Lord, Lord Roberthall, was indicating, we think about stocking for the world rather than for ourselves. That might create a different emphasis. The EEC needs to compete economically with the super powers but we must see ourselves in relation to the world as a whole. Brandt makes this very clear. It is almost compulsory reading for the Commission staff, not to mention all the Council of Ministers and the different Ministers that are put up to do this.
In general—and I come back to this again—we must take a longer-term responsible look. This leads me to the two most important recommendations in the 32nd Report, to which the noble Lord, Lord Walston, drew particular attention. The first is paragraph 77, where a common food and agricultural policy is recommended which, as I see it, should impartially consider all aspects of what is colloquially known as the food chain; that is, the farmers, the processors, the distributors and the consumers. Sometimes there is more than one processor and more than one level of distribution. There are those four completely solid groups of aspects of the handling of food and they cannot be separated. They are all equally important to each other throughout the chain.
I suggest that in saying this there is no need to alter Article 39 of the Treaty of Rome. For your Lordships who have the 32nd Report, that article is repeated in

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paragraph 8. The second point in paragraphs 66 to 69 of the 32nd Report is the five-year rolling programme, a programme to achieve the longer-term aims of the Community, updated each year in as orderly a fashion as practicable. Before I go on to say a little more about them, I hope that my noble friend the acting Leader of the House, when he comes to reply, will say something about the Government's view on those two points: the common food and agricultural policy and the five-year rolling programme.
To turn now to the implementation of Article 39 and its relevance to the new proposals, I quote the concluding paragraph, not because it is more important than the others, but it is the one to which the noble Lord, Lord Mackie of Benshie, would pay less attention, based on what he has told us. The paragraph says:
"to ensure that supplies reach consumers at reasonable prices".
To achieve this I suggest that all the earlier groups in the food chain that I mentioned need as much price stability as possible at each level so as to be able to produce and buy as economically as practicable.
For the long term, the aim should be to work towards a greater dependence on the price mechanism, and that is mentioned in the report. In the meantime there is a great advantage in stability of pricing policy announced in advance and adjusted minimally year by year, as suggested in paragraph 71 of the 32nd Report. As well as allowing farmers to plan ahead, it would introduce a much-needed stability in the raw materials market as a whole. This would enable more economic and orderly buying policies from which the consumer can benefit in lower retail prices. At the moment a skilled buyer can make contracts in advance based on his estimate of the production of raw materials from the farms both in the EEC and, where essential, outside it. In doing this, the buyer needs as many sources of supply as possible. One example of that is referred to in paragraph 40 of the 44th Report, where the point is well made that in this country we require three basic sources of sugar supply.
Having made those basic estimates, the buyer can then, in arriving at his decision,
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go on to make a further estimate of how his national currency will move against other currencies. What he cannot do with any measure of certainty is to forecast how prices may be further altered, sometimes relatively dramatically and nearly always at short notice, for political reasons: devaluations of the green pound are a good example of just that. Thank heavens! to a certain extent those are now in the past. I would suggest that to a certain extent the same difficulties must be experienced by the farmers themselves. Even if they are going to benefit from a devaluation of the green pound, perhaps they will not do so well over a revaluation and they will be grumbling about the political interference instead of about the processes in between. The ultimate sufferer is the consumer, who pays more than he should as a result of what I would call "playing the political joker".
A five-year programme, subject to annual review and adjustment, will serve to make more realistic forecasting possible in the raw materials market. Hopefully, it will also act as a restraint on Ministers when they are considering adjustments. Finally, any adjustments that are made should always be made well in advance, of the start of the crop year—a point that was very well made by my noble friend Lady Elliot, and to which reference is also made in paragraph 50 of the 46th Report.
To sum up, we have been struggling on an annual basis to rationalise equitably the very different aspirations of the food chains of nine nations, with major differences in temperament, in history and, at any one time, in the politics of the moment. We have a duty to the rest of the world as well as to ourselves and, if we did not know it already, the Brandt Report gives emphasis to that. The management of the CAP in recent years appears to have paid scant concern to that duty. Even the very laudable efforts for food aid have been directed more to meeting surpluses than to meeting established needs. The very disgraceful concentration in the sugar market on looking after ourselves and allowing EEC sugar to be dumped on a struggling world market is shame enough as an example. It seems to be generally accepted that the CAP needs reform. I suggest that basically its aims and achievements are in fact well established. What is needed is a better framework of management on a longer-term basis. What it

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needs is not so much reform but a better management system. The recommendation in the 32nd Report of a change in approach to a common food and agricultural policy, managed with a five-year rolling programme, should provide just that.
5.5 p.m.
Lord SAINSBURY: My Lords, it gives me very great pleasure to follow the noble Lord, Lord Mottistone, as, not unsurprisingly, we are often allies. We are considering today three separate reports. Obviously, it would not be possible to cover all the issues raised in them without unduly taking up your Lordships' time. It would also be impossible not to deal with the subjects and points in the report that have been made by other speakers.
I should like to confine my remarks largely to the 32nd Report on the Common Agricultural Policy. We have had several debates on the reform of the policy in the past. I think it would be generally agreed that it is very much easier to analyse the weaknesses and shortcomings of the policy than to propose positive reforms that would be both politically acceptable to each of the nine Member-States and administratively realistic and enforceable. Each Member-State has its own point of view and its own particular interest that it wishes to safeguard. As a result, the decisions arrived at are often no more than unsatisfactory compromises based on political expediency.
The noble Baroness, Lady Elliot, has already quoted Christopher Tugendhat and I also should like to quote from the Commissioner. He has put in rather more forceful language in a recent speech what I have just said, and I quote:
"The Agricultural Council of Ministers have time and again shown themselves able to engage in trade-offs between various agricultural interests that pay little apparent regard to the interests of taxpayers and consumers or the limits of Community finance".
Over the last five years the cost of the CAP has more than doubled. Surely no one can doubt that an urgent start must be made to reduce this huge agricultural expenditure, but it will take time to bring this down to a reasonable share of the total Community budget. I therefore agree with the Minister of Agriculture, Fisheries and Food, when he said in a recent interview that the most hopeful
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scenario one can envisage is a gradual reform of the CAP over a period of, say, five years to reduce, as he so rightly described it, the absurd cost of financing surpluses without disrupting the social fabric of Europe's agricultural areas.
In my opinion, the present difficulties have been caused by three factors. Right from the start, before Britain ever joined the Community, the support prices were fixed at much too high a level—far above the prices of alternative supplies from outside the EEC. Secondly, the open-ended nature of the guarantees has encouraged the farmer to maximise production, irrespective of demand. Thirdly, and of most importance, price has been used as an instrument of social policy to support the marginal farmer in the poorer regions of the Community. How successful this price support has been, in creating employment and stimulating regional growth, is open to doubt. I agree with those who suggest that it might be cheaper and more effective, in the long run, to make direct payments to low income farmers. Those are, I believe, the three main causes for the CAP's failings.
Their effects have been aggravated by the almost total disregard for the fifth objective, as laid down in Article 39 of the Treaty of Rome, which is to ensure that supplies reach consumers at reasonable prices. I cannot help feeling that this criterion has never been uppermost in the minds of the policy makers, nor in the mind of our own Minister of Agriculture. As a result of this neglect of consumers' interests, I believe that the production side of the agricultural equation has received too much attention, at the expense of consumption.
This obsession with production, due perhaps to the very influential European farm lobby, has led to the belief that self-sufficiency should be one of the aims of European agriculture. Nowhere in the Treaty of Rome, nor at any time, has this ever been a declared objective of the common agricultural policy. I am totally opposed to the protectionist arguments of this lobby. Trade is always two-way.
In our own interests, in the spirit of the Brandt Report and for the benefit of world trade, we must keep Community markets open. At most, we should

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attempt to achieve only 80 or 90 per cent. of self-sufficiency. By aiming at 100 per cent. self-sufficiency, we shall be depriving ourselves of the benefits of buying commodities from third countries at prices below those inside the EEC. We shall also be damaging the economies of the many countries which are dependent upon their exports.
As has already been said, sugar is a good example. For certain developing countries, sugar is virtually their only export crop. It is often their sole means of earning vital foreign currency. If I may quote another example, the New Zealand economy—although in a different category—depends for its viability on agricultural exports of meat and dairy products. It has been estimated that the loss of the European butter market would mean the near collapse of the New Zealand diary industry.
I should now like to turn to the 32nd Report on the CAP, and those measures that would bring greater balance between supply and demand for commodities in structural surplus. To help achieve equilibrium, greater use should be made of the price mechanism. I am confident that the long-term response to lower prices would be a reduction in output. I therefore support the Minister of Agriculture in his stand for a price freeze, which is a cut in real terms, for milk and sugar beet. In attempting to control supply, some form of quantitative restrictions, such as quotas, has to be considered.
Our objections to quotas have been clearly stated in the report; that a quota system ossifies production, is administratively impossible to operate, gives no benefit to consumers through lower prices and is contrary to British interests. However, some means must be found to ensure that the producer bears at least part of the cost of excess production. The Commission's proposal for a supplementary levy on milk would, I believe, have this effect, but, as has already been said, because of the proposed exemptions, with discrimination in favour of small producers, the policy would be counterproductive, penalising efficiency and protecting the non-viable farmer. There should be no exemptions.
As has again already been stated, the Committee recommend that a five-year
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rolling programme be introduced. At present, price fixing takes place annually. No farmer, nor businessman, can plan production on such a short-term basis. By drawing up medium-term production programmes, which estimate Community demand, farmers will not only have the security to plan ahead, but will be able to adjust production levels according to consumption. The problem of the CAP is essentially one of supply. I feel that these measures will go some way towards controlling the tendency to overproduce. The imbalance between supply and demand is a reflection of the deficiency in decision-making.
Greater co-ordination is essential at every level in the process of formulating policy. This is particularly important at the highest ministerial level, for the CAP needs to be financially accountable. To achieve that, budgetary and agricultural considerations must be harmonised by the Ministers concerned working together. I believe very strongly that what is required is a food as well as a common agricultural policy, a policy that takes into consideration the needs and requirements of consumers, as well as the needs of those concerned with the production of food.
5.19 p.m.
Lord TRANMIRE: My Lords, first I should like to congratulate the noble Lord, Lord Walston, on the volume of information that he has given to us in these four red books and for the clarity of expression both in the report and particularly in his opening speech this afternoon. Perhaps I should begin by making a reference to my history, because when I was in the other place six years ago I made the judgment that it would not be in the interests of this country either economically or for its parliamentary sovereignty for it to be a member of the Community. That was some time ago, and this House in particular took a different point of view. I think now that we are in we have to try and make it work, however difficult it is; we have to forget our previous views on it. No doubt some of the inconsistencies and absurdities that we saw six years ago still remain, and it must be by aiming at those targets that we shall alter it.
I think we have in this 32nd report an extremely valuable number of recom-

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mendations. If I quarrel at all with them—and it is only a very minor quarrel—I rather felt when the noble Lord, Lord Cledwyn of Penrhos, was talking about the step-by-step approach, that perhaps it was rather too gradual and he did not realise entirely the size of the problem. If 72 per cent. of this budget is devoted to agriculture, and of that 72 per cent. 63 per cent. is being set aside especially for the elimination of the surpluses consequent upon policy, it is a very serious position for everybody, and for ourselves in particular when, either this year or next year, we become the largest contributor to the Community. After all, when we talk about these large sums for agriculture, the burden is going to be greatest on us; it will come out of our net contribution. But I do not think, as someone said earlier, that that necessarily would be a argument that would prevail with our friends across the Channel. Therefore, let us look at it from another point of view.
As I see it, the most worrying aspect in the whole of this 32nd Report comes right at the end in page 117, where the Ministry gives us a history and projection of expenditure. It shows, as the noble Lord, Lord Sainsbury, was saying, that every four years the expenditure doubles. If one looks forward at the projection of expenditure in 1982, one finds that it will be kept on at that rate, so it is clear from the Community's point of view that unless something is done with this at an early date the whole budget will go bankrupt. It cannot go on after 1982 at the latest, or possibly 1981, because they will run out of cash. I do not think anybody will put his hand in his pocket to correct it.
Another factor I think was mentioned by Lord Roberthall in his speech. We are now coming to the period of enlargement when very poor marginal farming countries will be coming in as members, and if there is something radically wrong with the Common Agricultural Policy, those difficulties will be intensified when the Community is enlarged.
While I appreciated the speech of the noble Lord, Lord Walston, and tendered my congratulations when he was out of the room—may I repeat them with great sincerity—the only worry that I have about this report is that I think it takes rather too much of what I call a step-by-
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step policy, without mentioning the immediate urgency of the crisis.
We have had another report that I want to mention, because the second report touched on this. I think it would be rather a good thing if, in the little I have to say, I could marry up these two reports, the second and the 32nd, because they both deal with the same problem. I should like to quote paragraphs 59 and 60 of the second report:
"The weakness of the present Common Agricultural Policy is it attempts to combine a social policy to keep many marginal producers on their holding with an agricultural policy designed to establish a common price for both small and large producers.
"This in effect raises the target and threshold prices higher than is necessary for profitable production of the quantity required and thus leads to the creation of surpluses".
That, I believe, is the key to the problem of the CAP. Until one can get that right one is never really going to get the Community working properly. I think the Government have to take a lead on this at a very early date. It will certainly have advantages in respect of our own budgetary problem, but it is even more vital in trying to get the Community to make sense.
When we look at regional policy generally in the Community, it is wisely based on the requirement of "additionality". A Member State does not get regional aid unless it is making a contribution to that particular regional aid. The degree of aid is geared to the gross national product of the Member State. When one comes to agriculture and the CAP, the aid in the form of level of prices is geared to solving the problem of the marginal farmer rather than that of the reasonably efficient farmer. That is in fact their measure of aid and it is putting up the cost of food generally in the Community, without making any provision for the contribution from the Member State, which does not make sense. Why is it, when suddenly the regional problem becomes an agricultural instead of an industrial problem, that the whole scheme of the Common Market is changed?
When we come to the problem of how to deal with surpluses—let us take the co-responsibility levy—what happens? Anybody with 14 cows is exempted and the first 60.000 litres a year are exempted, which means that all the Irish producers do not have to pay any co-responsibility

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levy. And, as usual, 91 per cent. of the French get off. None of the Bavarian farmers come in, but the British farmer, who is reasonably efficient and who is not contributing to the surpluses, pays what? Is it 10 or 15 per cent? When the noble Lord the Deputy Leader of the House replies, I hope he will tell us exactly what is the proportion, under the co-responsibility levy of 1.5 per cent., that British dairy farmers will have to pay. Very few of those farmers will be exempted.
Therefore I suggest, as the report suggests in paragraph 75, that this is the first step towards getting the whole matter right. I would commend that paragraph not only to this noble House but to the Government. It says:
"While a proportion of the cost of [aid] could well come from Community funds, the major part should be a charge upon the resources of each individual country".
If we get this right, it will be fairer to farmers generally to know what is the true agricultural cost and what is the aid cost in the Common Agricultural Policy. When it is aid cost, I think it is only right that a country which is reasonably prosperous, like Germany, should not expect the British Government to have to pay this great cost of aid for Bavarian farmers, who are being very well looked after by Herr Ertl.
This to me is the background to the matter. I believe that if this policy were to be applied we might get to the position that Sir Henry Plumb was talking about when he gave evidence before your Lordships' committee. One could get the Common Agricultural Policy reduced to something like 40 per cent. of the budget and the remainder put properly where it belongs. A less prosperous country, like Italy—or Greece or Spain, which are coming into the Community—would get a very reasonable share of its aid for marginal farming. If it is a prosperous country, the cost would be borne by the Member State. That seems to me to be the only hope if we are to get this matter right.
I repeat again the warning that I gave: that some action must be taken. It is no good having a slow policy—a five-year rolling programme—when the Community is on the road to bankruptcy. The first step has to be taken early, and I beg Her Majesty's Government to give that lead.
5.34 p.m.
Lord DAVIES of LEEK: My Lords, I am rather delighted that we have just been listening to the noble Lord, Lord Tranmire. Even before he spoke I looked up paragraph 75, because this is a reversal. I was not in favour of the Common Market. The legislation went through this House like a thunderbolt, rapidly, without the changing of a comma. It was disgracefully pushed through, without full discussion. The way it was foisted on the House to serve ulterior motives was very unfair. Paragraph 75 says that the European Community's farm structural policy must be reviewed. It makes this point clearly here. In some of these areas, the British farmer is at a great disadvantage. In many of these areas—Bavaria and other places—farmers pay no income tax, as we do, and do not face the problem of high rates of interest if they want to borrow funds.
If noble Lords have read today's Times they will have seen a succinct and cogent letter from a working farmer. What he says is worth quoting:
"Your leading article on "Farmers and Consumers" (April 12) might be likened to the way our cows are grazing the new grass—ranging widely and avoiding the unpalatable parts. British farmers' incomes are now at their lowest level for many years, in real terms by 26·5 percent. compared with 1977 (ministry figures). In this country we still spend over £200 million a year on butter imports alone and £150 million on cheese from other EEC members. This situation cannot make sense for farmers or consumers alike. Other unpalatable features of the mysterious pastures of the common agricultural policy and monetary compensatory amounts"—
that is the MCA, reported here in the 32nd policy report—
"include the very low interest rate loans available to other EEC farmers, and several other forms of subsidy that we do not enjoy".
Many of these are hidden.
"The problem from our farmyard can be seen most simply thus: a new tractor this year cost three times its price five years ago. The price of our products to those who made the tractor have barely doubled".
This was a letter from a working farmer in Cross-in-Hand, Heathfield, which appeared in today's Times, and it succinctly describes the situation of the British farmer.
As somebody who for many years has sat on committees and watched chairmen at work, I think that this House must be grateful to the noble Lord, Lord Walston,

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and to those who work quietly, cogently and sometimes unnoticed, until the report appears, in the upper committee rooms. They work hard to produce these valuable documents for both sides of the House, whatever point of view we may hold. Consequently, I would add my name to what was said by the noble Lord, Lord Roberthall, who was the distinguished chairman of the Commodity Committee upon which I had the honour to sit. He paid a tribute to the witnesses. We must always remember that when we call witnesses to this noble House they may have come from any part of the British Isles, at expense to themselves both in time and sometimes in money, to give first-class information, under cross-examination, to members of the committees. Therefore, it is worth while for all of us, on both sides of the House, to pay a tribute to those who help us to produce these first-class reports.
Having said that, I notice that I have already been speaking for four minutes. However, some of the things that I wanted to say have already been said, so I will now try to whittle down my speech to about 12 minutes. Coming as I do from small farming stock and mining stock, both of which are honourable professions, I am on the side of the National Farmers' Union. Thank God we do not let the farmers do the mining and the miners do the farming for us, otherwise we should have nothing to burn and nothing to eat. As the National Farmers' Union have pointed out, in the case of certain commodities, as indicated in the 32nd Report, there are the most pressing issues to decide about the Common Agricultural Policy.
Whatever measures are now adopted there is no real prospect that the total cost of operating the Common Agricultural Policy can be reduced substantially, quickly or overnight. Consequently these questions must be considered separately from the issues of the UK contribution to the EEC budget. A solution to the budget problem depends on the adjustments being made to the contribution arrangements and perhaps to the development of common policies, outside agriculture. As the noble Lord, Lord Tranmire, and others have pointed out, countries like Portugal, Greece and some others who have large agricultural
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communities and whose agriculture may be in olive oil or different types of commodity from ours, will be creating, for the Common Agricultural Policy, completely new problems and therefore increasing the difficulties of the smooth working of the CAP, and thus making it very difficult indeed to meet the purposes of Article 39 of the European Economic Community.
I want to get that on the record because that was the pious hope of the Treaty of Rome, and, as was referred to by a noble Lord who has now left the Chamber and who made an excellent speech on this point about needing to consider the Common Market in relation to the Brandt Report and to look at the production of commodities such as milk, butter, wine and cheese instead of thinking how to destroy them or change them into other articles. The Brandt report shows exactly the North-South problem, and we should be working out for the Common Market policies that would let these surpluses go to parts of the world where hunger, and not the Soviet Union, is the enemy.
The Treaty of Rome established the European Economic Community and specified that there should be a common policy for agriculture. Article 39 of the Treaty listed the objectives of the Common Agricultural Policy as follows:
"(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour"—
that is rather pompous language but nevertheless we know what it means. It goes on:
(b) "thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) to stabilise markets;
(d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices".
When we went in to the EEC I was against it, but I think we have to face the realities of the world in which we are living and we have to try to make this thing work as an organisation that will get rid of its competitiveness and will develop a real and true unity in the Community, adding to it the aims and policies as envisaged—and as mentioned by the noble Lord, Lord Tranmire—in the Brandt Report.

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There are two other points that I should like to make. The noble Baroness, Lady Elliot of Harwood, has left the Chamber but she is an expert in farming and she made a delightful, informed speech which only the noble Baroness with her practical knowledge could have made. She made the plea that some aims should be changed inside the Common Market itself.
The other policy which I find to be strange is the sugar policy. I should have liked to have time to go into it in depth. I read the report with care and I happened to be in Fiji and South-east Asia and around the Pacific Ocean when the British Commonwealth countries were making the sugar agreements. The noble Lord, Lord Shepherd, was leading those discussions in Fiji at the time when I was staying in Suva, and we made promises to various parts of the world that the cane sugar industry would not be imbalanced by our joining the Common Market. I have said that I shall only speak for 12 minutes and so I have not the time to go into that problem in depth, but I aver that we have not kept our promises about the Common Market to the cane sugar producers and to the beet sugar producers here in England. Neither is getting a square deal from the Common Market so far as the sugar industry is concerned. I hope that on either side of the House, if only in passing, a reference will he made to the problem of the sugar industry.
I should have liked to quote the facts and figures, but in the mood that the House is in on a Thursday afternoon I am afraid it would bore them. However, I am speaking to an intelligent audience and all the references are there without Lord Davies of Leek reiterating them. I sincerely hope that the trouble will be taken by noble Lords who are now beginning to be interested, to look into the figures on the sugar problem so far as the Common Market is concerned.
Having said that, I should like to add a point in regard to the budget that the principles of the existing sugar market in the main may he sound and may be kept, but there is no doubt that that itself needs modification. Such are my notes that at this point I think it would be wise to leave it, and possibly during questions and during further opportunities in the months to come we can clarify the position so far
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as the Common Agricultural Policy is concerned and get it modified on the lines of linking the Common Agricultural Policy together with that of the entire EEC budget.
I should have liked to be able to take up the point raised by the noble Lord, Lord Mackie of Benshie, who himself is an expert on the beef industry, and to say with regard to his final sentence that there is a desire in the dairy industry (of which I knew something at one time) to say that we have to reduce. They speak about killing off a million cows and therefore leaving derelict acres. If over five years we lose a million cows a year we shall have lost seven and a half million acres of land in Europe. What in the name of God are we going to do with it—have pheasants and grouse and not produce food in a world that is hungry? I cannot understand the mentality of the people who want to destroy food production when two-thirds of the world is still hungry. Consequently there is a crying need for another look at the Common Agricultural Policy. My Lords, I have spoken for 13 minutes—one minute over my time.
Baroness GAITSKELL: My Lords, before the noble Lord sits down I should like to ask him a question, if my noble friend Lord Gordon-Walker will allow me to do so. I should like to challenge the statement that the Bill under Mr. Edward Heath, the Prime Minister, was rushed through this House. I well remember the occasion because everyone was very surprised that I voted for that Bill, expecting me to vote against it because my husband, Hugh Gaitskell had been against it. I had read his speech at least 15 times and crossed out the things he asked for, and found that I could vote for entering the Common Market.
Lord DAVIES of LEEK: My Lords, I will not reply, but I did not vote for the Common Market.
5.49 p.m.
Lord GORDON-WALKER: My Lords, I think the House is greatly indebted to two of my noble friends: to the noble Lord, Lord Walston, for his admirable introduction of an admirable report and also the great clarity and brevity with which my noble friend Lord

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Cledwyn of Penrhos dealt with an extremely intricate matter, although it did not appear intricate as he introduced it to us. Also, I noticed when my noble friend Lord Davies of Leek was speaking he said that the treaty was "foisted" on this House. I thought it was rather less dramatic; I thought we just passed it by a majority. Anything that is passed by a majority is foisted on the House in one sense, but this one in no special sense was foisted upon the House.
Lord DAVIES of LEEK: With no amendments accepted!
Lord GORDON-WALKER: My Lords, I have known that to happen all the time; I have known my own Government—and the noble Lord's Government—do it from time to time. But I must say that I listened with great pleasure to his vigorous speech which was filled with great knowledge and information, and I particularly noticed his emphasis on Article 39 of the Treaty of Rome, which I will conic hack to later. I recall that when the Labour Cabinet was considering entry to the Economic Community m 1972 we came to two particular conclusions; that the probable effect of joining upon our industry would be very evenly balanced, but that the probable effect upon our agriculture would be to our advantage. This was the conclusion we came to, because our more efficient agriculture would profit in a market of common prices. This was a fair assessment at the time. What has happened since then is that the Common Agricultural Policy has changed its nature. It has diverged more and more from the terms of Article 39 of the Treaty of Rome which set up the Common Agricultural Policy.
The original purpose of intervention, for example, has fundamentally altered in the course of time. The original intention was to set a floor to the market to even out temporary surpluses due to specially good harvests and things like that. It became gradually a permanent and open-ended system of subsidies to farmers, and that is the prime cause of the mountains and of the enormous cost of the CAP on the EEC Budget. A new innovation, that has not been talked of very much in this debate, and it was certainly not
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mentioned at all in Article 39, is the development of the green currencies, which has mucked about the common agricultural market. That was introduced to even out the effects of the currency fluctuations of 1969–70 which otherwise would have greatly benefited some countries and disadvantaged others. So they introduced the system of border taxes and subsidies to try to even things out. That, too, was intended to be temporary, and it was an expedient which it was thought would be removed directly the currencies settled down again. But as always happens vested interests were created, especially in Germany, where the green mark gives about 20 per cent. protection to German farmers. Therefore, the green currency persisted as an unintended integral part of the Common Agricultural Policy. It was never envisaged in Article 39; it was never intended to be permanent, but it has become permanent. It destroyed the common price system through the common agricultural market which had been the basis of our original estimate of the effect of the CAP on our agriculture. One of the ironical consequences of all this is that EEC countries now have more interference with trade at the frontier than they had before the Economic Community was set up, because these subsidies and tariffs at the border are very complicated things to work. They change from day to day and week to week; you need a lot of people and there are a great many customs officers now at the frontiers of Community countries.
A further feature which was not mentioned either in Article 39 is that the so-called Council of Ministers, which sets agricultural prices, consists solely of Agricultural Ministers who are, of course, in almost every country, if not every country, a kind of ambassador for the farmers; they are not in our country, but they are in every other country in the Community. The enormous cost of the CAP causes the EEC's own resources system to weigh particularly heavily on our country. The own resources to a very considerable extent consists of levies on Member countries' imports and as we are the biggest importer of food we pay much more, naturally, as a consequence of this to the EEC budget than do richer countries that do not import food on the same scale.

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All these distortions of the original concept of the CAP have become metaphorically and actually sacred cows. They are all regarded as essential parts of the CAP and the CAP itself is regarded as the main manifestation of the Economic Community. To suggest now that the CAP should be brought back into accord with Article 39 which set it up would be regarded as an attack on the Economic Community itself. I must say that I think the Prime Minister is living in a dream world of wish fulfilment if she thinks she can change the effect of the CAP to get anything like the £1,200 million a year that the CAP now costs us. It simply will not be accepted by others whatever she may say. I think the idea of witholding VAT is also a bad one. It would breach Community law, though I must say there was a very interesting article in The Times on 26th March last which showed that Germany, Luxembourg and Ireland have ignored the Commission's Directive of 1st January 1979, which we accepted, that the old system of direct government grants to the CAP should be replaced by 1 per cent. VAT. The Times has reckoned that Germany gains £30 million a year by not having made the change, and Ireland £8 million. Nevertheless that others break the law does not justify our breach of the law, and in any case it would not gain us very much money.
I think we should try to push up any offer that is made by others to reduce the burden, but I think it would be wise of the Government to take what we can get, a half or even a third of a loaf, and to wait with a little bit of patience for a very little time until the cost of the Common Agricultural Policy runs up against the limit of its ceiling, when it will not be able to have any more money. That will probably happen next year. In any case, the Community will have to begin to consider it now, because it is a very great problem that is facing them. When this happens I think there will be a real chance of a radical longer-term reform of the CAP. The Commission itself is beginning to propose reforms, as the noble Lord, Lord Walston, pointed out in the 46th Report, but it is still to be seen whether the Council of Ministers is going to accept any of these proposals. I have very much doubt myself. Once
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the resources of the Community reach the ceiling the United Kingdom will no longer need to make the pace. The Prime Minister will in effect be in the position of a lady wooed by many suitors because there will be many people wanting to get our consent to different changes in the Community.
Among the reforms I think will become possible over a period is the one suggested by my noble friend Lord Sainsbury, that we could ensure that Ministers of Finance sit with the Ministers of Agriculture in the Council of Ministers for this purpose. I think we could also get rid of tariffs on foods which cannot be produced in the Common Market or at any rate hardly produced, such things as long rice and hard wheat. Both of these feature in the proposals of the Commission. This would benefit the United Kingdom, but against that we have been very unfairly discriminated against for a very long time in these respects. I think we should try, and it will be easier once the ceiling is reached, to get a fixed timetable over a longish period to get rid of the green currency and restore the CAP of common prices, which would benefit our efficient farming. I think the five-year rolling programme advocated in the report, though it is an extremely radical proposal, is a good one. If these things were brought in in stages, I do not think they would be unreasonable changes. They would not destroy the Common Agricultural Policy at all. Indeed, they would bring it back nearer to its original intended form in Article 39 of the Treaty of Rome.
6 p.m.
Viscount BROOKEBOROUGH: My Lords, having listened to the speeches this afternoon, it is with considerable trepidation that I rise to congratulate the noble Lord, Lord Walston, on having introduced the debate and to support him and all other noble Lords in their congratulations of the staff. When one has heard the evidence put before the committee one is amazed to see how shortly and clearly it has been assembled and how the conclusions of the Committee have been placed before us so well.
I should like to support the noble Lord, Lord Mackie of Benshie, in his complaints about the assaults of people like the noble Lord, Lord Sainsbury, and my noble

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friend, Lord Mottistone. Not having attended the committee so assiduously as they have done, I feel that I must now rush to his protection. The noble Lord, Lord Walston, sits in the chair with great equanimity and rules with perfect fairness, but I feel that I must now come to his help rather more often. I should like to support the noble Lord, Lord Mackie, in ensuring that we remember that one of the main objectives of the Common Market is a fair return to farmers.
The noble Lord, Lord Davies of Leek, raised the question of what will happen if we remove five million dairy cows and replace them with beef. I think that that would have very profound effects if it were done over a five-year period. With one million cows going on to the market, how many more will be unemployed? If that is what the Common Market eventually decides to do it will be a very profound decision.
What has emerged from our report is that there is very little wrong with the principle of the Common Market, but a whole lot wrong with the decisions and in many cases the lack of decisions. I, for one, look back over the period when we had our own price review with a great deal of nostalgia. It is right that, in view of the complicated situation of the EEC, our committee report should reject the possibility of going back to that system. Previously we had our own Government only and one Minister of Agriculture who was usually a man of great skill. Indeed, I see one or two ex-Ministers in the Chamber at present. They drove with great skill and when they approached a corner they touched the brakes and accelerated away into the straight. The noble Lord, Lord Walston, said that we must now have a reappraisal. What agriculture cannot stand is what the Americans called an agonising reappraisal at intervals. As our report says, agriculture must have a rolling programme and therefore I welcome a five-year rolling programme.
The report—and many of the speeches which have been made today—has raised the problem of when agricultural production support becomes really social support, and where that should be carried in the EEC budget. Should it be carried on the national Budget. If I concentrate on that subject it is because I have experience of
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it in my own part of the world. The area of Northern Ireland in the United Kingdom is unique. Some people would say that it is unique in many ways, but it is unique in agricultural terms in that we have a land frontier and a strip of water between ourselves and our markets.
Many noble Lords have, in fact, referred to the question of MCAs and currency fluctuations. Nowhere has that been more clearly felt than by the farmers of Northern Ireland, and indeed the South of Ireland. I am amazed by some of the articles which have been written as a result of the Government having what is called a positive MCA existing today. I do not understand how people can write without seeing an area where both negative and positive MCAs are having an effect. Had it not been for the action by the late Government and the noble Lord, Lord Peart, with a negative MCA of 13.6p in the kilogram on cattle, the meat industry of Northern Ireland would have been ruined, because the Southern Irish meat plants could buy at prices far in excess of the prices existing in this country. That is one effect of the currency fluctuation.
However, to really understand the situation the experts should come to the Border. I have mentioned previously the question of smuggling. There has been a violent and agonising reappraisal on the part of smugglers, because what went up last year must now go down, and what went down last year must now come up. Anyone who doubts that should try to buy a bottle of gin in the Irish Republic where it is now £7.50—even our retailer friends would agree that that is a fluctuation that should not be condoned.
The agricultural industry for Northern Ireland has only two sections. The first section is beef and dairy which is a grass-based industry, and the second is the pig and poultry industry. The pig and poultry industry was based on 80 per cent. imported grain. As regards dairy and beef, that industry was developed and it is a highly capitalised and very efficient industry. It was based on having parity price, or pool price, with the rest of the United Kingdom. It is very important that that pooling should continue either in the form of milk aid or some similar aid.
Northern Ireland has no cereals—it has

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no sugar beet and it has no horticulture of any description. But, on top of that, 10 per cent. of the population depend on agriculture as opposed to 2.5 per cent. in the rest of Great Britain. Obviously what happens to agriculture is relatively much more important to us than it is to the rest of the country. However, our report raises the question: where should that support be social aid and where should it be production aid. That is something which I am sure must be given a great deal of thought. Nowhere has that become more critical than in the pig and poultry industry of Northern Ireland, and especially in the pig industry where it is more easily demonstrated.
The pig industry of Northern Ireland was developed from grain from the United States of America. It is an efficient industry—it is efficient in its producer line and in its processing. It has pioneered over the past 30 years in an extraordinary way. It has the most advanced methods of production and much of Europe has a great deal to thank the people in Northern Ireland for—people such as the McGuckians and the Jordans, who have shown how to produce first-class cheap pigmeat. Now we are talking about this proud industry, of people who have worked extremely hard and pioneered. They are faced with the barrier against importing grain from America. Our main source of supply instead of coming from the West to our efficient ports has to come from Norfolk and from France. The extra cost of feedgrains to Northern Ireland from Norfolk is £15 a tonne. That is something which no industry can bear.
But, to add insult to injury—and it is almost that—we find that when Italy became members of the EEC their Government were able to derogate their feed-grains so that they receive a rebate on feedgrains going to their livestock industry. It would appear that our Government, in their hurry to get into the Common Market, failed to see the consequences of that act and so therefore failed to protect their industry. If we get no help, the industry will collapse to a level that will support only the home market. At present the pig and poultry industries employ about 12,000 people. Somewhere around 4,000 people would then become unemployed. Since joining the Common
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Market the industry has declined by 40 per cent. For instance, the poultry flock has gone down from 8 million to 4 million, and the sow population from 120,000 to 70,000.
In an area where we have twice the level of unemployment of the rest of the United Kingdom, it really is a disaster which should be looked at very carefully. We go to the extent of being willing to provide Government grant-aid for new jobs in industrial terms at the rate of £15,000 per job, and in some cases—such as that of De Lorean—it is even greater. But it would cost far less per year than the interest on that capital to provide some sort of abatement on the cereals which would be used by that industry. From a sociological point of view—from a community point of view—how much better those people would be working and producing food than being unemployed.
So I return to where I started. We have a proud, efficient and progressive industry in our pig industry. We are in an area of high unemployment. When does a production policy under the CAP really become a social policy? However, I am absolutely sure that industries in the position of our pig and poultry industries cannot be allowed to collapse without very serious thought.
I come to my last point. I began by saying that there was very little wrong with the principle of the Common Market. I am very afraid that there has been so much criticism, not only of the Common Market but of agriculture, that we who are involved in agriculture will find ourselves up against a public relations campaign which will make it very difficult for us to to get our just deserts. The Common Market policy is a prudent policy; and some of the countries in Europe which have been occupied will know that they cannot afford to have anything but a prosperous country, and know that their agriculture has stood between them and starvation. But we should not apologise for the principles of the Common Market policy, even when it involves a social element in its expenditure. We should be proud of it, and I have great pleasure in supporting this report.
6.13 p.m.
Lord ENERGLYN: My Lords, I, too, should like to express my admiration for

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the noble Lord, Lord Walston, and his committee. Like all the other committees they have produced a monumental report, and as the noble Lord, Lord Davies of Leek, pointed out, no tribute can be too great to pay to these committees who work so unselfishly. I wish that a number of other committees throughout the country would work as efficiently and as voluntarily as these—I speak of the Quangos. I should like to see them work on the same basis as the committees of your Lordships' House. Then we might get quality instead of quantity.
Be that as it may, the noble Lord, Lord Walston, impressed upon me—and I am sure upon the rest of your Lordships—the difficulty in agriculture of controlling surpluses and deficiencies. It seemed to me that it might be constructive to give some attention to any possible way in which one might be able to assimilate these surpluses and also to recognise certain shortfalls.
I was impressed by the evidence given by the noble Earl, Lord Jellicoe, speaking in his capacity as chairman of Tate and Lyle, in which he said (and I quote from page 7 of the report):
"The second reason why I should like to extend a general welcome to the Commission's proposals is that they should enable the Community to join the International Sugar Agreement, the ISA. As things have turned out in the last decade, although it was not the intention, the Community has proved something of a rogue elephant in the world sugar community. By joining the ISA it would take its due place as a responsible member of the sugar community and thereby help to bring greater stability to world sugar markets".
It scented to me that that offered a sensible and workable approach to at least the sugar problem. It also emphasised in my mind that it might be of interest to your Lordships to recognise that we are well into the age of polymers, and that one of our anxieties is that the sources of our polymers are mainly petroleum and coal, which are both wasting assets. The only renewable source of the raw feedstock for our petrochemical industries is carbohydrates. Here we are talking about surpluses of carbohydrates without pausing to think. I think that this is a feature of over-bureaucratic organisations like the EEC, nationalised industries and so on, which do not really get to the heart of the problem, as does the businessman.
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I was privileged to listen to a remarkable paper given by Dr. Parker, the chief scientist of Tate and Lyle, at a symposium held by the Rubber and Plastics Research Association. In this paper—and perhaps I may graphically describe it this way he drew the curtains apart at the window that looks into the polymer world of the future, and gave an enormous amount of evidence to show that eventually we shall be dependent upon carbohydrates for our feedstock in the petrochemical industry.
Therefore, it is well worth pausing for a moment to look at the viability of surpluses in terms of these natural products, not for human consumption but as chemicals. Perhaps I may remind noble Lords that at this very moment Brazil is supplementing its motor fuel with ethanol derived from the fermentation of vegetable matter. For example, it is now established that we can calculate pretty accurately how much ethanol we can get by fermentation processes. If, for example, we take the sort of figure about which we are talking in sugar, of a surplus of plus or minus 3 million tonnes, we can think of that producing about 1 million tonnes of ethanol. But now there is value added to be added to that, because that million tonnes of ethanol could produce about three-quarters of a million tonnes of ethylene, one of the most important primary ingredients of the petrochemical industry.
Noble Lords may think that I am speaking like a romantic scientist, but I assure your Lordships that these processes are on their way, and that tomorrow noble Lords will see that these sources of hydrocarbons are with us. It seems to me that either the French and the Germans are blind to this petrochemical potential, or they are trying to control it by imposing quotas upon our beet production. If we wished, we could process our beet for petrochemicals, and perhaps rely on sugar cane for our home consumption. The noble Lord, Lord Mottistone, will be able to straighten me out on that matter. Be that as it may, the technology of processing the carbohydrates is far more advanced in Britain.
I am sure that that statement will cheer the noble Earl the acting Leader of the House, who characteristically pointed out to us the singularity of the British. We are ahead of the world on carbohydrate

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chemistry from an industrial point of view. Therefore, I would ask your Lordships, in looking at the EEC agricultural policy, not to lose sight of the potential that exists in this country and our still great influence in the Commonwealth, where we can take into these countries that we have given birth to value added characteristics to the carbohydrates they have been producing over the centuries.
You may think too that in talking about three-quarters of a million tons of ethylene, or 1 million tons of ethanol, that this is really just a little bubble in the picture. But—and I am afraid I must declare an interest as I have a patent in this—it is well established that carbohydrates containing more than six carbon atoms can perform the same task as metallurgical coke in smelting steel. May I remind your Lordships of the wasting assets of coal? Coke is in tremendous demand throughout the world. Japan cannot exist with about 90 million tons of it, and she is searching the world for coke. Germany has to import about 30 million tons. It will not last much longer. It is not every type of coal that can be converted into coke. But using carbohydrates you get away from the use of coke, and you now have a medium for smelting iron ore which could put the smelting of low grade iron ore in this country back on its feet again.
Having said that, I would therefore urge upon your Lordships to remember that this technology could come silently into being. I am afraid that I must declare another interest. I am British, and I prefer to be in Britain rather than across the 22 miles of sea. Therefore, before we get ourselves too entangled and too hardened in our views regarding agricultural policies, I urge your Lordships to bear in mind that there is a potential here for using the earth for growing chemicals in addition to food.
6.23 p.m.
Lord CROWTHER-HUNT: My Lords, as a very new Member of your Lordships' EEC Committee and also of its sub-committee on food and agriculture, I feel very hesitant indeed about venturing any opinion on the highly complex problem of the reform of the Common Market Agricultural Policy and indeed on the
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other reports from the EEC Committee which are the subject of our debate today. In this respect, I might just say in parenthesis how much I have been impressed by the work of the Food and Agriculture Sub-Committee under the expert guidance of its chairman the noble Lord, Lord Walston, and under the guidance too of its expert advisers, and the work of its dedicated staff.
It more than justifies the faith of those of us who teach in our universities and who, over the years, have been advocating the extensive development of a parliamentary special Select Committee structure for the better conduct of our affairs. I count myself as highly privileged to find myself now serving on just such a committee, which not only so admirably probes and checks the executive but also does so much to open up the whole decision-making process of Government both at the national level and also at the Common Market level. It is on that general decision-making process that I propose to concentrate what few remarks I want to make this evening rather than say anything about the substance of our Common Agricultural Policy or the substance of sugar policy. I want to concentrate on the decision-making process at both the Common Market and United Kingdom level, because in my view unless we get that right we shall never get the sort of reform of the CAP which is so crucial to us all, and at the moment this decision-making process is fundamentally wrong.
The first point I want to stress here is the obvious one that the Common Market decision-making process must be reformed so that the Common Market agriculture Ministers are placed firmly under the control of their finance Ministers. We must end the state of affairs in which the Common Market agriculture Ministers on their own as a Council of Ministers, in their late night or early morning bargaining sessions in Brussels, determine the intervention price levels and, in effect, commit the whole EEC to a level of agricultural expenditure which their finance Ministers can only subsequently regret.
I know that our present Minister of Agriculture and Food is on public record as saying that he always gets the prior approval of the Treasury and the

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Cabinet for his Brussels negotiating positions, and this he said on a farming programme on the BBC last Saturday morning. But over the years there can be little doubt at all that Common Market agricultural expenditure has got out of hand because Common Market agricultural Ministers at the final stage in the decision-making process have not been adequately controlled by their Governments as a whole and by their finance Ministers in particular.
I am told that the idea of joint meetings of finance and agriculture Ministers as a sort of enlarged council of ministers to take the final decisions involving agricultural expenditure is not the way ahead I am not sure why that is not the way ahead, but so the experts say. Be that as it may, the crucial factor here must be that if the agricultural Ministers are going to be left to take the final decisions on agricultural expenditure, then those decisions must be within a total financial or budget limit imposed previously by the Common Market finance Ministers, and there must be no supplementary estimates, as it were, to bail out the agriculture Ministers if they get their sums wrong, or otherwise exceed the limits imposed.
It is in this context that I find the report of the Three Wise Men on the working of our Common Market institutions rather disappointing. While that report recognises that there has been a fragmentation of, and loss of, central control in the Community as a result of the development of the specialised Councils of Ministers—the agriculture Ministers, the energy Ministers, and so on—and it recognises this decline, coupled with the decline of the General Council of Foreign Ministers which, as the report of the Three Wise Men says, has failed to live up to its traditional task of overall co-ordination), the report is a little disappointing in its proposed solution.
It naturally recognises that it is only the meetings of the European Council—that is, the thrice yearly meetings of the Heads of State and Governments— that can give the EEC the overall co-ordination and direction that it needs. But nowhere, so far as I can see, do the Three Wise Men recommend that a crucial function of the European Council—that is, the Heads of State and the Heads of Government—must be to set the Community's budget
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and proposed spending for the years ahead. I shall be interested to hear the Government's view on this.
Should it not be an important function of the European Council to agree on the total EEC proposed spending on a rolling five-year basis for each of the five years ahead; and within that, set a series of ceilings for total agriculture expenditure which must not be exceeded by any subsequent decisions by the Council of Agriculture Ministers? This is a vital and crucial duty which the Heads of Government and Heads of State must perform, and their Ministers of Agriculture must operate within that ceiling. I hope that the Government will press for that aim in the development of our European institutions.
So far I have spoken of the top level of decision making in the EEC, but there is a lower level of decision making in Europe which is also clearly in need of reform. Here I refer specifically to the way in which the Commission draws up its proposals for agricultural support prices. It is clear that in this process there are detailed consultations with the professional agricultural organisations. In my view, this is essential and right. Such consultations take place, as the Commission itself puts the matter, "before, during and after" the Commission is producing its proposals. It is right that that should be so. But European consumers do not appear to get anything like this equality of access to the European Commission as it formulates its price policies. According to the representatives of the consumers in the European Community Group, which gave evidence to the Food and Agriculture Sub-Committee, it was stated categorically that:
"the emphasis on consumer involvement in the decision-making process is far too slight".
The representatives illustrated this by saying that during the time the Commission was producing its present proposals they had "two meetings with Mr. Gundelach", but they added:
"Unfortunately the second of those meetings which was supposed to be about the proposals did not take place until the Commission had decided on the proposals".
That is a far cry from consultations with the farmers "before, during and after" the Commission is producing its proposals.

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Another major change must take place in this crucial decision-making process so that consumer organisations and groups are given equality of treatment and access to the European Commissioners while considering their price proposals. In this respect it is probably also necessary that the consumer groups themselves need considerably strengthening because they do not begin to pack the punch possessed by comparable farming organisations.
There is also a technical deficiency about the way in which decisions on agricultural support prices are reached in the EEC Commission, although it might also be dubbed a deficiency in principle. Whatever one calls it, it is wrong and needs to be changed. Perhaps I can best illustrate what I have in mind by referring to the Commission's proposals this February for the overall increase in average prices which we are now very much considering. Part of the justification for this average increase in prices was, as the Commissison pointed out, that farm incomes in Europe had not kept pace with incomes in the economy as a whole. We all know that an important element in the CAP is to ensure a fair standard of living for those engaged in agriculture compared with other workers in the Community.
The EEC Commission, on page 9 of its report dated 20th February, produced a spendid graph in support of its proposals which indicated the gap which had opened up between farm incomes on the one hand and other incomes on the other hand. Thus, one important part of the Commission's case for an increase in price depended on that graph. But that graph was based on the incomes of both efficient and inefficient farmers. What we crucially want to know on this part of the argument is how the incomes of efficient farmers over the years compared with the incomes of other people in the Community. It should be no part of CAP pricing to subsidise inefficient farmers, and other noble Lords have emphasised this point strongly. Such a task should be left to the Social Fund or to the Regional Fund.
I am sorry to report that our own Department of Agriculture does not have any adequate figures on this point, nor has the department apparently thought
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it important enough to obtain these figures in previous years. When pressed on this point, the best the department could do was to obtain some rather out-of-date figures for Europe for the period 1973 to 1977, dealing with the incomes of full-time farmers compared with part-time farmers. Since the figures in the graph referring to full-time and part-time farmers were lumped together, not unnaturally the figures for full-time farmers showed that the gap between incomes of other people in the Community compared with farmers was less for full-time than for part-time farmers. However, I repeat that they had been lumped together in the same graph.
That at least took the matter a little further, but it seems to be based on the assumption that all full-time farmers are efficient, which is certainly not the case in Europe. The figures we need for the future, if we are to have a comparison between the incomes of farmers in Europe and the incomes of other workers in Europe, are those which relate to efficient farmers in Europe rather than that all farm incomes of both the efficient and inefficient should be increased. I hope that in future the Treasury and the Department of Agriculture will be keen, as they should be if they are looking after our interests properly, to obtain these figures so that we may make the appropriate judgments.
My last three points are of a more general nature about the decision-making process in agriculture. I have already said that the interests of farmers rather than of consumers seem to have considerable advantages in decision-making. Perhaps this would not matter too much if the European Parliament were able to do something to redress the balance. It seems reasonably well placed to do so in its ultimate powers over the European budget, because on the surface it appears overwhelmingly to represent consumer interests rather than purely farming interests. If we examine an occupational analysis carried out on the Parliament as a whole, we see that only 5 per cent. of its Members regard farming as their main occupation. It should be pointed out that recently, the Parliament boldly rejected the Commission's budget. But let us look at what its Agriculture Committee did recently. Instead of agreeing to the price increases proposed by the Commission, that committee recommended that prices should be

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increased by more than three times the Commission's figure.
It is interesting to note in this connection that while farmers form about 5 per cent. of the total membership of the European Parliament as a whole, they form about half the membership of that Parliament's Agriculture Committee. Therefore, perhaps it is not surprising that they more than trebled the recommendation about increases in farm prices put forward by the Commission. This left the European Parliament in a position in which it could virtually do no more than abdicate any decision about the recommended prices. Perhaps the European Parliament should develop a convention that on its specialist committees those with a vested interest in the outcome of its recommendations should not form a larger proportion of the committee's membership than their proportion to the Chamber as a whole. We need to do something like that if European farmers are to be cut down to size.
I would add for good measure, and perhaps more controversially—because I am talking about adopting a convention there—that we might in Britain break the convention that seems to have been growing up in recent years that our Minister of Agriculture and Food should be a farmer. I think I am right in saying that three of the last five, including the present Minister of Agriculture, have been and are farmers. This runs directly counter to our other basic convention that all other Ministers in this country should divest themselves of any commercial or other interests on taking office that might be thought to produce any possibility of a conflict between their private concerns and public duties as Ministers. Yet so far as Ministers of Agriculture and Food are concerned, we seem to accept that it is in the public interest that the very reverse should be true. Indeed, I believe it to be true now that all four of our Ministers in the Department of Agriculture are farmers. Those of us who are consumers must wonder, if only a tiny bit, whether the views of consumers are as adequately represented as they might be in the higher direction of that department.
That may be all too controversial, so I hope I can end on a note of harmony with the final criticism I want to make of
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the Common Market decision-making process. It is that in future decisions about prices must be made well in advance of the year in which they are to apply. It makes no sense at all that of the Commission's price proposals, which we have before us now and which are still to be agreed, some are to be effective from 1st April, which has now passed, and that is true so far as milk and butter prices are concerned; some are to be effective from 7th April, now also passed, and that is true so far as beef and veal prices are concerned; and some from 1st August, and that is true so far as wheat, barley and maize are concerned.
How can one hope to regulate production by price policies when the agricultural produce concerned is growing or grown or has already been borne before the prices of it are actually agreed? Agriculture Ministers may be, and have been, able in the past to hold back the clock. They cannot, thank goodness, hold back the natural rhythm of the seasons. Their decision-making processes must at the very least recognise that.
6.44 p.m.
Lord PEART: My Lords, the noble Lord, Lord Crowther-Hunt, made a fascinating speech. He seemed obsessed with the influence of officials in the Department of Agriculture, and indeed of Ministers. I would remind him that probably one of the best Ministers we ever had was a miner, Tom Williams. Apart from that, I do not think it is necessarily an attribute that a Minister should have when he becomes a Minister of Agriculture, and I found no difficulty dealing with farmers, even though I was not a farmer. I came straight out of the Army—academically I was a geologist, but I taught for a short time—and I had no trouble. It depends on how one behaves and reacts as a Minister. I think he was a little unfair to the officials of the Agriculture Department. I am sure that what he said will be looked into, hut perhaps it was something in which the Treasury were involved.
I am sorry that my noble friend Lord Gordon-Walker, a former Foreign Secretary and colleague in the Cabinet, said that every Minister of Agriculture should have a finance Minister with him when at the Community. Heaven forbid! The

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Treasury is a bad enough influence on wise spending and wise policies without getting them to shadow Ministers when they go to negotiate. When I could, I took with me a Treasury official or an official of the Prices Department which was set up; Shirley Williams, for example, sometimes accompanied me. Ministers should he trusted, and if they cannot do their own negotiating they should not be there doing the job.
Lord GORDON-WALKER: Will my noble friend give way?
Lord PEART: In a moment, my Lords. Apart from that, my noble friend knows that long before a Minister took up a stance—this applied also in the old days of the ordinary price review under the 1947 Act—there were long discussions with the Treasury and there was a special committee. Usually that committee was chaired by a Minister who was fairly impartial. That was so even in relation to the working out of policies before I ever went to Brussels; I had to appear before a committee and justify to my colleagues what I. was seeking to do.
Lord GORDON-WALKER: My Lords, my noble friend is properly stating what British practice is and it is admirable, but is he sure the same thing applies in all the countries of the Common Market?
Lord PEART: Even Herr Ertl used always to say that he had to think in terms of the Cabinet when he went back to negotiate, and I am talking about agriculture and the Commission. I am simply saying that it is wrong to say that a Minister should be shackled by having some snoop on his right hand, watching him and reporting back. Government is not conducted in that way now, and my noble friend should know that. I believe there is too much opposition to what Agriculture Ministers have done. After all, it is a Common Agricutural Policy. I did not want to go into the Community, for different reasons.
The noble Lord mentioned a perfect reason why he thought there was advantage in going in—because our farmers would like to have a similar system—whereas I always felt that in going into the Community there was danger to the system, which really flowed from the Agriculture
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Act of Tom Williams, of assured markets, guaranteed prices and broadly approaching a deficiency payments system which was a good system for British agriculture. I was afraid that, by going into a managed market then, I would harm the industry I was representing.
For that reason I was often very critical. It amuses me now when I hear some of the people who were so enthusiastic the other way. I recall paying a visit to Australia and New Zealand, and New Zealand was mentioned by a noble Lord on the Cross-Benches. I was in terrible trouble because I dared criticise the Common Market in New Zealand. When I returned to England, Jo Grimond demanded my resignation from the Cabinet without even warning me about it. I thought that was a grand tribute from the Liberal Party. I must not pursue such matters; we could go on all night reminiscing. In my own party one of our Members was a rabid "anti" and demanded my resignation for a speech I made about the Common Market, a speech of which my noble friend Lord Gordon-Walker approved when he was Foreign Secretary. But I must stop that, or we could go on for hours and turn up a lot of stones.
This has been a good debate and I congratulate the noble Lord, Lord Walston—the second time I have done so. He makes a distinctive contribution to our proceedings and I pay tribute not only to him but to the committee, and of course to my noble friend Lord Cledwyn of Penrhos, who was also a good Minister of Agriculture and who I think would approve of what I have said. Be that as it may, this has been a good debate and it is not for me to reply to all my colleagues. I did that yesterday in another way when we had a rumbustious debate.
I was feeling rather rumbustious today in view of what was said, because I believe this country has one of the best Departments of Agriculture in the world. The officials and scientists connected with it are superb. The noble Lord, Lord Energlyn, spoke about sugar, and I know he has been doing work on the molecule. That shows that there are new possibilities and I am sure that our scientific service in the Ministry of Agriculture—and remember, it is the Ministry of Agriculture and Food—will respond to the work he has

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been doing, which I know has been taken up at university level, and bodies like Tate & Lyle are interested in it. We must recognise that the Ministry of Agriculture covers both agriculture and food. Many people did not want that marriage. In fact when Tom Williams was Minister there was a Minister of Agriculture and a Minister of Food. I believe that it is better to have the two together; this leads to greater efficiency. I hope that we never seek fragmentation.
The noble Lord, Lord Sainsbury, made an outstanding and important speech in which, quite rightly, he defended the consumer. He was not anti-farmer, but he said that there must be a two-way process. I agree with him so much about New Zealand. The noble Lord, Lord Robert-hall, took up this point, too. I am, and always have been, a great believer in New Zealand products, and indeed I was partly responsible for the negotiations relating to New Zealand and the Community. The recommendations were finally made at the Summit in Dublin, but my Government have always paid great attention to Commonwealth products. The noble Lord who is a former Foreign Secretary and a former colleague, with whom I have crossed swords, played his part, too. The Commonwealth was always included in our discussions and negotiations, and I trust that the entry of New Zealand lamb into our market will continue. As the noble Baroness, Lady Elliot of Harwood—who knows agriculture so well—said, New Zealand lamb comes in at a different period from ours, and there is no conflict. This is wonderful, because the New Zealand people are really British in the best sense, and I believe that it is good that we should try to help them.
It is right that we should have agriculture Ministers playing their part in Europe. The noble Lord, Lord Cledwyn of Penrhos, was right, to quote paragraph 62 63 and 65 of the report. There is the nub of the matter. If the Government keep to the basic principles there, they will do no wrong.
The noble Lord, Lord Tranmire, was very wise when he spoke about the period of enlargement—Spain, Greece, Portugal. This will present difficulty, but we are committed to this, and I think it is right; and I am glad for political reasons. It is
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good that Spain, which after a long period has renounced fascism, finally has become a democratic country and is now in the Community. That strengthens the political side of the Common Market. I do not believe in the Common Market only in terms of fish and food: I believe that it is an important political unit. I did not always agree with that view, but more and more I have become convinced that one of the great assets of the Market is to give us strength in a community which will prevent war ever occurring again. Let us remember that we are now living in very dangerous times. I will not trespass on other ground but I believe that despite all the difficulties, the creation of the Community, as well as its enlargement, will play a major part in securing peace in Europe and in the world.
That is why I also agree so much with the noble Lord, Lord Mottistone—whose point was taken up by other noble Lords—about the importance of the Brandt Report. We should think of those countries where there still exists not only poverty but illiteracy as well. I have always considered the FAO one of the finest organisations of the United Nations, and with UNESCO it has played a great role in many parts of the world. I was once privileged to give a lecture in Pittsburg on the FAO and UNESCO. The FAO is a great organisation, and I am glad that it was the British who took the initiative in this—I think of Lord Boyd-Orr. I met one of his relatives not long ago when I was looking at the farms of the noble Baroness, Lady Elliot of Harwood. I can tell your Lordships that the noble Baroness tried to take me around at a very fast pace. She has a wonderful farm, and I now know the reason why she speaks so well on agriculture. We had a good night at the National Farmers' Union dinner, where we all sang and had a good meal. I was escorted back to the night sleeper, but I shall go again to Scotland.
I fear that I have spoken for too long, but I must mention Northern Ireland. We must never forget Northern Ireland. As an "Ag" Minister I always thought well of Northern Ireland, and the noble Lord knows that I have taken a great interest in it. He is quite right in this regard. He mentioned the penalties as well as the difficulties facing the industry. I hope that the noble Lord will impose

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the necessary pressures on the department and that the difficulties will soon be over. We have had a good debate, and I hope that the noble Earl will respond in a magnificient way, as he always does on agriculture, and will give us some news.
6.56 p.m.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, I am much obliged to the noble Lord, Lord Peart, for expressing the hope that I can tell him many new things that he does not already know, but I did not think that I can tell the noble Lord anything. However, I agree with him; I think that this has been a quite outstanding debate because it has been the distillation of a very great deal of hard work. I think it was the noble Lord, Lord Roberthall, who said that if the committees had done a lot of work, we should not forget those who had testified to them, because it was their work and efforts which enabled the committees to make their reports. My noble friend Lady Elliot of Harwood said that she had had stacks of papers to read and that that involved much hard work, but I have no doubt that she will not forget the work put in by those departments that had to produce those stacks of papers. The work of departments in providing information for such committees is considerable.
I must say that I find some slight difficulty in winding up a debate in which 14 speakers have taken part and which has covered three reports and four books. The list of speakers was very formidable. It included two ex-Ministers of Agriculture, as well as a number of noble Lords who were on the committee. When I looked at the list of speakers I could not help but think of the rather nice word that the French sometimes use to refer to ladies of a robust nature—formidable.
The committees have produced reports which have been of great interest. I should like to refer to the noble Lord, Lord Tranmire, who I thought took a particularly statesmanlike view, as one who was not keen on joining the Common Market, when he said that there are great problems in the Common
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Agricultural Policy, and he hoped that this Government would at least take a lead in trying to resolve them. I hope that we shall. We shall certainly play a part, and we shall certainly take a lead. It is one thing to do that, but of course it is another thing to try to get eight other members to agree to an alteration; but that is the challenge of the Community.
The noble Lord referred, as did the noble Lord, Lord Peart, to the enlargement of the Community. I agree entirely with what the noble Lord, Lord Peart, said. The Community does not exist as a selfish enclave for the benefit of its members. It must be an outward-looking Community for the benefit of others, and for the rest of the world, and indeed for the stability of the world. That is a vital and important role which it must play, and I believe that it may well play an even greater role in that respect later on.
The noble Lord, Lord Walston—who, if I may, I congratulate not only on initiating this debate but on being able to set the scene of three reports so clearly and succinctly, in a way we have come to expect of him—put his finger on the point when he said that we can all agree and see the problems of the Common Agricultural Policy, but it is another thing to find a solution to them. He said, as indeed did a number of other noble Lords, that he would have liked to see the Common Agricultural Policy become a Common Food Policy. I think the noble Lord, Lord Roberthall, said that, and my noble friend Lord Mottistone said that, too. Frankly, I think there is quite a lot to be said for that, but in a way it depends what one means. The Common Agricultural Policy, if it becomes a Common Food Policy, should mean that it produces reasonable prices to consumers; it should be able to produce the right quantities of food for the consumers' needs; and it should not necessarily restrict the consumers' access to foods which the Community cannot produce. I think that in that we would have a total agreement. Where my noble friend Lord Mottistone says he thinks it ought to incorporate food processors and manufacturers, and all the way down the chain, I think that, desirable though that may be, it would he quite a complicated thing to achieve.
The noble Lord, Lord Sainsbury, in what I agree was a remarkable, if provo-

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cative, speech, said he felt that the problems of the Common Agricultural Policy were not easy of solution; and I think it was my noble friend Lord Mottistone who said that we were struggling on an annual basis for the food requirements of nine countries different in temperament and requirement. Of course, he is perfectly right. It is an annual struggle, and many people want to see it not an annual struggle. But, my Lords, this has always been the problem with agriculture. It was so before we were in the Common Market, as well as now. Everyone knows that agriculture is a long-term matter. The trouble is that food is short-term, and food is politics. Inevitably, agriculture is bound to get tied up in politics, and you cannot keep it out. But the Government remain totally convinced that action to hold down agricultural prices is still the most direct and practical way in which to start to tackle the problem of over-production, and, indeed, the escalation of the Common Agricultural Policy.
The noble Lord, Lord Cledwyn, who is not here, in the very last words of an important speech, said that, if we do not control the Common Agricultural Policy, the Common Agricultural Policy may fail, and if the Common Agricultural Policy fails then the European Community will fail. My Lords, this was a trenchant point, and I think he is absolutely right. Whatever our views may be of the Common Agricultural Policy, its rights and its wrongs, it must succeed. We must make it succeed, because it is, for better or for worse, such an integral part of the European Community. But the restriction of prices is an approach which will help to bring Community prices into a better relationship with those on the world markets, as well as with what consumers inside the Community are able and willing to pay for their food.
Of course, price restraint is a policy which can take time to have an impact on production patterns. Indeed, in some sectors it can have the effect, as the noble Lord, Lord Walston, said, of actually inducing farmers to try to keep up their incomes by producing more. With milk, despite the successively lower annual price increases, which culminated last year in the freeze, production is still expanding; and a policy of price restraint must therefore be followed consistently
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over a period if it is to have an impact of any scale.
I believe my noble friend Lady Elliot said that the numbers of milk producers had dropped from 150,000 to 44,000. The figures I have show that the number dropped from 101,000 in the last ten years to 44,000, which is a significant drop in the number of producers. Of course, the trouble is that the number of dairy cows rose from some 3,275,000 to 3,288,000 over that same period, and the actual production of milk went up from more than 11,000 million litres to over 15,000 million litres. So, although you had a reduction in the number of producers, you actually had an increase in the number of cows and a substantial increase in the amount of milk produced. The noble Baroness, Lady Elliot, said that she thought we ought to go out and be more aggressive in selling. I entirely agree with her. Indeed, if all Community countries drank as much liquid milk as we drink then there would not be a milk lake. But the trouble is that the bases of their philosophies are different. The French are cheese and butter eaters, as opposed to milk drinkers; and this is why, as my noble friend Lord Mottistone says, you are really trying to interrelate the difficulties of countries of different temperaments.
The committee recognised this difficulty when they suggested that there should be a five-year rolling plan for agricultural production which relates output to expected demand and provides the regular reductions in real prices for products which are in surplus. My noble friend Lord Mottistone supported this idea, and indeed it is an attractive one. It recognises that change will not take place overnight, but that we must start somewhere and a medium-term framework offers the best chance of carrying through a consistent policy on price. One may appear to quibble at some aspects of the committee's recommendations (though I would not wish to do so) but, of course, it reflects one's doubts about the negotiability of this idea rather than the value of taking a longer view of Community agricultural policy. As this year's price negotiations are showing, yet again there is a very great reluctance in Europe to accept that prices should be held down even for one year, let alone for five. So, while the idea is attractive and has much

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to commend it, I question whether at the moment it would be acceptable to other members of the European Community to have a longer period.
My Lords, with regard to milk, which I referred to earlier and which, after all, is one of the great problems that we have in the European Community, all I would tell your Lordships is that we are wholly opposed to a price increase; and while the proposed increase in the basic co-responsibility levy is not of itself inconsistent with last year's decisions, we cannot accept the proposals which are now put forward with regard to the exemption, which would discriminate unreasonably against our farmers. My noble friend Lord Tranmire asked what the discrimination would be. According to the Commission, the figures for the proportion of milk production which would be exempted in each Member State show that, in Italy, 3·5 per cent. of the production would be exempted; in Belgium, 13·3 per cent; in France, 21·8 per cent; in Germany, 21·2 per cent; in Ireland, 39·8 per cent.; in Luxembourg, 65·6 per cent.; and in the United Kingdom only 4·5 per cent. That is what we say is unfair, and that is why we think that it is not right to accept that kind of restriction.
Lord TRANMIRE: My Lords, can my noble friend give the figures on the number of producers? They are rather different. I was quoting the 91 per cent. of the French producers who would be exempted. I wonder whether he has the figures on that basis.
Earl FERRERS: My Lords, I cannot give my noble friend the figures at the moment, but I will write to him to let him know.
Baroness GAITSKELL: My Lords, may I ask the Minister—this is something that the ordinary housewife cannot understand about this milk production—why we do not have more of our beautiful English cheeses? Why is that? These are the kind of things which confuse ordinary people about the Common Market.
Earl FERRERS: My Lords, I do not want to go off on a tangent, but I would say that there is no reason why we should not have plenty of English cheeses provided
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we get the market for them. It is what people wish to buy. I would say that there is a certain store in Paris, an English store, Marks & Spencer by name, which sells a very substantial amount of English cottage cheese every day. That is an example of where, if you promote the products, there is a market. There is no reason why we in England should not have English cheeses. The difficulty is to encourage English people to eat English and not Continental cheeses.
Lord DAVIES of LEEK: My Lords, what about Caerphilly?
Earl FERRERS: My Lords, I like Caerphilly very much. If the noble Lord would care to give me some I should be delighted to remind myself of its delicate flavour.
A number of noble Lords have referred to the social aspect of the EEC. My noble friend Lady Elliot did so, as did Lord Sainsbury, who said that it should not be part of the Common Agricultural Policy. I think that the noble Lord, Lord Gordon-Walker, referred to it as did Lord Davies of Leek, who said that he would hate to see vast areas of the country without cows and left for grouse and pheasant and so on. I think we would agree with him there.
For too long the Common Agricultural Policy has been used as an all-purpose instrument for attempting to maintain satisfactory incomes to all producers by fixing prices at levels which keep the less efficient in production. I should not be sorry to see those Member States who wish to retain such producers on land, for political or social reasons, both of which would be important, facing up to the question of how they are to be supported, if not from the CAP. The answer may lie, as the committee has suggested, in those Member States themselves taking the financial responsibility. The trouble is there is no sign of their being prepared to do so. On the contrary, they tend to want the Community itself to favour small producers, for example, by exemption from the milk co-responsibility levy to which I have referred. But even if national funds were used to supplement the incomes of small farmers, the extra production arising from keeping them in business presumably would still have to be disposed of at Community expense.

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This is not to say that there is no place in Community agriculture for the small producer. I, for one, would very much regret it if agriculture became the exclusive preserve of the larger man. So far as that goes, there is much to be said for Lord Brookeborough's pride in the fact that the CAP does have a social side to it. Small farmers have their part to play particularly in times of crisis when their determined talents, personality and ability to work unfettered with other problems may see them through more successfully than possibly the big farmer with his big commitments. But retaining the small producer as an integral part of the social structure of the countryside should be one of the objectives of a social rather than an agricultural policy with funds made available to cater for his special needs on a national rather than a Community basis.
The noble Lord, Lord Sainsbury, made a very robust speech and it was good fun. I must say that he attacked my right honourable friend the Minister of Agriculture for not giving more support to the interests of the consumers. I would remind him that that is not fair. My right honourable friend, representing the United Kingdom, was about the only one of the Community agriculture Ministers who was prepared to say, "No, we are not going to have another price increase". It was he who was determined last year to stop the prices from being increased, and who is showing the same determination this year. He has, as the noble Lord, Lord Peart, has said, the consumer interests in mind because he is the Minister of Food as well as the Minister of Agriculture. In the long-term the interests of the farmers and the consumer should be one; and it is in the interest of the consumers of this country to have a viable agriculture, because only in that way can we hope to have a proper supply of food. I question the view of the noble Lord, Lord Sainsbury, that we ought to go for only 75 per cent. self-sufficiency and not 100 per cent. I know very well as I am sure that he does) that there is nothing worse than a shortage. He, as a retailer, knows that if you have a shortage it compounds itself. While we in the European Community have a problem of surpluses, that, on the whole, is more acceptable than problems of shortage.
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One of the main points of this debate has inevitably been the question of sugar. I would say this and it is very important. The committee have pointed out that what would help the world sugar market more than anything else would be for the Community to become members of the International Sugar Agreement—and the noble Lord, Lord Walston, referred to this. The noble Lord, Lord Mackie, condemned our producing too much sugar and dumping it on the world, and upsetting the world. The noble Lord, Lord Energlyn, made a fascinating speech about sugar. It so happens it touched a chord in my heart. I believe that agriculture can be a source of energy as well as of food. He drew attention to how in Brazil sugar is being turned into energy. It may be that in the European Community, too, we shall find this is a possibility. There are many people in this country who are making a study of the problem and we may find ourselves on the threshold of something important. His speech was honey to my bread and butter.
I welcome the direction of the recommendations of this report, because that is the way in which the Government are going. The United Kingdom has strongly supported the Commission's proposed reduction of the total Community quotas, and we welcome the indications that the Commission is preparing to bring the Community's total exports under control, including exports of sugar produced outside the A and B quotas. The United Kingdom has consistently pressed—as the noble Lord, Lord Walston, wants—its Community partners to agree that the Community should start negotiating terms for its membership of the International Sugar Agreement. We recognise that there is no prospect of the Community deciding to open negotiations until the new sugar régime has been settled. We want the new régime to help the Community to join the agreement. We made it clear that we support the arrangements to which the Community has committed itself in the sugar protocol of the Lomé Convention.
In considering the future of the United Kingdom sugar market, I must stress that the Government have regard to both cane and beet sugar sectors. Both have their importance in terms of the economy, of employment, of the balance of payments and the supplying of our needs. The

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Government want to balance the interests of these two sides to obtain for both the best arrangements they can in relation to our market. In negotiations in Brussels, my right honourable friend the Minister of Agriculture has said that the Commission's revised proposals are still not good enough. The Government believe that a quota greater than the Commission has proposed is compatible with the continued flow of ACP sugar to the United Kingdom at its present level. Bearing in mind the surplus of sugar, we are also opposing any price increase. The noble Lord, Lord Mackie of Benshie, castigated Lord Donaldson and asked who was producing the excess of sugar in the Community.
My right honourable friend is concerned to see that we have a reasonable quota. Let me give your Lordships the facts, if I may. On the whole, we consume in this country 2·4 million tonnes of sugar. We produce 1 million tonnes ourselves and we import 1·2 million tonnes from the ACP countries and about 200,000 tonnes from Europe. Those are very rough figures. So strictly, as we produce less than half of what we consume, we do not add to the surplus in Europe. Germany contributes 300,000 tonnes and France 2 million tonnes to the excess. In the EEC proposals, our quota would have been cut by 24 per cent. while that of the EEC as a whole would have been cut by 10 per cent. and France by 4 per cent.
Your Lordships have been kind enough to produce an interesting and stimulating debate. I have not been able to encompass all the points which have been made by your Lordships. If I have left any out—which I have—I hope that your Lordships will not consider that I have been discourteous; it is merely for the convenience of other noble Lords. It might be appropriate if I did not refer to other important points which have been made, not the least those in Lord Crowther-Hunt's speech, which was not merely a breath of fresh air but like a howling gale which swept through the place. Lest he should think that we are all wicked Ministers if we have agricultural interests, I am bound to declare—as I should have done at the beginning of my speech—that I also happen to be a farmer, as are my three colleagues in the Ministry.
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This is not novel. Whether it is good for agriculture or not I do not know. If one asked some of the old farmers whether those who are in the Ministry are the best Ministers they might give the noble Lord some answers which would be honey to his ears!
I appreciate greatly what has been said during this debate. It has been a great help to us. My right honourable friend is going to Europe next week, to the Council of Ministers, to continue the price discussions and all the points which your Lordships have made will be very well noted and interest will be taken. I am grateful for the expression of concern which has been shown.
7.23 p.m.
Lord WALSTON: My Lords, I am grateful to the noble Earl for what he has said. I am grateful to all noble Lords who have taken part in this debate. It was of some interest (I might even say some amusement) to me to realise that such disagreements as there were have not been across the Floor of the House but rather on one side entirely. We have my noble friend Lord Peart disagreeing with my noble friend Lord Crowther-Hunt; we have my noble friend Lord Davies of Leek disagreeing with my noble friend Lord Sainsbury. But across the Floor of the House there has been general agreement. That shows what an objective approach your Lordships have to this enormously important problem.
I share the noble Earl's comments on the stimulating speech of the noble Lord, Lord Energlyn. It was very refreshing indeed to have it pointed out to us in such an expert and clear fashion that while the future of agriculture always must be concerned primarily with food production, it may well be concerned with the supply of other raw materials which are so essential to our modern way of life. I hope that whether it be the Government, whether it be private enterprise—it might even be the British Sugar Corporation—far greater attention and resources will be devoted in the next few years to developing these alternative sources. One might even find that the British Sugar Corporation can dispose of all the surplus sugar that it would like to by converting it into coke equivalent, and then everybody would be happy.

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I do not want to end on a discordant note and I am grateful to the noble Earl for his kind words about the report in general. But I must confess that I should have been happier had he not only said to us categorically that he and Her Majesty's Government agree with the general line, but had said specifically that when his right honourable friend goes to the Council of Agricultural Ministers he will press very firmly for a common food policy running over five years, even though he may not get it. Just because you believe you will not get agreement does not mean you should not put forward your view and take a positive stand instead of reacting to the proposals of other people. There should be seen to be a real lead from this country with a constructive approach to these difficult problems.
At this late stage I urge upon the noble Earl to persuade his right honourable friend not to be deterred by difficulty. If, as he told us, he agrees with the general ideas here, he should go out and fight for them and take a lead in seeing that eventually they are achieved. I thank your Lordships for your help in this debate.
On Question, Motion agreed to.

ECC REPORT: WATER POLLUTION (MERCURY)
7.26 p.m.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness White)The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness White) rose to move, That this House takes note of the Report of the European Communities Committee on Water Pollution (Mercury) (38th Report, H.L. 187). The noble Baroness said: My Lords, before I take up the theme covered in the draft report that we are now to consider, I should like to add my congratulations to those who took part in the immediately preceding debate on three other reports of your Lordships' Select Committee and in particular to thank the noble Lord, Lord Walston, as chairman of the sub-committee particularly concerned.
In the 38th Report which we have presented to your Lordships' House during this Session we are discussing a proposed Directive dealing with mercury discharged by the chloralkali industry. This is the second in a series of EEC draft Directives concerned with the discharge of toxic
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substances to the acquatic environment. The first, as most noble Lords who are present tonight will recall, dealt with aldrin, dieldrin and endrin and was debated on 23rd October last on a Motion moved by the noble Lord, Lord Ashby, who will, I am happy to say also be speaking on the report we are discussing tonight.
Both these draft Directives are extremely narrow, in the sense that they deal with specific industrial uses only of the substances concerned. What is familiarly known as the "drins" draft Directive was confined to their manufacture and their use in moth-proofing, while this draft Directive on mercury specifies discharges from one industry only—albeit an important one—the chloralkali electrolysis process.
So far as the United Kingdom is concerned, there are, I believe, eight installations directly affected, of which one, on the river Rother, discharges to fresh water and the others to estuarial waters, in one instance via a canal channel into the Mersey and thence to Liverpool Bay. We were informed in evidence that over the past five years or so, some £20 million has been expended on treatment works to deal with this form of mercury pollution, with a significant reduction in its effects; one obsolescent plant has been closed down and further expenditure over the next year or so is firmly committed by the industry. So we have not been sitting back awaiting an EEC Directive before taking significant action.
Narrow as these Directives are, they are important in that they set the pattern both for other substances characterised by toxicity and persistence and hence included in what is known as List I or the black list, and for further Directives dealing with other uses of the "drins" or mercury respectively not included in the drafts which have so far come before us.
In the report which we are debating tonight, your committee has tried to spell out in a little more detail than usual some of the difficulties encountered by a Member-State which for geographical, administrative and, may I emphasise, scientific reasons finds itself in a minority among its European colleagues on matters of water resources management and pollution control.
I will not reiterate this evening the history of the earlier instances described by the noble Lord, Lord Ashby, in our debate on 23rd October, which we hoped had been settled by the agreement which was familiarly referred to as Environment 131, which became, more formally, Directive 76/464. But the very fact that the draft directive before us deals with only one specific use of mercury, a substance which is widely found in nature and which has other uses than in the chloralkali industry, is indicative of the difference between the two approaches: one a narrowly industrial one and the other a comprehensive approach which, where it can practicaly be applied, we believe to conform more fully and properly with both environmental and scientific needs.
The former approach, as we know, relies on uniform limit values for particular discharges of the substance concerned and the latter, known as the environmental quality objective, or the EQO system, is based on the quality of the receiving water after total pollution from whatever source has been taken into account. To call these two systems "parallel", as was done by the two leading spokesmen in the recent debate in the other place, seemed to your Committee to be mistaken. Accordingly, we have preferred to use the term, "alternative", as being in our view more accurate.
It is clear that if one relies on uniform limit values for particular discharges, an industry-by-industry approach makes good sense; but to try to fit EQO procedures into the industry-by-industry pattern, as both the "drins" and the mercury draft Directives have attempted to do, is in my view a Procrustean exercise which, with the best will in the world, is bound to lead to difficulties. I believe this to be a fundamental stumbling block which lies in the way of the better understanding which your committee certainly seeks with our colleagues in Brussels. As one of our witnesses pointed out, among other things, it leads to putting responsibilities for attaining certain standards on one section of industry alone for what may in certain locations be a multiple responsibility which should be shared by other users or sources of the substance concerned, even if they are only lesser culprits.
Such sources, of course, include sewerage systems as well as industrial direct discharges and in some cases agricultural run-off too.
If one tries to judge the two systems sdie by side, by what criteria can the alternatives be judged to be "fair"? As the noble Lord, Lord Ashby, forcefully pointed out in speaking of the "drins" draft Directive, the comparisons in that instance, as it came before us, seemed orders of magnitude out of true as well as appearing inconsistent with the Coin-mission's own water quality standards, established in other Directives, such as those for the abstraction of drinking water.
I must confess that we found it depressing that after long discussions with Brussels we still faced in the mercury draft directive which we are discussing tonight, in the part dealing with the EQO approach, a requirement for a separate programme dealing with indirect discharges of mercury. That this could have been so included in that section seemed to indicate either astonishing carelessness or, more probably, a persistent failure to appreciate the essence of EQO philosophy, which is after all to tackle pollution by a particular substance in its entirety in the area of water concerned. It does not really make sense to take "moth-proofing" or even chloralkali processes on their own, particularly in estuarial situations.
Properly to apply the EQO system seems to me to require a series of comprehensive directives, substance by substance, with a time-scale appropriate to each exercise concerned. Having said that, I should also like to record that in certain important aspects I believe our recent discussions with our colleagues in the Commission have been most helpful in putting certain matters into better perspective. In particular we have tried, in paragraph 30 of the report we are discussing tonight, to indicate what we take to be one of the major practical difficulties in attempting to reconcile our differences; namely, the situation in countries with significant trans-frontier supply and pollution problems, which do not touch our insular administration. We draw attention to the fact that in recent years our water administration in England and Wales has been reformed on a basis more consonant with natural and scientific principles;

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namely, with one authority responsible for water resources in each main river catchment area, including supply, sewerage and quality control. This is far from being the position in certain other Member-States; for example, in the Netherlands, where I believe there are some 600 water authorities in all in that small country.
We have been much interested to learn that what we call our "total" approach now seems to be finding favour in France, where I understand it is now being adopted—albeit possibly in a more sophisticated form—in one of the most important river administrations. I hope very much that my noble friend Lord Ashby will be able to elaborate on this, because I know he has been studying the problem. As I understand it, the rivers of France flowing directly to the Western seaboard are, like our own, free of trans-frontier complications and therefore can be administered more easily on what we believe to be the best environmental basis.
One important feature of our administrative system is that quality control is governed by the intended use of the water—a principle recognised by the European Community in a number of Directives which are already in operation. The general public are reminded of this principle in the current issue of the popular series called European File, and I refer to the April 1980 issue which is devoted to The European Community and Water. This refers on page 3 in the section on "Quality objectives" to the fact that,
"… following proposals from the European Commission … these vary according to the ultimate use of the water'.".
Following the reorganisation of our water authorities, each one has drawn up a scheme of designation use for the waters under its control. The quinquennial review of the quality attained in each river system is being undertaken this year and I understand the results should be available early in 1981. It is against this background of intended use that quality objectives are established for each area of water, and it is from these objectives that quality standards are devised for particular characteristics or substances. It is against the requirements of these standards that in turn individual discharge consents are formulated by the water authority for particular effluent
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emissions to the receiving water in any particular location. That these levels of consent vary according to the ultimate use of the water is obvious, but, properly administered, the system is logical and complete. I am sure, incidentally, that some misunderstandings could be avoided if we all were careful to use the terms "environmental quality objective" and "environmental quality standard" each in its proper sense and not, as sometime we carelessly do, more or less interchangeably.
However, it seems to some of us that even after all our cross-Channel dialogue we have not yet taken steps to make available to European colleagues, including of course Members of the European Parliament, a full description of the application of EQO methods which they can accept as truly valid. The problem arises among other things from our decentralised methods of administration, with each water authority making its own localised decisions on the standards it proposes to apply to meet its own chosen environmental quality objectives for particular stretches of water.
To those who have had no opportunity of studying the system in its detailed application, a system so described must appear to be excessively arbitrary and to offer considerable opportunity for leniency in certain situations. My colleagues on the Select Committee and I believe that the proof that the system is basically efficacious lies in the conspicuous improvement in water quality, which has been such a marked feature in British rivers in the past two decades or so. In particular, one cannot but be impressed by the spectacular work done on the Thames and, perhaps less dramatically, on the Tees.
Both efforts have been the result of carefully worked out programmes specifically designed to improve river quality with the most effective use of resources. Both water authorities have published their results, but such particular reports are not quite what is needed to secure a more general acceptance of the policy which we are advocating in the European context. The fact that the appropriate sections of the Control of Pollution Act 1974 are still not fully operational, and that the public registers of discharge consents are therefore not yet freely available, does not help our case, although we recognise that

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certain water authorities do publish consent details voluntarily. But if the noble Lord who is to reply to the debate on behalf of the Government can give us any comfort in this direction, we shall be extremely grateful to him.
I understand that the industries concerned with this draft Directive—in particular, the chemical industries—have themselves expressed the wish that, particularly for List I substances, the authorities in the United Kingdom should demonstrate that they are, in fact, exercising comprehensive control of all relevant receiving waters using the EQO policy, with its corresponding environmental quality standards. Can we not, therefore, have such an authoritative statement in a form which is intelligible to the interested lay person, and with sufficient illustrative detail to ensure that it carries conviction?
The need for such a presentation, geared specifically to the EEC situation, would seem to be urgently desirable. I would not go as far as some persons have been advocating in a recent publication, which I think many noble Lords will have seen. But I believe there is a point that we are still not making a sufficiently successful presentation to those who are not familiar with the way in which the British system works. I would particularly draw attention to the need to have material which can be of real use to Members of the European Parliament, whether they are from the United Kingdom or not, who are concerned with these matters, and who are expected to give their own opinions on the draft Directives which appear from the Commission and which go to the Council, particularly when they are all aware that there is one country—namely, ourselves—which is asking for a system to be approved which is different from those accepted by all our other partners. Therefore, there is a very real need, it seems to me, to make this case in terms which can be appreciated at a non-specialist level.
In any such attempt, we should make it plain that, while an EQO is primarily a tool for systematic water quality improvement over a period of time, it can where necessary allow for the control of specific substances in circumstances in which the general river quality may still be low; in other words, in the small proportion of our
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river lengths which are in our lowest river quality classifications. If this is not made clear, then it seems to me that there are bound to be doubts about our practices in the Class 4 lengths of our industrialised rivers, were the EQ0s may not at first glance seem to be adequate for the control of List I substances. I have had discussion on this matter with some representatives of the industries concerned, and I believe that they would not dispute that some such arrangements are desirable.
If I may deal with one or two of the more detailed points in the report which is before us tonight, as we mention in paragraphs 21 and 32 of our report, in the initial stages of drafting the Directives governing List I substances the Commission believed that the only distinction in conditions which it was empowered to make under Article 6(2) of the basic Directive 76/466 was between those applying to fresh and salt water respectively, and that other characteristics had to be disregarded. We understand that they have now been advised that this is not so and that, accordingly, they are free to adjust the conditions proposed, so that they may be compatible with levels which make good sense in an EQO situation, and which are also compatible with levels set in their own previous Directives.
With this in mind, your committee have made suggestions in paragraphs 33 to 36 for adjustments which would seem to them desirable, including the important one of distinguishing between soluble arid insoluble forms of mercury, which have very different environmental effects. These suggestions are necessarily tentative, in the sense that your committee is a scrutinising and reporting body, without executive responsibility. Nevertheless, we hope that they may prove helpful. In one particular respect, in paragraph 33, we have diverged from the views of the majority of our witnesses, in so far as we have expressed doubts about the adequacy of relying solely on fish sampling to test water quality, although such sampling undoubtedly has its uses.
I trust to my scientifically learned friends, who are to follow me, to elaborate on some of the more technical points which emerged from the evidence which we received. We hope that we have properly understood the apparent discrepancies of the proposed time-scales to which we

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refer in paragraphs 29 and 37 of our report. These worried us considerably in both this draft Directive and in the one on "drins", as our initial reading of them made them appear grossly unjust to those who pursue the EQO route. I trust that we are now right in believing that our initial reading was mistaken.
Finally, I should perhaps indicate that, while everyone accepts that mercury is a persistent toxic substance which, in the extreme conditions dramatised in the disastrous consequences to fishermen and their families in Japan, can undoubtedly be excessively damaging to human health, no one among our witnesses offered us evidence of specific deleterious effects having occurred from anything arising in our own water. I mention this, because I think that one should put these matters into perspective.
have tried to indicate with what attention your committee endeavour to pursue the trains of thought underlying the complex propositions which emerge from the Commission. But we do so willingly, in the hope that, ultimately, we shall achieve agreement on proposals which are both environmentally sound and will secure the optimum deployment of resources. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Water Pollution (Mercury) (38th Report, H.L. 187).—(Baroness White.)
7.49 p.m.
Lord NUGENT of GUILDFORD: My Lords, it falls upon me to follow the noble Baroness, Lady White, and to thank her for her admirable exposition in moving the reception of her report. I read it with great interest and I have listened to her speech with equal interest, and found both lucid, authoritative and, if I may say so from my knowledge of the situation, entirely correct. As she told us, it follows the precedent of the 17th Report on "drins" which we had here last October. At that time, by an accident of timing, I found myself sitting on the Woolsack while the debate was going on, so I had the pleasure of listening to it but could take no part in it. So I am glad to be able to remedy that situation now.
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This 38th Report on the discharge of mercury is based precisely the same grounds as the "drins" report in October. I thought the exposition which the noble Lord. Lord Ashby, made then in his introductory speech was quite admirable and must have convinced anybody whose mind was open to be convinced on the soundness of the approach which we are making and prefer to make in this country, that of environmental quality objectives rather than uniform emission standards. I feel sure that it must have made some impression on the slightly resistant mind of the Commission in Brussels. In any event, the debate today gives me the chance to join in what I regard as a very important subject.
It was my responsibility to introduce the policy of river board quality improvement in 1978, when I was chairman of the National Water Council, and to introduce the concept to the regional water authorities of water quality objectives. We did that after very long and careful study and discussion. There was a good deal of resistance to it, because of course among other things it has committed all of the regional water authorities to defining precisely what the objectives are for the different lengths of river for which they are responsible, and in some cases that has meant that the standards which had previously applied to those lengths of river have had to be downgraded, because they were never observed and, I fear, for some years it will not be possible to observe them because of the nature of the industrial discharges into them.
Therefore, the whole basis of this policy was to deal with reality so that everyone in the country—all who are interested in rivers and the whole community—would know precisely what was the condition in our rivers and the regional water authorities were completely committed to those standards of quality being defined. That meant that every individual discharge into the rivers would be individually classified, monitored and controlled, and that is now happening.
That was the response of the industry to the 1974 Control of Pollution Act (which covered water), on a voluntary basis, as the noble Baroness, Lady White, has said. There are very great difficulties about which I am sure I shall

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hear from my noble friend Lord Mowbray and Stourton when he replies, to the implementation of the whole of that Act, but a great deal has already been done on a voluntary basis. The main water authorities concerned with industrial effluents in the North and the Thames are already conforming. They have classified all of the discharges; they have registers that are open to public inspection on a voluntary basis, and therefore they are doing precisely what we want. Some of the other water authorities may not have got quite as far as that, but they are near to it, so that the response to this lead has been entirely co-operative and has taken us a very long way towards obtaining a complete classification of every discharge into every river in the country, which will be known to everybody.
I should like to add that my experience with the water industry is not confined to the five years that I had as chairman of the National Water Council. For many years I was Chairman of the Thames Conservancy Board, which was responsible for the management of the River Thames. I suppose I could fairly claim that the River Thames is the best managed river in the world. It has to do so much for us as a country: most important, in supplying London with two-thirds of its water supply, in providing a notable amount of navigation—for pleasure nowadays, it is true, but for tens if not hundreds of thousands of people—and in receiving effluent from Swindon up at the head right down to London down into the estuary. Yet it is a river in beautiful condition, so it is a very well managed river, and the principle upon which we proceeded was that of river quality objectives. In those days we had rather tenuous powers under local Acts, but because we had a very long time to do it we made them work, and I am quite confident that this is the best system to operate, to get on the one hand improvement in the quality of the rivers and on the other hand conservation of what has already been achieved.
Therefore, I warmly commend the report which the noble Baroness has moved with such conviction, because I am sure it is the right way in which to go. My only regret is that the Commission's obvious preference for uniform
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emission standards is still there and there seems to be a strong bias against the RQOs in the timescale the noble Baroness mentioned; also, I would have thought, in the standards, but I do not propose to discuss the scientific aspects of this. The report does so admirably and the noble Baroness has called our attention to some of the main points.
I should like to conclude with a few words about the future policy in this field, and I was very glad to hear the noble Baroness speaking about this—I mean particularly the political, in the broadest sense, as well as the scientific policy. Here I should like to congratulate the noble Baroness and her noble friends the committee in the visit that they paid to Brussels to make personal contact with the officials there. I am sure that that was very wise and that it was an entirely helpful thing to do. I do not doubt that they were received by the Commissioner, Mr. Carpentier, with his customary charm and courtesy and I am sure that they recognise in him, as I do, a top official of super ability and integrity who is charged with a monumentally difficult job of trying to achieve the cotrol of pollution throughout all the Member States of the Nine, and a progressive programme of aquatic improvement. We all want him to succeed in this, and it concerns me just as much as it does the noble Baroness that we should find ourselves in any respect—even in minor respects—at odds with him; but I am quite sure that personal contacts must be helpful in achieving mutual understanding of our respective points of view.
I should also like to commend the contacts by Ministers and civil servants. I am sure that they are to be encouraged in every way as well in this particular field, and I should like to congratulate both Ministers and officials of the Department of the Environment on their close cooperation with the water industry and their skilful grasp and handling of these complex scientific matters. In this context, I notice that the Press release yesterday was critical of the way in which they have handled this particular matter, and I would only say that in my judgment that particular Press release was right off target. They could not be more wrong.
With regard to scientific contacts between the Commission officials, and the engineers and scientists of the water

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industry in this country, I thought the noble Baroness, Lady White, was most helpful and constructive in discussing the problems that still have to be solved on the presentation of what we do here. I believe we have a very good tale to tell here, a tale that no other country in the world can tell. In fact, we now have in this country a system of management for our water technologically in advance of that anywhere else in the world. We have a system where all the water, all the rivers, all the discharges, and all the treatments in this country are under 10 single managements through the regional water authorities. This gives tremendous advantages in achieving the best possible result with the resources which are available.
As I say, most water authorities have already completed the classification of all their discharges. They have all established their RQOs now. In most of the water authorities the registers of discharges, with their classifications, are available for inspection. There is nowhere else in the world where these could be seen. I should have thought it would be immensely interesting to the officials from Brussels to make an inspection of these. They would learn how this operates in practice: what you can do and what you cannot do, how the monitoring works and how effective it is. This must be helpful to them and I should have thought that it would be quite impressive. So I hope they may feel inclined to do this. I hope also that they will respond to invitations from my friends in the water industry to demonstrations, seminars—anything which will show them that we in this country have quite a hit to show. We may not be in advance in every respect, but we have a very good tale to tell, and what we have to show we can be absolutely sure of.
In the context of scientific advance, I believe the Commission pay close attention to environmental and scientific progress in the United States. Especially, I understand, they watch the Environmental Protection Agency there. I hope they may have noticed that last autumn the President's Council on Wage and Price Stability, which is a very influential body, made a critical comment on the EPA's quality criteria for water, based on uniform emission standards. They said that they regarded them as inflexible and causing unnecessary costs—and
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"The resulting inflexibility has the effect of imposing a national water quality standard largely independent of"—
this is the important point—
"the stream's specific factors".
That may not be very attractive English but we can understand what it means. They said that the stream's specific factors ought to be taken into account. This is a quite useful indication that leading thought in America on this matter is moving towards our river quality objectives. This, I hope, may well influence thinking in the Commission to move in the same way.
I hope that this little debate may move feeling in this country towards confidence in the job which the water industry does and may also move the Commission to accept the wisdom of the policy which we have adopted here. I hope, too, that they may recognise that we are trying here to make a contribution not only for ourselves but for the benefit of the European Commission as well.
8.3 p.m.
Lord ASHBY: My Lords, there is a Salvation Army hymn which begins: "Tell me the old, old story". It would be an apt title for this debate because your Lordships will have heard all this before with, so to speak, a different text—on one occasion titanium dioxide, on another the "drins", on another water for fish, and now mercury. But, like the old, old story in the hymn, we have to go on telling this one.
I should like to join the noble Lord, Lord Nugent of Guildford, in thanking the noble Baroness for introducing this report, even though she is not arrayed like a Salvation Army lady. I know that the noble Baroness took an enormous amount of trouble over the drafting of the report in order to make it conciliatory without sacrificing accuracy. Sub-Committee G of the Select Committee is deeply indebted to her leadership, and we are delighted that she has now become chairman—not, as the Americans would say, "chairperson"—of the whole Select Committee. The noble Baroness has covered the material in the 38th Report so well that I have nothing to add to it, but I should like to detain your Lordships for a few minutes by trying to put this problem into a slightly wider perspective.

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I am afraid that the Commission in Brussels regards reports from this House on the environment with a mixture of perplexity and irritation. Over environmental issues, Britain seems so often to be out of step with the rest of the Community; and, what makes it worse, we seem to give the impression that we regard the rest of the Community as out of step with us. There is a reason for this. The reason for our stubbornness is that we have been in the business of pollution control for very much longer than all of our European neighbours. We have been in the business for well over a century. Legislation, much of it initiated in your Lordships' House, has provided a philosophy of pollution control which works fairly well. It has its weaknesses, but it works well and we are very unwilling to give it up. But this philosophy is not the one which the Commission is trying to impose upon us. The Commission is dedicated to a vision of harmonisation.
If this harmonisation were as one finds it among the States of the United States of America, the British would, I think, be willing to comply with it—and would, indeed, be glad to. But the Commission is not asking Member States to act in harmony in that sense. It is asking them to act in unison, which is a quite different thing. That is why this case-by-case pragmatism of the British approach to environmental problems is constantly coming into conflict—conflict, as the noble Lord, Lord Nugent of Guildford, said, that is very courteous and very diplomatic—with what one might describe as the elegant Cartesianism of the Commission.
Which of the two attitudes is right? I think it is proper to say in this House that there is something to be said on both sides. The Commission believes that harmonisation of social practices, as well as harmonisation of laws and trade, is perhaps a first step on the long journey towards a United States of Europe. When we are pressed to comply with rigid environmental directives it is not because those directives would make our environment any cleaner than it would be with our own procedures. Often that would not be so. It is to achieve harmonisation. I like to think it is a step on this long and exciting journey towards a real European
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unity. All of us who are pro-Europeans sympathise with this aspiration, but this does not give us any reason to fail to criticise the Commission when we think it is not going about it the right way. And it is not.
The reason for this is fairly simple to explain. It is that even after 100 years the policies for the environment are still tentative. They are improving all the time. They are the outcome of trial and error, something which the sub-committee's expert adviser, Professor Edwards, called an "iterative process". This means you try a technique and you change it or adopt it, according to whether it is failing or succeeding. In an arrangement like that, where a process is evolving, the very worst thing you can do with it is to impose inflexibility and standardisation.
That is why we have to go on trying to persuade the Commission to adopt a much more flexible attitude towards environmental policies than it has up to the present. We have got to make the point that you cannot have a uniform environmental policy unless you have a uniform environment. And the environment between John o'Groat's and the tip of Sicily is not uniform. Member States have all got some advantages and some disadvantages. In the Mediterranean there is more sun and it is warmer; and they grow grapes and make wine. In Britain, we have short rivers, big tides and a west wind. Whenever Germany and Holland have legislation about water matters, they are preoccupied with the unique trans-national problems of the Rhine. To impose a single environmental standard and policy for all these conditions simply does not make sense. Nor does it make sense to impose a single standard which takes no account of the use to which the environment is put. That is why, as the noble Baroness said, Britain has to press for environmental quality objectives, set case by case, depending on local circumstances and taking into account the balance between the costs and benefits that would follow.
As the noble Lord, Lord Nugent, and the noble Baroness, Lady White, mentioned, it is encouraging that two other nations are clearly adopting the policy that we have followed for many years. In America the Council on Wage and Price Stability made the recommendation

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that the noble Lord mentioned and went on to make a statement that I should like to put on record because it shows the attitude of the Council towards the problem of use. The EPA—the Environmental Protection Agency—which is taken very seriously in Brussels should, the Council said,
"weigh incremental benefits and costs of clean-up for individual bodies of water and in doing so … provide criteria in the form of a range of values corresponding to different 'levels of protection' within a use level …".
It is, like the one read by the noble Lord, a monstrosity of a sentence, but I think its import is quite clear.
France, too, as the noble Baroness said, is adopting a flexible approach similar to our own in its six Basin Agencies. Each agency, like our own regional water authorities, has a good deal of autonomy, but they are all committed to a strategy of the kind we have been urging upon the Commission for the last five years.
Again, I should like to put on record a passage from a pamphlet on Water Management in France, published by the French Ministry of the Environment. This is the way in which quality of objectives is decided:
beginning with the use of the stream"—
and note the word "use"—
"they set the maximum waste flows which are compatible with this objective and then supply the regulations to ensure compliance".
In another passage the political aim of this policy is made very clear: it is to match the strictness of control to the benefits that one will get from it. There is one passage in the report which discusses the discharge of phosphates into rivers and the report says this—why
"compel the whole of French industry to abate this kind of pollutant in places where it is not doing any harm?"
It is to be hoped that, although Britain has not, so far, persuaded the Commission to relax the inflexibility of its Directives about water pollution, the examples from America and France may help the Commission to change its mind.
Meanwhile, I believe it is vitally important that we stick to our philosophy of pollution control: to set objectives depending on use and to fix standards which will then achieve the objectives. To depart from this philosophy would simply be a futile waste of money and resources. The
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Department of the Environment and the National Water Council I believe are to be congratulated on defending this policy in Brussels with great patience and some success. I emphasise this for the reason referred to by the noble Lord, Lord Nugent of Guildford. A body called the Environmental Data Services yesterday released a misconceived statement saying that the faults for the misunderstandings that we have been talking about:
"appear to lie with our negotiators in Brussels and those who brief them".
This charge is completely unfair and absolutely unworthy of the other publications from that body, and as a body called Environmental Data Services it is very short of data because it has omitted several important statements, including one from the National Water Council on future objectives. If a data service cannot produce data one cannot have much confidence in anything else that it produces.
In France there is one decision of the Basins which I should like to emphasise because, as the noble Baroness pointed out, the negotiators of both the Department of the Environment and your Lordships' sub-committee when we go to Brussels, find ourselves labouring under one disadvantage. This disadvantage is, I believe, the fault of Her Majesty's Government. When Britain's case for flexibility and pragmatism is made in Brussels we are reminded that the Commission might have more confidence in our case if our own Government had implemented the whole of the Control of Pollution Act which was passed six years ago, and in particular the section giving public access to the evidence that we are controlling river pollution.
It is a very great encouragement to hear from the noble Lord, Lord Nugent, that regional water authorities are doing this voluntarily but the French and other members of the Latin races are not convinced so much by what people do as by what the legislators have determined they ought to do. Therefore, if Section 42 of the Control of Pollution Act could be implemented I think it would give very much more confidence to the French that what the noble Lord, Lord Nugent, said was being done voluntarily is in fact being done; because the French themselves say that information about the

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degree of pollution of their rivers—and I am quoting again from the Ministry's report—
"is at the disposal of any person who wishes to consult it, at the Prefecture, the Basin Agency and the Ministry of the Environment".
But Section 41(2) has not yet been implemented by our Government.
I realise that there are great difficulties (and I am sure that the noble Lord who is to reply to this debate will tell us what they are) in implementing Part 2 of the Control of Pollution Act, but it would be helpful for us to know whether this particular section could be implemented so that it is known and it is part of the law of the country that the records should be open to inspection by the public free of charge and at all reasonable hours. It is not that we have anything to hide. The Department of the Environment has just published a Digest of Environmental Pollution Statistics, which gives a refreshingly frank overall summary of the state of Britain's environment. But it is no substitute for the implementation of a law that we passed six years ago.
I come back, at the end, to mercury. As the noble Baroness has made clear to your Lordships, the assessment of mercury in water is a very complex matter and it is better for the policy to control mercury to err on the side of caution. That is quite evident from the figures published in the Digest of Environmental Pollution Statistics to show the amount of lead which is going into Liverpool Bay and the mercury content of some of the fish there. But the most efficient way to carry out this policy is to set quality objectives based on a rational foundation, and one rational foundation is the longterm health of people and fish and then to rely on water authorities to set standards which would guarantee that these objectives are met. But I believe that the credibility of our style of pollution control would be greatly strengthened if we could, when we go to Brussels, point to the Control of Pollution Act passed six years ago and say that it is now the law of Her Majesty's Realm.
8.19 p.m.
Lord WYNNE-JONES: My Lords, one advantage of being the last speaker before the noble Lord, Lord Mowbray and
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Stourton, replies, is that I have had the great advantage of listening to three speakers who know a great deal about the subject. In consequence, over the last half hour or so I have been able to learn something about this question, which gives me an advantage that I would not otherwise have had.
The noble Baroness, Lady White, has given us a very clear outline of the recommentations of the report and the noble Lord, Lord Nugent of Guildford, has backed it up with intimate experience of the water industry. As for the noble Lord, Lord Ashby, when I have listened to him I always feel why else, after this, should one dream of talking about a scientific matter without listening to him first. He has explained the whole business so skillfully and well. I have little to add but I should like to make just a few comments.
In the first place this word "pollutant" is used. It is put down here as water pollution of mercury. A pollutant is an excellent thing in the wrong place. There is nothing wrong with mercury. It is an extremely valuable and important substance, but it so happens that if it is present in certain forms in certain places it can be dangerous.
I think a certain degree of confusion arises whenever one gets a Directive. A single word, mercury, is covering a lot of different things. One has liquid mercury, which is largely innocuous. One has mercury in what is called the mercurous condition, which is also largely innocuous. In fact, calomel has often been prescribed for internal administration. But the mercuric form is poisonous, and some of the organic forms in which mercury can occur combined with organic matter can be very deadly. So it is not just mercury we are talking about. It is all lumped together here. It is not just mercury; it is certain forms of mercury which are serious and dangerous.
As the noble Lord, Lord Ashby, has correctly pointed out, it is what you are going to do with the water that matters. There may be a whole lot of purposes for which it is not very important whether there is mercury contamination or not; the level may not matter. And let us remember that the chance of getting mercury somewhere in this country is very

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high indeed. I see the figure which is given in this report is that the average annual discharge of mercury from the chemical industry amounts to about 18 metric tonnes, which is a very large quantity of mercury, but that of course is spread over all the various rivers into which discharge takes place. A lot of it is liquid mercury which will settle out fairly quickly and will not be so serious as a contaminant. But a certain amount of mercury is almost inevitable, and this of course is recognised in the Directive and it is recognised in this report. You cannot set a nil figure for the quantity of mercury in water. That would be a ridiculous figure to set. You just cannot do it; you could not hope to achieve that.
The Directive which we get from the Commission puts in also methods of analysis, and one method of analysis is referred to in paragraph 27 of the recommendations of the report. It says:
"The proposal lays down a 'reference method of analysis' for analysing samples to check compliance with the directive. The Water Research Council commented that it was 'so vague as to be almost worthless', and was not a reference method but a reference principle. The restriction to a single method could have the dual disadvantage of preventing the use of better methods which may exist or be developed, whilst failing to ensure that results quoted by different authorities are directly comparable".
This is quite a serious matter, and I pick this out because my attention was called quite recently to a very peculiar but rather gross error which occurred in a Directive which came from the Commission; the Directive is an old one; I believe it goes back to 1963. There a method of analysis for a fungicide on citrus fruit was quoted. I happen to have had my attention called to this through the Royal Institute of Chemistry because a firm of analytical chemists in this country trying to use the method described in the Directive found that the method just could not work. They took a lot of trouble to find out why it could not work and they finally published a scientific paper in which they pointed out that the method could not work but explained how you could modify it to make it work. This was brought to the attention of the Ministry of Agriculture, Fisheries and Food in this country, but they could not get the Commission to take any action on the matter. Whose fault that is, I cannot say.
It was not until I was able, through the
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intervention of a friend, to get access to Brussels that it turned out, after nearly two months' inquiry in Brussels, that there had been a mistranslation from the French. The Directive read in English that you had to heat up the material without boiling. You cannot analyse it without boiling it; it is only by distilling that you can analyse it. This was a mistranslation of the French word "cuisson" and that word is really used for baking or firing bricks or anything like that. It really meant avoiding the clotting of the material. It was mistranslated as boiling, and consequently for a period of several years no effective analysis could be carried out in this country simply because of this very easily made mistranslation. This is where, when we are examining Directives, very great care is required, especially when they touch on matters such as this.
This question of analysis of mercury is not an easy matter, and I think it is extraordinary of the Commission to attempt to lay down one single method of analysis. It is perfectly clear to me as a chemist that any good analytical chemist would use more than one method in order to be sure that he was getting dependable results. Therefore, all methods ought to be regarded as reasonable and a degree of harmonisation rather than unison is required in this matter. My Lords, I think this report is an extremely valuable and important one, and I hope your Lordships will agree with that.
8.28 p.m.
Lord MOWBRAY and STOURTON: My Lords, it is once again my pleasure to speak on behalf of the Government in a debate on a report of Sub-Committee G of the Select Committee on the European Communities. We have all been here once before quite recently, as has been mentioned. We debated in October the "drins" proposals. These two sets of proposals have much in common, and many of my remarks will be of dual application rather than specific to the mercury text. First, let me pay a warm tribute to the Select Committee for this report, and in particular to the noble Baroness, Lady White, as also for the admirable way in which she introduced it this evening.
I said in the earlier debate that the authority and quality of their reports is

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well established. This one, like the "drins", is no exception. The Government welcome this 38th Report, on mercury. It is a most thorough and efficient assessment of these proposals clearly and lucidly expounded. I congratulate again all those concerned. I hope and expect that the report will be widely read, particularly in Brussels and the other capitals of the Community. I should also like to pay tribute to the quality of this debate. As with the "drins" debate in October, it has been most impressive to hear the range and eloquence of the various contributions. I am glad the noble Lord, Lord Nugent, was not immured on the Woolsack this time and was able to give us the benefit of some of his vast experience. We have even had a useful short lesson in French from the noble Lord, Lord Wynne-Jones.
The noble Lord, Lord Ashby, said, "Tell me the old, old story". I agree with him that many of those present during the "drins" debate will already have had a feeling of deja vu in the proceedings today. I may not be able to avoid contributing to that during my own remarks, although naturally I have some different things to say about mercury and about the negotiations in Brussels. But much that was said in the previous debate about drins remains relevant to the draft mercury Directive.
As has been said, mercury is the second "offspring" of the parent Directive, passed in 1976, dealing with water pollution by dangerous substances. The drins and mercury proposals were prepared together and published last year within a few weeks of each other. The issues of principle and precedent highlighted in the drins debate apply to mercury—as also, I am afraid, do many of the problems. The committee's 38th Report is critical of the mercury proposals, as it was of the drins, and rightly so. The Government broadly agree with the committee's criticisms and have been pressing similar arguments in the negotiations in Brussels.
The House may like to know that, in the current negotiations under the Italian Presidency, the "drins" and mercury texts are being run together. The Government believe this is a sensible approach. It has enabled the negotiators
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to identify key issues in the implementation of the parent Directive—for that is essentially what we are now engaged upon, with these first two "offsprings"—and, hopefully, will allow solutions agreed to the various problems to be readily applied, where appropriate, to both of the texts.
Your Lordships will know of two developments in the negotiations, from the supplementary memorandum submitted to Parliament by my right honourable friend Mr. King, the Minister for Local Government and Environmental Services. For both mercury and the "drins" there are now single draft Directives, covering both methods of pollution control, instead of the two separate tests for each substance considered by your committee. This change is, in fact, foreseen in paragraph 8 of the report before us. The second development concerns the scope of these proposals, which I will deal with in a moment.
Mercury, as has been said, is a widely-used substance, which also occurs naturally. Its potential dangers as a pollutant are well known, although it must be said that we have not experienced any significant incidents in the United Kingdom or in the Community. For implementing the 1976 parent Directive, mercury was rightly given priority by the Commission and the publication of draft Directives was formally welcomed by all Member-States.
The Select Committee's report makes clear, however, that this is, in a sense, a limited proposal. It concerns only the mercury discharged by the chloralkali electrolysis industry. The Commission sought to make an early impact on the problem of black list substances and chose this industry as the largest single source of mercury discharges in the Community. It was the first on their list of mercury-using industries to be covered by proposals under the parent directive. There are chloralkali plants in all Member States, except Ireland and Luxembourg. My information is that in this country four different companies in a total of seven plants—the noble Baroness said that she thought it was eight, but we shall not argue about that—produce about one million tonnes of chlorine a year. Our industry's capacity represents approximately 20 per cent. of the Community capacity. The

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Commission plans to publish another draft Directive this year dealing with the other main sources of mercury discharges. We expect there to be perhaps five or six different industries, including paint and battery manufacturers.
Your Lordships will appreciate that we face here one of the many examples of the differences in approach between ourselves and our European colleagues. Controlling discharges of blacklist substances on this industry-by-industry basis is not our way. Our approach is based upon environmental quality objectives (EQOs). This means that our main concern is with the quality of the water, which may be affected by various discharges of mercury and also by some natural or background levels. We should therefore prefer Directives dealing generally with each dangerous substance—whatever the source of discharge.
The present approach of taking different industries in turn is obviously based upon the uniform emission standard or limit value system used by the other Member States. As that is the majority view in the Community, we can accept it and cooperate with it. But we believe that the EQO option in these Directives must be more comprehensive. Quality objectives and standards should encompass all the mercury in the water and not just that discharged by a particular industry. So, we consider, as the only Member-State adopting the EQO option provided by the parent Directive, that it would be wrong to restrict the application of the quality objectives and standards agreed for mercury to the chloralkali industry.
This is the second development referred to in our supplementary memorandum. Your Lordships will, I am sure, agree that not only does this comply with existing United Kingdom practice but it also represents more comprehensive and effective environmental legislation. For EQOs, only one Directive is needed to lay down the appropriate standards and procedures for controlling each black list substance like mercury.
Many other criticisms, some of them detailed, can be made of the mercury proposals now before us. But most are effectively made in the committee's report. They were very well summarised in the opening speech by the noble Baroness,
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Lady White. I just want to mention one point of disagreement between the Government and the committee, which concerns paragraph 33 of the report. It may appear to the House a detailed point, but it is an important one on which I ought to clarify the Government's position. Briefly, the committee agrees with the Commission that for seawater there should be a quality standard for the water itself. This would be in addition to the standard based on mercury in fish, which the Commission proposed on the basis of original United Kingdom research and monitoring. The Government's thinking here is as follows. The prime objective in controlling water pollution by mercury must be to protect human health. The main danger to health lies in eating fish which have absorbed an excessive amount of mercury. Most of the fish we eat in this country comes from the sea. It is therefore essential that we control mercury discharges to estuaries and to the sea and that we monitor the condition of fish caught round our shores. We have proposed a standard for acceptable levels of mercury in fish which must not be exceeded; this particular standard is, as I have said, agreed by the Commission and appears in the draft directive now before us.
In the Government's view, fish are a very effective "sampler" of mercury in the water and a reliable indicator of the condition of the water. There is therefore no need for an additional standard of water quality. It would entail extra monitoring, which would be unnecessary and costly. We therefore intend to resist it. It is unusual for the Government to have any disagreement with the committee on matters of this kind and I hope they, and the House, will understand why we take a different view in this case. I mentioned earlier the differences in approach between the United Kingdom and other Member-States in water pollution control. These differences are not surprising, given the contrast in circumstances, conditions and traditions, as has been so clearly mentioned by the noble Lord, Lord Ashby, and the noble Lord, Lord Nugent of Guildford. Our system of water pollution control is well-established and based upon our own particular circumstances. As the noble Baroness, Lady White, said, we are not concerned at all with the problems of

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transfrontier pollution in rivers like the Rhine; but we recognise that this is a major pre-occupation for countries like Germany and France, and even more so the Netherlands. So, it is not easy to draft and agree Community Directives in this field and the Commission deserve some sympathy in their task.
The House will know, however, from our previous debate, that in these particular proposals we are on very firm ground in seeking appropriate provision for the United Kingdom system. These differences in approach and attitude were adequately taken account of in the agreement contained in the parent Directive. That provided the so-called "parallel approach", or the "alternative approach" as Sub-Committee G and others would prefer to call it. The 1976 Directive provides that its offspring Directives covering blacklist substances must specify both uniform emission standards and quality objectives and these are alternative options for Member States to use.
Our major difficulty in the current negotiations has been that the Commission and others took a different view of what the parent Directive provided. Their interpretation is reflected in the draft directives we are considering. The EQO system was to be adapted for the supposed special needs of blacklist substances. In the case of mercury, quality objectives and standards were to be based not on the use of the water, as in the practice in the United Kingdom, but merely on a distinction between freshwater and seawater. There were to be stringent minimum standards, taking no account of variations in local conditions and needs.
There are two points I want to make on this important issue. First, the Government have taken the view from the outset that there was no legal justifiction for this very narrow reading of the parent Directive. That Directive contained a compromise achieved after complex negotiations; each side could use its own system to achieve the same end, the elimination of water pollution by dangerous substances. The Minister then responsible, Mr. Denis Howell, strongly confirmed that this was the original agreement in a speech on this subject in another place on 19th February. I am happy to
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say that our interpretation of the parent Directive has also now been confirmed in a written Opinion by the Council's Legal Services.
The second point I would make is a practical one. What is the justification for modifying our existing practice and procedures to deal with blacklists substances under a Community Directive? As has been said, water authorities in this country have been dealing with such pollution problems effectively for many years; I think that the noble Lord, Lord Ashby, said for over 100 years. I believe that that is certainly so. There is, of course, always room for improvement, and, with substances like mercury, vigilance and care must be eternal. But a costly and substantial modification of our system of the kind envisaged in these proposals is neither necessary nor acceptable. And I would point out that we are not seeking in the negotiations any basic modification of the alternative system used by other countries, even though there are patently flaws and dangers in it. So, the United Kingdom position is absolutely clear. The parent Direcitve 76/464/EEC specified both methods of water pollution control. The United Kingdom was enabled to deal with blacklist substances like mercury in its traditional way, using environmental quality objectives. What we now seek in this Directive is realistic quality objectives and standards based upon existing theory and practice in this country. That is not what we find in the present text. So, the Government's official negotiators have, as the committee mentions in paragraph 32 of its report, made counter-proposals in Brussels for a range of EQOs by use for a mercury Directive.
I am happy to repeat to your Lordships the assurance given by my honourable friend Mr. Fox, the Parliamentary Under-Secretary of State for the Environment, in another place, in last February's debate on the drins and mercury proposals. There must be changes in the present mercury tests—especially in providing realistic quality objectives—if the United Kingdom is to be able to agree a Directive. The Government are seeking those changes in the negotiations in Brussels and are firmly resolved to achieve them—as the noble Lord, Lord Ashby, said—in a spirit of harmonisation.

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The noble Baroness, Lady White, asked me whether paragraphs 29 and 37 of the committee's report are, in the Government's view, correct. As noble Lords will be aware, these proposals deal with the tricky use of the time-scales within which the different standards in the Directive would come into force. I can say that the committee's observations are broadly in line with our thinking, but I would stress that the question of appropriate time-scales is very much a matter for negotiation.
The noble Baroness, Lady White, also asked whether the Government could give her any comfort about the implementation of Part II of the Control of Pollution Act. We are considering how and when this very desirable step can be taken. I hope that there will be an announcement before too long. As the noble Baroness can probably guess, I am afraid that the main problem is the availability of resources.
Baroness WHITE: My Lords, if I may interrupt the noble Lord for one moment, he will have heard confirmed by the noble Lord, Lord Nugent of Guildford, what I had already briefly referred to in my own remarks, that as we understand it, a number of the water authorities are already voluntarily complying. If the major water authorities, including the major industrial ones—as I understood from the noble Lord, Lord Nugent—are already doing this on a voluntary basis, then the disparity in resources cannot be all that large.
Lord MOWBRAY and STOURTON: My Lords, local water authorities have autonomy in managing their own affairs. If they can do it without charging their customers too much, we shall not stand in their way. But in the present circumstances, unless we can see our way ahead financially, we are averse to ordering people to do it by bringing the Act into operation at once.
The noble Lord, Lord Ashby, stressed the desirability of implementing in particular Section 41 of the Control of Pollution Act. I can assure the noble Lord that we are aware of this, and I shall draw the attention of my right honourable friend to what he has said; I promise him that note will be taken of what he has said.
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Reference has been made by the first three speakers in this debate to the recent criticisms of the Government's conduct of these negotiations. I was very glad to hear this article in a certain publication made by a company called Environmental Data Services Limited described by my noble friend Lord Nugent as right off target. The noble Lord, Lord Ashby, suggested that it was an ill-named company to be called a data company when so patently it was lacking in data. I do not know how the company obtained the material that it published, or how it drew its particular conclusions. It is a pity that it did not take the trouble to check its information with us before publishing it, as it would have discovered how wide of the mark were its criticisms.
I should like to make one or two comments in response to this point. There is a central and vital falsehood in these criticisms. Our problem in the negotiations has not been that the Commission and other Member States have misunderstood our position, but that they disagree with it. This is, of course, a wholly different issue. Commission officials have frequently visited the United Kingdom and know our system. Our EQO counter-proposals were carefully explained, but, as I mentioned earlier, the Commission in particular took a rather unique view of the EQO provisions in the parent Directive. I am glad to repeat that this view has been refuted by the Council's legal services and we expect a reassessment of the Commission's position.
We shall assist that reassessment with all the information and explanation that is necessary. Our proposals are already on the table. If the Government negotiators need any help, they will not hesitate to call further upon the united front which already exists, comprising all the organisations and companies affected by these proposals. The representatives of the National Water Council, the CBI, the Chemical Industries Association, and all the chloralkali companies have been closely and frequently consulted by the Government since negotiations began. Their help has been invaluable, and I can assure the House that we shall continue to make the most of it.
I can only end by commending the committee once again on this 38th Report

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and thanking them for an excellent critique of these mercury proposals. The Government endorse their conclusions, save on one particular point, which I have identified and explained. We are also grateful for this very useful debate, and I can assure all your Lordships that careful note has been taken of the various points made. There is very strong and widespread support for the Government's policy on these draft Directives from all the interested bodies and industries in this country, and I am very happy to see that reflected here, once again, in this House.
8.50 p.m.
Baroness WHITE: My Lords, I should like to thank most warmly the select band who have contributed to this brief debate. It is not a subject which arouses great popular concern, but it is important, particularly for the industries—both the water industry side and the industrial producers in this country—that we try to get these matters as correct and as workable as possible. Nevertheless, I think that there is a case for the plea that I put forward that was not in fact touched upon by the noble Lord; that is, for something which one could hand, for example, to the MEPs.
We have there a new dimension in this situation, and there really is not, so far as I know, a convincing document that you can give to what I call the intelligent lay person who has an interest in the matter. We assume a great deal. We assume that people understand that our system works. You have to do more than that if you are going to try to convince a Member of the appropriate committee of the European Parliament who is not himself acquainted with the way in which we try to administer our system, and that applies equally to the majority probably of the United Kingdom Members as well. I believe there is a case for trying to prove that what we are doing is fully justified and defensible.
If you consider after all the point that I mentioned—the rivers which are categorised as Class 4—it is not easy to explain that you are really playing the game when each separate water authority, under a certain amount of pressure, let us face it, from the industries in its own catchment area, takes its own decisions,
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sets its own objectives, and follows them up by laying its own standards; and the third step in the process, the actual consent conditions for the particular remission of discharges. You have to be able to prove that the right course is being taken. It is like justice: it has to be seen to be done.
I do not believe that we have paid enough attention to the presentational side of this. I therefore ask Her Majesty's Government not to be put off by what they feel to be quite unjustified criticism, but to recognise that there is a real point of presentation here which could be taken more seriously than we have done so far.
I was most grateful to the noble Lord for the kind things he said about the work of the committee and about our report. He picked on one point, to which I had drawn attention, where we differed from the majority of our witnesses. I assure him that we have taken some advice on this not only from our specialist adviser. There are different views among biologists, as among other people, on what may be necessary in these circumstances.
It is partly a question of how widely one takes the obligations for protection of the environment, which includes rather more than simply human health, even though that may be the predominant consideration. If one looks at the originating Directive, there is a wide obligation to environmental conditions as well as to the health of human beings. We may decide that we cannot afford to look after the environment, that we have enough to do to look after our own wellbeing. But we have had some serious consideration about this, and if that is the only point of difference between us, I do not think that we need worry unduly. I very much thank all noble Lords who have taken part in this debate.
On Question, Motion agreed to.