HL Deb 19 May 1982 vol 430 cc719-27

3.55 p.m.

Earl Ferrers

My Lords, with your Lordships' permission, I should like to repeat a Statement which is being made by my right honourable friend the Minister of State for Agriculture in another place. The Statement is as follows:

"Together with my right honourable friend the Minister of State"—

I should point that that is not me, but Mr. Buchanan-Smith—

"I attended a meeting of the Agriculture Council which met in Brussels on 17th and 18thMay.

"Since January at eight meetings of the Council of Agriculture Ministers we have been negotiating this year's price fixing arrangements. During these meetings member states had by negotiation obtained unanimity on many of the questions involved. Britain had retained specific reserves on a number of agricultural issues and a general reserve on the entire package. The purpose of the general reserve was to ensure that the position adopted at last November's European Council meeting in London by all member states in considering the 30th May Mandate that the budget and agricultural matters should be dealt with in parallel should be complied with.

"We therefore expected that at the meeting this week we would continue to negotiate on those remaining questions where unanimity had not been obtained. If by the time of the completion of our meeting there was no agreement upon the budget measures we would retain our general reserve.

"Together with Denmark and Greece we strongly protested when the Presidency, encouraged by the Commission, announced that for the first time since 1966 the principle of obtaining unanimity where a very important national interest had been invoked and explained was to be violated and that a decision was to be taken in accordance with the Treaty arrangements for majority voting.

"I made a firm statement to the Council contesting the procedure and declaring that the Council had violated an accepted convention under which all previous price fixings had been adopted. I stated that the Government considered that, as important national interests were involved, in accordance with the established practice of the Community discussions should have continued in this Council until a unanimous agreement had been reached. I pointed out that the decisions that were being taken would place a further financial burden on the United Kingdom, that there was clearly a direct and organic link between the price-fixing decision and the budget negotiations and that this link had been recognised by all member states in their agreement that the three Chapters of the 30th May Mandate should proceed in parallel. I placed on record that I considered the conduct of the Presidency of the Commission and the member states who had joined in this procedure had created a very sad and damaging day in the Community's history and that the Council had quite unjustifiably chosen to depart from the established working practices based on the agreement reached in 1966.

"A majority decision was therefore taken on all of the regulations in accordance with what had been negotiated and agreed on by 9 member states in the meetings prior to this week's Council. Under the Treaty, these regulations become Community law with effect from tomorrow.

"Had the normal process of negotiating continued and had not the presidency, the Commission and seven member states violated the normal traditions, we would have endeavoured to obtain some further improvements in the clawback arrangements on lamb, an even larger reduction in the co-responsibility levy, while at the same time reducing the price increase for milk. We would have sought lower price increases in a number of cereals and in the prices of a range of Mediterranean products.

"Many of the regulations were of course in accordance with the package that had emerged from the negotiations that had taken place in previous meetings of the Council. In those previous meetings the United Kingdom had achieved a number of important objectives to the benefit of consumers and producers, and these will now be implemented.

"We successfully resisted pressures from the Commission and all other member states to revalue the green pound.

"We obtained a half per cent. reduction in the milk co-responsibility levy which will be worth around £10 million to United Kingdom producers in 1982–83.

"The Commission were made to withdraw their proposal for a progressive co-responsibility levy which would have been damaging to the interests of our industry.

"Improvements were made in the provisions and aid for school milk. The Community subsidy was increased and this should lead to an increased up-take by local authorities.

"We succeeded in obtaining an increase of two-thirds in the maximum beef premium payments and an increase in the Community contribution from the 25 per cent. negotiated by our predecessors to 40 per cent.

"We obtained a firm Commission declaration ensuring that the sale of wine distillates will not threaten the alcohol industry in this country.

"We resisted the Commission proposals for a large reduction in the United Kingdom butter subsidy, and the subsidy will continue at around 13 pence per pound.

"The result of the total package that has now been agreed on farm support prices in the United Kingdom is an increase of 10.2 per cent. The effect of this on the retail price index over a full year will be a quarter of 1 per cent. and on the food price index over a full year 1¼ per cent.

"The consumer benefit of the beef premium scheme, sheepmeat regime and the continuation of the butter subsidy will be worth some hundreds of millions of pounds, depending on the market situation.

"The Commission estimate that the settlement increases the budgetary cost of the common agricultural policy by around 1,500 million ECUs or over £900 million in a full year. They also calculate that the increase is well within that of the Community's own resources. We estimate that the extra budgetary cost to the United Kingdom is about £120 million in a full year. This emphasises the importance of agreement on the adjustment of our budgetary contribution, which member states had previously agreed should be decided in parallel with the agricultural decisions.

"Separately from the price-fixing, the Commission announced that a satisfactory solution had been reached to the problem of Dutch horticultural gas prices, which should be of benefit to United Kingdom producers.

"It is wrong that for the first in time 16 years a number of member states should have changed the rules of procedure to suit their immediate requirements and it must be noted that three of the four member states that have joined the Community strongly protested at the violation of the normal procedures that took place yesterday, for they had joined the Community in the knowledge that these were the procedures of the Community.

"The Government will be urgently considering the implications of what was done yesterday, and what action it will take."

My Lords, that concludes the Statement.

4.5 p.m.

Lord Peart

My Lords, I wish to thank the Minister of State for his Statement. This is a very important Statement affecting one of our most important industries. As a former agriculture Minister, I can appreciate what has happened in the Community and I hope that we will somehow have an improvement despite all the difficulties.

Will the Government consider a debate in due course? When shall we be told what action the Government propose to take in response to what is contained in the Statement? When are they going to announce this The Statement says that some of the regulations will be implemented immediately. Will the Minister state which regulations will not be implemented?

Can the Minister also say what implications this has for the common fisheries policy? Will a majority decision apply to that also? What are the wider implications? Will the Government not agree that our entry into the EEC was based on the veto principle? Does this not bring our position in the Community into question? I hope that I can have satisfactory answers on that matter.

4.7 p.m.

Lord Mackie of Benshie

My Lords, I too should like to thank the Minister for repeating the Statement. It is important and I should like to congratulate his right honourable friend on what he has achieved. The 10.2 per cent. rise in farm prices I can assure the House—and I am declaring an interest—is very much needed by the farming community all over the Community. This is evidenced, as it has been many times, by the enormous amount of money that the industry owes to the banks. This continues to rise. This is probably the best evidence that they are not—as people usually say of farmers—howling for the moon. So the 10.2 per cent.—which is much less than the 14 per cent. voted for by the Conservative Members of the European Parliament—is from his right honourable friend's point of view very satisfactory. It is going over the points.

It is absolutely first class that the right honourable gentleman has resisted pressure to revalue the green pound. This would have been grossly unfair. The reduction in the milk responsibility payment is excellent from our point of view, although it is not a satisfactory levy. The increase in the beef premium and the increase in the Community contribution is really a startling achievement. This is against Community practice. Their practice has always been to raise the money from the Market through support buying. To give way to us in this shows a willingness to see the British traditional position.

I could go on and refer to the butter subsidy. The total package is all very good for this country and for the consumer. The rise of a quarter per cent. in the whole index and one and a quarter in the food index is very satisfactory in these times of inflation.

In face of this, our attitude in the Community is most disturbing. I look forward to hearing from the Minister what the Government think they are going to do about it. In the face of the obvious concessions made by our European partners, it appears that our insistence on the practice—and it is not a principle, it is only a practice—of unanimous decision must have been very sorely trying to our partners in the Community.

I hope that when the Government are considering what they should do, they might consider stopping trying to bully our partners in the EEC and to think more in the way that our partners think and the concessions that they have given. I should be very pleased if the Minister would tell me whether we were offered a decent one-year concession on the amount of money we pay. I agree that this is important. It is more important that we remain as good members of the Community and do not get the reputation for being awkward, entirely selfish and non-communantaire.

Earl Ferrers

My Lords, I thought I was going to thank both noble Lords for their replies. I will thank the noble Lord, Lord Peart, for his reply and I will thank the noble Lord, Lord Mackie, for part of his reply but will maintain reservations about the latter part of his comments on the Statement. The noble Lord, Lord Peart, was quite correct when he said that this was a serious Statement—so it is. It does contain a lot of problems which have not heretofore arisen in the Community. That I readily acknowledge. He also asked whether the Government would arrange for a debate to be held on this matter. That is a matter which can be considered through the usual channels.

The noble Lord also asked when the Government would announce a decision on what action they were going to take. I am sure he will understand that I cannot give an immediate answer to that because this happened only yesterday, and the question of what action should be taken is now under consideration—not just for the United Kingdom but for the benefit of the Community as a whole, of which we are full and determined members. The noble Lord asked when these regulations come into force. They come into force tomorrow; that is, midnight tonight is the starting point.

He also expressed anxiety over the fact that when we joined the Community we joined it on the principle that we had the right of veto. That is perfectly true and we have always accepted that. Indeed, that is the understanding on which other member states also joined. I refer to Denmark, Greece and Ireland, although of course Ireland voted for this package. It is not without interest to note that when Denmark had a referendum on joining the European Community it was one of the nub points that they would have the right of veto. It was also a nub point when the United Kingdom joined the Community.

It is quite clear that the principle of the veto no longer exists. It is also curious—and I am bound to say this—that having voted this through the Council of Ministers yesterday, both France and Italy then said that the Luxembourg compromise had not been undermined. It is absurd for countries to try to stick to the rules when it suits them and to change them when it does not. This is a matter of very considerable concern and when the noble Lord, Lord Mackie, said that this settlement was good for the United Kingdom, I agree with him. Many parts were agreed and they were agreed by negotiation; they referred to things which would have been, and are, of benefit to the United Kingdom. But there were certain matters which we wanted to see improved and there are certain matters, as the noble Lord well knows, which cannot be considered out of context with the budget problem. It was part of the mandate agreement which was agreed by all member states on 30th May that, regarding the common agricultural policy, the budget decisions there and the budget decisions of the Community should be negotiated in parallel. That was the understanding of all member states and that is what has now gone by the board.

When the noble Lord says that we must really stop bullying our partners in the Community, I would only remind him of this—that we are there as full members and we want to play our full part in negotiations. We do not anticipate, and neither do other members of the Community, having regulations forced upon us which deeply affect national interests and in regard to which we have always previously understood the position to be that those were negotiable. It is the fact that these are not now negotiable and have been forced upon us, which is a matter of concern—and that is not bullying by the United Kingdom.

Lord Peart

My Lords, I mentioned the fisheries policy. The Minister has not referred to that.

Earl Ferrers

My Lords, the noble Lord is quite right. There will be a fisheries meeting in due course and we shall have to await the outcome of that.

Lord Kennet

My Lords, is the noble Minister aware that we on this Bench are in sympathy with all that he has said? The destruction of the Luxembourg compromise can only be a sad day for the Community. Are we not right in thinking that it does mean that the nightmare of many of those who strongly favoured British membership of the Community has now come to pass? Law is being made in this country against the will of the British Parliament. Is this not a great gift of ammunition to those who opposed British membership and therefore is not this a most unfortunate development?

Is the noble Earl further aware that, despite our sympathy with all that he has said, there remain other things to be said? Has it been wise all this time to concentrate so exclusively on obtaining little budget refunds and tinkering with the price of this or that agricultural commodity rather than going in an imaginative way for a complete reform of the CAP? Where is the Government's imaginative vision of a new CAP which will not operate against us? We would hope to be able to debate this and would call, with the noble Lord the Leader of the Labour Opposition, for an early debate.

Earl Ferrers

My Lords, I think that the noble Lord, Lord Kennet, is perfectly correct in saying that this is, as he put it, one of the nightmares of some people who felt that there might be laws passed of which the United Kingdom disapproved. This has in fact happened, and it is a matter of considerable concern. I think it is right to point out that the Luxembourg accords represent a political agreement and are not part of the treaty itself. Despite the differences between member states about the interpretation of the accords, it has been the invariable practice for the member states which invoke the agreement to decide whether their important national interests were at stake.

What happened in the Agricultural Council is clearly at variance with the established procedures of the Community and it raises very serious questions which we are now considering. The issue will be discussed at next week's meeting of the Foreign Ministers' Council. It is clearly more important than ever that a decision on the budget problem should be taken next week if we are to avoid an even more serious crisis in the Community. We have made clear that we are ready to decide now on a third year refund, as provided for in 30th May agreement, while discussions are completed by the end of the year on a longer-term arrangement. Our views regarding the application of the provisions of 30th May agreement for a third year have been made known to our partners.

Earl Alexander of Tunis

My Lords, would not my noble friend agree that this is a positive and encouraging Statement, in contrast to what has appeared in the press recently?

Earl Ferrers

My Lords, I agree with my noble friend that there are many aspects of this Statement which are extremely encouraging and highly beneficial to agriculture. The package will provide an extra £340 million of additional receipts to British agriculture, and there are many benefits to consumers as well with regard to school milk, the butter subsidy and the fact that the co-responsibility levy has been reduced. There are many benefits, and these have been slightly over-shadowed by the action that was taken yesterday.

Lord Gladwyn

My Lords, would not the Government perhaps agree that, with hindsight, their recent policy in the Agricultural Council has been really misconceived? Not only for the reasons advanced by my noble friend but also for the fact that linking it so tightly with our subscription to the budget and holding up the whole process of agricultural policy for so long—apparently indefinitely—not unnaturally infuriated most of our colleagues, and that at the moment when their help was obviously desirable in connection with the Falklands crisis. Furthermore, despite what my noble friend speaking from the SDP Bench said, would he not further agree, on reflection, that the gradual abandonment of the famous Luxembourg compromise, far from damaging our long-term interests, is really the only way to make the Community work, and therefore to avoid our all relapsing into protection and self-sufficiency and into the establishment in Western Europe of a series of directed economies, which can only be to the benefit of the Soviet Union?

Earl Ferrers

My Lords, the noble Lord, Lord Gladwyn, asked me to say whether, in retrospect, I think that Her Majesty's Government's policy had been misconceived and that we were being too obdurate over the price fixing. I would only remind him of the debates which we have in this House, in which his noble friend and noble Lords opposite frequently take part, in which they criticise the common agricultural policy because of its high costs, because of its increasing costs and because of its increasing surpluses, and they ask what the Government are going to do to reduce these. We have consistently said to the Community that there must be restraints on these. We have consistently said that we must not increase absurdly the prices of those commodities which are already in structural surplus. That is what we have done, and I see the noble Lord, Lord Sainsbury, who has invariably advocated that. With respect, that is not being difficult. It is trying to get a fundamental concession and review of the common agricultural policy. It is no use pretending that there is no connection between that and the budget, because our contribution to the budget is a very substantial one and, as a result of this agreement, it is now going to go up by £120 million.

Lord Stewart of Fulham

My Lords, is the noble Earl the Minister aware that there are a number of us who believe that a shift from the principle of unanimity to the principle of majority voting is in the long-term interest of all Europe, but also that, if, as he suggested at one stage, what is going to happen is that each nation is to rely now on unanimity and now on majority voting, as happens to suit its interests at the time, that creates an impossible position and the Government must do their best to prevent that result?

Earl Ferrers

My Lords, I could not agree more with the noble Lord, Lord Stewart, in the latter part of his remarks. Of course, it is absurd if member states are going to use one set of rules when it suits them, and another set of rules when it does not suit them. We have to try to get unanimity. It always was the practice that there was unanimity and that these arrangements came about by agreement. I think that the noble Lord, Lord Stewart, would find that it would appeal very much more to the people of this country, and indeed to the people of the Community, if they felt that arrangements were arrived at by unanimity, rather than by diktat by other member countries over which they had no right of veto.

Lord Morris

My Lords, may I ask my noble friend whether, at any time, there has been any attempt by any partner of the United Kingdom within the European Economic Community to link some of their support in our problems in the South-West Atlantic with the discussions on the agricultural pricing policy and the negotiations on the budget?

Earl Ferrers

My Lords, to the best of my knowledge and belief, at no time has there been any con- sideration by any other member state that the problem in the South Atlantic should have any bearing on these arrangements which they were discussing about price fixing.

Lord Molloy

My Lords, is the noble Earl aware that the firm, bold and courageous Statement made by his right honourable friend in another place is to be welcomed, and that lots of people will be asking how long it will be before this kind of thing is done again? Many folk will also be terribly worried if the Government do not act and at least take this opportunity of telling the House quite clearly that they are certainly not going to adopt the genuflecting posture of the Liberal Front Bench in this House, but will take this issue in a very serious way and tell the Community that they have done this once, but they will not get away with it again unless there is proper consultation about the rules, because that is the only way in which they will be indulged.

Earl Ferrers

My Lords, I always knew that the views of the noble Lord, Lord Molloy, were fairly different from our views, but I am glad that he has equally distanced himself from the views of the Liberal Party. He asks when this will happen again. I cannot answer that question. All I can tell him is that it has not happened for 16 years, and that is why we never expected it to happen this time. But I would add that we are members of the Community and we want to see it succeed. Inevitably, in the process of growing and evolving there will be difficulties and substantial problems. When one comes up against a difficulty such as we have now come up against, we should not regard that as the ending of all the previous relationships which we have had. We have to get over these problems and make sure that they do not happen again.

Lord Mackie of Benshie

My Lords, has the noble Earl heard about the lady who was watching a troop of Boy Scouts going past and said "It's extraordinary. They're all out of step but my Johnnie"?

Earl Ferrers

My Lords, I know many stories, but I did not know that one.