HL Deb 20 May 1985 vol 464 cc64-73

6.34 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)

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

"With permission, Mr. Speaker, I wish to make a Statement on the Council of Agriculture Ministers' meeting in Brussels on 13th to 16th May 1985. My honourable friend the Minister of State and I represented the United Kingdom.

"The meeting was devoted entirely to negotiations on the 1985–86 agricultural prices and an agreement was reached last Thursday covering all commodities other than cereals and rapeseed.

"Decisions on prices were overdue and, while decisions on all commodities would have been preferable, I was not prepared to give in to German insistence that there should be no meaningful reduction in prices for cereals. They felt so strongly on this issue that their Minister made it clear, using the words of the Luxembourg compromise, that very important interests were involved for his country and that the Germans were not prepared to agree to a vote. This represented a significant change in the attitude of the Federal Government towards the use of the Luxembourg compromise.

"Turning to the decisions which were taken, the co-responsibility levy for milk was reduced by 1 per cent., backdated to the beginning of April. This is linked to the reduction of 1 per cent. in the national quotas. With the 1.5 per cent. increase in the support price for milk, this means an average improvement of 2½ per cent. in the support price for milk. Now that these decisions have been made, we can go ahead in the next week or so to notify individual quotas for 1985–86. Letters to producers will start to be sent out later this week.

"The Council agreed that supplementary levy will be collected annually at the end of the milk year. This avoids problems over quarterly or half yearly payments which may bear unfairly on producers if they change their seasonal pattern of production.

"The Council did not agree to the Irish Government demand for a permanent addition of 58,000 tonnes in their quota allocation on account of a statistical error in the Irish production figures on which the Council based its decisions last year. An adjustment was made only for 1984–85 and 1985–86.

"As I foreshadowed in my statement on the implementation of the COMA Report, I accepted that the special United Kingdom butter subsidy should be discontinued. Taken together with other adjustments affecting butter, this will mean over time a small increase in butter prices of about one penny per 250 gram pack.

"I secured the continuation of the Beef Variable Premium Scheme in an unchanged form, against very strong opposition from most other member states. This will be welcome to producers and consumers alike, and will reduce the quantity of United Kingdom beef going into intervention. The guide price for beef will remain unchanged. But United Kingdom producers will benefit—by approximately 1 per cent.—from an increase in the intervention prices under the second stage of the carcase classification grid agreed last year.

"For sheepmeat, there will be no price change this year. But, for next year, when the marketing year will start on 6th January, the basic price will increase by 1 per cent. I successfullly resisted pressure from the Commission and other member states for changes in the regime which would have been damaging to our interests, including a proposal to impose a ceiling on variable premium and a related bar to the recovery through the ewe premium of any money foregone. I also resisted pressure for an immediate end to the Special Export Certification arrangements, which facilitate the export of ewes from Great Britain. Instead there will be further discussions about these arrangements over the coming months. The Commission has undertaken to bring forward proposals to enable annual premium to be paid for next year on certain sheep in especially disadvantaged mountainous areas which cannot be tupped until their third season.

"I secured agreement to the modification which the unions and trade had sought to the sheepmeat seasonal scale which will promote more orderly marketing. I also secured an extension until the end of 1987 of the exemption from clawback for our sheepmeat exports to third countries, which should enable our exporters to develop that trade with more certainty.

"Agreement was reached on measures that should bring about a better balance for Mediterranean products and establish a greater control over the regimes in these sectors. In particular, significant price reductions were agreed for tomatoes, citrus fruits and some varieties of tobacco.

"The overall effect of the changes agreed will have a negligible effect on food prices in our shops.

"Throughout the negotiations, I have attached great importance to the Council continuing with the task which was started last year of bringing greater realism into the common agricultural policy within the budgetary constraints laid down. The Commission stated clearly that they would ensure that the measures agreed, with the decisions yet to be reached on cereals and rapeseed, will be within the budget provision recently agreed for 1985.

"The Council will meet again on 11th June to continue its discussions on cereals and oilseed rape.

"This package agreed last Thursday meets our objectives. In particular, I was determined to resist measures which would discriminate against British interests, and this we have done. I consider it a good agreement for the United Kingdom and for the Community as a whole. I commend it to the House."

My Lords, that concludes my right honourable friend's Statement.

Lord John-Mackie

My Lords, we are very much obliged to the noble Lord for repeating the Statement that was made in another place. It is a pity that it is so late. As your Lordships know, the agricultural year starts at the end of March or the beginning of April, and here we are into May. It was mentioned the other day—I forget in which publication—that the Council of Ministers seem to have their heads in a heap of grain. Our Minister certainly does not hide his light under a bushel, so far as this report is concerned.

What about cereals? The Minister has said that he is not prepared to agree that there should be no meaningful reduction. I wonder whether the noble Lord can say what would be a "meaningful reduction", because during 1983–84 and this year cereal prices have been reduced by nearly £20 a tonne and I should have thought that quarrelling about 0.9 or 0.7 per cent. and not settling was splitting hairs. I shall be glad if the noble Lord has any ideas to offer on that.

The milk agreement seems very satisfactory indeed, except that I wonder whether the Minister can clarify the Irish situation a little. Does this mean that the 58,000 tonnes is to be allowed for the two years mentioned or is it some other figure? The Statement does not make that clear. If this statistical mistake was made, it seems a little hard on the Irish that it was not corrected to go on all the time. The Minister may have some ideas on that.

I am sure that the sheep farmers will be delighted with the sheep rÉgime. People who export fat ewes will find that the clawback arrangements help the trade immensely. On the question of Mediterranean products, I wonder whether the Minister can help us. As we know, the Channel Islands and the Scilly Isles have a tremendous interest in tomatoes which are considered a Mediterranean product. Can the Minister say whether this will affect them?

On the overall effect of the changes, the Statement says that there will be a negligible effect on food prices in the shops. The funny thing is that prices fixed by the Council of Ministers sometimes have little effect, but what the processors do afterwards—and I am sorry that the noble Lord, Lord Mottistone, is not here—makes a big difference. So I hope that the processors have noted what the Minister said.

On the question of the negotiations on cereals and rapeseed, the Statement says—and it is rather curious, considering that this has not been settled—that this budgetary arrangement will tie up with the restraints that have been imposed and it will not cost any more. How can that possibly be forecast when the cereal prices have not been fixed and we do not know the size of the harvest? Last year's harvest was a record one and this one looks like being even bigger. So I think that this is being a little optimistic about keeping within the budget. I wonder whether the Minister would care to comment on that.

On the whole, it is good that this matter is settled. We get very tired of these long processes and I am sure that the Minister and his colleagues get even more tired night after night. However, I hope that the noble Lord will be able to make some reply to the points I have raised.

6.45 p.m.

Lord Walston

My Lords, time was, many years ago, when a messenger returning from a foreign country with bad news paid for his unwelcome news with his life. I am glad that we have now moved on from that time, because I should hate to see the noble Lord, or even his right honourable friend, paying for this abysmal failure with their lives. It really is one of the most depressing Statements that we have had, ever since I can remember these Statements being made, and, as is so often the case, it is masked with a veneer of pleasure and self-satisfaction.

For instance, the Statement says that there has been a significant change in the attitude of the Federal Government towards the use of the Luxembourg compromise. There has, but would the Minister not agree that at least part of that change is due to the example set by Her Majesty's Government over earlier negotiations, in invoking the Luxembourg compromise in matters which we asserted were of significant national interest, but where we found very little support from other countries?

Turning to milk—one of the two most important of the commodities—we are still going on giving an increased guaranteed price for quantities well in excess of the total Community requirements, thereby leading to still further storage costs, still further buying into intervention and still further costs of disposal of these unwanted surpluses. No progress has been made here, other than a paltry reduction of 1 per cent. in the national quotas. Has the Minister any hope to hold out to us that in due course there will be some significant progress both in restricting the quantities of what is required and in making a real approach to the prudent price policy about which we have heard so much?

There is a small adjustment in butter, but what is the effect of that? It simply means that people in this country will now have to pay rather more for their butter—not a lot more, but a small amount more—with no advantage to anybody else. That is true. I declare my interest as a beef producer and I am delighted to hear that producers will benefit by approximately 1 per cent. But will the Minister confirm that there is a growing surplus of beef production within the Community and, therefore, that still more beef will be sold into intervention and will have to be disposed of at a loss after it has declined in quality because of the fact that it has been taken into intervention?

We hear also that progress has been made with the task that was started last year, of bringing greater realism into the common agricultural policy within the budgetary constraints laid down". My understanding—and it is borne out by something that was published in The Times today, and which the Minister undoubtedly read if he did not know it already—is that according to the agreement made last year with regard to wheat, cereals and rape, the price should have been reduced by some 8 per cent. because of the great over-production that occurred due to the munificence of the harvest last year. In fact, that reduction has not been achieved.

Lord Boyd-Carpenter

Is this a speech, my Lords?

Lord Walston

Nothing like it has been achieved, my Lords, and there is now a question mark over what is going to happen. I will underline what was said by the noble Lord, Lord John Mackie—

Lord Denham

My Lords, if the noble Lord will allow me, the Companion to Standing Orders specifies that Statements should not be made the occasion for a debate, but should be the subject only of brief comments and questions for elucidation.

Lord Walston

My Lords, I hope the noble Lord will agree that all the brief comments I have made have taken the form of questions to the Minister, which I hope he will be able to answer.

My penultimate question is, in reinforcing what has been said by the noble Lord, Lord John-Mackie, this: how is it possible for the Council of Ministers to give an assurance that the budget will not be exceeded when there is still a question mark hanging over not only the harvest but also the actual prices that will be paid for cereals—the largest crop of the whole Community?

Finally, can the Minister say on what grounds he considers this to be a good agreement for the United Kingdom and the Community as a whole in view of the various difficulties which have been outlined?

6.52 p.m.

Lord Belstead

My Lords, perhaps I may reply to the questions put by both noble Lords in respect of my right honourable friend's Statement. The noble Lords, Lord John-Mackie and Lord Walston, asked about the meaning of the Statement where it says that we believe there should be a meaningful reduction in cereals. Both noble Lords know the situation: that there should have been a 5 per cent. reduction if the guaranteed threshold had worked. In fact, the commission produced a proposal for a 3.6 per cent. reduction in cereal prices and the Federal Republic of Germany felt that it could not wear even anything like that. This is the one area—an enormously important area—which was left to be decided upon.

My answer to both noble Lords on this particular point is that it is now for the commission to bring forward proposals for the meeting on 11th June. Whatever proposals it now puts forward, those proposals must ensure that expenditure will be kept within the budget agreed for 1985 and within the financial guideline for 1986.

I turn to the second question asked by the noble Lord, Lord John-Mackie, concerning the Irish situation. This is simply a question of meeting the Irish over their request for an increase of 58,000 tonnes for the two years 1984–85 and 1985–86 only. I do not think that the Irish Government have been hard done by in this matter. It was for Ireland, like every other member state, to get its figures right when the agreements were being gone into; agreements which were crucial for all the member states concerned. There was only a certain amount to go around and I believe that the Irish have been treated generously by the other member states in this matter.

The noble Lord was, characteristically, very generous about the result of the sheep negotiations. Indeed, I believe that those negotiations were good. The Statement points out that my right honourable friend did everything he could to defend British interests. If one looks through what has been said about the sheep regime it will be seen that there, perhaps more than anywhere else, my right honourable friend brought home about four very good decisions.

The noble Lord, Lord John-Mackie, asked me also what the meaning is of that part of the Statement which makes reference to Mediterranean products. As a result of the agreement, consumers will benefit from improved access to fresh and processed products but the effect on our growers will be very little. United Kingdom growers receive only a small part of the withdrawal compensation which is paid to growers in the Community. Our main withdrawals are for apples, for which there is no price change, and for cauliflowers, for which there is a small price increase. What is of importance to us in this country is that support for Mediterranean fruit—citrus, and of course tomatoes as well—has been realistically reduced.

The noble Lord asked me finally about the costs of the package; indeed, both noble Lords asked me this particular question. The final cost will depend on what is agreed for cereals and rape seed, but the commission has made an undertaking that if the overall costs after the price fixing looks like exceeding the budget provision for 1985 of 19,955 mecu, the commission will adopt the necessary market management economies to keep within that provision.

I will deal briefly, because of the time, with the questions raised by the noble Lord, Lord Walston, who was, perhaps, uncharacteristically less generous so far as this Statement is concerned. I would say to the noble Lord that when my right honourable friend returns to this country bearing some improvement in the difficult situation for milk producers, the retention of the enormously important beef variable premium (important for both producers and consumers), the retention of all the main features of the sheep regime, and in addition to that has been participating in negotiations which are keeping within the financial guidelines, then that is good news.

It is not the picture which the noble Lord, Lord Walston, painted. For once, I depart from the noble Lord's view. The noble Lord is enormously experienced in these matters but on this occasion I certainly depart from his comments. I will underline the fact that by keeping within the financial guideline, for the first time ever the agricultural expenditure and the price fixing is operating within a financial discipline for which the United Kingdom has been the chief protagonist.

The noble Lord, Lord Walston, spoke about the position of the Federal Republic of Germany. The German Minister of Agriculture specifically referred, as I understand it, to the fact that interests important to the Federal Republic were involved and that he favoured continuation of the discussion. The view of the United Kingdom Government about the Luxembourg compromise is well known. We support the idea of it and we would not have participated if matters had gone to a vote. In that event, if matters had been pressed to a vote the commission's proposals would not have received sufficient positive votes for them to be carried. In fact, we are still in a situation where discussion continues. I hope that on 11th June there will be a sensible final decision in respect of cereals and rape seed, to add to what I believe has been a good negotiation.

The Earl of Onslow

My Lords, can my noble friend elucidate this point? If the American budgetary move is successful, the world price of grain is due to fall quite dramatically. What kind of strain will that place on the EC budget? Secondly, has any progress been made with the introduction of the proper marketability, with the free marketing of milk quotas? I suggest that that could be one of the most advantageous developments for both milk producers and the Community as a whole.

Lord Belstead

My Lords, the answer to my noble friend's first question is that in the event of the situation which he explained there will be considerable strain on the Community's export refunds so far as cereals are concerned. This underlines—as my noble friend very shrewdly implied in his question—the enormous importance of seeing to it that there is a realistic final agreement reached on 11th and 12th June in respect of the cereals part of the negotiations.

My noble friend asked about milk quota mobility. I should like to say to my noble friend that the Commissioner told my right honourable friend the Minister of Agriculture that the Commissioner would be considering British concern that provision should be made for the buying and selling of quota.

Lord Bruce of Donington

My Lords, I have only two short questions to ask the noble Lord. The noble Lord assured us that during the current year the constraints imposed by the budget will be adhered to. Can we therefore have his assurance that there will be no supplementary budget in respect of the current year and in respect of demand-led expenditure in the agricultural guarantee section? Can we have that undertaking and can he also assure us, following what he said, that it will now be subject to strict cash limits, because that is what budgetary constraint ultimately means?

Will the noble Lord explain why on this particular occasion Her Majesty's Government decided to sustain the right of veto of the German Federal Republic but were content to leave the whole question of the 1982–83 veto by the United Kingdom which was overridden by the Community?

Lord Belstead

My Lords, I can give the assurance the noble Lord asked for. There will be no supplementary budget, so I am advised. I think I have already answered the noble Lord's second question.

Lord Stodart of Leaston

My Lords, may I assure my noble friend that the most important objective that his right honourable friend has achieved has been to hold on to the cattle and sheep regimes, because the prosperity of the most difficult areas in the country—namely, the upland and marginal areas—are totally dependent on livestock?

Lord Belstead

My Lords, I am grateful to my noble friend Lord Stodart. I always bear in mind that the beef variable premium was first secured by the noble Lord, Lord Peart, when he was Minister of Agriculture. Although he was a Minister in the Government of a party of which I am not a member, that agreement was none the worse for that. It was a fine move by, if I may say so, a Minister of the past whom many of us admired. I am very glad that the point has been brought out by my noble friend Lord Stodart.

Again, on sheep, it is enormously important and I am glad to have confirmation from my noble friend north of the Border that the agreement on sheep is looked at as being a good one. I believe it is.

Lord Gladwyn

My Lords, in view of the fact of the apparent vetoing of a 2.6 per cent. lowering of the price of cereals by the German Minister of Agricul- ture, which cannot possibly be described as being in supreme national interest and flatly contradicts everything that the West German Government have been saying for the past few years about majority voting, would it not be possible on 11th June for the President to put the Commission's proposal to the vote and if the Germans are alone in opposing it, simply declare that, under the Treaty, it is carried?

Lord Belstead

My Lords, as I have made clear to your Lordships' House, if it is put to the vote under those circumstances, we would not participate in any such vote because we take a certain view of the Luxembourg compromise, and that view has not changed, and will not do so.

Lord Gladwyn

But, my Lords, confronted with that necessity, the Germans might say, "All right, we agree."

Lord Belstead

My Lords, I entirely understand why the noble Lord, with his skill and experience in these negotiating matters, puts that point to me; but I have to make it clear on behalf of the Government that we believe in the concept of the Luxembourg compromise and if put to the vote, we would not participate.

Lord Soames

My Lords, there has been constant reference to the Luxembourg compromise. May I ask my noble friend whether Her Majesty's Government still construe the Luxembourg compromise as being one which enables any member state of the Community to be the sole judge of whether a particular matter is in its vital national interest? May I suggest to my noble friend that if this continues, there will not be one quarter of the progress made in the European Community towards which most people in all countries aspire? If a country wishes to use the veto because the arguments go against it, that problem can be resolved only if the fact that it considers the issue to be of sufficient national importance to itself is debated before the main question comes before the Council of Ministers.

Lord Belstead

My Lords, I do not think that it would be right for me, with little experience compared to my noble friend, to start talking about the principle of the Luxembourg compromise. My noble friend and, indeed, other noble Lords are enormously experienced in this matter and on this specific agricultural Statement I would be well advised not to start giving any offerings on a matter of principle. However, I say to my noble friend that I have clearly heard what he said.

Before I sit down, perhaps I may add that so far as the practicalities of the matter are concerned, the Agriculture Council is due to meet again on 11th June. Therefore, I remind your Lordships that the Federal Republic has asked for the discussion to continue. I hope that they will have had time to reconsider their position, so that agreement can be reached when that date arrives.

Lord Harmar-Nicholls

My Lords, is my noble friend aware that although he has been pressed from both sides to encourage the withdrawal of the veto, that view is in no sense universal? If matters were as my noble friend would like them to be—and I wish that they were, too—that argument would be fine. But it is quite clear to those of us who have sat in Europe for five or six years and have made some study of how it works that it is not yet the kind of Community that was envisaged. It is still a meeting of nations and the national point of view has to be argued for some time yet before one can throw it open to the majority verdict which would allow all sorts of arrangements to be made which, at the end of the day, would not necessarily be in the best interests of the continuation of Europe.

Lord Bedstead

My Lords, in order to bring this question and answer session to an end I say again that I hear what my noble friend has said. So far as the practicalities are concerned, we must see how we go on 1 1 th June. But surely it is important—and this goes back to the original questions asked by the noble Lord, Lord John-Mackie, and the noble Lord, Lord Walston—that the final negotiations should be within the budget for the current year and within the financial guidelines for next year. We have been given an assurance by the Commission that that will be the case.