Lords Sitting of 23 November 1992

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of St. Edmundsbury and Ipswich.
Lord MacAndrew Lord MacAndrew —Took the Oath.

Plutonium
Lord Jenkins of Putney Lord Jenkins of Putney asked Her Majesty's Government:
What is the purpose of the international trade in radioactive plutonium.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, as is the case with any commodity, international transactions in civil plutonium arise from the wish of the participants to pursue their commercial interests.
Lord Jenkins of Putney: My Lords, is the noble Baroness entirely unaware of the widespread concern throughout the world about the international trade in reprocessed plutonium? Is she also unaware that the International Atomic Energy Agency has stated:
"The excess of recycled plutonium poses a major political and security problem world-wide"?
Does the noble Baroness consider that in contributing to that excess the British and French Governments may reasonably be regarded as spreading concern and alarm throughout the world? Is she entirely unaware of these matters?
Baroness Denton of Wakefield: My Lords, obviously I hear expressions of different viewpoints. Perhaps I could point out that whether or not the spent fuel is reprocessed is a matter for the owners of the material to decide on safety, technical and economic grounds.
Lord Jenkins of Putney: My Lords, am I to gather from that reply that the noble Baroness is unaware that reprocessed plutonium is barred from the territorial waters of the United States, from South Africa, Australia, New Zealand and other Pacific and Latin American countries and from the Panama Canal? Does she understand that these cargoes are regarded as completely undesirable and extremely dangerous to the world community as a whole?
Baroness Denton of Wakefield: My Lords, the noble Lord lists the views of other governments. I can only represent this Government.
Lord Stoddart of Swindon: My Lords, do the ending of agreements and the closing down of the Dounreay fast breeder reactor in any way affect the position and attitude of Her Majesty's Government?
Baroness Denton of Wakefield: My Lords, I am sorry but I did not catch the end of the noble Lord's question.
Lord Stoddart of Swindon: My Lords, perhaps I may repeat the question. Do the ending of agreements about fast breeder reactors and the closing down of Dounreay power station, which uses this fuel, affect the Government's attitude to the whole business of the transportation of this fuel?
Baroness Denton of Wakefield: My Lords, the Government decided in 1988 that the Dounreay prototype fast reactor would close in 1994. We are simply moving that decision.
Lord Williams of Elvel: My Lords, is it not the case that more than 50 tonnes of separated plutonium is currently held in store at Sellafield? Is it not further the case that in the 1990s world production of separated plutonium will leave a surplus to civil requirements of some 110 tonnes and that the surplus will largely be stored in the United Kingdom and France? If that is the case, can the noble Baroness tell us why we are producing and storing all that plutonium when there is no civil market for it?
Baroness Denton of Wakefield: My Lords, the current UK stock of plutonium at the end of March 1991 was 33 tonnes. Whether or not spent fuel is reprocessed is, as I said, a matter for the owners of that material. I assure your Lordships that this material is very safely stored at Sellafield.
The Earl of Halsbury: My Lords, can the noble Baroness confirm that reprocessed uranium from commercial reactors is not weapons grade?
Baroness Denton of Wakefield: My Lords, I am delighted to do that.
Lord Williams of Elvel: My Lords, this is not the question at issue, but perhaps I may press the noble Baroness a little further. Is it not the case that during the 1990s some 70 tonnes of civil plutonium is liable to be used in light water reactors, which are going out of fashion? Therefore, is it not further the case that there will be a substantial surplus which has to he stored and the only places capable of storing it are Sellafield, France and Russia? Are the Government satisfied that storing and perhaps trading in this material is a sensible way to go about things?
Baroness Denton of Wakefield: My Lords, I am not at all certain what the noble Lord is asking me to say. This material is recycled and is stored. That is a fact of life. I believe that what matters to your Lordships is that it is safely managed.
Lord Williams of Elvel: My Lords, perhaps I may intervene, with your Lordships' leave, to ask the noble Baroness whether, in the light of the fact that all other countries apart from the United Kingdom, France and Russia have for safety and political reasons sought to minimise the storage of plutonium, the United Kingdom is satisfied that we should be the dump where that material is stored?
Baroness Denton of Wakefield: My Lords, despite the emotion, I am sure that the noble Lord would not wish me to say that the United Kingdom is wrong and that other countries are right.
Lord Grimond: My Lords, as someone who knows nothing about the subject but who has listened to such Questions, I ask the Minister to assure the House that the Government take an interest in the matter and do not leave private enterprise to do what it likes. The implication is that the Government have washed their hands of this extremely dangerous substance. Will the Minister reassure the House that that is not the case?
Baroness Denton of Wakefield: My Lords, I am delighted to reassure the noble Lord that that is not the case at all. We are most anxious to ensure that the material is fully subject to international safeguards.
Lord Jenkins of Putney: My Lords, is the Minister aware that I have a copy of yesterday's edition of Japan's Sunday Times in which concern about this issue is expressed? Does she agree that, if as seems likely, the trade is stopped as a result of the extremely dangerous nature of the cargo, we shall be left holding a baby with a half life of 20,000 years? That matter if nothing else must concern the Government.
Baroness Denton of Wakefield: My Lords, I congratulate the noble Lord on the source of his material. Civil plutonium would be transferred abroad only if the country in question were able to give a satisfactory account of how it would be used.

European Court of Human Rights
2.45 p.m.
Baroness Hooper Baroness Hooper asked Her Majesty's Government:
Whether they intend to support the proposal to create a single European Court of Human Rights as a full-time body, in view of the increase in the number of applications submitted to the Commission and the Court.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we have made and will continue to make a constructive contribution to discussion within the Council of Europe on reform of the control machinery of the European Convention on Human Rights. We remain committed to finding a long-term solution to the question of reform and will aim to take forward the discussions on this issue during our presidency of the Council of Europe.
Baroness Hooper: My Lords, I thank my noble friend for indicating that the Government remain open-minded on this issue. Does she agree that, as regards the countries of eastern and central Europe which have recently joined the Council of Europe, and in particular applicant countries such as Slovenia and Bosnia, it is important that their new-found democracies and rule of law should be supported by the mechanism of the independent European Court of Human Rights? Does she further agree that it is of the utmost importance that the Court should be as efficient and cost-effective as possible?
Baroness Chalker of Wallasey: My Lords, my noble friend is right. As regards human rights, our main
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concern has always been to ensure that the machinery of the European Convention on Human Rights operates more speedily and effectively. In particular, we must ensure that any agreed reforms to that convention genuinely meet those criteria. It is critical that new members are able to align their legislation with the convention. That is why we are taking so much trouble to try to get these reforms right.
Lord Judd: My Lords, does the Minister accept that in this country there is a great deal of anxiety about the log jams and delays involved in the present system? For how long can we remain the odd nation out? Is the Minister aware that nations such as Bulgaria and Hungary are incorporating the convention into their law? Is it not time that we took a fresh look at the matter?
Baroness Chalker of Wallasey: My Lords, the Question is not about incorporation into our law; it is about the future of the Court and the Commission of Human Rights. It is about whether they should be formed into a single body—"the merger process", as it known—or whether we should have a two-tier system such as that proposed by the Dutch and Swedish Governments. One of the ways in which we hope that it will be made more efficient is for the Commission to give binding judgments in certain cases and also for the right to refer cases to the court to remain with the member nations; that is, cases which are more complicated or which obviously set new precedents. We need to ensure that the whole system is more efficient and that is what we are trying to solve.

Police: Personal Protection Devices
2.48 p.m.
Lord Constantine of Stanmore Lord Constantine of Stanmore asked Her Majesty's Government:
Whether, in view of the increasing number of armed assaults on the police during the perfor-mance of their duties, they will consider making available personal protection devices such as RAPEL which emits a disabling effluvium.
The Minister of State, Home Office (Earl Ferrers): My Lords, devices which emit a disabling effluvium are relatively novel as a matter of protection. Home Office scientists undertake research into new products and I have asked them to look at this one. Decisions about the selection and purchase of equipment are, of course, the responsibility of chief officers.
Lord Constantine of Stanmore: My Lords, I thank the Minister for that Answer. Is he aware of a product called Mace, which is freely used in America and Europe? The intention of those who have imported RAPEL from America is to stop the activity of an assailant without inflicting injury upon him. Unfortunately, Mace inflicts injuries to the lungs and to the eyes. Will the Minister consider whether that alternative might be used?
Earl Ferrers: My Lords, under Section 5(1) (b) of the Fire Arms Act 1968, any weapon, of whatever description, which is designed or adapted for the

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discharge of any noxious liquid, gas or other matter is a prohibited weapon. I believe that the item to which my noble friend referred in his supplementary question would fall into that category. Whether or not the item referred to in the original Question would do so is a different matter because it is designed to be broken against the carrier's own body rather than to be sprayed on the attacker. Therefore, the court may decide that it is not a weapon.
Lord Mellish: My Lords, have the police requested this equipment?
Earl Ferrers: My Lords, I do not know whether the police have requested it. Periodically we invite the Home Office police scientific development branch to carry out research into various items. One advantage of RAPEL is that it gives off the most appalling smell. It is suggested that it should be used by ladies as protection against rape. I understand that the phial shatters and, in the words of the manufacturers, it emits the foulest, putrid and overpowering smell which is unimaginably awful. The manufacturers go on to say that, whatever the thoughts of the attacker are before sensing the smell, those thoughts are very soon forgotten. It is one matter for potential attackers to arm themselves, but whether or not it is a suitable weapon for the police is another matter.
Baroness Gardner of Parkes: My Lords, can the Minister tell us whether further thought is being given to products such as Mace? The noble Earl may be aware that in the United States advertisements offer two cans at a cheaper price than the price of one. Is the noble Earl aware that a number of cases have come to court here in which tourists were carrying Mace because they were not aware that the product was not allowed in this country? Is our ban because of the danger to the lungs of the human being, as described by my noble friend Lord Constantine, or are we merely opposed to the general principle? Women value some form of protection.
Earl Ferrers: My Lords, if women wish to give themselves some form of protection and not be contrary to the law, they may try the product mentioned in my noble friend's Question. Many funny things happen in America. If friends of my noble friend were to be carrying Mace in England, it would be found to be a prohibited weapon for the reasons which I have given. It is a noxious fluid which passes onto a person. That is slightly different from using an aerosol hairspray, which is used for different purposes but can also be used for the purposes which my noble friend has in mind.
Lord Morris of Castle Morris: My Lords, is it not the case that those devices which emit disabling effluvia are only of use to deter at close range attackers who, like rapists, intend to stay at close quarters for a certain amount of time? That is not the most likely scenario for those who attack the police, which is the subject of the Question. Such people tend either to hit, kick, stab or shoot and then get away as fast as they can.
Earl Ferrers: My Lords, the noble Lord makes a good point. As I understand it, the product in question is an oil which depends for its success upon a chemical reaction with the skin. It is similar to ladies putting on scent. It smells better after it has been on the body. This product operates in a similar manner but with rather different effects. The noble Lord suggests that the product may not be suitable for use by police officers. But if they are being attacked and if they had this product, I gather that it would repel the attacker just as it would repel other people. That is why I have suggested that this matter should be investigated.
The Earl of Winchilsea and Nottingham: My Lords, most police officers that I know would not wish to be armed with any sort of gas as a means of self-protection. They feel that the early introduction of the side-handled baton might give them more protection, as by far the highest percentage of attacks made on police are from people armed with knives. Can the noble Earl say whether the current Home Office studies on those devices are anywhere near completion?
Earl Ferrers: My Lords, I can understand that police officers do not wish to be armed with a gas. Moreover, many of them would not wish their colleagues to be armed with this product. Not many of them would wish to accompany a colleague in a van who had been so sprayed. With regard to the side-handled baton, my right honourable friend the Home Secretary last Friday confirmed that he did not consider it to be an appropriate weapon for police use. It is aggressive in appearance, difficult to carry and would alter fundamentally the style of policing in this country.
Lord Stallard: My Lords, does the Minister accept that one of the problems in North London is not how to repel the police but how to attract them?
Earl Ferrers: My Lords, of course. That is why the police must be adequately prepared to protect themselves. The noble Lord is looking uncomfortable.
Lord Stallard: My Lords, I was saying that we never see any policemen. We have no reason to repel them. We would rather attract them into the area.
Earl Ferrers: My Lords, my modest intellectual capacity had not reached that point. I had not realised that the noble Lord had asked me such an offensive and irrelevant question. There are many policemen about.
Lord Constantine of Stanmore: My Lords, the manufacturers of RAPEL, which is being made under licence here from America, tell me that the Home Office Crime Prevention Centre at Stafford has tested and is testing it. Anyone who is interested may refer to Chief Inspector Brian Hewitt of that centre who will keep them informed of the up-to-date position.
Earl Ferrers: My Lords, that is as near to a commercial as one could possibly get. My noble friend is right that this matter was referred to the Home Office Crime Prevention Centre. Because I thought my

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noble friend might refer to it, and being a prudent kind of fellow, I asked what the conclusions were. It has been concluded that the smell is so vile that it is beyond description and it could act as an extremely effective deterrent for some people.
Lord McIntosh of Haringey: My Lords, perhaps the Minister would care to reconsider his answer to my noble friend Lord Stallard. It may be that he thinks that my noble friend's question was wide of the Question on the Order Paper. But I do not believe that he would wish it to be recorded that he thought that my noble friend was being offensive and irrelevant.
Earl Ferrers: My Lords, that was my first reaction to the fact that I had not realised the import of the question. It was not irrelevant or offensive, but it had nothing much to do with the Question on the Order Paper.

Examination Results: Publication
2.57 p.m.
Lord Taylor of Blackburn Lord Taylor of Blackburn asked Her Majesty's Government:
What is their response to the concerns raised by teachers, parents and local authorities about the publication of raw examinations results.
The Minister of State, Department of Education (Baroness Blatch): My Lords, publication of examination results has been widely welcomed as a further contribution to the debate about standards in our schools. We want parents to have as much information as possible about all aspects of schools. Examination results are an important part of that package.
Lord Taylor of Blackburn: My Lords, I thank the Minister for that reply. I do not disagree with her about giving parents as much information as is possible. However, does the Minister not agree that the way in which the results have been presented has caused much anxiety to parents, teachers and local authorities?
Baroness Blatch: My Lords, I am not absolutely certain what the noble Lord is referring to. It may be worth while to put the whole matter into perspective. It has been a phenomenally successful exercise. There were a quarter of a million factors and 4,600 schools. There have been 82 complaints, of which 61 have been investigated so far. Of those 61, five have been substantiated and of those five, two were typing errors in the names of the schools.
Baroness Blackstone: My Lords, is the Minister not aware that the publication of statistics in this form has not been widely welcomed but widely denigrated by the majority of the national press as well as those who have any expertise in this sphere? When the statistics are published in local newspapers, as the Government say they intend to do, will they check with all the schools concerned as to the accuracy of the statistics, since there seem to have been a number of errors? Will
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the Minister ensure also as regards the publication of statistics that it is made absolutely clear when a school has no sixth form or when a school is a special school?
Baroness Blatch: My Lords, I can confirm that every school in the country was checked. As we investigated many of the complaints we found that the errors were mainly on the part of schools in verifying the information. Further, contrary to what the noble Baroness said, the tables were widely welcomed by the press. Ten leaders of newspapers came out overwhelmingly in favour of the information being made public; only two leaders were against, one being the Daily Mirror. Only one of those 10 newspapers that came out overwhelmingly in favour decided on Sunday to reverse that view, and that was the Independent on Sunday. Otherwise there has been wide acclaim for the information being made public.
The Earl of Halsbury: My Lords, if examination results are to be published at all, is it not better that they be raw rather than cooked?
Baroness Blatch: My Lords, I absolutely agree that they should be raw rather than cooked. But as time moves on it will be possible to make judgments regarding how far a child has travelled in terms of his or her progress in education whatever the base he or she started from, whether that be a low ability or a high ability base.

Business
3 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lady Denton of Wakefield will, with the leave of the House, repeat a Statement that is to be made in another place on GATT. That will be followed by my noble friend Lord Astor who will, again with the leave of the House, repeat a Statement on the Windsor Castle fire.

Business of the House
The Lord Privy Seal (Lord Wakeham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Motion in the name of the Baroness Turner of Camden set down for 25th November shall be limited to five hours.—(Lord Wakeham.)
On Question, Motion agreed to.

Foreign Compensation (Amendment) Bill [H.L.]
Baroness Chalker of Wallasey:My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Baroness Chalker of Wallasey.)
On Question, Motion agreed to.

Agriculture Bill [H.L.]
3.2 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I beg to move that this Bill be now read a second time.
The essential purpose of the Agriculture Bill is to improve agricultural marketing. Its provisions are founded on the belief that those who are engaged in a specific industry are in the best position to define their needs and that they should not be constrained more than is necessary by actions of government. While government have an inescapable duty to look after certain vital matters such as the safety of food and the fairness of competition, they must always strive, within those constraints, to give the maximum possible scope to the efforts of individuals, or groups of individuals in voluntary association, to establish the conditions of their prosperity. That means a presumption in favour of giving them the freedom to back their commercial judgment and the responsibility that goes with it.
The improvements in milk marketing which the Bill would make possible by ending the statutory milk marketing schemes are to be seen in that light, together with the abolition of government financial guarantees for potatoes and wool and the provision for introducing a scheme to grant-aid group marketing initiatives.
The powers provided to end the potato marketing scheme and wind up the Potato Marketing Board are only enabling. If activated, however, they would, as in the case of milk, place responsibility on the board for proposing successor arrangements.
Turning first to milk, it is right that I should declare a personal interest as a registered milk producer. Part I of the Bill provides for the revocation of the four statutory milk marketing schemes in Great Britain and their replacement by purely voluntary marketing arrangements. The schemes came into being in 1933 and 1934. The objective in each case was to give dairy producers the collective security and market strength which had previously been singularly lacking. To that end the milk marketing boards were granted the exclusive right to purchase, and hence to sell, all the milk produced in their respective areas.
That statutory monopoly remains in place today. In recent years, however, the feeling has been growing, not only within government but within the dairy industry itself, that the rigid structure of rules and regulations which necessarily underpins the milk marketing schemes—necessarily, because we are dealing here with a statutory monopoly—is no longer in the industry's best interests. There are plenty of examples to show that things are not as they should be. Despite our favourable climate, the structural advantages of our dairy industry in terms of size, and despite a lower self-sufficiency in milk in this country
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than in, say, Germany, France, or the Netherlands, our producers' returns have not been among the best in the Community as one would expect, but at best in the middle of the pack. Retail prices are not noticeably lower than in other member states, however, which indicates that the system is failing to obtain the best value from our limited supply of milk. High levels of import penetration in high value-added products point to the same conclusion.
There are other indications too that all is not well. There have been many instances reported in the press of cheesemakers with a top quality product to sell and a substantial order book but without supplies of milk for months at a time. Some said that they would have been willing to pay more for their milk in order to obtain supplies but the rules of the scheme did not allow for that. At the same time, some of the major processors have been able, under the EC rules governing the boards, to withhold milk from recall to the domestic market in order to export it in the form of low-value bulk products with the aid of a large subsidy from the taxpayer. There has also been a steady stream of complaints from producers and others that their attempts to exploit the few freedoms open to them under the scheme are frustrated, if not by reluctance on the part of the boards, then by the legal and technical complexities of the system. Indeed, an attempt by the England and Wales board and the Dairy Trade Federation to give market forces a bigger say in the selling of milk—an exercise known as "New Ways"—itself foundered largely for the same reason. Even though "New Ways" was commercially sensible and desirable, it would, as originally conceived, have transgressed against the principle of non-discrimination by giving an advantage to existing purchasers of milk over potential new entrants. It was therefore not acceptable.
The failure of "New Ways" demonstrates, better than anything else could, the need to move to more flexible arrangements which allow those engaged in the industry to back their own commercial judgment. The dairy market itself is changing rapidly. The days are long since gone when British milk was consumed almost exclusively as butter, cheddar cheese and silver top milk. We now consume yoghurt, fromage frais and a large range of other fresh products and soft cheeses. Approximately 42 per cent. of drinking milk in England and Wales is purchased in skimmed or semi-skimmed form, as against 2 per cent. in 1982. Doorstep delivery in England and Wales has shrunk from 86 per cent. to only 60 per cent. of total liquid milk sales over the same period. Our processors are facing intensified competition as the single market nears completion. And we shall soon be faced with the advent of standardised whole milk.
Those developments, taken together, are putting great pressure on our monolithic marketing arrange-ments, which grew up in totally different circumstances. What was a commodity market has become a brand-dominated consumer market, and one which is no longer isolated from the rest of Europe.
The system is engulfed by change. The European Court of Justice will rule next year on whether or not

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low fat milk falls within the boards' exclusive purchasing right. If it rules otherwise the boards themselves believe that it will be impossible to sustain the operation of the schemes. But even if the case is won there are few in the industry who believe it to be possible or desirable to keep the schemes going for much longer.
The Government's concern has been to safeguard the livelihoods of producers, including a great many small family farms for whom the milk cheque is crucial, and the vitality and competitiveness of the processing sector, which is important for the consumer, for jobs and for the balance of payments. If we do not organise change now, an increasingly competitive market will force change on an unready industry, not in an orderly way, but damagingly. Since it is the milk marketing boards which fall to be wound up if the schemes are ended, it is to the boards that we looked for proposals. We made clear, however, that change must lead to more, not less, competition; to more open markets, greater choice and to more flexibility in the market.
In April this year all five milk marketing boards presented government with proposals for change to non-statutory milk marketing arrangements. Each board proposed that it should be succeeded by a single successor co-operative in its area, membership of which would be entirely voluntary for producers. Each co-operative would purchase its members' milk and sell it to milk processors and other users. Each board proposed that some of its assets should be transferred to its successor body but that provision should also be made for the distribution of part of the assets to registered producers in recognition of the loss of their existing interest in their milk marketing board.
The England and Wales board proposed that its processing subsidiary, Dairy Crest, should be separated from and independent of the board's successor. The plan is that it should be partly owned by dairy producers with additional finance provided by stock market flotation. The other boards, which are much smaller than the England and Wales board, proposed to retain their processing arms and preserve more or less their present structure but without the statutory monopoly. Government invited views on those proposals from interested organisations in August and received a substantial number of responses. Virtually all of them welcomed the proposed move to more open and competitive marketing arrangements in England and Wales, and the proposed separation of Dairy Crest.
I want now to talk in more detail about how the Bill would bring about change to milk marketing arrangements in Great Britain. Northern Ireland is not dealt with directly in the Bill but Clause 54 makes provision for Part I to be extended to the Province by Order in Council.
Clause 1 of the Bill provides for the England and Wales milk marketing scheme to be revoked on 1st October 1994 and the three Scottish schemes on 1st April 1994. Before then and, to be more precise, by 31st December 1993, each board may, under Clause 2, submit for Ministers' consideration a reorganisation
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scheme dealing with the reorganisation of the arrangements relating to the marketing of milk in its area and in particular with the transfer of its assets, rights and liabilities to one or more successor bodies, to registered producers or to both.
The deadlines which I have mentioned for revocation of the schemes are not in fact immutable. They provide a realistic timetable for change, bearing in mind the substantial amount of work needing to be done before a reorganisation scheme could be implemented by a board. In the case of England and Wales, the somewhat later deadline reflects the likely need to allow time for the flotation on the stock market of Dairy Crest. The deadlines for revocation are, however, capable of extension by order, to allow for the unexpected, up to but not beyond 31st December 1995. It would also be open to a board to propose an earlier date than that laid down.
Your Lordships will also no doubt wish to give particular scrutiny to Clause 3, which lays down the conditions that must be fulfilled before Ministers decide whether to approve a reorganisation scheme submitted by a board, and the matters to which they must have regard in reaching their decision. They must first satisfy themselves that the board has taken reasonable steps to bring the principles of its scheme to the attention of registered producers; that the scheme contains the information specified in Schedule 1; and that the proposed trading practices of any successor bodies take account of the interests of milk purchasers. This latter point is to be judged on the basis of a statement which must, under Clause 2, accompany the submission.
Subject to satisfaction on those points, Ministers must decide whether the reorganisation scheme ought to be approved, having regard to all the circumstances and, in particular, a number of specific considerations. These include, and I paraphrase: the interests of consumers and producers; the desirability of making reasonable provision for the distribution of assets to registered producers; the desirability of ensuring that the board's liabilities can be met whether they are retained or transferred; and the competition implica-tions of the proposals in so far as they are a matter for agriculture Ministers. In this latter regard I should make clear that while the agriculture Ministers would wish to avoid giving their approval to a structure which was inherently open to challenge in the courts, the law of this country as it relates to fair trading is concerned more with the actual behaviour of a body than with its structure. It would be for the competition authorities to monitor the trading practices of the boards' successor bodies once they had started trading.
Various clauses in the Bill lay down the procedures to be followed by the boards and by Ministers for obtaining and granting approval of a scheme, for refusing approval, for agreeing modifications, varia-tions and, if necessary, withdrawal of an approved scheme. There are technical provisions to facilitate the transfer of the boards' assets under an approved scheme and to deal with various points arising in respect of taxation treatment.

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The Bill further provides for the survival of the boards in residuary form, with a suitably modified constitution, after the transfer of their assets in order to complete remaining tasks. There are procedures for Ministers to monitor the implementation of an approved reorganisation scheme and to ensure, as far as is practicable, that a residuary board is left with sufficient assets to meet its liabilities.
Noble Lords will expect me to say something of the Government's attitude towards the milk marketing boards' present proposals. I will have more to say about that when I come to wind up. For the moment I will say only that the proposals of the England and Wales board, in common with those of their Scottish counterparts, would achieve the essential objective of ending the statutory monopoly and creating more freedom in the marketplace: freedom to choose and freedom to compete. For the first time in 60 years producers would be free to sell their milk to whomever they wanted, and purchasers would be equally free to buy milk direct from producers.
I have no doubt that in the new world after the abolition of the boards many individual producers will want to take advantage of those freedoms by selling direct to dairy companies and other users or by undertaking joint marketing initiatives. Some of them may take advantage of any grants which may be made available under Part III of the Bill to form local groups. I believe that there is an abundance of innovative talent ready to exploit the new freedoms by developing local initiatives and marketing local products. I see no reason at all for producers to fear change.
I now turn to Part II of the Bill, which deals with the potato marketing scheme. This has, in very general terms, the same form as Part I in that it would allow the Potato Marketing Board to come forward with proposals for certain of its functions, together with its assets and liabilities, to be transferred to a successor body or bodies.
The provisions in Part II of the Bill are enabling only, and in that respect significantly different from the provisions in respect of milk. No decision has been taken on the future of the potato marketing scheme. The Bill merely provides a trigger for action should Ministers at some future date decide to act.
It may well be asked, then, why these powers are being taken now. In Our Farming Future, the Government announced their intention of continuing to keep the scheme under review in the light of developments within Europe and elsewhere. One development which might make it impossible for the board to continue in its present form would be the introduction of an EC market regime for potatoes. A proposal seems likely to be put to the Council of Ministers sooner rather than later. At present Ministers may only revoke the scheme if potato producers vote to bring it to an end, or as a result of a report by a committee of investigation set up under the 1958 Act. The present Bill would give Ministers the powers they lack and allow for board activities, such as research and development and promotion, to be
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passed on to a successor body, should the board's regulatory powers disappear; for instance, on the introduction of an EC regime for potatoes.
Part II of the Bill operates by empowering the Ministers to decide by order that the scheme should be revoked. From the date when the order was made the board would be precluded from setting any further quotas, and would have a period of six months (which could be extended) during which it could come forward with a scheme for transferring its assets and liabilities to a successor body or bodies. If it did so, Ministers would judge the proposed scheme against various criteria—including the interests of registered producers —and then either approve the scheme, suggest modifications which the board may incor-porate, or reject it. Once a scheme was approved, a vesting day would be set for transfer of assets and liabilities to the successor body or bodies, after which the scheme would be revoked. The board would remain in existence in attenuated form after revocation to deal with its winding up, and would then be dissolved by order.
If the board did not come forward with a transfer scheme, or if its scheme were finally rejected, Ministers would petition the court to wind up the board under the existing provisions of the Agricultural Marketing Act and the scheme. In this case, any remaining assets after discharge of the board's liabilities would he distributed to registered potato producers. Many of the technical provisions of this part of the Bill follow closely those for the milk boards. The principal differences derive from the fact that the Potato Marketing Board is not a trading body.
It may be convenient if at this stage I deal also with the termination of the Government's guarantee, which is in Part IV. The intention of abolishing the guarantee was first announced in 1988, a decision already accepted by the industry and not, so far as I am aware, in any way contentious. In accordance with the Agriculture Act 1957, Ministers set a guaranteed price per tonne for potatoes grown for sale for human consumption for each coming season. When prices fall below that level the PMB may intervene in the market. Under a financial agreement with the ministry, intervention may not exceed 500,000 tonnes. The PMB would be responsible for meeting the full cost of the first 450,000 tonnes of intervention purchases, with the Government meeting the cost of the final 50,000 tonnes. Should the PMB's reserves become exhausted, however, the Government would be responsible for meeting the full cost of support buying. The board's joint consultative committee, under an independent chairman, with a membership representing the whole of the industry and consumers, recommends to the Minister the annual target area which the board must aim to have planted by registered producers in order to meet market needs.
Part IV terminates the guarantee by removing "potatoes" from the list of products to which the Agriculture Act 1957 applies. The Minister will then have no further locus in determining the target area to be planted each year. Clause 50 therefore vests setting

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the target area with the JCC, and establishes an arbitration procedure should either side object to the target area or the quotas established under it.
The guarantee in Northern Ireland would be terminated by a consequential Order in Council. The potato marketing scheme does not extend to Northern Ireland, so Part II has no relevance to the Province.
I shall conclude my remarks on potatoes by reiterating that the powers in respect of the potato marketing scheme are enabling only, so that enactment of this Bill will make no difference to the current arrangements for the growing and marketing of potatoes in Great Britain.
I turn now to Part III. Twelve months ago the Prime Minister called together leading figures from all sections of the food industries to find out what needed to be done to help increase the market share for British goods. The conclusion was that farmers needed to work closely with one another to develop profession-ally run marketing enterprises large enough to guarantee volume, consistency and reliability of service to meet the needs of their customers. Others in the food chain such as manufacturers, retailers and caterers also needed to play their part in helping suppliers to understand and meet their specifications.
At the seminar the Government announced two important initiatives to help get things working on the right lines; but good marketing opportunities are still being missed simply because there is a general lack of understanding about the benefits that can be available to all sectors through greater collaboration. It would be wrong of me to paint too pessimistic a picture because we have fine examples of close working partnerships from the farmer to the retailer, but we need more.
In April this year we introduced the group marketing grant to encourage the development of sizeable, professionally managed groups with a real commercial edge. The scheme falls into two phases, the first of which is a feasibility study. The object of this is to get a prospective enterprise to examine its existing business, think carefully about where its future market opportunities lie, and work out a plan on how it can gear itself up to meet that demand. The second phase of the scheme enables grant to be paid towards the legal costs of setting up or modifying business structures, the salary of key staff such as a manager, the costs of training directors or key staff, and the expenses of outside directors to help inject commercial expertise.
Separate powers are currently being relied upon for the operation of the scheme in England and Wales, and in Scotland. These powers are less than ideal because only the Minister of Agriculture, Fisheries and Food has the power to act in Wales. They are also limited and restrictive in a number of other important respects. They enable us only to pay grant to groups engaged mainly in the marketing of primary agricultural and horticultural produce. This not only affects our ability to help those engaged in processing as well as our ability to promote greater collaboration between the primary production and processing sectors. The powers are also deficient in a number of
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other respects, including the lack of provision for the creation of offences, penalties, or formal grant recovery procedures.
The new powers will remedy the situation and enable us to provide a firmer legal framework for any future scheme. The provisions have been drawn widely to enable the Government to help tackle perceived weaknesses or encourage particular strengths in relation to any type of marketing activity in the food supply chain.
Clause 44 enables Ministers to establish a scheme covering Great Britain for the making of grants for the marketing of the produce of agriculture, fish farming and anything derived from such produce. Ministers may by order extend the range of produce eligible for aid under a scheme.
The clause specifies the various matters a scheme may include, such as the approval of proposals, the conditions subject to which grants may be made, the manner and timing of payments and different provision for different cases or areas. It makes provision for a Minister to delegate functions and also empowers Ministers to amend by regulation the constitution or powers of a statutory body upon which a scheme confers any functions.
Finally, the clause provides for the recovery of grants where any scheme condition is not met or the applicant has given false or misleading information. But Ministers must give at least 30 days' written notice of the reasons before taking action.
Clauses 45 and 46 make it an offence for any person knowingly or recklessly to make a false or misleading statement for the purpose of obtaining grant for himself or another and deal with penalties and related matters. The provisions are an important part of the Government's proposals to encourage a more market-orientated agriculture and food industry and I urge your Lordships to give them your full support.
I can be brief in dealing with the final part of the Bill, the more so as I have already described the provisions concerning the potato guarantee and quota areas. Clause 48 terminates the arrangements under which the guaranteed price for wool is fixed annually by Ministers. The wool guarantee has served the industry well since 1950 by stabilising producer returns from wool but has now outlived its usefulness. The elaborate structure of agricultural guarantees built up in the 1940s and 1950s has largely become redundant in the face of Community support measures under the common agricultural policy. Sheep and wool producers now receive very substantial support through the ewe premium and hill livestock compensatory allowances. The wool indu-stry is ready to accept financial responsibility for its own affairs and to face even more directly the challenge of the market.
Termination of the guarantee will not otherwise affect the marketing arrangements for clip wool under the British wool marketing scheme. The scheme has been administered successfully by the British Wool Marketing Board. It continues to operate in the interests of both producers and consumers of wool. The board will have the opportunity to build further on its achievements once the guarantee is ended.

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Clause 48 also provides the board with a sensible and workable timetable of two years for the sale of wool which remains from the 1992 and previous clips. This will assure a clear and precise end-date for Exchequer liability without disruption to traditional marketing patterns.
The requirement to hold an annual review of agriculture is ended by virtue of Clause 55 and Schedule 5. This requirement was laid down in the Agriculture Act 1947. Its purpose was to enable the Government, through consultation with the industry, to formulate national price support policies. With United Kingdom accession to the European Community, decisions on levels of price support and other policy issues are now taken primarily in the context of the annual EC price fixing settlement. This removes the need for a statutory annual review and the Bill accordingly repeals the relevant part of the 1947 Act.
Finally, Clause 51 would amend certain provisions of the Industrial Organisation and Development Act 1947. The Government are aware that there is a strong desire in many parts of the industry that a means should be found of securing the continued funding and operation of those functions of the milk marketing boards, such as research and development, which might not be continued by commercially orientated successor bodies. The National Farmers' Union has advocated the establishment of a development council with this end in view. The Bill envisages also that a development council might be set up to take over the non-regulatory functions of the Potato Marketing Board. Ministers would need to receive a formal approach from representative organisations at the appropriate time before reaching a decision. The Agriculture Bill would prepare the ground by making it easier for any agricultural development council to operate a statutory levy. It would enable a levy to be collected via intermediaries such as a first-hand purchaser. I should make clear from the outset, however, that this measure is conceived in line with the Government's aim of enabling the industry to do what is best for its own future. Any development council which is set up will have to be funded by the industry itself and not from public funds.
I trust that I have given sufficient explanation of the content of the Bill and of the policies which underlie it. The changes which it would bring about are intended to strengthen the industries to which they relate, with a common theme of enabling them to respond more directly to the needs of the market and hence the consumer. In the case of milk the changes proposed are of a far-reaching and historic nature. I am glad to say that they have the support of the milk marketing boards and the National Farmers' Union, and I commend them and the other elements of the Bill to the House.
Moved, That the Bill be now read a second time. —(Earl Howe.)
3.31 p.m.
Lord Carter: My Lords, the House will be grateful to the Minister for explaining the Bill so clearly. Like him, I should also declare an interest as a director and shareholder in a farming company which itself is a registered milk producer.
As the noble Earl said, this is the most important Agriculture Bill for a very long time. It brings to an end the marketing schemes which have served the producer, the consumer and the trade well for nearly 60 years. My view and that of my party is that these schemes are being ended for reasons of ideology rather than perceived need or Community compulsion. We know that the present legal status of the milk marketing boards has been accepted by the European Commission since 1978. I can well remember that in the early 1970s there was much assertion that the marketing boards were not allowed under EC rules and were anathema to EC doctrine. That argument was put to rest in the late 1970s. The legal status of the marketing boards was accepted and could not be challenged however much it clashed with the normal competition rules in the Community. The Commission saw the advantage to producers when they were facing an increasing concentration of buying power on the other side of the farm gate, a point to which I shall return later in my speech.
It is the Government's decision to wind up the milk marketing boards which has forced them to produce their proposals for successor bodies and to open up those proposals to EC competition scrutiny. I should make it clear at the outset that if my party had won the general election we would not have sought to wind up the marketing boards. We would have adapted them to suit the changing nature of the market for milk, which was well described by the Minister, but we recognise the valuable role that the marketing boards have played in securing a profitable enterprise for the dairy farmer while ensuring that we have the highest quality of milk in Europe. We feel that the proposals add further unnecessary uncertainty to a farming industry which is already in a desperately uncertain situation.
In fact, we would argue that preserving the marketing boards would be a good example of subsidiarity in practice. If we can satisfy the Commission regarding the legal status of the boards and ensure transparency in the way in which they sell their milk to the dairy companies, it should be a matter for the national governments to decide the marketing system which best suits British conditions. The Government have taken the view that the marketing boards are not the right way to do this. Curiously, the Commission does not propose to look at the reform plans of the Scottish boards and the Northern Ireland board, on the basis of subsidiarity. It is concerned about the England and Wales board because it controls more than 10 per cent. of the Community's milk covered by the scheme but believes that the others are small enough to be dealt with on a national basis. So the principle of subsidiarity has already been accepted—in this case by the Commission.

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However, we now have to deal with the Government's proposals as set out in the Bill, which is, as the Minister said, an enabling measure. The Bill does not attempt to specify the exact type of successor bodies which have to follow the milk marketing boards or the Potato Marketing Board. It places the obligation on the marketing boards—and only the marketing boards—to bring forward proposals for reorganisation schemes and those schemes have to meet the criteria laid down in the Bill. When these schemes are in draft, is it the Government's intention to seek wider consultation throughout the industry—with the NFU and all the other interested bodies —or is it to be left just for the Government to decide without further consultation?
As I read the Bill, it appears that there is no intention to bring the reorganisation schemes, when agreed by government, back to Parliament for approval. Furthermore, there is no intention to seek the views of producers by means of a poll, although this is required in the case of the Potato Marketing Board. Since the eventual reorganisation schemes will have a profound effect on dairy farmers, consumers and the trade, can the Minister say why they are not being presented to Parliament for approval? Why have the Government not required the reorganisation schemes for the milk marketing boards to include provisions for a producer poll, as is set out for the Potato Marketing Board in Clause 36 of the Bill, to ascertain the level of support for the proposed successor bodies to the milk marketing boards and to ascertain producer views of the reorganisation schemes?
Dairy farmers have been led to believe that their views would be sought. As the Minister said when introducing the Bill, it is up to the industry to define its needs. In a press statement on 31st July 1990, the Milk Marketing Board said:
"The Board would only consider recommending becoming a co-operative if it received specific and satisfactory assurances. Then and only then would producers be asked to vote on it and decide".
At a press conference in March 1991 the Milk Marketing Board emphasised several times that there would be no change in the existing scheme until producers had voted favourably in a referendum and an Act of Parliament had been passed. Why has there been a change of view? Why, as dairy farmers, are we not to be asked our views through a producer poll, which is a central feature of the Agricultural Marketing Act 1958 and the earlier Act of 1933?
We may well wish to seek to amend the Bill both to allow for parliamentary approval for the proposed reorganisation schemes and to allow for a poll of producers. If the Government resist such proposals, the whole of the dairy industry will be asked, to coin a phrase, to buy "a cow in a poke". I am not at all sure that dairy farmers, the trade, consumers and Members of this House and another place would be happy to leave the whole thing to a cosy stitch-up between the Government and the marketing boards.
Although the exact nature of the successor bodies to the marketing boards is not specified in the Bill, we all know, as the Minister said, that the marketing
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boards have produced their outline proposals—and they differ considerably. The Minister said that when he replies to the debate he will express some of the Government's views on the various proposals. I appreciate that he has to be careful and that he should not attempt to prejudge the proposals but he should be prepared to give the House some general indication of the Government's thinking. Are the Government concerned, for example, by the proposal of the MMB of England and Wales for a single co-operative as a successor body? The dairy trade has expressed considerable concern about the proposal, with much talk of "a voluntary monopoly". As a matter of semantics, I find the phrase "a voluntary monopoly" a little hard to understand. We know that "voluntary" means acting by choice or freely given assent and that "monopoly" means the sole power or privilege in dealing with anything; the exclusive command of possession. Since as milk producers we will be able to sell our milk where and to whom we like once the marketing schemes have ended and as it is extremely unlikely that a single co-operative will have exclusive control of milk supply as the milk boards have now, I quite fail to see how a voluntary monopoly could be said to operate.
Will the Minister confirm that a single co-operative or indeed a number of co-operatives set up under the Industrial and Provident Societies Acts and the Companies Act will be exempt from the restrictive trade practices legislation? Clause 33 of the Restrictive Trade Practices Act 1976 specifically exempts industrial and provident societies and companies with characteristics of a co-operative so long as 90 per cent. of the shares are held by persons who are occupying land for agriculture.
Clause 3(4) (e) attempts to deal with the competition point. How do the Government propose to satisfy themselves about that requirement? For example, will confidential guidance be sought from the Office of Fair Trading or do we have to wait to see what happens? The Minister was unclear. He explained the department's responsibility in the matter, but the producers are interested to know whether the department will just wash its hands and wait to see what happens about competition or, as I said, will receive some confidential guidance.
There has been some criticism of the proposal that the successor body to the MMB should receive all the board's assets, with the important exception of the Dairy Crest assets. I cannot see why there should be that objection unless those who object to the transfer of assets want to ensure that the successor body is powerless. In that respect, I cannot help noticing that 79 per cent. of the UK market for dairy products is in the hands of the multiple retailers, and that four of the largest multiples command no less than 75 per cent. of that market.
There are a number of important points with which we shall have to deal in later stages of the Bill and which I shall not take time over at the moment, but merely mention. There is the question to which I do not believe the Minister referred of the administration and management of the milk quota scheme. At the moment, every litre of milk produced in the UK is on

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the marketing board computer. As a result, the scheme is extremely easy to administer. With the ending of the marketing boards' exclusive right to purchase milk, presumably every first-hand buyer, producer/retailer and producer/processor will have to be registered and report every producer's milk production to some central agency, either the intervention board or a department of the Ministry. Perhaps the Minister will confirm that point and say whether that will have any effect on the statement contained in the Bill's Explanatory and Financial Memorandum that that will have no effect on government finances or public service manpower.
We welcome the idea of a development council for milk to fund such industry-wide matters as research and development, generic promotion, the proposed animal data centre and related matters. Will the Government welcome proposals by the industry for a milk development council so that such a council could be in operation from the new scheme's vesting day? From my experience over some 30 years of attempting to set up a number of agricultural development councils, I know that that takes a long time. A letter from the Minister, Mr. Gummer, to Mr. Naish the president of the NFU states:
"We have discussed whether a development council for the dairy industry established under the Industrial Organisation and Development Act 1947 might provide a suitable vehicle. This is a matter on which it is primarily for the industry to take the initiative by making its case at the appropriate time".
Can the Minister define what is the appropriate time?
I have referred to the important work of the animal data centre. I hope that the recent announcement by the MMB about the stand-alone financing of the national milk records will not affect the very good relationship that exists between the animal data centre and the national milk records, which must of course work closely together if the ADC is to be a success. There is also the work done by the National Dairy Council in consumer promotion, education and representing the whole industry. I imagine that those are the types of thing that the Government will expect the new —if there is one—milk council to take on board. As someone who has been involved for years in a number of attempts to get development councils off the ground, I have to say how the Government's thinking on that matter has changed. We were told only a few years ago that they were completely out of the question; that they were anathema; and that they did not suit the Government's free market ideology. We now see that there has been a change of heart. We only wish that their conversion had extended also to their views on marketing boards.
There is another important point about dairy farming which should be addressed and upon which the Minister touched; that is, the considerable effect there may be on the rural economy, especially in isolated areas, if the present milk marketing system is abolished. Over the years, by its system of pooling price and haulage costs, the marketing boards have performed an enormously valuable service by ensuring that small dairy farmers in isolated areas away from the big conurbations had a viable business with a monthly milk check. Is it significant that in its criteria the Bill makes no mention of the social effect
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of reorganisation schemes? I understand that in the draft proposals there is already talk of a collection every other day or even every third day from small farms, and a discount on haulage costs for big farms. Milk collection on alternate days or every third day will mean expenditure by small farmers on extra milk tanks. Has that factor been taken into account? There are many other important matters regarding the future of milk marketing. They will certainly be fully explored at later stages of the Bill.
I turn to the important provisions regarding the Potato Marketing Board. The first point I wish to make relates to parliamentary procedure. Clause 22 refers to the application of Clauses 23 to 43 to potato marketing. Clause 42 relates to consequential amendments. If we then turn to Clause 53 we find that it is all about orders and regulations. It provides that all orders and regulations will be subject to the negative resolution procedure. That is the usual attempt made by all departments in most Bills to give themselves a quiet life. We do not intend to let them get away with it. We shall seek to make the revocation of the potato marketing scheme subject to the affirmative not the negative resolution in both Houses
The ostensible original reason for seeking the enabling power to wind up the PMB was the possibility of the European Commission proposing a potato regime for the Community which would not allow the PMB to operate. Once again, the principle of subsidiarity should apply. If the majority of producers on a poll, as is required in Clause 36, wants a potato marketing scheme, if the scheme can satisfy the normal competition rules, and there is transparency in its activities, why on earth do the British Government not argue the case for subsidiarity in that that is a matter best dealt with at national level?
Since, as I have said, the original reason given for seeking the enabling powers to revoke the potato marketing scheme and to wind up the PMB was the possibility of EC action, I fail to understand why that is not mentioned in the Bill. The Minister said that it was one consideration that might be taken into account. We may have to try to stiffen the Government's resolution on this matter by relating the revocation of the potato marketing scheme specifically to action by the EC. We shall need a great deal of clarification of the circumstances under which Ministers propose to exercise their enabling powers. I understand from the PMB that in formal discussions with Commission officials and with its counterparts in the main potato producing countries, it understands that there will be no strong objection to the continuation of essential elements of our scheme within our own country. I also understand that France may argue for retention of its national structures within an EC regime.
I turn now to other matters. We welcome the proposals contained in Part III relating to marketing grants. Although the Minister has already given some indication, it would be helpful when he replies if he would give the House some idea of the Government's thinking on that matter: what plans they have for future marketing grants and how they would like to

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see the grant scheme developed. Perhaps he will also tell us the order of magnitude of the expenditure foreseen for those grants.
The ending of the wool guarantee is a matter of some regret. We shall want to explore the rationale for that decision at later stages of the Bill. As the Minister said, when we look at Clause 55 and Schedule 1 we see that they seek to repeal what remains of Section 1 of the Agriculture Act 1947. That marks the end of an era in our post-war farming history. This is not the place to conduct a post mortem, but it is significant when a government repeal a requirement to promote a stable and efficient agricultural industry, to secure the proper remuneration for farmers and farm workers, and an adequate return on capital.
We all understand that the days of the annual price review are long past. Perhaps I may digress for a moment with an anecdote about the days of the price review which sums up, for me at any rate, what used to happen. Noble Lords may remember that the price review was something of a ritual: the Minister announced the determination to Parliament and then there was a series of meetings. On one particular day when there had been a price review, I happened to be in the farmers' club when a member of the NFU negotiating team came in. I said that I thought that it was a pretty good result. He said, "Yes, but there was nothing on pigs until we got to Downing Street". That sums up the whole story of the price review; the power that was exercised in those days has long gone.
Under this heading, we shall seek assurances from the Government regarding the collection of statistics to the same standard as at present and that the Government will continue to consult the various bodies in the industry regarding the forecasts that are made. Since the Government, I understand, have already given an assurance that they intend to publish the information currently contained in the annual Agriculture in the UK reports, we could ask why there is a need to remove the statutory obligation to publish it.
To conclude, we shall, of course, give the Bill a Second Reading; but that does not mean that on this side of the House we support the ending of marketing schemes which have served the farmer and the consumer well. We do not agree with introducing further uncertainty into an already desperately uncertain farming situation. We are convinced that the Bill has much more to do with ideology than a rational consideration of policy.
We must hope that in future years farmers and others do not look back on the Bill as yet another factor in the inexorable decline in the fortunes of farming that has taken place in the past 13 years. We shall do our best to amend and improve the Bill, as it proceeds, so that it leaves this House in better shape than when it entered it.
3.51 p.m.
Baroness Robson of Kiddington: My Lords, I thank the Minister for introducing the Bill so fully to us and explaining the Government's attitude of mind. Many of the arguments used by the noble Lord, Lord Carter,
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are similar to what we feel on these Benches, but all of us must agree that one can broadly support the stated objectives of the Bill. The trouble is that there are too many areas where we have points of anxiety and which, no doubt, during the passage of the Bill through this House, we shall have the opportunity to amend.
We should like the Bill to be seen as an opportunity to expand marketing opportunities for agriculture and to give farmers a better chance to compete with the large processors and the supermarkets. If the proposals are to benefit farmers and consumers at the same time, it is vital that the Bill does not simply become a mechanism for allowing supermarkets to use their buying power to cut farm-gate prices even further.
There has been a growing differential over the years between farm-gate and shop prices. Since 1982, the producer price of milk has increased by 45.5 per cent. During that time shop prices have increased by 70 per cent. Over the same period, 1982–92, beef producers received 46 per cent. of the selling price of beef in 1982. That has now fallen to 36 per cent.; so there is obviously something wrong in the marketing system between producer, middleman and the consumer.
Milk, the product of farming activity, is a special kind of commodity. It is the most perishable product produced by agriculture. It requires enormous storage capacity and enormous investment in transport so that it can be delivered to the consumer in a fit state. Therefore, in 1933 when the Milk Marketing Board was first introduced, it was essential that some system be introduced in order to ensure that the product could be delivered fresh to the consumer. The board was a statutory co-operative. The Bill now proposes to create a private co-operative.
We broadly welcome the proposals to form a single producer co-operative. We argue that if the co-operative is to succeed, it is essential that as many farmers as possible join it. One would hope that as many as 90 per cent. of milk producers will join. Membership of the proposed co-operative will, of course, be open to all farmers and it will promise to buy all the milk that members produce. But no farmer will have to join. Each will have his own choice and decision and will be able to leave the co-operative at short notice. Buyers will not be obliged to buy from the co-operative.
In view of those regulations, it is essential that farmers learn the lessons of the 1930s. If they allow themselves to be picked off one by one by initially attractive independent deals, then their incomes will collapse.
If a near market monopoly is created by a single co-op in England and Wales, what are the Government's plans for the regulation of that body, apart from the obvious rules with which the co-operative will have to comply? In other words, it must comply with the same UK and EC laws on compensation as other dairy companies. I wish to know what further regulations the Government propose.
I also wish to know much more clearly than I have heard so far this afternoon what criteria the

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Government will use to decide whether a scheme is acceptable and to what extent real consultation—a point raised by the noble Lord, Lord Carter—will be entered into with producers and consumers.
The noble Lord, Lord Carter, mentioned the need for a milk development council. I agree with him that it is essential to establish a milk development council to take care of all those functions previously looked after by the milk marketing boards which are not to be transferred into the new co-operative; for example, research and development and generic promotion. We believe that the milk development council should be funded by a statutory levy on all milk collected at the point of first purchase. It is essential that when the milk marketing boards no longer exist we have the milk development council established. We want that assurance.
On the question of potato marketing, the Bill starts from the basis that the scheme shall be brought to an end if the relevant Minister so certifies. The excuse for the enabling power that has been given is the imminent, or possibly imminent, introduction of an EC regime into potato marketing. However, it is unclear to me why the Government seek powers potentially to end the scheme at a future date. Are the Ministers or the Government already intent on abolishing the Potato Marketing Board, irrespective of what happens in the EC?
What worries us, perhaps more than anything else, is that it appears to be yet a further example of government by regulation. We would seek to restore the powers of Parliament in regard to the scheme, or at the very least to ask the Government to state the circumstances under which they are prepared to exercise their enabling powers. Under present law the potato marketing scheme can be revoked at the instance of Ministers only if each House of Parliament approves the draft order to that effect. I must declare an interest as I am also a farmer. We do not wish to lose that provision. It is essential that we retain the right to have the question referred to both Houses of Parliament and not to have it governed by regulation.
The noble Lord, Lord Carter, said that we want to retain the annual review of agriculture. It seems to me that even if that is not needed for price fixing, agriculture is still the biggest industry in this country and it is right that Parliament should debate the future of the industry at least once a year in the House so that we can be kept up to date with what is happening. I sincerely hope that the Government will not insist on withdrawing the annual review of agriculture. The review is of importance to producers and to the whole country.
The one proposition in the Bill that finds favour with both the noble Lord, Lord Carter, and noble Lords on these Benches, is the proposition concerning the grants for marketing. We see this as the basis of a system that would allow for the development of proper marketing co-operatives in this country so that British agriculture can compete with the co-operatives already in existence in France and Denmark. We shall be looking for assurances that these schemes will be
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properly funded and that the regulations will be constructed in such a way as to be practicable to implement.
MAFF has produced some group marketing grants which have been less than efficient. We sincerely hope that the new grants will be properly planned and regulated. If within the context of the CAP reform it can be demonstrated that the provision of realistic funding for effective co-operative marketing enables us to compete on even terms with our EC neighbours, we can build on that to the benefit of both producers and consumers. However, the Government must put their money in the same place as they put their promises.

GATT
4.3 p.m.
Baroness Denton of Wakefield: My Lords, with the leave of the House, I wish to repeat a Statement made by my right honourable friend the President of the Board of Trade in another place.
"With permission, Madam Speaker, I should like to make a Statement about the latest developments in the GATT Uruguay Round of trade negotiations.
"As many honourable Members will have heard, the European Commission and the United, States Government announced on Friday that they had reached agreement on the remaining issues separating them in the negotiations. These included key points in the GATT agriculture agreement, and the separate but related trade dispute over Community support for oilseeds production.
"This is excellent news. It opens the way to a full GATT agreement between all 108 parties in the Uruguay Round. Most immediately it removes the threat of an imminent trade war with the United States over oilseeds.
"I should like to congratulate the two Commissioners directly involved, Mr. MacSharry and Mr. Andriessen, as well as the United States negotiators, Mr. Madigan the Agriculture Secretary and Mrs. Hills the United States Trade Representative. I should also pay tribute to my right honourable friends the Prime Minister, the Foreign Secretary and the Minister for Agriculture, Fisheries and Food, who have done so much to work for this agreement.
"The main features of this agreement were, on agriculture, the cutting of quantities of subsidised exports by 21 per cent.; and on oilseeds, a limit on the area under cultivation. We have still to see all the details, but it would appear that a GATT agriculture agreement on these lines will be broadly consistent with the reforms of the CAP regimes agreed by the Community last summer. The Commission will be preparing a report on compatibility with CAP reform.
"This is in any case just one of the whole package of Uruguay Round agreements. The results should be judged on the balance between all the elements.

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The Council of Ministers will take a final decision on whether to accept the deal when all the elements are in place.
"Talks will be restarting in Geneva this week so that the other 95 participants in the Uruguay Round can consider what has been agreed. I believe it is possible to complete the negotiations this year and we will be urging all parties to reach a conclusion as soon as possible. Apart from agreeing the necessary changes to the agriculture text tabled by the GATT Director-General, Mr. Dunkel, at the end of last year, there remains a great deal of work on other aspects of the Uruguay Round negotiations. Negotiations on liberalisation of trade in services and tariff reductions have to be completed. Much work had already been done on this and was waiting for a final resolution on agriculture. Final agreement is needed on the establishment of a Multilateral Trade Organisation and a single dispute settlement system covering all the GATT agreements. And legal texts must be finalised for all the agreements—not only agricul-ture, services and tariffs, but also intellectual property and investment, textiles, anti-dumping, subsidies and a whole range of other GATT rules and procedures. This is a formidable agenda and much remains to be done.
"Completion of the negotiations this year would meet the target set by the Munich G7 Economic Summit, and by the Birmingham European Council. It would enable texts to be ready for presentation to the US Congress before the 2nd March deadline under their 'fast-track' approval procedure.
"Let me remind the House what that will mean. It will mean perhaps 200 billion dollars extra yearly output for the world by the end of this decade. It will mean improved opportunities for our exporters. It will mean that we are able to take advantage of increased trade in services. It will mean our inventors and artists have better protection for their intellectual property—it has been estimated that the UK record industry alone loses £1 billion a year through piracy.
"For the developing countries it will mean western markets being more open to their agricultural and textiles products. The gains to them from increased trade could exceed the total western aid budget.
"In short, this is a good deal—for the UK, for the European Community, for the United States, for the developing countries, and for the world. With determination and good will on all sides, I believe that such an agreement can be reached by the end of the year. I hope therefore that the whole House will join me in welcoming the achievement of the Community and the United States".
My Lords, that completes the Statement.
4.9 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Baroness for repeating the Statement made in another place by the President of
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the Board of Trade. I certainly join with the noble Baroness in congratulating the two Commissioners directly involved, Mr. MacSharry and Mr. Andriessen, as well as the United States negotiators on what has been an extremely difficult negotiation.
As the noble Baroness will know, we have consistently supported every effort that can be made towards a conclusion of the Uruguay Round. I will not deviate from that fundamental position on our side. However, a number of points are raised in the Statement about which I should like to ask the noble Baroness some questions.
The Statement says that the GATT agricultural agreement on the lines that have been negotiated will be broadly consistent with the reforms of the CAP regimes that were agreed by the Community last summer. That has been a matter of considerable controversy. Are those agreements consistent or are they inconsistent? We must know the answer to that question. Our agricultural industry has to know whether our farmers will be disadvantaged or advantaged by the agreements that have been arrived at by Mr. MacSharry and Mr. Murdigan.
The second question relates to the statement that "this is a formidable agenda" and that much remains to be done. It is true that much remains to be done, but how is that sentence consistent with the final paragraph of the Statement which says "In short, this is a good deal"? Much remains to be done; it is not yet a deal. If there were a deal, we could then be in a position to state that it was a good deal. It is odd and a bit previous to announce that there is a formidable agenda and that much remains to be done—which is true—and then at a later stage to state "this is a good deal". If the agenda is completed, it will be a good deal. However, I agree with the noble Baroness when she states that much remains to be done.
The third and most important question relates to the attitude of the French Government. We on these Benches understand that there is a domestic problem in France. The farmers in France have demonstrated, in a very vocal and sometimes violent manner, their opposition to any agreement under the Uruguay Round that compromises their position.
There are clear provisions in the Treaty of Rome for weighted majority voting on such an issue as this. If the National Assembly in Paris requires the government to exercise their rights under the Luxembourg compromise (as it was known in 1966 and is known now) can I ask the noble Baroness this. The Luxembourg compromise was only arrived at in early 1966 after an "empty chair" policy by France in late 1965, and allowed, in a manner which is not yet specified, a national veto on any Community measures that were contrary to the vital national interest of any one major member state. If the Luxembourg compromise is to be invoked by the French Government as a result of a parliamentary vote, will the British Government accept the Luxembourg compromise? Did the British Government, in assenting to the Treaty of Rome, also assent to the Luxembourg compromise? If they did, how did they do it and in what form?

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I understand that the Luxembourg compromise was a minute of a meeting that took place in Luxembourg in early 1966. If that is the situation, did the Government accept that minute? Did the Government put before Parliament the fact that they had accepted that minute? If so, do we also have the right to invoke the Luxembourg compromise when our vital national interests are at stake? If that is not the position, what are the Government proposing to do? Are they proposing to say that they have not accepted the Luxembourg compromise, that they will not accept it, and, therefore, that the weighted majority voting which is described under the Treaty of Rome for these purposes to approve the GATT Uruguay Round, will go through? I should like the noble Baroness to respond in some detail to the points that I have raised.
Noble Lords on all sides of the House fervently support a positive conclusion to the Uruguay Round. What we cannot have is one country standing out on the basis of possible doubtful legality simply because its farmers, who are experiencing a difficult domestic situation, will be disadvantaged. Either the Community works or it does not work.
I shall reserve my congratulations to the Prime Minister and the Secretary of State for Foreign Affairs until I hear the Government's position.
4.15 p.m.
Lord Ezra: My Lords, we on this side of the House heard the Statement with much satisfaction. This is one of the most important issues that unites all parties in Parliament. I also have a number of questions about which I hope the noble Baroness will be able to give some elucidation.
The Statement indicated that the Commission will be preparing a report on compatibility with the CAP reforms which were agreed last summer. If it is shown as a result of the report that there was compatibility beyond any reasonable doubt and that what has been negotiated is entirely in line with what was agreed by all member countries last summer, would that not mean that it would be very difficult for any one country to stand out against the agreement? We shall be relieved to hear the answer to that question.
In spite of the obvious benefits of the agreement, there is very little doubt that it will place a further squeeze on employment in rural areas both in Britain and throughout the Community. Will that issue be taken into account when the final settlement is reached, and will mitigating measures be taken to deal with that aspect of unemployment, which will add to current problems?
I agree that much else remains to be done. There are a number of key issues that are yet to be dealt with which have been deliberately put on ice until the key agricultural issue is decided. What is the future of the Multi-Fibre Arrangement that will affect a large number of countries? There is the question of the trade in services which we were told at one time aroused uncertainty in the minds of third world countries. There is the question of the better protection of intellectual property that is referred to in the Statement. Can those difficult issues be negotiated
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before 2nd March in order to meet the American deadline? We very much hope that will be the position; but it would be helpful if the noble Baroness can give us some reassurance and also indicate some of the difficulties in the other areas.
4.18 p.m.
Baroness Denton of Wakefield: My Lords, I should like to thank the noble Lords, Lord Williams and Lord Ezra, for their support for the work that has been done in bringing the GATT agreement towards a conclusion. I have been grateful for this support in the past and I am grateful again. I was also grateful for the support I received against retaliatory measures when that was on the agenda earlier in these discussions. That was most helpful.
The noble Lord, Lord Ezra, draws attention to the fact that the Commission are preparing a report on the compatibility of this agreement with the CAP reforms. May I say in answer to the noble Lord, Lord Williams of Elvel, that my honourable friend the Minister for Agriculture has welcomed the deal. While we still need to study the details, it would appear to be broadly compatible for those products for which reform was agreed earlier this year. Therefore, it should not impose additional burdens on United Kingdom and Community farmers. In addition, compensation payments to farmers for reduced production are fully protected from cuts. We shall need to wait to see the outcome of the report and the work; and I am sure that my right honourable friend the Minister for Agriculture will be well involved in those discussions.
The noble Lord, Lord Ezra, raised the issues of the rural unemployment that this may involve. I am sure again that this is an area where my right honourable friend the Secretary of State for Employment will be conscious of the need to look at the particular work. The noble Lord, Lord Williams, questioned my reading that it was a good deal because there is so much to be done. It was a good deal to move forward to the point we are now at. We were at a blockage. We were continuing for some time at fingertip distance. We have now managed to join hands together again so that negotiations continue. Progress has been made. I agree wholeheartedly that there is so much to do; but I believe that when it is finished it will not be just a good deal, it will be a brilliant deal.
The French Government was party both to the G7 Agreement and to the Birmingham Summit Agreement and of course the conclusion of the negotiations is important. The European Council of Ministers will have to decide whether to accept a complete, final package at the end of negotiations. We believe that there is a legal base to provide for qualified majority voting for trade policy decisions. We believe that the question of the Luxembourg compromise is something that may arise in due course, but that is not the issue at this stage. The Luxembourg compromise is not a formal part of treaties. It depends on support from member states.
Lord Harmar-Nicholls: My Lords, I apologise to my noble friend for interrupting with a sedentary comment. I said that that was sad hearing. The

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Luxembourg compromise must mean something; or we ought to know if it means nothing. It affects our whole approach to membership of the European Community.
Baroness Denton of Wakefield: My Lords, perhaps I may assure my noble friend that it means something; but it depends on the support of the member states. What I am trying to get over is that I do not believe that at the end of the day any one member state will be able to block this deal. I hope that the noble Lord will find that satisfactory.
Lord Boyd-Carpenter: My Lords, would my noble friend carry a little further the argument that she has just submitted to the House? Can she say explicitly whether Her Majesty's Government accept that the French Government could veto this agreement? If her answer to that is in the affirmative, then what will Her Majesty's Government do about it?
Baroness Denton of Wakefield: My Lords, I repeat that we believe that there is a legal base to provide for qualified majority voting for trade policy decisions.
Lord Boyd-Carpenter: My Lords, would my noble friend allow me to intervene? Does that mean, then, that Her Majesty's Government take the view that the French Government does not have an effective veto?
Baroness Denton of Wakefield: My Lords, at this stage we do not want to go ahead of the problem actually facing us, which is to get towards bringing the agreement to the whole Council of Ministers. Forcing pressure on our partners when we are aiming for an agreement is not helpful. That has been referred to in the past.
Lord Bruce of Donington: My Lords, the noble Baroness will appreciate that does not get us very much further. This question is one of the most vital importance. Is she aware that on a number of occasions the House has been assured by Ministers sitting opposite that the Luxembourg compromise is still in effect? If that be the case, and if the French Government is entitled to exercise a right of veto, I ask this. First of all, will Her Majesty's Government bear in mind that in May 1982 when the United Kingdom sought to invoke the Luxembourg compromise that the remaining members of the Community, including France, ignored the United Kingdom's veto?
Will the noble Baroness give the House an assurance that if the occasion arises—and I am not saying that it will—that Her Majesty's Government will also see that this particular right is placed in the balance against the overwhelming advantages of GATT? Will the noble Baroness also give the House an assurance that when the council next meets to discuss this question that it will be unnecessary for the President of the Commission, M. Jacques Delors, to attend because the agenda for the council meeting will have already been prepared by the committee of permanent representatives where the president always has the right of access anyway?
Baroness Denton of Wakefield: My Lords, the assurance I can give is that the United Kingdom Government are totally committed to ensuring that the GATT-Uruguay Round deal is achieved. It will therefore bear in mind every possible action in doing this; but I cannot give assurances ahead of negotiations. I am sure that the instance that the noble Lord, Lord Bruce, raises is well known to my colleagues. Certainly past history and practice will be borne in mind.
It would perhaps be helpful if I confirm to the House that the Luxembourg compromise is still in effect, but it is not entirely certain that this is necessarily relevant in this case. It applies to internal measures and it is not clear that it applies to external trade agreements. I hope that your Lordships will accept at this stage that the aim of the United Kingdom Government is to ensure that these negotiations are brought to a successful conclusion; and as each step in the way is met, that will he our sole aim.
Lord Cockfield: My Lords, I should like to say a word on this. The Luxembourg compromise has no legal base. It is therefore in a sense, a meaningless question.
Lord Harmar-Nicholls: My Lords, it is not.
Lord Cockfield: My Lords, in a sense it is a meaningless question to ask whether it exists or whether it does not exist. There were two precedents in the 1980s. The one to which the noble Lord, Lord Bruce of Donington, referred, where the Luxembourg compromise was not upheld, and the other one in 1986 involving Germany when the Luxembourg Compromise was upheld. The practical answer to the question is this. If, when it comes to the point, a sufficient number of member states resile from a position of having supported a proposition so that in the event a qualified majority for that proposition cannot be obtained, the proposition falls.
Baroness Denton of Wakefield: My Lords, the support from noble Lords is most welcome. I am grateful, as the House so often is, for the experienced views of my noble friend Lord Cockfield who has so much more knowledge on this issue than I do.
Lord Stoddart of Swindon: My Lords, the Luxembourg compromise is designed to protect vital national interests. The noble Baroness has just told us that her view of the compromise is that it applies only to internal matters. It now appears that we have a new ruling about the Luxembourg compromise. Hitherto it has been deemed to apply to every matter which may or may not affect a vital national interest. Now we are told that it applies only to internal matters. Is that an official ruling or the personal opinion of the noble Baroness?
Baroness Denton of Wakefield: My Lords, we seem to be moving towards a discussion on this subject, not a debate. I hope the noble Lord accepts that I am not standing at this Dispatch Box passing personal opinions. I draw attention again to the comment of my noble friend Lord Cockfield that this matter will be

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considered when the point arises. I believe that to go ahead of the matters under discussion now is not helpful for the future of the negotiations.
Baroness Elles: My Lords, I support the statement just made by my noble friend the Minister. I consider that this is a hypothetical question with regard to the Luxembourg compromise. The French Government have not invoked the compromise. We do not know whether they even intended to invoke the compromise, although clearly from an internal political position they may well attempt to make that kind of noise. We all know the difficulties we have in our own countries where there is a difference of opinion. Would it not be helpful to the Government and, more importantly, the negotiations as a whole, for the Government to carry out their duties as President of the Council and get the agreement through as quickly as possible, if necessary by a qualified majority under Article 113 of the Treaty?
Baroness Denton of Wakefield: My Lords, I am most grateful to my noble friend Lady Elles for putting so well what I was trying to say.
Lord Morris: My Lords, I think everyone will agree that my right honourable friend the President of the Board of Trade was absolutely correct in congratulat-ing the negotiating parties. However, perhaps my noble friend can assist me. Bearing in mind the critical importance to world trade that a general agreement on tariffs and trade should be obtained as quickly as possible, are Her Majesty's Government considering the negotiating method for obtaining such an agreement in view of the shock that the public have sustained in the knowledge that the negotiations have been going on for over six years?
Baroness Denton of Wakefield: My Lords, I am delighted to reassure my noble friend that all the focus in our Presidency is on reaching a termination of this matter. It must be pointed out that it is the Commission which negotiates, not the United Kingdom Government; but in our Presidency we think that that is the point on which to focus. I agree that in the past it has seemed much more like a general agreement to talk and talk, but I believe we are coming to the end of that.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that everybody recognises the vital importance of the Uruguay agreement being turned into a deal which will stick? That is vital from the point of view of ourselves, Europe and the world. The comment upon the Luxembourg compromise is not intended to interfere with that; it is an attempt to anticipate possible difficulties that may arise to prevent it becoming a deal. It is not that yet. It is silly to think that we can ignore the signs from France that certain steps may be taken. I hope that that point of view will not prevail in France, but we must not overlook the possibility.
I have a positive suggestion for the Government to take into account. This may be the correct time to define, as far as we can, the Luxembourg compromise in this sense. At present it is understood that it can be
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invoked only when it can be established that vital national interests are affected. We should make clear that that ought not to mean vital government interests. There is all the difference in the world between genuine national interests and France invoking it to protect a party or government and where it could not be established in any kind of court that the national interest is affected. If countries can prove that it affects their national interests they ought to be allowed to use the compromise; if not, they ought not to be allowed to use it. I ask my noble friend and her colleagues to keep that point in mind when they are turning this discussion into a deal.
Baroness Denton of Wakefield: My Lords, I assure my noble friends and other noble Lords that I understand that the concern is based on the fact that we want to lead these discussions to completion. I am sure that the Government are taking every possible scenario into consideration. We cannot go ahead of the fact that the Council of Ministers will only have to decide whether or not to accept the complete, final package at the end of negotiations. But I would point out that there are other important interests in France. For instance, as it is the second largest exporter of services there must be many internal conversations going on there.

Windsor Castle Fire
4.37 p.m.
Viscount Astor: My Lords, with the leave of the House I shall now repeat a Statement on the fire at Windsor Castle which is being made in another place by my right honourable friend the Secretary of State for National Heritage. The Statement is as follows:
"Shortly before midday on Friday a fire started in or near the private chapel close to the state apartments. It took hold rapidly. The county fire service arrived within eight minutes and built up to 39 fire appliances and more than 200 fire fighters. By late afternoon the fire had been contained in the north east corner of the castle. The fire services continued fighting the fire throughout Friday night and by Saturday morning it had been largely extinguished.
"The fire has severely damaged several of the state rooms in the north east corner of the castle including St George's Hall and the Grand Reception Room. An extremely effective pre-planned salvage operation was carried out to remove pictures, furnishings, carpets and other valuables from threatened rooms.
"I visited the castle on Saturday and saw the extent of the damage. I am sure the house will wish to join me in saying to Her Majesty that we share with her the sadness of the devastation of what is, at one and the same time, her home, a major state building, and a unique asset and attraction of our national heritage.
"I would like to pay tribute to the county fire services, to the Windsor Castle auxiliary fire service and to all those who so quickly and efficiently helped to salvage so much from the burning

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buildings. In very difficult and dangerous circum-stances they performed with skill, courage and dedication. There was no loss of life and only limited damage to works of art. One picture, one sideboard and an antique carpet appear to have been lost. The fire was contained to one area and the contingency planning was put into effect most successfully. Investigations into the cause of the fire started almost immediately and I will receive a complete report in due course.
"Scaffolding is being erected to stabilise the structure, and temporary roofing will he provided. Surveys will then be carried out to identify what action is needed to restore the buildings, and a full report is expected within a month. Meanwhile the rubble will be carefully sifted by experts from English Heritage and elsewhere working in close co-operation with the Royal household to provide essential information for authentic restoration work. It will then be possible to estimate the scale and cost of the restoration work and to plan for it. Those state apartments that have not been damaged will be opened to the public as soon as possible.
"Windsor Castle is the property of the state, and it is the Government's responsibility to ensure that resources are provided to maintain it in a manner commensurate with its status and its role on occasions of state. I therefore have no hesitation in saying that resources will be provided to restore this most precious and well loved part of our national heritage.
"Once preliminary examinations of the circum-stances of the fire have been completed and considered, I will want to decide in consultation with the Royal household what further investigations are necessary.
"Windsor Castle is a world famous symbol of this country. I believe it is our duty to ensure that the damage is repaired as soon as possible."
My Lords, that concludes the Statement.
4.41 p.m.
Baroness Birk: My Lords, we on this side of the House join with Ministers and the rest of the House in expressing sadness at the devastation of such a magnificent part of our heritage. We also pay our tribute to the fire fighters and all the rescuers who by their efforts reduced what could have been a very much worse disaster. We await the full report, which, according to the Statement, is expected in a month's time.
Having said that, I must say that I fear the Secretary of State was very quick off the mark with a definitive and almost wholesale statement about the whole dreadful incident. We accept, as he does, that the state is responsible for the fabric of the castle. But such a specific Statement was undoubtedly, we believe, premature.
There are a number of questions, I believe, that need to be asked. First, did the Secretary of State speak to the Chief Secretary to the Treasury about the huge amount of money and how it would be
824
forthcoming? How is the restoration to be paid for? Who actually owns the pictures, furniture and objects? This is a grey area. Has an assessment been made of what the actual cost will be? It seems impossible that the Secretary of State could have made that assessment so quickly. Will Her Majesty the Queen be making some contribution towards the repairs? Most of the popular papers today seem to think that she should pay something, and 90 per cent. of the 1,600 callers to a London phone-in are against the taxpayer footing the whole bill. This, I am afraid, exposes the Government's dilemma at a time when the question of royalty paying taxation is under public discussion. That was not so some years ago; it is quite a new thing.
The major problem is the confusion between public money—money from the Civil List—and private money, which is money belonging to the Royal family. Windsor Castle has both public and private features. I believe that the Civil List needs to be looked at by an ad hoc Select Committee. The question has been raised several times in the past but I do not believe that anything has been done about it.
English Heritage advises on the repair of the fabric. According to the Statement, its representatives are now sifting through the rubble to see what can be done and what can be saved. I would like to ask the Minister whether it is true that officials from English Heritage had been refused permission to record architectural features and that it is therefore difficult to discover what has in fact been lost. Will the huge amount involved have to come out of the English Heritage budget and the national heritage budget, or will it be new money? That is very important since we are short of money for the heritage and for the arts anyhow.
I hope that arising from this dreadful disaster a thorough examination of fire protection for our heritage, using the most up-to-date technology, will be made with no skimping on manpower, which in any case would not be very great. There has been a sea change in what is expected financially from royalty. The opportunity should be taken to examine the whole question of financing our monarchical system.
Lord Bonham-Carter: My Lords, I too would like to thank the Minister for repeating the Statement made by his right honourable friend in another place. I associate these Benches with the condolences expressed to Her Majesty on the tragedy that has overtaken this national monument which is also her home and in which she spent many years of her youth, not least during the war. I associate myself also with the tribute paid to the county fire service for its very efficient and speedy response to the outbreak.
There are one or two points that I want to draw to the attention of the Minister. Major fires have broken out in recent years in three buildings of historical importance: Uppark, Hampton Court and, now, Windsor Castle. In each case the fire broke out during restoration. In any investigation of the cause of this latest fire we should look carefully at what steps need to be taken, when ancient buildings are being restored, to diminish the likelihood of fire breaking out. Clearly, restoration provides circumstances in which fires are more probable than otherwise.

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I too would like to know whether, as the noble Baroness said, no proper architectural survey of Windsor Castle took place. The absence of such a survey makes it more difficult to restore the fabric to the condition in which it was. If that is the case, would it not be wise for other buildings of comparable importance to have such surveys put in hand at once so that such evidence would be available in the face of disasters of this nature.
I read in the press that English Heritage experts had been sent to Windsor Castle not only to sift but to advise on restoration. I should be interested to know whether those heritage experts are among the 380 skilled tradesmen who will be declared redundant in the next three years. If so, it would seem rather an unfortunate conjunction of events. I hope that we can have the assurance that English Heritage will now reconsider whether it is wise to get rid of 80 of its skilled craftsmen by February and over 300 craftsmen in the next three years.
Viscount Astor: My Lords, I am sure all noble Lords concur in the condolences that both the noble Lord and the noble Baroness offered to Her Majesty and join in the tribute paid to the fire fighters and all those who played some part in tackling the fire at Windsor Castle and rescuing the pictures and treasures.
The noble Baroness asked where responsibility lies for funding. The Secretary of State made it very clear at the weekend. Windsor Castle is a state property and has long been recognised as such. The Government have a longstanding responsibility going back to before the great Reform Bill to provide funds for the fabric of the building. The Royal collections and furnishings are the responsibility of Her Majesty the Queen and not the Government. In 1831 Parliament transferred such expenditure to Votes in return for a reduction in the Civil List. That is why Parliament provided the money to repair another Royal residence—Hampton Court—when it was destroyed by fire. It is too early to offer any useful estimate of the cost. However, the Civil List is provided specifically for Her Majesty's household and expenses and not for the repair and maintenance of palaces such as Windsor Castle.
The noble Baroness asked about funding. That will depend partly on the level of requirement but we do not expect the likely amount to be easily absorbable within the department's budget. The Secretary of State will be discussing that matter with my right honourable friend the Chancellor of the Exchequer.
There was confusion about the English Heritage survey, which was discussed in the press. English Heritage was not involved in the rewiring survey. There were no structural changes—only rewiring was involved—and English Heritage accepted that view. However, it was closely involved with the work carried out on the round tower and other structural work that has taken place at the castle. A survey was carried out by the Royal household. In answer to the noble Lord, Lord Bonham-Carter, English Heritage advised on the restoration of Hampton Court and it is advising on Windsor Castle. Its direct labour force did not
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carry out any work. English Heritage experts are at Windsor; they are the architectural conservation specialists and not the direct labour force.
4.52 p.m.
Lord Clark of Kempston: My Lords, does my noble friend agree that until we have the exact cost of refurbishment and so forth it is academic to talk about who will pay? Would it not be better to wait for the report to discover the cost? We can then discuss whether there should be a contribution from Her Majesty; whether the taxpayer should bear the whole expenditure; or whether there should be a national appeal.
Viscount Astor: My Lords, my noble friend is right; it is impossible to know at this stage what the costs may be. There are substantial structural costs but luckily, as a result of the building works taking place at Windsor Castle, most of the contents were not in those rooms at the time.
Lord Annan: My Lords, will the Minister confirm that were Sandringham or Balmoral to suffer such a disaster it would be the responsibility of Her Majesty to find the funds to repair the damage but that that is not so in the case of Windsor Castle? Will he bring that fact to the attention of the editor of what is becoming our leading republican newspaper; that is the Independent?
Viscount Astor: My Lords, I agree with the noble Lord, Lord Annan, and hope that the editor of that newspaper takes note. The Department of National Heritage is responsible for Windsor Castle, Buckingham Palace, St James's Palace, Hampton Court Palace, Kensington Palace, the Banqueting House and the Tower of London. Those are the state responsibilities.
The Viscount of Falkland: My Lords, are the Government satisfied with the safety of the objects and artefacts which were taken from Windsor Castle? Will they be safe from damage or theft while in transit or in the place where they are deposited? Indeed, are they insured and have all possible steps been taken to ensure that criminals do not have an easy job in obtaining any of them while they are outside Windsor Castle?
Viscount Astor: My Lords, some of the objects were hurriedly evacuated from Windsor Castle at the weekend. The pictures, objects and works of art are now in more secure places. I understand the paintings are insured by the Royal household against damage but not against loss because most are irreplaceable. Luckily, only two objects were lost; namely, a portrait and a sideboard which were too large to move from the rooms during the restoration work.
Lord Aberdare: My Lords, in planning the restoration of the rooms which were tragically damaged by fire, will full account be taken of the lessons learnt at Hampton Court where rooms damaged by fire were brilliantly restored?
Viscount Astor: My Lords, absolutely. A substantial sum of money was spent on rewiring and fire prevention at Windsor Castle as a result of the lessons learnt from the fire at Hampton Court, which were pointed out in the report that followed.
Baroness Nicol: My Lords, as it appears that the Windsor Castle fire and the Hampton Court fire occurred during renovations, is the contractor liable? If it were discovered that the fire occurred as a result of the renovations, surely the contractor, who has some insurance, could make a contribution. One can understand that he could not meet the whole cost.
Viscount Astor: My Lords, I do not believe that the fire at Hampton Court occurred as a result of restoration; it resulted from a burning candle. The noble Baroness may be thinking of a fire at Uppark which was due to some form of restoration. Of course, that is a National Trust house. We do not know the cause of the Windsor Castle fire and it is too early to speculate. The Government do not insure such major buildings, taking the view that that is not worthwhile.
Baroness Nicol: My Lords, I understand the Minister's comments but I believe that contractors carry insurance for such events.
Viscount Astor: My Lords, I do not know whether the contractor has such insurance; it is pure speculation. We do not know the cause of the fire but if that were found to be the case I am sure that the Royal household would look into it.

Agriculture Bill [H.L.]
4.56 p.m.
Second Reading debate resumed.
Baroness O'Cathain: My Lords, I welcome the Bill and its three distinct objectives. The first is the freeing-up of the managed markets. Managed markets were almost certainly essential in the 1930s but they really have no place in the 1990s. The benefits of managed markets are considered to have been almost exclusively enjoyed by the primary producers—that is the farmers—but that is too simple a conclusion to reach. The freeing-up of managed markets will have far-reaching effects on groups of people other than farmers.
The second objective is the issue of grants for the marketing of agricultural, horticultural and other produce. That is fundamentally important if we are ever to get anywhere in attempting to tackle the serious balance of trade deficit in food. The third objective of the amendment concerning the extent of levy-raising powers draws interesting questions as to who is responsible for funding vital research, undertaking consumer education and providing a vital database to assist future policy formulation in the agriculture sector. I presume that there is also the unstated objective to comply with Brussels.
As I have said, I welcome the Bill but I have two concerns. The Bill is almost impossible to understand and that could result in a lack of interest in it in your Lordships' House. That would be a great pity. The Bill
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is most important and the issues it raises have implications for farmers, the agricultural supply industry, other rural businesses, food processors, wholesalers, retailers and, most important of all, consumers. However, having heard the Minister today I believe that those present in your Lordships' House will have a much clearer idea of what the Bill contains. I congratulate him on his lucidity.
My second concern centres on the fact that since the Bill's publication almost all comment has been about milk and the future shape of the dairy industry. Many of its other provisions are also of great importance and I hope that they will receive serious consideration and not just go by through default. I have alerted the House to the danger that we might think that we are discussing the Milk Marketing Bill. As a result of my specific experience in milk marketing—incidentally, I am the first non-farmer to speak today—I guess that I could be accused of falling into that very trap. I intend majoring on Part I and making brief comments on Parts II, III and IV.
The proposal to remove the statutory powers of the Milk Marketing Board of England and Wales, the three boards in Scotland and by extension the Northern Ireland board, is to be welcomed. It is in the interest of everyone to have as free a market in milk as possible—and I emphasise the words "as possible". Increased competition will lead to better value for consumers and increased efficiencies within an industry which has been bedevilled by the stultifying effects of formulae pricing and cost-plus systems for far too long.
I recognise that the Bill establishes a framework for the assessment of a scheme to be put forward as an alternative to the current regime and is not intended to deal with the detail of any such scheme. But it is disappointing that there is such scant reference to the consumer. On a quick run-through of the words contained in Clauses 1 to 21 inclusive (which I estimate to contain approximately 4,000 words) I could see the word "consumer" mentioned only once!
The Bill puts the onus on the milk marketing boards to produce a proposed replacement scheme for the current position. I have to say that I feel that that is somewhat too "hands off" by the Government. Recent history, where more than two years of torturous negotiations between the boards and the dairy trades federations on a new pricing policy came to nothing, does nothing to encourage me to be optimistic that a scheme acceptable to everyone can be achieved in as short a timescale as is envisaged by this Bill. But I was relieved to hear the Minister say that time —I use his word—is not "immutable". I believe that the new scheme has to be acceptable to all the vested interests —not only to the primary producers, the farmers, and to the Government, but also to the dairy trade whose livelihood equally depends on the outcome.
In addition, the retail trade, which relies on a regular supply of high quality fresh milk and dairy products to satisfy the demand from its customers which it has built up and fostered over many years, has a very strong interest in the issue. I would hope that the Minister will be able to give an assurance to the

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House that the Government will be more pro-active in assisting the achievement of the desired objective than the wording—or at least my interpretation of the wording—of this Bill indicates.
I would hope also that there would be early and frequent consultation and discussion with the dairy trade; otherwise, I fear that there will be endless disputes, calls for arbitration and general suspicion and animosity. Believe me, the history of relationships within the milk industry is not all sweetness and light and now that there is a positive move towards improving the market for all parties, particularly the consumer, it is in the interests of all that as much agreement as is possible should be reached before the new system is introduced.
Clause 3(2) (c) requires that practices contained in any scheme put forward take account of the interests of milk purchasers. The Bill does not define the purchasers, and f am left to wonder whether purchasers, for the purpose of this clause, include retailers and consumers as opposed to just the dairy trade. I am aware that that level of detail will be dealt with in Committee, but I make the point only to re-emphasise the fact that there seems to be a lack of recognition of the importance of the consumer in all this. I fear that the Government are mirroring a tendency, too prevalent for too long in this country, to put the needs of the consumer rather low down the list.
Freeing a market, which for so long has been protected to a very large extent, is going to be a painful exercise for many. I wish all parties well in the difficult days ahead. But just because it is likely to be difficult is no reason for not attempting it. More than that, it is no reason for not achieving it.
The benefits to the farmers, and the country as a whole, of the milk marketing scheme—now almost 60 years old—are well known. The certainty of a non-bouncing cheque each month, the amazingly reliable service of collection of even a few gallons of milk, no matter what the weather, the first-class testing facilities and the greatly valued on-farm advice service are all too often taken for granted. But in total they compensate in a large measure for the fact, as has already been pointed out this afternoon, that the milk price to farmers has not been as high as many would have wished. And it is not only the farmers who benefit. The dairy trade sometimes forgets that life has been made a lot less complicated for it by the very operation of the scheme which it loves to hate.
Consumers have also benefited. The daily "pinta" on the doorstep and the supply of calcium-rich products are well regarded. But today's consumers demand more than that and even the greatest supporters of the scheme must admit that it has militated against efficient new product development. It grieves me to see that innovations in the dairy product range on sale in the supermarkets are almost wholly from other countries—thus contributing to the shameful balance of trade deficit in food products. It will be an exceedingly difficult task to achieve the right balance. It will require the patience of Job, I fear. I wish all involved the best of luck; they will need it.
Before I leave Part I of the Bill, I should like to flag up the points that I believe will need to be taken into
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account in the new circumstances, other than those that I have already mentioned. Very briefly, those are: funding of basic dairy herd research; funding of near-market research; management of quota. The milk marketing boards have done quite the best job in the EC in this area. That skill must not be lost. That point was highlighted by the noble Lord, Lord Carter, but it needs re-emphasis. As regards pensions of former staff and future pensions of current staff, the successor bodies to the boards must not be allowed to plunder the funds. There will be other points to he considered but I am sure that the Minister is well aware of all of them.
I make one further specific point. I am sure that the noble Earl does not need me to flag up the fact that there could be a particular problem in conforming to one aspect of EC legislation once the milk marketing boards are disbanded; namely, the requirement to provide statistical information on production and consumption of milk and dairy products within the UK. Most of that information has been generated by the milk marketing boards and it is essential that the database is maintained not only to conform with EC requirements, I hasten to add, but as a valuable marketing tool.
Turning to Part II, I am pleased to note that the consumers' interests are important as are the interests of:
"those who purchase potatoes otherwise than as consumers".
Again, a managed market is going to be freed-up and I welcome that.
The market for potatoes has developed beyond recognition during the past 12 years or so. I remember the furore which greeted a statement by a Member of your Lordships' House (correction, he was not a Member of this House when he made the statement) to the effect that a certain type of potato was pretty awful. The potato producers had apoplexy. The consumers suddenly realised that there were more than two kinds of potato. During the ensuing years the supermarkets have carried out an excellent education job for the potato. There are many varieties readily available, varieties that are specific for different end uses. I am sure that with the final freeing-up of the market, the potato will become even more of a speciality purchase. That is what should happen.
My hope is that no longer shall we be importing significant numbers of potatoes, that UK growers will ensure that they produce what their customers want and that organisations like McDonald's will not have to import their potatoes from the Netherlands:
"in order to ensure consistency of quality".
The third part of the Bill deals with grants for marketing and I welcome it wholeheartedly, without any caveats. In essence, the much greater flexibility, whereby grants can be made available not only for the primary product—the raw material—but also for the processed product, will greatly encourage groups of producers and processors to redouble their efforts to provide the market with what it actually wants.
The extension of the current scheme to food, at the Minister's discretion, should benefit all the interests I

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have listed before and really lift the marketing of UK food and agricultural products. I hope that the Minister will be liberal in his discretion!
Finally, I turn to the fourth part of this extensive and complicated Bill. The section of this part which concerns me is the implication for research if agreement on levy collection cannot be reached. I have already made reference to this while speaking about milk. I hope that there is a universal acceptance that we must not skimp on research but I would not go so far as to say that it is imperative that there should be a levy for generic advertising. I remain to be convinced that generic advertising works. More than that, I fear that if it does work, the UK levy payers are supporting the marketing efforts of the importers of products competing with the product produced by the UK levy payers.
The Bill is to be welcomed and I hope that it will receive widespread support in this House and, eventually, in the other place. It is a significant development for the agriculture industry—one of this country's most important industries, but one whose contribution is taken so much for granted. For too long we have been less successful than many other EC countries in agricultural marketing. I feel confident that this Bill could prove to be the stimulus which the industry needs in order to show that not only can we produce the best agricultural produce in this country but we can also market it alongside the best.
5.10 p.m.
Lord Joseph: My Lords, a number of noble Lords expressed surprise on seeing my name on the list of speakers for an Agriculture Bill. I am not a farmer. I am a consumer. I warmly congratulate the Government and the milk marketing boards on recognising the need for change, both for the sake of producers and consumers. Indeed, when I heard my noble friend the Minister articulate some of the defects of certain arrangements, I was not surprised that there had been a growing rumble of complaints against the long life of the milk marketing boards.
I must apologise to the House that a longstanding engagement involving other people requires me to leave before the end of the debate. I shall speak briefly and concentrate mostly on the milk aspects of the Bill.
I strongly agree with what was said by the noble Baroness, Lady O'Cathain. I recognise that the Bill seeks to improve the interests of both producers and consumers. There has been a long series of constructive complaints by people outside the House in regard to the present situation, which the Government intend to change. I refer specifically to the writings of Linda Whetstone which were published through the Institute of Economic Affairs, and to Richard Pool and Andrew Threipland, who recently published through the Centre for Policy Studies a pamphlet entitled, Set Food Markets Free.
We all recognise the history of the milk marketing boards, but their monolithic—I use the Minister's word—indeed their collectivist nature is certainly no longer optimising the scope of producers or the
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interests of consumers. I look forward to arrangements being introduced which will serve both purposes.
I am not in any way sufficiently expert to go into the detail of the Bill. But I have one question. I understand that the scheme to be introduced and considered by Ministers, and perhaps by the House, will be required to make arrangements for the disposal of the assets of the present milk marketing boards. I understand that the producers as a whole contributed to the building up of those assets, and that arrangements are being made for shares in a privatised Dairy Crest to be distributed to all producers who contributed to the creation of that enterprise.
It would seem to be unfair that producers who will not, in the future, belong to some newly-formed body, will not receive something back in return for the assets to which they contributed when Dairy Crest is returned, in the form of shares, to all those who contributed to its creation. It is a point which will become important at a later stage of the Bill and I hope that Ministers will pay attention to it.
So far all the speakers except the noble Baroness, Lady O'Cathain, honourably declared interests as farmers. But the Minister referred several times to the interests of consumers and, if I may say so with respect, quite right too. The response of Her Majesty's Opposition was given most engagingly by the noble Lord, Lord Carter, to whom we listen with respect in this House. He told the House the sad news that had his party won the election he would not have introduced such a Bill. More is the pity that even in opposition he was not able fully to welcome the Bill.
Not surprisingly perhaps, the noble Lord focused on the interests of producers although he made reference here and there to consumers. Without going too far, I suggest that his references to consumers were fairly grudging. I believe that the Bill seeks to serve both producers and consumers and all the stages in between. I agree with the noble Baroness, Lady O'Cathain, that the rest of the Bill is also important, and I hope that before long the Government will end the wool subsidy and introduce some consumer voices into the potato monopoly. But I am glad to support the introduction of the Bill and congratulate both the Government and the milk marketing boards on introducing it.
5.15 p.m.
Lord John-Mackie: My Lords, I was among those noble Lords who were surprised to see the name of the noble Lord, Lord Joseph, on the speaking list. I am pleased that he took a stand and spoke on behalf of consumers, because consumers are an important part of the whole situation.
Like others, I must declare an interest that I too am a farmer. Come Friday I shall have been farming for 65 years. During that time I hate to think how many thousand tonnes of potatoes and millions of gallons of milk I have produced, with the result that I have received great benefit from the two bodies that we are discussing today.
In the early 1930s my father was president of the Scottish Farmers' Union and took a large part in

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pressing for the Aberdeen and District Board, as it was then—there were three boards in Scotland—and I was interested in what was happening. I am sorry that the noble Baroness, Lady Elliot, is not in her place. Her late husband was the man who piloted the Bill through Parliament and came to Aberdeen to put his point of view. I met him there at that time.
My father was a milk producer, as was my brother who had just started farming. I did not produce milk until around 1939. During that early period of 1930 my brother was pouring milk down the drain. I moved from a farm in Aberdeenshire to a farm in Kincardine, where I had to drive my predecessor's potatoes into a quarry hole because he could not sell them. At the same time I was going to Glasgow, to Merklands, where they sold the cattle from Canada and Ireland, to buy store cattle. On a bus on the way out, in a poorer part of Glasgow, I saw people queueing to receive the dole. They looked ill-clothed and ill-fed yet my brother was pouring milk down the drain and I was driving potatoes into a quarry hole. I felt that there was something seriously wrong and, quite frankly, that is when I joined the Labour Party.
I do not want to go into the details of the schemes of the MMB. The Minister did that extremely well, supplemented by others including the noble Baroness, Lady O'Cathain—I hope that that is the correct pronunciation; it is a little difficult. The MMB and the PMB had a great effect in those two important areas of agricultural production, particularly in milk. I do not want to deride the Potato Marketing Board, but there is no question but that the milk situation was helped tremendously over the past 60 years or so. It has been a particular boon, as has been emphasised by others, to the small farmer. His milk is collected every day and he receives his regular monthly payment. I hope that the new co-operative will ensure that that continues.
As your Lordships can see, I am in favour of the boards and hope, quite frankly, that some persuasion and will to make changes will help them continue. However, that is not to be, particularly as the Government have no will and there is also the so-called free and flexible market. Perhaps I may quote from a letter from the chairman of the board:
"In recent years, however, the Milk Marketing Scheme has come under ever-increasing tensions and strains".
That is expanded on in the official pamphlet on the subject. There is no question but that a tremendous job has been done in looking into the matter. This morning I was invited to be briefed on the subject. I took up that opportunity. I was very impressed with the detailed way in which the plans for co-operative marketing have been put forward. I was so impressed that within an hour-and-a-half this morning I was converted. The main factor is that the smaller farmers will get fair play especially in collection and payment. That is essential. We do not wish to see small farmers having to give up maybe 10 or 12 cows in areas of Wales and Scotland and the North of England. I have been converted to the fact that the co-operative system may be good after all.
The chairman and staff this morning emphasised the number of co-operatives that they would like.
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They would like them to deal with 80 per cent. of the farmers, but they are doubtful whether they can achieve that. I see no reason why the scheme should not be a success if that number can be achieved.
The noble Baroness, Lady O'Cathain, said that this a most difficult Bill to understand. I could not agree with her more. I read it and wondered why so much was included just to carry out what seemed to me to be the fairly simple operation of changing a statutory body like the Milk Marketing Board into a co-operative. I refer to page 10 of the Bill. It is extraordinary to me that instructions are given to people and that according to Clause 19(1) any document to be served on a person may be served,
"(a) by delivering it to him or by leaving it at his proper address"—
or, bless my soul,—
"sending it by post to him at that address".
It is ridiculous to put such a statement in the Bill telling people how to post a letter. I hope the Minister will see that that kind of thing is cut out of the Bill.
5.23 p.m.
Lord Mackay of Ardbrecknish: My Lords, like my noble friend Lord Joseph, I do not need to declare an interest because I am a consumer and neither a farmer nor a producer. I was not in the least surprised to see my noble friend's name on the list of speakers. I thought that he had put down his name in order to tell us that the market is far better at organising these matters than statutory bodies. He did not disappoint me.
I am also delighted to follow the noble Lord, Lord John-Mackie, whose extended family in Aberdeenshire has a formidable record in agriculture. Perhaps he will not mind my saying that even inside that extended family there is, I believe, controversy and disagreement about the merits of the Bill and the continuation of the milk marketing boards.
Most noble Lords have concentrated on milk. I shall start with that subject, but I hope to say a few words about potatoes and even wool. All those products are vitally important as regards clothing and feeding us. Undoubtedly both north and south of the Border there has been a great deal of controversy inside the industry about the continuation of statutory bodies like the milk marketing boards. What we are experiencing today has come about largely because of a great deal of pressure both from the dairy trade and also from certain people in the farming industry. I have already alluded to certain members of the extended family of the noble Lord, Lord John-Mackie, who have perhaps contributed to that debate.
All the arguments inevitably lead one to believe that in 1992 we live in a different world. We have to look at the changes which are necessary to structures which were set up in the 1930s; even before I was born. The world has moved on; farming has moved on and the power of the consumer has also moved on. That is very important to remember when one looks at how we should allow farming to organise its markets. Earlier on, when we were talking about the GATT negotiations, reference was made to the distortions of the markets throughout the world which have been

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caused by agricultural politics and the damage that that does not only to the world's trade patterns but also to the interests of customers and consumers.
The Scottish milk marketing area has three milk marketing boards. I am sure that noble Lords will not mind if I say something about the Scottish scene. I also wish to consider what is proposed for England and to ask why there should be a difference. One of the interesting ironies of the current situation—this was mentioned earlier—is that in some parts of the country we are putting milk into processing in order to process goods such as butter and skimmed milk. That is promptly put into intervention. In other parts of the country we are actually depriving creameries of milk that could be turned into cheese, which the market wants. That happens in Scotland and I am sure that it also happens in England and Wales. Nothing could be more daft. Consumers believe that as do the public. Taxpayers would also think so if only they knew how much of their taxes were going into fairly daft policies of that kind.
As regards the Scottish scene, I ask my noble friend to answer this question: when we envisage voluntary co-operatives after the milk marketing boards are wound up, is there to be a decision that there should be three voluntary co-operatives in Scotland reflecting the current three marketing boards, perhaps continuing the barrier that exists in moving milk from where it can only be produced into mountain-making products and preventing it from moving to those areas where it can be made into cheese, for which there is a market? In those circumstances the poor Community taxpayer would not have to take up the storage and intervention bills. I hope my noble friend can answer that question. Will it be left to the milk industry itself to decide on the co-operatives, just as it is in England and Wales?
I believe that there will be a large co-operative for England and Wales. I cannot see that there will be much competition when there is to be only one co-operative for the whole of England. It is inevitable that not all the farmers will join the co-operatives. In Scotland, in the farming pages of the Herald, for weeks now we have had blow-by-blow accounts by its agricultural correspondent, Mr. Ian Morrison, of the battles between the Scottish Milk Marketing Board and Mr. Wiseman of Wiseman Dairies. I believe that he is also president of the Scottish Dairy Trades Federation. That battle has gone on year after year rather than month after month. Mr. Wiseman is going to offer farmers contracts to provide him with milk at a higher price than the pool price which they are currently offered by the milk marketing boards and, presumably, could be offered by the co-operatives.
I try to live in the real world. Many farmers will take up that offer. Therefore, what concerns me is that the co-operatives may be left to pick up the milk produced by farmers away from the central belt. The noble Lord, Lord Carter, addressed that matter. It is a difficulty. I want to see a free market, but that could have certain damaging consequences especially in remote rural areas where the board has been obliged
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—I believe that is the right word —to pick up the milk no matter how small the quantity or how high the expense of collection.
If we are going to go down the free-market road, we must go down it with our eyes open. The dairy trade, the supermarkets and the Wisemans of this world will dominate. That will not be a bad thing for most farmers because they will be paid reasonable prices directly for their products instead of having to go through the artificial pool market, but I hope also that the whole milk industry will be much more adventurous in selling the product. I believe that it was the noble Baroness, Lady O'Cathain, who mentioned the fact that most of the initiatives in milk products have been imported into this country. In the United States one sees terrific variety in the milk products that one can buy, especially in the supermarkets. We shall see a real and extended use of milk in this country only if we have a variety of products and not simply the ordinary pint of plain milk, if I may call it that. We must consider other products. I hope that my noble friend the Minister will be able to help me on that point.
I have mentioned the three milk marketing boards in Scotland. My recollection is that, as far as the movement of quota is concerned, the three boards are ring-fenced. One cannot move a quota from the area of one board into the area of another. That is also true of the English Milk Marketing Board. One cannot move a quota from England into Scotland, where we could do with the milk to produce the cheese that the market wants. I wonder what will be done in the new situation. I read the Bill but could not see anything in it about that particular difficulty. Nevertheless, I think that it is a very real difficulty which the Government will have to resolve before setting out down the road of an open market.
Equally, as the noble Lord, Lord Carter, said, we currently operate a very tight quota system in this country—obeying the Community's regulations—and that is entirely because we have the milk marketing boards. Are we to walk down the same road as Italy—which may not be a bad thing from the farmers' point of view—where I understand everybody goes on gaily and blithely ignoring the quotas without seeming to police or bother about them; or are we to be law abiding? I have no doubt that we shall try to obey the quotas, but how are we to do that if the milk marketing boards have been abolished?
I now turn to the Potato Marketing Board for a few minutes and ask a few questions about that. What bothers me when reading that part of the Bill is that I do not at present see clearly what triggers the abolition of the board. Unless my noble friend works quite hard on me, I must say that I have some sympathy with the view that a parliamentary mechanism should be inserted into the Bill so that Parliament has an opportunity to look at the trigger on the day that Ministers decide that it should be operated so that the arguments can be properly directed at that stage.
Potatoes are defined as being under a "light-weight regime" in the Community. For the non-farming community, that means that taxpayers do not pay very much for the potato regime. I am all for

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light-weight regimes. The more commodities in the Community that have light-weight regimes, the better for the customer, the taxpayer and the Community as a whole. I earnestly hope that we shall not encourage the Community to create some complicated CAP regime for potatoes in order to allow us to abolish the Potato Marketing Board because, along with its abolition, will come the abolition of the acreage controls—perhaps one should now say the "hectarage" controls—which have existed for years with the Potato Marketing Board.
Perhaps I may now mention the subject of wool. In the area of Scotland from which I come sheep are very important and the wool clip is an important part of a farmer's income. I will not need to worry if my noble friend the Minister can help me with this, but I am just a little worried that, in offloading onto the market the rest of this year's clip and the remains of the previous year's clip in the time between now and the abolition of the control, the market will be severely distorted to the detriment of farmers at next year's clip. I hope that my noble friend will be able to tell me that my fears are groundless.
Having had to decide in a previous existence on the level of the guaranteed price for wool, I recall that it is pretty artificial. I am sure that my noble friend Lord Joseph will tell me that clearly we would be far better off with a free market. Perhaps we would, but I put this question to my noble friend. I gather that we take about 2.5 per cent. of the world's wool market, so if we are to have an open market are our major competitors also to have an open market? Perhaps I should have asked that about potatoes and milk as well. If we are trying to free our market in this country and to allow proper market forces and consumer demand to have full play it is desperately important to ensure that neither elsewhere in the Community nor in the other parts of the world which trade with us in agricultural products are there distortions which would prevent a proper, even playing field for the farmers and producers in this country.
Finally, I very much welcome the marketing developments that are contained in the Bill. Certainly there is one thing that farmers in this country have not done well: they have not taken advantage of co-operative marketing in the same way as has been done on the continent. I understand that in Denmark—or perhaps it is Holland—there are three major co-operative organisations for potatoes. They are absolutely dominant in the market. They are powerful and do a very good job, selling a lot of potatoes into our market. If my noble friend's Bill allows our farmers to move in that kind of direction, good, but I only hope that he can also motivate them to do so because our farmers have been singularly bad at doing so over many years. They need only look across the Channel to see the considerable successes that farmers there have had in forming marketing co-operatives.
In conclusion, I look forward to the Committee stage of the Bill. In general terms, but with some reservations, I shall be quite happy to support my noble friend.
5.36 p.m.
Lord Geraint: My Lords, I am grateful for this opportunity to speak on a subject about which, as a farmer—I declare my interest—and as a consumer, I have some knowledge. I have to say that I am deeply uneasy about the Bill and its possible consequences.
Before we write off the statutory powers of the marketing boards of this country, let us remember—we who are farmers—that if it were not for the operations of the marketing boards during the past 50 years many of us would not be farming today. I should say that, if the truth was known, over half of all producers in the agricultural industry are in favour of statutory powers and marketing boards. I shall tell your Lordships the reason why: over the past 10 years the agricultural industry has been knocked about mercilessly by government polices. So farmers are very uneasy and, in some instances, too worried to express their views publicly.
I am old enough, as perhaps, with great respect, are many of your Lordships, to remember those days back in the 1930s when the free market reigned supreme in agriculture in this country. My memory is of farmers hardly being able to scrape a decent living, many of them giving up, and scores of farms lying empty with the land turning to scrub and wilderness. I still farm the farm that my father farmed in 1932. He told me many times that the gross takings of the farm in 1932 were £60—and he had to pay a farm worker out of that. Let us remember what our forefathers did for the industry in 1933. Many farmers from west Wales were keen to set up the Milk Marketing Board. If it were not for their initiative in those dark days of the 1930s, many family farms would have been ruined and many families who farm up to 50 acres in Wales would not be there today.
It was not until 1947 when we had a Labour Government and the late Tom Williams introduced the Agriculture Act that agriculture was turned around and the foundations laid for the highly efficient and productive industry that we have today. It was then that orderly marketing was introduced, offering a lifeline to farmers with regular payments for their produce and a reliable supply for consumers. We have lived happily with the marketing boards, formed then, over the past 40 or 50 years, and I cannot see how the British farmer—or the consumer—will benefit from the changes that are on offer today. Like many others, I have come to the conclusion that the Government did not fight sufficiently in Brussels for the interests of British farming to ensure the retention of these systems.
The Milk Marketing Board may say that it is generally supportive of the Bill, but even the board admits that over the past 60 years it has served the producer, the dairy trade and the consumer extremely well. It has guaranteed, day after day, year in year out, the availability of fresh supplies of milk of the highest quality throughout England and Wales and has made a very significant contribution to the rural economy. The board expresses anxiety that if the Government do not accept its particular replacement scheme —a dairy farmers' co-operative—then farmers and rural communities will be devastated, with the likelihood of

839
the breakdown of universal milk collection and distribution. What the board advocates apparently is that dairy farmers should be free to sell the milk to whomsoever they wish, to belong to whatever co-operative they wish, or to deal direct with buyers. That, to me, looks like a recipe for mayhem and the end to orderly marketing, which I feel is essential if the consumer is to get his milk and the farmer his reward.
Why could not the Commission in Brussels be persuaded to keep the Milk Marketing Board with its statutory powers? I suspect that the answer has more to do with the power of money and big business than with helping either the producer or the consumer. Can the Minister explain to the housewife what will happen to the daily "pinta" delivery, which is very important to many people in the rural areas?
Turning to the British Wool Marketing Board, I have to declare a particular interest as I was an elected member of the board for 21 years, representing my native Wales, and its vice-chairman for 11 of those years. I think I can testify, without undue bias, that in its 40 years of history the board has operated well. The Bill takes away the guaranteed price for wool. The effect, under current circumstances, is that from next year the income derived from wool production will be cut by 50 per cent. The average price paid to farmers at the moment is 117 pence per kilo. The current market price is just 60 pence per kilo. The arithmetic is simple. It means that wool producers in this country will lose £26 million next year. That is not a very good policy to pursue. There are 98,000 wool producers in this country at present, a large proportion of them farming the hills and the less favoured areas, barely making ends meet. The last thing they need is to lose the security of the guaranteed price.
From what I can gather, there is no obligation under Community rules to drop the guaranteed price system. If that is true, why are the Government so keen to penalise the sheep producers of this country? If my memory serves me right, wool is classified as an industrial product and not as an agricultural commodity. Why are the Government keeping the statutory powers of the Wool Marketing Board and doing away with the statutory powers of the Milk Marketing Board and the Potato Marketing Board? Why do they introduce quotas for some commodities in this country and not for others? There is something radically wrong somewhere.
It is ironic that while we are imposing quota systems in the sheep and milk sectors, we are doing away with the quota system for potatoes. That is against the wishes of the potato producers and shows some inconsistency, to say the least. I should be grateful if the Minister could give an assurance to Pembrokeshire farmers, who grow the best new potatoes in the country, that even though they are far away from large markets they will be able to compete on equal terms with producers in other parts of Europe.
I have just a few questions for the Minister. An article in Farming News last week reported a Mr. Olier, director of the Even dairy co-operative based in France, as saying:
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"We believe the ending of the statutory monopoly of the Milk Marketing Board has given us a tremendous opportunity to expand business in Britain … We are looking at the quality end of the market".
The article continued:
"The Even co-operative group is one of the largest in Northern France with 2,115 employees, 57 firms and a turnover of £430 million".
If it is moving into the south west of England—I have been told that it is moving into South Wales as well—what will happen to the employees of our milk industry in Britain? There are many questions to be answered here. There will be an increase in unemployment in this country due to those factors. What will happen to the cheese factories if milk from the south of England and South Wales goes to this big firm in France? I am delighted to see the Minister shaking his head.
I should like to refer to the Potato Marketing Board for a few moments. Listening to the Minister, it seems that everything is rosy in the garden. But according to Farming News last week:
"John Gummer received a broadside from the potato industry this week by publishing an Agriculture Bill that would empower him to scrap the Potato Marketing Board. I'm bitterly disappointed. We'll fight this like hell,' was PMB chairman David Sinclair's first reaction to the Bill".
I wonder whether there have been any consultations between the Potato Marketing Board and the Government.
Noble Lords on both sides of the House may not be aware of the marketing system for wool. Fifty per cent. is paid to us three months after we deliver the wool. Farmers have to wait for another 12 months before they receive the other half. That is not a very good marketing system.
I have before me a press release quoted by the Farmers' Union of Wales. It states:
"In an introductory description of hill farming in Wales, the Union says that according to official figures, general net farming income dropped by 25½ per cent. to £7,561 in the year to April 1991. Hill and upland farmers fared much worse however—45 per cent. made a loss on their holdings while 40 per cent. earned up to £10,000".
The union states:
"For 85 per cent. of the LFA farmers to be deriving net incomes of £145 or less a week—56 per cent. below the average industrial wage—is not a sustainable position".
Yet here we have the Government again introducing measures which will reduce farmers' incomes by £26 million. The Bill will go through the House, but British farming is at the crossroads. I make a plea once again that the Minister should reconsider many of his proposals. If reasonable amendments are tabled by noble Lords on all sides of the House, I hope he will heed what is said by experienced and long-toothed farmers. He is a very young man and a very good Minister. I hope that he will listen.
5.51 p.m.
Lord Wade of Chorlton: My Lords, I have also to declare an interest. I am a registered milk producer and a director of a company that is a milk buyer. I have been involved with the milk industry in one way or another for most of my business life. I welcome the Bill. I congratulate the Government on bringing it

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forward. I congratulate especially the new leadership of the MMB which has responded to marketing needs and had a positive approach to the Bill's proposals.
Many noble Lords have referred to the formation of the MMB, but they did not refer to the fact that at that time the milk supply was greater than the demand. The board was successful in marketing a product of which there was an over-supply. It showed how it could be marketed more effectively, opened up new opportunities for it and structured the industry to cope with the position.
In the late 1970s it was clear to me that the MMB could not adjust to the changing market and demands by consumers in this country and adapt to the changing needs of the European market where we were competing with products from France and Germany in a way that we had never done before. This country was traditionally a manufacturer of commodity products: liquid milk, Cheddar cheese and butter. We structured our business accordingly. With the changes in the EC during the 1980s it became clear that our consumers were to be given the opportunity of having a whole new range of products to which our industry was unable to adapt. The main reason we could not adapt—another point to which noble Lords have not referred—is that we had a joint pricing committee of the MMB and the dairy trade which fixed a range of prices based upon the end use of the product and not on the value of the milk. The result was that it did not matter what was done with the milk, the producer ended up with approximately the same profit. The milk pricing committee ensured that that was the case. There was no incentive to invest in new methods of production and new products and no enthusiasm to see the whole of our market and the European market as offering us an opportunity. For many years, especially during the late 1970s and the early 1980s, there was a preponderance of imported milk products, a point to which many noble Lords have referred.
We now have an opportunity to change that system and to open up the market in a way that has not been seen by the milk industry since 1933. Such a move will obviously make many people nervous. Farmers who have been in business for a long time have become used to a system, to which the noble Lord, Lord Geraint, referred, in which they receive a regular cheque. They have not been marketing people. Similarly, the trade itself has not been used to dealing with supply and demand in a free market; it has merely been used to dealing with the MMB scheme. All the main milk buyers were much more adept at dealing with the scheme than trading in milk and looking for new products.
The Bill proposes doing away with the boards' statutory powers and opening up the market. That will have an impact on all levels of the industry. The changes are all for the good, because supply is now much less than demand. We cannot adjust suddenly to the change in demand because the quota system ensures that that cannot happen. It will be some time before the supply and demand of milk in Europe will be in balance. The market may then find a level where there is no need to apply strong quota controls.
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What changes will the Bill allow to take place? Perhaps my noble friend the Minister will be a little more explicit as to the criteria he is laying down for successor organisations. The industry has many views on that matter. My noble friend referred to Scotland where a different approach to the organisation of a voluntary board is needed. We must also take into account the fact that any voluntary board should be subject to the same rules and regulations as those imposed upon any other body. Voluntary boards should not have opportunities unavailable to existing companies which are potential milk purchasers. I should be grateful if my noble friend would tell us the Government's plans for ensuring equal opportunities for all milk purchasers when the statutory boards cease to exist.
One of the technical aspects of the Bill is that there will be one price for milk and that will be the price that the producer receives. It will be based on the price that each purchaser pays. The result will be that the industry will need to add value to milk in a way that we have not seen before. We shall probably see multi-range dairies or dairies with a multi-range of products so that they can maximise their return upon their milk. Those freedoms which will be necessary to obtain the full benefit of the market place are made possible by the Bill. The Bill must not restrict the new opportunities which the new market place will create.
The noble Lord, Lord Geraint, referred to the fact that overseas companies may set up and buy milk in this country. We are now in a European market. That decision has been made. People will have the opportunity to set up over here but we shall have an equal opportunity to set up in other European countries. We must ensure that we can create major milk companies in this country which will be able to compete in Europe. The companies that have the size and strength to be most competitive will be those which will be able to market their products in Europe. That is how our milk producers will be able to command the right price for their products in Europe.
That leads me to my next point—the efficiency of our industry. I was brought up in an industry which saw the buyer as the enemy. When I was young, I was taught to believe that the milk buyer was the enemy. If one reads the history of farming in Cheshire one sees that the buyer was always the enemy. Now we must realise that we have the opportunity of bringing all sides of the industry together and taking a one-industry view which is in the interests of the milk producer, the purchaser, the supplier, the middle man (if there is one), the manufacturer, the marketer and, at the end of the day, the consumer. In order to maximise on that opportunity, as one efficient industry, we must look at efficiency at every level. So there will be rationalisation throughout the industry from milk producers to manufacturers and those who handle the final product. That is an inevitable consequence, not necessarily just of the Bill but of the change in the market place throughout Europe.
Again—and I wish my noble friend to comment on this—nothing should be done in the Bill and more particularly nothing should happen in negotiations that take place between the Minister, the boards and

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the successor board at a later stage, which prevents that market opportunity. It must not prevent us in Britain from being the most efficient industry in marketing our goods throughout Europe and the world as it becomes more competitive. We must not do anything at any stage to prevent that.
As regards the Potato Marketing Board, I agree with the changes. However, I also agree with my noble friend that at some stage it would be desirable that the matter should come back to this House or another place for confirmation of the changes which the Minister thinks are appropriate. Clearly, circumstances can change and it is right that we should have the opportunity to debate them.
I agree wholeheartedly with the marketing proposals and feel that they are a positive step to help many sectors of British agriculture to market their products more effectively, brand-name them and undertake further development in the European market.
We then come to the proposal for the milk development council. Before I refer to it specifically, I am one of those who have always been against generic advertising. The right people to advertise a product are those who manufacture it, put their name on it and put money behind it. It is the job of the person who produces the product to market it.
I do not necessarily want to see a body set up which takes more money from the farmer and puts it into a generic advertising scheme. It is important that within the successor boards the pricing structure is such that we do not expect the farmer to pay for matters which the manufacturer and the producer ought to be doing. I want the successor boards to keep their costs to an absolute minimum and to do only those things that are necessary for them to take milk from the producer and to give it to a buyer at whatever stage he wants it. There may be opportunities to change the products and for people to buy in milk from the farms and turn it into a whole range of different milk products—high protein, low protein; high fat, low fat—and to conform to the various demands on the industry.
However, I do not believe that there is a need to have a successor board which does all the things that the present boards find it necessary to do: for example, if a farmer wants a breeding programme, he pays for it; if he wants advice, he pays for it. Similarly, if a manufacturing company wants to advertise its products, it pays for that, not someone else. There again, it is important that the successor body should be able to keep costs to a minimum. People who want services should pay for them in a negotiated way, as in any other market.
I repeat that I welcome the Bill. It is something for which I personally have worked and argued for a long time. I am delighted that it has now arrived and that the Government have brought it forward. I wish them every success with it. There will no doubt be a number of issues which we shall debate as the Bill goes through the Committee stage, but I am sure that ultimately it will bring much greater confidence to the agricultural industry, much greater opportunity to our rural economy and it will strengthen many aspects because
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the pricing structure will be more attuned to the market place. It will have one great asset: it will show to farmers and producers that at the end of the day we must have a customer. There will not be someone in the middle to look after us and protect us, because one day we will be faced with the responsibility of producing a product that someone wants to buy at a price at which it is worthwhile producing. For many years our farmers have been protected from that
Our market, and the world market have now moved on. We were talking about the influence of GATT a few minutes ago and its impact on involvement in markets that some of us have never even dreamt about in the past. It will bring tremendous fresh approaches to everything that we do. We must grasp the opportunities in a positive way and not keep looking back on what we might have done. We must now work together as a massive, wonderful industry with great talent and opportunity and one prime purpose—to make all sectors of that industry dominant in the European market so that at the end of the day there is a little more money in all our pockets.
6.5 p.m.
Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Carter, expressed the view that the Bill was rooted in political ideology. Having listened to my noble friend Lord Wade and most other speakers in the debate so far, I think that it is rooted in common sense.
The Milk Marketing Board was kind enough to invite me to a presentation, during which it was explained to me how the present system works. Those in the board gave their view of how the future may shape itself. Like most noble Lords who have spoken, they accept that change in the milk scene is inevitable. In any case, as I understand it—and my noble friend the Minister will put me right if I am wrong—the present system is permitted under European Community competition rules only because of a derogation, a let-out clause. That derogation can be revoked at any time, so it could become illegal to operate the system.
Noble Lords have said much about the fact that in a world where the producer needs to be as close as possible to the wants and needs of the consumer, able to assess and respond swiftly to what the consumer wishes to buy, the present milk system works against the whole concept of enterprise. My noble friend Lord Wade illustrated that very well. It works against farmers making their own judgment of the market and adjusting what they produce to it. It becomes difficult for people to produce specialist products, special local products. We have all read of manufacturers who wanted a ready, steady supply of milk in this country and who have had to go elsewhere because they could not rely upon it.
As a result of all this, consumers in the UK and abroad are not getting the choice they might at the price they might for UK dairy products. That is unquestionable. At the same time, as the frontiers come down and raw milk from other European states

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becomes available daily in the United Kingdom, farmers will increasingly want and need much more flexibility as to what they sell and where they sell it.
Change has to come. I am sure that the Government are right not to impose any new system on dairy farmers but simply to propose, as they do in the Bill, enabling legislation. That legislation prescribes criteria that any new arrangements must meet, including the requirement that account be taken of consumer interests and producer interests.
Clearly, as we examine the Bill in Committee Members will have to pay particular attention to these aspects: whether the criteria for the approval of proposed new arrangements are right; whether the interests of the consumer and fairness to producers are properly catered for; and whether a totally unacceptable outcome of the Bill is precluded.
At this stage, may I ask my noble friend on the Front Bench two questions about milk? First, are the Government satisfied that it is in consumer and producer interests to allow such a large, new marketing organisation as seems likely to emerge in England and Wales? It seems likely that the milk marketing boards will be replaced by one single giant, referred to by Northern Foods and the noble Lord, Lord Carter, as a move from a statutory monopoly to a voluntary monopoly. It is, I believe, a rather good description.
My noble friend Lord Joseph mentioned the Milk Marketing Board's assets being transferred to the co-operative and the fact that farmers may well feel coerced into joining because of the possible loss of the benefit those assets represent. Are the Government satisfied that it is right to have that enormous co-operative? Would several smaller co-operatives, in competition one with another, not be more beneficial to consumers and more user friendly for farmers? It is obviously easier for the Milk Marketing Board to pass over its marketing side to one large organisation. But is that right? Is it right simply to wait to see if the new co-operative is taken to court because of competition rules? Should the organisation not be such that it is not taken to court? That is one question.
My other question is: should the Bill not actually require the flotation of Dairy Crest to ensure that this huge co-operative cannot also inherit an interest in processing? The Milk Marketing Board's so-called successor bodies in Scotland will have a far smaller impact on the market, albeit a fairly big impact in the Scottish domestic market. I am not sure that what I ask necessarily applies to those bodies but it seems to me that the new giant in England and Wales simply must not have its processing still within it. Therefore I wonder whether the Bill should not stipulate that Dairy Crest should be floated on the stock market. I shall be interested to hear what my noble friend says about that as it will affect my attitude to the Bill.
In discussing potatoes, I am on more familiar ground. I used to have a financial interest in growing seed potatoes; however, I no longer have that interest. It has been explained that the proposed arrangements are somewhat different to those for milk. That is to be welcomed because the United Kingdom Potato Marketing Board is a very different animal to the Milk
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Marketing Board. My noble friend Lord Joseph, who alas has had to leave us, referred to the Potato Marketing Board as a monopoly. It is not and has never been a monopoly purchaser from producers. Farmers can sell their potatoes to whom they like. Further, any change in the potato marketing system will not happen immediately, or necessarily happen at all. However, as noble Lords have commented, there are pressures for change in the world of potato marketing too.
The support system to which potato farmers have contributed through the compulsory levy per hectare of potatoes grown has been much appreciated and still is. It smoothes out the effects of weather conditions year by year on the level of production and consequent price for which potatoes can be sold. That is important because a small excess or a small shortage of potatoes can make an enormous difference to the price. For that reason the Scottish National Farmers' Union is anxious that the system should continue for the time being. I rather think the union would like it to continue forever if that were possible, but it knows that that cannot be the case. I believe my noble friend told us that the potato scheme, like the milk scheme, may not be compatible with European Community rules.
As my noble friend also told us, although potatoes are not part of the CAP, it is possible that in due course the Commission may aspire to introducing a potato regime. I believe my noble friend said he thought that that might occur sooner rather than later. That might make change in our own system not only desirable but unavoidable. All that being the case, the Bill's enabling proposals for potatoes need careful scrutiny by your Lordships, just as careful a scrutiny as that which we give to the milk proposals. If potato farmers find it desirable to set up voluntary co-operative arrangements, it is important that the Bill ensures the right framework for that to make sure that there is fairness to farmers and closeness to consumers. Seed potato growers are important to the economy of Scotland. It is necessary to maintain closeness to customers at home and abroad.
I have two further questions for my noble friend as regards potatoes. The first was put earlier in another way. Under what circumstances do Ministers envisage that they might find it necessary to use the mechanism in the Bill to trigger any change regardless of what Parliament has to say on the matter subsequently? Secondly, should the Commission propose adding a potato regime to the CAP, would the Government, in view of the already enormous cost of the CAP, seek to resist that proposal? I shall listen carefully to my noble friend's replies to those questions as they are important and they are part of the context of the whole Bill. However, I certainly support the Second Reading of the Bill.
6.16 p.m.
The Earl of Perth: My Lords, unfortunately I must declare an interest. I use the word "unfortunately" because I grow seed and ware potatoes and at the moment no one wants them. Be that as it may, in general I feel—in common with almost every other

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speaker—that the Bill is both necessary and right. Having said that, I wish to concentrate on the potato angle. There I feel I am in unison with what the previous speaker has said. This matter raises various questions that we need to tackle carefully.
What will happen as things stand? This is an all important matter. The noble Baroness, Lady Robson, and the noble Lord, Lord Carter, have made the point, as did other noble Lords, that this is an enabling Bill. It proposes an important change to the present system. Clause 22 states that it enables:
"the Minister of Agriculture, Fisheries and Food, the Secretary of State for Scotland and the Secretary of State for Wales acting jointly certify by order that it appears to them that it is necessary or expedient that the Potato Marketing Scheme should be brought to an end".
That leaves the matter up to them. Under this Bill at the moment Parliament has no redress. That aspect worries me greatly and I know it worries other noble Lords too. I do not understand why the present system is not effective and reliable. Under the present system it is perfectly possible to wind up the Potato Marketing Board but it is necessary to have the approval of both Houses. I hope that the Government will consider the whys and wherefores of that point and will reflect on the fact that every speaker who has mentioned that point has expressed the same opinion as my own.
I have one other small point to make. One noble Lord said that the Bill perhaps endangered the annual farming review. If that were true, it would be a distressing and serious matter. What are we talking about? We are talking about the largest industry in the country. It affects the country from an environmental point of view and the country depends upon it. I hope that the noble Earl can assure us that there will be an annual review. That would enable us in a general manner to assess what is happening in the CAP.
6.20 p.m.
Lord Monk Bretton: My Lords, being a milk producer and one who believes in expanding producer co-operative marketing, I shall speak mainly about the England and Wales Milk Marketing Board.
I think that we should pass the Bill, provided that it is the intention of the Government to approve the milk board's proposals and provided that the noble Earl, Lord Howe, manages to pacify the potato growers.
I confess to only modified rapture about the milk situation because we are not about to follow a well tried path. The two well tried paths are either a statutory board or a system of vertically integrated co-operatives, which own substantial assets, on the European model. Those paths have protected the producer most successfully, and probably the European boards have done the best job for the consumer. The board here is not quite the same animal and perhaps not quite so successful. At the moment we have a quota situation and a shortage of milk.
I see the proposals as a compromise plan. I regret to state that opinion because the Milk Marketing Board should be congratulated on its untiring efforts for at least four years in putting forward its proposals.
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However, the plan is a compromise because the new co-operative has to be big enough. It has to be an England and Wales co-operative. If that is the position, it will have to part with Dairy Crest and, with that, vertical integration in the future. I am not entirely happy about that matter.
I do not think that we should keep the board and try to reform it. There are political reasons for that view, the first one being that the European Community has never liked it and a large number of problems have flowed as a result. Most of those problems have already been mentioned.
There are also market reasons that nobody in politics can change in any event. The main market reason is that under the new proposals milk should flow more readily to the markets that want it most. That is a matter of very great importance. It follows that the innovative newcomer to the processing industry would be able to bid successfully for supplies, which at the moment he would have great difficulty in obtaining. It would get rid of the arrangement whereby since 1984 producers have had to compensate the dairy trade for loss of through-put due to quotas. That has been a principal reason why UK farm-gate prices have been lower than those in Europe, which seems to be the most remarkable and unsatisfactory distortion.
I do not think that the new England and Wales co-operatives should be divided, and I am sure that that would be the overwhelming view of producers. Memories of pre-1933 die very hard and producers rightly perceive a need for size.
In order to find the reason for that situation one must look at the UK scene where there are six multiple supermarket chains doing upwards of 70 per cent. of grocery business. (In Germany the first 70 per cent. of grocery business is carried on by over 100 firms.) There are then four main dairies which are obviously territorial. They compete on their fringes but not necessarily everywhere. There are 39,000 producers. The supermarkets will inevitably deal with large organisations and, if they are not big enough here, they will go to the Continent. That is an unfortunate tendency that has been felt in spheres other than the milk industry. Therefore, we should have a large co-operative to match the UK and European scene.
Looking at the turnover figures of the European concerns and thinking about how matters will work out with the Milk Marketing Board turnover figures, if there are three co-operatives instead of one, they would be on the small side and probably more expensive to run than one. One would be splitting it down. In Europe the opposite is going on: amalgamations in the dairy trade are legion.
I do not think that the new co-operative will constitute an uncontrolled monopoly. I should like to remind noble Lords that it starts in the same position as the average producer, except that his tank of milk is larger; but it still has to be marketed before the following morning. That is not a very good start for any monopoly.
If I may return to my state of modified rapture, I should like to talk about another aspect of the situation. MD Foods recently bought Alliance

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Dairies. Alliance Dairies sell 10 per cent. of UK liquid milk. MD Foods is the trading and manufacturing end of the major Danish milk producers' co-op. It handles no less than 80 per cent. of production right through to manufacture, and it retails in some cases. It is a very large organisation. One might well ask how it gets by the European Commission competition rules. We have heard from the noble Lord, Lord Geraint, about similar approaches in the south west of England from France. I do not suppose that UK producers will be offered membership of either of those organisations. It is highly unlikely. It is no worse for the English producer than supplying a UK PLC dairy. However, the situation poses a very significant question. Should our English co-operative be allowed to own dairies because that is what the other co-operatives do?
If the UK disposes of its producer-owned dairy trade assets and Danish producers buy them, we will be losing ground. Frankly, I should like to see the new co-operative retain control of Dairy Crest. I know that it would amount to 25 per cent. of the dairy trade here, but that would be considerably less than the 80 per cent. of the dairy trade held by the company I referred to in Denmark. I know that the DTF will not like these things said at all. I am sorry about that, but it is a matter that the Government should bear in mind because it is a matter about which only the Government can do anything and the Government would really have to do some governing. I should prefer it if there were a period of delay before the shares in Dairy Crest are distributed and gone forever, because I have a great fear that farmers will not hold those shares. It took a long time to put that enterprise together, and when it has gone, it has gone.
I shall not say anything more beyond a few details. I might want to put down a probing amendment to Clause 3(5) regarding distribution of shares. It does not seem clear what will happen. There may also be a possible amendment to ensure that the prospective co-operative will be able to start negotiating conditional contracts prior to its actual formation—an administrative matter over which there is a little doubt. As regards the proposed development council that we have heard about, it is important that we watch costs. It may not be as objective an organisation as the board has been over this. We must be hard-nosed about generic advertising.
6.32 p.m.
Lord Forbes: My Lords, I want to concentrate my few remarks on the Bill to the marketing of milk, particularly to the marketing of milk in Scotland. First, I believe that the three existing milk marketing boards in Scotland have served both milk producers and customers extremely well. However, I agree with the Government that the time has come for change, especially in view of our European Community membership. Accordingly, it is right that the present rigid monopoly system of milk marketing boards should be replaced by systems more attuned to the European Community systems.
Having sat on one of the Scottish milk marketing boards for 10 years—that was a long time ago—I believe that there has been considerable merit in
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having three milk marketing boards in Scotland. A degree of competition among the boards has benefited both producers and consumers by keeping the boards on their toes. Furthermore, with the new systems envisaged I believe it most desirable that Scotland should continue to have three milk marketing organisations as competition, mentioned by my noble friend the Minister, will be a spur to the success of the future organisations. In fact, I venture to suggest, as have other noble Lords, that England and Wales might well benefit by having more than one milk marketing organisation. I am not going to create south of the Border and follow up that line today.
My next point concerns Clause 3 of the Bill, which deals with the mechanism by which the existing milk marketing boards are wound up, and in particular with the transfer of assets under an approved scheme of reorganisation; that is, before the Minister makes an order for dissolution of the milk board. The winding up of the milk boards will lead to a distribution of surplus assets. That is what I, and my noble friend Lord Joseph, have considerable concern about. The mere mention of a distribution of assets so often opens up a minefield.
What exactly are the assets to be distributed? Assets at times are displayed for all to see, yet at other times they seem to get so easily tucked away. To make the question of assets even more complicated, the present Scottish milk boards are by no means similar. At least one board has a commercial enterprise while another board has no commercial adjunct. It is essential that the milk marketing boards should know now precisely what is required in their distribution proposals so that they know what will be acceptable to the Minister concerned. Equally, the Minister must be satisfied that each proposal is fair and reasonable, especially with regard to any distributions so that after the Minister has accepted the proposal it is unlikely that the ensuing scheme will lead to challenge in the courts.
This is especially important in Scotland with its three milk marketing boards, if one distribution scheme has more favourable or less favourable distribution terms than the others it is likely that this will lead to court cases on the grounds of unjustifiable deprivation of property. That in itself would be disastrous for the setting up of any alternative new organisations. I hope that the Minister will give an assurance that this important matter will be looked into before the Committee stage. Indeed I hope that the Minister can give an assurance that the Government are already considering amending, where necessary, Clause 3 to take into account the fears that I have raised.
6.37 p.m.
Lord Gallacher: My Lords, this has been an interesting debate, as I anticipated it would be, because we are embarking on a course of action that could prove disastrous in certain respects for farmers, for producers, and certainly for consumers. As I listened to the speeches from both sides of the House my mind kept recalling the fate of the bakery trade in this country. In some ways we stand at a similar point as the bakery trade itself stood when the millers

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decided that, big as they were, they needed to become even bigger, and so they acquired bakeries. Having integrated milling and baking they then thought they were able first of all to survive the loss of trade on rounds and to offer bread to retailers at prices that would safeguard themselves having regard to the totality of their operations.
If you read the financial columns these days you will find that bigness has not saved the integrated bakery trade organisations. Indeed, many are now under considerable pressure in takeover bids because of the poorness of their performance which they, in their defence, say is not attributable to their diversity but to the fact that the bakery trade is not what it was. The reason for that, hit upon by the noble Lord, Lord Monk Bretton, is that the retail multiple traders in this country wield a power without parallel anywhere else in the world, and it is growing. It is not diminishing. So far as I can see, given the nature of town and country planning regulations, there is nothing to stop its growth, not even the present restrictive trade practices legislation. They dictate to suppliers.
Turning specifically to milk and the future of the milk marketing board in England and Wales, we should first of all direct our attention to that lulu of a subsection at page 3 of the Bill, where the Minister's grounds for determining a scheme are set out in some detail. Under Clause 3(4) (e), regard shall be had to,
"whether the structure of the new arrangements contemplated by the scheme is such as to avoid the possibility of their being challenged in court on competition grounds, with any reasonable likelihood of success, as soon as they come into operation".
I believe that that presages the possibility of legal action but that it also constitutes a washing of hands by the Minister. It would certainly make an all-time classical question for degree students of economics to comment upon in the light of its ambiguity and evasion of responsibility. Other noble Lords have spoken of the possibility of legal action. I believe it is fraught. One of its deficiencies is that,
"challenged in court on competition grounds, with any reasonable likelihood of success"
seems to discount the powers of advocacy of the legal profession. I believe that these days that is quite an assumption. Although we must live with it, I believe that the clause may give rise to trouble. If it appears in the Bill in unamended form litigation is almost certain to follow.
The legal form for milk marketing boards follows the lines that we expected. We on this side are not going to oppose the Bill. My noble friend Lord Carter has already said that we think it misguided and precipitate. Nevertheless, if it represents the wishes of producers, so be it. But we intend to take a close interest in the Bill's provisions during the Committee stage. It cannot be gainsaid that the Bill gives unfettered power of approval of schemes to the Minister. It is for him to say whether a scheme submitted by a marketing board is acceptable or not. But the schemes are supposed to take account of the interests of consumers. One immediately comes up against the following dilemma. Unless, for example, the co-operative in England and Wales handles a large
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percentage of total supplies it will be unsuccessful. On the other hand, if it has too large a market share how will consumer interest be safeguarded under the Bill?
Schedule 1, paragraph 11(2), allows the new body to be an industrial and provident society under the 1965 Act, or a company under the Companies Act 1985 that has not previously carried on business, or a company which was a subsidiary of the board immediately before the day of the passing of the Bill into law. Three options are set out. It must be said with some certainty that the new body in England and Wales is likely to be a company because the Industrial and Provident Societies Act limitations now make it suitable only for small units or idealists. Co-operatives under that Act cannot pay dividends on capital; there is a limit of £10,000 on shareholdings; and they cannot raise loans. That leads us to believe that we will see the milk marketing boards as co-operative companies.
That raises a question that has not so far been touched upon this evening: why is it necessary in the Bill to give recognition to a subsidiary company as a legal form? Are companies going to be formed in anticipation? Will the Milk Marketing Board, having created the company, be allowed by the Minister to transfer assets to that company? I am bound to say that companies as such are not noted for consumer solicitude. Of course, they will argue that competition in the marketplace protects consumers. (How many times have I heard that?) However, that will hardly be the case if in England and Wales the company co-operative controls more than 50 per cent. of the supplies of milk.
Sometimes non-executive directors are invited to join company boards. That has become very fashionable. Non-executive directors so invited are not likely to be irksome persons beyond, say, asking for an independent performance assessment to check on the company's efficiency. We believe something more positive than that is required in this case.
At present the Milk Marketing Board in England and Wales has 18 members elected regionally, plus three independent members appointed by the Minister. In addition, all marketing boards report annually to Ministers in England, Wales, Scotland and Northern Ireland.
As has been said, the Milk Marketing Board in England and Wales is a very large undertaking and will certainly be a very large company co-operative. The existence of one member, one vote in a company co-operative should not wholly deceive us into ignoring the fact that at heart it will be a co-operative. Even one member, one vote leaves the remainder of the financial field wide open for the company to pursue policies that it regards as being in the best interests of its shareholders. There is already concern, and it has been expressed this evening, about the use of commercial power over suppliers—even more so in the case of financial power over the assets of the company which we now realise will have cost the co-operative company nothing. Consumers have contributed to the growth of these assets. For many years most milk supplied to consumers was charged at a standard price. After all, orderly marketing was the basis of the Milk Marketing Board's success.

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Whatever legal form co-operatives take under the Bill, we believe that three directors should be appointed, perhaps from six names submitted by Ministers to the co-operatives, after consultation with representative consumer organisations. Similar pro-visions should be made for the co-operatives that are to merge in Scotland and Northern Ireland. At the Committee stage we will be seeking to give legal effect to that.
The Consumers' Committee of Great Britain was also appointed by Ministers. It performs a useful job. I recall in recent years worthwhile reports on milk and potatoes. The Consumers' Committee of Great Britain which overlooks the operation of marketing boards costs little to maintain. I should like to ask the Minister what is to become of it under the new regimes postulated in the Bill. Are the legal forms of the three milk marketing boards in Scotland likely to differ from those in England and Wales? For example, could each marketing board there opt for a different legal form? That point was touched upon by the noble Lord, Lord Forbes. Is there any prospect of mergers in Scotland before or coincidentally with the new status? The noble Lord, Lord Forbes, is against that concept, believing that three boards have operated well as statutory bodies and will do so equally well on a voluntary basis. My personal experience of merging co-operatives has been salutary. Usually it is only adversity that compels them to merge. It may be worthwhile looking at that aspect of the Scottish scene before we go too far in establishing three separate legal entities.
In Northern Ireland—which I understand is to follow mainland organisations—can we know whether the timetable for the changes is also likely to be in step with the timetable for mainland Britain?
I am glad that on both sides of the House the feeling has been expressed that the proposal for potatoes is premature, even though the Minister has been at pains to point out that these are merely enabling powers. In our view, the proposal gives the green light to the Commission of the EC to proceed with a light regime and exclude the Potato Marketing Board as an operator under it. We believe that the Commission has an inborn dislike of statutory marketing boards as a principle. We recall clearly the battle that the late John Silkin had as Minister of Agriculture to preserve the milk marketing boards in Britain. Do we need a potato regime in any case having managed for so long without one? What has happened to subsidiarity under the United Kingdom presidency? Most proposals from Brussels relating to food still seek to transfer power to the centre. The Commission appears to be wedded to Lenin's doctrine of democratic centralism. The EC system of indirect democracy is alien to the British way of life; indeed, many of our troubles with it stem from that particular fact.
Are the Ministers of Agriculture in the United Kingdom disenchanted with the marketing boards? I felt that some hint of that came through in the Minister's speech today. For example, is the Secretary of State for Scotland in favour of the Bill's proposals for potatoes? We believe that the potato proposals should not be on the statute book ahead of any
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agreement that may be reached in Brussels about a light regime. In our opinion the current proposals put the Potato Marketing Board in some jeopardy. They put a blight, if that is an appropriate word, over the current operations of the board. It is certainly unhelpful when the future of the board is surrounded by a very high degree of uncertainty. That represents our comments on the Bill. As I said, we shall seek to amend it. We believe that it needs strengthening in a number of respects and that clarification is required in other respects. We are not opposing it. If it sees the light of day, we wish the statutory voluntary co-operatives all possible success. But we are not so sanguine after a lifetime in the co-operative movement to believe that that success is as certain as some claimants maintain both here and elsewhere.
6.50 p.m.
Earl Howe: My Lords, this has been an informed and constructive debate. I am grateful to all noble Lords who have taken part in it. I am particularly grateful to those noble Lords who have welcomed the Bill. I believe that there is a recognition on the part of all speakers that, leaving aside the provisions for the PMB which are purely enabling, the Bill addresses issues of fundamental importance for the dairy sector in particular and for the marketing of agricultural produce generally. I hope that by the time it completes its passage through your Lordships' House, it will have benefited from close scrutiny and that it will, in the process, gain a wide measure of approval. A number of noble Lords have expressed misgivings about certain aspects of the Bill, in particular the proposed ending of the milk marketing schemes, but also the provisions relating to the PMB. I propose to address each area in turn.
I am the first to agree with the noble Lord, Lord Carter, about the record of the milk marketing boards. Over the years since their inception the boards have many achievements of which they can be proud. They have given producers the security of a guaranteed monthly milk cheque; they organised an efficient milk collection and distribution service at a time when the nation's transport system was nothing like it is now; and they can take a great deal of the credit for the rise in milk hygiene standards which has put British milk at the top of the European league. Change is, however, both necessary and inevitable.
The noble Lord, Lord Geraint, looked back to the early 1930s and expressed his fears for the future. I certainly do not believe that dairy producers have anything to fear from change. The situation is not as it was before the boards were set up in the 1930s. Producer prices are now underpinned by the mechanisms of the common agricultural policy, including milk quotas. Moreover the boards' proposals would allow for a continuation of strong producer bodies for those, no doubt many, producers who would wish to belong to a collective marketing organisation. My noble friend Lord Wade rightly stressed the need for strong producer bodies.
It is in fact the prospective marketing strength of the single voluntary successor co-operative proposed by the England and Wales board which has attracted

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the most criticism from milk processors. A number of concerns on this point were also raised by consumer organisations which commented on the proposal. Noble Lords have also expressed their worries, not least my noble friend Lady Carnegy. But a number of the fears expressed rest on the misconception that a single co-operative would not be subject to effective regulation. Let us therefore look at the facts.
First, while it is impossible to predict how many producers would join a successor co-operative for England and Wales, it is sensible to assume that it would be in a dominant position in a substantial part of the market, whether this is defined for these purposes as the EC market or the British market. But a dominant position is not the same thing as a statutory monopoly. The proposed co-operative could not force anyone to join it, nor would it have the power to levy or fine non-members, as the board does.
A dominant position, however, has implications under competition law. The EC Commission has already considered the board's proposal in this light. While it has made known its preference for a multi-co-operative system, it has in effect approved the implementation of the board's proposal for an initial period of two years. Following the initial two-year period, the Commission would again review the effects of the reforms on competition in the British market.
But even during those two years it would also be closely monitoring the activities of the co-operative. Under Article 86 of the treaty a dominant body is prohibited from abusing its position. A dominant body may not, for example, apply dissimilar conditions to equivalent transactions with its trading partners so as to place any one of them at a competitive disadvantage. I have no doubt that the Commission would prove just as ready to investigate any allegations of abuse against a co-operative as it has been to challenge the boards over alleged infringements of the regulations relating to them.
If Ministers were to approve the board's proposal, a single co-operative would also be subject to the full rigour of UK competition law, involving scrutiny of its trading practices by the Office of Fair Trading. It has always been the Government's intention that, as soon as the milk marketing schemes were abolished, the same rules should apply to milk trading as those which operate in any other sector. As a logical part of this approach, the present restriction on the powers of the Director-General of Fair Trading to refer the marketing of milk in bulk for investigation by the Monopolies and Mergers Commission will be removed at the same time as the marketing schemes come to an end. Your Lordships will know that the Monopolies and Mergers Commission may recommend sweeping changes in the structure of an industry if it feels that it is operating against the public interest. For its part any dominant co-operative would know full well that it was in the spotlight and would have every incentive to trade fairly. It would need to work out a system for selling its milk which commanded the confidence of the trade.
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I said when I opened this debate that I would have more to say about the Government's attitude to the boards' proposals. I must preface my remarks by reminding noble Lords of the duty of a Minister not to prejudge an issue on which he may later be required to reach a formal decision. Bearing in mind the very real powers which the EC and the UK competition authorities have at their disposal to deal with any abuse of a dominant position or other evidence of unfair trading practices, the Government decided that the Bill itself should be drafted so as to enable them to accept the establishment of a single successor co-operative in England and Wales, subject to the obvious proviso that any eventual decision must be based on the details of what is proposed and on the provisions of the Bill, once enacted. It is also germane that the Commission's approval of a single co-operative was based on the full separation and independence of Dairy Crest from a single co-operative, as envisaged in the board's present proposal and on liberal terms of leaving for members of the co-operative.
The position is different in Scotland where all three boards are proposing that the successor co-operative retain control of the respective processing arms. The Secretary of State for Scotland is aware of the extent of the concern felt by processors in Scotland about particular aspects of the Scottish boards' proposals. He could accept the principle of a single co-operative structure as proposed by the Scottish boards. He is, however, continuing his discussions with the boards about other aspects of their proposals in the light of the recent public consultation exercise in Scotland.
I shall deal briefly with a number of other implications of the ending of the statutory milk marketing schemes. First, there is the role which the milk marketing boards currently play, as agents of the agriculture departments, in the administration of milk quotas. That is a matter raised by the noble Lord, Lord Carter, and the noble Baroness, Lady O'Cathain. The transfer rules and other matters are for separate consideration and EC rules are being renegotiated. However, I can say that it would not be appropriate for a commercially trading co-operative to take over that role.
The Government are therefore considering other ways to ensure the continued effective administration of milk quotas in line with Community regulations and the maintenance of commercial confidentiality where appropriate. That means that it will not be appropriate for any successor body to the board to administer the quota register. One possibility would be for agricultural departments to do this; another would be for the intervention board to do it. I stress however that no decision has been taken. The noble Baroness, Lady O'Cathain, stressed the need for a continuing statistical database and I fully agree with her. The provision in the Bill for a development council could well provide the answer to that.
The noble Lord, Lord Carter, expressed the view that the Government wished to abolish the milk marketing boards for ideological reasons while at the same time congratulating the Government for their practical approach towards the principle of development councils. Our approach to the future of the milk

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marketing boards is governed by equally practical considerations. The schemes are simply outmoded in the condition of a modern consumer market and in a Britain which forms part of a wider single market. They are unduly restrictive of personal and commercial freedom and the economic distortions of which they give rise are becoming increasingly apparent, as I mentioned in my opening remarks; for example, the excessive concentration on low-value products largely for bulk subsidised export. The noble Lord favours more limited change but I put it to him that limited change is not enough. A statutory monopoly is by its nature regulatory and bureaucratic. An attempt to introduce more market signals into the method of selling milk—an initiative known as "new ways"—failed. The boards jealously defended their monopoly against attempts by producers to secede over low fat milk and contract processing because they know that a crack in the edifice makes the existing structure untenable.
The noble Lord, Lord Geraint, suggested that the abolition of the MMB would not be in the producers' interests. However, in income terms the producers are not at the moment doing particularly well out of the scheme. The returns achieved by the board are well below those in countries with large surpluses such as Germany and Denmark. It would not be in the producers' interests to allow the scheme to collapse in disarray, which could be a real possibility. Most of the industry agrees that induced pricing and the allocation system is on its last legs. That point was well made by my noble friend Lord Wade.
There have been an increasing number of challenges from producers, many of whom want the right to act in accordance with normal commercial freedoms. It does not add up to say, as did the noble Lord, Lord Geraint, that large numbers of producers may go out of business. We have a shortage of milk in this country and CAP mechanisms are underpinning prices. There is every reason for producers to look to the future with confidence. By giving the boards the opportunity to present reorganisation schemes the Bill opens the way to the creation of successor bodies which will provide the security of collective action for those producers who want it. I agree that it would be utterly wrong to adopt the alternative of selling off the boards' assets and leaving producers to fend for themselves.
The noble Lord, Lord Geraint, also suggested that the abolition of the MMB is a golden opportunity for the French to move in. That is an alarmist view. The point of abolition is for market forces to work through properly into the UK industry. It will enable the UK industry to be more and not less competitive.
My noble friend Lord Wade and the noble Baroness, Lady O'Cathain, rightly drew our attention to the inefficiencies of the present system pointing out that not enough milk is going into value added products. I fully agree with that. The abolition of the scheme will enable us to get the best value out of British milk. The danger is that if we do nothing British milk will be exported because of the low price under the scheme and the guaranteed equal access to it for other member states. Once normal commercial
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arrangements are in place our supplies will be less vulnerable. The import penetration of the product market is already at a high level and the scheme has done nothing to combat that.
The noble Lord, Lord Gallacher, suggested that the abolition of the MMB was not necessarily in the interests of consumers. At present the dairy companies are forced to pay much higher prices for milk for the liquid market than for milk for manufacturing. That is an artificial premium due solely to the existence of the milk marketing scheme, which can he expected to disappear once the schemes go. Many producers sell direct to consumers by operating their own delivery rounds. At present if they do so they must pay a levy to the board of nearly 2.4 pence per pint on sales of whole milk. Next year that levy will be extended to low fat milk if the European Court of Justice decides that low fat milk is within the boards' monopoly. The abolition of the boards and the removal of the levy will remove that disincentive and encourage doorstep sales. Lest there be any fear that product prices might in the process increase, I say merely that competition in the milk products market is already extremely fierce, including competition from imports. That is the best guarantee of fair and realistic prices.
The noble Lord, Lord Carter, asked why there is no provision for the MMB to poll producers to assess the support for submitting a reorganisation scheme. 'The milk marketing boards and the Potato Marketing Board would find themselves in different positions under the provisions of the Bill. Each milk marketing board will be faced with the definite end of its milk marketing scheme. They have already made such preparations for that as they can. In August the boards consulted their producers about the kind of non-statutory successor arrangements which they would like to see introduced. Each board would, therefore, be able to take account of the views expressed in drawing up a reorganisation scheme. However, I wish to point out that the milk marketing boards have their own procedures for consulting producers and they do not wish to have a special power for a formal poll.
The noble Lord, Lord Carter, called for consultation on reorganisation schemes. That matter was also raised by the noble Baroness, Lady Robson. The degree of consultation that will be necessary will depend on the nature of the reorganisation scheme being put forward. The Government have already consulted on the boards' existing proposals. If those are simply resubmitted in the form prescribed by the Bill a full-blown consultation exercise by the Government might be unnecessary. However, I wish to assure the House that the Government are not intending to act in secret. The Bill requires Ministers to be satisfied before approving a reorganisation scheme that the principles—that is to say, the main elements—have been brought to the attention of producers. They will therefore be in the public domain. Ministers also need to be satisfied that any statement of proposed trading practices by a successor body will take account of the interests of purchasers. The Bill also requires them to take account of consumer interests. It is difficult to see how Ministers

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will establish those matters without undertaking consultations with the usual interests. That follows as a matter of course and it does not need to be laid down in the Bill. It follows from that, however, that if the boards' proposals were fundamentally different from the present ones a further formal round of consultation would be in order. Again, it is unnecessary to provide for that in the Bill.
The noble Lord, Lord Carter, expressed the view that Parliament should decide on eventual schemes. The problem with that approach is that it is not simply a matter of a "yes" or "no" vote. As the procedures in the Bill show, the process of decision-taking is ongoing. Therefore, we need a provision to deal with change and a developing situation. There may well be modifications to the details of the scheme after it is first submitted.
The noble Baroness, Lady O'Cathain, asked to what extent the Government would seek the involvement of the DTF in reaching a conclusion on reorganisation schemes. I stress that the Government are in close touch with all sides of the industry. The purpose of the formal consultation exercise was precisely to enable it to state its views. The processors' interests will certainly not be overlooked. The Government believe that some of the processors' present criticisms of the boards' proposals are wide of the mark but it is worth repeating that a single voluntary co-operative would not be an unregulated monopoly.
My noble friend Lord Monk Bretton suggested that the England and Wales board should set up a vertically integrated co-operative. The retention of Dairy Crest in a single England and Wales co-operative would create a very strong body. The board has had regard to the likely reaction of competition authorities, including the EC Commission, in framing the proposals. The Government have looked to the industry to produce its plans. I have no doubt that it is best placed to judge what is in the producers' interests. The MMB is an elected body. It would be open to the board to propose a structure of several vertically integrated co-ops if it wanted to, but it has judged it best to propose a single England and Wales co-operative. My noble friend Lord Monk Bretton appeared to endorse that choice.
My noble friend Lady Carnegy asked whether the Bill should not provide specifically for the separation and flotation of Dairy Crest. I believe that the answer is that it should not because the Bill provides a framework for each of the boards to bring forward its own proposals. It would be inconsistent with that to lay down conditions for one of them. Therefore, Clause 3 relates to competitiveness in general. It is deliberately geared to structure since the actions of the successors will be governed by general competition legislation. It is worth noting that the Commission's approval was on the understanding that Dairy Crest would be separated. The board would certainly need to take account of that.
My noble friend Lady Carnegy went on to ask further about Dairy Crest. The Milk Marketing Board would need to include in its reorganisation scheme
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details of the basis of any allocation of shares in Dairy Crest to producers or any other distribution of assets. Ministers would need to assess those in line with the provisions in the Bill. In determining whether a scheme should be approved, Ministers must have particular regard to whether it makes reasonable provision for the distribution of assets to registered producers. Clearly, the basis for distribution must be practical. Therefore, the Bill specifies what basis for the distribution of assets to registered producers could not be taken to be unreasonable.
The noble Baroness, Lady O'Cathain, referred to pensions of MMB employees. We recognise the interest that members of the Milk Marketing Board's pension schemes have in their future pension arrangements. The MMB has said that it wishes to maintain its scheme members' expectations. I understand that it intends to provide them with full details of those intentions by way of future arrangements as soon as possible.
The noble Lord, Lord Carter, expressed his worries on the social effects of abolishing the milk marketing boards. It is worth reminding ourselves that there is a national shortage of milk—something that I stressed earlier. The existence of milk quotas virtually guarantees a good future for every efficient producer of milk. It may well be that producers in more remote areas will wish to co-operate for the benefit of local consumers. Of course, they will be able to do so free of the current levy.
The noble Lord, Lord Geraint, asked whether the abolition of the boards poses any threat to this country's unique system of doorstep delivery or to the continued availability of fresh pasteurised milk—
Lord Carter: My Lords, is the noble Earl suggesting that producers on Exmoor or in Carmarthen should set themselves up carrying out doorstep deliveries as their salvation?
Earl Howe: My Lords, it is for them to decide whether or not they do so. I was merely making a general point.
As regards the doorstep "pinta" the answer is unequivocal. There is no such threat. Both doorstep delivery and the bottling and pasteurisation of milk are matters for the commercial dairy companies and not for the boards. I have no doubt that the companies will continue to be responsive to what the consumer wants and is prepared to pay for.
The noble Lord, Lord Carter, referred to competition policy as it relates to the MMBs. We are not proposing to change the Restrictive Trade Practices Act as the exemption in it relates to the relations of the co-operative with its own members. However, a statutory instrument will be used to extend the Fair Trading Act which deals more generally with competition to milk marketing. As I said, that will enable the Director-General of Fair Trading to refer bulk milk marketing arrangements for investigation by the Monopolies and Mergers Commission.
My noble friend Lord Mackay spoke about the proposals for the Scottish boards. The Government have pursued a voluntary approach to the reform of

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milk marketing whereby the boards have submitted proposals for change. The Government have not imposed any particular solution on the boards. They are the boards' own proposals.
My noble friend also asked whether there will be three voluntary co-operatives in Scotland and questioned the effect of that on small producers. All three Scottish boards have produced proposals for converting themselves into voluntary co-operatives. Producers will be free to join the co-operatives and sell direct to dairy companies. It will be open to producers in one board area to sign up with any other co-operative. My noble friend Lord Forbes rightly drew attention to that kind of healthy competition. Currently, the Aberdeen board is supplying milk for the liquid market to Wiseman Dairies which is in the Scottish board area. Once again, remote producers could band together to market milk and supply their local market. Indeed, most creameries are in the more remote areas. The boards propose that the co-operatives must take all milk offered to them. At the same time, processors will be competing for that same supply of milk.
My noble friend Lord Forbes said that the three Scottish boards need to know now what will be acceptable to Ministers in terms of distribution of assets. He said that they will certainly need to know before Committee stage. Ministers are well aware of the anxieties of the boards as regards the different proposals for distribution of assets. My right honourable friend the Secretary of State for Scotland continues his discussions with the boards on a number of aspects of their proposals, including the distribution of assets. Ministers will need to ensure that any reorganisation scheme makes reasonable provision for distribution of assets before approving it.
The noble Lord, Lord John-Mackie, asked why the Bill is so complex in the language used; for example, in Clause 19. The reason for setting out matters in detail is the same here as with other Bills; namely, so that those affected know their exact rights and duties. The reason for specific provisions on the service of documents is that the procedure for the approval of schemes involves a number of provisions with time limits; for example, suggested modifications. A provision showing exactly how documents are to be served puts beyond doubt whether the time limits have or have not been observed.
I turn now to Part II. The noble Lord, Lord Carter, asked why we should have to wind up the PMB. I remind the noble Lord that the Bill contains enabling powers only, should Ministers decide it is necessary or desirable to end the scheme. The point is that the Bill would enable us to wind up the board constructively and provide for a successor to the PMB. We could not do that under the European Communities Act which is the only other route currently available.
The noble Baroness, Lady Robson, asked why we need to take those powers now. Presently Ministers have no power to revoke the scheme should they need to do so. The Bill merely provides a convenient opportunity to take such powers.
I should say to my noble friend Lady Carnegy that this is not exclusively linked with a possible EC
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regime. However, the likelihood is that the central elements of the potato marketing scheme would be incompatible with any EC regime. In that situation those powers would allow us to comply with EC requirements but importantly provide that the PMB's assets are passed to a successor body of the PMB for such activities as research and development.
The noble Lord, Lord Geraint, questioned whether the PMB had been consulted about the Bill. It has been kept informed about the contents of the Bill in so far as it relates to it.
My noble friend Lord Wade suggested that the Government should come back to Parliament. We could undertake to consider that; for example, a triggering order could be made subject to the negative procedure. There is a strong possibility that the abolition of the board will become unavoidable because of an EC potato regime.
I am delighted that so many noble Lords welcome Part III of the Bill and the provisions for marketing grants. The noble Lord, Lord Carter, asked about the Government's plans for future marketing grants and the order of magnitude for expenditure. It is not yet possible to say what form a future scheme will take. Consideration will be given to that in the light of the operation of the group marketing grant as it develops; it has, of course, only been running for a few months. A future scheme is not expected to have new implications for public expenditure. Currently around £5.4 million is allocated to the group marketing grant over a three-year period.
The noble Baroness, Lady Robson, expressed the view that the group marketing grant had been less than efficient and that the new scheme needed to be properly regulated and funded. I am concerned about her comments. As I said, the scheme has only been running since April and should the noble Baroness or anyone else have any comments on its operation we shall be happy to look at those in detail.
The noble Lord, Lord Carter, asked about development councils and what might be the appropriate time for the industry to come forward with proposals. Perhaps I can say that as soon as the Bill receives Royal Assent, the Government will be favourably disposed to receive any proposals that the industry may choose to make. The noble Baroness, Lady Robson, wanted an assurance that a develop-ment council would indeed be set up. The procedures in the 1947 Act must be followed, but I repeat that the Government are favourably disposed.
My noble friend Lord Mackay of Ardbrecknish asked whether, after ending the wool guarantee, the UK wool industry would be able to compete freely with wool produced elsewhere in the world. UK wool represents around 2.5 per cent. of the world production and also competes with a significant volume of imported wool at free auction markets in the United Kingdom. The termination of the wool guarantee will not affect that arrangement.
My noble friend asked also whether the ending of the guarantee would lead to wool being off-loaded on to the market. The Bill provides that wool already collected by the British Wool Marketing Board in 1992 and previous clip years will continue to qualify

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for the guarantee provided it is sold before 1st May 1995. That will assure the board of a sensible and workable timetable for the sale of the wool without disruption to its traditional marketing patterns. It will also provide a clear and precise end date for its exchequer liability.
The noble Lord, Lord Geraint, made the point that wool producers are also suffering delay in payments for their wool. Decisions on payment arrangements are a matter for the British Wool Marketing Board, which is an independent statutory body. The Government's decision to end the guarantee was announced in 1988. After the guarantee is ended the prices paid to producers will not be known until after the year end. In recent years the board has taken steps to prepare for post-guarantee conditions. Those include the introduction of a two-stage payment system.
The noble Lord feels also that the wool guarantee should not be ended, given the impact it will have on producer incomes, particularly in the hills. The total return from wool amounts to only around 5 per cent. of the total producer returns. Sheep farmers will continue to receive substantial government support through the new premium and hill livestock compensatory allowance. UK producers currently benefit from over £400 million in direct subsidies from those sources.
The noble Lord, Lord Carter, expressed regret that the annual review was coming to an end and asked whether the Government could give an assurance that they will continue to collect and publish statistics. I can assure him that they will do so. The noble Baroness, Lady Robson, felt that we should continue to have an annual debate on agriculture and that therefore the abolition of the annual review was inappropriate. Parliament no longer debates the annual review. However, the EC price proposals and eventual agreements are debated, and it is perfectly in order for any noble Lord to table a general debate on agriculture at any time.
Looking at the Bill as a whole there are many issues which I am sure noble Lords will wish to explore during the Committee and later stages. I trust that I shall be forgiven for not covering every point raised in the debate. It only remains for me once again to thank all noble Lords who have taken part. I beg to move.
On Question, Bill read a Second time, and committed to a Committee of the Whole House.

Food Protection (Emergency Prohibitions) (Lead in Ducks and Geese) (England) Order 1992
7.25 p.m.
Earl Howe Earl Howe rose to move, That the order laid before the House on 2nd November be approved [11th Report from the Joint Committee].
The noble Earl said: My Lords, this order was made once it became clear to us that there were no other means by which we could ensure that geese and
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ducks containing extremely high levels of lead on a holding in Billingsley, Bridgnorth, would not be put into the public food supply.
The background is that a private veterinary surgeon was consulted by the farmer of the holding following unexplained illness and death among his flocks of some 78 geese and 300 ducks. The veterinary surgeon sent one of the geese to the Ministry's veterinary investigation centre at Shrewsbury for a diagnosis. A post-mortem revealed that the liver of the goose contained almost 200 parts per million of lead. Noble Lords may find it helpful to know that that compares with the general statutory limit for lead in food of one part per million.
Staff from the state veterinary service visited the farm straightaway and discovered significant numbers of ducks and geese displaying clinical symptoms of lead poisoning. Indeed, lead pellets were actually discovered in the gizzards of some of the birds examined. The farmer concerned confirmed that his land lay in the path of a now defunct clay pigeon shoot. It was clear that affected ducks and geese had become ill as a result of picking up quantities of spent shot while feeding. Further samples taken from among affected birds revealed lead concentrations in liver and kidneys ranging from 100 to almost 400 parts per million.
It was clear to us that affected birds should not be put into the food chain—a view supported by the Department of Health. My officials therefore informed the local environmental health department of Bridgnorth District Council and went back to the farm to see whether the farmer would give his voluntary agreement to withhold affected birds from public supply. During the course of that visit, officials were also able to ascertain from the farmer that he had sold no ducks or geese for some months prior to the current incident. Inspection of the farmer's sales records confirmed that point.
In considering what action to take, the Ministry had three objectives. First and foremost, we were absolutely committed to ensuring that consumers were not exposed to food derived from contaminated birds. Our second objective was to provide advice on the welfare aspects of the case. And thirdly, we wished to do whatever we could to mitigate the effects of any marketing restrictions on the farmer's business.
Officials put it to the farmer that all birds not displaying clinical symptoms should immediately be moved off, and kept away from, the contaminated land. Those could then be considered for release into the food chain once they had spent a month on clean land and provided that they remained healthy during that time. An alternative suggestion was that all the internal organs from such birds should be removed as a pre-requisite for sale, obviating the need to move the birds to clean land. Ministry veterinary staff also told the farmer and his own veterinary surgeon that there was little possibility that birds displaying clinical symptoms of lead poisoning would recover. The advice given was that they should be humanely destroyed on welfare grounds.
I regret to say that the farmer felt unable to accept those options or the advice offered. Moreover, he

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strongly implied that he intended to market birds from the affected flocks. In those circumstances, we had no option but to introduce statutory measures to ensure that consumers were not put at risk. An order made under Part I of the Food and Environment Protection Act 1985, banning the movement off the affected holding of ducks and geese, plus any food or feed products made from those birds, was brought into force on 31st October.
I recognise, and am sympathetic to, the serious financial impact which that incident has had on the farmer concerned. We went to considerable lengths to try to mitigate the worst effects. But once the farmer had refused to co-operate in voluntary arrangements to protect consumers, we were left with no alternative but to take statutory action. The department is continuing to keep in close touch with the farmer in order to monitor developments and to provide welfare advice. We also stand ready to consider any management options, both for the short and longer term, and prospects for selling unaffected birds. We shall also be looking to lift our food protection restrictions just as soon as we can safely do so without compromising the safety of consumers. I commend the order to the House.
Moved, That the order laid before the House on 2nd November be approved [11th Report from the Joint Committee].—(Earl Howe.)
Lord Carter: My Lords, the House will be grateful to the Minister for explaining the order so well. In view of the time we spent on the Agriculture Bill, I propose only to say that I understand that each time this matter arises—there is more than one clay pigeon shoot in the country—the Government will have to bring forward an order. For once that favours the negative resolution procedure to save the time of the House.
Earl Howe: My Lords, it depends whether in future incidents the farmer concerned complies voluntarily with the measures currently in force. The point here is that he was not prepared to do so.
On Question, Motion agreed to.

The Caribbean
7.30 p.m.
Baroness Young Baroness Young rose to ask Her Majesty's Government what action they are taking to secure the long-term political and economic future of the Caribbean.
The noble Baroness said: My Lords, I am very glad to have this opportunity this evening to introduce an Unstarred Question on the Caribbean. I had the good fortune, when an FCO Minister, to have ministerial responsibility for the Caribbean and, after many visits, came to know something about the region and to have made a number of friends. Since leaving office I have been a vice-president of the West Indian Commission and have maintained my interest.
Perhaps I may say right at the beginning how delighted I am that so many of your Lordships are
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taking part in this Unstarred Question this evening. We all of us look forward particularly to hearing the maiden speech of the noble Lord, Lord Glenconner.
This is the first time that the Caribbean has been debated in your Lordships' House, yet it is an area which has strong links with the United Kingdom through the Commonwealth. through its ties of history—for the Caribbean, despite other claims, was known as "the jewel in the crown"—ties of trade and, more recently, the fact that thousands of people from the Caribbean have come to live and work in the United Kingdom. With the English speaking Caribbean we share a common language, a common belief in democracy and the rule of law. There are still five dependent territories in the Caribbean—and after all, we all play cricket!
I want to talk today not only about the English speaking Caribbean, but about the wider area of the Caribbean where great changes are taking place. We should not forget that 62 per cent. of the people of the region speak Spanish; 20 per cent. speak French; 17 per cent. speak English and 1 per cent. speak Dutch. So when I refer to the Caribbean I mean all the islands, as well as Belize, Surinam, Guyana and French Guiana. In the longer term the American definition of the Caribbean basin, which also includes all the central American republics, may be more appropriate.
I believe that the debate comes at the right time. First, there is a real danger that the Caribbean will be marginalised. The ending of the Cold War has meant the disappearance of the strategic pressures on the United States Government to involve themselves in the Caribbean. At the same time, world attention has been focused on the future of Russia and the other republics of the former Soviet Union; of Eastern Europe, Yugoslavia and the Middle East. Thus, because the Caribbean does not make the headlines the danger is that it will be forgotten. Yet the Caribbean has the capacity to produce the unexpected crisis —Grenada, for example.
There is the problem of the very small size of many of the states. Within the English speaking Caribbean there are nine independent countries which have populations considerably less than a million people. There is the instability of Haiti, and who knows what lies in store for Cuba? Those are political concerns. Overhanging all the Caribbean are the obvious dangers of the drug trade. Drug traffickers use the Caribbean islands as staging posts.
The second reason for the timeliness of the debate is the fact that the Caribbean is changing rapidly. Over the region as a whole there has been a spread of democracy, deregulation and trade liberalisation. For example, nobody can visit Puerto Rico without being impressed by its enormous economic growth and prosperity. In my view it compares, in terms of economic success, with the countries of the Pacific rim. Not everyone realises that United Kingdom trade is increasing faster with the Dominican Republic than with anywhere else in the region. We also have to recognise that, however it occurs, change in Cuba will bring about a significant shift in the balance of economic activity within the Caribbean region. It will

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almost certainly lead to a reassertion of Hispanic identity, thereby marginalising within the Caribbean itself much of the English speaking Caribbean. At the same time, all the countries of the Caribbean will be affected by the two great trading blocks—that is to say, the North American free trade area (soon to be a reality) and the European Community.
The third reason why the debate is timely is that I believe that there is an important message that friends of the English speaking Caribbean need to make. It is this: if the United Kingdom has found it essential to join the European Community and to stay with it, however stony the path may be at times, how much more important is it that the countries of the English speaking Caribbean should move economically and politically closer together and that all of them should move closer together to the wider Caribbean.
I turn first to the English speaking Caribbean because that is the part where we have the closest ties and with which people are most familiar. I touch on four issues. First, the five remaining dependent territories as they are a direct responsibility of the British Government. I believe that although all five territories wish to retain their present status, they seek a more advanced relationship with the British Government who recognise that each country has an elected legislature and Ministers. I therefore welcome the initiatives of the British Government in reviewing their policy towards the dependent territories.
As I understand them, the key to the proposals is the need to support good government. That means increased diplomatic support for governors, support for the police and customs services, as well as the regulation of offshore finance. Those policies must be right as all five territories depend on offshore finance and tourism for their economic prosperity.
The Ministerial board of management, chaired by my honourable friend in another place, Mr Lennox-Boyd, will ensure greater co-operation in Whitehall of all departments and agencies with an interest in the Caribbean, and all will be represented in it. A new secretariat will co-ordinate all official funding. If that leads to better use of what money is available, then so much the better.
There is not time to do justice to all the proposals, but I am concerned that there may well be confusion over the role of governors and the management board; and more importantly, whether the dependent territories will feel that their aspirations of direct dialogue with the British Government are being met. They would like one Minister to be responsible for all the political, aid and trade relations with the dependent territories. It will be helpful if my noble friend can say something on that particular matter. They would like a relationship based on partnership. The dependent territories are not sure that their concerns about their relationship with the European Community will be met, let alone that with their regional neighbours.
Turning now to the independent countries of the English speaking Caribbean, I should like to touch on three issues. The first is the outcome of the West Indian Commission chaired by Sir Shridath Ramphal.
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The commission was set up in 1990, fundamentally because I believe CARICOM, established in 1973, had been widely criticised even in the Caribbean, for its lack of dynamism. CARICOM was intended to promote economic integration, the more efficient operation of common services and, eventually, closer foreign policy co-ordination among its 13 member states, all members of the Commonwealth.
The West Indian Commission was set up to advance the goals of CARICOM through a process of consultation. Its interim report was published in July 1991, but recently there has been a special meeting held at the end of October to consider it in detail. The report contains about 200 recommendations covering a wide range of measures on economic, political, commercial and social fronts. The main recommendation is the establishment of a CARICOM commission by 1st January 1993, comprising a President and two commissioners with powers comparable to those of the EC Commission. Its main tasks would be to further the process of integration among CARICOM members and to develop relations between CARICOM and the wider community of Caribbean countries.
However, I understand that although the majority of the decisions were welcomed by CARICOM heads of government, the main recommendation to set up a CARICOM commission was not accepted. Instead the heads of government opted for a CARICOM bureau with,
"competence to initiate proposals, update consensus, mobilise action, and secure the implementation of the CARICOM decisions in an informed and expeditious manner".
The communiqué from the fifth Europe/Caribbean conference held some two weeks ago in Curacao said that many delegates were disappointed at this outcome and doubted whether it would prove to be an effective alternative to the proposed commission. This seems to me to be a very serious matter and a most unfortunate outcome to the West Indian Commission's deliberations. I wonder whether there is anything that we in this country can do to help this essential process of integration.
No one today can speak about the Caribbean without saying something about bananas, an issue particularly important to the Windward Islands, Jamaica and Belize. The problem is easy to state, but difficult to solve. Broadly speaking, after 1st January 1993 the European Community must introduce a single market for bananas. This requirement runs counter to its obligations under the Lomé Convention. African, Caribbean and Pacific producers of bananas believe that they are just as efficient as dollar producers. Nevertheless, largely for geographical reasons—the countries are small and mountainous—their price is higher. There is therefore a real danger that ACP bananas will be driven out of the EC market post-1992.
We may well ask: does that matter? I believe that it does because bananas are a special crop which has been the engine for economic growth in the Caribbean as well as essential for political stability. Were that source of strength to be taken away it is difficult to see what legitimate business could be put in its place. We are left with the insidious drug trade. Furthermore, if

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the trade in bananas fails the cost to the UK and the EC in aid will increase dramatically. The seriousness of the situation cannot be overstressed. I believe fundamentally that this is a political issue rather than an economic one.
I appreciate that this is a very delicate moment in the negotiations on this matter, particularly given the outcome of the Council of Agriculture Ministers last week, and the developments on GATT. However, it would be most helpful if my noble friend the Minister could give us any information about the current position. It would be particularly helpful to hear that the British Government's commitment to the Caribbean producers of bananas remains as firm as it has been in the past. Perhaps I might add that the concern of the Caribbean banana industry is that there is virtually no time left to establish a managed market before 1st January 1993. There is a growing likelihood that, with the absence of Customs posts and barriers within the single market, dollar fruit will be dumped after that date in previously managed markets such as the United Kingdom. These are very real concerns and anything that my noble friend can say on the matter will be most welcome.
Before turning to the wider Caribbean, I should like to say a word about aid. There is, I understand, a review taking place on aid policy generally. The philosophy behind it is that aid should go to the poorest countries. I think that this is a point which we can all appreciate, but it means that the Caribbean's case is not as strong as it might otherwise be. Perhaps I may, therefore, make the following points. First, we have spent a lot of time encouraging Guyana towards democracy and have used our aid budget as a stick. If we are not able to continue to give aid to support the new government, what message will that convey about our seriousness about democracy and the rule of law?
Secondly, there is a pressing case for a private sector aid window. If we believe that the private sector both here in the United Kingdom and in the EC is the principal motor for growth—I think that the Government believe that, and I do —we should develop strategies which recognise the importance of the private sector and which are operated not through governments but through private sector institutions.
Finally, we need to find simpler ways to ensure that our aid programmes reach those for whom they are intended. Much, for example, is spent on a never-ending stream of consultants. If this is necessary, could we not consider placing more consultancy work with Caribbean firms?
turn now to Britain's relations with the wider Caribbean. Quite understandably, the Government's concern has been to put in place a framework for good government in the dependent territories. But we should not lose sight of the fact that we need a forward-looking strategy towards the larger and wealthier countries of the Caribbean. These relation-ships will, I believe, be predominantly based on trade and investment. I have already referred to the shift in power which will come from the opening up of Cuba, but we need to look at our relations particularly with Jamaica, Puerto Rico and the Dominican Republic. The wider Caribbean constitutes a market of around
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50 million people, almost the same size as the United Kingdom and, incidentally, larger I believe than many of the markets of Eastern Europe. Our trade particularly with the non-British Caribbean has grown. Puerto Rico is our fastest growing investment market and has an annual import bill of £8 billion. The Dominican Republic is our fastest growing export and tourist market. From the British point of view the danger is that we could lose our traditional markets without getting the benefit from growth in the non-traditional markets.
There could be a serious negative effect on the English-speaking Caribbean countries as the Hispanic influence grows stronger. This will almost certainly lead to closer trading linkages between the larger economies of the Western Caribbean and the United States. What should the British Government's attitude to all this be, and what, if anything, could they do? Would it not be possible to look again at our diplomatic and commercial representation in the area? Of course, there are constraints on resources and I recognise the importance of the dependent territories and our ties with members of the Commonwealth. However, unless the whole area prospers, smaller islands could become politically unstable.
It is therefore disappointing to have only one second secretary dealing with commercial work in the whole region and no resident representation in the Dominican Republic or Puerto Rico. We rely on two excellent honorary consuls, to whom I should like to pay tribute, Mrs. Maureen Tejeda in the Dominican Republic, and Mr. Ian Court in Puerto Rico. I am not suggesting that we should pare down further our diplomatic representation in the English speaking Caribbean, but we should look at our longer-term needs well into the 21st century. This may mean, for example, locating a smaller number of "superposts" in two or three locations in the region, with staff able to travel to those countries where previously there have been resident missions. Another suggestion is that we should have more commercial representation within the region. If that happened—and certainly if we had a permanent representative in Puerto Rico—we could encourage more British investment in the Caribbean.
I should also like to see greater co-operation between the private sector and the Government, and between the private sector in the Caribbean and that in the United Kingdom. We need to help the Caribbean to export principally in non-traditional exports, particularly by programmes designed to encourage the penetration of the European Community market. We need to link up small businesses in the Caribbean with businesses started in the United Kingdom by Caribbean immigrants. An overall strategy for the region could encompass these points.
Finally, we should consider what help we can give to the Caribbean's relations with the European Community. We should be under no illusions: Europe has few, if any, long-term reasons to care about the Caribbean unless the countries of the Caribbean themselves and their friends in the EC can find reasons for doing so.
I have already referred to the problem of bananas but the time will come, if it is not already here, when GATT and NAFTA end the existing preferences from the Caribbean.
Then there is the Caribbean's relations with NAFTA as well as Mexico. When NAFTA is a reality it is likely that the establishment of free trade agreements with individual Latin American and central American states will erode the preferential advantages of the Caribbean basin initiative. In all these matters I believe that we should develop policies that actively deepen and widen Caribbean regional integration.
Time, I fear, does not allow me to talk on many other issues which are of great importance to the area. Everyone would like to see a peaceful transition of Cuba to democracy. But will this happen, and can we and our EC partners help that to come about? Should we not, if we are not already doing so, encourage a dialogue between Cuba and the United States?
I hope that I have said enough to show that the future of the Caribbean matters to us as a country. Our first priority must be to the dependent territories and I welcome the initiative that has been taken even though I, and I believe chief Ministers, have some reservations about it. But there is also a pressing case to have a broad strategic policy for the whole area which looks forward to the 21st century, particularly towards the larger and more prosperous of the non-English speaking Caribbean. This requires, too, the whole area to see where it is going, and that is why I believe that we need to do all that we can to help the widening and deepening of the integration process.
The Caribbean should not remain isolated from all the great changes taking place in the world. What is important is that it should not be forgotten that its voice should be heard in Europe and the United States and that the Caribbean should have the opportunity to take advantage of the great changes going on to bring about greater prosperity for its people and with it the strengthening of democracy.
7.52 p.m.
Lord Pitt of Hampstead: My Lords, we are all grateful to the noble Baroness for asking this Question. She has become an honorary West Indian and we are proud to welcome her to our midst. We are grateful to her for the part she plays in exposing our causes.
I intend to spend most of my speech dealing with bananas, and I make no apology for doing so because it is the government's immediate task to prevent the economic destruction—I use those words advisedly—of the Windward Islands. They can only do so by preserving a market for their bananas. The banana industry is the life blood of the islands. I shall give the House one or two figures to show what I mean.
Bananas provide 70 per cent. of the export earnings of Dominica, and 30 per cent. of Dominica's workforce is employed in the industry—one person in three. Bananas provide 60 per cent. of the export earnings of St. Lucia, and 38 per cent. of St Lucia's national income. Bananas also provide 40 per cent. of
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the export earnings of St. Vincent. Noble Lords can see the importance of the industry to the life of those areas. The banana industry is fundamental to the social and political stability of the islands.
The arrival of the single European market on 1st January 1993 threatens the complete destruction of the banana industry in the islands unless they can be provided with a secure market within Europe comparable to the secure market they now enjoy in the United Kingdom. In theory they have secured that through the Lomé Convention. It strengthened the protection they enjoyed as traditional suppliers to the United Kingdom market which was safeguarded under Article 115 of the Treaty of Rome when the United Kingdom joined the European Community. In theory the protection is there but it is not quite as straightforward as that.
The Commission has been grappling with the problem for the past four years. The task has been difficult because the Community has to balance its obligation to the ACP suppliers under the Lomé Convention with its obligation to its own producers, to its customers, and, internationally, under the GATT. The Commission has recommended a quota system which would be acceptable to the Caribbean banana producers. However, as the noble Baroness pointed out, a recent meeting of the Council of Ministers failed to agree to those proposals and there were no alternative proposals. There is therefore a real danger that if there is no arrangement for a managed market in bananas, on 1st January there will be dumping of dollar bananas. Caribbean bananas will be unable to compete and this could lead to the eventual demise of the Caribbean banana industry and a dramatic deterioration in the social and economic fabric of a number of Caribbean nations.
The Caribbean banana industry is in no position to compete with dollar bananas from central America. The physical limitations of the islands with their small size and difficult terrain inhibit their ability to compete internationally in agriculture, whether in bananas or other crops. That is a fact. Agriculture is generally rain fed because irrigation would not only be extremely expensive but virtually impossible. As a result, land productivity or yield per acre is comparatively low—about 8 to 12 tonnes per acre compared with the 18 to 24 tonnes per acre of the large flat plains and rich alluvial soils of central America.
Moreover, the vast majority of producers are small farmers. There are 23,000 growers in the Windward Islands whereas the industry in central America is based on large plantations, often owned by multi-nationals. The costs of inputs are much higher due to smaller volumes, whereas the costs of inputs of the dollar bananas are low because of larger volumes. The shipping costs are generally higher in the Caribbean, again because of smaller volumes. Thus the dollar suppliers can achieve economies of scale that could never be reached by the Caribbean. That does not relate to bananas only. It is true for most of the crops that the Caribbean Islands have attempted to grow.
Agriculture in the West Indies has always been export-orientated. Before bananas were introduced as

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an export crop, the islands exported mainly sugar. However, at various times export crops such as cocoa, nutmeg, copra, arrowroot, citrus fruits and cotton were tried. However, except for cocoa and nutmeg which have survived in Grenada, the other crops were largely unsuccessful and gradually declined in importance. Even sugar, the principal export for many years, suffered a major decline with the introduction of beet sugar in Europe. Increasing supplies of and competition from beet sugar forced down prices and placed the Caribbean sugar industry under tremendous pressure. It was difficult for the Windward Islands to compete internationally because they had also to compete with the rest of the Caribbean. All the Caribbean islands, from Jamaica down to British Guyana, were producing sugar, and they were major sugar producers as compared with the Windward Islands.
I shall give your Lordships a little history because it is important to understand the position vis-à-vis these islands and bananas. In the early 1950s the position became difficult. It was essential to find another crop to save the islands from economic decline and to avert social unrest. The Windward Islands at that time had no valid alternative outside agriculture. There were no other industries such as mining or manufacturing, and tourism was in its infancy. What was required was another export crop to replace sugar in magnitude and economic importance, and to absorb the relatively large and growing rural population. Bananas fitted the bill perfectly. Not only was it relatively easy to shift to bananas on the sugar cane fields, but banana cultivation was a much greater attraction to the growing numbers of small peasant farmers than ever sugar was. Cultivation practices could easily be adapted to small farm conditions.
Indeed, the banana is the perfect cash crop for the small farmer. It is non-seasonal and through the Ratoon process it has a continuous cropping system which provides a weekly or fortnightly harvest. That means that it provides a regular source of income throughout the year for the small, self-employed farmer. The small farmer thus became very important to the agricultural sector and to the islands' economy generally because, in addition to his traditional role as a producer of food for domestic consumption, he had now entered into production for the export market. Thus the small farmer became important.
The Caribbean banana industry has steadily improved the quality of its fruit. It is fair to say that while the bananas cannot compete on price, they can, on average, compete on quality. It is therefore essential that the United Kingdom (which now holds the EC presidency) should use all its influence to secure an agreement during the next five weeks. I say that advisedly because the Danish Minister is one of those expressing doubts about the Commission's proposals. It is rumoured that the Danish presidency will probably recommend a 20 per cent. tariff on bananas as a means of dealing with the issue. I can assure your Lordships that that would lead to the demise of the Caribbean banana industry, because the
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Central Americans will flood the market with dollar bananas and, when they have driven the Caribbean bananas from the market, will raise prices.
I have concentrated on the banana issue because of the danger to the Windward Islands and frankly because it is an issue upon which Her Majesty's Government are apprised of the consequences of failure. They are fighting hard for the Caribbean. We in Parliament must give them every support. I hope that when the Minister replies she will he able to assure the House that bananas from the Caribbean will have their EC markets secured before the British presidency expires on 31st December.
As I have said, I have spoken mostly about bananas; but there are many other issues. If the House will permit me, I shall take another three or four minutes to mention them. There is the issue of sugar. That is not in the same position as bananas because it is covered by a protocol of indefinite duration. The price of cane sugar is tied to the price paid for beet sugar under the CAP, and there are proposals for changes to the CAP which will have the effect of reducing the price paid for beet sugar and consequently cane sugar. In any case, even if that were not happening, the GATT negotiations will probably bring about a reduction in the price paid for sugar.
Rum will compensate to some extent. Rum producers should benefit from a new protocol; but here too there are problems, including that of EC quotas up to 1996 being agreed in a manner which reflects the letter and intent of the Lomé rum protocol. There is also an inbuilt tariff advantage for rum from Guadeloupe and Martinique (which are French departments); but they are minor problems compared to those of bananas.
There is then the tourist industry. There are problems for British West Indian Airways in its struggle with British Airways over Caribbean routes. I have been asked to raise the issue of direct flights to Grenada by British West Indian Airways. The Grenadian Government are anxious that they should take place, but I am told that British Airways is objecting on the grounds that there are insufficient passengers; and that even if there were sufficient passengers, it is in a position to meet the need. I hope that the Government will recognise the value of allowing both carriers to operate once weekly flights direct to Grenada. That provides the customers with choice not just in respect of carriers but airports, because British West Indian Airways flies from Heathrow and British Airways flies from Gatwick.
More important in terms of tourism, is the infrastructure. I hope that the Government will take on board the need to give help to the islands with the development of their infrastructure which is essential for a successful tourist industry. I merely have to compare what I saw in Bermuda with what I know of Grenada. The infrastructure of one compared with that of the other is chalk and cheese. For a successful tourist industry, infrastructure is essential and I hope that the Government will take that on board.
I wish to raise an important matter affecting the West Indian community in this country. When they retire, many West Indians wish to end their days in the

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Caribbean. If they do so, their pensions are frozen and the pensions they take with them remain the same—pensions do not increase with inflation. So the pensions gradually lose their value. But the sum involved is not large and the pensioners will have paid for that already through taxes and national insurance contributions. The pensioners receive the increase if they remain in this country. It would be a good gesture to the community to change the policy and allow pensions which are carried abroad to be increased in line with inflation, as if they had been paid in this country. Moreover, the country to which the pensioners retire will have higher inflation than this country. Therefore, as I say, the pension will gradually reduce in value and in terms of its ability to keep the pensioners. I know that the Minister cannot commit the Government on such matters which are not within her portfolio.
However, I can raise one matter which is in her portfolio. I believe that the Government can support the movement towards unity in the Caribbean through the Government's aid policy. The noble Baroness, Lady Young, mentioned that. That is very much in the hands of the Minister. I hope that when she replies she will be able to tell me that she has taken on board much of what the noble Baroness, Lady Young, said. Those matters are important to the Caribbean.
I cannot ask the Minister to commit the Government on issues which must be decided at the highest level. However, one of the biggest contributions the Government can make to the Caribbean is to use the close association and special relationship with the United States to bring about a rapprochement between the United States and Cuba. I await the Minister's reply with (shall I say?) expectation and anxiety.
8.13 p.m.
Lord Glenconner: My Lords, may I first thank and heartily commend the noble Baroness, Lady Young, for introducing this crucial debate on Caribbean affairs. I can do little better than to echo what the House has heard from my noble friend Lord Pitt of Hampstead. The debate comes at a time when dark clouds are gathering over the Caribbean and there is an indication of a storm far more severe than any natural hurricane, far more devastating than hurricanes Alan, Andrew, Hugo and Gilbert put together.
I am a natural backwoodsman and, as the noble Lord, Lord Pitt, said, my parish is the Windward Islands, particularly St. Vincent and the Grenadines and St. Lucia. When I spoke last week to my right honourable friends the Prime Ministers of St. Vincent and St. Lucia, the Right Honourable James Mitchell and the Right Honourable John Compton, their message to your Lordships was unanimous and clear: "Save the banana". The message could have been shorter: "SOS".
During the period that I have been out in the Caribbean, I have seen traditional crops one by one wither away. Believe me, at present there is no
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alternative to the banana, quite apart from the fact that in an area that is subject to hurricanes, the banana is one of the few crops that offer hope of recovery. As it has only a nine-month cycle, in theory it can be planted and produce another crop within the hurricane season, within a year. It gives the Caribbean—which is subject to the hurricanes, unlike Central America —an opportunity to recover which it would otherwise not have.
As my noble friend remarked, I have been witness to the demise, one by one, of all the traditional crops. First, there was sugar cane which was seen off by sugar beet. Then there was cotton which bowed to synthetics. This afternoon, I am wearing a shirt which is the last of its kind. It was spun in 1961 from the last crop in Mustique of the noble strain V135, the West Indian sea island cotton. It is now extinct, as is the sugar industry in St. Lucia and as is virtually the arrowroot industry in St. Vincent, due to synthetics.
Now, once again, we see possibly the last viable crop in the West Indies under threat. The banana boat will have to be steered very carefully to go between the Scylla and Charybdis of GATT and the EC—on the one hand tariffs and on the other hand free trade. As the noble Lord, Lord Pitt, pointed out, neither of those will be the answer for the eastern Caribbean. The only hope is to navigate through this narrow strait and with the help of Her Majesty's Government arrive back in the calm waters of Lomé IV and a managed market, as was promised, until the year 2002.
We all sympathise greatly with the rapeseed growers in France and the miners here in England whose plight is none of their fault. However, with the greatest respect, perhaps I may say that for them there is a safety net. I hope that they will never have to use it, to that extent, but their safety net is that they live in a welfare state where there will be compensations and opportunities for retraining. In a welfare state one can count on not becoming destitute. But that is not the case in the Windward Islands. Many people are already unemployed, but there is no unemployment benefit. There are no sickness benefits unless people are already in employment, no maternity grants, no child benefits. The countries simply cannot afford them.
In this gentler, caring age that four small, young, third world countries can be deliberately devastated so that perhaps they may later qualify for aid is senseless. It seems to me to be little else than a case of absentee colonialism—the worst possible kind of colonialism where decisions are made thousands of miles away without reference or without compensation.
We are not speaking about banana republics—your regular fly-by-night banana republics—but about banana kingdoms because in these countries Her Majesty the Queen is Head of State. Her Majesty the Queen has not forgotten these islands and nor have members of her family. She pays regular visits there. These kingdoms have belonged to England at least since 1783 with the Treaty of Versailles, as was confirmed in 1815. These people are not some remote tribe, they are our relations. That has been pointed out this evening. More than one million of their kith and kin from the Caribbean have come to England since

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the war and have become British citizens leaving behind the auntie Erolines and uncle Winsberts with the old quean in Kingstown looking after the grandchildren. They are our relations and many of them are worthy people who have grown up in the Caribbean since their childhood.
In St. Lucia alone, with a population of 140,000, in the past 13 years there have been two Nobel prizewinners, that is Sir Allen Lewis the economist, and this year the great epic poet, Derek Walcott. These people treasure their independence which was only won 10 years ago. They have every confidence that Her Majesty's Government will find a way of steering them through these difficult waters. I am sure it will be your Lordships' wish that that should happen.
I should like to say a few final words on quite another subject. If Her Majesty's Government are wondering what to give the Windwards for Christmas—"a little present for de Christmas!"—I hope I may suggest the following. In 1978–79, when these territories became independent they were promised a golden handshake of £10 million. Some £5 million of that was a grant and £5 million, not yet all paid, was a loan. If Her Majesty's Government wish to give a delightful surprise to that area they could perhaps convert that loan into a grant and relieve those hard-pressed governments who have to find out of their own resources the money to pay for administration, schools, doctors and other things which were previously paid for by grant-in-aid. This is not a large sum of money and it amounts perhaps to 50p per head of the population. However, in these very difficult times it would be a wonderful present to those patient, undemanding and loyal friends.
8.24 p.m.
Lord Greenhill of Harrow: My Lords, on behalf of this House I congratulate the noble Lord, Lord Glenconner, on his maiden speech. I do so most warmly. He speaks with great authority and has made many points which we shall want to turn over in our minds, including many points we did not know previously. We have, if I may say so, waited a long time to hear the noble Lord's maiden speech. I think we all agree that the speech was worth waiting for. We hope very much that he will not wait a further decade before giving us the advantage and pleasure of hearing him speak again, and not necessarily on this subject only.
Others will join with me in thanking the noble Baroness, Lady Young, for focusing our attention on the Caribbean. I know from my own experience that she has been one of the few Foreign and Commonwealth Office Ministers who has consistently taken an interest in this area. The noble Baroness, Lady Chalker of Wallasey, knows that I do not include her in that mild reproach.
I cannot pretend that I have any specialised knowledge of the Caribbean, but it is plain for anyone to see that the people in the area find themselves, as we all do, in a new world. They are suspended between three continents and those who once took an interest in them no longer feel a need to do so. Professor
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Hennessy, of Warwick University, an expert on the affairs of the area, in a letter he kindly sent me, succinctly summed it all up when he stated:
"The Caribbean is probably at the most critical moment in its history with the impact of the North American Free Trade area and the European Community, the uncertainties of the GATT and the question mark over Cuba".
He is quite right. Each one of the problems mentioned by the professor is difficult enough. The question which we in this country must ask ourselves is: can we make some contribution to their solution? We are certainly under a strong obligation to try to do so and this obligation will continue for many years into the future.
As others have said, our connection with the West Indies has existed for several hundred years. It has been enhanced by the influx of their people into this country sharing our language and religion, and incidentally vastly strengthening our athletic resources. Sometimes our connection has been cruel and harmful; at other times it has been mutually beneficial. Fortunes have been made by some of our fellow countrymen and British enterprises in sugar and fruit have prospered to the benefit of ourselves and the islanders. As a member of the European Community we have helped for the time being their trade interests by the terms of the Lomé conventions.
It is true that some of the profits made in the West Indies were ploughed back and have been well employed. An example known to many noble Lords is Codrington College in Barbados which is now being restored and extended. Funds have come, as one would expect, from All Souls College, Oxford, with its Codrington connection and a development fund has been energetically raised by residents in Barbados, in this country and in Canada.
The point that I should like to emphasise is that we are required to discharge an important obligation. That obligation is more than any that we may have towards ex-colonial territories in Africa, for example. Admittedly, unhappily, the West Indians are more developed and intellectually more equipped than many other third world countries which had connections with us.
For many years our interests have been strategic as well as commercial. The Royal Navy has operated in the Caribbean for centuries and naval victories in World War One and World War Two in the South Atlantic were made possible as a result.
The United States' strategic interests are protected by its base in Cuba, the future of which will depend upon developments there. It seems likely that the American interest will remain, but one can hope that it will eventually be reconciled, as it has been, for example, in the Philippines.
Older members of this House will recall the remarkable response of volunteers from among the people of the West Indies in 1939 when the Royal Air Force in particular benefited. The navigator of Field Marshal Montgomery's plane in Europe was a recruit by the name of Barrow who eventually became Prime Minister of Barbados.
It is a strange fact that the nearest the world has come to a nuclear war was during the Cuban missile crisis. Nine years ago we were debating the military

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action of the United States in the Commonwealth island of Grenada, which gave great offence to some people here, whereas it was wholly in the interest of the islanders who should not have been neglected by us. It should not have been left to the United States to assume the responsibility that they did.
Perhaps I am looking too much to the past. The West Indies may have lost their strategic importance, but we cannot ignore them. They are, as Professor Hennessy pointed out, suspended between the Community and NAFTA. The problems are largely commercial. They need help and guidance on how best to adjust. The Caribbean Trade Advisory Group, set up by the British Overseas Trade Board and now under the chairmanship of Michael Adda, should be able to help itself by fostering trade and industrial development in selected islands.
The noble Baroness, Lady Young, correctly drew attention to Puerto Rico and it is worth continuing to study what is happening there.
The work of the Trade Advisory Group is complemented by the West Indian Commission. It would seem logical for the islands to feel their way to greater integration in spite of the past failure of the West Indian Federation. However, there are many obstacles, as the lukewarm reception of the report by Sir Sonny Ramphal has revealed. It is not for us to dictate to the islands what to do and how to integrate. Integration can take many forms. National feelings, even in small islands, are very strong. There is little doubt that the North American Free Trade Area will attract the larger islands, for example, Trinidad and Jamaica, to say nothing of Cuba in due time. It is essential that we should stand ready to help them and to see that obstacles are not necessarily put in their way.
In the European Community we have Dutch and French allies with whom we should consult and co-ordinate. We help with development aid to the best of our ability and also in the education field, but it is not enough. We must continue to accept our obligations and act as friends.
One matter where our responsibility is clear is the management of the Caribbean dependent territories. Those islands are a relic of the dissolution of the Empire; they are our direct responsibility. Their present constitutional relationship is unlikely to change. They are especially vulnerable to drug trafficking and the laundering of drug money. I am satisfied from conversations that I have had with members of the Foreign and Commonwealth Office that their problems are being energetically tackled. The Foreign and Commonwealth Office is training personnel who will be specially equipped in their administration.
We have every reason to be proud of our past colonial record and the small territories deserve our special attention as never before. The board of management which has been set up under a Foreign and Commonwealth Office Minister should facilitate this. I hope that the cuts that have been made in the Foreign and Commonwealth Office vote will not impede developments.
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We have an obligation to the area which we must try to discharge. Our responsibility to the dependent territories is inescapable.
8.30 p.m.
Baroness Hooper: My Lords, I should like to thank my noble friend for introducing the debate and I congratulate the noble Lord, Lord Glenconner, on his maiden speech.
There are a number of issues that are of vital importance to the lives of the people who live in the Caribbean. Those issues have been dealt with very adequately by my noble friend Lady Young and others whose knowledge of the Caribbean is far greater than mine. It has been a wide-ranging debate, but the scope of my noble friend's question is wide.
With regard to the subject of bananas, I recognise the arguments put forward by the noble Lord, Lord Pitt. However, I would like to make a plea in relation to the Latin American bananas or the so-called dollar bananas because in those countries people's livelihoods depend very much on the production and on the sale of that product. I believe that there should be a single market in bananas which gives the producers of all countries fair and non-discriminatory treatment. To construct elaborate quotas is not the right way to solve the problem. I am unhappy about the current European Community proposals, although I recognise the need for transitional arrangements. There is a case for the European Community to provide direct assistance to help those countries which have a mono-crop system and need to diversify.
Turning to a more general point, because of my own background and interest in the development of European co-operation and the institutions that reflect that co-operation, I look with interest at the structures within the Caribbean. My noble friend Lady Young referred to developments in that area.
Given the North American Free Trade area, which impinges upon the Caribbean via Mexico as well as the United States, given the Central American market and given the Andean Pact countries which impinge on the Caribbean via Venezuela, there is a great risk that the smaller countries may get lost or squashed between the various giant groupings. Therefore, I welcome the fact that the Caribbean Council for Europe and the recent fifth European conference enabled the voice of the Caribbean to be heard in Europe because not only was that voice heard, but each of the countries and the regional bodies to which I have referred had to get together and work together. In this context I assume that the Organisation of American States also has a role to play in co-ordinating views and policies, and I should be grateful if my noble friend the Minister would let us know the Government's views on the future development and interaction of these regional groupings, and indeed their relationships with European institutions.
The other main point that I wish to make reinforces again a point raised previously in the debate, and it relates to the problems and the real dangers that can result from drug trafficking. Although I understand that in most cases consumption—that is to say, consumption of hard drugs—is not a major problem

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in the countries we are concerned with here, the effect of being transit countries and in the centre of an ever-developing communications network makes the risks of the problem of consumption arising in the future very real indeed.
I trust therefore that the Government will continue in their policy of demand reduction in terms of activity in this country as well as of aid-related projects in this field. When we talk about the economic development of these countries we need to recognise that a failure to provide alternative crops, a failure to provide markets and fair trading conditions, and failure to provide for the long-term development of the economies of these countries could lead to problems greater than any we have seen to date.
My aim is to be brief, and I therefore end with a specific reference to Venezuela. Venezuela may be recognised as a country rich in oil, as indeed it is; it may be less known that its second main industry is the banana industry. Again I say that the livelihood of many people depends upon that. But an important and interesting development in terms of the world's energy needs is the production and export of orimulsion. I mention that as an example of diversification. Orimulsion is the trade name of the new liquid fuel which is a bitumen-in-water emulsion which can be used for generating electricity and heat and power for industry. It adds to the diversity of supply of raw fuel. It competes favourably with coal, and indeed is already on trial in this country in four or five power stations.
However, I have noted already—and this is why I venture to refer to this specific issue—that suggestions are being made, without any proof, that this substance is less environmentally friendly than other fuels. If we wish to encourage the prosperity of the region I hope that there will be some means by which we can avoid any possibility that vested interests in this country will attempt to obstruct the use of this new substance.
I must finally apologise to your Lordships' House in advance because I fear that, owing to the late hour of our proceedings, I may not now be able to stay until the end of the debate. I regret this and will of course scrutinise Hansard to be aware of other points that may be made if I find that I am not able to stay until the end of the debate.
8.44 p.m.
Lord Taylor of Gryfe: My Lords, like other noble Lords I should like to pay tribute to the noble Baroness, Lady Young, for introducing this subject and for her continued commitment to the interests of the Caribbean. The noble Baroness, Lady Young, became hooked on the Caribbean when she had a spell at the Foreign and Commonwealth Office. I am delighted that, while she no longer has responsibilities in government, she pursues the interests and welfare of the Caribbean so vigorously.
In reading some of the briefing notes that I have received, which consist of reports of a large number of conferences on the subject of a common market in the Caribbean and integration of the Caribbean states, there was one thing that seemed apparent, and that was the feeling among the people in the Caribbean
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that, with the great events taking place in the world following the collapse of the Soviet Union, the development of the European Common Market and the proposal to expand the North American Free Trade Association, this little group of islands in the Caribbean did not seem to be featuring in these changes, and its interests were perhaps being totally neglected as the world concentrated on what are regarded as the big issues. I am quite sure that the people and governments of the Caribbean, some of whom will read this debate, will feel reassured that in the House of Lords at least we have pursued the subject of their welfare and their best interests.
Among so many experts who have spoken in this debate and who will speak following me, I have to establish my own credentials. I have been trading in the Caribbean for over 40 years, including arranging access to international capital markets of some of the islands which required finance. In addition, I worked in the great experiment of Puerto Rico, and I shall come back to Puerto Rico since it has been mentioned in the debate. A few weeks ago I was in Belize, so perhaps I should start with Belize.
The total population of Belize is 200,000 and the area covered by Belize is the size of Wales, so it is not important in a geographical sense; but in the sense that it is a bridge between Central America and the Caribbean it is very important indeed. It is important, too, that its northern border touches Mexico and its border to the west touches Guatemala. It is important, therefore, now that the North American Free Trade Association negotiations are proceeding. Belize is strategically important as a country that is so close to the Mexican border, which is going to be part of NAFTA, so I do not apologise for mentioning it.
Belize is a part of the Commonwealth, and it deserves great respect for its human rights record and its operation of a democratic state when one considers that its immediate border is with Guatemala, which has an appalling human rights record, and that San Salvador and Nicaragua are not far away. It is great to have, in an unstable area, this centre of respect for human rights, for the democratic process, and respect for the law when there are such neighbouring countries as Guatemala, San Salvador and Nicaragua.
We support Belize by having a battalion of the British Army stationed there. While I am a pacifist by nature and conviction, that is the one case where I feel I could justify the continued presence of the British Army. That provides protection against a possible invasion by Guatemala, which has claimed Belize for over 100 years. Without the presence of the British Army there would be great danger that Guatemala—which is now moving towards democracy but is still uncertain—would pursue its objective of taking over Belize, which it believes should be part of Guatemala. What is just as important is the fact that the British Army plays a very decisive role in controlling the drug traffic. That area is a drug corridor, and the presence of British troops is a tremendous support to the Government of Belize in their fight against the drug barons.
Belize is one of the central American states and at the same time is part of CARICOM. Despite its small

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size and population it is very important that we continue to have a presence there and encourage their government. Belize has developed a tourist trade with protection of the Great Reef and the environment. It has an extremely liberal immigration policy which is becoming dangerous in one sense because 20 per cent. of the population comprise of refugees from Guatemala, Nicaragua and San Salvador and that may cause tensions. They are Spanish-speaking and Belize is the only English-speaking area in central America. The Belize Government deserve our encouragement and support in their great achievements through the democratic process.
Puerto Rica has been mentioned. Puerto Rica is one of the most exciting developments not only in the Caribbean but in the world. To be frank, when I was originally invited to go there the first thing I had to do was find it on the map. I arrived in Puerto Rica at the beginning of Operation Bootstrap which changed the whole economy of that country. Instead of being a somewhat backward area it now has the atmosphere of a bustling mid-west American city. Puerto Rica was one of the first countries to have 10-year tax holiday provisions. It has the advantage of being part of the United States. It is not a state of the United States but is an associate state, which means it has direct access to the United States market but pays no taxes to the United States Government. It is indeed in a very favourable situation.
Puerto Rica has achieved a very great deal by first-class leadership and by getting across the idea of Operation Bootstrap; that is, that you pull yourself up by your own bootstraps. It has generated a sense of pride under the remarkable leadership of a man called Munos Marin, who was President of Puerto Rica. Interestingly enough, following an election he won every seat in Parliament—and it was not an East European election but a perfectly democratic election. He amended the constitution to provide that one-third of the seats should be allocated to the opposition, although they had not won them, because he believed it was not a good thing for a government to have no opposition. That kind of enlightened leadership of Puerto Rica raised its status and brought about economic success.
Belize and Puerto Rica are important because of the negotiations which will take place with NAFTA. I see the Caribbean moving more and more into the area of the North American Free Trade Association. Mexico is part of NAFTA. Puerto Rica is part of the United States. It is very important that we see the Caribbean not as being too much oriented towards the EC but becoming more and more involved in trading relationships with the North American Free Trade Association. I presume that NAFTA will replace the Caribbean Basin Initiative which has proved a great success in giving Caribbean states free access to the United States market. An adjustment is required to make sure that the CBI is replaced under the new arrangements with NAFTA.
If one looks, for example, at Jamaica, 60 per cent. of that island's trade is with the United States, and 50 per cent. of its imports are from the United States.
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Looking at the Caribbean in the future, I believe it will be moving more and more into the orbit of NAFTA, which would not be a bad thing.
With regard to the disappointment expressed about the failure to secure early integration of all the Caribbean states—that view was expressed recently by Sonny Ramphal —when reading the minutes of various discussions and debates one cannot help feeling that it is a bit like Maastricht. Many of these countries have their own cultural backgrounds: some are Spanish, some Dutch, some French, some American and some are Danish. Each has different traditions. One does not have the convergence of those islands in terms of economic performance that permits the kind of integrated ambitions of Sonny Ramphal, and others.
I would not be too disappointed at the fact that these countries have not immediately achieved the aim of the Caribbean Common Market. I believe that they are in a pre-Maastricht phase. But that does not mean there should not be greater co-operation between the islands. The great jewel of the Caribbean is the University of the West Indies. Students are no longer coming to our universities from the West Indies. They can get a perfectly adequate education at the UWI and the various campuses in the islands. That degree of co-operation has been achieved without all of the political implications that the integrationists have in mind.
I believe that the idea that has come out of the conferences about having common representation in various parts of the world is a very desirable objective. The present arrangements whereby each island has its own representative, or even its man at the UN, must be a tremendous burden on many of these islands. I believe that integration or co-operation in common representation overseas is another area that can be developed. I wish the islands well in their objective to secure integration, but, like many countries in Europe, they have long and different histories. I can understand some of the immediate hesitations. Anyone who has watched the islands play cricket will realise the degree of commitment to their own interests. That has got to be taken into account.s
Once more I hope that the Caribbean islanders will have listened to this debate and at least feel that they are not forgotten.
9 p.m.
Lord Selsdon: My Lords, a number of things have surprised me tonight. First, I had no idea that there had not been a debate on the Caribbean in your Lordships' House. I am very grateful to my noble friend Lady Young for having introduced it. It also surprised me that only 17 per cent. of Caribbeans speak English. I had thought that it would be a far greater number. I was further surprised to hear from the noble Lord, Lord Pitt, that they are still almost totally dependent on bananas and if that commodity collapses, the economy collapses. From the noble Lord, Lord Glenconner, in a remarkable maiden speech made without notes, which proved conclusively

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his absolute knowledge of the area, I was surprised to learn that sea island cotton had gone almost for all time.
One asks: what future does the Caribbean have? What future does it hold for us? Is it the West Indies? Is it a place where fortunes were made and lost? Does it have any economic future at all? I ask myself whether I am qualified to speak tonight, and I reply that I do not think I am. But it was 55 years ago, give or take 10 months, legend has it that I was conceived on the beach of Ocho Rios, during my parents' honeymoon. I was what would colloquially referred to at that time as "a mistake". A few days later someone was rude to my mother and as a result my father, much as an amateur boxer might do, laid him out, was arrested for criminal assault, locked up briefly, prosecuted and let off with a three and sixpenny fine. I have a great affection for Jamaica and the Caribbean. Perhaps that led me with some of my colleagues to embark upon hopeless assignments—not so hopeless as those of the noble Lord, Lord Taylor—to advise and assist those very countries to find some future.
I went to Nevis the queen of the Caribbean to be reminded that Nelson had come there from Bath and there met and married Miss Nesbitt and found the finest water in the Caribbean. I went on to Jamaica where again Bath was founded. One looked at the Bath river which cured and healed people. I went to Barbados, the Bahamas and right the way on until finally I ended up saying, "If the Americans cannot trade with Cuba, surely we can". The late Lord Walston (I call him my noble friend) and I went together to visit Cuba. I had the honour of holding the world record London-Havana-London by Concorde just for lunch. I love it out there. Perhaps I may with something of an upbeat feeling say that the assets of the Caribbean or the West Indies are not the countries themselves. Sugar production has dropped in Jamaica down to a few hundred thousand tonnes although it is still high in Cuba. The assets are the people of those islands. They are the entrepreneurs of the world. The countries themselves or their governments may have become poor but not the people. They are everywhere. They are starting businesses all the time. They are constantly thinking of new ideas.
I move to some of the cultural aspects. It is said that it is an imported culture. When I go to church, none of my family will stand next to me when I sing, because I can sing on only one note. I am apparently almost tone deaf. When I go to the Caribbean and listen to the beginnings of calypso, reggae and rap, and see how businesses have been made and created out of the sheer rhythm of the place, I think again about those rhythms. Then I have some feelings of regret, but not total regret. When I first went there I had all the right introductions. The introduction to which I paid no attention was a letter from the secretary of the MCC, which was by far the most important introduction that I could have had. I remember sitting one day on St. Kitts and listening to a noise outside my hotel window. It was a continual "click, click, click". I looked out and went down. There I saw some cricket nets. There was a man
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wearing a hat and laid back in a hammock teaching children to hit a cricket ball, each cricket ball being a lump of wood suspended by string from a branch of the tree. He was saying, "You may murder the British, you may murder the Australians, you may murder everybody, but never murder the ball. If you want to be good at cricket, do not murder the ball".
If a collection of countries like that, with a relatively small base and all the problems of internal relationships can go out and create cricket teams which perform so well, there are many other things that they can create.
What is the future of the West Indies, or the Caribbean, economically? In the long term perhaps it cannot be bananas. In the long term perhaps it cannot be sugar. It certainly is not cotton or agricultural produce. It has to be something else. Perhaps, in looking towards its future, we as a nation more than any other should undertake to help it.
I come to a number of areas which have not been mentioned today but where the Government do quite a lot. There is one organisation for which I have a great affection, initially because it was the only body I could find that was required by law not to make a loss. I refer to the Commonwealth Development Corporation created in 1948, which has been a major investor in the Caribbean. I believe that something like £130 million, which is only 13 per cent. of its total commitment, has been made there: £70 million to Jamaica, £10 million to Cayman, £10 million to Bahamas or perhaps it was Barbados, £6 million to Belize and £5 million to Trinidad and Tobago. It even has a programme which, probably out of the total of £130 million today, may increase by a third, if my noble friend the Minister for Overseas Development will give it that encouragement and support. It is an organisation that needs far greater support than it has at the moment.
In those countries with which I have dealt—I myself come from an island and therefore have an affection for islanders —I have noted one thing especially. Islanders are extremely interested and heavily involved in politics but they have the ability to change their politics from time to time. We are now faced with the inability to justify the extremism of communism, which makes it difficult for some nations to find an opposition. We have to say that all the territories at the moment look more and more—to use a term that I do not like but which is acceptable—to "privatisation". There is a recognition that government cannot do as much as individuals.
I return to what I said earlier about those individuals in the Caribbean who have far more reason than we have to be entrepreneurs. For the past 25 years or so when one asked a question in this country or made a suggestion someone would ask "Why?". Ask the same question in the Caribbean and the answer comes back, "Why not?". It is that initiative and thought that needs to be encouraged. I draw attention to one or two examples.
I was in my professional career involved in assisting one of the countries to begin to privatise its hotels. That was at a time when everyone said that its politics were so bad that it was not safe to go there and that

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no one would invest. As 12 of the hotels were privatised an interesting development occurred; some 80 million dollars of private money followed as investment to upgrade and to improve them. Everywhere that I have come across that mood the money appears to follow. I believe that often the money has been held abroad by people who have been successful overseas and are prepared to invest in their own country.
We should not forget too the high level of repatriation of funds which comes from those in the Caribbean who work abroad successfully and who want to return. I and perhaps many noble Lords share the dream of people who work here. It would be nice to earn a large amount of money and to retire to the Caribbean. I am advised that even on relatively lowly pensions it is an area of exceptional merit. First, one does not have a high cost of heating. Secondly, one does not need many clothes. Thirdly, the food is readily available—or is it?
When I was looking at the tourist industry in the Caribbean I was surprised to be told that approximately 80 cents of every dollar's-worth of goods bought by tourists had to be imported. I refer to food, drink and other items which logically could be produced. Although members of your Lordships' Select Committee on manufacturing said that we do not want to be entirely a tourist country here the potential for the growth of tourism in the Caribbean is great.
I do not believe that the United States understands the Caribbean or that it ever will. The cultures are so different. I record only one incident when I happened to be on a particular island at the time of the Grenada incident when Mr. Bush and Mr. Baldrige came to lobby it for support. Many people in this country could not understand what the fuss was about. A major attempt was made to gain support for a boycott. I was sitting at table for dinner and, needless to say, when the word "boycott" was mentioned the biggest concern was whether he would play cricket in South Africa. I do not believe that the United States has the ability to resolve the future of the Caribbean.
However, there is another country with which we co-operate closely and should do so even more—I refer to Canada. It has considerable interests in the Caribbean, in particular because when the weather is bad in Canada it is nice in the Caribbean. I am not sure what a government can do at present except to promote and to encourage trade. Above all we should encourage the enthusiasm and the entrepreneurial spirit of the individual West Indian.
9.10 p.m.
Lord Sharp of Grimsdyke: My Lords, I too thank my noble friend Lady Young for her initiative in raising the subject of the West Indies. I spent a great deal of time visiting many of the Caribbean islands on business when I was chairman of Cable and Wireless. I had many discussions with government leaders, trade union representatives and local businessmen. Therefore, I identify myself with the aspirations of the
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Caribbean people to improve their economic well-being as they gain or develop their political independence.
We are talking about democratic communities with independent judiciaries and developing traditions based on centuries of association with and guidance from Britain. They have been loyal members of the Commonwealth despite the gravitational pull of North America. They deserve more than a few moments of our time in order to ventilate their problems. I suppose that one critical question is whether our willingness to encourage and to assist the political independence of the West Indian communities was fuelled by our desire to reduce the economic cost to this country of sustaining those communities which were struggling from a low base of productivity, technological development and limited economic and social resources. Furthermore, in consequence, has this country a special or moral responsibility to assist those communities to sell their products in an increasingly competitive world dominated by large trading blocs with restricted access?
I believe that we have such a special responsibility to use our influence in the one forum with which this Government have linked our future; that is the European Community. But facing the future in Europe must not mean turning our backs on our friends. When the United States forces invaded Grenada, which is a member of the British Commonwealth, in order to preserve the political stability and democratic institutions of that country, much concern was expressed about the legitimacy of the action. Personally, I had no doubts about the necessity of such emergency action. But military intervention in a third world country to preserve political stability makes no long-term sense if economic and social conditions are ignored. Therefore, your Lordships will understand if I take this opportunity to reinforce the remarks made by my noble friend Lady Young and the noble Lord, Lord Pitt of Hampstead, by commenting on the economic and social importance of the banana crop to various Caribbean communities and reviewing the critical significance of preferential access to the wealthy European Community market.
The noble Lord, Lord Glenconner, in his thoughtful, compassionate and admirably delivered maiden speech, emphasised the absolute dependence on bananas. However, bananas are just one small item in a nation's import account and a very minor item in the consumer's shopping basket. However, to many Caribbean communities, the successful marketing of the banana crop is a matter of life and death. Bananas and tourism dominate those economies. Both are affected by extraneous factors such as exchange rates, hurricanes and a hostile economic environment.
The noble Lord, Lord Pitt of Hampstead, pointed out that in the case of Dominica bananas account for no less than 70 per cent. of its GDP. That applies, to a lesser degree, to St. Lucia and other Caribbean countries. It is true that every opportunity is being

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taken to reduce that dependency by diversification but inevitably that will take generations to implement, if it is at all possible.
What can we do to assist those courageous communities to pull themselves up by their own efforts? First, I suggest that we should affirm that it is in everybody's interests to see those communities expand by their own efforts rather than by cash handouts. Secondly, the European Community must allow the Caribbean banana producers access to its market through balanced quotas, which ensure a level, and stability, of prices that give both producers and small farmers a worthwhile return and in consequence provide economic and social stability in those Caribbean communities so heavily dependent on the banana crop.
It may be argued by Community officials that the current arrangements are satisfactory in being even-handed in providing quotas to producers from all parts of the world, and that, with the advent of the single market by January 1993, consumer interests must also be safeguarded. When one contemplates previous and present distortions of the market, favouring producers and national interests—such as the special arrangements for the Iron and Steel Community, the subsidies for coal and nuclear power, and the grossest distortion of all, the common agricultural policy, including the blatant protection of the French oil seed industry—it would be cruel and perverse to resist the powerful claims by the Caribbean countries for special consideration over other dollar banana exporting countries which have more balanced economies.
Of course, the Caribbean countries must play their part. They should constantly improve the quality and marketing of their product. They should seek advice from the large, progressive retailing groups in this country. They should work closely with the main exporting traders, such as Geest and Fyffes, for better marketing and seek reduced distribution costs. But the vital battle will take place in Brussels, and it is there that I ask Her Majesty's Government to press as strongly for understanding of the Caribbean banana producers' position as the French will for the banana interest of their overseas territories. In essence, the Caribbean producers are asking for transitional relief until their costs are brought into line with prices to give them some margin to keep their communities alive.
I understand that at last week's meeting of the Council of Agriculture Ministers, the Ministers refused to discuss the Commission's proposals on bananas. That is understandable in the light of the domination of the agenda by the GATT issue. What is not understandable—and perhaps the Minister will comment in her reply—is why the British Ministry of Agriculture allegedly failed to respond to the request for members to table alternative proposals. That means that there is no time left to establish a managed market before the single market comes into operation on 1st January 1993. As has already been said, that will inevitably lead to a flood of imports by the dollar producers. Further, the presidency passes to the Danes on 1st January 1993 and it is likely that they
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will propose a tariffication solution to the banana problem. That would leave the Caribbean producers worse off than if bananas had been subject to GATT.
I urge the Government, therefore, while they still retain the initiative afforded by their presidency, to press now and urgently in the Council of Agriculture Ministers and the Foreign Affairs Council for continuing the protection provided by the Lomé Convention and its banana protocol—and in particular to continue the quota system, based on real market trends and not on the proposed artificial levels achieved by dollar imports in 1992 and projected for 1993. The Community proposal to limit the imports of Caribbean bananas to 1990 levels is manifestly unfair and makes no economic sense, particularly as the Caribbean producers, unlike their competitors, have no alternative market and therefore would he denied their share of growth and the opportunity to reduce costs. I hope that both the Secretary of State for Foreign Affairs and the Minister of Agriculture will speak with one voice in advocacy for our Caribbean friends who, in an increasingly hostile world, can look only to this country for the assistance they richly deserve.
9.22 p.m.
Lord Hollick: My Lords, I too am grateful to the noble Baroness, Lady Young, for giving the House the opportunity to discuss the political and economic future of the Caribbean. I also add my congratulations to the noble Lord, Lord Glenconner, for a powerful and impressive maiden speech.
Most of the speakers in today's debate clearly have ties of family or friendship with countries in the Caribbean and therefore our interest in the region is based upon strong feelings of affection for, and in many cases a deep personal knowledge of, the people and the countries. Approximately 1 million of our fellow citizens in the United Kingdom are of Caribbean origin. Our island culture was initially exported to the Caribbean islands who enriched it and in turn re-exported it to Britain.
In culture, sport, education and political and legal institutions we share a common heritage. Many in this country took great pleasure when Derek Walcott won the Nobel prize for literature. As has been said, we admire Caribbean sportsmen and women for their excellence, whether they play in the Caribbean or in the United Kingdom, although I suspect that for many of us the prospect of a four-man pace attack of the West Indies cricket team is something to be frightened of rather than admired.
I stress those deep-rooted cultural, social and political ties because they are current and not simply historic, and because they form the basis of a special relationship between the Caribbean and Britain. That special relationship has, of course, changed significantly over the years since independence. Now, with Britain's eyes fixed firmly upon its future in Europe, it is changing again. Our concern to establish our role in Europe could lead to a weakening of our relationship with other parts of the world. I urge the Government to guard against that possible drift away from historic links and to ensure that our special relationship with

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the Caribbean and other parts of the world is nourished and actively developed. Those relationships not only enrich our political, social and cultural life, but they are also of great economic importance and benefit to both Britain and the Caribbean.
Those economic ties are founded upon trade and investment. Trade must be reviewed in the context of the development of world trade agreements and, more particularly, regional trading blocs. Investment must address the specific requirements of Caribbean countries. Bilateral country to country trade negotiations have now been superseded by negotiations between these large trading blocs.
For its part, Britain needs to develop an approach to the Caribbean which not only covers the English speaking countries but also the rather more populous French and Spanish speaking countries which together have sizeable and fast-growing economies. Britain, thanks to its special historical links, can and should play a leading role in developing the European Community's relationship with the wider Caribbean. It is important for the English speaking Caribbean to develop CARICOM to the point where it can become an effective voice and can negotiate for the region. It is disappointing that at their recent meeting Caribbean heads of government did not move more positively and enthusiastically towards a CARICOM commission for I believe that such a commission would strengthen their bargaining position in world affairs.
The principal trade issues at the moment concern the future arrangements for the export of bananas and sugar from the Caribbean to Britain and other EC countries. Many of your Lordships have emphasised the critical importance of both crops to many islands. It is no exaggeration to predict that without a guaranteed outlet for that primary product, a number of island economies would collapse. I hope today that the Minister will be able to reassure us that the Government will use every effort to support the European Commission's proposal to create a protected quota for Caribbean bananas and specific-ally that they will oppose tariff-based regulations which are likely to favour the richer banana-growing countries.
Over-dependence on one crop or one natural resource is widespread in the Caribbean and can only be tackled by product and industry diversification. Many of the Caribbean countries, particularly the larger ones, are making important moves to develop a more balanced economy. I believe that the British Government can do much to help that process. Aid to the poorer countries in the region can help to fund the training and infrastructure projects essential to the development of new industries. Investment in new commercial ventures by both government agency and the private sector is often the only way of getting such ventures off the ground.
The CDC is an important source of risk capital. The Government should encourage and enable it to play an expanded role throughout the Caribbean basin. I understand that the CDC's ability to enter into joint funding with the private sector is often circumscribed by the Treasury's definition of public
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sector financing. I hope that the Minister can use her good offices to persuade the Treasury to ease those guidelines so that the CDC can work closely with private sector finance for innovative investment opportunities.
Many countries in the Caribbean are now opening up their economies through various economic reforms such as deregulation and trade liberalisation so that the private sector can become a major force for economic development. Perhaps we may consider the case of Trinidad and Tobago, a country blessed and occasionally cursed, by its oil resources. Trinidad is seeking to reduce its dependence on the public sector for investment and employment generation. Unemployment in Trinidad is running at nearly 25 per cent. Trinidad is also seeking to diversify away from its dependence on energy.
A loan from the Inter-American Development Bank is supporting a range of economic reforms in Trinidad to stimulate the growth of private investment in the country from both domestic and foreign sources. That loan will fund the development of a legal and institutional framework, including a one-stop investment agency and a securities and exchange commission which will all help to create a more favourable climate for overseas investment. The loan will also support efforts to mitigate the environmental and social impacts of adjustment to new industrial development and will also provide the training necessary to support the new industries.
If countries like Trinidad and Tobago are to escape from the vagaries of commodity prices they must develop a more broadly based economy. To do that they require financial assistance from foreign governments and agencies and the active participation of foreign investors. The British Government have a dual role to play. They can provide financial and technical assistance. For instance, why not consider a Caribbean know-how fund? They should—indeed must—encourage private investment.
The British Government's trade and investment promotion activity in the region is far too thinly spread. The resources are simply inadequate for the job and do not do justice to the opportunities available for British inward investment. There is a good case for Britain to upgrade its commercial representation to ensure that it takes full advantage of this fast-growing Caribbean basin market.
There is a desire within the region to see an increase in British and European investment in order to counter-balance the investment which flows from North America. Although the region is expected in due course to become an associate or even full member of the North American Free Trade Area there is a strong desire to sustain the existing special relation-ship with Britain and to ensure that Caribbean economies do not become totally dependent on the United States.
Finally, I should like to touch briefly on the problem of external sovereign debt in the Caribbean. Many of the countries in the region fall between two stools. They are too rich to be considered poor and yet, sadly, too poor to be considered rich. They have not therefore benefited from some of the more

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generous arrangements to forgive or reduce overseas debt. They are still saddled with substantial borrowings which must be serviced out of hard-pressed currency reserves and which make additional borrowings very hard to obtain. British Government policy should acknowledge this enduring burden and recognise that faster economic development is the only solution to the problem. More investment and technical assistance, greater trade representation in the region and a sustained effort to work with Caribbean countries to encourage and facilitate private sector investment is the best way of helping these countries to achieve faster economic growth and the best way of protecting Britain's current and long-term economic and political interests in the region.
9.31 p.m.
Baroness Eccles of Moulton: My Lords, I should like to add my thanks to those already paid to my noble friend Lady Young for providing the opportunity to debate the future of the Caribbean. As the last of the Back-Bench speakers on such a comprehensive list, there is really nothing new that I can say. However, I hope that my few brief comments will at least bear repetition.
I have visited the region both on holiday and with my husband in his capacity as chief executive of the Commonwealth Development Corporation. All visits—no matter for what reason—have been a pleasure. It is such a beautiful part of the world with a large, warm and mostly very clean sea. There are so many interesting things to see, such as the volcanos of St. Lucia, the Petit Piton volcanic needles, the green Sisseroh parrots of Dominica and the spectacular blue mountain coffee slopes of Jamaica.
There is a strongly held view that the Caribbean region needs to establish and expand successful private sector ventures on which to base its trade with the single European market and the emerging North America Free Trade Area. It also needs to develop strong economic and political ties with its trading partners. As my noble friend Lady Young said, well over half the population have Spanish as their first language and nearly one-fifth are English speakers. Our historic links go back over a long period.
It is accepted that pan-Caribbean strength, which embraces the whole region, is to be encouraged as the area competes in world markets. However, as is well known, the Caribbean is characterised by countries which vary from the comparatively well off Martinique and Guadaloupe to the very poor Haiti and Cuba. Political fragmentation of the Caribbean can lead to events which are an embarrassment, to say the least. The most notable occurred in Grenada, as mentioned by my noble friend Lord Sharp. It must be in our interests to make every effort to encourage stability and progress in the smaller Caribbean states. Although the West Indian Federation, which was formed at independence, was a failure, new and welcome moves towards regional co-operation are taking place through CARICOM, as my noble friend Lady Young described in detail.
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Development needs to be encouraged in order to improve and decrease the disparity between incomes. Economic opportunities are not easy to find in the smaller Caribbean islands which historically have been heavily dependent on sugar and bananas. A great deal has been said about bananas already this evening by noble Lords who know much more about the subject than I do, but I must add another word on the subject. The outcome of the meeting last week of the EC Council of Agriculture Ministers does not augur well for the future of the Caribbean banana industry. This will have particular significance for the smaller islands. The bigger islands can aspire to an industrial base; for instance, methanol production in Trinidad. In Jamaica American companies invest in factories adding value because of high, inexpensive labour content, and the products are imported into the US under the Caribbean basin initiative. But all need to recognise the importance of diversifying agricultural production into non-traditional exports such as fruit and vegetables. Tourism has probably the greatest potential as the industry of the region.
Capital investment in infrastructure is another important area for development. To a lesser or greater extent the islands will be able to make a contribution towards financing capital expenditure through savings, but external help will be needed. Electricity and telecommunications are sectors where there is already much activity. For instance, a Canadian company is the majority owner of the power company in the Cayman and CDC is the majority owner of the power company in St. Lucia. Once ownership is established continuing provision of capital often follows. Cable and Wireless, as my noble friend Lord Sharp will know a great deal better than I, is very active in the Caribbean and makes a major contribution. This is a particularly encouraging example as no company will continue to invest in this way unless it is profitable.
The governments of Caribbean countries with British connections are encouraging the inflow of foreign capital. They are removing unnecessary obstacles to investment and by and large they are able to service their debts. A continuing contribution to the development of the Caribbean countries with which we have the strongest ties will benefit both the economies of those countries and their political relationship with the United Kingdom.
9.37 p.m.
Lord Bonham-Carter: My Lords, I thank the noble Baroness, Lady Young, for introducing this debate which, as she rightly said, has come at the right time—one might say, high time. I only hope that it is not too late. One of the impressive aspects of the debate is the sense of urgency; the sense that we have to find a way through the problems which confront us in a very short time.
I should also like to thank my noble friend Lord Glenconner for his most notable maiden speech. It combined virtues which are rarely combined—sincerity, eloquence and knowledge. That is something from which we have all gained. I hope that we shall hear from him again short of another 10 years.

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The theme or aspect of the debate which has gone on emerging and which I find most worrying is the very real danger that the Caribbean will be marginalised, that it will slip between the two great trading blocs because it is rather small and rather fragmented, and will simply be forgotten. That seems to he a genuine danger and one which must concern us all and one which we must try to prevent. The danger of marginalisation is partly because of our perception of the Caribbean and partly because of its intrinsic fragmentation. There are a huge number of islands spread over a vast area. Its geographical, political, linguistic and historical heritage are all fragmentary. This increases the danger to which I have referred and reinforces our perception of the Caribbean which tends to see it in anglophone terms; in cricketing terms; in terms of people of West Indian origin living in this country. The total perception is of a relatively small anglophone Caribbean population whereas, as the noble Baroness, Lady Young, and others have told us, the population amounts to 50 million which is, after all, about the same as this country's population.
Secondly, it is worth reminding ourselves that we are discussing the crisis which faces the Caribbean, but the major economic problems facing the people are not of their own making. Their trade has deteriorated sharply over the past two decades. The oil crisis of 1973 affected them more drastically than it affected the developed world. The price of the primary products that they export has about halved, whereas the price of goods that they import has about doubled. The position is not one of their making, but it is one with which they have to deal. It is, as Michael Manley said, rather like climbing up an escalator which is going in the opposite direction.
However, during this rather dispiriting ordeal, it is remarkable, as the noble Lord, Lord Taylor, pointed out, that during the midst of these stringent economic conditions they have sought and striven towards achieving more and better democratic institutions, organisations and practices. That is a creditable and remarkable achievement. As has been said during the debate, there are two questions confronting us: what can they do to help themselves, and what can we do to help them help themselves? Again, I have been impressed by what people have said about the real and profound nature of our obligations towards the people living in those islands; by the urgency of the crisis; by the fact that those who now depend upon bananas have, anyhow in the short term—if we take that as being the next 10 years —no real available alternative. There is, again, the danger of their being marginalised and slipping between the two trading blocs.
There is a short and a long-term problem. The first is how we see the islands through the short-term crisis facing the banana industry; and, secondly, what we want to help them attain in the longer term. In that respect, the report of the West Indian Commission has been mentioned frequently. The programme that it
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has offered—based clearly upon the analogy with the European Community—which proposes that the way through is by political and economic integration is of course in principle attractive and would seem the obvious course for them to pursue. I am persuaded that, in principle, it is the right development and the right way for them to go. However, I have been impressed by suggestions made by a number of people who know the Caribbean much better than I do who have described the real, historical, geographical and emotional difficulties which will exist if they are faced by a programme of rapid integration. The formula may be too closely modelled upon the European precedent. There may have to be modes of co-operation; and ways and means of developing co-ordination of a different type when dealing with islands that are so widely separated and with such different histories, particularly if one is to embrace within that area of co-ordination not merely the anglophone countries but the French and Spanish-speaking ones which, as many people have said, have very different traditions.
However, whatever one's reservations about the West Indian Commission's report, it seems to me to provide a way ahead for British policy. It seems to me to say to this country, "You have reached a moment, come to a time when you have to formulate a new and coherent attitude towards the Caribbean, based on responding to contemporary conditions". Such a policy I think would see the enlargement of CARICOM to include all 50 million people which would be able to talk to NAFTA and the EC. That is the key point. That is why some degree of co-ordination is essential, because without it, how can they talk to these huge trading blocs? I think I am right in saying that at the moment in London there are 10 High Commissions talking about bananas. That is not a sensible way of getting a good bargain.
Therefore, whatever the difficulties, some kind of co-ordination of policy throughout the Caribbean must be devised if it is not simply to slip between these two trading blocs. It seems to me that in this, British policy, British diplomacy, the British relationship has an important and constructive part to play.
Further, it is an opportunity to rethink our aid policy. I agree with the noble Baroness, Lady Young, who I think said that if aid is to be confined to the poorest, the Caribbean will come out badly. That would be a poor way in which to fulfil our obligation. In many ways, it seems to me that the Caribbean needs the kind of aid which we are giving the central and eastern European countries. When the noble Lord, Lord Hollick, mentioned the know-how fund, I had written it down myself. What the Caribbean needs is know-how of the kind we are giving in central and eastern Europe: know-how in training, in education, in building the kind of institutions which underlie a prosperous market economy, the kind of institutions which underlie and support a solid democratic structure.
Those seem to me to be the objects which we should pursue in our policy towards the Caribbean: an

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encouragement of integration, whatever the difficulties, for the reasons I have given; a provision of aid which is designed for a country of that order of poverty and wealth and which concentrates on
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providing the infrastructure of knowledge and institutions from which it can build the long-term alternative to the banana industry.
9.47 p.m.
Lord Judd: My Lords, the noble Baroness, Lady Young, deserves the thanks and appreciation of us all for having introduced the debate tonight with her characteristic clarity and sound knowledge of her subject. I shall hope to underline some of her observations during my remarks.
The noble Lord, Lord Glenconner, made an outstanding maiden speech. It was full of passion, humanitarian concern and invaluable direct experi-ence. I know that we all look forward to hearing him repeatedly in debates of this kind.
A number of powerful representations from outside organisations about the debate illustrate the significance and timeliness of the subject. I think Christian Aid has concisely summarised many of the concerns so well expressed in the introduction to its helpful brief which I should like to quote:
"1992 sees two important dates: the deadline for the completion of the Single European Market … and the quincentenary of the arrival of the first European in the Caribbean.
500 years after the arrival of Columbus, Europe—and in particular the United Kingdom—still has a major responsibility for the economic well-being of the people of these islands".
The noble Baroness, Lady Young, the noble Lord, Lord Greenhill, and others have recognised in what they said our very special responsibility for the dependencies: Anguilla, the British Virgin Isles, the Cayman Isles, Montserrat and the Turks and Caicos Islands. It would be appropriate to remind the House that some doubts have arisen in some quarters as to how far the Government remain committed to eventual independence. It would be helpful if the Minister could tonight clarify the constitutional future and spell out exactly how the Government's policy now stands on the economic development of the dependencies.
The Caribbean region, as the debate has underlined, raises interesting issues in terms of aid policy. Rightly a priority for ODA across the world must be the needs of the poorest. On the whole the Caribbean does not rank in this category, but if we genuinely want to see self-generating development, the relationship with precisely this kind of region with all its exciting potential is crucially important. It would be a strange approach to development which abandoned nations on the brink of take-off. The Minister's thoughts on this will be important, not least on what she sees as the role of the ODA in co-operating with NGOs and the private sector, as called for so cogently by the West Indian Commission and indeed by the noble Baroness, Lady Eccles, and others tonight.
In this context, as the noble Lord, Lord Selsdon, reminded us, the Commonwealth Development Corporation has had a distinguished record in the Caribbean. It would therefore be good to learn more from the Minister tonight how she sees its future role. But there are, of course, still areas of desperate need within the region. Haiti has the worst health record in the Western hemisphere with life expectancy of only 54 years and an infant mortality rate of 123 per 1,000 live births.
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Indeed, according to the Catholic Institute of International Relations in its publication entitled Profile Haiti the appalling levels of sanitation, malnutrition and health provision put Haiti on a par with the nightmare in Sub-Saharan Africa. The situation in the Dominican Republic is also disturbing with the infant mortality rate at 70 per 1,000. Infectious diseases which are poverty related and preventable account for, I gather, as many as 85 per cent. of the deaths of women at childbirth. Malnutrition among young children is on the increase. Situations like these obviously present immediate challenges to Britain's aid programme and we anxiously await the Minister's words tonight on how she is meeting them.
Jamaica has one of the highest per capita debts in the world —some £1,000 per head for every man woman and child owed to the industrialised world. About £80 million of that is owed to the United Kingdom alone. Some 25 per cent. of Jamaica's gross national product goes on debt and interest repayments. The consequent cuts in social infrastructure have been draconian. Some hospitals lack even aspirin and bandages. Families are frequently expected to provide linen and food and patients are sometimes required to share beds. Alleviating the crippling debt crisis in the region as a whole is of course essential if self-generating development is to have any hope of success. But surely at the very least the Trinidad terms could be extended to countries such as Jamaica. It would be good if the Minister could this evening indicate some initiative in this respect.
Development is about more than aid. Trade is, of course, vital. The outcome of the current GATT negotiations will have profound implications for the Caribbean. As my noble friend Lord Pitt has so movingly brought home, it is difficult to exaggerate the life or death importance of banana exports to Britain for the people of the Windward Islands and indeed Jamaica. Any undermining of the special access to Britain could cause catastrophe for 30,000 small farmers in the Windward Islands who work their own plots, frequently less than one hectare in size. In Dominica, too, bananas account for 70 per cent. of exports. The poor quality of the soil and the steep and rocky nature of the terrain mean that prices are inevitably higher than those of the so-called dollar bananas from Central and Latin America. As the noble Baroness, Lady Hooper, argued, it may well be that diversification is essential. However, diversification is easier said than done, and it takes time.
On 1st January next, in the context of the single European market, we cannot abandon our Caribbean friends who have supplied us so well. The Lomé Convention spells out the position very clearly, as the noble Lord, Lord Sharp of Grimsdyke, has reminded us. I quote from the rules:
"In respect of its banana exports to the Community markets, no African, Caribbean and Pacific state shall be placed, as regards its traditional markets and its advantages in those markets, in a less favourable situation than in the past or present".
The European Commission has drawn up a sensible proposal for a protected quota for ACP bananas exported to Europe, based on current export levels

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and a 20 per cent. levy on all bananas that are imported from Latin America. However, the latest news from Brussels is not reassuring. The Community is not rallying behind the proposal. In the corridors alternative schemes are actively being canvassed based on tariff rates that are supposed to keep ACP bananas competitive in a free market. However, such a scheme could easily fail because it would be open to manipulation by multi-national dollar banana companies which have ample resources to subsidise their products for a time in order to undercut ACP bananas, forcing them out of the market despite the tariffs.
We have little more than a month to secure the position of our Caribbean friends. We need to hear from the Minister tonight exactly how she proposes to do so, thereby honouring specific pledges that were made by the previous and the present Prime Minister in this respect.
My noble friend Lord Pitt spoke of sugar, which presents another grave crisis for the Caribbean. As part of the reform of the common agricultural policy, Europe is considering a new sugar regime. The European Community produces more sugar than it needs. The surplus is dumped on world markets, driving down international prices by as much as 15 per cent. For people in countries like the Dominican Republic, that means decreased earnings and increased poverty. However, the European Community has an agreement whereby it buys 1.3 million tonnes per annum of sugar from a number of its ex-colonies at the same price that it pays to the domestic beet sugar producers. That is substantially higher than the world price and provides a very valuable form of assistance to countries such as Jamaica. The proposed changes to the European Community sugar regime will involve a reduction in the European Community sugar price. That situation could cause havoc among those in the Caribbean who have supplied our needs so well in the past and whose economies and social organisation have been tailored to do just that, founded as they were on ruthless exploitation and slavery.
Can the Minister give us a categorical assurance that there will be compensation and assistance with diversification for ACP producers, should there be any reduction in the price paid for their sugar, and, for that matter, that at long last effective steps will be taken to end the dumping of surplus sugar on world markets?
Bananas and sugar illustrate the new pressures on the Lomé convention. Such pressures will probably increase as GATT seeks to remove the so-called trade distortions and as enlargement of the Community brings in countries that have no traditional links with the ex-colonies. The balance of voting power in the Council of Ministers will move away from supporting Lomé countries. Lome has provided a very important pillar of development policy in the past. I hope that the Minister will reassure us that the UK will insist that if Lomé provisions are to be weakened or removed, they will be replaced by other forms of assistance.
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Meanwhile, there is still room for improvement in Lomé. It is disturbing that despite Lomé preferences, Caribbean countries find it easier to export horticultural products and textiles to the United States than to the European Community.
Healthy trade is naturally two way. The Caribbean is a market of 50 million people. The United Kingdom's approach to this market seems extraor-dinarily complacent. Why is it that in some of the largest parts of this market, as the noble Baroness, Lady Young, reminded us, we have no formal diplomatic representation and rely on splendid honorary consuls to promote trade in their spare time? By contrast our North American and European competitors are upgrading their commercial representation and export promotion throughout the Caribbean region. Can the Minister assure us that the United Kingdom Government intend to pull their finger out in this respect?
No debate on the Caribbean would be valid without reference to human rights. Since the military coup in September 1991 the people of Haiti have been literally terrorised by the regime. It is estimated that in the first six months after the coup 2,000 people died of bullet wounds, 500 died after torture, and 6,000 people were wounded by bullets. In their determination to eliminate popular support for the legitimate president, both secret police and military have targeted non-governmental organisations and members of the opposition.
Christian Aid has advocated that the European Community should establish a special budget line for human rights and democracy in Haiti. Oxfam has argued that a return to democracy and renewed economic progress can best be tackled through the NGOs of Haiti, and it has put forward proposals to the European Community on their behalf. Can the Minister tell us what support she is giving to these initiatives? What is the Government's position on refugees from the regime?
In British Guyana the new government elected on 7th October in the first free elections since 1964 faces a tough task, not least since the outgoing government of the People's National Congress looted a considerable amount of government funds and property before they left office. I wonder whether the United Kingdom Government are going to provide assistance for the process of democratisation. Amnesty is concerned at the growing number of prisoners of conscience in Cuba. But the internal demand for reform there is growing. It would be good to hear of any contingency economic planning by our own Government, the European Community and the United States to assist in the process of transition to democracy as it gathers momentum.
Although not central to our debate this evening Guatemala remains a potential threat to Belize. My noble friend Lord Taylor spoke tellingly about this. The human rights situation in Guatemala is still grim. Has the Minister any encouraging news on the peace process, for peace and democracy will be good news for Belize? I raise these matters because of the Government's commendable commitment to a human rights dimension in their aid policies, coupled with

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their commitment to support the cause of democracy. We now look for the evidence of consistent and substantial application of these frequently declared commitments in practice.
The noble Baroness, Lady Young, spoke of the need for regional integration. She is right. Like Europe, the Americas are moving towards integra-tion. Canada, the United States and Mexico are joining in the North America free trade area; Argentina, Paraguay, Uruguay and Brazil are similarly coming together. I suggest we and the European Community should be giving all possible support to facilitate a comparable process in the Caribbean. That process should involve the whole Caribbean Basin including the nations of the Central American common market, rather than the Caribbean islands alone. This could greatly increase the bargaining power of the region as well as providing economies of scale and strengthened development through shared information and technology. The noble Baroness, Lady Young, and the noble Lord, Lord Bonham-Carter, have spoken of the recent report of the West Indian Commission in this context. It was a constructive report. I hope that the Minister will share with us her reactions to it.
My noble friend Lord Hollick made a significant contribution in what he said about the interwoven heritage and culture of the United Kingdom and the Caribbean. Courageous sons of the Caribbean have fought shoulder to shoulder with us in two world wars. I believe that in thanking the noble Baroness for making this debate possible tonight we have, in the best spirit of this House, demonstrated a bipartisan concern for a flourishing and positive relationship between the people of the United Kingdom and the people of the Caribbean, and that not for the first time we have said clearly to the Minister have the strength of what we know are your convictions, and we will be behind you all the way.
10.5 p.m
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, once again we have had a stimulating and caring debate about the Caribbean. First, I should like to congratulate my noble friend Lady Young for introducing the debate and stimulating many others to contribute so imaginatively to the problems and to look at the challenges ahead, but none more so than the noble Lord, Lord Glenconner, in his maiden speech. How right the noble Lord, Lord Judd, was when he said it was impressive. It was imaginative, colourful and, above all, sympathetic in description of the grave dangers facing the banana farmers of the Caribbean, especially the Windward Islands. I shall long remember his reference to the Scylla and Charybdis of the GATT and EC—a better description one would go a long way to find.
This debate is very fitting for it takes place 500 years after the Caribbean connection with Europe began. I hope noble Lords will consider that 1992 marks not the end of that link from which both Europe and the Caribbean have benefited but rather
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the forging of new relationships. We share with the Commonwealth Caribbean its commitment to fundamental values of democracy, freedom and individual rights. Our historical ties and shared interests encourage us to work together in partnership, for example in the Commonwealth institutions, and further to strengthen our links with and assist the economic and political development of the Caribbean. Britons have enjoyed particularly close and historic cultural relations with the Commonwealth Caribbean. As the noble Lord, Lord Hollick, said, the evidence is plain to see in our daily lives. The contributions made by the West Indian community to our industry, sport, entertainment and the media are magnificent.
We have a very special interest in the region, not least because of our responsibilities for the five remaining British dependent territories in the Caribbean. Our economic links and institutional ties remain strong. Many of the smaller commonwealth Caribbean countries have become independent in relatively recent years but still look to us for encouragement and assistance. Our continuing commitment to the Caribbean is reflected in the fact that one of the priorities in negotiating our accession to the European Community was to establish a satisfactory development and trade relationship with those parts of the Caribbean with which this country traditionally had enjoyed close and special connections.
The world in which we live is changing rapidly. As so many speakers in the debate have said, the countries of the Caribbean face difficult decisions about their destiny. To avoid that it was very important to have a thorough examination of the issues facing the Caribbean. That was made clear in the recent report of the West Indian Commission chaired by Sir Sonny Ramphal that commonwealth Caribbean governments have been considering.
My noble friend Lady Young, the noble Lord, Lord Bonham-Carter, and others spoke of the danger of marginalisation. Marginalisation must not happen, but I have to say that it is in the hands of the Caribbean governments. They must decide how best to confront the challenges and change for the future. That was exactly what I know Sir Sonny Ramphal was hoping would emerge from that recent report. I may return to it if there is time later.
One of the things I am confident about in the Caribbean is that the basic Commonwealth Caribbean values of democracy, freedom and respect for individual rights will continue to guide them, and other countries in the area have much to learn from the Commonwealth Caribbean. I shall try to deal with the main issues raised. Where I am unable to answer tonight, I shall write to individual noble Lords.
There is an urgency of action. Let me begin with trade. I never fail to remember that trade is lifeblood and it is that lifeblood which most Caribbean people want more than any aid. That is not to say that they do not need help too. They do; but the best help we can give them is through trade. That is why the Government attach the greatest importance to maintaining the close commercial links which the UK

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has with the English-speaking Caribbean in par-ticular; but also, as the noble Lord, Lord Hollick, said, to developing commercial relations with the non-English-speaking countries of the Caribbean too. We ignore at our peril the potential of the Spanish, French, Dutch and other Caribbean islands.
We have had a steady growth in trade in recent years. It now exceeds £1.1 billion in two-way trade, the balance of which continues to be in the Caribbean's favour. The Caribbean remains an important market for UK companies which last year exported over £500 million worth of goods to the region. In addition, the total amount of UK investment in the region is of the order of £2 billion. This is an important economic area. I am the first to recognise, as my noble friend Lady Young said, how important it is to have proper representation in the Caribbean.
There are no plans at present to alter the pattern of diplomatic representation in the Caribbean. We review plans regularly and at this very moment we are considering how we can best reinforce our representation in Puerto Rico, a priority market for trade promotion in the Caribbean. There are currently nearly 70 UK-based Foreign and Commonwealth Office staff serving in the area, including the staff of the dependent territories' secretariat which is now being established. Of those, 19 have specific responsibilities for trade promotion. They are supported by a further 19 locally employed commercial staff. But it will behove us well to look again at the way in which we use our commercial staff in the region and to see whether it could be done with better pinpointing of targets.
There is no doubt, as my noble friend Lady Young said, that Puerto Rico has become a very impressive developing country in the sense that it is now a very active trading country too. That is why it is the second BOTB market in the region. It has the most diversified economy; it has a large and sophisticated industrial base with direct access to the US market and an annual import bill now of some £7 billion. The most important thing that we have done, which has certainly helped in markets such as Puerto Rico, Cuba and the Dominican Republic, is through CARITAG; namely, the export promotion activity established by the British Overseas Trade Board some 20 years ago. It receives an annual subvention from the DTI. CARITAG's overall aims and objectives are to increase the value of exports to target markets and sectors by promoting a greater awareness of commercial opportunities in the region and particular-ly in the non-English-speaking markets. But it is critically important that the work that is done through CARITAG is matched by work that is done within the region itself.
That is why I turn swiftly now to the question of CARICOM and the West Indian Commission because it is very important that there is indeed a response from the countries in promoting economic integration and wider co-operation among the countries of the region.
We were pleased to make a small contribution towards the work of the West Indian Commission because we believe that there must be a concerted
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approach by the Caribbean states. That must be the best response to the developments elsewhere. As was said by my noble friend Lady Young, the noble Lord, Lord Hollick, and other noble Lords, unless there is action within the Caribbean area by the Caribbean countries they cannot benefit when everyone else is involved in their own actions. That is obviously true in relation to the European single market and to the North America Free Trade Area. I should hate to see the small economies of the Caribbean countries marginalised. That is why we hope that CARICOM will have real success in strengthening their ability to work together.
The Time for Action, the report of the commission which was submitted to the heads of government in October for their special meeting, contained more than 200 recommendations. They did not relate simply to the argument for an accelerated process of economic integration and the establishment of the CARICOM commission; they covered the freedom of movement, financial institutions, common currency, wide-ranging economic issues, human resource developments, social concerns and external relations. It is a disappointment to many in your Lordships' House that the heads of government set aside much of the integrationist thrust of the report. However, they were able to agree on some proposals, in particular to strengthen the secretariat.
I hope that there will be further moves to strengthen the way in which the countries of the Caribbean can work together. Without that there is a real fear that NAFTA-the North American Free Trade Area—could divert new investment funds away from the region. That we well understand. The USA is not at present negotiating with Caribbean countries on an extension of NAFTA, a question asked by the noble Lord, Lord Taylor of Gryfe. I believe that when NAFTA concentrates in its next stage on negotiations with Chile and Venezuela a number of Caribbean countries will be worried about that. It behoves the Caribbean to become involved in what is going on and to look for opportunities in markets within their region which they could exploit. That is what we are really talking about.
My noble friend Lady Young, in her first-class opening speech, made us aware of the close-knit relationship which is sought by the United States, Canada and Mexico in the free trade agreement. Although I understand that the agreement has yet to be examined by legal experts before ratification, it is only a year and a month or so before it will come into force. While we welcome the agreement on NAFTA, because it is a boost to free trade and to trade and investment, we are concerned to see that the Caribbean countries might benefit and not suffer as a result. That is why we hope that a greater interest will be taken by the Caribbean countries. However, although NAFTA is structured to allow other countries to join I doubt whether any Caribbean country is yet ready to do so.
Your Lordships asked many more questions concerned with trade but I wish to concentrate now on rum, sugar and bananas. I have often called them the "Lome Cocktail" because it could be poisonous if we

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do not get it right. I am more aware than most of the critical importance of all those products. Although we speak only little of rum that is of enormous importance to our Commonwealth Caribbean partners. Throughout the Lomé IV renegotiations we pushed hard to phase out the national quotas. I was greatly relieved when late one night in November 1989 I obtained a Community agreement that we should do that by 1993 because that is extremely important for the prospects of the Caribbean producers.
I was asked also about sugar. The Government remain committed to continued access to the Community for the 1.3 billion tonnes of ACP sugar under the sugar protocol to the Lomé Convention to which the noble Lord, Lord Judd referred. The future of that protocol is not under threat. The UK has consistently supported the ACP request to convert the 75,000 tonnes currently imported into Portugal at a reduced levy into permanent ACP levy-free access. However, it will look favourably upon any Commission proposals for the ACP to benefit when additional amounts of raw sugar required by Portugal are discussed within the Community. It is a narrow but extremely important point because it lays the foundations for future dealing on this matter. I shall not go further into the detail; suffice to say, your Lordships should know that both the Foreign and Commonwealth Office and the Ministry of Agriculture are absolutely determined to see that the commitment which we have given is fully carried through.
Before I turn to the all important subject of bananas, on which I believe all noble Lords have spoken, perhaps I may make one comment on the GATT Uruguay Round because it is against that background that we must consider the situation. The Government warmly welcome last Friday's agreement between the EC and US negotiators. It is a key step on the path to an overall GATT agreement to benefit all the GATT contracting parties, including the Caribbean countries. The OECD estimates that a Uruguay Round agreement would add about 200 billion dollars to the world's GDP and about half of that would be of benefit to the developing world. That is why, at every instance, I sought to ensure that the needs of the developing world were fully considered in every element of the GATT round. The next step is for the bilateral and multilateral negotiations to resume in Geneva on the remaining issues before a final agreement can be reached. I take very much to heart the comments of the noble Lord, Lord Judd, in winding up for the Opposition and all the comments made about bananas in this debate.
The production and export of bananas play a critical role—often the most important role—in the prosperity of the Caribbean countries. But, as my noble friend Lord Sharp of Grimsdyke said, there is a responsibility among the banana producers, as well as among those of us who import those bananas, to ensure that the quality, handling, marketing and distribution improve. My noble friend Lord Sharp of
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Grimsdyke made one of the most interesting résumés of what needed to happen to the banana market that I have ever heard in either House.
We have no hesitation in saying that our commitment to the banana producers in Jamaica and the Windward Islands stands; that is, that they should continue to enjoy preferential access to the markets. There is no doubt that France and Spain, which also have traditional banana suppliers elsewhere in the Caribbean, think likewise. The United Kingdom played a leading role in making sure that the fourth Lomé Convention between the EC and its member states and the 69 African, Caribbean and Pacific countries continues to embody that practice in granting preferential treatment. However, as my noble friend Lady Young said, with the establishment of the single market on 1st January next year, those arrangements for bananas, which differ between member states, must be replaced by Community-wide arrangements. We made it clear that those future arrangements must fully meet our Lomé obligations. At the same time, the arrangements must be compatible with the successful outcome of the GATT Uruguay Round which will benefit us all.
Our position is not motivated by economic self-interest but by wider interests, notably those of the developing countries with whom we have these traditional links. It is perfectly true that the European Commission recommended to the Council of Ministers that future arrangements be based on what some call "protected quotas". We have not finished the discussion on those proposals; it still continues. I fully heed the entreaties of the noble Lord, Lord Bonham-Carter, and the noble Lord, Lord Judd, that we, as a presidency, should do our utmost to achieve the establishment on time of not only the single market but also a resolution of the banana question.
We are doing all that we know how, but if future arrangements have not been agreed by the end of the year we shall ensure that interim measures are in place to allow access by ACP bananas to the UK market to be maintained. More than that, tonight, I am afraid I am unable to say. I believe that it is absolutely critical to the economies of those Caribbean countries that we succeed in finding an overall solution and, if it is not achieved by the end of the year, that we have a workable interim solution. I might say that it is not simply the Foreign and Commonwealth Office, but all government departments, including the Ministry of Agriculture, Fisheries and Food, that are working to that end.
I was asked a number of interesting and important questions. Let me just say that with regard to the dependent territories our policy is that we should not seek in any way to influence opinion in the territories on the question of independence. We do not urge them to consider moving to independence. On the other hand, we remain ready to respond positively when it is clearly and constitutionally expressed by the people of those dependent territories, should it be so.
However, we felt it right, as my noble friend Lady Young said at the beginning of the debate, to have a review of the policy and management of the Caribbean dependent territories. As I told the House

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on 2nd November in reply to a Question from my noble friend Lady Young, the main conclusions of the review were that we should continue to help the dependent territories to secure economic development within a framework of good government. The arrangements we set up will provide more capacity and strengthen the links between Whitehall and dependent territories and thus ensure that the dependent territory business is given adequate and timely attention. I shall draw to the attention of my honourable friend the Parliamentary Secretary, Mr. Mark Lennox-Boyd, the comments made in today's debate. They are most important for the future management of the dependent territories.
I remind your Lordships that the review reiterated the importance of partnership with the governments of the dependent territories. It is not a question of the United Kingdom telling dependent territories what must happen. It must be a partnership. That is why we are seeking to draw up jointly agreed country policy plans in which both Her Majesty's Government and the governments of the dependent territories commit themselves publicly to a programme of economic development, on the one hand, and good government on the other. We shall review those plans annually and they will each form the basis for the bilateral aid programme.
Let me turn briefly to aid. I was interested to hear the comments regarding what many of the Caribbean countries need. They are not as poor as the poorest countries in the world although they contain many areas of great poverty. Simply because our memories are of wonderful beaches and summer holidays in the area we must not forget that there are some extremely poor areas in the Caribbean.
The reasonable needs of dependent territories remain a first charge on the British aid programme. Four Caribbean dependent territories—Anguilla, British Virgin Islands, Montserrat and the Turks and Caicos Islands—receive financial assistance and technical co-operation on grant terms. The total expenditure this year is expected to be approximately £20 million, which is about 50 per cent. of the total allocation to the region. It is likely to remain at that level in the coming years.
Our two themes in British assistance to the dependent territories are the development of human resources and the provision of major infrastructure. Our central objective is that those dependent territories should become economically self-sufficient. That obviously implies an ability to finance public investment requirements from healthy recurrent budget surpluses and increasingly from prudent borrowing without recourse to the United Kingdom grant aid.
hope that the noble Lord, Lord Glenconner, will accept that, since a decision I took in 1990, we have made sure that all new capital commitments will be on grant terms. We have already moved to help in that way. The additional assistance that we give in the Caribbean to the independent countries works out at about £7 per head. Compared with some other parts
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of the world noble Lords will realise that that reflects the importance we place on our traditional links with the region.
Certainly our programmes in the East Caribbean islands and Belize have been based on agreements made at the time of independence. Some countries have exhausted the funds now and new agreements are in place. But we are seeking to make technical co-operation arrangements wherever that is worth-while. When we speak of technical co-operation in the developing world it is their equivalent to the know-how funds in Eastern Europe and the former Soviet Union. We are seeking to ensure that the help we give is relevant to the needs island by island and territory by territory.
Jamaica—that wonderful and important place—has been a beneficiary of the British aid programme over many years. It has received about £48 million since 1978. As it goes further down its independent route we continue to assist it, particularly with diversification from bananas into other agricultural crops and economic sectors. We also put high on the agenda help with the environment for all the Caribbean countries. We are the lead agency for the tropical forestry action plans in the Caribbean.
We want to continue to help in every possible way both technically and through investment. My noble friend Baroness Young asked about the use of aid consultants. Certainly there has been no wish to cut out anybody from being a consultant. We seek to ensure that the expertise provided is that which is real value for money for the Caribbean country. We use local consultants where they show us competence and value for money. They are already working on many aid projects in the Caribbean. If my noble friend has specific cases in mind I shall be only too glad to look at them because it is important that we take every possible opportunity to use local and regional consultants.
My noble friend Baroness Eccles spoke of CDC, as we might well have expected of her. I explain briefly both to her and the noble Lord, Lord Hollick, about the CDC in which we have so much trust. It is beginning to do more and more in the Caribbean. It now has an excellent office in Barbados adjacent to the High Commission from which it is doing first-class work all over the Caribbean. The CDC has not only done a valuable job there but across the world.
I am a great supporter of CDC, as is well known in this House and elsewhere. That was why I thought it rather important to try to secure some new arrangements for CDC financing in the public expenditure survey this year. As from 1st April 1994 the outstanding aid loans to CDC will bear a zero rate of interest. CDC will be able to borrow externally provided that its borrowing meets the government's rules. That should assist it. The zero interest on past aid loans affects all past aid loans. Currently, CDC pays some £25 million per year in interest, which will rise to about £30 million over the next few years. So the new arrangement will be of benefit, although I cannot yet detail how it will be used.
We have also been able to find a way of giving CDC the prospect of borrowing overseas from funds

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available for some Caribbean Basin Initiative countries. These are what are known as "the 936 funds". It is possible that these, too, could amount to about £20 million a year in due course. If wisely used, that is good news for the CDC and especially for the CDC in the Caribbean.
There is one final topic that I must say a word about before closing. It had been mentioned by my noble friend Lady Young, the noble Lords, Lord Greenhill and Lord Taylor of Gryfe, and many others. I refer to the whole question of the threat posed by the drugs trade to the economic and social well-being of the Caribbean region. Sadly, the Caribbean islands are ideal staging posts for the trafficking of drugs from South America to North America and Europe. The societies and the economies of the islands are particularly vulnerable to destabilisation, including violence, corruption and the undermining of confidence in the banking system on which some of them depend. Sadly, most Caribbean states have not been well prepared to meet the threat. They need regular encouragement and assistance. That is why we spent nearly £2.5 million last year in drugs-related assistance. We are giving a further £2 million this year to improve law enforcement as well as to help with education to prevent local drug abuse.
The Government attach particular importance to removing illicit profits from drug traffickers. That is why we have concluded the bilateral agreements with six Caribbean states to work with us to trace, freeze and confiscate illicit profits. We intend to reach such agreements with all countries once they have enacted compatible domestic legislation, and we have given help to some to achieve that. We have done it in a whole variety of ways which I am happy to detail in answer to a Question if noble Lords would like it, but I shall not detail it now because the hour is extremely late. We are more than ever conscious of the need to
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go on helping these countries to combat that terrible scourge which otherwise could lay some of those islands to waste, could inhibit their very important tourist trade and could change their way of life out of recognition.
The evidence-and there is plenty of it-suggests that the Caribbean is trying and is now really beginning to see how it can benefit from a special relationship with the European Community. I have been heartened by the Caribbean's growing awareness of the need to take a deep interest in European developments. I was very pleased to meet the ACP ambassadors in Brussels only three weeks ago and to discuss with them, above all things, bananas.
In Britain, the Government will take full account of the Caribbean's needs as well as their interests-and their great potential. We should never forget that we are talking about an area of great potential if it is given the chance of maximise that potential. We have seen the end of the Cold War. We have seen invigorated economic growth in different parts of the world. We see now the dismantling of trade barriers and greater integration in the western hemisphere and Europe. We hope that that will mean greater stability and prosperity, but it also means continuing responsibility. And that responsibility extends as much to the Caribbean countries as to anywhere else in the world. We shall stand by them. I believe that this Unstarred Question, initiated so wisely by my noble friend Lady Young, has been of great value in making us focus and concentrate once more on the needs and the potential of the Caribbean countries.

Sporting Events (Control of Alcohol etc.) (Amendment) Bill [H.L.]
Returned from the Commons agreed to.
House adjourned at twenty-one minutes before eleven o'clock.