CAP Tobacco Subsidies: Italy and Greece (Hansard, 28 April 1993)

The Earl of Caithness
My Lords, no. It is up to the Commission. The Government will press the Commission for a report on alleged misuse of CAP tobacco subsidies.

§ Lord Jay
My Lords, how soon shall we be told the full facts about the scandal? Is it not somewhat unsatisfactory, that the Government should, first, spend public money on warning people of the risks of smoking; secondly, contribute large sums from the CAP to subsidise tobacco production in Italy and Greece; and, thirdly, discover that some unknown part of those funds is apparently being lost in fraud and corruption, not merely in Italy and Greece but now it seems in Brussels?

The Earl of Caithness
My Lords, on the subject of fraud, I hope that we shall receive a report from the Commission in the not too distant future. We shall certainly press for it through Council meetings and other representations available to us. As regards the amount of tobacco subsidy, the noble Lord will be pleased to know that the United Kingdom Government have made efforts to reform the CAP, and part of that relates to a reduction in support for tobacco.

§ Lord Boyd-Carpenter
My Lords, does not the money that was lost in corruption at any rate do less harm than the money spent in producing this poisonous crop?

The Earl of Caithness
My Lords, before I answer my noble friend, I ought to await the report from the Commission.

§ Lord Wyatt of Weeford
My Lords, as we help tobacco growing, will the Government now stop their hypocritical, fraudulent and unscientifically based campaign against smokers?

The Earl of Caithness
My Lords, that is another question.

§ Lord Mason of Barnsley
My Lords, is not the Minister aware that as regards fraud within the Common Market we are not entirely innocent either? Is he not aware that the most recent report on Common Market fraud reveals that Britain is one of the Community's top fiddlers too? We are third behind Italy and Denmark. Indeed, in the past 12 months there have been 300 cases, totalling over £21 million. Under Common Market law it is the responsibility of national governments to uncover fraud and deal with it. Will the Minister tell the House what measures Her Majesty's Government are taking to cut back on this fiddling and fraud of Common Market subsidies and funds?

The Earl of Caithness
My Lords, I am glad to be able to agree with the noble Lord that it is up to individual member states to take action. As he will be aware, we recently had a debate in your Lordships' House on this very matter. Some helpful contributions were made in that debate. The steps that the Government had taken to try to press the rest of the Community members and the Commission to take action on fraud were acknowledged. The Maastricht Treaty contains a number of provisions on fraud.

§ Lord Mackay of Ardbrecknish
My Lords, does my noble friend realise there is considerable concern in the country at the ridiculous position where the European 347 Community, through the common agricultural policy, subsidises the production of tobacco in the countries of southern Europe and at the same time other departments in the Commission are preventing its sale? I agree with preventing the sale of tobacco but the obvious step to take is to stop the production of tobacco.

The Earl of Caithness
My Lords, my noble friend will therefore welcome the fact that there has been a significant change in the tobacco regime under the reforms of the common agricultural policy. Although we have not eliminated support totally, it has been and will be reduced in future years.

Lord Bruce of Donington
My Lords, is the noble Earl aware that fraud in the case of the tobacco regime has been talked about quite openly in Brussels and elsewhere for the past two years? Is he also aware that we do not need a report from the Commission on the latest developments to alert the Government to this whole matter? Is it not a fact that when the regime is considered annually on the occasion of the Commission budget, for the past two or three years Her Majesty's Government have turned a blind eye to the expenditure when they already have information that in many countries that expenditure has been fraudulently applied to the tune of millions of pounds?

The Earl of Caithness
My Lords, I can assure the noble Lord that the Government do not need a report from the Commission to persuade them to take action. As I have already said, we have taken action and positive steps with the main producer member states to establish control agencies and also to reduce the amount of crop that is subject to subsidy. As regards the specific allegation of fraud, we need to await a report from the Commission. I hope that that will be produced shortly.

§ Lord Mackie of Benshie
My Lords, is the Minister aware that the reason for this rather ridiculous subsidy on tobacco, half of which cannot be used in Europe and has to be sold elsewhere doing great harm there, is to alleviate a social problem in areas where tobacco is grown and where there is no alternative crop? What proposals have our Government made to alleviate the social problem without subsidising a bad product?

The Earl of Caithness
My Lords, the noble Lord is right to say that this matter has implications for employment and other issues. Some 800,000 people on 200,000 holdings, mostly in the poorer member states, depend on tobacco production to a greater or less extent. However, as the noble Lord will be aware, there are other funds within the European Community to tackle such problems.

§ Lord Borthwick
My Lords, as regards fraud, what does my noble friend think about the laws in Andorra where tobacco is grown? When the tobacco is ripe, it is harvested, weighed, classified before the Inland Revenue and payment is arranged. However, the next day it is all burnt. They should not be able to get away with that.

The Earl of Caithness
My Lords, I believe most tobacco ends up being burnt in some form or another. However, I must be careful when commenting upon Andorra as it is not a member state and has a special position with regard to the Community.

§ Lord Molloy
My Lords, does not the noble Earl agree that one of the fundamental issues here is that the British Medical Association has established beyond all peradventure that smoking tobacco can cause lung cancer? That is a serious position. Should the Government therefore not be interested in any kind of arrangement that leads to increased tobacco smoking?

The Earl of Caithness
My Lords, the noble Lord tempts me to answer a question which is different from that on the Order Paper.

§ Lord Carter
My Lords, is the Minister aware that fraud is endemic in the common agricultural policy? That policy is a lunatic system, as it is neither common, agricultural nor a policy. The estimated cost of fraud is £5 billion to £6 billion a year which represents some 25 per cent. or more of the CAP budget. Does not the Minister agree that the whole rotten system was summed up by the comment of an EC official who could not understand why Signor Quatraro had committed suicide as, he remarked, he would probably have been given a little money and asked to leave his post anyway to avoid scandal?

The Earl of Caithness
My Lords, there is no question but that fraud is a serious problem in the agricultural sector. It is being tackled in a number of ways. As the noble Lord will be aware, the United Kingdom Government have been very much at the forefront of making sure that other member states fulfil their responsibilities and the Commission fulfils its responsibilities.

§ Lord Stoddart of Swindon
My Lords, is not my noble friend absolutely correct when he says that fraud is endemic within the EC? Would not the right policy be to repatriate agriculture to this country? That may give the Agriculture Minister, Mr. Gummer, something to do and perhaps he would not then interfere so much in matters ecclesiastical.

The Earl of Caithness
My Lords, I know that the noble Lord cannot wait to have the Maastricht Bill in this House, whereupon he will be able to discuss those matters at length.

§ Lord Airedale
My Lords, apart from fraud and corruption, does the noble Earl have any figures to demonstrate the proportion of the subsidised tobacco grown in southern Europe that is of such poor quality it simply has to be thrown away?

The Earl of Caithness
No, my Lords, I do not.

§ Lord Jay
My Lords, how much is now being spent on this tobacco subsidy? Is it not several hundred million sterling a year?

The Earl of Caithness
My Lords, I am sorry, I missed the first part of the noble Lord's question.

§ Lord Jay
My Lords, how much money is now being spent annually on the tobacco subsidy?

The Earl of Caithness
My Lords, I cannot tell the noble Lord exactly how much is being spent but the amount of tobacco receiving this support has been reduced from nearly 460,000 tonnes in 1992 to 350,000 tonnes in 1994.