EC Budget: Tobacco Subsidy (Hansard, 8 June 1994)

§ The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley)
My Lords, the Government would like to see the level of support for tobacco reduced. They will press for reductions in tobacco or any other item of expenditure if estimates of expenditure are considered to be excessive in relation to the objectives of the Community policy to be implemented.

Lord Bruce of Donington
My Lords, I thank the noble Lord for the small relief of which he has given some hint for the future. But is he aware that in the current year Community expenditure under this particular head amounts to some £936 million, of which the United Kingdom shares about £117 million—a not inconsiderable sum—and that so far, according to the overview of the 1995 preliminary draft budget, which we were able to obtain yesterday, expenditure under this head for next year is at the moment down to £823 million, or £103 million of British taxpayers' money? In view of the report of the Court of Auditors into the whole tobacco regime, which must have been known to the Government months if not years ago, will the Government take some steps to reduce this grossly obscene expenditure?

§ Lord Henley
My Lords, the noble Lord is right to draw attention to the excessive level of that expenditure. As the noble Lord will be aware, in Government we have constantly campaigned for reductions in subsidies for tobacco, but unfortunately with limited support from other member states. We will continue to press for reforms to avoid waste, to improve controls and to reduce the opportunity for fraud.
As the noble Lord knows, the 1992 reforms were a small step in the right direction. But more ought to be done. I think the noble Lord will also know that a further review is scheduled for 1996. The noble Lord was right to draw the attention of the House to the recent report of the Court of Auditors, which we shall certainly use as evidence that that review should be brought forward from 1996 to some earlier date.

§ Lord Boyd-Carpenter
My Lords, is it not quite absurd to spend hundreds of millions of pounds introducing a commodity and then spend further money persuading people not to use it? Would it not be better to take a more robust line than, with respect, the one that my noble friend has taken and say that Her Majesty's Government regard expenditure on this production of tobacco as wasteful and unnecessary, and that they will fight not merely to reduce it but to eliminate it?

§ Lord Henley
My Lords, I am sorry if my noble friend feels that we are not taking a sufficiently robust line. I agree with virtually everything my noble friend said. However, I do not think that I can take him much further than I took the noble Lord, Lord Bruce, when I said that we will continue to press for further reforms and further reductions. It is, after all, perfectly legal at the moment under the treaty to pay support for producing tobacco. What we have said we would like to do is to see further reductions in those subsidies, and perhaps one day we might remove them altogether.

§ Lord Marsh
My Lords, will the Minister accept that the concern for many of us is not the level of subsidy? This subsidised tobacco is particularly carcinogenic and its market is almost exclusively the third world. Rather than subsidise it at all, would it not make sense if necessary to pay people the same amount of money not to produce it?

§ Lord Henley
My Lords, the noble Lord is correct. I am advised that not all the tobacco is the particularly strong and heavy tobacco to which the noble Lord refers. I understand that the Commission is trying to encourage the growth of more "user friendly" tobacco. One must remember that tobacco is a perfectly legal product. There are many of us, particularly in this House, who rather enjoy tobacco. While it continues to be legal I see no reason why people should not grow it.

§ Lord Mackie of Benshie
My Lords, is the Minister aware that the noble Lord, Lord Marsh, made a very good point? It is ludicrous to subsidise the growing of tobacco, but there are enormous social problems in the areas where this tobacco is grown. Are the Government putting forward schemes to replace this ridiculous payment with something that would produce jobs and cure the social evils?

§ Lord Henley
My Lords, I cannot go much further than I did in saying that we will continue to campaign constantly for reductions in the subsidies for tobacco. However, I have to say that we need the support of other member states. So far there has been limited support from the other member states for those reductions. There are, after all, seven European countries which grow tobacco and which are in receipt of these subsidies.

§ Lord Stoddart of Swindon
My Lords, is it correct that most of this tobacco is grown in only one area of the EC; namely, Greece?

Noble Lords
No, more than one.

§ Lord Stoddart of Swindon
I understood that it was just Greece. Perhaps I am wrong. Even so, is it not quite absurd that this country should in any way contribute towards growing tobacco when at the same time the Government are apparently trying to stop people smoking? Would it not be wise, and would it not make the EC more acceptable, if we were to stop subsidising Greece and other countries for growing tobacco?

§ Lord Henley
My Lords, the Government are not trying to stop people smoking tobacco. They are trying to discourage the smoking of tobacco. That is a very important distinction to make. With regard to the noble Lord's first point, I ought to correct him. The tobacco is not all grown in one country. He referred to Greece but some 38 per cent. is grown in Italy, 36 per cent. in Greece, 12 per cent. in Spain, 2 per cent. in Portugal, 8 per cent. in France, 3.5 per cent. in Germany and 0.5 per cent. in Belgium.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that the happenings of the past 10 years have given the impression that the common agricultural policy (which is the most expensive and wasteful of all regimes) is sacrosanct and that nothing can be done about it? Are the Government prepared to go on accepting the fact that the most dangerous policy that arises from the Treaty of Rome cannot be amended in some way?

§ Lord Henley
My Lords, the noble Lord goes slightly wide of the original Question. We have made our views on the common agricultural policy quite clear on a number of occasions. We believe that expenditure is excessive. We will continue to campaign, as we do with tobacco, to encourage reforms and particularly reductions in the tobacco regime.

§ Lord Eatwell
My Lords, does the Minister agree that the Government will find it somewhat embarrassing to attempt to enforce a sanction of the kind proposed by my noble friend, desirable though it might be, against governments who have contravened EC regulations in view of the fact that the British Government have today been found guilty in the European Court of breaking European regulations which they had freely entered into and agreed to enforce?

§ Lord Henley
My Lords, I wondered how the noble Lord would manage to bring up that matter. It is completely and utterly wide of the Question—as wide as it is possible to be. The judgment has only just been received and we shall need time to consider it. All but one of the issues covered by the ruling were addressed last year in the Trade Union Reform and Employment Rights Act 1993. The effects of the judgment are therefore very limited. It is largely past history and, quite frankly, I cannot understand why the European Commission bothered to waste their time and that of the court to take the issue to the court.

§ Lord Richard
My Lords, the Minister said that there was only one point missing. That is true, but it is an important point, is it not? Will the Minister confirm that it concerns the right of workers to be consulted over redundancies and transfers of undertakings? Is not that 1222 yet another example of British workers being denied rights that are accepted in law in all other European countries?

§ Lord Henley
My Lords, that is why unemployment is coming down in this country far earlier in the recovery than in any other country; far earlier than the pundits predicted and against the trend in the rest of Europe.

§ The Lord Privy Seal (Lord Wakeham)
My Lords, I believe that the general feeling is that we ought to move on to the next Question.