EC Tobacco Regime: UK Expenditure (Hansard, 26 October 1994)

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)
My Lords, the latest estimate on expenditure on the tobacco sector for 1994 is 1,087 million ecu (£839 million). The cost to the United Kingdom arises from our contribution to the EC budget. However, as we do not produce or store tobacco and therefore have no receipts, the abatement agreed at. Fontainebleau would apply in full. In effect, our net contribution would be around 5 per cent. to 6 per cent. of EC expenditure.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that informative reply. Can he say whether the time has come for Her Majesty's Government to refuse to make any contribution whatever to subsidising the production of that poisonous product? Should not the Government stand quite firmly by that line and refuse any contribution?

Earl Howe
My Lords, my noble friend expresses his distaste for the EU tobacco regime, as he has done on a number of occasions in the past. The Treaty of Rome provides for tobacco to be eligible for support under the CAP. The UK is a signatory to the treaty. We cannot, as it were, cherry-pick our treaty obligations. The fact is that tobacco is an important crop in many areas of the Community, particularly in southern member states. What we must now do is reform the regime and reduce 532 its cost. The UK has been very successful in influencing the Commission and our fellow member states in that regard.

Lord Bruce of Donington
My Lords, is the noble Earl aware that Her Majesty's Government have no control whatsoever over the European budget as such? Is he further aware that on 25th July last, when a government representative of the Treasury last appeared in ECOFIN, he did not seek to alter the figure in any way from the figure already in the preliminary draft budget, over which—again—he had no control? Will he accept that it has been found not only by a Select Committee of your Lordships' House but by the Court of Auditors and other financial bodies generally that it is in that area that the greatest amount of fraud against the European Community takes place? Does he agree: that it is disgraceful that the British taxpayer should be saddled with a bill of over £100 million annually in respect of such a wretched production?

Earl Howe
My Lords, first of all, I should correct the noble Lord about his last point. As 1 said to my noble friend Lord Boyd-Carpenter, the UK's contribution is effectively much lower than the figure that he gave. But the noble Lord overlooks what was achieved in the 1992 reform of the tobacco sector. I am sure he will recall that production quotas (which, as he knows, exist for every member state) will be cut from 430,000 tonnes in 1991 to 350,000 tonnes in 1994. There will be no payments for tobacco produced over quota. Export refunds and intervention payments will no longer feature as a normal part of the regime, controls will be tightened and producers encouraged to convert to low tar tobacco and other crops. In all, the Commission estimates that that will reduce expenditure by over 25 per cent. between 1992 and 1997.

§ Lord Ennals
My Lords, at a time when the funding of the Health Education Authority and of ASH (Action on Smoking and Health) appears to be very uncertain, does the noble Earl feel that it is quite wrong that any British or European funds whatsoever should be used for that purpose? Does he agree that the British Government should be more active in seeking not just to reduce but to stop that absurd subsidy?

Earl Howe
My Lords, I can assure the noble Lord that when the tobacco regime next comes up for its formal review in 1996, the UK will be at the forefront of efforts in the Community to reduce the subsidies still further. With regard to his other point on the health aspects of smoking, it is surely right that the Government should devote resources towards discouraging smoking, whether or not the tobacco that is smoked is grown in the Community. Those efforts form one of the main planks of the Health of the Nation initiative.

§ Lord Marsh
My Lords, would the Minister allow us to share with him the arguments put forward for 533 ensuring that the present grants —the same amount— for growing tobacco are transferred to compensate farmers for not growing tobacco?

Earl Howe
My Lords, the problem with that idea is finding alternative opportunities for those who currently grow tobacco. Tobacco production is a very labour intensive undertaking and alternative employment would need to be provided. Alternative crop opportunities are very few, and support of whatever kind the noble Lord has in mind would need to be very long term if rural depopulation is to be avoided.

§ Lord Renton
My Lords, in their further consideration of this matter, would Her Majesty's Government feel that their hand was strengthened by the recently published report of the Royal Commission on Environmental Pollution, and bear in mind that the smoking of tobacco possibly causes individuals more harm than the matters considered in that report?

Earl Howe
My Lords, as I said, the campaign to discourage the smoking of tobacco is one of the main planks of the Health of the Nation initiative. I agree with my noble friend that that effort should not be relaxed. The Government have consistently criticised the tobacco regime. We shall continue to do so. We also support the reorientation of tobacco production away from high tar varieties into low tar varieties. But when all is said and done, demand for tobacco stems from consumers. The fact is that imports meet over two thirds of consumption and are increasing.

§ Lord Carter
My Lords, despite the evident absurdity and expense of the tobacco subsidy, it represents, as the Minister said, an important source of income for farmers in southern Europe. Does the noble Earl agree that this is perhaps a case in which some variation of the bond system could be used whereby farmers would be compensated for the loss of income but the EU would stop subsidising the production of tobacco?

Earl Howe
My Lords, I am sure that that idea will be explored. I am grateful to the noble Lord for putting it forward. We return to the rural depopulation issue. One must find alternative activities for current tobacco growers to engage in. That is a very difficult problem which the Community will have to address.

§ Lord Boyd-Carpenter
My Lords, does my noble friend agree that the argument that useful employment is given in the production of such a poisonous product is a very weak argument which could be applied to the production of other poisons? Has Her Majesty's Government taken action to try to ensure that the Community stops giving the subsidy altogether?

Earl Howe
My Lords, tobacco is indeed a noxious substance, as my noble friend said. But we still live in a free country. It is open to men and women to possess 534 and smoke tobacco, if they wish to do so. The Government have not yet taken the step of forbidding people to smoke tobacco.

§ Lord Mackie of Benshie
My Lords, is not one of the worst features of the regime—and I appreciate the arguments involved—not the fact that they are growing tobacco of either high tar or low tar, but that they are growing tobacco which even the addicts do not want to smoke? That is one of the reasons for the increase in imports.

Earl Howe
My Lords, the stronger forms of tobacco which used to be a feature of the tobacco grown in the EC are now on the decline. We are encouraging, with the Commission, those countries which produce such tobacco to convert to lower tar varieties, and I believe that that is a useful way forward.