HL Deb 15 December 1999 vol 608 cc209-11
Baroness Jeger

asked Her Majesty's Government:

Why does the European Union continue to subsidise the growing of tobacco; and how much was spent on this subsidy in the last financial year.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman)

My Lords, Her Majesty's Government strongly disapprove of the common agricultural policy support regime for tobacco introduced in 1970 to support production in disadvantaged areas of the Community. We have argued consistently that the Community should progressively disengage from support for tobacco production on the g rounds of health and cost. We shall continue to press for further progress in that area. In the year ended 30th September 1998—the last year for which figures are available—just over 870 million ecus were spent on tobacco premia.

Baroness Jeger

My Lords, I thank the Minister for her reply. I have asked the same Question in the House for about seven years. Every time I receive a similar Answer: that the Government do not approve of subsidising tobacco growing, but because of the CAP we are bound to dish out money for it. Does the Minister realise that there is a contradiction here? Quite rightly, we spend millions of pounds on campaigns to stop people smoking in this country and to stop advertising and yet we ask the British taxpayer to pay taxes to subsidise the growing of tobacco. I believe that that is unsupportable.

Does the Minister realise that much of the tobacco that is grown in Europe is substandard? According to the World Health Organisation, a great deal of that tobacco is exported to the poorer countries of the world, where, as the WHO also tells us, smoking is increasing. I hope that some thought will be given to the ridiculous situation of sending subsidised tobacco to the poorest people in the world while spending millions on telling our own people not to smoke.

Baroness Hayman

My Lords, I have considerable sympathy with the points made by my noble friend. We have to recognise the contradictory nature of paying premia for a product that gives rise to such grave health concerns and which damages so many people's lives and health. My noble friend says that she has asked this Question for seven years. As she will know, there was some reform of the tobacco regime in 1992 with the introduction of a clawback arrangement of 1 per cent of the premia. In 1998 there was a modulation of the premia according to quality and a quota buy-back system for growers wishing to leave the sector. The clawback arrangements were increased to 2 per cent.

However, I recognise what the noble Baroness says about the quality of the tobacco that is grown and the way in which it is exported. The Government recognise and share the concerns. They have done all that they can and will continue to work in that area, but being part of a union where there are eight producer nations means that it is not so easy to make the progress that we would like.

Viscount Waverley

My Lords, is it the intention that all subsidies, including those that are camouflaged, will become illegal under World Trade Organisation rules?

Baroness Hayman

My Lords, the outcome of the latest WTO negotiations is so clouded as not to allow me to give an absolute Answer to the noble Viscount at the moment. However, I shall write to him on that issue.

Lord Pearson of Rannoch

My Lords, I apologise for putting the matter this way, but can the Minister answer the Question on the Order Paper? Why does the European Union continue this absurd folly? In relation to the second part of the Question, can she say how much the United Kingdom contributes to the £700 million or £800 million that go down that classical "Euro drain"?

Baroness Hayman

My Lords, I tried to answer the Question. I was asked how much was spent on the subsidy in the last financial year. I gave the last available figure which, as the noble Lord may be interested to know, was 2.5 per cent of the overall CAP payments. I cannot work out the British share of that amount in my head, but I shall do so back at the office and write to him on that point.

I also said that the reason that the CAP support regime was introduced in the first place was to support production in disadvantaged areas of the Community, to maintain farmers' incomes and to reduce surpluses by adapting production to market needs. I imagine that that is the same reason that it is supported by those countries where tobacco producers operate now.

Lord Bruce of Donington

My Lords, is the Minister aware that, according to recent authenticated reports, this area of expenditure was the subject of considerable fraud which brought into disrepute the whole way in which these funds are administered, both centrally and regionally? Will my noble friend agree that once again this is the result of qualified majority voting applying to all European expenditure and the allocation of resources? Will she agree also that any further endeavour to introduce qualified majority voting ought to be resisted with the support, I imagine, of the entire United Kingdom population?

Baroness Hayman

My Lords, I always hesitate to answer on behalf of the entire United Kingdom population in these matters. My noble friend is absolutely right that this matter is governed by qualified majority voting and that fraud has been a serious problem in this sector. The reforms in 1992 to which I referred reduced the opportunity for fraud by eliminating intervention and export refunds and by simplifying the premium arrangements, reducing the categories of tobacco on which payment was made from 34 to eight. The member states were also required to set up national control agencies in order to oversee the payment of premiums, the administration of the quota system and the contractual arrangements. Expenditure is going down in this area but, as I said before, we still believe it is too great.

Baroness Trumpington

My Lords, does the Minister realise that she has my sympathy on this occasion, as well as sympathy for the noble Baroness who asked the Question? I spent a great many years answering in her place on this subject. As far as I remember I was told that most of the money goes to Greece for areas where they can grow nothing else.

Baroness Hayman

My Lords, the noble Baroness recalls well. Greece is one of the areas, together with France, Germany, Spain, Portugal, Belgium, Austria and Italy, that receives subsidy in this regard. It is a major problem because major investment is often required to help people to change. The alternative crops are often themselves in surplus, like olive oil and wine. Added to that, tobacco still attracts the highest premiums per hectare under the CAP regime. Changing things is therefore not an easy task.