HL Deb 07 November 2001 vol 628 cc203-4

3.1 p.m.

Lord Willoughby de Broke

asked Her Majesty's Government:

Why the Department for Environment, Food and Rural Affairs has announced reductions in compensation paid to farmers for animals which due to movement restriction will have to be destroyed because of the lack of food and shelter during the coming winter.

Lord Whitty

My Lords, the Livestock Welfare (Disposal) Scheme is intended to provide a disposal route for animals whose welfare has been compromised by the foot and mouth movement restrictions. It is preferable for those animals to be marketed for further fattening or human consumption, and in most parts of the country that is now possible. The scheme is not intended to form an alternative market but to provide a temporary source of income to address the welfare problems caused by these restrictions. The payment rates are kept under review to make sure that they do not represent an alternative to normal market rates. I recently announced new rates applicable from 30th October. Those reflect the trends in current market prices, which in most cases have been downwards.

Lord Willoughby de Broke

My Lords, I am grateful for that Answer. Can the Minister confirm that it is only because of the Government's foot and mouth restrictions that these farmers are unable to market their animals? In that case, is it not somewhat mean-spirited of the Government suddenly to announce a savage reduction in compensation, particularly as the scheme has only six months to run? Will the noble Lord reconsider that decision?

Lord Whitty

My Lords, no. The rates as announced in the summer approximated to 70 per cent of market value for the temporary period while the restrictions still applied to a large part of the country. First, only a very small part of the country is now affected by those substantial restrictions; and, secondly, market prices have moved, in most cases downwards. In the case of breeding ewes, where the rates have moved upwards, we have raised the amount. As for being mean-spirited, your Lordships should know that the cost of compensation under this scheme, which is basically a safety net, is over £200 million. The total cost including disposal is more than twice that figure. I do not believe that that is mean-spirited by any stretch of the imagination.

Baroness Byford

My Lords, I accept what the Minister has just said. I remind the House of my family's farming interest. But the cuts are very drastic: from £18 to £10 for culled ewes; £25 to £10 for all lamb; £700 to £350 for cows and heifers; and a new category for breeding ewes. Those are not minor but major cuts. Will the Minister reflect that perhaps if the Government had got to grips with the outbreak in the first place we would not find ourselves in this position today?

Lord Whitty

My Lords, the various inquiries into this disease will undoubtedly show that there were some things that the Government could have done better, but their commitment and that of DEFRA's officials, in conjunction with the industry, to contain the spread of this disease was absolute throughout the epidemic. It is, therefore, wrong in any sense to ascribe to the Government the rapid spread of this disease. In many cases it was due to practices that had grown up within the farming trade, and were perfectly legal, which meant that the movement and mingling of animals spread the disease throughout the country much more rapidly than had ever been anticipated. As a result, there is a huge cost to the taxpayer in terms of compensation, administering the scheme and the safety net for livestock welfare disposal to which I have just referred. The total cost to the taxpayer of this epidemic will be over £2 billion. That is a tragedy for the farming industry and a huge cost to the taxpayer, but it is not the Government who caused this. The Government have had to pick up the bill and try to deal with the epidemic as far as possible.

Baroness Miller of Chilthorne Domer

My Lords, perhaps the Minister will agree that one way in which the Government tried to give farmers a fair price for their produce was to ask the Office of Fair Trading to look into supermarket pricing. That resulted in the Government publishing last week a code for supermarkets. Can the Minister say why the Government have failed to do anything about a regulator for that code which means that there is no one to enforce it? Does the noble Lord believe that that is a gap which the Government should rectify?

Lord Whitty

My Lords, this arose directly out of an OFT inquiry some months ago which produced a code of practice for the dominant supermarkets in their dealings with suppliers. I suspect that in the course of the deliberations of the Policy Commission on the Future of Farming and Food the issue of relationships between supermarkets and their suppliers will be addressed again, and there may be other issues that we need to deal with in that context.

Lord Tomlinson

My Lords, does my noble friend agree that, notwithstanding the £2 billion of special payments made to agriculture arising from the disease, to put some of these complaints into perspective it should be borne in mind that the normal subsidy to agriculture exceeds the total that is received by the whole of British industry?

Lord Whitty

My Lords, I agree that that is a correct perspective, and certainly payments mainly via the common agricultural policy need to be borne in mind. The Government are committed to major reforms of the CAP which they hope to start to negotiate next year.