HL Deb 02 July 2003 vol 650 cc880-2

3 p.m.

Lord Livsey of Talgarth

asked Her Majesty's Government:

What impact different levels of decoupled common agricultural policy support in various European Union countries are likely to have on the future profitability of United Kingdom farming.

Lord Whitty

My Lords, economic analysis of the common agricultural policy proposals shows that full decoupling would give fanners in the UK the opportunity to cut costs and increase their incomes. The benefit to farmers in other countries will, of course, depend on the extent to which they decouple, but it is unlikely that if they adopt a partially coupled approach they would have any competitive advantage.

The CAP package includes several options. Farmers can retain 25 per cent in arable or 50 per cent in sheep, and there is a variety of recoupling percentages for beef. It is difficult to work out the total effect, but our contention is that full decoupling, which we intend to pursue in the UK, will give our farmers greater clarity and greater ability to produce for the market, rather than for the subsidy.

Lord Livsey of Talgarth

My Lords, I thank the Minister for that reply, but I wish that a fully independent and objective analysis could be made of the comparisons that need to be made. Will the Minister and his right honourable friend commission an independent report by one of the university agricultural economics departments, so that an evaluation can be made of the impact on the profitability of different UK farming systems of last week's agreement on CAP reform? That could then be fed into the public domain and used for policy initiatives to the benefit of UK agriculture.

Lord Whitty

My Lords, it is not clear what kind of study the noble Lord wishes. It will be a dynamic situation in the various farming sectors in the UK and in the other member states. The outcome will be affected not only by the changed CAP system but by the outcome of the WTO talks later this year.

The Government will, of course, take the best economic advice—as, no doubt, will the industry—on how things will work out in practice. Our assessment, based on the economic advice that we have, is that UK farmers will benefit, provided that they meet the opportunities with which the change provides them.

Lord Brittan of Spennithorne

My Lords, does the Minister agree that by far the best outcome would be for countries such as France, which have extracted the ability not to engage in full decoupling, to be persuaded that exercising that discretion would not be in their interest, as it would be administratively complex, expensive and, ultimately, not to the benefit of their farmers? Will he do everything possible to persuade such countries that, having achieved their politically necessary aims, they should not exercise the right given to them?

Lord Whitty

My Lords, I thoroughly agree with the noble Lord. As he will know from his long experience, persuading the French of what is logically and clearly the case is not always the easiest task. I suspect that, in a few years, the sou will have dropped, both with French farmers and with the French Government.

Lord Carter

My Lords, is it not correct that UK farmers have a head start because we have gone for full decoupling? Why on earth should we try to persuade the French to create a level playing field?

Lord Whitty

My Lords, my noble friend is right. British farmers, if they take the opportunities provided by the package, should be ahead of the game in meeting the markets nationally and internationally. It is not up to Her Majesty's Government to support the French Government in continuing to hobble their own farmers. In this country, we like to see fair competition, so I would not go along entirely with my noble friend's anti-French remarks.

Earl Peel

My Lords, can the Minister tell the House whether the new entitlements that will be paid to farmers under the CAP reforms will be attached to the land or to the farmer? If the entitlements are attached to the farmer, there is a real possibility, because of the environmental cross-compliance conditions that go with the entitlement, that the farmer could walk away from the land, taking with him the responsibility for environmental management that will have been built up on the back of taxpayer's money. The taxpayer will have a bad deal, unless the entitlement is firmly attached to the land and not to the farmer.

Lord Whitty

My Lords, as the noble Earl knows, there are arguments both ways. The system agreed in Luxembourg will mean that the entitlement—the single-farm payment—would go to the producer on the land as of 31st May this year. The amount would depend on an earlier reference period. It would be transferable, but only if the land to which the then producer was attached were replaced by an equivalent amount of land elsewhere. The aggregate amount of land to which the cross-compliance arrangements applied would continue to be constant for the same amount of subsidy.

I agree that there are downsides to that, but there are also upsides. Eventually, the whole country will, at some time, be covered by the cross-compliance arrangements.

Baroness Byford

My Lords, following my noble friend's question, I ask the Minister to tell us what happens if the person who is entitled to the payment dies. Does it go back into a common pool?

Lord Whitty

My Lords, if the person to whom the entitlement applies is the inheritor of the land, it will go to the heir to that land. There are, of course, complex, different systems of tenure throughout Europe.

If the lease ends because of the death of a tenant, the entitlement would revert to the landowner in the short term and would be available to the new tenant, if a new tenant were to take over the land. The new tenant would then have the option—as the deceased tenant would have had—of moving to another part of the country with the same amount of subsidy. Even through death, the total amount of land would remain in cross-compliance.

Lord Harrison

My Lords, can my noble friend remind us whether the successful CAP reform brought home this week was achieved by qualified majority voting, thus preventing the exercise of any veto that might have scuppered that successful deal?

Lord Whitty

My Lords, in agricultural policy, as my noble friend knows, there is no veto. Had it come to a vote, a result could have been achieved by qualified majority voting. However, the way in which the Council proceeded ensured that, in the end, despite the reluctance of—principally—one country, the package was agreed without a vote.