§ Mr. HoodTo ask the Minister of Agriculture, Fisheries and Food if he will make an application to the EU for compensatory payments to farmers for the effects of the current value of sterling. [55223]
§ Mr. RookerThe Government fully recognise the effect that the recent strength of sterling is having on the agricultural industry. The EU agrimonetary rules permit the UK to pay compensatory aid within a maximum ceiling to offset the income effects of revaluations of the sterling "green" rate. Following sterling revaluations in 1997 and 1998 about £165 million of aid is currently available to the UK, most of which is payable only to the cereal and beef sectors. The operation of the UK's EU budget abatement means that even paying the EU-reimbursed element of this aid carries significant public expenditure implications for the UK exchequer. Broadly speaking, the UK exchequer would bear around 71 per cent. of the costs of the £118 million EU-reimbursed element of this aid, and 100 per cent. of the costs of the £47 million national element making up this package.
It is against this background—and a tight position on public spending—that we have to take decisions about agrimonetary compensation. In recognition of the special circumstances facing the livestock sector, we announced on 18 December 1997 a one year, one-off package of aid to the beef and sheep sectors worth £85 million. This aid has provided substantial additional assistance to this sector.
My colleagues and I continue to keep the situation under review and are listening to the representations being made by the farming unions.