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Commons Chamber

Volume 114: debated on Thursday 23 April 1987

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House Of Commons

Thursday 23 April 1987

The House met at hall-past Two o'clock

Prayers

[MR. SPEAKER in the Chair]

Private Business

GEORGE DONALD EVANS AND DEBORAH JANE EVANS
(MARRIAGE ENABLING) BILL [Lords].

Read the Third time, and passed, without amendment.

JOHN ERNEST ROLFE AND FLORENCE IVEEN ROLFE
(Marriage Enabling) Bill [LORDS].

Read the Third time, and passed, with amendments.

London Regional Transport Bill

Order for consideration, as amended, read.

To be considered upon Tuesday 28 April.

Whitchurch Bridge Bill

MASONIC TRUST FOR GIRLS AND BOYS BILL

As amended considered; to be read the Third time.

YORK CITY COUNCIL BILL (By Order)

CITY OF WESTMINSTER BILL (By Order)

TEIGNMOUTH QUAY COMPANY BILL (By Order)

LONDON DOCKLANDS RAILWAYS (BECKTON) BILL (By
Order)

Orders for second reading read.

To he read a second time upon Thursday 30 April.

Oral Answers To Questions

Agriculture, Fisheries And Food

Hengistbury Head

1.

asked the Minister of Agriculture, Fisheries and Food how much grant-aid will be given for coastal protection work to Hengistbury Head.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food
(Mr. Donald Thompson)

I am not yet in a position to quote precise figures, but, taking into account the grant previously approved on the first phase of the work, it seems likely that the total grant will be a little under £2·3 million when paid.

Will my hon. Friend accept the grateful thanks of my constituents and of Bournemouth borough council for this grant-aid to prevent further erosion of this important part of our coastal heritage, which is also a valuable tourist attraction? Does he agree that this kind of public expenditure has become available only as a result of the Government's prudent management of our economy? What percentage of the total cost of the coastal protection work does this grant-aid constitute?

I agree that prudent management has made about £13 million available this year for such work. The figure that I quoted for the grant for the first phase of the works represents 63 per cent. I expect that later phases will increase that percentage.

Would this be regarded as a specially-assisted general election area grant?

I notice that the hon. Gentleman has not put in for a grant for his coastline. But if he could, he would. We are spending nearly £1 million in Newbiggin in Northumberland and we hope that that will help us in the election. We are spending £4 million in Blackpool and £2 million in Whitby, and we hope that that will help as well.

My hon. Friend will be aware that the eastern exposed part of Hengistbury Head is in my constituency. Is he aware that the tidal flow around the head has long been presumed to be one of the main causes of the continuing loss of sand on Friars Cliff beach? Will he ensure that when money becomes available—as he has announced today—research into that aspect, which bothers many of my constituents, will be funded out of that or alternative sources?

I am sure that my hon. Friend will have many opportunities over the years to repeat that question, and we will consider it carefully then.

Tenant Farmers

2.

asked the Minister of Agriculture, Fisheries and Food when he last met representatives of tenant farmers; and what subjects were discussed.

I meet tenant farmers and their representatives regularly to discuss matters of mutual interest.

When will the Minister reply to my urgent letter of six weeks ago posing questions to him about grass keep and the transfer of tenancy between father and son? Does he accept that his suggestions about planning guidelines, taken with the threat to country structure plans and the reduction of protection for agricultural lands, could leave tenants facing incontestable eviction orders, without adequate compensation?

I have a copy of the hon. Gentleman's letter. It is a long, three-page letter, to which we are trying to give him a detailed reply.

The proposed changes in planning procedures would not put tenants in a worse position than they are in now in terms of protection or compensation. All proposals for the development of agricultural land will still require planning permission. Local authorities will have to look at each case on its merits in the light of general Government guidance. Moreover, if a landlord is granted planning permission, a tenant can receive additional compensation—a sum equal to four years' rent —over and above the basic compensation. Compensation is also available for improvements and other tenant rights.

When my right hon. Friend last met the tenant farmers, did they congratulate him on the Government's policy which allowed farm rents to be charged on the earning capacity of the land?

As far as I can remember, that particular point did not come up, but I am pleased to say that the Agricultural Holdings Act 1984 has had the effect of encouraging rather more tenancies. Certainly the Central Association of Agricultural Valuers' surveys in 1985 and 1986 have suggested that there has been an increase in fresh lettings in the private sector since Parliament passed that Act.

Is the Minister not at all concerned about the fact that there are now 5 per cent. fewer tenanted farms than there were when the Government took office, partly because of the predictable failure of the legislation to which he has just referred, but also because of the deplorable conduct of Tory-controlled local authorities, and, indeed, the Scottish Office, which have been disposing of let smallholdings? Will he acknowledge that the Labour party's proposals for a land bank to make land available to let to tenant farmers is the only way in which more tenants will be able to come into the industry?

I am sure that the hon. Gentleman will long have the opportunity to sit on the Opposition Benches spending money, of which, mercifully, he will never have control, on various wildcat schemes that he might think are a good idea for the time. In the months that lie ahead the Labour party's agricultural policy will get just about as much support as it has always had.

Farm Incomes

4.

asked the Minister of Agriculture, Fisheries and Food how average farm incomes in the United Kingdom for the latest available period compare with those for the other nine member states of the European Community.

The Minister of State, Ministry of Agriculture, Fisheries and Food
(Mr. John Selwyn Gummer)

Commission figures show that in 1984–85, the most recent year for which figures are available, farm family income in the United Kingdom was broadly twice the Community average. The United Kingdom was fourth highest in the Community, ahead of both France and Germany.

I am grateful to the Minister for his reply, but is he aware that between 1980 and 1986 the net incomes of farmers in Wales dropped by 34 per cent., while the net incomes of farmers in the United Kingdom dropped by 21 per cent.? Does the blame for that lie with the Secretary of State for Wales, the Minister of Agriculture, Fisheries and Food, the Government, or the EEC?

It is still true that the average incomes of everyone working in agriculture have risen more in Britain over the past three years than in France, Italy or Germany. That must be because of the excellent arguments of this Government, who fight for British farmers within the EC harder than any other Ministry.

Does the Minister agree with Mr. Robin Leigh-Pemberton—as he well knows, a farmer as well as the Governor of the Bank of England — who, in a reported statement last week following an address to an audience of farmers, said that in his view the outlook for farmers' incomes will get worse rather than better?

Farmers have a real future within the Community if they are efficient and sell their goods effectively, and if the Government continue in office, fighting for British farmers within the EC.

What would be the effect on net farm incomes if the scheme proposed by the leader of the Social Democratic party were put into operation — a scheme which the president of the National Farmers Union has described as a disaster, or a potential disaster?

The effect would be to increase the incomes of other countries' farmers relative to those in the United Kingdom and to depress most significantly the income off our largest producerss of grain, as well as the income of the producer of other products. The fact of the matter is that my hon. Friend is a little out of date. There have already been three agricultural policies from the alliance since that one, each worse than the previous one.

Is the Minister aware of the danger of quoting averages and of the fact that in Wales about one third of small farmers are on family income supplement? In view of that, will he state the Government's attitude towards the European Community's plan to top up farmers' incomes? Will he give an assurance that, if the scheme goes ahead, we shall not miss out in competition with France or Germany?

The hon. Gentleman is quite right. Averages are not always helpful, but if we are to compare countries, it is difficult to find another way to do so. The problem that he put forward is that, because the average size of farms in the rest of the Community is between a quarter and a fifth of what it is in this country, if we go ahead with the kind of scheme that is proposed it is likely that precisely what he wants will not be obtained. In other words, the majority of the money will go to other countries' farmers and not to those in this country. The Government have been seeking to ensure that, in all decisions within the Community, British farmers are dealt with fairly. That is our job and that is what we are working towards.

Alternative Farm Enterprises

5.

asked the Minister of Agriculture, Fisheries and Food what is the value of the output of alternative farm enterprises from commercial holdings in the most recent year for which figures are available.

The phrase "alternative farm enterprises" covers a wide range of farm-based activities. I am afraid that no single figure for output is available.

Does the Minister accept that the recent figures announced in his programme of £25 million subsidy is pathetically small in comparison with the £2·5 billion subsidy to agriculture in general'? How will the ALURE proposals affect this policy and arise when the figures are so small and he is not able to respond to the question that I originally asked?

The hon. Gentleman's original question was suitably vague, and therefore he got a suitably vague answer. The £25 million is to be added to the whole range of grants that are available in the hon. Gentleman's constituency and other less-favoured areas, which are sometimes as high as 30 per cent.—often 15 per cent.—and for environmentally beneficial works, 60 per cent. The less-favoured area grants are well appreciated and well understood by farmers. If we add the amount that the hon. Gentleman put to the grants already available, it comes to a substantial sum.

Does my hon. Friend agree that whatever may be the potential income from alternative farming enterprises, the main income for farmers will still be derived from producing traditional crops and other foodstuffs that are produced on the farm? Does he not think that it might be appropriate at this moment to pay tribute to those who have done a marvellous job in marketing our cereal surplus during the past year, because they have halved to just under 2 million tonnes the amount of surplus cereals that we are carrying forward to next year?

It is a remarkable piece of marketing that I hope will be taken up by other parts of the industry. Marketing is most important. I agree with my hon. Friend that the main range of crops will, and must, be the basis of British farming for years to come.

Will the Minister tell us how many jobs he expects to be created as a result of the £25 million investment in alternative enteprises that was announced by his right hon. Friend last month? Will he confirm that the £25 million is new money and that he is not simply talking about money that has already been earmarked for investment in the countryside

It is new money, and it is a good initiative that saves jobs before they are lost. That is the sort of thing for which the hon. Gentleman has been looking for a long time.

Does my hon. Friend agree that despite the fact that many people claim that agriculture is being subsidised to the tune of £2·5 billion, according to our right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), the net cost to the Treasury of agricultural support is only £246 million? Will he explain this inconsistency?

My hon. Friend has obviously read the White Paper and is still reading it. In fact, he has not got to the part that gives him the answer to the question about which he is coming to see me next week.

Sheepmeat

6.

asked the Minister of Agriculture, Fisheries and Food if he will take steps to ensure the future of the European sheepmeat regime.

The regime brings considerable benefits to British producers and consumers and is an important factor underlying our strong sheepmeat sector. I shall continue to resist firmly any changes that would discriminate against United Kingdom interests, including the introduction of two-tier pricing.

Can the Minister tell us what progress he hopes to make in the coming summer's review of the European sheepmeat regime, and can he give us some indication of the proposals that he will put to the Commission to secure the position of British sheep producers, particularly in the less-favoured areas?

The present regime has great advantages and we intend to defend those. It is the Commission that is doing this review, and no doubt we shall seek to put forward our views. The one thing that we must ensure is that there is no discrimination against the United Kingdom. That is why I again raised the question of two-tier pricing, because that is the way to ensure discrimination. I hope that the hon. Gentleman will dissociate himself from his own party's policy on this matter.

May I express the hope that in fighting for British farmers the others come off worse than my right hon. Friend?

As the right hon. Gentleman knows, two-tier pricing is not the only discrimination. The current proposal by the Commission in the price negotiations is to limit the grant to flock sizes, which would be heavily discriminatory against the United Kingdom. Will he ensure that that does not get through?

The hon. Gentleman is quite right and is at one with us in fighting against that. I draw to his attention the fact that that is one of the things we find so unacceptable in the policies put forward by the alliance parties, which constantly suggest that we can have a policy in the Community that gives special help to small farmers while ignoring the fact that small farms in the Community are very much smaller than small farms in Britain. It is no good suggesting that we can have a Community policy that excludes all those small Farms but gives special help to British small farms. One can say that only if one's remarks are directed at the electorate and not at the Community as a whole.

Will the Minister address the real concerns of those who are raising sheep in the hills and uplands, namely that measures to constrain production of cereals on lowland ground will lead to the expansion and proliferation of sheep flocks in these areas, to the detriment of the store breeders in the hills and uplands?

That is why, in the proposals by my right hon. Friend the Minister of Agriculture, Fisheries and Food, the suggestions for set aside will not allow payment to be made for those who move into grass and use that grass in competition with those on the hillsides. When any of the hon. Gentleman's constituents raise these concerns, he is able to defend the policies of the Government in protecting their interests. I hope that he will also tell his constituents the truth about his policy, which would harm them very considerably.

Milk Quotas

7.

asked the Minister of Agriculture, Fisheries and Food when he next intends to have discussions with the European Community Council of Ministers about the operation of milk quotas.

The next meeting of the Council of Agriculture Ministers will start on 27 April, but the operation of milk quotas is not on the agenda for that day.

Is my right hon. Friend aware of the deep resentment felt by many British dairy farmers over the fact that New Zealand imports are included in the British national quota? Does he think that this is fair, particularly when one third of the butter consumed in this country comes from New Zealand?

My hon. Friend will remember that when we joined the Community, part of the negotiation was that part of our butter market should be available to New Zealand. My hon. Friend will also recall that the importation of New Zealand butter has halved since we joined the Community, and each year imports are on a descending scale. This matter will come up for review again next year, and no doubt the comments of my hon. Friend will be heard and noted by the Commission at that time.

Will my right hon. Friend bear in mind that, since New Zealand has reneged on her defence commitments, she has no further claim to part of our market for agricultural produce?

I hear what my hon. Friend had to say. I think he knows, as I do, that many farmers in Britain have expressed similar views. However, it is not a matter for immediate negotiation. It will come up again next year.

Is the Minister aware that when I recently attended my regular meeting with the Cumnock branch of the National Farmers Union of Scotland, the right hon. Gentleman was about as unpopular there as at the annual meeting of the National Farmers Union of England? One of the questions asked by my constituents in the farming industry related to reductions in milk quotas. Can the Minister say what compensation will be given to farmers who are compulsorily required to reduce their milk quotas? Will it be in any way similar to that given to those taking part in the outgoers scheme?

In answer to the hon. Gentleman's first comment, I can only say that these are not happy times to be a Minister of Agriculture anywhere in Europe. At least I have not been burnt in effigy, as my German colleague has been on a number of occasions—[Interruption.]

Compensation for reductions in milk quotas is to be made at the same rate as in the previous outgoers scheme—27·5p per litre will be paid over seven years. The temporary suspension of quota will be compensated at 6·5p a litre. Bearing in mind that the average profit on a litre of milk is between 3p and 4p, the hon. Gentleman will surely agree that the second of those levels is generous.

My right hon. Friend has presented the House with a great temptation this afternoon, but will he reconsider the very relevant question put by my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox)? Is it fair, when my right hon. Friend and his colleagues on the Front Bench make great play of the contribution to dairy surpluses made by the United Kingdom dairy industry, that we should have to accept about 76,000 tonnes of New Zealand butter, when that is the reason for our contribution to the surplus? Will my right hon. Friend say now that he thinks it wrong that United Kingdom dairy farmers' income and future should be placed in jeopardy because we in the United Kingdom take sole responsibility for New Zealand butter in the EEC?

Yes, but many hon. Members at the time of our accession to the EEC were insistent that adequate steps be taken to preserve the position and to look after New Zealand. If my hon. Friend would be good enough to look at the figures, he would see that the amount of butter that is manufactured in this country and put into intervention is larger than the amount that is imported from New Zealand.

Does the Minister accept that, even after the recent rise in the outgoers scheme price, it is almost certain — as market prices are running ahead of the 27·5p a litre that he mentioned — that that will be the flop that its predecessor was? Will he reconsider the position or does he think it just and fair that those awarded hardship quota by the tribunals are still receiving only 50 per cent. of that quota?

The reason why hardship cases last year were not able to receive their full quota was the lack of milk available to be allocated to them. We could have allocated 100 per cent. to the hardship cases, but that would have meant finding the milk from the others who had set quotas. Unfortunately, we cannot produce spare quota from thin air.

When my right hon. Friend read the recent Court of Auditors report, did he notice that the cost of cold storage for butter stocks alone exceeded the entire revenue that was raised by the milk co-responsibility levy? Does that not show what nonsense has been made of CAP economics, and does it not point to the need for further sensible reform that is fair to the United Kingdom dairy sector?

Yes. My hon. Friend will know that I have been making that point for a very long time. He will agree that the ultimate nonsense is that half the total costs of running the European Community relate to the storage and disposal of surplus foodstuffs.

Beef

8.

asked the Minister of Agriculture, Fisheries and Food when he will next meet the president of the National Farmers Union to discuss the beef sector of the agriculture industry.

I meet the president of the National Farmers Union frequently. On 1 April we discussed a number of matters, including the state of the beef sector.

When my right hon. Friend next meets the president of the National Farmers Union, will he discuss with him the very real anxieties of the hard-pressed beef producers in this country, and in particular the anxiety about the effect on the market of the cow cull that will result from the implementation of the outgoers scheme? Is he aware that there is some confusion about the existence of some 430 million ecu, apparently to help to stabilise the market, and will he be so kind as to explain this to the House?

Yes, I am glad to explain to my hon. Friend that the Commission recognises that measures taken in the milk sector will have an impact on beef producers. It estimated that the cost of the dairy package that would fall on the beef budget would be 435 million ecu in 1987 and 1988. That figure, which was confirmed by the Commission on 27 March, is an estimate of the extra expenditure on aid for private storage and export refunds that could arise as a result of the extra cow beef coming on to the market.

Republic Of Ireland (Beef)

11.

asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the level of import of beef from the Republic of Ireland.

Imports of beef from the Irish Republic totalled 122,000 tonnes in 1986. The green rate change secured in December has reduced the UK MCA and eliminated the advantage which Irish exporters gained last summer. Imports in the first two months of 1987 were 15,656 tonnes.

Does the right hon. Gentleman accept that the only reason why imports of Irish beef in recent months have fallen below the 10,000 tonnes a month that were being imported at the end of 1986 is that the Irish seem temporarily to have run out of cattle to send here? Is there not a very serious threat of a new surge of imports following the clampdown on intervention buying in the Republic of Ireland earlier this month, and will he take urgent action, either through a further adjustment of the green pound or through any other mechanism that is available to him, to protect the interests of British producers against unfair competition from Ireland?

The hon. Gentleman must, I think, accept that that is not the only reason. Part of the reason is the effect of the change in the green pound that we have already secured, but he is perfectly right in saying that the green pound differential adds to the difficulties and provides opportunities for the Irish in our market. It is a traditional market for the Irish, and the hon. Gentleman is quite right that many British farmers very rightly feel aggrieved that they are being undercut in their own market. However, I would remind him that this is partly also one of the inevitable effects of the beef variable premium arrangements, which were put into operation by his own right hon. Friend. Those arrangements mean that the beef variable premium is payable on Irish products that are sold in this country. In order to put that right, a series of measures will have to be taken. In our negotiations we are very conscious of the needs of the beef industry and of the way that it is affected by our near neighbour, the Republic of Ireland.

My right hon. Friend must be aware that in 1986 beef imports to the United Kingdom from Ireland were 48 per cent. above those of the previous year, and the 6 per cent. reduction in the green pound was certainly not adequate for United Kingdom beef producers. Will he therefore ensure in the negotiations that whatever reduction there may be in the green pound, it will not disadvantage United Kingdom beef producers? They cannot cope with a reduction in the green pound if the same kind of reduction is given to the Irish. The Irish should not be allowed unfairly to compete against United Kingdom producers.

My hon. Friend ought to remember that during the negotiations, and finally almost the fisticuffs, to ensure that the green pound devaluation for beef in this country was equal to that in the Republic of Ireland, we made the point that he has made, namely, that changes in the green pound for Ireland inevitably demand a similar change in the green pound for the United Kingdom if there is not to be a further distortion in relations between the two countries.

Price Fixing

12.

asked the Minister of Agriculture, Fisheries and Food if he will make a statement on progress with the price fixing negotiations in the Council of Ministers.

At the meeting of the Agriculture Council on 30–31 March Ministers set out their initial reaction to the Commission's price and agrimonetary proposals. I expect negotiations to start again at the meeting of the Council next week on 27–28 April.

What was the Minister's initial reaction to the ludicrous proposal from the Commission on the devaluation of the green pound?

I have told the Commissioner that we are looking very carefully at that situation. If the hon. Gentleman is a little patient he will find that I have some more to say about that at the beginning of the debate this afternoon, provided that I catch your eye, Mr. Speaker.

When my right hon. Friend next meets the Commission to discuss the price review, will he reassure the House that he will not accept proposals for a fats and oils tax?

Again, I say to my hon. Friend that I shall be saying more about that later this afternoon. Our opposition to that proposal is exactly the same as it has been in the past. We are wholly opposed to it.

Does the right hon. Gentleman accept that his opposition to such a tax will receive total support from all sections of the House? This is not a partisan issue in the House. The whole of the British people are opposed to any such tax on oils and fats.

I am grateful for the support of the hon. Gentleman. No doubt he was as pleased as I was to note that the Agriculture Committee of the European Parliament yesterday voted decisively against that tax. That fortifies me very much for the discussions next week.

Will my right hon. Friend also bear in mind that cutting prices will not solve surplus production, that in the past eight years the price of cereals has fallen by about 33 per cent., and that during that same period production has doubled?

On many occasions I have told my hon. Friend that I am aware that cutting prices alone will not deal with the cereals surplus. That is why I proposed last year to the Council of Ministers — when it met in the United Kingdom — that we should go for a land diversion scheme for cereals. I am glad about the decision that was taken a few weeks ago in Brussels in agreeing the socio-structural package and that we now have a door that is wider open to a scheme of the sort that I have been proposing to deal with the cereals sector. I hope that that will be further encouraged in the course of the weeks and months ahead.

Food Aid

13.

asked the Minister of Agriculture, Fisheries and Food what is his latest information as to the costs incurred by charities in the operation of the European Economic Community food aid scheme.

Community funds cover the costs for charities of packaging free food and transporting it to their own distribution points; and claims for a total of £1·8 million have so far been received by the Intervention Board for Agricultural Produce. Onward distribution costs were for the charities themselves.

Does the Minister accept that if any such scheme is discussed in future with the Commission, strong representations should be made to it so that charities can be properly compensated for their loss of time, use of premises and expenses under such a scheme?

The hon. Gentleman is right to say that we should learn lessons from the scheme. I hope he will not say that it was a complete loss. Most of the charities to whose representatives I have spoken have welcomed the opportunities that the scheme gave them. It has enabled them to reach people in certain areas whom they would not otherwise have reached. If the subject is raised again, perhaps the way to tackle it would be to make the scheme more efficient, but I do not know whether it will be raised.

Is my right hon. Friend aware that last month the Public Accounts Committee was told that 9,000 tonnes of butter had been given away under the scheme, but that stocks in this country remained at 237,000 tonnes? If he uses the scheme again to give some of those massive quantities away, will he ensure that the details are more accurately thought out first?

My hon. Friend must accept that it was never seen as a means of getting rid of surpluses. It was seen as a means of helping people who had been particularly hard hit by the bad weather. However detailed the organisation may have been, if we had held it up we would probably have got rid of less in this country, given the timing that was arranged. In the end, people can use only a certain amount of butter. We have given away 54 million packets of butter and over 8 million portions of beef. Some of us ought to say how good that is and support the charities for the work that they have done.

Should not the Government accept their responsibilities and properly cover the cost of the distribution of the food, rather than sponge off charities such as the Salvation Army and War on Want in such a disgraceful way?

To my knowledge War on Want has not been involved in this. The Salvation Army and the other charities that have been involved have all accepted the terms on which it was run with great enthusiasm. I am sorry to say to the hon. Gentleman, who I know does not mean his comments in this way, that the only people who are making the sort of comment that he is making are the politically motivated Members on the Opposition Benches.

Is my right hon. Friend aware that many people in the country believe that this scheme was a very good one and that it provided an advantage for the charities involved to do good work, which is what they are there to do? In future, will he see that the scheme is extended rather than diminished?

I agree with my hon. Friend that it has provided great opportunities and I very much commend the sort of comments that have been made by people such as the Cardinal Archbishop of Westminster and the heads of the Salvation Army and other charities about their pleasure at being able to take part in such an important scheme. Of course we must still learn from it. We are not complacent about it, but the nasty party political backbiting that we have heard from the Labour party is something that we should eschew.

Dairy Quotas And Beef Subsidies

4.

asked the Minister of Agriculture, Fisheries and Food what further representations he has received concerning the current changes to dairy quotas and beef subsidies; and if he will make a statement.

I frequently receive representations on these matters from farmers and industry representatives.

If more dairy cows are to be culled as a result of quota restrictions, can the Minister tell us what the effect will be on the price of beef in the short-term and the longer term?

I think the hon. Lady would probably agree that in the longer term — 18 months or so — the likelihood is that the beef market will firm up considerably because of the smaller dairy herd and the need to bring more forward from specialist beef producers. In the meantime, there is a wide range of views, some of them from independent sources, suggesting that it will not have a major effect. We are certainly going to spend a good deal of money trying to take beef off the market into third markets to try to help. If the hon. Lady will cast her mind back to the original imposition of quotas, the truth was that the effect upon the beef market was very much less than had been feared. The hon. Lady must watch carefully, but my own view is that things will not be as bad as some fear and that in the medium term there is a good future for the beef industry.

Will my right hon. Friend ensure the continuation of the milk quota leasing system, which worked well last year and brought a welcome degree of flexibility to the system? Can he explain why it has been stopped, and say whether he will reinstitute it as a matter of urgency.

We are doing everything possible to defend the flexibility in the system which the milk quota leasing opportunities give. We are the country most concerned with that flexibility. We are opposed by other countries in the Community and I am afraid that the Commission has not always found it possible to support us, although it does look as if it is being a little more supportive now. I hope very much that we will be able to continue that for as long as we have quotas, because flexibility is the name of the game if we are to ensure that the milk industry is open to others and is not just closed on those who are in it at the moment.

May I revert to the figure of 435 million ecus mentioned by the Minister as being the effect of cow culls on the beef industry? Will he now confirm that that is nowhere in the EEC budgets for the coming year, despite the Commission's obvious sympathy, which was mentioned by the Minister?

I have to say that exactly what my right hon. Friend the Minister and I have said in the House has been confirmed by the Commission. There is no doubt about it. The money is there for that purpose. It is there clearly in the budgets and was taken into account when the budgets were drawn up. It is there in the additions. If the hon. Gentleman would like to do the addition he will find that there is an extra sum for that purpose.

Will the Minister tell the House why he supports the Irish beef producers so that they can make a profit while beef producers in the United Kingdom make a loss?

I hope that the hon. Gentleman will bruit abroad that I was attacked violently in the Irish Dail for my opposition to the Irish subsidy—[Interruption.] My current state is not entirely the result of that. I do not think that anybody could accuse me of being other than extremely strongly opposed to any special treatment for the Irish. The Irish have been treated in a way that is not acceptable, particularly in the original allocation of dairy quotas. I am pleased to say that my right hon. Friend the Minister had a major success in ensuring that on this occasion the Irish got the same treatment as everyone else.

Prime Minister

Cereal Production (Balance Of Payments)

Q1.

asked the Prime Minister by how much the balance of payments in relation to cereal production has grown since 1979; and if she will list those industries, services or sectors where the balance of payments has grown by an equivalent or greater sum.

In 1979 the cereal sector had a deficit on its crude trade balance of nearly £500 million; for the 12 months to September 1986 it returned a surplus of nearly £100 million. Similar improvements have occurred in some other sectors, including organic chemicals, aerospace equipment, insurance, banking and other financial services, oil and natural gas extraction.

I thank my right hon. Friend for that reply. Does she agree that her reply is, in itself, a tribute to the efficiency and enterprise of agriculture and of the cereals sector in particular?

Yes, I agree with my hon. Friend that farmers have made an outstanding contribution to the economy. They and we know that some things, including cereals, are now in surplus. We have to try to deal with those surpluses because they are taking far too much of the total European budget. We shall try to do so at a rate with which the farmers can cope.

What does the Prime Minister intend to do for those sectors that have not done quite as well as the cereal sector—for example, electrical machinery, textiles and vehicles? In those sectors, a combined surplus of £1,400 million has turned into a combined deficit of £6,400 million under this Government. What will she do for those important industries?

Textiles, as the hon. Gentleman is aware, have made a tremendous comeback and monthly improvements are being made, both in the amount produced and in the excellent textile designs for clothing and furnishings. It sounds to me as though the hon. Gentleman is proposing a good deal of protectionism, which, of course, we reject. We have a multi-fibre arrangement. I remind the hon. Gentleman that Opposition Members frequently ask for more aid for Third world countries while denying them trade.

Is my right hon. Friend aware that it would be a disaster for cereal farmers if their agricultural buildings were rated, as the Labour party wants, or if their products suffered a two-tier price structure, which is what the alliance wants? Will my right hon. Friend confirm that the Conservative party is implacably opposed to the rating of agricultural properties and to a two-tier price structure?

Yes. We are totally opposed to the rating of agricultural property, which would not only have a disastrous effect on farming but would put up prices for the consumer.

Does the Prime Minister accept that, had the coal or textile industries received the same degree of protection that has been afforded to the cereal producers of Europe, their performance might have been rather better?

As the hon. Gentleman is aware, the textile industry has a multi-fibre arrangement, through the European Community, which is renewed each time that it runs out. The hon. Gentleman is aware of the difficulties of negotiations that we have with it. He is also aware of the massive subsidies that continue to go to the coal industry each year.

Engagements

Q2.

asked the Prime Minister if she will list her official engagements for Thursday 23 April.

This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.

During her busy day, will my right hon, Friend find time to consider supporting the Leader of the Opposition in his plea to teachers to desist from strike action, not for the selfish reason of trying to preserve the Labour vote in the election, but for the much more genuine reason that it will do grave damage to pupils and will affect the reputation of their profession?

I believe that parents have no sympathy whatsoever with teachers who disrupt their children's education and deliberately set out to damage their children's educational prospects. Most of us want teachers to be regarded with high prestige and as a profession. Professional people do not set out to damage the education of children in their care.

Has the Prime Minister yet ascertained what message was intended to be conveyed to her by the recent spate of letter bombs?

I am not quite certain what the right hon. Gentleman intends, but I personally find his question rather offensive.

Following the question of my hon. Friend the Member for Berkshire, East (Mr. MacKay), will my right hon. Friend send a message of encouragement to those teachers in my consitituency and elsewhere who are not taking industrial action? Is not the latest attitude of the appropriately named NUT a classic case of being willing to wound but afraid to strike?

I firmly believe, with my hon. Friend, that most teachers do not go on strike and will not go on strike. They appreciate the enormous increase in pay and the new salaries structure that has been granted to them. They wish to get on with the job of giving a good education to children. Those teachers deserve all our support and recognition.

In view of the various studies that have been undertaken under the Government's auspices into systems of welfare benefit payment, will the Prime Minister tell us whether she is opposed to any scheme that would make payment of full benefit to the unemployed or the families of the unemployed conditional upon their undertaking compulsory work or training?

We have no proposals for compulsory work or training. There are countries that have what is known as a workfare scheme. Such schemes vary enormously from state to state in the United States. At the moment we have the community programme in which people can engage, and we hope that they will engage in it. At the moment we have no proposals for compulsory work as a condition of receiving benefit. The right hon. Gentleman will be aware that we have already put through the House legislation that shows the general structure of our future welfare benefits.

Is the Prime Minister aware of the widespread concern there will be at the use of her phrase "at the moment"? I address the question to her again: is she in favour of forced labour, required as a condition of unemployment benefit, or is she not in favour of such forced labour? That is a very direct question. There must be a very direct answer.

May I put to the right hon. Gentleman—[HON. MEMBERS: "Answer."] I am trying to answer in a reasonable and reasoned way. The Opposition are not used to that. I put this point to the right hon. Gentleman: young people from 16 to 18 can stay on at school, can stay on in further education, can undertake a youth training scheme—they have a guarantee that they can do that—or they can do a job. I think that we shall very soon be putting to the electorate whether young people who neither stay on at school, nor stay on in education, nor take training, nor take a job, are entitled to receive supplementary benefit.

Can the Prime Minister explain to the House and to the country why, if youngsters are rich and indolent, tax concessions must be offered to get them to work, but if youngsters are poor and despondent, they are punished and have to take compulsory schemes?

The right hon. Gentleman is talking nonsense. These young people about whom we are talking have the chance of education, training and education through technical colleges, a youth training scheme for which they receive an allowance, or in many cases a job. They may choose to refuse all four, but it is not the Government to whom they then look to pay them. Any benefit they get then is found by working people, and many of us think that they are not entitled to call upon their neighbours to keep them under those circumstances.

Did my right hon. Friend hear or see the news last evening when one of the teachers' union leaders said that they hoped that pupils taking examinations would not be affected? Is this position not totally unacceptable? Will she ensure through the Secretary of State for Education that any teacher who withdraws his labour from pupils taking examinations will be dismissed, and furthermore that the union that encourages that will be prosecuted?

Teachers, if they wish children to do their level best in examinations, will not disrupt the education of those children, but will do everything to stay at their posts and help children study and pass their examinations. As far as dismissals are concerned, teachers are employed, not by Government, but by local educational authorities, and that is a matter for their decision.

Q3.

asked the Prime Minister if she will list her official engagements for Thursday 23 April.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Is the Prime Minister aware of the great sense of injustice among Scottish universities in general. and Aberdeen and Dundee universities in particular, at the latest round of cuts in funding? Does she not accept that it is almost impossible for universities to get on with the job of attracting research and teaching students when they are faced with cuts that threaten their very viability?

As the hon. Gentleman is aware, total funding to universities this year through the Universities Grants Committee was increased by 10 per cent. How that is distributed is a matter for the University Grants Committee, on criteria that it publishes. Some of it goes according to the excellence of research institutions in universities. The total amount is increased. Distribution is a matter for that committee.

Is my right hon. Friend aware that a number of teachers in my constituency have written to me enclosing their ballot papers for the NUT-NAS ballot, complaining bitterly that the ballot is not secret and that they have to return these forms, with their name and the address of their school open, to their union representative? In these circumstances, they feel that pressure is being quite unfairly brought upon them.

I am very glad that my hon. Friend has brought up that point. I agree with her that undue pressure is being put upon them. It is not surprising that many teachers are leaving both the NUT and the NASUWT, when these matters are occurring.

As there has been great difficulty in retaining both nurses and midwives, and in some parts of the country great difficulty in recruitment, will the Prime Minister accept that it would not be acceptable, for the third year running, not to implement the independent pay review body awards in full, and that it should not be stage? It is of particular importance, if we are to persuade teachers to go for an independent pay review procedure, that they should have confidence in the capacity of the Government to accept independent pay review awards.

As the right hon. Gentleman must be aware, a written question is being answered this afternoon, within about half an hour, on the results of the Government's consideration of the review body reports. I am rather surprised therefore that he chose to ask that question.

Q4.

asked the Prime Minister if she will list her official engagements for Thursday 23 April.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Order. The hon. Gentleman must make his question relevant to the Prime Minister's responsibility.

They all want to know about the teachers over there, so I am going to tell them. I repeat the question. Will the Prime Minister agree with me that one of the fundamental principles that divides democracy from dictatorship is the right of working people freely to negotiate with their employers without any pressure from the Government such as to destroy their negotiating power? Now that the right hon. Lady and the most hated Secretary of State for Education and Science that there has ever been — [Interruption] — have totally disrupted our children's education, and intend to continue doing so, will she have a good talk to him? The Prime Minister has only to order the right hon. Gentleman to reinstitute negotiating rights for teachers for all children to be back at school being educated properly.

The hon. Gentleman is aware that the Burnham committee had not been working for quite some time. It did not work through the most recent negotiations and the teachers' unions could not agree on what they would have. It was because the committee did not work that my right hon. Friend the Secretary of State for Education and Science had to take the action that he took. He has given teachers the best pay deal that they have ever had in history, including a good teaching structure, and many teachers are grateful for it——

It is something to do with money if they do not get it or if they have not got it. As the hon. Gentleman knows, the present negotiating position is temporary. There are many who say that they want a new negotiating position, and so do we. It is difficult, however, to get them to agree on what would be appropriate in the circumstances. We shall use the coming years to secure a new negotiating arrangement, which we want just as much as does the hon. Gentleman.

The hon. Gentleman referred to matters that had taken place this week. I do not think that the teaching profession has enhanced its status by the performance this week that was seen on television.

Business Of The House

3.31 pm

May I ask the Leader of the House to state the business for next week?

Yes, Sir. The business for next week will be as follows:

MONDAY 27 APRIL—Until about Seven o'clock, Second Reading of the Consumer Protection Bill [Lords].

Afterwards Second Reading of the Paliamentary and Other Pensions Bill.

Motion on the Coal Industry (Restructuring Grants) Order.

TUESDAY 28 APRIL—Opposition Day (12th Allotted Day). Until about Seven o'clock there will be a debate entitled "Housing: A Major Cause for Concern". Afterwards there will be a debate entitled "The Proposed Privatisation of Rolls-Royce". Both debates will arise on Opposition motions.

Motion on the Stansted Airport Aircraft Movement Limit Order.

WEDNESDAY 29 APRIL — THURSDAY 3o APRIL — Consideration in Committee on the Finance Bill.

At the end on Wednesday, motions on value added tax orders. Details will be given in the Official Report. FRIDAY I MAY—Private Member's Bills.

[Debate on Wednesday 29 April:

The Value Added Tax (International Services) Order 1987

The Value Added Tax (Betting, Gaming and Lotteries) Order 1987]

I am grateful to the right hon. Gentleman. I understand that the pay review body's recommendations on nurses' pay and the Government's reaction to them are to be made public this afternoon without an oral statement being made to the House. Together with many other right hon. and hon. Members, I condemn the evasive way in which the Government are announcing an important decision without giving the House an opportunity to cross-question the Secretary of State for Social Services. I hope that the Government will honour the recommendations of this year's review in full, pay the increase in full, date it from 1 April and not evade, dodge or give short change to nurses, as they have done for the past two years.

Has the Leader of the House read the statement which was made yesterday to the Select Committee on Transport by Mr. James Sherwood, to whom the Government sold off Sealink for a scandalously low price, to the effect that the shipping industry has been written off by the Government? In the light of all-party early-day motion 515, which has been signed by 234 right hon. and hon. Members, will the right hon. Gentleman give consideration to a debate in Government time on the merchant fleet so that the Government's deplorable indifference towards this vital part of our economic and defence capability can once again be considered by the House.

[That this House notes with anxiety the continuing rapid reduction in the size of the United Kingdom-owned and registered merchant fleet; notes that this reduction is only partly offset by the increase in the number of United Kingdom-owned ships on overseas registers; expresses its concern at the adverse impact of these developments on theUnited Kingdom's and North Atlantic Treaty Organisation's defence capability and the United Kingdom economy, including shipbuilding, employment and the balance of payments account of the United Kingdom, notes the dearth of new investment in British-owned ships, whether new or secondhand, which alone can remedy the situation; and calls on Her Majesty's Government to take urgent steps in the forthcoming Budget to encourage such investment and to initiate action in the European Community to adopt domestic policies which will restore the profitability of ship owning and international policies to scrap surplus ships and unfair practices in shipbuilding and trading.]

I am sure that the Leader of the House will recognise the urgent need for a debate on the order on teachers' pay and conditions, which is part of the legislation that has so damaged relations in education by destroying the negotiating rights of teachers. I asked him before the Easter recess for a debate on the order. Can he now give us a date for a debate?

As the right hon. Gentleman may recall. I have previously pressed for an urgent debate in Government time on the Government's grossly inadequate policy on research and development. Has the right hon. Gentleman been able to arrange for such a debate, since it is obvious that there is great interest in the subject on both sides of the House and many hon. Members would want to speak?

Finally, the House is still waiting for a Government statement about trade relations with Japan. Will the right hon. Gentleman ensure that a statement is made on the whole spectrum of trade relations early next week?

I will take the points in the sequence in which they were presented by the right hon. Gentleman.

I am sure that the right hon. Gentleman will have noted that over many years it has been traditional to inform the House of the outcome of the pay review bodies by means of a written answer. Therefore, what is happening on this occasion is no different from what has happened many times previously. I ask him to contain his impatience for a few more moments when all will be revealed and we may have his plaudits.

With regard to the possibility of a debate on the merchant fleet, I recognise the interest in the House, which is evidenced by the early-day motion. Perhaps it is something that could be considered through the usual channels.

I note what the right hon. Gentleman says about the desirability of a debate on the order on teachers' pay. Clearly it concerns a matter which arouses a good deal of interest throughout the House, and I will take account of his representations.

I cannot offer the prospect of an early debate on research and development, but that is something that can be considered further through the usual channels.

I will certainly refer the right hon. Gentleman's request for a statement on trade relations with Japan to my right hon. Friend the Secretary of State for Trade and Industry, who will in any case be answering questions on Wednesday.

Will my right hon. Friend make arrangements for an early debate on the importance of maintaining unity within the NATO Alliance on the current disarmament talks?

I take account of what my hon. Friend says. I agree that one of the most important current foreign affairs questions is how NATO adjusts itself to the new situation. I cannot offer the prospect of an early debate on foreign affairs, but I will bear his comments in mind.

Is the Leader of the House aware that there is growing evidence that some mentally handicapped people are being kept in institutions because there is no community care provided for them outside, and that some of them are being discharged without community care and have to fend for themselves? Does he find this as shocking as I do, and can he arrange for a debate on the subject?

I take note of what the right hon. Gentleman says. I am certain that the whole House shares his anxiety on this point. I will refer it to my right hon. Friend the Secretary of State for Social Services so that it may be further considered.

Is my right hon. Friend aware of the growing use of phoney opinion polls by certain unscrupulous people? Will he, at this opportune moment in the life of this Parliament, find time for a debate on the need for a satisfactory code of practice to underpin the professional standards of the majority of those in this industry, standards which unfortunately appear to elude the Liberal party whenever an election is in the offing?

I note what my hon. Friend has said and the robust way in which it has been acclaimed in the Chamber. There is no early opportunity in Government time for the debate that he seeks and if legislation were required that would be a formidable obstacle over the next few weeks.

On the more general question of the use of bogus opinion polls, the whole circumstances in which we fight elections are covered not only by very explicit law but by what are believed to be appropriate conventions. I think that there would be deep distaste for any manipulative use of bogus opinion polls.

May I support the hon. Member for Rutland and Melton (Mr. Latham), who last week raised with the Leader of the House the Williams Holdings take-over bid for Norcros? Is the Leader of the House aware that this matter is a great problem in the Isle of Wight, where more than 200 employees' jobs are at stake? The bids are supposed to close next week. The right hon. Gentleman supports a Government who claim that industrial production is increasing. The take-over would do nothing of the sort for Norcros, which is a capable company, nor for my constituents. Will the right hon. Gentleman kindly ask the Secretary of State for Trade and Industry to intervene in this matter before it is too late?

I explained to my hon. Friend the Member for Rutland and Melton (Mr. Latham) the circumstances that had to attend that take-over bid. We have an Office of Fair Trading and a Monopolies and Mergers Commission which properly have a role to play, and this matter should not be the subject of direct political interference. However, I shall, of course, refer the hon. Gentleman's point to my right hon. Friend the Secretary of State for Trade and Industry.

As today is St. George's day, of which I am sure my right hon. Friend is fully aware, would it be possible for once to have a debate on England in view of the amount of time and money that we spend discussing the affairs of other countries within the United Kingdom?

May I say as an English Celt to an English Saxon that I believe that the English are sufficiently self-confident that they can go through life without the constant self-examination of parliamentary debates

Will the Leader of the House have a word with the Minister of State, Ministry of Agriculture, Fisheries and Food with a view to his making a statement at the Dispatch Box next week on the organisation for the allocation of free fresh food from Europe, bearing in mind that he made a right cock-up of the last effort? He said that "we", meaning the Government, made a large contribution last time. I advise him that they did not make any contribution at all. In fact, people in charities in my constituency had to pay, out of their own pocket, for the cost of fuel, petrol and diesel oil to distribute the food to the people who wanted it. We need a statement to the effect that there will be proper organisation in the future.

I cannot accept those strictures about the role of my right hon. Friend——

I stand here between the hon. Gentleman and my right hon. Friend and I have to say — [Interruption.] I have a feeling that the hon. Gentleman had a rich point to put in agriculture questions earlier this afternoon and shows all the signs of frustration at not being able to put it. None the less, I shall refer his point to my right hon. Friend.

Does my right hon. Friend recall that I asked for a statement from the Secretary of State for Defence regarding the accidental dropping of a Sidewinder missile in the Devon, North constituency? May I ask that a reply be given as a matter of courtesy to my constituents in the near future?

Yes. Following our exchange, to which my hon. Friend has just referred, I got in touch with the Ministry of Defence. I understand that an inquiry is proceeding and that the Ministry of Defence will write to my hon. Friend once the outcome of the inquiry is known.

May we have an early and urgent debate on the abuse of overseas registration arrangements following the issue of forms by the so-called independent non-political British community committee in Paris, together with Conservative party propaganda? It turns out that this organisation, which the Prime Minister has informed me is independent and nonpolitical, shares premises, address, telephone, officers, secretary and, no doubt, political views with the British Conservative Association. Is the Leader of the House aware that a Home Office Minister has told me in a written answer today that the Government are reviewing the need for guidance to be given so that this should not happen? That is not good enough. A statement, an apology and a full inquiry are required now to avoid further abuse in this disgraceful way through a fraudulent front?

I should have thought from the hon. and learned Gentleman's description that the Government's reaction showed clearly that they were worried about the issue which he raised, but naturally I shall bring to the attention of my right hon. and learned Friend the Minister of State, Home Office his preference for a statement.

May I support calls for an early debate on teachers' pay and conditions so that we can examine the tragic position that some teachers in some unions are fighting yesterday's battles rather than for today's and tomorrow's needs for educational reform? In particular may we look in that debate at possible ways of achieving the successor to Burnham at as early a date as possible?

I am grateful to my hon. Friend for making that point, because I have already given a sympathetic response to the Leader of the Opposition. My hon. Friend reminds me of the widespread interest in this topic which he shares.

Did the Leader of the House see the programme on television last night about data bank information? If he did, he will probably share the anxiety of many millions of British people at the obvious weaknesses in the legislation which allow blatant intervention in people's private lives and, more seriously, the production of erroneous information. Will he arrange for the appropriate Minister to make a statement to the House on the contents of the programme and the serious consequences exposed?

I did not see the programme, so I cannot sensibly comment on what the hon. Gentleman has said, but I shall certainly pass on his request for a statement to my right hon. Friend the Home Secretary.

Can my right hon. Friend find time for a debate on early-day motion 897 standing in my name and the names of several of my hon. Friends?

[That this House expresses its abhorrence at the showing of a video entitled How to be a Lesbian in 35 Minutes shown at a Haringey Council community centre recently to an audience, including young people, and calls upon the Government to require local authorities to submit sexually explicit videos and literature to the Department of Education before such material can be shown to the public.] It relates to a video entitled "How to be a Lesbian in 35 Minutes" which was shown recently at the Labour-controlled Haringey council community centre when disabled teenagers were present. As its showing seems to contradict the words of the Leader of the Opposition reported in The Sun today which were that there would be no possibility of attitudes being imposed by his party on people who were not gay or lesbian, would not such a debate enable him to explain himself and to reassure the parents of teenagers with daughters living in that area that their children are not in danger of corruption?

My hon. Friend has made the point the more forceful for being succinct than it might have been made if Government time had been provided for the Leader of the Opposition to make his somewhat equivocal position clearer than it seemed in The Sun. [Interruption.] If the right hon. Member for Islwyn (Mr. Kinnock) thinks that that is any reflection on him, I shall withdraw the comment at once. My hon. Friend's point is valid and certainly deserves to be aired in the House. I very much hope that he is successful in securing an Adjournment debate.

As the Government have been reluctant or even afraid to provide time to discuss their proposal to privatise Rolls-Royce and the Opposition have had to provide time for a debate, will the Leader of the House now give an assurance that the Government will provide time for at least a half-day debate on aerospace matters, especially on the airbus A330 and A340 projects which have severe implications for the industry?

I appreciate that there is interest across the Floor of the House in launch aid for those projects. I shall bear that interest in mind, but for the moment, given the demands on the time of the House made by the Finance Bill, I can offer no early prospect of a debate.

Has my right hon. Friend seen the quite extraordinary assertion made by three Labour members of the Treasury and Civil Service Select Committee that relief for mortgage interest is now largely a means of tax avoidance on investment income and their recommendation that the relief should be phased out? Will he so organise next week's debates on the Finance Bill as to enable us to debate that important subject so that each of the parties can make its position clear?

I should have thought that the very topics that will be debated next week on the Finance Bill would enable that issue to be given the most full and appropriate airing.

Does the Leader of the House share the widespread concern about the ongoing crisis in Scottish prisons which culminated in the events at Perth prison over the weekend? In view of the large numbers of people sent to prison in Scotland—the highest for any identifiable western country, including many for the non-payment of fines—is he surprised that none of his Scottish ministerial colleagues has made a statement on these matters? Are they not worthy of urgent debate?

It is certainly an important topic, and the entire House will agree with the hon. Gentleman to that extent. However, I must state quite candidly that this is the time of year when Government time is necessarily limited. I can offer no prospect of an early debate on the topic in Government time. Of course, the hon. Gentleman may wish to try all the other opportunities available to a Back Bencher.

I agree with the hon. Member for Burnley (Mr. Pike) about his request for a debate on Government launch aid for the A330 and A340 airbus projects — this matter is important as it affects many constituencies and the future of the aerospace industry—but will my right hon. Friend the Leader of the House take more seriously the request made by the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) for a debate on community care? Before irrevocable decisions are taken with reference to the disposal of psychiatric hospital sites, it is clearly most important that the House should be able to debate the future of the mentally ill and mentally handicapped.

I hope that my right hon. Friend will agree that it would be a tragedy if refuges and asylums were completely taken away from the mentally ill. I refer particularly to Parkside hospital in my constituency, which is under threat in the long term. In the light of the report of the Select Committee on Social Services produced a few months ago, will my right hon. Friend permit a full debate on that critical and vital issue?

My hon. Friend makes his point with the authority of one who graced the Select Committee. I fully accept the importance of the topic, and it was because of that that I replied in the spirit that I did to the right hon. Member for Stoke-on-Trent, South (Mr. Ashley).

Are we to have a statement next week from the Foreign Secretary regarding the position in South Africa and yesterday's brutal killings, or are the Government concerned only with the denial of rights in Eastern Europe?

Is the Leader of the House aware of the widespread concern about possible conflict between outside interests and constituency interest? Has not virtually every Conservative Member some outside interest? Indeed, if there is one Conservative Member without, I have a certain amount of sympathy with him because he is being discriminated against. Is there a case for a Select Committee to look into that matter, particularly after the excellent point of order raised by my hon. Friend the Member for Carlisle (Mr. Lewis) yesterday?

With regard to the hon. Gentleman's first point, of course I will refer his request for a statement to my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs. With regard to his second point, which was redolent with innuendo, the appointment of any new Committee is a matter for the House. If the hon. Gentleman believes that any hon. Member is behaving dishonourably, I hope that he will be candid enough to name names.

Is my right hon. Friend aware that all public servants in this country are entitled to count war service towards their pensions except if that public service was overseas? Is that not an indefensible anomaly? Will my right hon. Friend arrange for the Secretary of State for Foreign and Commonwealth Affairs to explain his Department's mean attitude towards these thoroughly worthy people?

My hon. Friend is a seasoned campaigner on this topic and he will not expect me to be any more forthcoming now than I have been in the past. However, I will most certainly draw his remarks to the attention of my right hon. and learned Friend the Foreign Secretary.

Will the Leader of the House ask the Chancellor of the Exchequer to make a statement about the recent shady business deal regarding the PCW syndicate that has been put before the names at Lloyd's'? Is he aware that it was widely reported in most of the papers in the week before the recess that, as a result of the £40 million fraud, for which no action was taken by the Government, the police, the fraud squad or the Attorney-General, losses of £600 million were sustained by names of Lloyd's? On 12 April the Sunday Telegraph said that the names would not have to put forward all the money involved in order to take part in the rescue plan, only participate in a deal of £134 million and the rest would come from tax relief. Does not that show the double standards of the operation? There is one law for the bankers and the names at Lloyd's and another for the pensioners who are offered only 80p a week.

The hon. Gentleman makes a number of accusations upon which I shall make no comment, and which I shall certainly not endorse. He has asked that those observations be made available to my right hon. Friend the Chancellor of the Exchequer, and I shall see that that is done.

Will my right hon. Friend reconsider his answer to my hon. Friend the Member for Elmet (Mr. Batiste) when he said that there would be no time for a debate on bogus opinion polls? Is my right hon. Friend aware that there are elections on 7 May and that the Liberal party is up to its usual dirty trick of publishing bogus opinion polls? Would not such a debate give the hon. Member for Southwark and Bermondsey (Mr. Hughes) an opportunity to make a personal statement about why he should be peddling such polls?

My hon. Friend demonstrates with great skill that such points can be argued without the necessity to have a debate.

As the Minister of Agriculture, Fisheries and Food demonstrated clearly this afternoon during agriculture questions, the Government have been unable to control agricultural spending in the EEC and as a result there is to be a 20 per cent. cut in the amount spent from the social fund in Britain. I believe that that 20 per cent. cut is to be taken by voluntary organisations which at present receive a substantial sum of money from the social fund. Should not there be a statement on the precise implications of such cuts in the social fund to voluntary organisations in Britain?

As my hon. Friend the Member for Macclesfield (Mr. Winterton), who is a good commentator on these matters, says, there will be scope for some of those points to be made later this afternoon. It may well be that the policies to which the hon. Lady refers necessitate Community instruments, in which case they would be considered through the normal processes of scrutiny, but I shall certainly bear that point in mind.

Is my right hon. Friend aware that many Conservative Members would welcome a debate on the pay and conditions of nurses and related professions, not only to demonstrate the importance which all hon. Members attach to the work done by those people but to draw attention to the Government's positive record, and finally to remind the House of the record of the right hon. Member for Plymouth, Devonport (Dr. Owen), when he had some responsibility for those matters, which bears rather sharp contrast with his statements today.

I note what my hon. Friend says. I cannot say anything in advance of the publication of the answer to which I referred earlier this afternoon, but doubtless, when the House has had a chance to consider the evidence that will then be made available, it may judge that it is an appropriate occasion for a debate.

Now that the Guinness board has admitted that the squalid affair of the takeover of Distillers has cost its shareholders £125 million, should not we have an opportunity to examine those matters on the Floor of the House in a debate on the operation of company law? Is not the Leader of the House a little concerned that a part of that £125 million may be offset against the tax liabilities of that company? Are not those matters which should now be debated in Parliament, and surely before the next election?

I am fairly certain that the tax conditions relating to the arrangements to which the hon. Gentleman referred come within the purview of that part of the Finance Bill which will be debated on the Floor of the House. As to the wider issue of debating company law, of course I shall refer the hon. Gentleman's interest to my right hon. Friend the Secretary of State for Trade and Industry.

Is my right hon. Friend aware that there is a need to find time to debate the totally bogus opinion polls that were peddled by the hon. Member for Southwark and Bermondsey (Mr. Hughes) and the Liberal party in Greater London last weekend? As no such poll took place, is it not monstrous to try to twist people's voting intentions by such a fraud?

The position that has beeen outlined by my hon. Friend gives rise to genuine disquiet about the extent to which opinion polls can be manipulated to try to produce induced election voting behaviour. I gave a fairly measured reply to my hon. Friends who raised the matter, but I take account of what my hon. Friend has said and I congratulate him on the part that he has played in making the public more aware of this episode.

As today is William Shakespeare's birthday, may the House have a debate on literature, not on the brilliant works of William Shakespeare, but on the works of Leicester teachers and the association of Leicester teachers who have published a book called "Outlaws in the Classroom—Give School Gays a Better Deal"? Does he agree that our children are in desperate danger of being corrupted by teachers writing books that promote homosexuality as the norm? May we have a debate to protect children and to ensure that heterosexual relationships are encouraged and promoted in a family, loving way in our schools?

These great issues never seem to happen in Shropshire. I am sure that the local political situation which reflects that kind of proselytising of particular tastes and behaviours will centre on the election campaign in Leicester and will, I am sure, help to sustain and enhance my hon. Friend's majority.

Ballot For Notices Of Motions For Monday 11 May

Members successful in the ballot were:

  • Mr. John Cohen
  • Mr. John Watts
  • Mr. John Fraser

Statutory Instruments, &C

With the leave of the House, I will put together the nine motions relating to statutory instruments.

Ordered,

That the Milk (Community Outgoers' Scheme) (Scotland) Amendment Regulations (S.I., 1987, No. 425) be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Definition of Capital Expenses (Scotland) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Occupiers' Liability (Northern Ireland) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Limitation (Amendment) (Northern Ireland) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Enduring Powers of Attorney (Northern Ireland) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Enduring Powers of Attorney (Northern Ireland Consequential Amendment) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the Home Grown Cereals Authority Levy Scheme (Approval) Order 1987 (S.I., 1987, No. 671) be referred to a Standing Committee on Statutory Instruments, &c.
That the Tyne and Wear Development Corporation (Area and Constitution) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
That the New Valuation Lists Order 1987 be referred to a Standing Committee on Statutory Instruments, &c. — [Mr. Neubert.]

Agriculture

Motion made and Question proposed,That this House do now adjourn.— [Mr. Neubert.]

[Relevant documents: European Community Documents Nos. 4844/87, CAP Price Proposals 1987–88, ADD 1 + COR 2, ADD 2, and ADD 3 + COR 1, 4224/87, Situation in the Agricultural Markets in 1986, 4446/87, Milk Sector Reforms, 4236/87, Disposal of Intervention Butter, 5046/87, Disposal of Intervention Butter (Court of Auditors Report), 4537/87, Intervention arrangements for butter and skimmed milk powder and the Ministry of Agriculture, Fisheries and Food's two un-numbered explanatory memoranda on national aid to French milk producers are relevant.]

4.3 pm

The main documents that are listed as relevant to our debate today are those that contain the proposals of the European Commission for changes in farm support prices and mechanisms for 1987–88. It is appropriate that the House should consider them today, since the negotiations upon them will commence in earnest in Luxembourg on Monday.

These proposals, like all other decisions on farm policy, have to be considered against a wider background; indeed, a worldwide one. The problems that face farming in Europe also characterise farming in other parts of the world. The supply of most major products exceeds demand — a situation that results in surplus stocks, low world prices and high expenditure on support measures. Farmers outside as well as inside the European Community are having to adjust. In countries such as Australia and New Zealand, where world prices feed through directly in farmers' returns, this adjustment is sharp and painful. It is not surprising that agriculture has been singled out as a major topic for the new round of GATT negotiations that were agreed last year in Punta del Este.

It was against that background that the Government responded to demands for a strategy for United Kingdom farming and for the rural economy generally. As the House knows, on 10 March we published a number of documents dealing with different aspects of rural policy. In the document "Farming UK" we have set out our view of the many pressures for change which face the farming industry at the present time, and the way in which the industry as a whole must adapt to this situation.

The emphasis can no longer be on expanding production. The level of production in Europe must therefore be brought back closer to the level of consumption. Therefore, we have also to look at alternative uses for land. At the same time, there must be more attention to the needs of the market and to the demands of the environment. The document explains the Government's programme for assisting the industry to move in these directions, and I shall have more to say about that shortly.

Does my right hon. Friend agree that the fact that we can grow increasingly more of our food needs, particularly new hybrids, on a lower acreage, should be seen not as summoning a period of crisis for the farming industry but rather as a period of opportunity, particularly for conservation and opening up woodlands to public access? Does he think that we should increase grants for broadleafed trees and be even more generous than the Government have so far proposed?

We have made available a large amount of new money to support alternative land uses. We must see how that scheme works out before we start thinking of making any changes. With regard to my hon. Friends first point, I am aware, of course, that there are many exciting new hybrid varieties coming along, some of which have been bred in a distinguished way in my hon. Friend's constituency, which will make changes in future. The one thing that agriculture must not do is to get Luddite and believe that it can set aside new developments. If it does that, undoubtedly we will find that the competitive edge is taken by other countries and other farmers.

So far as the common agricultural policy itself is concerned, the document set out the principles underlying the approach that the Governmnt have taken and will continue to take. First, we have to reduce costs and tackle surpluses, by bringing supply and demand in the Community as a whole into better balance. The principal instrument must be price policy, but this should be supplemented by other appropriate measures. Secondly, market forces must play a greater role in determining production. The role of intervention has to be correspondingly reduced. Thirdly, there must be evenhanded and fair treatment between member states, between the different regions of the United Kingdom and between farmers, traders, the food industry and consumers. These principles will guide the Government in the negotiations that are about to start in earnest, and it is in the light of them that we should consider the Commission's proposals.

With certain important exceptions, I believe that the Commission is on the right track. It has to start, of course, from the serious budgetary situation that confronts the Community today. Four main themes run through its proposals : first, the continuation of a tough price policy, involving a freeze on the prices of most products and price cuts for others; secondly, some further substantial moves to limit intervention buying and restore it to its proper role as a safety net in the market; thirdly, the extension and strengthening of the concept of guarantee thresholds, whereby the full level of price support is linked to a specified quantum of output; and, fourthly, changes in the complex green money system.

While I would have preferred the Commission to go further in a number of respects than it has done, its basic approach is the right one and those four points are those that should be addressed.

In one respect we are in an unusual situation in these negotiations, in that the Community has only recently, in December, taken major decisions on milk and beef, which will apply for the 1987–88 marketing year and indeed beyond. As the House will recall, after very long negotiations, decisions of principle were reached on these two commodities under the British presidency in December, and the detailed implementation of those decisions was settled this year in the initial meetings of the Council under the succeeding Belgian presidency.

The Select Committee has drawn the attention of the House to the regulations implementing the decisions on milk and they are also listed as relevant to the debate. For both milk and beef the support provided through the intervention system was, quite rightly, reduced. I remind the House that the variable premium arrangements for beef, so important to the United Kingdom producers, were maintained and safeguarded for two years. That is the longest run for this system that we have ever succeeded in negotiating.

While recognising the valuable contribution to the British beef sector that my right hon. Friend has made by securing that commitment, may I ask him what progress has been made towards encouraging other member states to come round to the same line of thought, so that the system of getting beef down people's throats rather than putting it into intervention may continue?

We made a move forward in the December negotiation, in that although some countries were strongly opposed to it we established a new premium for beef. It is a weaker one than the one that we enjoy, but at least it means that the other members of the Community are moving over to the premium philosophy rather than sticking to the philosophy of intervention that has governed the beef sector for many years. We are making progress there. I know my hon. Friend agrees that we are far better off with our beef variable premium system than we would be if we embraced the new Community premium arrangement.

This year's price-fixing negotiation will be the first for years in which the United Kingdom has not had to fight off opposition to the beef variable premium. However, I am well aware of the current concerns of beef producers. The addition of cull cow beef to the market could cause problems in the future. This matter was mentioned at Question Time. However, recent beef prices have been only 1 per cent. or so below last year's prices. I shall continue to watch this market very carefully.

In the near future, is there any chance of persuading our friends in Europe to accept a scheme for beef similar to the one that we have for lamb?

The variable premium arrangement for beef is similar to the variable premium that we have for sheepmeat. The hon. Gentleman knows that, and also knows that the variable premium for sheepmeat is not practised in other countries of the Community. I think that France has expressed a growing interest in moving towards the system that we have in the United Kingdom for sheepmeat. That is a helpful move in the right direction.

The main feature of the milk decisions was. of course, the cut of 9·5 per cent. in Community output, to be achieved over two years mainly through quota cuts and suspensions, but with compensation. I am glad that the flexibility provided through the formula B arrangements and regional transfers, which the Commission originally proposed to abolish, were retained. That was a big bonus for us. This flexibility is of special benefit to the United Kingdom. Finally, the Council endorsed a Commission programme for the disposal of intervention stocks, with reimbursement to member states deferred until the period 1989 to 1993. Given that the decisions on milk quotas will prevent the stocks from building up again, these exceptional financing arrangements were justified.

In the light of the major decisions taken in December, the Commission's price fixing proposals contain little new on milk and beef. However, one proposal that it makes in this area—to end intervention for salted butter—is one that I shall oppose. The market demand in the United Kingdom and Ireland is essentially for salted butter, and it would make no sense if butter producers in these two countries had to make a different type of butter simply to put it into intervention. The Commission rightly picks on cereals as a sector calling for major changes.

Does my right hon. Friend agree that there are certain problems about the manner in which the French have managed to secure agreement in the Council of Ministers for national aids to France's own farmers? Those aids will enable them to receive social security payments when they have a litreage of, I think, 60,000 a year or less. Are similar arrangements proposed to assist small and medium-sized dairy farmers in the United Kingdom when they are in similar circumstances?

The Council of Ministers discussed this arrangement. It was originally proposed specifically to help smaller farmers, most of whom expected to retire shortly. After discussion the Council agreed that it would allow the arrangement. I think that my hon. Friend has had this question answered before. It was with certain mixed feelings, and in the interests of much wider and more important settlements, that we agreed to the arrangement.

As I have said, the cereals sector calls for major changes. It is crucially important, and the House should note carefully, that the Commission has estimated that unless firm action is taken, stocks of cereals in the Community could reach a disastrous 100 million tonnes by 1993. The Commission's proposals rightly focus not just on the support prices themselves, but on intervention arrangements. Intervention would be available for only four months in the latter part of the crop year, and the monthly increases would be applied to the price only in the last three of those months. This is the right approach. We have always said that intervention should be a last resort and that it should not become a market option in its own right.

On prices, the Commission proposes to cut the feed grain price by 2·5 per cent. and thus widen the differential between bread wheat and feed grain to 7·5 per cent. This is realistic and is in line with what the market would produce. Lower feed grain prices benefit livestock producers and make our exports more competitive. The record United Kingdom exports of grain this season, which will total about 10 million tonnes, have undoubtedly been helped by the lower feed grain prices agreed last year.

This is a tough package of measures. It adds up to an appreciable cut in effective support and I do not expect grain farmers to welcome it. However, the cereals sector must be tackled seriously in view of the perils ahead, and I believe that this is essentially the right way in which to do so.

As I have said before, action on the support level itself needs to be accompanied by additional measures. The House is aware that I advocated last year a cereals land diversion scheme, involving incentives to farmers to take land out of the crop. My intention was to stimulate discussion, and that was indeed the effect. I am glad to see that the National Farmers Union now goes along with the idea of a voluntary approach. Key elements of my ideas were taken up in the socio-structural measure, which again was agreed in principle under the British presidency and put into detailed legislative form under my successor.

Under this measure, member states will be obliged to come forward with national schemes to encourage farmers to "extensify" the production of certain commodities, including cereals, and also to encourage conversion from surplus to non-surplus production. Methods of intensifying production can include leaving land unused, and the concept is thus very similar to the one that I put forward last year.

We shall need to see how far the new measure will be applied uniformly in all member states of the Community and whether its effectiveness can be demonstrated. If so, it will be a useful step towards the policy that I have been advocating. My Department will, in consultation with the interests concerned, work out in detail what needs to be done to implement the decision in the United Kingdom.

Another important and expensive idea, particularly following the enlargement of the Community, relates to oil and fats. Here I cannot approve the Commission's proposals as they stand. They rightly involve reductions in support, achieved essentially through strengthening and extending the guarantee threshold system. However, the Commission has chosen to link this with a proposal for a consumer tax, disguised under the title of an "edible oil price stabilisation scheme", and I am thoroughly opposed to that. It is no proper part of CAP reform to provide extra funding through a tax on consumers, particularly the least prosperous consumers. Moreover, it would damage the Community's trading relations with a large number of countries, including some of the poorest. It would, in particular, be folly for the Community to provoke a new quarrel over agriculture with the United States so soon after settling the last.

My right hon. Friend will have noted earlier the unanimous support of the House for his stance. However, does he believe that our colleagues in the Community understand the dramatic adverse impact that the measure would have on Third-world countries, especially Malaysia, Indonesia and other countries in south-east Asia?

I am certain that it would have that effect. I visited Malaysia last year, and my right hon. Friend the Minister of State has recently returned from the Cameroons. We have both come firmly to that conclusion. and it strengthens our view. I am not alone within the Community in my opposition to this part of the Commission's proposal, and I hope that the Commission will be persuaded to think again and withdraw it. In any event, I shall continue to oppose it firmly.

The hon. Member for Northampton, North (Mr. Morris) asked the Minister what efforts had been made to acquaint the EEC with the effect of the proposal on the Third world. When the Minister met the Select Committee on European Legislation and sent a note to the Committee, he agreed that the Commission's proposals could involve an increase in margarine prices of 15 to 30 per cent., or possibly more. Has he communicated that estimate to the Commission to reinforce his comments, which I am sure have the backing of the whole House?

I believe that the Commission is fully aware of the background figures, and the point will no doubt arise again in our discussions next week.

Finally, on specific commodities, I should draw attention to the revival of the Commission's 1986 proposal to limit payment of the annual ewe premium to 1,000 ewes per farm in the less-favoured areas, and to 500 elsewhere. This is obviously contrary to the principles to which I have already referred. I opposed it successfully last year, and we shall do so again this year.

Turning to the green currency system, the question at issue is the common price level: that is, the level towards which divergent national prices should in principle be aligned. In 1984 it was tied to the strongest currency, and it has in practice been dragged up by the rising strength of the deutschmark. To the extent that countries have taken advantage of this upward movement to raise their own national prices, I believe that the change has been inflationary, and the Commission seems to agree. Its idea is to prevent price inflation in the future by requiring offsetting reductions in common prices in the two years after each realignment of the EMS.

The effect on support prices in negative MCA countries such as the United Kingdom would be neutral, bat in countries such as Germany, national prices would be reduced. That proposal is on the right lines. The question is whether the Commission might have gone further and proposed to abolish the link with the deutschmark altogether.

The Commission has made a number of proposals for the devaluations of various member states' green rates. As I believe the House is aware, it has proposed a 4 per cent. devaluation of the green pound. Given the position in which we find ourselves and the problems of our industry —I am thinking especially of the beef sector — I shall make it clear to the Commission that we shall want to improve on that figure. I shall certainly expect to secure a bigger change than has France or the Republic of Ireland, which have smaller MCAs than we have.

The Commission's proposals, as I have said, are designed to respond to the Community's budgetary as well as to its market position. The Commission estimates that its proposals, taken together, would save 1,300 million ecu in 1987 and 3,600 million in 1988. But 500 million this year and 2,100 million next year would come from the proposed oils and fats tax. Therefore, the savings must be measured against the huge financial problem currently facing the Community.

The Commission estimates that, disregarding its proposals, the available resources fall short of what is needed to finance the CAP in 1987 by nearly 4,000 million ecu. It is therefore very important that the savings proposed by the Commission, other than those arising from the oils and fats tax, are secured. Indeed, the Government believe it essential that additional savings are found, either during the price fixing itself or subsequently, to avoid major difficulties arising later in the year. The 1987 budget must be balanced. There is no question of the Government condoning a breach of the 1·4 per cent. VAT ceiling.

This then, is the Government's approach to the Commission's proposals. While the CAP is much the biggest single influence on our farming industry, full weight must also be given to the action that we can take on a national basis. As I have said, our document "Farming UK" looks at the initiatives that the Government have already taken in the countryside and that we shall be taking in the future. Those initiatives include first, the new farm woodland scheme, on which we have issued a separate consultation document as a prelude to legislation. The objectives of the new scheme are various: the diversion of land from agriculture; the improvement of landscape, wildlife habitats, recreation and even tourism; support for farm incomes and employment; and, of course, timber production, particularly if farmers can be encouraged to adopt the methods that are necessary for high quality timber production. I am glad to say that the scheme has already been welcomed by a range of interests.

When will my right hon. Friend publish further details of the various grants? We have been given the outlines of the various schemes, but when will we be given the nitty-gritty?

I said a moment ago that we had already issued a consultation document on the new farm woodland scheme. I hope that diversification will take place as soon as possible, in view of the urgent need to diversify.

Secondly, I envisage further expansion of traditional forestry, particularly on better land. That will also help with surpluses and rural employment. Thirdly, we aim to double the resources that are committed to environmentally sensitive areas. Uptake in the existing areas has got off to a promising start. In future, as a result of the socio-structural measures, the expenditure will attract a Community contribution. We shall be designating new areas, and I hope to be able to announce these within the next two months.

Fourthly, there is our scheme to help farm diversification, including new assistance for marketing the products of diversified businesses. A consultation paper will appear shortly and we shall be inviting comments on the scope and coverage of the new scheme. The sort of activities that we should like to grant-aid are facilities for visitors on farms, the processing of farm products and recreational and amenity facilities.

My right hon. Friend has been running ahead rather. If there are to be afforestation schemes, will he consider controlling those schemes so that the tourist characteristics of our country are not lost? Will he also suggest to his right hon. Friend the Chancellor of the Exchequer that special grants should be given for doing up redundant steadings and farm buildings, to be used for small business purposes and as dwellings? Although all these measures are good, does my right hon. Friend not appreciate that unless we solve farming finance in this country, particularly in Scotland, by examining the square root of the 4 per cent. devaluation of the green pound—[HON. MEMBERS: "The square."] I apologise; unless we examine the square of the 4 per cent. we shall come nowhere near the real figure.

I think that every farmer in the country would have a heart attack if he heard my hon. and learned Friend refer to the square root of 4 per cent. I note what he said about the controlled expansion of woodlands. Indeed, that point is very much in my mind. I agree that diversification provides a major opportunity to do up old buildings. My right hon. Friend the Secretary of State for the Environment has provided a great deal of planning encouragement for this purpose. I am unable to answer questions about Scotland, but I presume that the same applies to Scotland. If my hon. and learned Friend looks at the papers that the Government published in March, he will see that they contain a number of references to the opportunities that we envisage for redundant farm buildings.

Finally, we plan to place more emphasis in our research and development and advisory programmes on novel crops and livestock — anything from United Kingdom production of cashmere wool to improving production techniques for lupins and sunflower seeds. Again, this initiative could be of interest in a Community context because of the aid scheme for conversion to non-surplus crops that is to be introduced as a result of the socio-structures package.

This programme is designed to encourage farmers to adapt their output to the changing pattern of demand; to divert their land to products that are not in surplus, including trees; to diversify their businesses to make full use of their land and buildings and the skill and expertise of farm and family labour; and in some areas to farm their land less intensively. Overall, it provides voluntary options for those farmers who are looking for additional enterprises.

My right hon. Friend knows that there is a degree of worry that foodstuffs, which at present are not in surplus, will come into surplus if there is a flight from beef. Does he have any proposals to prevent a flight from beef into lamb, which would result in a surplus of lamb?

I understand the problem to which my hon. Friend refers, and I remind him of one area in which I am trying to take his point into account. In the proposals to divert land use from the production of cereals, we have made it clear that we do not intend to provide assistance to anyone who moves out of cereals into grass, because that would be patently unfair to the sheep producers to whom my hon. Friend has just referred.

The common purpose underlying all my inititatives, and those announced by my right hon. Friend the Secretary of State for the Environment, is a healthy rural economy based on an enterprising, adaptable and competitive agriculture and the enhancement of our attractive and incomparable rural environment. I am sure that the House will want to endorse that theme.

Together with CAP reform, these measures are inseparable elements of our overall approach to provide a framework in which enterprise and initiative —qualities that characterise our industry — can be rewarded and in which the rural economy and the environment can be enhanced.

I should be very grateful if my right hon. Friend would refer to what he believes will be the impact of these proposals on consumer prices. He has not mentioned that element. It seems to me that the result of these arrangements will be further increases in the shop price of commodities that are in surplus. Will he tell me whether I am right, or wrong?

My hon. Friend is right when he says that some of these proposals would have a considerable influence on the cost of food. That is one reason why we are implacably opposed to the one item that has the biggest effect on the cost of food—the oils and fats tax. The House ought to recall the Government's record since we came to power. Food prices have risen only at the rate of 6 per cent. a year since 1979, compared with over 16 per cent. a year when the Labour party was in power.

This year's negotiations on common prices will be no easier than in the past. Some member states have already demonstrated their hostility to the proposals. I cannot say when agreement will be reached, but I am determined that the measures agreed must be effective in taking forward the battle against surpluses and their associated astronomic costs; and that they must do so in a way that does not discriminate against the United Kingdom. This is the approach that the Government have consistently adopted, and will continue to adopt, in the knowledge that we are succeeding, and will continue to succeed, in safeguarding the agriculture industry's place as the provider of food for the nation and the cornerstone of the rural economy.

4.41 pm

This debate is about more than the documents that we are strictly considering, and certainly more than the price review proposals. To concentrate on those alone would be short-sighted because at this stage it is impossible to forecast how negotiations will turn out. All that one can say with confidence is that they will be protracted and tedious and, if in nothing else, we are united in our sympathy for the Minister, who will have to undergo those protracted and tedious negotiations.

On the three items of concern in the price negotiations, the Opposition echo the criticisms made by the Minister of Agriculture, Fisheries and Food, and the Commission should know that he carries the views of a united House when he negotiates on the three matters that have been mentioned.

On the issue of the oils and fats tax, it is novel to me to discover that, because one is unable to sell one product, one does not drop the price of that product in order to sell it, but raises the price of its competitor product. That is a novel economic doctrine that deserves to be more widely understood than it is. It will raise the United Kingdom food bill by about £300 million per annum. That needs to be stressed time and again. It will raise the price of some of the cooking oils that are available to the housewife by up to 90 per cent. If that were to be forced through, it would be a retrograde step and a source of great hardship and enmity towards the idea of the CAP.

The annual ewe premium, which it is proposed should be paid annually on the first 500 ewes in a holding and on the first 1,000 in less favoured areas, clearly discriminates against the British farming system and must be opposed. So, too, must be the suspension of intervention for salted butter. These are not party political issues; they are matters in which the United Kingdom appears to have been singled out for discriminatory treatment and they must be whole-heartedly opposed.

The debate gives us an opportunity that is rare in the House to debate, in as general terms as you, Mr. Deputy Speaker, will allow, the melancholy story of how far the Council of Ministers has progressed in its task of reimposing control on the common agricultural policy, and how far it still has to go. The answers to those questions are respectively, "nowhere", and "a long way". During our short recess, lamentations have issued forth from the Commission about the imminent bankruptcy of the EEC— yet again. I say that because it is now an almost annual refrain. I believe that many people have ceased to take it seriously for that reason. We were told that the EEC agriculture budget was going to overrun by £3 billion this year, but M. Delors has now asked for a £3·5 billion extra subvention to keep the Community from going bankrupt.

That is quite the wrong way to deal with the matter. We are making a £400 million loan to the Community for butter on advantageous terms and making a further £600 million subvention in the form of loans, so we are being asked to lend the Community £1 billion in the near future to prevent it from going bankrupt. Budgetary control, not increased income, is needed.

The great paradox of the CAP is that, while it costs us more and more, it has proved inadequate to maintain farm incomes in the long run. At Question Time, figures on that were quoted which I believe were generally accepted. Perhaps no such system could work, but I reflect on the fact that, from time to time, the Government talk about others throwing money at problems. There is a real danger in the CAP that many members of the Council of Ministers believe in throwing money at this problem in the hope that that will somehow solve it.

We all agree with the hon. Gentleman that we do not like the prospect of an oil tax. If the EEC is right about the shortfall that will occur if that tax is rejected by all the countries concerned, what alternative would the hon. Gentleman propose to make up the shortfall?

The question is addressed to the Minister and myself, because we are united in our opposition to the tax. The Minister has kindly indicated that he will allow me to answer the question on his behalf.

The issue is a serious one. Obviously, the shortfall is being partly disguised. I hope that the hon. Gentleman is not falling into the trap of saying that we must pay an oil and fats tax to diguise the harshness of the position. That makes no sense, either in dietary or economic terms. Perhaps this does not reassure the hon. Gentleman, but the answer is that, with more immediacy and clarity than the Commission and the Council of Ministers have yet managed, we must tackle the problem of overspending and over-production. We can readily get a faultless analysis of the position year after year. We have the common agricultural policy review, which analyses what has gone wrong and why we are overspending, but the solutions offered are limp and meaningless. We must be conscious of that.

We must also be conscious of the sensitivity of food to price movements. Food is peculiarly sensitive to price increases — especially fresh food. We must take into account not only the effect of the price review, but the latest Euromania to issue forth from Brussels, which has been widely quoted—the insistence of the Commission, under the aegis of Lord Cockfield, that VAT be imposed on food. If that happens, and VAT is levied at the full 15 per cent., about £3·2 billion a year would be raised. That would be the extra bill for food in this country. Even if it were charged at a concessionary rate, the addition to the cost of food would still be enormous and its effect would be considerable. Such a tax would be truly regressive, in the sense that poorer families spend a higher proportion of their income on food than do the more well off. Therefore, the tax will bear hardest on the poor in our community, further erode the markets for fresh foods and destroy the hope that people in this country might be encouraged to eat more healthily and in accordance with their own preferences, rather than being penalised by price and forced to adopt a less salubrious diet.

I have been listening carefully to the hon. Gentleman's speech. Will he be explicit about what Labour party policy is on redressing the budgetary problem to which my hon. Friend the hon. Member for Dorset, North (Mr. Baker) drew his attention?