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Westminster Hall

Volume 552: debated on Thursday 1 November 2012

Westminster Hall

Thursday 1 November 2012

[Mr Christopher Chope in the Chair]

Common Agricultural Policy

[Relevant documents: First Report of the Environment, Food and Rural Affairs Committee of Session 2012-13, Greening the Common Agricultural Policy, HC 170, and the Government Response, HC 654.]

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Heath.)

Welcome to the proceedings, Mr Chope. It is a great honour and a pleasure to serve under your chairmanship. On behalf of the Select Committee on Environment, Food and Rural Affairs, I am delighted to have secured this timely debate. Before I go any further, I draw colleagues’ attention to my modest entry in the Register of Members’ Financial Interests, which is pertinent to this debate.

We are discussing our first report of this Session, which I commend to the House, on greening the common agricultural policy, and the Government response. Our debate is timely for a number of reasons. The next round of CAP reforms will build on those achieved by Commissioner MacSharry and Commissioner Fischler, and now on the proposals launched by Commissioner Ciolos. The European Commission package introduces numerous greening measures with which farmers will be asked to comply. One of the first conclusions of the Committee was that there is insufficient detail for us to do an in-depth analysis, although we managed as best we could. Some of the problems that I will discuss include potential problems of cross-compliance, the possibility that the proposals might overcomplicate rather than simplify the CAP, and our main concern that it should not be a one-size-fits-all policy.

The backdrop includes the unprecedented weather conditions faced by UK farmers this year. We started with a drought that then became the wettest drought, followed by a late harvest in which many crops rotted in the ground, and our current potato crop is virtually impossible to harvest. I recognise that not only the farmers in my community, but those across Britain and the whole of Europe, have suffered. That will affect falling farm incomes.

I am delighted to see the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath), in his place, and I welcome him to his new position. The Department for Environment, Food and Rural Affairs will not publish farm incomes until January. I shall certainly watch them closely to see what the impact has been. One study on the area of northern England in which I grew up—I am sure that it is not dissimilar to the area that I now live in and represent—shows that hill farmers’ incomes have fallen to £8,000, which is unsustainable.

Two challenges form the backdrop for the next round of CAP reform: food security and climate change. Those twin challenges were identified by the outgoing Labour Administration. The Committee conclusions state that we believe that the Commission should allow member states to tailor environmental measures to their local environmental and agricultural conditions. I commend successive British Governments’ approach; we have a raft of agri-environmental measures that place our farmers ahead of many other European farmers. I believe that our agri-environmental schemes, among the best in Europe, deliver meaningful year-on-year environmental benefits. The Committee concluded that those benefits must not be watered down or diminished by the Commission’s greening proposals.

I commend the hon. Lady on her introductory remarks to this debate. It is a good opportunity. I agree entirely with her comments about flexibility. We support the Minister in seeking to achieve that flexibility for UK farming, but farmers in other EU nations should not be allowed any sort of opt-out. That would add further inequality to the playing field that we are trying to level.

I absolutely take the hon. Gentleman’s point. It is essential that farmers in other European countries should catch us up. I will come to in-depth issues such as modulation in a moment.

I hope that the Minister will tell us where we are procedurally. I had the opportunity to visit Brussels last month, and I understand that MEPs have tabled about 7,000 amendments to the Commission proposals to reform the CAP. The agriculture committee in the European Parliament now has co-decision. It is vital that all of us with an interest snuggle up to MEPs of all nationalities and try to influence them to use that new power responsibly.

The European Parliament agriculture committee has set itself a deadline of the end of November for negotiating and voting on compromise amendments. Given the challenges that we face nationally—due to weather, falling incomes, rising fuel and feed costs—and globally, we must increase production significantly. We are asking farmers to do so by using both land and chemicals more responsibly, and by using less water.

Will the Minister consider the budget and procedure? The EU budget as part of the multi-annual financial framework proposes—I hope I am not being too controversial; I think we all agree that we must reduce overall expenditure on the CAP—that spending on the CAP will fall from 37% of the total EU budget in 2014 to 27% by 2020. It will still total €38.3 billion. I had understood that structural funds would undergo wholesale reform and would fall, but they are set to rise by 18% by 2020, to a total of €76.6 billion.

What will the impact be if we do not secure a freeze but move to annual budgets? What will the implications be for reaching agreement on the farm reforms if the debate on the multi-annual financial framework is delayed from November to December? The message that I am hearing loudly and clearly from farmers in my constituency—I am sure this is shared across the country—is that they need an element of certainty. They need to know what the reforms will be and they need sufficient time to implement them. Lead-in time is crucial.

The UK food system faces other problems. As I mentioned, prices are rising. I am told that food price inflation is running at 4%, but farm incomes are falling. We must grasp that.

Will the Minister say more about what will happen to the rural development programme for England? Is that programme bound up with the negotiations? Again, will farmers have an element of certainty?

I recognise that we have a new Minister and a new Secretary of State, but it would be helpful if the Minister set out the UK’s negotiating position. What discussions have been held with the devolved Administrations? Who are our main allies in the Council of Ministers and, just as importantly, the European Parliament? Will he update hon. Members on Commissioner Ciolos’s response to the original proposals and the British negotiating position? Does the Minister agree with the Select Committee’s view, which we set out clearly in our report, that the Commission

“should set the high-level objectives for the CAP and provide for flexibility of approach through delegating the details to Member States while ensuring that there are…safeguards to protect the competitive position of UK farmers”?

Does the Minister agree that the CAP is complex and burdensome? Will he agree to press for further simplification of the CAP? Does he share our concern that the proposals on ecological focus areas and the definition of “smaller farmer” will lead to farmers having a less clear understanding of the conditions with which they have to comply? Will he ensure that the policy is implemented and provides value for money for the British taxpayer?

What is the Minister’s response to the Danish bid for a rebate? Returning to the budget, will he confirm that the implications of the loss of the British rebate in the Blair negotiations are severe? The rebate was lost on the non-agricultural element, which, in the scenario I set out earlier, is due to increase, and the rebate that we kept is only on agricultural spending, which is due to decrease from 37% to 27%. The implications for farmers are very serious.

Will the Minister further ensure that the reforms to the CAP are coherent with the UK’s existing agri-environment schemes? Any greening requirement should take account of environmentally beneficial activities undertaken by a farmer under an agri-environment scheme.

To protect the competitive position of UK farmers, the Select Committee would say that modulation has gone far enough. In powerful evidence to the Committee, the national farming unions said that English farmers are already subject to a higher modulation rate, whereas continental farmers enjoy a higher direct payment rate. Obviously, if we are modulating to a 19% rate in England and 11% to 14% in the devolved Administrations, whereas most other EU countries are modulating only to 10%, the implications of the Government’s proposal to transfer money between pillar one—direct payments—and pillar two are extremely serious. Farmers told us in a previous inquiry that the higher rate of modulation creates unfair competition, and they advocated either equal rates or no modulation. DEFRA seems to argue that higher rates of modulation are needed in England to fund environmental stewardship schemes. How can the Minister convince hon. Members that, by doing that, we are not disadvantaging our farmers?

One of my main concerns is about the Government’s response to the CAP report, particularly to recommendation 28 that

“farmers currently in agri-environment schemes will receive no penalty for leaving…should either the design of or payments under those schemes alter as a result of ‘greening’.”

The Government response states:

“However, there is no legal basis for allowing farmers wishing to withdraw from their agreements ahead of the new programme (and before the five or ten years of their agreements has expired) and they would be required to return all payments received during the life of their agreements, plus interest, in the normal way.”

That seems flatly to contradict the Minister’s predecessor, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), who told the Committee that no farmer will suffer a penalty from the new greening measures if they have entered a new 10-year scheme. That is a real and present problem, because our farmers are under great pressure to sign up to new agri-environment schemes.

The hon. Lady is pursuing an important point, and I would be concerned if there was some contradiction, but does she agree that if protection is afforded by the Minister in the EU negotiations for those farmers who are in agreements, to ensure that they do not lose out and are not penalised, reciprocally we should expect them to continue in those agreements as long as they are not penalised? That is signally different from possible future schemes. We want people to continue in agri-environment schemes for the wider public good.

That is the case, but farmers who are coming to the end of a 10-year agreement now face the prospect of receiving no agri-environmental moneys. What should we recommend to each individual farmer who comes to our surgery or whom we meet at auction marts on a regular basis? What is our advice to them? Will the Minister give a commitment that they will not be penalised? My recommendation is not that they exit a scheme that is still running, but my request is for confirmation that if they enter a new 10-year scheme, which I understand the Government are encouraging them to do—farmers would currently benefit from existing EU agricultural moneys—they will not be penalised. That is precisely the response that the previous Minister gave. I am afraid that the Government’s response set off alarm bells.

There are a number of other issues that I, and I am sure the Select Committee, wish to flag up. We need to ensure that the reforms do not damage food security and that we do not, as a result of the greening reforms, take land out of food production. I do not think that is the Government’s wish, but it could be the consequence of the Commission’s reforms. We want assurance that this country’s agricultural sector will remain competitive and viable so that our farmers do not lose out to competition from devolved areas of the UK or other EU countries.

Will DEFRA set out more clearly how it will reduce reliance on direct payments, and outline the tools it needs to do so? I have absolute confidence in the ability of the British farmer to go out, match and compete with the best in Europe and the world, but if we are taking our farmers out of direct payments, we want an assurance that other EU farmers are also coming out of direct payments and that there is that elusive level playing field.

If the Minister can give us new ideas on how to make UK farming more competitive, that will be welcome. I hope he will reject the Commission’s one-size-fits-all policy. The Committee favours greater flexibility for member states to develop measures that are better tailored to local environmental and agricultural circumstances, and we believe that any greening policy should enable that to happen. We also advocate that the Commission limit itself to setting out the high-level objectives, thereby allowing member states to implement how they will apply on the ground in each country. We also make the plea that DEFRA must stop gold-plating the regulations—something first identified by my noble Friend Lord Heseltine. I commend the work that DEFRA has done through the Macdonald taskforce. We watch with interest to see precisely which regulations will be removed or renegotiated. However, when the new proposals come before the House to be implemented at the end of the process, we must not gold-plate them. We must have a categorical assurance from the Government—from the Minister today—that that will not happen.

We set out our concerns relating to crop diversification and the Government responded, so I think they are alert to them. There were also issues relating to the retention of permanent pasture and ecological focus areas. I have a particular concern, which is shared by those who represent upland farmers and reflected in the Committee’s conclusions, about the role of tenant farmers in agriculture. Will the Minister ensure that any negative impact of CAP reform does not disproportionately affect them? I welcome the Government’s response, which states that the definition should relate to active farming of land, rather than the type of organisation. I mentioned the potential exit. I urge the Government to take the opportunity to explain how the exit strategy will work for those farmers who are signing up to new agreements.

On the definition of public good, I have to mention—colleagues would be disappointed if I did not—the project in my own area, the Pickering pilot scheme, which enjoys funding from a number of sources. If the scheme works, it could be rolled out across the rest of the country. I therefore hope that the Minister will look favourably on that type of project, under the definition of public good, and that the negotiations will allow that to happen.

The reforms greening the CAP have to balance the twin challenges of food security and climate change. The absolute bottom line is that greening the CAP should not damage the competitive position of UK farmers. I hope the Minister will respond positively to the debate, clarify the Government’s response to our report on the issues I have mentioned, update the House on the proposed timetable, and give us an assurance that the CAP will be agreed before the end of the Irish presidency, allowing enough time for our farmers to prepare and have the certainty of knowing when the reforms will be implemented.

DEFRA has a big agenda: CAP reforms, common fisheries policy reform, bovine TB, dairy package and so on—I will not list them all. However, EU plans to impose new environmental regulations must not damage the very good work that our farmers have undertaken to green our land. I hope the message will go out that we are very European and very green, and that we will not allow the Commission proposals to damage the work that our farmers have done. There should not be a one-size-fits-all policy. We cannot expect farmers from Finland through Britain to Sicily to be tied down by rules that are too prescriptive. We hope that the Department will not compound that with gold-plating. I commend our report to the House.

I intend to make a short contribution. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on a worthwhile and important report, which highlights the importance of food security and climate change, and the fact that one size does not fit everybody. All too often, we have seen agricultural policies in which one size fits nobody at all. The fact that 7,000 amendments to the proposal have been suggested demonstrates aptly why people across Europe think that this process has to be made to work in individual member states, and in different geographic regions of member states. Perhaps it is even ambitious to think that a continent as diverse as ours in its climate, geography and economy could have a one-size-fits-all policy on anything.

The key point I want to make is that farmers need to be given credit for what is already happening on greening. They are already engaged in the stewardship of the land—in looking after and maintaining it. That is not always profitable. It is probable that only a small proportion of farms would be economically viable without the kind of support provided by the common agricultural policy. It is important to recognise that farmers are engaged in a wide range of climate change and environmental practices that are already helping to move towards a greener CAP. I hope the Minister will take on board that starting point and argue strongly that what many farmers are already doing is an important step.

I hope there will be room for member states—in the case of the UK, for the devolved Administrations—to tailor solutions to circumstances, and that there will be subsidiarity in how the policy is rolled out. The National Farmers Union has provided a briefing that suggests a range of sensible amendments to the greening proposals. For example, it asks for a menu approach—a regional approach—for measures on crop diversification and permanent grassland that are particularly relevant to Scottish agriculture. I hope Ministers will look at those proposals closely as the negotiations go forward and work closely with the Scottish Government to make sure that we find workable, practical solutions.

The hon. Member for Thirsk and Malton highlighted the wider context in which the greening proposals are being made. I have slightly different view on the CAP budget. Part of the problem for Scottish agriculture and the CAP to date has been a disproportionately low benefit. Scottish farmers receive €130 per hectare, compared to a UK average of €229 per hectare. I hope that the Minister recognises that we need a fairer proportion of the EU budget, and that spending should be more equitably distributed within the UK. Scotland has particular climatic, geographical and land quality issues that the CAP is designed to address. I hope Ministers will take those issues on board.

Will the Minister give me assurances today that any uplift via the convergence mechanism will come back to Scotland? The UK will qualify for uplift on the basis of Scotland’s already very low benefit from the scheme. The only countries with a lower benefit from the CAP than Scotland are Latvia, Romania and Estonia. After the proposals are implemented, we could be the worst in Europe on both pillar one and pillar two. If Scottish agriculture is to meet its food security and climate challenges, it needs to be supported in the right way. Greening measures have been accepted across the board in principle, but we need to make them work in a practical way.

It is a pleasure to serve under your chairmanship, Mr Chope. I thank my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chair of the Select Committee, for securing the debate.

First, I want to say that I am probably a very sad case, because I spent 10 years in the European Parliament, and all that time was spent on the agriculture committee, which I chaired from January 2007 to June 2009. I am actually waiting for the men in white coats to come and get me; I am sure they will, before too long. The only thing that gives me some recompense is the knowledge that I will probably not be the only one who is taken away. It is a good idea to debate greening the common agricultural policy. Like the Chair of the Committee, I want to start with some history—how we have come to the place we are in—and the issue of the mythical level playing field that farmers always seek, but that often seems further and further away.

We not only do not have a level playing field across the 27 member states of the European Union, but do not have a level playing field in the United Kingdom, because we have three different agricultural policies. The policy in England is to spread payments across the land and is not so historically based on the number of cattle and sheep kept, whereas in Wales and Scotland payments are made entirely on the basis of historical payments made to farmers between 2000 and 2001-02. There is no doubt but that we must look again at some of the systems of payment, because it is ridiculous to base an agricultural policy from 2014-15 to 2020 on payments made to farmers in 2001-02.

Another issue, which is probably more European, is that Estonia receives €70 per hectare and Greece €500 per hectare, so there will have to be a little bit of levelling of those payments. When in the European Parliament, I was not always admired by the French and Germans when I said, “In 2004, when the new member states came in, they were not equal, but by the time we get to 2014-15 and later, they ought to be much more equal.” Those payments will have to be levelled, like it or not, across the EU. The one good thing for British farmers is that we are somewhere in the middle of the payment table, between Estonia and Greece, so should not be affected too badly by some sort of levelling. If there is to be any form of common policy, the level of payment across Europe needs to be considered.

The CAP was started in 1962 by five member states to produce food after the war, and it was successful in producing food until the 1980s, when there was a lot of food in the world and Europe was subsidising it. When there was too much food in Europe, we put it on the developing world’s markets, destroying their markets. Something had to be done about that. We were subsiding Greek tobacco, for instance. One can argue about whether it is right or wrong to subsidise food and food production, but to use good taxpayers’ money to subsidise tobacco takes a little bit of working out, especially when one third of the tobacco grown in Greece was burnt in heaps on the ground, one third was reasonable quality and the other third was dumped on developing-world markets, leading to Zimbabwe and other countries having trouble with this dodgy tobacco.

We have to face up to the fact that it is no good producing food for the sake of it. The idea of CAP reforms was to move towards an environmental, land-based payment. That is being done to some degree. It is also useful from a world trade point of view, because payments are put into the so-called green box and are not directly linked to production, and so can technically be made to farmers without distorting the international market for food. That also means that we are not directly subsidising the number of cattle or the number of hectares—in real money, acres—of corn, and so on, to produce more food.

We have rightly moved in that direction, but as we move into 2012-13 and onwards, we should recognise that we are living in a different world. The Labour Government, slightly belatedly, worked out that there was a need for food and food production. I attended a Morrisons breakfast the other morning. We were talking about the affordability of food. There is no doubt—I do not level the charge at Morrisons in particular—that certain big buyers over the years have looked around the world to buy reasonably cheap food. However, now there are not vast amounts of cheap food to be had out in the world. China was eating 500,000 tonnes of beef 40 years ago, but is now eating 5 million tonnes of beef. The United Kingdom produced 1 million tonnes, but China is now eating five times the amount of beef that we produce. The beef produced in Brazil, Argentina and other countries that produce lots of beef is not necessarily finding its way on to our markets; it is finding its way into China. Therefore, food and raw material prices are higher.

Although the CAP must be greened, it also has to reflect the fact that we need food that is produced at an economic price that our consumers can afford. I am a farmer—I declare an interest—and farmers would like the prices that they are paid for food to be higher. Of course, consumers are having to pay more. We should ensure that enough of the money that the consumer pays the retailer for his or her food gets back into the producer’s—the farmer’s—pocket. Although that is not necessarily part of CAP greening, it is relevant to agriculture and farmers’ incomes.

The hon. Gentleman makes an important point about food prices. Does he agree that, although people always say that farmers receive subsidies, as if those are going straight into their back pocket, the truth is that in a lot of cases farm subsidies in recent decades have subsidised a cheap-food policy? Household expenditure on food has been falling for many decades, and that has reversed only recently.

The hon. Gentleman makes an interesting point. The payments coming to farmers have encouraged them to produce food—in many ways quite rightly—and helped to keep the price of food down for the consumer. It is only now, in recent times, with 7 billion people and rising in the world, that more food has been needed, and its price is going up.

In recent times, the prices of fertiliser, fuel and all those inputs that are needed to produce food have doubled. Therefore, the key is to consider an agricultural policy that is not only green, but looks to ensure that food that can be produced sustainably, is supported. This point has been made many times before, but if we look at our upland and hill farming, why are our hills so green and pleasant? Because they are farmed, and because there is stock on those hills. We need to consider that in respect of the CAP, because again—I am probably a little bit more controversial than some in this regard—it is no good just making a general payment across all farmers in future; we must look at the way that those payments are made.

Does the East Anglian farmer on the fens, who can produce 4 or 5 tonnes of wheat per hectare, necessarily need the same payment as the farmer struggling on the hills? Is it not time that we found a way for the farmer in East Anglia, who could carry on producing good wheat, to trade his environmental payments with somebody farming on the hills? In Britain there is not a shortage of land used for conservation and agri-environment schemes; nearly two thirds of the land is in one scheme or another.

I attended the same breakfast as the hon. Gentleman; it was a good discussion. On the important point that he is making, is there a case for the Minister engaging in that? In respect of high levels of CAP payment, particularly to the large agri-industrialist arable farmers towards the top end, there may be a case to be made for ensuring that the additional money from taxpayers is used for increased innovation, research and development, and more targeted and accurate farming, so that the productivity, not just production levels, on such farms is massively increased as a result of using taxpayers’ money.

The shadow Minister is exactly right, and he leads me down a path towards making a point on which not all will agree with me, which is that the one thing that is being denied to European and British farmers is biotechnology and science. No other industry in this country is hampered by not being able to use the best science. A blight-resistant potato used for starch production is in existence. Eventually, we will have a blight-resistant potato fit for human consumption; will we then deny ourselves the use of it? Many in the House are better historians than me, but was it not potato blight that caused the potato famine in Ireland? Solving the problem of having to spray potatoes 20 times a year—probably more this year, because of the terrible weather conditions—would be a great bonus. Similarly, as always promised, we might soon have nitrogen-enhancing wheats and oilseed rapes. Will Europe deny itself those, too?

As a Government, we need to be a little more proactive in discussing biotechnology. It is not for the Monsantos and Syngentas to promote it, but perhaps for our universities and others, so that we can tell people about the possible green bonus from crops that need to be sprayed less and that use less artificial fertiliser—all part of science and technology.

On science, technology and innovation, as my hon. Friend knows, because he has attended meetings of the all-party group on science and technology in agriculture, of which I am chair, the Government have just launched a call for evidence on precisely that—a strategy for agricultural science and research, as part of a comprehensive life sciences strategy. Does he agree that, as we think about greening the CAP, we should consider how Europe’s farming and its agriculture, science and research base, often led by this country, can play a part globally in tackling the challenge of sustainable intensification, as laid out in the foresight report?

My hon. Friend makes a good point. I congratulate him on chairing the all-party group. We need to bring to the attention of the world what is needed, with biotechnology. We have a moral duty not only to look after the environment, but to feed people. As there is more and more global warming, northern Europe, and we in particular, will need to produce more and more food, and using biotechnology is the way forward. Europe, however, has dragged its feet, as has this country. The debate would be worth having if the potential for environmental and productive gains and slightly cheaper food could be presented to the British public, and if they could see some financial benefits—people’s hearts are on the left and their pockets are on the right.

If we look at the protein that we feed our chickens, our pigs in particular, and our dairy cows, most comes from South America and America, and most is genetically modified soya, so the idea that we are living in a world free from GM is absolutely wrong. The Americans, dare I say it—I never was politically correct—might in part be slightly overweight, but they have not died from eating GM products, which have been used to good effect in America. If we want a more competitive agriculture in Europe and Britain, denying ourselves GM in the future would be wrong. A Government who brought up that subject for debate would be brave, although I think that the public might just about be ready for it. I am interested in what our new Agriculture Minister will say. I am tempting him, ever so slightly, to comment on the subject.

We have some good stewardship schemes in this country, probably among the best in Europe. The trouble is that the Ciolos reform is trying to go down to the lowest common denominator. Of the 27 countries, some have monocultures of maize, maize and more maize, so Ciolos is trying to bring in such things as a four-crop rotation, but if we have land in stewardship schemes or permanent pasture, or hill land that is extremely valuable for its landscape, the last thing we want to do is encourage farmers to plough up part of it. Some of what is coming through from Ciolos, therefore, is complete madness. One idea is that every farm has to have 7% set aside, but some farms have anywhere between 20% and 40% of their land in a stewardship scheme—some more—while other, highly productive farms are much better off producing food and getting on with it. That is why “one size fits all” is not the way forward, as my hon. Friend the Member for Thirsk and Malton said.

We will have to fight hard in Europe—I look forward to the Minister fighting his corner—because in this country we run very productive farms. We farm pretty competitively. When some of my farmers in the west country get excited if the Commission talks about small farmers, I warn them, “Don’t get too excited,” because the Commission means farmers of about 5 acres, or 2 hectares, not farmers of 50, 100 or 150 acres. Poland has more farmers than the rest of the European Union, or certainly did when it entered, because it has so many small farms. Be careful when the Commission offers handouts to small farmers, because it does not mean ours.

That brings me to a key point. As we green the CAP, what is needed is agricultural environmental policy, and at the moment too much social policy is involved. Many member states will talk about labour requirements that very much favour the huge amount of labour on the very small farms in some countries, which will put British farming at a disadvantage. That will also take the CAP from where we want it to go, because the whole idea—probably with cross-party support—is to see farmers not only farming in a green way, but producing food competitively, and we also want them to get more money out of the marketplace. That is where I disagree with the hon. Member for Banff and Buchan (Dr Whiteford), who spoke before me. It is not a matter of finding more money from the CAP to support farming; it is about enabling farmers to be competitive and produce food well. I do, however, agree with the need to look much more at what land is given the CAP payments; that is where Scotland may well benefit.

I agree with the hon. Gentleman on his latter point, because in Scotland we have some serious disadvantages, in the kind of land that we have, its quality and its location. My key point was that the proportion we get of the overall CAP budget, whatever its size, needs to be more equitable.

I understand exactly where the hon. Lady is coming from, but looking at Scotland, dare I question whether the highlands and the bare rocks need the same payment as some land that can be farmed, such as grasslands? Averages of payment throughout Scotland are interesting. How I dare even suggest such things, I do not know—I do not want to get into a war with Scotland—but there are statistics and statistics.

We are at a crossroads, and at a place where Britain is well in advance of others, with regard to environment payments. We need to ensure that we can pay for those payments. I agree with my hon. Friend the Member for Thirsk and Malton that modulation is unfair to British farmers. However, I also know that the Treasury is not noted for its generosity, and if we do not modulate, we will not have enough money to pay for our stewardship schemes. If the Minister and the Secretary of State with responsibility for agriculture went cap in hand to the Treasury, saying, “We already receive £2 billion or £3 billion from the CAP, but we need more money from the Treasury to prop up stewardship schemes,” I suspect that they would be told in good Anglo-Saxon terms to go on their way. As we negotiate the new agricultural policy, we must ensure that those stewardship schemes are funded through it in some shape or form. We must be careful when we say that we will throw the modulation out with the bathwater, because that may not be the right way forward.

This debate is a great opportunity, and I wish Ministers well in their negotiations. The argument in Europe is always that we should have an agricultural policy for the whole of Europe and a budget to fit that policy, but in the real politics of the European Union, there is a budget for agriculture, and agricultural policy is then fitted to that budget. That is exactly what will happen this time.

We must get the best deal for our farmers and the environment. I wish our new Minister and the Secretary of State well in their negotiations with our European partners. We must be tough to ensure that we move our agriculture forward to competitive food production and a green agriculture policy, but we must not lose sight of the fact that in the end, much of the food that our farmers produce is also part of the green environment.

Does my hon. Friend agree that a problem with a one-size-fits-all policy such as the CAP is that it is difficult to have policy innovation, because any such innovation is stifled by the need for negotiations between 27 member states? Does he think it might be better gradually to move to a system with a common agricultural policy with common objectives—safeguarding the environment, improving animal welfare, and food security—so that those policies are increasingly delivered on the ground by national Governments from their own budgets, and we do not recycle funds through the EU in the first place?

Yes. My hon. Friend raises a good point. What needs to be brought in is not only a policy, but co-financing, because each member state would then pay for its own agricultural policy, and might not be quite so keen on throwing money away on strange projects, as some countries do. Olive oil is produced in Greece, and reindeer are supported in north Finland and Sweden. Wheat and barley are grown across much of Europe, and rice is grown in parts of Italy and Greece. It is difficult to support a policy and have one aim. It would be much better to ensure that member states had their own money. The downside of that is that we do not want the French throwing all its money into supporting suckler cows and beef production, and that highly subsidised beef then coming across the channel to compete with our beef, which may not be subsidised in the same way.

I completely accept that point, but does my hon. Friend agree that for any other goods, and in any other part of the single market, state aid rules, which the European Court of Justice enforces, prevent that from happening? It would be possible to have an agricultural policy with common objectives, but delivered nationally, with those state aid rules to prevent the sort of behaviour he mentioned.

My hon. Friend has heard the phrase, “The law works for the law-abiding,” and we can be certain that the French would find every reason to distort the market in their favour, wait until that was challenged by the European Commission, and drag it through the European courts for years, so I am not as sure as he is that state aid rules will stop the French or anyone else distorting the market. We must be careful if we go down that route. State aid rules are a blunt weapon, and I believe the Anglo-Saxons in Europe conform to them more closely than those in other parts of the European Union. State aid rules alone will not be enough.

We must ensure that CAP reform is done in a way that does not distort the market further. We should green it, but have food production, and ensure that as we deal with farmers in this country, we have food production on the best land and increase it sustainably, but have conservation on our more marginal land. That is the way forward, and that is where we must be careful in our negotiations on the greening of the CAP. I look forward to Ministers doing a good job.

It is a pleasure, Mr Chope, to serve under your chairmanship again. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh), Chair of the Select Committee, on a superb report. It is always a pleasure to follow the hon. Member for Tiverton and Honiton (Neil Parish). I was particularly struck by his remarks about food prices. He and all right hon. and hon. Members know that there is no greater pressure on household budgets at the moment than the rising cost of food.

The CAP can do a huge amount to limit that pressure, but the EU could make a more concerted effort, through the G20, to look at the position limits that some major financial institutions hold in the food futures markets. When the Better Markets campaign visited the Houses of Parliament last year, I was struck to find out that the share of speculation in food futures markets has risen from a third to two thirds, and that the share of liquidity being injected into the market has fallen from two thirds to one third as a result. There is clear evidence that speculation at global level is driving increases in food prices. We know that that hurts consumers in Europe, and it hurts people in Africa particularly. There has been a crisis in the horn of Africa over the last couple of years when food prices rose by 70%, so I hope that the debate spurs the Government on to regulating and calling for proper position limits as the US Administration have done on food prices.

Given the increased public awareness and scrutiny of the multi-annual financial framework for 2014-20, the debate is extremely timely. Spending on the CAP has reached €55 billion a year, or 41% of the EU’s total budget, although that is set to reduce to 32% by next year. That sum has been frozen in real terms until 2013, but it is still far higher than what the EU spends on science, innovation and promoting research and development. Given that unemployment in the EU stands at more than 25 million, with low growth and weak economic demand across the Union for the foreseeable future, we must question whether that is sustainable.

Open Europe’s report in February demonstrated that there is no link in the CAP between a country’s wealth and how much it receives from the CAP. For example, Latvia receives £115 per hectare—the least of all member states—from EU direct subsidies despite the average farmer’s income being only 35% of the EU average. Lithuania, whose farmers are the poorest in Europe in absolute terms, receives the third least from the CAP. In contrast, wealthier member states such as Ireland and France continue to do well out of the CAP. Despite a series of reforms, those inequalities in the system remain, which is why the discussions and negotiations of the financial framework should be more radical.

On the environment, in the UK the share of the CAP spent on explicit environmental aims and protection is only 13.6%. That is caused partly by the fact that the CAP fails to differentiate between different types of land, and it actively channels public resources away from those areas in which the biggest environmental gain could be generated.

There are four main aims that a comprehensive reform of the CAP should attempt to achieve in this financial framework period. First, it must generate greater food security and food price stability. The Commission said, in the proposals that the Committee evaluated in its report, that there is a strategic interest for the EU in retaining significant food self-sufficiency. As Commissioner Barnier said, during his time as France’s Agriculture Minister,

“if Europe were to cut back on its agricultural production then the increase in its own food imports would contribute significantly to a worldwide increase in food prices.”

In other words, maintaining Europe’s farm outputs at current levels also contributes to the stabilisation of global food markets. There is some truth in that, but the question is whether the design of the CAP actively helps or hinders that aim.

Secondly, the CAP must remove trade-distorting barriers and enable investment in science and innovation in agriculture to increase, so that we see higher growth, innovation and productivity in the sector. Thirdly, reform of the CAP should increase the contribution that food supply chains make to the EU’s targets for reducing greenhouse gas emissions from the agricultural sector, and also improve standards of environmental stewardship. Finally, CAP reform should promote greater trade justice in the EU’s relationships with the developing world.

One approach specifically identified by the EU and the Commission is the provision of basic income support payments—which could be uniform per region, but not flat rate across the EU, based on new criteria and capped at a certain amount—and a compensatory environmental payment for additional actions that improve stewardship; that includes crop rotation, permanent pasture or even an ecological set-aside. I note that the Committee has expressed concerns about the detail of those proposals, so I hope that the Minister can demonstrate that, alongside the positive benefits that there will be from environmental stewardship, farmers will not be unduly inconvenienced by such measures.

On market measures, the Commission’s plans identify some scope for streamlining and simplifying measures, and possibly introducing new elements in terms of better functioning of the food chain. Whereas market measures accounted for 92% of CAP spending as recently as 1991, just 7% of the CAP budget was spent on them in 2009. Eliminating trade-distorting subsidies is not simply about increasing growth; it is also a matter of justice for the developing world. The combined US and EU subsidies for cotton production over the past nine years amounted to $32 billion, which has had the effect of driving down global cotton prices, reducing demand for west African cotton, and restricting that region’s ability to export its way out of poverty. The EU pays out approximately $2.50 per pound in cotton subsidies to support 100,000 cotton growers in the EU; that is far more than the market price for cotton. Fairtrade estimates that those subsidies have resulted in a lost income of $250 million a year for west African cotton-producing nations. The EU could therefore fulfil the pledge that it made during the World Trade Organisation negotiations to eliminate those unfair subsidies and ensure that the provisions from the treaty of Lisbon are implemented to assess the effect of EU policies on developing nations. That needs to happen in the CAP as well.

The CAP must be about showing how agriculture can change and improve through investment in research and development. The 2011 UN Food and Agriculture Organisation report recommended a major increase in investment in research and development. We need a CAP that rewards farmers and others in the food supply sector who make the right investments in photovoltaic cells, wind farms, better water-recycling policies, and better use of soil. It is true to say that converting a CAP that, at the moment, pays perhaps too much for pure production instead of investment will be an important part of the reforms.

Finally, I turn to the role of tariffs. Open Europe estimated that

“the average external tariff paid on imports from countries without special arrangements with the EU”—

those that do not have most-favoured nation status—

“range between 18% and 28% of the value of the good imported... This is much higher than the average 3% tariff paid on manufactured goods.”

Any proper programme of CAP reform must look at the effect that the tariffs have on imports, and particularly, on the economies of places such as Africa, where clearly, if they are to see an improvement in living standards, they need to have fairer access to our markets than our distorted trade rules provide.

Those are the aims that I believe we should have in a comprehensive and radical set of CAP reform proposals. The Government will have the Opposition’s support if they pursue a programme in Europe of securing greater partners for that, and I wish them success. However, they will face scrutiny from us to ensure that they achieve their aims and that we secure an agricultural policy in Europe that is better for the environment and for the consumer.

As ever, it is a pleasure to serve under your chairmanship, Mr Chope. I want to focus on the concerns being raised by environmental organisations about this issue, and particularly on the views expressed by the Royal Society for the Protection of Birds, the Campaign to Protect Rural England, and the Wildlife and Countryside Link. It is important to note that although this matter is immensely important to our farmers, it is not only about them, as everyone should have a stake in the countryside, whether they own land, make money from it, work on it, or not.

May I commend my hon. Friend, Mr Chope, on introducing to the debate the concept of a one-nation CAP reform?

I thought for a moment that my hon. Friend was congratulating you, Mr Chope, on introducing that concept, and I wondered whether I had missed something. Yes—a one-nation CAP reform. That is our slogan for today.

If the concerns raised by environmental organisations are not addressed, there is a danger that the CAP, which has demonstrably made some progress over the past 20 years—albeit painfully and slowly at times—could, as part of a process intended to improve its environmental performance, perversely be taken backwards. I am glad to say that there is general agreement on the need to green the CAP, which I regard as absolutely necessary if we are to achieve three objectives: first, to support more long-term sustainable food production; secondly, to address the ever-increasing challenge of global food security; and, thirdly, to meet our environmental goals, which range from halting and reversing biodiversity declines by 2020, to meeting our climate change targets.

Greening of pillar one payments must happen and, at the same time, pillar two must be fully protected or ideally, increased. The added justification for those changes is, in the words of the RSPB’s evidence to the Committee’s inquiry, to

“legitimise expenditure of €300 billion over the next seven years.”

That is a huge sum of money. We know from yesterday’s debate on the EU budget just how much concern there is in this place, and among the wider public, about EU spending, of which the CAP is the largest single component. I agree with the Committee’s conclusion that it is a concern that greening may be seen by the Commission as a way of justifying the significant public expense of its policy on direct payments, rather than a way of delivering environmental improvements across the EU. I hope that the Minister will devote some time to that concern in his response.

There is also concern, as there is in relation to other areas of Government policy, that this could become an exercise in so-called greenwashing—greening in name, but not in outcome. Greening must be designed and implemented in a way that secures genuine environmental improvements at farm level and across all member states. There are worrying signals that the member states want to maintain the status quo but to repackage the status quo as green when it is clearly not. The Luxembourg paper contains some strong examples of that. The measures suggested by 16 member states in that working paper, published in April, are even worse in delivering environmental outcomes. In particular, the section on farmers who are “green by definition” has raised concerns. Arguing that a farm is automatically green just because a certain proportion of it is grass is nonsensical, as there is huge variation.

I am glad that the Minister is nodding. I hope that he repeats that when he comes to make his speech at the end of the debate. Grassland can be managed in a way that is good for the environment, but can also include reseeded and extensively managed grassland, which does not deliver comparable environmental benefits. The UK was one of the member states involved in that document. I am pleased that the Government have since distanced themselves from it, saying that the UK was not a co-signatory, but just wanted to move the Commission’s thinking forward. I hope that the Minister will use this opportunity to clarify that again.

One argument that we are hearing a lot, including from the Country Land and Business Association and the NFU in the UK, is that farmers in agri-environment schemes should be counted as “green by definition”. It is true that there are many good examples of what those schemes are achieving in the UK, but there are two problems. First, there would be no environmental additionality from such an approach, and that is badly needed. Secondly, it would in effect involve double funding. Farmers would be paid once via their agri-environment scheme payment—paid for under pillar two—and paid again from their new greening payment, when the new CAP comes into force, under pillar one. Therefore, although it is important that greening and agri-environment schemes work coherently together, I do not think that “green by definition” is the answer.

Let me move on to talk about flexibility. The Select Committee and the Government agree that a one-size-fits-all approach is not appropriate. The Select Committee Chair, the hon. Member for Thirsk and Malton (Miss McIntosh), talked about that in some detail today, as did the hon. Member for Banff and Buchan (Dr Whiteford). It is only practical for there to be flexibility so that environmental measures can be tailored to local environmental and agricultural conditions. I would very much support that approach. However, there are some dangers with too much flexibility.

I can see that, for the UK, a flexible approach makes most sense, as we are leading the field with our higher-level stewardship schemes and would most likely use that flexibility to deliver positive environmental outcomes. However, if member states are allowed the full flexibility that they are calling for to implement greening in their own way, that flexibility could extend even to determining what counted as green. That could allow member states to kick out the Commission’s greening proposals and do what they liked, and sadly in many EU countries that could amount to next to nothing. The NFU has also raised concerns about that, but from a different perspective. As the report outlines, the NFU is concerned that DEFRA may impose more stringent greening measures on UK farmers that would not apply in other EU countries.

As I think the hon. Member for Tiverton and Honiton (Neil Parish) said, it is very important that we achieve the level playing field that is talked about so often when it comes to EU matters. I therefore support the calls from a number of environmental bodies that there should be a common framework that every member state must deliver, with flexibility to tailor implementation to local circumstances. A free-for-all on greening is not the best outcome for the environment in the EU.

Let me deal briefly with ecological focus areas. It is perhaps in the Commission’s proposals for EFAs that a common approach has best been mapped out and could make the best contribution to realising the ambition of greening the CAP. There is criticism outlined in the report about the proposed percentage of a holding that would be included in EFAs, with concern that that would mark a return to set-aside and severely limit increases in food production and competitiveness. However, as many environmental organisations have pointed out, because it could include a wide range of landscape features and low-grade agricultural land, which may already be under some form of environmental management, it would not necessarily mean taking significant areas of high-quality arable land out of production.

EFAs could have significant potential to make the direct payments that farmers receive from pillar one of the CAP deliver more for the environment. By including in EFAs important landscape features of the countryside, such as hedgerows, and ensuring that EFAs help to protect and maintain them, the character of our farmed landscapes and their wildlife could be greatly enhanced. However, the proposals would not achieve that aim and would need to be carefully designed and implemented to deliver real environmental benefits.

Lastly, I would like to raise an issue outlined by the CPRE. It stresses the need to ensure that the environment does not lose out when it comes to allocating funding to rural development measures under pillar two. Ensuring that pillar two is adequately funded is essential not only for green farming schemes, such as environmental stewardship, but to ensure that enough rural development funding is available for measures that support local food producers to boost economic sustainability in rural areas. The CPRE recently mapped the links between those who produce, process, buy and sell food sourced locally. It found that local food networks could be contributing £6.75 billion of value to local economies.

That is particularly important in Bristol, one of whose seats I represent. We recently held a mini food summit, bringing together organisations such as the CPRE and the people running Bristol’s green capital bid, which I very much hope we succeed with next year—it may be third time lucky. We were talking about how we could bring together people working in the food sector across Bristol as a hub for the south-west. The shadow Farming Minister, my hon. Friend the Member for Ogmore (Huw Irranca-Davies), was there, and I think that he would agree that it was a productive discussion in terms of how we can look at sustainability issues, encourage people to grow food locally and tackle food waste, which I have not mentioned today, but have spoken about on many other occasions. Obviously, that is also an issue in the EU. It is important to us locally that we look at how we can support local food networks.

The Select Committee says that DEFRA must redouble its efforts

“to find, engage and secure reliable allies across the European Union”

and have the resources in place

“effectively and persuasively to put the UK’s case that the CAP should support…the agricultural sector and provide environmental protection.”

I totally support that conclusion. I am somewhat pessimistic about what can be achieved, but I urge the Minister to throw his weight—his much-diminished weight, it must be said—behind our efforts to ensure that real progress on environmental issues can be made as part of this process.

Thank you for allowing me to speak, Mr Chope. I am conscious that I was not here for the opening of the debate. The title of the Select Committee’s report is “Greening the Common Agricultural Policy,” but more specifically the Commission’s proposals are about greening pillar one of the CAP. It is worth noting that supporting the greening of pillar one represents quite a significant departure from the long-standing British foreign policy position, which is that we should gradually phase out pillar one and direct payments all together and put our support into pillar two, so that we can have more tailored local and national support for environmental stewardship schemes.

My concern is that by going for the greening of pillar one, we will end up with what is already being called in some circles green taping—rather than red tape, we will have green tape. There will be quite bureaucratic and centralised diktats coming out about what farmers can and cannot do, which invariably will not have been thought through properly. We might lose the opportunity to achieve the more satisfactory long-term objective of removing pillar one altogether and having effective, well thought through countryside stewardship schemes. In recent decades, British Governments of all colours have led the way in developing some of the successful ones. The entry-level and higher-level stewardship schemes are held up as exemplars for others to follow. There is a danger that we will lose that momentum towards a more sensible CAP and end up reverting to and getting bogged down in, again, quite a bureaucratic process.

I shall highlight a few key problems that I see with some of the proposals. There is the idea that we should go back to set-aside. We moved away from set-aside 15 or 20 years ago because it was not working. The point was made by my hon. Friend the Member for Tiverton and Honiton (Neil Parish) that it is not always right to have just 7% of every farmholding set aside and not farmed intensively. The evidence is that if we really want to encourage wildlife, we should have wildlife corridors. Some parts of the country where the agricultural value of the land is lower might opt to do more of these environmental schemes—

My hon. Friend is absolutely right about the set-aside argument. Do we get value for money in greening with set-aside, counterbalancing the fact that we are taking out a lot of land that could be used for food production? There is a moral duty to produce food as well as taking land out for so-called environmental set-aside.

That is right. The environmental stewardship schemes in pillar two are much more proactive about encouraging wildlife and improving biodiversity, whereas the problem with set-aside is that it becomes something that has to be done and everyone finds all sorts of ways around the rules so that, for instance, they can graze a particular type of goat on the land and get away with it. There is an issue with the bureaucratic system of set-aside.

My hon. Friend the Member for Tiverton and Honiton also alluded to the crop rotation requirement. Anyone who has been a farmer, as I once was, knows that crop rotation is a good thing. A farmer who farms without rotating their crops, particularly in the arable or vegetable sectors, will soon run into problems, such as crop disease, which causes a great deal more expense than any subsidy would have been worth. I question the value of insisting, in the latest proposals, that each farmholding must grow three crops. It proves that whoever came up with the idea is not a farmer; they are a bureaucrat. One could grow three brassicas—cabbage, oilseed rape and cauliflower—which would satisfy the three-crop rule, but the farmer would have clubroot disease in all those crops within two or three years.

I understand why some would regard the proposal to cap subsidies to individual farmholdings as superficially attractive; they think, “Why should we give a huge amount of money to very large farms?” However, no one has thought through the likely impact. Large farmholdings might break themselves into small farmholdings to get around the rules. There would be all sorts of avoidance problems, which would need a suite of anti-avoidance measures and people to ensure that farmers did not break up their holdings to circumvent the provisions. There would be major problems with that, so one must question what we are trying to achieve. If an objective of the CAP always has been and should be to promote food security and competitive farming, why would we want a policy designed to undermine the most productive and efficient farms in Europe and reward the least efficient? Although I understand why some would find the proposal superficially attractive, it is a mistake.

What are the hon. Gentleman’s thoughts on the proposal I floated earlier? Farms receiving the very high CAP payments are on the most productive land, but they need to be more productive because we face food security challenges. The very high CAP level should recognise additional investment in innovation, targeted farming, research and so on, so that it was based not purely on production volume, but on increased production.

That is an interesting proposal, which I would like to look at more closely. I have previously argued that we could develop a system in which environmental obligations became transferable in some regards. The lettuce grower on the Cambridgeshire fens, who has a model that getting the single farm payment is irrelevant to, might forgo the payment, which could instead go to a farmer on more marginal land in, let us say, Wales—I do not want to offend anyone with a Welsh background. Such schemes could therefore receive more investment.

A problem that we all recognise in the EU negotiating process, which I alluded to in my question to my hon. Friend the Member for Tiverton and Honiton, is that rather than going into negotiations saying, “What is the best possible agricultural policy we could design?” and “What is the optimum policy we could pursue?” we are always hamstrung by voices in DEFRA and the civil service that say, “You can’t do that because Denmark won’t agree. If you advance this idea France will reject it, and we will lose our allies in Poland and eastern Europe.” Everything about agricultural policy ends up being seen through the prism of an incredibly complicated 27-way negotiation, which frankly leads to a poverty of vision of what our agricultural policy could become. We instead plod along like a blinkered horse, trying to achieve what we can. It is all about the lowest common denominator, rather than genuinely successful and thoughtful policy. Pillar two is a classic case of that.

[Mr Dai Havard in the Chair]

In the last Parliament, our Committee, before I was on it, criticised the Labour Government for arguing that we should phase out pillar one and have pillar two only, because it was not achievable and undermined our negotiating position. If we do not even articulate what we believe because we are concerned that doing so will undermine our negotiating position, there is a problem.

I would like a much looser CAP in future: a common policy about common objectives. We could set common objectives for improving animal welfare, safeguarding the environment, enhancing biodiversity and promoting food security. There could be much looser policies and arrangements centrally and much more decision making and responsibility for implementation devolved to national Governments.

This will tempt my hon. Friend further from the topic of debate, but would a looser common agricultural policy, or an agriculture policy, be part of a new relationship that we might negotiate with Europe?

It might be, if we get to that point, but I do not want to be distracted by that now.

There is potential and it is not unrealistic, because that is the direction of the common fisheries policy. The Commission, under Commissioner Damanaki, is buying into ideas that will effectively lead to a partial repatriation —of sorts—of the management of individual waters and fisheries only to those groups of countries that share that fishing water. That is a sensible plan.

The hon. Gentleman has graciously given way. He tempted me in because I was the Minister who oversaw the instigation of that regionalisation of the common fisheries policy. It is a good approach, but it must be balanced against the imperative to achieve sustainability of fisheries in sea areas. In the same way, we are talking about the long-term sustainability of agriculture and getting more out from less in. There cannot simply be devolved management and let-loose chaos; it must be well planned and managed by individuals and organisations on the ground or on the seas.

I absolutely agree. In fisheries, the developments and techniques on maximum sustainable yield and how they are calculated and measured, with all their complexities, have come a long way. That should be the guiding philosophy of the common agricultural policy. The US has a statute that states that there cannot be overfishing beyond the maximum sustainable yield, and we could look at something like that at a European level. I accept what the hon. Gentleman says, but I am talking more about the implementation to deliver maximum sustainable yield in fisheries, how we could devolve management of that and how we could do the same for the common agricultural policy. We could set clear objectives to enhance animal welfare, biodiversity and environmental protection, but give individual countries much more scope to work out how best to achieve them.

I am interested in another area that has always struck me as a missed opportunity. The Committee took evidence on the natural environment White Paper proposals, which the Government launched soon after the election. Some of that evidence made it clear that putting a value on biodiversity and the natural environment was a powerful idea that had a great deal of potential. There were interesting proposals in the White Paper, but the big thing that held them back was the lack of funding to make them a reality and to make such a market a reality. A huge amount of money—the best part of 40% of the EU budget—is tied up in the common agricultural policy, but there is no really thoughtful, innovative policy in it. There are interesting ideas in the White Paper, but no money for them. Could we somehow marry the two and use some of that CAP money to make a reality of the natural environment White Paper?

Welcome to the proceedings, Mr Havard.

My hon. Friend did not hear my opening remarks when I highlighted the fact that funds under the CAP are going to the projects that he mentioned. Perhaps the Minister will clarify whether those will continue under the revised rural development programme for England and possibly the agricultural environment schemes as well. Does my hon. Friend the Member for Camborne and Redruth (George Eustice) agree that we heard powerful evidence that this could be achieved through private enterprises, such as water companies, which might be a better route and attract more investment?

There are a number of routes that we could pursue to bring this forward. My point is that there is a huge amount of money tied up in the CAP. There are funds, as my hon. Friend said, in pillar two. If we are serious about greening pillar one, we could try to transform it into a market, with state funds available to do that, to promote environmental schemes, so it could be almost a transferable obligation. The lettuce grower on the Cambridgeshire fens might choose not to participate. Another farmer might choose to participate in quite a big way, so we would get some critical mass. We would have wildlife corridors and make a genuine difference rather than making token gestures.

A lot of the proposals are probably beyond the scope of the CAP negotiations. It was ever thus. One of the big problems with the CAP is that it always tends to be about 10 years behind where it needs to be. It is now focusing on the environment when it probably ought to be paying, as my hon. Friend the Member for Tiverton and Honiton said, a little more attention to food security. However, I know there is room for negotiation and an understanding that greater flexibility needs to be included in some of the proposals. We should at least be arguing for them, and not be afraid of arguing for them just because we do not think that we have enough allies at this point.

I am glad. I need watching, Mr Havard. My thanks to your predecessor, who was here until a couple of minutes ago. You tried to throw me by changing chairmanship as I stood. It was a delight to serve under Mr Chope’s stewardship as well.

I welcome this debate. It is an excellent and timely chance to examine the Government’s approach in the EU negotiations, and to support and challenge it where necessary. I thoroughly commend the Environment, Food and Rural Affairs Committee, and its Chair, the hon. Member for Thirsk and Malton (Miss McIntosh), on their work. I had some lovely nights in my flat reading the Committee’s compendious volume. It was very good and had some excellent recommendations, to which the Government have responded; I read that response, too. The report has brought a good open and transparent debate to some of the key issues around the CAP, including the issue of greening the CAP, which we are debating.

I also commend the engagement of wider society in this debate—that is imperative—including the engagement, mentioned by several hon. Members, with domestic and international non-governmental organisations, farming bodies, farming leaders, farming unions, and farm workers. EU parliamentarians are playing an increasingly important role in this recent process of co-decision. The hon. Member for Thirsk and Malton urged MPs—and Ministers, I think—to, in her words, “snuggle up to MEPs”. We are indeed facing some cold winter evenings, so that might be something that we want to do, although it could lead to some racy headlines, particularly for a happily married man such as me.

The process was always going to be complex and all-consuming for those concerned with food security, domestic and international; competitiveness within the farming sector; and, of course—the focus of today’s debate—the wider environmental and public benefits that good reform can bring. There is the rub: good reform, not just any old reform.

The hon. Lady, who introduced the debate, rightly talked about the potential impacts of any delay to agreement on the multi-annual framework. That is an item that we have raised before. It would be good to get an update from the Minister on where he thinks the budgetary debates are going, because they could have an impact on CAP reform and forestall the changes that we are talking about. The hon. Lady also commented on the broad issue of achieving a level playing field, which we are always chasing. Today’s debate has flushed out not only the difficulty, but the absolute necessity, of achieving that, so that our farmers who strive for the highest standards of environmental gain and animal welfare are not at a disadvantage in so doing, compared with farmers in other EU nations. What struck me about the hon. Lady’s comments was that there is probably cross-party agreement that in the reforms we should be seeking a green and pleasant, but also productive and biodiverse land.

The hon. Member for Banff and Buchan (Dr Whiteford) pointed out that many farmers would not be viable without the support of the CAP, which tempted me to reiterate a comment that I made earlier this year: happy 50th birthday to the common agricultural policy! I do not think that many hon. Members will join me in saying that, but there is an element of truth in the statement that one of the unavoidable outcomes of the CAP over the past five decades has been an element of price stability and avoidance of price volatility. As we move towards a more competitive CAP with fewer barriers to trade that opens out internationally, the challenge will be different.

Successive Governments have made it clear that they need to move away from food production subsidy to more competitive farming and fewer trade barriers. Indeed, the hon. Lady spoke up extremely well for diversity within farming—a critical issue not only within CAP reform, but in wider domestic reforms that the Government are looking at. I entirely agree with her that we need to see the socio-economic importance of the diversity of farming. That will give us resilience, and it includes having smaller farmers alongside larger farmers, and highly productive land alongside less favoured areas. Diversity needs to be maintained and supported, not least for the public benefits that it brings.

Public benefits are not purely about the birds and the bees. I declare an interest as my wife keeps bees. They have done very well this year. I will discuss with the Minister later how they have done well, because it is to do with the preponderance of a particular non-native species in our area, which has kept them going in pollen this year.

Indeed. The hon. Member for Tiverton and Honiton (Neil Parish) spoke with expertise, as always. He described how we got here with the CAP, and spoke about the diversity of approaches to payments in the UK. That will be a major factor for the Minister as he tries to steer a way forward. The hon. Member for Tiverton and Honiton also spoke of his worry that his infatuation with the CAP and farming meant that the men in white coats would soon be coming. I assume he is not referring to officers of the Animal Health and Veterinary Laboratories Agency. He also referred to the madness of some of the Commission’s proposals, so there seems to be a running theme in his contribution.

My hon. Friend the Member for Glasgow North East (Mr Bain) widened the debate significantly and spoke with a great deal of expertise about the increasing speculation in food markets by those who, frankly, have never set foot in a field or run a farm—other than a health farm, so that they could have their limbs massaged alongside their profit margins. There is a world of difference between commodity trading by farmers to enhance their profit margins and pure speculation, which my hon. Friend mentioned, which lines the pockets of traders to the complete disadvantage of not only farmers, but consumers, because it is undoubtedly having an effect on prices.

My hon. Friend also talked about the overriding priorities that we should be focusing on: food security, food price stability and removing trade barriers. Removing such barriers will help the competitiveness of our UK farmers and improve the viability of those in developing nations. It will help us to tackle the global food supply and shortage problems. He talked about innovation and the priorities affecting food supply chains, and their role in climate change, as well as the big social justice issues that we often miss when we talk about CAP reform. He also reminded us specifically of the market distortions of CAP, and their impact on developing nations in particular—the reason we are trying to change it and move away from it.

My hon. Friend the Member for Bristol East (Kerry McCarthy), with a little instigation from me, introduced the concept of one-nation CAP reform, for which I thank her. The basic premise is simple: CAP reform is not only to do with farmers. It is to do with wider public benefits, and taxpayers have a prominent stake in it, as do consumers, NGOs and farmers. It must be a subject that inspires debate beyond the agricultural or food-processing community and this Chamber. My hon. Friend called for genuine environmental benefits, not greenwashing. I am sure that the Minister heard her, and I hope that that call is also heard in the European Parliament. It is a valid concern and brings us back to my initial point: let us have good reform, not just any old reform. One Europe-wide organisation, BirdLife, said that the rather purist original Luxembourg proposals

“would signal the end of any legitimacy of EU direct payments to farmers”.

I think we all agree that we need to avoid that result at all costs and explain to people the wide variety of reasons why it is valid to put those funds back into farming, not least of which is the environmental and wider public benefits.

The hon. Member for Camborne and Redruth (George Eustice), the closing Back-Bench speaker after a wide range of contributions, raised the issue of green tape, as opposed to red tape, and complexity. I agree with him that we need to find ways of simplifying things. He engaged with the detail of proposals and interestingly discussed the cap on CAP payments. That raises the question, for me, of what additional benefits in public goods for the taxpayer can come from very high-level payments. They might take the form of increased productivity on the part of the largest recipients of CAP payments. There is an increasing necessity to explain to taxpayers, day by day, why their money is being used as it is. We can do that, but we need, with the Minister’s help, to explain why it is a good use of money, and what extra we get from it, as opposed to large volumes of production.

The hon. Member for Camborne and Redruth also dwelt on the potential for greater regional management and subsidiarity, which is the direction under the common fisheries policy; I think it is slightly ahead of the CAP in that respect. It took a fair deal of persuasion to get where we are on the CFP, and NGOs, alongside fisheries people, did a lot of good work to articulate the fact that the approach could work scientifically as well as commercially. I think we will win in that case, and I hope that the process continues. Perhaps, some time in the future, we can reach the point of much more ownership, regionally and locally, among the farming communities, NGOs and others, of how we take things forward. Sustainability underpins all that is happening, and the scientific evidence. The hon. Gentleman also introduced the interesting concept, which raised quizzical looks between me and the Minister, of transferable obligations. That strikes me as having some similarities with carbon trading, which has advantages, but also loopholes and disadvantages. The concept is interesting, and worthy of further consideration.

The UK has long been in the lead among the more progressive nations on CAP reform. I am thankful for the leadership shown under successive Governments, in successive negotiations, including by my right hon. Friend the Member for Leeds Central (Hilary Benn) when he was Secretary of State. At the forefront of like-minded and progressive nations, he advocated strong reform of the CAP, to bring about enduring benefits for farmers, consumers, taxpayers and the environment from bold, ambitious, green reform—good reform.

I should take this opportunity to thank all the witnesses to the inquiry, which I did not do before. There is a long list, as the hon. Gentleman mentioned. On the point about negotiations under successive Governments, it is important to recognise that this is the first time that co-decision has rested with MEPs and the Council of Ministers. Like my hon. Friend the Member for Tiverton and Honiton (Neil Parish), I served in the European Parliament, for 10 years, and—this is a secret, so I know it will not go beyond this Chamber—for six months as a stagiaire with the Commission, so I have even more chance of being carried off by the boys and girls in white coats. I am concerned that we may we overlook this point: MEPs so often feel ignored and neglected, and among the 7,000 amendments there will be some sensible ones on which we can possibly do business. It is incumbent on us all to use whatever contacts we can, in the most platonic of ways.

The hon. Lady raises a strong point and is right. Although co-decision brings more challenges in negotiation, I welcome the fact that it is a great enhancement of democratic engagement beyond what has been referred to as the bureaucrats. It puts things into the hands of people who are democratically elected, and can speak up for their regions, including on international issues and trade. They can speak up for wildlife and farmers. We need to engage with and influence those individuals.

I was delighted that the head of the agriculture committee came to Westminster for a seminar, attended by various organisations, that brought us up to speed on the 7,000-odd amendments. He has his plate full, because he must work through the various Members who have tabled them and come up with his priorities, just as Ministers do. It is almost like adding a new but very democratic level to the previous tripartite arrangement. However, the hon. Lady is right that it gives an opportunity for a different means of influence. We should use that. Towards the end of the month, I shall be going out to meet European parliamentarians to discuss that very issue. I shall treat that as being as important as meeting the Commissioner.

We continue to believe that farmers should be supported by the Government for the public goods for which the market will not automatically reward them. As my hon. Friend the Member for Wakefield (Mary Creagh), the shadow Secretary of State for Environment, Food and Rural Affairs, has said:

“Labour wants CAP reform to encourage growth, a secure food supply and environmental benefits”.

As the Environment, Food and Rural Affairs Committee notes, those sometimes apparently contradictory aims can be difficult to reconcile, not least in the minutiae of EU negotiations, made more complex, as we have just heard, by democratic co-decision. However, we must reconcile them if we are to have good reform, not just any old reform—and especially not the old-style reform, which did not take us as far as we wanted. To do that we must have friends, and work with them, so I ask the Minister, as the hon. Member for Thirsk and Malton did, to update us on progress on the greening proposals of the more progressive, like-minded states—our friends, including the Danish and Swedish Ministers—and on the extent to which their influence is being felt among the clamour of competing voices, some of which may be arguing for a more retro approach to CAP reform, a “déjà vu all over again” approach of protectionism and old-style production subsidy. By the way, the accidental use of the imported term “déjà vu” in no way indicates any one specific nation that may advocate a less bold set of reforms.

Among progressive reformers, there has long been a focus on delivering a smaller, greener CAP with a more competitive and productive farming sector, both in the UK and across the EU. Does the Minister agree that yesterday’s vote in Parliament on the question of seeking a real-terms reduction in the next multi-annual financial framework actively assists the Government in pursuing those aims? If so, perhaps he can explain why Ministers were whipped to oppose the motion. Surely yesterday we provided a clear assist to the Government, in strengthening their hand in negotiations on the overall budget, and ultimately in respect of bold CAP reform. We should not forget, with regard to greening and all other matters, that part of this long-advocated reform is intended to reduce the barriers of protectionism, not put more up. It is intended to liberalise trade, which I am sure is supported on both sides of the House.

As well as the need to increase the competitiveness and productivity of UK farming, there is a need to level the playing field across the EU. Let us not forget the need to reduce the trade barriers that disadvantage the poorest farmers in the developing world. We often talk about food security in domestic terms only, but it is also an issue for international trade and developing nations. We urgently need to support growth in agricultural production, especially in the developing world, to feed a rising and poor population.

Let me again commend the forensic work of the EFRA Committee, and then ask the Minister several specific questions on the greening elements of the CAP. First, on a consensual note, we are glad to see the Government continuing with Labour’s focus on a greener CAP, with a greater proportion spent on public goods. We note as well the Government’s commitment

“to a very significant reduction of direct support under Pillar 1 …and a CAP that moves away from market-distorting subsidies.”

We are also glad that the Government are focused on simplification. However, we share the EFRA Committee’s concerns that elements of the proposals, as currently understood, will indeed add to the complexity and the bureaucracy of delivering public goods, including environmental benefits.

The Government must continue to argue in the EU for flexibility for the UK to devise and implement greening measures, to build on what has been referred to in this debate as the great success of the past couple of decades—it is 25 years since we first introduced agri-environment schemes in the UK—and to further those environmental gains. We do not want to destroy our progress or duplicate, overcomplicate or add bureaucracy. One of the things that have not been emphasised as much as they should have been today is the fact that the EU needs to go further. Resting on our laurels, however comfortable, is not an option. Ambitious green reforms need an acknowledgement from Government and from farming leaders that there is more still to do.

I note the Government’s response to the Committee’s concerns, expressed in recommendation 8, about gold-plating greening, in which they restate their high level of ambition for greening across the EU. It is right that we should be ambitious about greening in the UK. Does the Minister agree that, despite all our progress in this area, we need to do more? We need to ensure that there is a level playing field, and that farmers in other nations are stepping up to the green mark, and not finding easy access to indirect payments that support production, thereby disadvantaging UK farmers who are doing the right thing.

The Commission’s impact assessment estimates a 15% increase in administrative burdens linked to direct payments. I hope that the Minister can tell us that he will not be returning to the UK at the end of the negotiations with additional costs and burdens for farmers. What can he tell us of his hopes to achieve simplification and lower costs, alongside the green reforms and public benefits? He understands the concerns about the crop diversification proposals, which, in the UK, could have negative consequences, whereas crop rotation could improve soil and water quality, and help climate change mitigation.

There needs to be flexibility in the ecological focus area proposals to reflect the diversity of UK farming. Perhaps we could use our imagination and modify further the proposal. One suggestion, which is already in play for the Minister, would assist farmers and the environment, and it ties in with ideas proposed by the hon. Member for Camborne and Redruth. It reduces the 7% devoted to EFA to 5% for farmers who are willing to work together to collaborate on projects such as wildlife corridors, and to co-ordinate on a spatial and regional basis to develop those things that help us with climate change adaptation. I have met with large-scale farmers, both out in the fields and here at Westminster, who are already working effectively together on environmental measures, and such an approach, I suspect, would appeal directly to them.

The permanent pasture proposals are in danger of failing to deliver the environmental benefits that they profess to seek.

Not only is there a problem with permanent grass payments, but if we are not careful, farmers will plough up in advance grassland that they would not otherwise have ploughed up if it had not been for this ridiculous measure coming from the Commission.

Indeed. That is one of the many unintended consequences of devising a central system, which is why it is vital that we have the right flexibilities in place, so that we can sometimes work around this. We will support the Minister in any way that we can on this matter. I remember, at the 11th hour of a three-day CAP meeting, when we had come up with a final list of proposals, a great chap—I will not say what region he came from, to avoid the risk of embarrassing somebody—who had been involved in the negotiations from the fisheries side came up to me and said, “I cannot say this publicly, but well done, Minister. That is the best possible deal we could have had. I am now going to go away and see how we can work around it.” What we do not want is that sort of outcome. We do not want to come up with a complex list of things that people plan to work around. We would rather see the matter simplified. None the less, the hon. Gentleman makes a good point.

I mentioned the permanent pasture proposals. There is a world of difference between valuable permanent pasture that is not ploughed over regularly, which is home to semi-natural vegetation and great biodiversity, and pasture that is periodically cultivated and seeded. How does the Minister intend to negotiate the maximum public good from that proposal?

On exemptions, how does the Minister guard against the fear of double payments and maximise taxpayer benefit? Will he give us more details on the ways the Government will improve the competitiveness and productivity of UK farming while promoting further progress in greening and the achievement of wider public good? What specific measures are the Government working on now, regardless of CAP reform, that will allow both aims to be achieved simultaneously? We do not want the green food project, which has been quite well received, going the same way as the green deal in the Department of Energy and Climate Change, which has over-promised, is forecast to underachieve and is fundamentally flawed. The green food project needs to produce benefits and to bring together all the strands. I am sure that the Minister will be able to stand up and assure us that that is the case.

The Government have had some criticism from the EFRA Committee and others for the late introduction of proposals for a points system that would aid flexibility of the Commission’s proposals on a member state basis. I welcome the proposals, but wonder whether playing this card so late has diminished the chances of success in negotiations. May I also ask the Minister how, in promoting the laudable aim of achieving member state flexibility, we can guard against the use of such flexibility by some member states to dilute their greening imperatives? Does not that risk mean that the Commission will strictly have to constrain any flexibility, and what impact will that have on the Government’s ability to deliver for farmers in the UK while trying to guard against the dangers of flexibility among other EU nations? I notice that the Minister is chuckling, but he knows what I am talking about.

In short, flexibility at member state level is not just desirable but essential, but it cannot be allowed, in other nations, to add to the very real cost for UK farmers and consumers. It cannot be allowed to become a euphemism for an abdication of environmental responsibility.

The Minister has a lot on his plate, but if he tires, I am more than willing to step in and pick up where I left off. That would of course require this Government to step aside, so it may not be an option for the moment. Meanwhile, I genuinely wish him well in continuing negotiations on greening, and on all other aspects of CAP reform. Labour will support where we can, and we will challenge where we should, to achieve the outcome that is good for farmers, consumers, taxpayers and the environment—a smaller, greener CAP, and a more competitive and productive farming sector. I am talking about a one-nation approach to CAP reform where the many, not the few, gain.

Thank you for calling me to speak, Mr Havard. I do not deal in soundbites; I deal in solid policy and solid negotiation. We will leave soundbites to the hon. Member for Ogmore (Huw Irranca-Davies).

It is a delight to serve under your chairmanship today, Mr Havard. I also want to say a big “thank you” to my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural Affairs Committee, first for committing her Committee to the report—the very compendious report—that it has produced, and secondly, for having the good sense to apply for the opportunity to debate it here in Westminster Hall today. It has been extremely useful for us to debate the report, not least because my official title is the Minister of State, Department for Environment, Food and Rural Affairs, so I am responsible for both agriculture and the environment, and it is nice to have a topic that clearly places both parts of my job description in the frame.

I am grateful to my hon. Friend for making it clear in her early remarks that we have these priorities of food security and climate change, and they are part of our background thinking in this sector. I am also grateful to her for drawing attention to the difficult weather conditions in the past few months, which unfortunately may continue, and to the need for certainty. Nothing would please me more than to say—through her to the farming communities, the people who are looking at this debate in terms of social policy and the people who are desperate to have answers to the environmental questions—that we have a degree of certainty, but the reality is that we do not. The negotiations that we are involved in are still very much in play and I will try to give the House the benefit of our experience, to say where we are and what our objectives are. However, I am afraid that what I will not be able to do, with any degree of certainty, is to say where we shall end up, because there is still an awful lot to play for.

I start by making it clear that the Government are very much in agreement with the majority of the EFRA Committee’s findings and with the conclusions in its report; that was also very clear in the formal Government response to the Committee’s report. If I may paraphrase, the Committee’s two key conclusions are that the UK’s existing agri-environmental schemes should not be undermined by greening, and that greening should be applied in a simple, flexible way that recognises local circumstances. As I say, we could not agree more with the Committee on either of those aspects. May I say how much I value the agri-environmental schemes that we have in this country? It is not being complacent to say that they are of a very high standard and that in many ways we achieve a higher level of outcome than many other EU member states.

Of course, I would always like us to do better and there are ways in which we can continually improve, not least by recruiting more people to higher-level stewardship schemes, but I will not say anything other than that we do a pretty good job at designing those schemes and we have done so for some time. The hon. Member for Ogmore said “Happy 50th birthday” to the common agricultural policy. I am not sure that that many people will be lighting candles in support of that contention, but I hope that more people might like to have a small celebration at the 25th anniversary of the groundbreaking agri-environmental schemes in England. I want to make it plain that we want to preserve and extend that legacy for future generations.

In light of the earlier comments by various hon. Members today, does the Minister agree that the success of the HLS schemes—albeit they might need to be tweaked again as time goes by—and the welcoming of that success is a result of DEFRA officials being out there on the farms, in the fields, with people, fine-tuning the schemes until the eleventh hour to get them right? Actually, the success of those schemes gives us a lesson about the need for there to be as much subsidiarity as possible within the CAP reform greening proposals. They need to be worked in the UK, for the benefit of UK farmers and the UK public.

The hon. Gentleman is absolutely right. Mr Havard, we are going to have an embarrassing degree of consensus in Westminster Hall today on an awful lot of this material, because we have very strong common ground across the political parties and across the nations and regions.

I must say that it was not always so. When agri-environmental schemes were introduced, I remember that in my part of the world in particular there was a huge outcry about the “imposition”, as it was described, of agri-environmental schemes on the Somerset levels. People were very upset about what was happening, and then effigies of Ministry of Agriculture, Fisheries and Food officials were burned on the levels. We get very excited about these things in my part of the world—we are all revolting peasants at heart.

My hon. Friend will agree with that contention, as I know where he comes from.

The confidence in agri-environmental schemes is, as the hon. Member for Ogmore says, the result of careful preparation and consideration, as well as ensuring that everybody understood not only what they were to do, but the reasons why they were to do it and why the schemes would have an effect.

That is partly the answer to the point made by my hon. Friend the Member for Thirsk and Malton about modulation. From our point of view, it is essential that we are able to ensure the continuation of these schemes, and the way that we can do that is to make sure that there are the funds within pillar two that enable us to maintain them. It is not just the agri-environmental stewardship schemes that matter, although they are important. It is also through one of the other things that she mentioned—the rural development programme for England—that we can deliver the other added benefits and the public good, by the use of modulated payments. We must be very conscious of that.

My hon. Friend also made a specific point about the exit from the schemes. I hope that the Government response to the Committee’s report set out the position of someone who has signed up to a 10-year involvement, which is clearly the legal position. However, if difficulties arise after we have concluded the negotiations and if the new schemes clearly require us to look again at transition, I will be happy to talk to her, the rest of the Select Committee and indeed other interested parties about that, to ensure that people are not penalised for something that is outwith anything that they might reasonably have expected. That is because my determination is that farmers who enter into agri-environmental stewardship schemes have the confidence that, in doing so, they are not shackling their businesses to something that they do not want to do and are not making a rod for their own back. Instead, they should have the confidence that the scheme will continue and will provide the support they need for them to do the things that they want to do, both in running their businesses on that land and in achieving the environmental benefits for the wider good. I happily give my hon. Friend that assurance.

What would be helpful is a letter of clarification. Perhaps I am misinterpreting the Government response, but when it so clearly states that

“there is no legal basis for allowing farmers wishing to withdraw”,

does that refer to an existing scheme or a new scheme that they are about to sign up to, which will then be an existing scheme from which they may wish to withdraw if the greener proposals are more advantageous to them? As I say, a letter clarifying that issue, which we could place in the Library, would be most helpful.

I am happy to give my hon. Friend a letter. Again—I am not trying to avoid the question—there may be some uncertainties at the moment, as we are discussing transition, a key issue, with the Commission. It is giving us all sorts of potential headaches in the administration of schemes. We have a limited time horizon, and we simply do not know at what point new arrangements will kick in and what those new arrangements will be. Until we know that, it is difficult to make longer-term plans. However, I will happily write to her and set that out if it is helpful.

I get the hon. Lady’s point. What we need clarity on—I understand if the Minister cannot give it today—is where the cut-off point is and at what point in the process it occurs. We need that clarity so that we and he can encourage farmers to keep signing up for existing schemes without fear that they will lose out.

The hon. Gentleman has grasped that we need to understand from the Commission what will and will not be acceptable. We need to know how we can make a satisfactory transition. I assure him and my hon. Friend that my intentions are to maintain that continuity in a way that is fair to everybody. I am not resiling from the difficulties; I am simply saying that we are trying to find ways of ensuring that that is the case.

To make it simple for the Minister, we want an assurance that he is saying what the outgoing Minister for Agriculture said: that farmers will be able to exit. I am detecting a change of position.

There is no change in position. I am simply saying that we certainly want to ensure that people are not penalised. However, we will not be happy if people enter stewardship schemes and then try to exit for no good reason when there is no substantive change from the new arrangements—if they simply say, “We signed up for 10 years, but we now think that it is in our interests to bail out after two,” for unconnected reasons. I will write to my hon. Friend and copy in the hon. Member for Ogmore to ensure that there are no difficulties in understanding. Perhaps I am not expressing myself well.

For the record, my understanding is that this discussion has been about Select Committee recommendation 28. The answer is given on page 9 of the Government response. Anybody outside who may have been listening to the runic, delphic discussion that has just gone on will have some idea of what we have been talking about.

I am grateful to you for setting that out, Mr Havard, but I have to say that anyone who hopes to follow all the ramifications and tergiversations of the common agricultural policy negotiations will need those pieces of paper in front of them to have any chance of understanding much of what we are talking about. Having said that, let us try to express ourselves.

I will now be even more runic, because the hon. Member for Banff and Buchan (Dr Whiteford) asked me about the effect of the rebate. Anyone who tries to explain how the rebate works inevitably ends up confusing everybody. I will simply say something about it, I hope without entering into a longer discussion, because we will all get confused.

If part of pillar one is greened, that will not affect the rebate. Even if we manage to secure a transfer of the greened component from pillar one to pillar two, it still would not have any impact, because all pillar one expenditure and all pillar two expenditure originating in pillar one counts toward the rebate calculation. I hope that the hon. Lady finds that helpful. Looking at her, I am not sure whether she does. Again, I can provide further information later if she likes.

I move to one of the key underlying issues of this debate: the Committee’s ambitions for simplicity and flexibility. Those are fundamental to the Government’s position on greening. We seek to ensure that the administrative burden is low for farmers and administrators. For farmers’ sake, we do not want to gold-plate—as my hon. Friend the Member for Thirsk and Malton called it—any proposals introduced, but the thrust of Government policy has been exactly in the opposite direction.

My hon. Friend mentioned the Macdonald review, but I think that it delivered some sound suggestions about how we could reduce the impact of red tape on the farming community. We are making good progress on implementing them. I am afraid that farmers do not always recognise when that has been done, because when they no longer have to fill in a form that they used to have to fill in, they do not notice. We may need to make people better aware of the fact that we are proceeding with that as fast as we can. Sometimes it will need changes in legislation, which will take a little longer, but wherever we can, we are trying to implement the Macdonald review. I have regular meetings with Richard Macdonald to ensure that we keep up with his timetable.

I welcome the Minister’s comments. Compliance has been the biggest single issue with the CAP. It is the issue that constituents raise most often with me, and I am sure that it is the same in his constituency. I questioned his predecessor on several occasions about whether the new CAP would tackle some of those compliance issues, and I urge him to keep trying to do away with what the hon. Member for Camborne and Redruth (George Eustice) called the green tape in the new CAP.

I apologise to the hon. Lady. It is “Whiteford,” is it not? I got the first bit right but the second bit wrong. That is that Neath valley problem.

It is certainly an awful lot better than the pronunciation of the hon. Lady’s constituency from the hon. Member for Ogmore, so I would not worry too much, Mr Havard.

The hon. Lady is right. To be absolutely clear, one of the big bones of contention in the negotiations is that we think the Commission’s direction of travel on the issue is precisely wrong, and we have to push very hard back the other way. One of my drivers for that—I am sure my counterpart in Scotland feels the same way—is that I simply want to ensure that we can implement the CAP effectively and efficiently when it is introduced. I do not want the Rural Payments Agency in England to go back to the dark days of a few years ago, when it was incapable of doing the job set for it because it was insufficiently well equipped to meet the complexities. I want to ensure that on the day when the arrangements are implemented, whatever they may be, we can deal with them. That means a long implementation time and simplicity in the construction and design of what is proposed.

Will the Minister return to the point that I raised about the Commission’s impact assessment suggesting that the proposals would add about 50% to the costs? He can extrapolate from that to complexity and bureaucracy as well. Is it his intention that the final outcome of the negotiations will entail no increase in complexity or costs to farmers, or will he accept some complexity if that is the only way to finalise negotiations?

There are all sorts of competing interests. The hon. Member for Bristol East (Kerry McCarthy) is keen to ensure that member states cannot simply slide away from the commitments that they make. It is difficult to answer on what the final outcome will be. We are clear about our objectives, which are to simplify the proposals dramatically to achieve the environmental objectives, but with enough flexibility to ensure that we do not engage in complications that would jeopardise some of the things that we have in this country. We certainly do not want to increase costs. At the moment, I can give no assurance to the hon. Gentleman about the result of the negotiations. All I can give him an assurance of is our best endeavours toward that end.

I seek the Minister’s graciousness in giving way again only to highlight the fact that his answer sounds remarkably like the answer that the Opposition gave when we were in government, which was, “We would love to have no increase in regulation, but there just might be some, because that might be where we end up.” We took a lot of flak when we were in government over regulation and gold-plating. Sometimes there is good regulation as well.

There is, but it must achieve the right objectives, and our concern about some of the proposals is that they increase the complexity and the regulation and do not achieve the beneficial effects. That seems axiomatically wrong, and I think the hon. Gentleman is agreeing with me.

I note what the hon. Gentleman says about flexibility. That is certainly what we are trying to achieve. We want the flexibility to apply practical, effective and simple measures for our farmers. I thought that he ended a sentence in his speech with, “We want flexibility in the United Kingdom but not in other nations”. I thought, “Right. Yes, just stop there,” but I do not think that that is an achievable negotiating position. To be fair, he did carry on with his sentence.

Let us be absolutely clear: we want to achieve an environmental benefit across Europe, but we do not want to lose our high standards. We are engaging, therefore, with the European Commission, the European Parliament and other member states to ensure that there is flexibility in the EU’s approach to greening.

My hon. Friend the Member for Thirsk and Malton requested an update on the process. It will be extremely difficult to offer the precision that she requires. Many different views are being expressed within the Agriculture Council and the European Parliament, and much will depend on the outcome of the overall budget negotiations. As Members have already said, until that budget is completed we will not know what the quantum is, and it would be difficult to resolve many of the CAP issues without knowing the size of that envelope.

There is a move by the Cypriot presidency to achieve a partial general agreement, before the end of the year and the end of its EU presidency. Such an agreement will come about only if we are satisfied that we have something that is sustainable in all its senses, and as far as the UK is concerned I think that we are some distance from that. I expect—this is no more than an expectation—that it is more likely that we shall come to a conclusion during the Irish presidency, following the conclusion of the budget round.

My hon. Friend the Member for Thirsk and Malton asked whether we have allies. Yes, we do. As always with European negotiations, there is a constantly changing kaleidoscope on different issues, but there are member states that clearly understand our points about flexibility and complexity and about how we can achieve the results, rather than focusing on an incomplete understanding of how we can best achieve better environmental benefits across Europe. It would probably be unhelpful at this stage in the negotiations to be numbering our friends and our enemies, because someone’s friend on one issue will often be their opponent on another.

Let me make it plain that we are not opposed to the concept of greening if it delivers greater public benefits from taxpayer expenditure. That is our clear position—the hon. Member for Bristol East made that point—and we want it to be achieved in a way that recognises the wide diversity of agriculture around the European Union. I just do not believe in the one-size-fits-all approach. It is hard to find such an approach even within the United Kingdom, as the hon. Member for Banff and Buchan said. Circumstances are different within England itself, with a hill farm in the Pennines being different from a cereal farm in East Anglia, and different parameters apply. I entirely agree with the EFRA Committee’s view that a one-size-fits-all approach might lose its relevance when applied to particular circumstances, and certainly when applied to our own.

Each of the areas proposed by the Commission initially, which were crop diversification, the retention of permanent pasture and the need for a proportion of land to be designated as ecological focus areas, has the capacity to divide opinion—informed opinion, because of exactly the points that Members have made today. Each measure contains the essence of a good idea—there is something there in the initial thinking—but the environmental benefits are not clear when the proposals are considered in the light of our own circumstances. I know that many other European Union member states are forming the same view, particularly when the supposed benefits are considered in the light of the costs and complexities of implementation. It is not obvious that the money should be spent in a way that more demonstrably delivers complexity rather than environmental benefit, which is crucial.

It is fair, and not unkind to Commissioner Ciolos, to say that a particularly remarkable aspect of the greening debate in Brussels is the fact that the Commission seems to have few, if any, supporters for the precise way forward that it has proposed. I would take some comfort from that if I saw a majority in favour of an alternative, but at the moment there are only many minorities.

Some countries have yet to be convinced about the basics, about the further shift towards paying farmers for delivering environmental public goods. They see ideals that we have long shared in this country as an expensive luxury at a time of economic difficulty, and we have to be alive to that view. There are attempts by some to water the proposals down and exempt the majority of their farmers. It is funny how definitions always exempt a member state’s own farmers from their effects—that is known as greenwashing. There are issues about greening by definition, and we do not want this to be a badge of convenience, with people carrying on exactly as before but with the application of greater funding, as that cannot be in anyone’s interest.

The Minister makes an interesting point. There are cases in Europe of people wanting to exempt small farmers from a lot of the conditions. In countries where the majority of the land is made up of very small farms, all the greening aspects get taken out because the farmers are ruled out of them.

Precisely so. Time and again people pay lip service to a “very good idea” but somehow it then does not apply to their own circumstances. We have to be wary of that and not fall into the same trap.

If we are to go down a route of some form of greening by definition—to which there is some advantage, in reducing complexity and allowing for easier systems—it has to be on the basis of something that shows the environmental benefit. I would argue, for instance, that our stewardship schemes do that. We could demonstrate beyond anyone’s reasonable doubt that our environmental schemes show a clear commitment to environmental benefits on the land within their compass. If we extend the self-definition too far, however, we get to the point at which simply having a hedge is sufficient qualification to be a greened farm. That is not an adequate definition.

Other member states share our view that this is basically the right direction for the CAP to be moving in, but that the Commission’s proposals are too blunt, too inflexible and too complex in their implementation. We have heard a few examples of that. The hon. Member for Banff and Buchan talked about the definition of “active farmer,” and my hon. Friend the Member for Tiverton and Honiton (Neil Parish) pointed out that quite a lot of Scotland is not farmed as intensively as most parts of England because of the nature of the ground. Yes, that is true, but the Scots have a case with, for instance, grazed heather, and we are helping to press that case strongly in the negotiations on behalf of the Scottish Government, with whom we have very close contacts, as we do with the other devolved Administrations.

With tenants, there is a question of who is the active farmer. It is far more important to identify the activity, rather than the status, of the person doing the farming. I hope we can move in that direction. I have already mentioned hill farming, and in the negotiations we have to be alive to the interests of less favoured areas. I said as much when I was in Cumbria recently and, not surprisingly, I received a measure of support, but we have to be conscious of the fact that there are many different types of farming, and we need to have something that, as far as possible, can accommodate those differences.

The hon. Member for Ogmore and others mentioned capping—I am sorry, but I cannot remember who provided the response. With the proposals on capping and young farmers, for instance, it is all too easy for lawyers simply to adjust the holding to fit the policy, rather than change what is happening. I am wary of that. I want to maintain the incentives, the competitiveness and all the rest. Although I can sometimes see the advantages of such proposals, I do not want the nominal ownership of an enterprise to be changed simply to create a money stream that would not otherwise be there, because that is not in the interests of efficient farming or the objectives that we have set.

I urge the Minister to keep his mind open, because the larger arable farmers would argue that they are already the most productive, that they invest the most in innovation and that they collaborate the most extensively. On that basis, they should be the most susceptible to an argument that, for the largest payments in the country, they should easily be able to prove that they are adding value, not purely on acreage or hectarage, but in the productivity and innovation of their farms. I urge him not to close his mind, because that is a sharp and intelligent argument for the good use of CAP payments.

I never close my mind to anything. I am always open to a discussion, but the hon. Gentleman’s proposal is not that different—if, indeed, it is different at all—from something that the Commission proposed right at the start of the negotiations.

There are difficulties, but I am happy to have further discussions with the hon. Gentleman, because I never rule out proposals until I can see clearly that they are not in the wider interest. In return, I ask him to consider the potentially significant problems with artificially fragmenting landholdings or artificially transferring titles, which are not helpful things to encourage.

If there is a consensus among member states, it is that greening is too complex an issue on which to rush to agreement. I have already indicated that, in setting out the timetable, there are still wide differences in approach, and few support the proposals as they stand. It seems to me that there is still a lot of work to be done, and the negotiations need to continue. The one thing in the Select Committee’s report that I would take slight issue with is the implied criticism that Ministers and DEFRA have not been as active as we might be in Brussels on greening. I simply do not recognise that in the case of my right hon. Friends the Members for Meriden (Mrs Spelman) and for South East Cambridgeshire (Sir James Paice), who are the predecessors of the Secretary of State and me. They were very active in Brussels on CAP reform in general and on greening in particular. The Secretary of State and I are taking that forward and engaging at all levels. We are working with the Commission, the European Parliament and other member states.

My hon. Friend the Member for Thirsk and Malton enjoined me to cuddle up to MEPs. I do not know about cuddling up, but I do have conversations.

I do not know whether it is possible to snuggle up down a phone between Westminster and Edinburgh, but I did a bit of snuggling up yesterday to try to ensure that we are pressing our case effectively in the European Parliament.

An eminent member of the European Parliament’s agriculture and rural development committee, whom I hope can advance our cause. It is important that we keep in contact because of the co-decision process that has changed the way such things move forward. It is important that we understand what is being talked about in the European Parliament, what the positions that are being adopted look like and whether we can, at the earliest stage, influence the way that those positions develop and where coalitions form to ensure that, as far as possible, our interests are served not only in the Council but in the Parliament, because ultimately we need to persuade both of what we want. Greening is on the agenda for pretty much everything that we do in Brussels on CAP reform at both ministerial and official level.

We are also working with stakeholder organisations on greening, because it is important to hear what they have to say. My message today is that achieving the right outcome will not be easy, and I am not going to pretend that it is. There are so many viewpoints to accommodate across the EU, and there is always a risk that we may not fully agree with every element of a wide-ranging package of measures. I find it reassuring that there is no discernible fundamental difference between the Select Committee and the Government on greening, but in some ways it is even more reassuring that there is no discernible difference in attitude between all the Members who have spoken in this debate and the Government or between the parties. We are clear on what the British position needs to be; the question is whether we can persuade others to adopt a similar position.

I am coming to the end of my contribution, but I want to mention agri-science, which was raised by my hon. Friend the Member for Tiverton and Honiton. In a way, agri-science is only tangentially relevant, but in another way it is fundamental. If we are talking about food security and measures that could benefit the environment within a context of higher food production, we have to embrace the best technologies to make that happen. I do not say that lightly—sometimes we have to adopt clear precautionary principles when we embrace new technologies—but the agri-science consultation launched by my Department and the Department for Business, Innovation and Skills, which has responsibility for science and technology, is important. Finding ways to get the research community and higher education properly engaged in those areas will be crucial to finding solutions in the long run.

My hon. Friend mentioned blight-resistant potatoes. I went to a research laboratory a few weeks ago and spoke to the only man in Britain who was really pleased about potato blight. That is perhaps being unkind to him, but he was researching blight-resistant potatoes and told me, “Look, everyone’s got potato blight this year—and we haven’t! I have a crop that has been shown to be resistant to potato blight.” There are things that can be done. It is not just about genetic modification or novel foods; we need to be engaged with, and make progress on, a range of areas.

Not only do we owe it to people in this country to make sure that we persist with the sustainability of our agriculture, but we owe it to people in other countries who will be facing much bigger difficulties—something mentioned by the hon. Member for Glasgow North East (Mr Bain). There are people across the world who need to be fed, and they will find it more and more difficult as the effects of climate change are realised. We are in a unique position because of what we can achieve with the quality of our research and technology. Our skills will provide some of the solutions to the questions that will increasingly be asked. I want this country to be in that position, I want the European Union to be in that position, and I hope that it is axiomatic to what we are discussing.

This has been a fascinating and positive debate. I hope I have been able to cover most of the issues raised and to indicate where we stand. At the moment, this is an incomplete and difficult negotiation. I will not be able to be certain about the outcome until the point at which we have an agreement, first on the budget and then on the CAP. However, I assure hon. Members, and the Committee in particular, that the concerns they have expressed are very much at the heart of our negotiating position. Dealing with those concerns is precisely what we are attempting to do as Ministers engaged in those discussions.

Thank you all for an intelligent and informed discussion. I wish the Minister the best of luck with his negotiations.

Question put and agreed to.

Sitting adjourned.