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Common Agricultural Policy

Volume 564: debated on Tuesday 18 June 2013

[Relevant documents: The First Report of the European Scrutiny Committee, HC 83-I, Chapter 1; the First Report of the Environment, Food and Rural Affairs Committee, Session 2012-13, Greening the Common Agricultural Policy, HC 170; and the Government response, HC 654, Session 2012-13.]

I beg to move,

That this House takes note of European Union Document No. 15396/11, a draft Regulation establishing rules for direct payments to farmers under support schemes within the framework of the Common Agricultural Policy, No. 15425/11, a draft Regulation on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), No. 15397/11, relating to a draft Regulation on establishing a common organisation of the markets in agricultural products (Single CMO Regulation), and No. 15426/11, a draft Regulation on the financing, management and monitoring of the Common Agricultural Policy; and supports the Government’s continuing efforts to amend these proposals in order to secure better value for money for the taxpayer and establish a greener, simpler CAP that enables the development of an innovative, competitive and market-orientated farming industry and thriving rural communities.

I am pleased to have the opportunity to debate these important issues in the House today. It is particularly timely because next week the Secretary of State will be going to Luxembourg in the expectation of securing a deal on the common agricultural policy at the Agriculture Council. With CAP reform subject to co-decision for the first time, the negotiations between the Council, the European Parliament and the European Commission have been intensive during the last few months, and indeed are likely to be during the next few days as well. It is thanks to the sterling efforts of the current Irish EU presidency that a potential deal is now within reach.

As many hon. Members will be well aware, the Government’s priority on CAP reform has been to negotiate a good deal for UK farmers, taxpayers and consumers, and that means working to deliver a greener, simpler CAP that continues to orientate itself to the market, increases the international competitiveness of EU agriculture, and increases our capacity to deliver environmental outcomes.

Does the Minister agree that successive Governments have tried to reform the common agricultural policy and there has been very little progress, although in the past previous Conservative Governments have tried to make out to the public that they have actually made some progress when they have not?

The hon. Gentleman is right that it is a long, hard business to reform the CAP. The sadness is that occasionally within negotiations some member states want to turn the clock back, and even to forgo the reforms that have already been accomplished, so I will not pretend anything other than that this is a long, hard process and the advantages and the movement forward that we gain are not always as far and as quick as we would wish them to be.

We want to see an efficient and responsive agricultural sector not just across the EU, but globally, and the CAP should be central to helping us achieve that. It is therefore essential that the CAP continues to reform and to reduce reliance on damaging direct subsidies that do not offer good value for money or deliver the public goods we want. The UK has worked extremely hard to engage with like-minded member states throughout the ongoing negotiations to ensure that the CAP continues on the path of reform, but we know that other member states and elements in the European Parliament are determined to turn the clock back and reverse some of the hard-won reforms of MacSharry and Fischler. We simply cannot allow that to happen.

I will touch on a few of the priority areas that will be the focus of our negotiating efforts over the next week. First, market intervention remains a prime concern. As we all know, the CAP has made great progress over the years in reducing reliance on expensive and trade-distorting measures that interfere with the market and helped to create the butter mountains and wine lakes of the past. I was therefore very disappointed when in March the European Parliament voted through amendments that would move EU agriculture away from market orientation. Those proposals would increase budget pressures for old-style market support. That is not an acceptable use of taxpayers’ money. It hits consumers twice; they pay for their food once through their taxes and again at the tills.

The EU sugar regime, for example, constricts supply in the market and adds costs for British food and drink producers and ultimately for the consumer. The combined effect of EU beet quotas and high tariffs on cane imports means that the current EU regime has driven up the wholesale price of sugar by 35% and added 1% to the food bills of hard-pressed families. Members states had previously agreed to end the restrictive sugar beet production quotas by 2015, but there has been incredible pressure to unpick that agreement. In our compromise in March, we agreed a partial extension of sugar beet quotas to 2017. I am disappointed that Members of the European Parliament voted to extend the quotas further to 2020. That is unacceptable. The situation is compounded by the lack of a level playing field for sugar cane imports, something we are working to change. We need to remain fully committed to moving the CAP in the right direction towards greater market orientation. Nothing must be left to chance. Butter mountains and wine lakes must remain a thing of the past.

I know that many hon. Members have an interest in the proposed greening of the CAP. The Government believe that the CAP should reward farmers for the public goods they deliver, such as environmental benefits and protecting and enhancing wildlife. Pillar two of the CAP is the best place to fund that, which is why at the European Council in February the Prime Minister secured the additional flexibility to be able to transfer up to 15% of our direct payments budget to fund our rural development and environmental programmes.

My hon. Friend will be aware of the concerns of the National Farmers Union and a whole alliance of farming organisations in that regard, and not just in north Yorkshire. Bearing in mind that our farmers already commit to many greening policies through stewardship schemes, 15%, or even 11%, would be unacceptably high and would make our farmers uncompetitive.

I am afraid that is an area where the National Farmers Union and the Government simply do not agree. I believe that we currently have extremely good higher level stewardship schemes within pillar two, and I want those to continue and to prosper. I want us to ensure that we can continue payments on some of the older schemes, where we have accrued benefit, which I do not want us to lose. I am absolutely clear that where we use the pillar two payments in the most effective way, we will be doing so to enhance the position of those who work the land and confer on it public goods. For instance, one of my priorities will be to see what we can do in upland areas, where people farm in less favourable conditions and where it might make all the difference, but I simply do not agree that the best way to distribute money is necessarily through pillar one.

Will the Minister expand on that? Farmers have expressed their concern to me in recent weeks and months over the transfers to pillar two. How can more effective use be made of the arrangements so that those farmers are not put at a competitive disadvantage? What fine-tuning can be carried out? How can we get more bang for our buck in the pillar two funding?

A simple answer—I appreciate that it might be considered a simplistic one—is that we target the funding better towards the places where it will have the most effect. We have a highly efficient and effective agriculture industry and we do not need to target funding at all sectors. We need to ensure that it reaches the places where it will have the greatest effect. As I have said, this is where we part company with the National Farmers Union, which would like us to maintain the maximum funding within pillar one. We believe, however, that pillar two is the most effective vehicle for benefiting environmental interests, which are important, and for directing support to the areas of this country’s agriculture that need it most.

The Minister is absolutely right to place the emphasis on pillar two. The figure for voluntary modulation to which he referred was 15%, but can he confirm that the figure for voluntary modulation has previously been as high as 19%? Can he also expand on what the 15% figure is going to mean for farmers, and on the implications for the Treasury in this regard?

I cannot give the hon. Gentleman as full an answer as he would wish. First, we have not yet agreed the deal, so we do not know whether that voluntary modulation figure will stand. Secondly, a lot will depend on the design of the schemes and on how we implement them at national level. We have been pushing the argument in Europe that, in relation to the devolved Administrations, we want as much flexibility and local determination as possible in the design of operation. We want to give Scotland, Northern Ireland and Wales the opportunity to use their own discretion on behalf of their own farming businesses, as they will know the best way of implementing the schemes in those countries. If we are successful in our objective of achieving that flexibility, as we have been so far, we will effectively have a devolved CAP.

Will the Minister acknowledge the need for regional flexibility to allow Northern Ireland to tailor any new policy to fit the needs of the local industry?

Absolutely. That has been one of our key objectives during the negotiations, and we have worked closely with Ministers from the devolved Administrations in that process. On any objective assessment, the Secretary of State has been remarkably successful in getting those elements written into the scripts that have emerged from the Council. The difficulty now is that we need to reach agreement with the European Parliament, and we want to ensure that the elements survive that process.

Surely the answer to the hon. Member for Brent North (Barry Gardiner) is no, voluntary modulation was not at 19%. It was 9%; the other 10% was compulsory modulation that applied to every member state.

The hon. Gentleman accepts my point. That arrangement created a level playing field across the whole of the EU. The reason that the NFU is concerned is that it is probably only English farmers who could lose 15%, thus making this an issue of competition.

I do not accept the issue of competitiveness, but I entirely accept the figures that my right hon. Friend has cited. That is the correct position.

The Minister said that only the devolved Administrations will be allowed to tailor their schemes to the needs of their own farmers, but that would be inherently unfair on the English farmer. I hope that he will agree that this is a wonderful opportunity to revisit some of the schemes, because some of the active upland farmers, who are often tenants, have been disadvantaged by the way in which the current schemes operate.

I hope that I have not misled the House in any way on this. We will bring forward our own proposals that will apply to England. I was simply making the point that the devolved Administrations would not have to conform to an English model. They will be able to devise their own schemes that will work best for them.

I am extremely interested in the Minister’s point about the United Kingdom having policies that are relevant to our own interests. In relation to the review of competences, will he tell us whether there is any intention to repatriate the common agricultural policy?

That depends on how we define repatriation. We have been arguing strongly for increased flexibility at national and regional level for those countries that have devolved Administrations. The obvious examples are the United Kingdom and Belgium, both of which feel strongly about this matter. We need the option to define some of the terms and regulations that will be put in place, so that they match our forms of agriculture. There is already divergence within this country over the application of the CAP. For example, there are still historic payments in Scotland. In my personal view, there will eventually be a need for internal convergence on that issue, but it is for the Scots to decide on the rate of change and on whether that should happen sooner or later. I believe that it is a distorting element at the moment.

The UK Government also argued, however, that we did not want a sudden, bumpy transition that would put the Scottish Government in difficulties while they were trying to achieve their objectives. So, although we want internal convergence, we have asked for as smooth a transition as possible because that will be in the interests of the devolved Administrations. There is already a considerable degree of variation in the way in which the current scheme works. We are trying to ensure that that continues and is enhanced under the new rules.

The Minister has put on record his intention to help hill and upland farmers in England. At the moment, there are three rates for the single payment, relating to moorlands, severely disadvantaged areas and lowlands. Would it not be advantageous to upland farmers if we had only moorland and lowland payments?

As always, my hon. Friend is very well informed on these subjects. He is right, and that is something that we will be looking at in relation to the implementation phase.

Reference has been made to Scotland in regard to the transition. Would the situation that the Minister has described apply also to Wales and England?

Wales will have the same capacity as Scotland to apply its own CAP rules within the overall rules, although the rules that will apply in Wales will not be quite the same because Wales will not be starting from the same position as Scotland. There is already an increased degree of convergence in Wales. The situation is not exactly the same, but that freedom is in the script for the settlement that we have agreed so far.

I should perhaps continue with my speech for a few minutes, rather than take any more interventions.

We do not believe that the original proposal for greening direct payments offered the same value for money as our existing agri-environmental schemes, and we have been working hard to move the negotiations in a positive direction. Any greening must be meaningful, administratively simple and deliver real environmental benefits for the taxpayers’ money that is spent on it. Value for taxpayers’ money is vital, which is why I am also opposed to proposals under which it would be possible to get paid twice for carrying out the same greening measures under both pillar one and pillar two.

No decisions have been taken on how greening will be implemented but, importantly, the position we agreed at the March Council included, as I have said, increased flexibility for member states and regions to deliver greening through a national scheme, if they so wish.

The Minister is being very generous in taking interventions. Will he respond to the concern of many farmers that the flexibility that the UK Government have understandably negotiated for our farmers could be interpreted very differently by farmers in other member nations and that it could, in fact, be interpreted to the disadvantage of our own farmers?

Obviously, we try as far as possible to eliminate potential disadvantages. I cannot say that we will be successful across the board, because this is a negotiated settlement. Where possible we try to make sure that we all play to common ground rules, but with local interpretation. It is clear, for instance, that lowland dairy farming in this country is very different from growing olives on a Greek island. Different criteria apply and we want to make sure that we recognise the differences as well as the common basis.

I appreciate the Minister’s understanding of this complex issue. Many farmers who have had to leave their comfort zone and consider doing other things will also be impacted by the CAP changes, so will help be made available to those who wish to diversify?

I am grateful for that question. A lot will depend on the local determination in Northern Ireland for the options under pillar two, which provides the capacity for supporting diversification. The relevant Northern Ireland Minister will have to decide the extent to which voluntary modulation applies and whether the pillar two schemes will be devised to support diversification. The capacity is there and the decision on whether it will happen or not will be a local one.

The Minister is being very gracious in the number of interventions he is willing to take. The UK has received the lowest EU share of the rural development budget, which will impact on schemes such as agri-environmental schemes, the less favoured area compensatory allowance and farm modernisation. Will the Government balance the reduction in rural development with funds from, for instance, pillar one?

The hon. Gentleman asks a basic question about voluntary modulation. We have already indicated that we will probably wish to see significant modulation from pillar one to pillar two in England. Obviously, other structural funds could be used for those purposes, if desired. On rural development, there is a need to utilise every possible source of funding to improve the rural economy. We are not simply talking about what is available through CAP funding to support agricultural and rural development.

Order. Before the right hon. Gentleman intervenes, may I gently point out that this is a 90-minute debate? The Minister’s speech is a matter of considerable importance and we listen to it with interest and respect, but no fewer than nine hon. and right hon. Members wish to speak in the debate, each and every one of whom is present and expectant. I know that Members will wish to tailor their contributions accordingly. If Sir James wishes, nevertheless, to persist—doubtless he will—I ask him to do so with great brevity.

I will be very brief, Mr Speaker. I would be grateful if the Minister put on the record the Government’s position on voluntary modulation but the other way around. Moving on from his argument about taking 15% from pillar one to pillar two, do the Government strongly oppose those in other countries who wish to have the flexibility to move money from pillar two to pillar one?

We do not believe that is a sensible position. We are not likely to succeed in preventing it, but we will look very carefully at where it may be applied and whether it will distort the agricultural market overall.

I take to heart what you have said, Mr Speaker. I was trying to allow Members to ask legitimate questions, but let me now make progress.

Simplification must be at the heart of all our CAP reforms. That is one of the Government’s priorities. Whatever the outcome, we must have a CAP that is straightforward for farmers to follow and simple for our national Administrations to implement.

We have made progress at home, through the farming regulation taskforce, in looking at unnecessary red tape and reducing burdens on farmers. It is important that we do not undo that good work with complicated changes in the CAP. I firmly believe that we should be getting out of farmers’ hair and freeing them from the burden of unnecessary red tape. We have already made significant progress. Since 2011, we have identified £13 of savings to farmers for every £1 of compliance costs added.

I know, however, that there is more to be done and I am determined to take further steps towards a more risk-based approach to inspections that will allow farmers who consistently achieve high standards to earn recognition and receive less frequent visits. We must work together to achieve this. It is important that European rules do not knock us off our course. Having made such good progress at home, I do not want CAP reform to bring additional burdens.

On regionalisation, which I have already mentioned, amendments clarifying the regional implementation of the CAP are very important. A reformed CAP must deliver benefits for farmers, taxpayers and consumers throughout the UK, and to ensure that, we must have the clarity to implement the CAP in line with our devolution arrangements. Achieving this is a priority for the UK Government and the devolved Administrations, and we will push hard to get it next week.

I cannot conclude without mentioning the CAP budget. As hon. Members will know, the Prime Minister negotiated a 13% cut in the overall CAP budget at the European Council in February. The smaller EU budget negotiated by the Prime Minister is appropriate in the current economic climate, and the reduction to the CAP budget made an important contribution in that regard. This reduction in EU expenditure will be to the benefit of all UK taxpayers.

The allocation of the CAP budget between member states has not yet been finalised, but it would appear that the UK’s share of the CAP will remain roughly equal to its existing share. How the CAP budget will be divided between the UK regions and nations is still to be agreed. Discussions between my officials and their counterparts in the devolved Administrations are now under way and I understand that a number of models for the distribution of pillar one and pillar two funds are being developed.

I hope that the motion captures the UK’s vision for a future CAP. I look forward to the debate and hope that the House will support the Government’s continuing efforts to secure a greener, simpler CAP that delivers better value for the taxpayer and enables the development of an innovative, competitive and market-oriented farming industry and thriving rural communities.

We welcome this opportunity to scrutinise progress towards reform of the common agricultural policy. I was going to say to the Minister that it seems like we debated the CAP only yesterday, but then I recalled that we did so in Committee.

The Secretary of State and the Minister may regard it as a measure of success that they have not faced criticism from one side in their negotiations, but they have in fact faced criticism from all sides, including farmers, farmers unions, Ministers in devolved Governments—particularly, but not exclusively, the Scottish Government—and environmental groups. Perhaps the Secretary of State is attempting a divide and conquer strategy—splitting the competing interests in order to diminish their effectiveness and leaving him free to argue his own way in European Union negotiations—but such a strategy has real dangers that can only diminish the outcomes for the UK. Being surrounded by attacks on their negotiating stance leaves Ministers looking weak and vulnerable. I am sure that the Commission, the President and the European parliamentarians involved in decision making will have noticed that isolation at home and will continue to utilise that weakness in negotiations.

That is just on the home front. Likewise, in Brussels and Strasbourg, the days of the UK being at the vanguard of progressive, like-minded nations on CAP reform are, as in so many other areas of policy, a fond but distant memory. The Government are trying to lead and to build on the collaborative approach to previous negotiations, but they have alienated far too many former friends.

No one can have failed to notice the intervention today in The Daily Telegraph—my daily reading—of the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), who draws an analogy between the Government’s approach to Europe and the heroic but doomed charge of the Light Brigade. The Secretary of State, like his Prime Minister, is boldly and valiantly galloping into the field of diplomatic battle: he and the Prime Minister are the Lord Raglan and Lord Cardigan of CAP reform and European relations, charging headlong into the cannons of Brussels and being scythed down, but nevertheless riding heroically into Eurosceptic mythology, mayhem and madness.

The Government have done their best to alienate potential diplomatic partners with their swivel-eyed lunacy—not my words, Mr Speaker—on the EU. That cannot but affect the negotiations on CAP reform and, as important, lessen the outcomes for UK farmers and consumers and for sustainable production here, in other nations and in the developing world.

On that fundamental point, does my hon. Friend agree that the idea that the CAP can be reformed in a big bang is nonsense? Reform must be predicated on sensible negotiations. The Minister without Portfolio, the right hon. and learned Member for Rushcliffe, says that there cannot be sensible negotiations if the British Government are confused about their position in Europe and send the message that they are essentially Eurosceptic.

My hon. Friend, who has great knowledge of this area, is right. It is as though the Government are playing with one hand behind their back. I have great sympathy for the Minister, because although he has great knowledge and wants to work in the best interests of UK farming, his colleagues are not making it easy for him.

I thank the hon. Gentleman for those kind words. I am interested to know what is the position of the Labour party today. Does it support or oppose the budget reduction? Would it have failed to argue for the budget reduction, or does it agree that the Prime Minister had a success in those negotiations?

The Minister ought to go back and look at the voting record, because the Labour party voted collectively on that matter.

The thrust of the Minister’s speech was about a more competitive farming industry. We do have a strong farming industry. The question is whether he and his Eurosceptic colleagues can carry that forward through the negotiations. I commend the work of UKRep officials in trying to get the very best outcome from a misguided ministerial approach to the EU. They have stuck their fingers in diplomatic dams, while Ministers have been digging away the foundations. I suspect that the Minister has been somewhat dismayed and has done his best among a very bad lot, but it has been a model exercise in how not to win friends and how not to influence people.

I am extremely grateful to the hon. Gentleman for giving way. He has a vision of the perfect negotiating strategy that his side might have. Might that include giving away half our rebate to get a fundamental reform of the agricultural policy? Will he remind me how successful that was?

There, once again, speaks the historic Eurosceptic wing of the Conservative party. We have always had the clear position that negotiations on the CAP, the common fisheries policy, on which I negotiated, and on Europe more generally are best served by honesty, transparency, frankness and collaboration. I must make some progress, given your dictate, Mr Speaker.

The Government’s approach both in the UK and in the EU has been wanting. Where does that leave us at this critical stage of the negotiations? At EU level, we are taking not two steps forward and one back, but one step forward and three back. The Secretary of State put it well when he wrote to the Chairman of the European Scrutiny Committee in February:

“overall I am disappointed in the outcome of the vote in Agriculture Committee”.

So are we. He continued:

“The amendments turn back the clock in terms of achieving good value for money from rural development, especially agri-environment, and do nothing to continue orientating European agriculture to the market.”

We agree, Secretary of State, we agree. He continued:

“There is a significant watering down of the greening proposals”.

It is all getting a bit gloomy, but there is worse:

“I would emphasise concern on the outcome of the vote on the single CMO where the compromises put a halt to, and even reverse, the direction of reform that CAP has been on”.

Yes, the direction of reform and the progress towards reform that had been achieved, including by Labour Secretaries of State working effectively, collaboratively and intelligently with like-minded progressive member states, are being reversed. How times have changed; how progress has stalled and even been reversed in some areas.

I remind the Secretary of State and his Ministers that his criticism of the lack of progress must be laid fairly and squarely at his own door. It is not enough to bemoan a lack of progress, or even a regression into old-style CAP production support, when that has happened under his leadership of the Department for Environment, Food and Rural Affairs, his Prime Minister’s leadership of the country and his party’s little-Englander, banner-waving, terrified-of-UKIP style of leadership. They have contributed to our current position. “Speak softly but carry a big stick,” has been replaced by, “Shout loudly and antagonise the neighbours.” Despite all that, we will continue here and in Brussels and Strasbourg to support the Government when they try to do the right thing. We just want them to try harder and negotiate cleverer. That is the backdrop to where we are now.

Many of the detailed contributions today will rightly be focused on farming and technical in character. Before I put some questions to the Minister, it is worth reiterating that Labour strongly believes that farming goes hand-in-hand with sound, sustainable farming practices. In addition to delivering food security and affordability, this CAP reform should not shy away from its broader sustainability remit. Profitable farm businesses are based on sustainable farming practices such as protecting and enhancing soil quality and the water environment; conserving special and priority species and habitats, landscape features and archaeological sites; minimising the carbon footprint of farming; promoting access to the countryside, high animal welfare standards and links to the wider rural economy and communities, and much more. That, by the way, is why pillar two and rural development cannot be overlooked while we strive to ensure the productivity and competitiveness of farming.

Collectively, the Government and their agencies have worked with farmers, landowners and non-governmental organisations throughout the UK over many years to deliver food security for this country; to produce affordable food for the consumer; to protect what we, visitors and tourists love aesthetically in our landscape and countryside, which boosts the wider rural economy; to conserve our habitats, wildlife and biodiversity; to enhance the wider public goods in management of our ecosystem and biodiversity; and, in all that, to adapt to the challenges of climate change. On top of that, farmers have been asked to work with the Government as the CAP moves towards a more market-oriented system, with less reliance on payments for production and more transparent use of public money for public goods.

The head of the National Farmers Union, Peter Kendall, is not alone among the farming unions in his concern that farmers are being left high and dry, confused and condemned by a Government who are as out of touch with farmers as they are with the EU negotiations. He states:

“Instead of delivering a genuine policy framework that embraces and fosters a modern, market orientated, competitive farming sector, free of unnecessary red tape, I fear we will be left with a complex mish-mash of competing and contradictory policy components which will leave farmers facing more bureaucracy and more distortions in the market than ever before.”

I ask the DEFRA ministerial team, who are leading our negotiations, how that came to pass on their watch.

How likely is it that the ongoing dispute over co-financing and the movement of funds between pillars one and two could scupper progress at the June negotiations? Equally important, if there is a delay, are there specific improvements that the Minister will seek in the time gained? Is there any possibility of using that time to reverse the undoubtedly backwards steps towards more old-style market support? Will he say whether the farming unions’ argument is correct that, because of the differential application of the transfer of funds between pillars one and two among nations, their members will unavoidably be placed at a competitive disadvantage? If so, will the Minister share with the House his analysis of how that is likely to affect profitability and competitiveness in each sector, as well as UK farming as a whole against our European neighbours? How will the Government ensure the level playing field to which the Minister referred? Our farmers are not afraid of competition, but it must be fair and open.

We have considered competitive disadvantage across the EU, but how will the Minister deal with the same question across constituent parts of the UK? For example, Scottish Ministers have made it clear that they want maximum flexibility to extend their support—including to sectors such as livestock—well beyond the levels of support that may be given to English or Welsh farmers. What is the Minister’s thinking on that and how will he respond to requests from Scottish Ministers for complete, up-front devolution of funding to the Executive? Will he argue against further use of coupled payments in devolved Administrations, or accept that that is part and parcel of devolution? If the latter, how will he explain that to farmers in England?

How will the Secretary of State respond to the view of the Country Land and Business Association, Tenant Farmers Association and farming unions in England that the introduction of greening elements reduces the need for such a substantial transfer of funds from pillar one to pillar two for environmental measures? Does the Minister believe that such transfers are essential to maintain environmental benefits and not substitutable for pillar one measures, or that they are additional and will extend the future scope of environmental measures?

Farmers want clarity on DEFRA’s position on opt-outs from greening proposals. Does the Minister intend that our farmers should be able to opt out of the specific greening measures proposed, forgoing just the 30% proportion of the new payment but without any further penalty; or will he hold them to complying with the whole package, with no opt-out other than a full one? I trust he can explain his position today.

It comes to something when the president of the NFU remarks candidly that “negotiators have come back from Europe with less than we started with.”

That is hardly a ringing endorsement of Ministers’ batting for British food, farming and rural communities. With the Secretary of State as Lord Raglan in this assault, UKRep and DEFRA officials are playing an heroic role as negotiators, unquestioningly negotiating through the valley of diplomatic death he has made for them. There is confusion and misdirection aplenty as UK interests get cut down again and again by the well positioned, well dug-in cannonades of other European nations. The French commander, Marshal Pierre Bosquet, exclaimed of the futile but spectacular charge of the Light Brigade:

“C’est magnifique, mais ce n’est pas la guerre.”

It is magnificent, but it is not war. Russian officers offered less praise and more regret, saying of the headlong charge, “C’est la folie.” It is madness.

Labour will continue to engage directly with farmers, farming unions, environmental organisations, MEPs, colleagues in devolved Administrations and Governments, and all who want to see CAP reform deliver for food security and affordability, environmental and wider public benefits, and rural communities. We will support the Government to get the best deal, despite a cack-handed approach to negotiations thus far. I wish the Minister good luck. Where he gets it right he will have our support, but there is a long way to go.

Order. The House will next be addressed by the Chair of the Environment, Food and Rural Affairs Committee. After her speech there will be a five-minute limit on Back-Bench contributions. We will hear from the Chair of the Committee with, I hope, suitable brevity.

I congratulate my hon. Friend the Minister on giving the House the opportunity to discuss the Committee’s two previous reports on this matter, and it is a pleasure to follow the hon. Member for Ogmore (Huw Irranca-Davies). I congratulate the Minister on the position he has reached in the negotiations, and thank my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) for his sterling work in commencing proceedings. I will stick to English, Mr Speaker, tempting as it is to break into French, Danish or Spanish, as I think your strictures on timing would preclude that. I spent a number of months working on the first ever co-decision procedure on road transport as a Member of the European Parliament, and although I am delighted that the democratic arm of the European Parliament is participating in the negotiations, that obviously adds an extra dimension to those negotiations.

I thank hon. colleagues from all sides for the work they have done with me in looking to the next round of common agricultural policy reforms after 2013, and I will dwell for a moment on the background to our current position. I represent a deeply rural constituency—having moved from the Vale of York to Thirsk, Malton and Filey—and a greater upland area than I represented previously, as well as lowland areas. The backdrop of the wettest autumn, with substantial flooding in my constituency and many other parts of the UK, followed by the coldest spring has had a huge impact on the harvest. We are expecting a smaller harvest and I understand that less milk was produced. Most worrying is that the harvest is expected to be down by potentially 30%, and as I understand it, for the first time in 11 years the United Kingdom will be a net importer of wheat.

Against that backdrop of depressed farming incomes, and the implications for food security, I would like to press the Minister on certain issues, particularly the greening of the common agricultural policy. As a number of hon. Members have said, UK farmers already green to a much greater extent and at some cost to themselves. In particular, I draw the attention of the Minister and the House to the position of tenant farmers across this country—not just those in the uplands of northern England—who seem to have a unique position in the European Union. The Committee’s report “Farming in the uplands” stated that the Committee is conscious that the position of tenant farmers is unique to UK agriculture, and that the impact of any reform on that group should not be overlooked by either the Commission or DEFRA. We concluded that tenants—and indeed commoners, many of whom I represent—might be disadvantaged in accessing agri-environment schemes.

The concerns of tenant farmers about some other reform proposals are wider and reflected by the Tenant Farmers Association. Those concerns include that farmers might be disadvantaged by the proposed entitlement scheme, that only those who made a valid claim on at least one hectare of land in 2011 under the existing single payment scheme will be eligible for direct payments under the new regime, and that some landlords may use that to capitalise inappropriately on changes brought under existing tenancies in order to bank land ahead of any new regime. On the other side, the CLA has said that it is not aware of such things, but I hope the Minister will keep the matter under review.

Tenant farmers have also raised concerns about the active farmer proposals on which the Minister might like to update the House. Wildlife trusts, and others, have said that the proposals are potentially unworkable and catastrophic for the management of the land. The costs of administering some of the present schemes for tenant farmers are prohibitively high, with lawyers being retained and up to 30% of the agreement used just to administer the scheme. This debate is therefore a useful opportunity to review the position of tenant farmers under the CAP.

In response to our debate on interventions and a potential transfer from pillar one to pillar two, will the Minister state whether he proposes that the measure will be subject under pillar two to co-financing? I know it is the view of the NFU and others that it should be, but the question that the House must address, and the Minister answer, is whether the Treasury will be prepared to co-finance. We have a comprehensive spending review next week. Will there be money if there is a 13% reduction in the CAP budget?

That is another argument in favour of the status quo. I am slightly arguing against myself, because Filey and other parts of the Thirsk and Malton constituency receive rural development funds through the LEADER programme, which is all to the good—obviously, I am here to help Filey to receive more in that regard. I hope that the Minister will address that. He touched on the 13% reduction in the CAP, but we have let to learn what the reduction in DEFRA’s budget will be.

I have discussed the position of tenants, the weather conditions and the drop in farm incomes, which in turn has food security implications, which I hope the Minister will address, as well as updating us on active farming.

I shall say a few words about ensuring that there is no discrimination against the UK farmer. I understand that Scotland currently receives 16% of the UK pot of money, yet produces less than 12% of the UK’s agricultural output. We need to be aware of that and restore the balance between Scotland and England, particularly for the border regions of Northumbria, Yorkshire and County Durham, which are affected by the imbalance. Decoupled direct support plays a pivotal role, but we should not put further pressure on farmers in England, and there should be no further modulation. Any increase in voluntary modulation from 9% to 15% would be resisted by farmers. Many of the farming organisations have lobbied vigorously in that regard.

The Minister and his predecessor, my right hon. Friend the Member for South East Cambridgeshire, argued that there should be no distortions and no negative impact on competitiveness in any switch from direct payments to rural development. I therefore hope that the Minister can conclude that there will be no extra burdens on English farmers from the negotiations.

The proof of the success of CAP reform for the UK farmer will be in the way it is implemented in England. I am conscious of the roles that DEFRA and the Minister play—they both negotiate on behalf of the UK but have specific roles in relation to English farmers. I make a plea from the heart on behalf of those I represent and the wider farming community that our farmers are rewarded for their toil. The House needs to ensure that it sends the message that we intend to continue to be self-sufficient in food and remain a major exporter. A drift towards being dependent on imports is a drift in the wrong direction.

All power to the Minister’s elbow. We will continue to monitor developments extremely closely. The Committee wants to establish a greener, simpler CAP, with emphasis on the simpler, and a CAP that is competitive and provides for farmers and rural communities.

I am delighted to speak after the hon. Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural Affairs Committee.

Food security delivered by a viable farming industry and the sustainable management of our natural resources must be compatible. It would appear that the CAP does its best to ensure that they are not. Greening is a lie. The proposals are not greening proposals. Modifications that are being made in the proposals to pillar one can be said to be greening in nature, but the proposals do not constitute the greening of the CAP as a whole. Only 13% of the funding under pillar one goes to specific greening measures. In many cases, good farmers are doing those things anyway. The real objection is that money is being used for subsidies around Europe instead of being used to encourage farmers to improve their practices and run better businesses. That is the tragedy of the CAP’s current structure. The CAP budget is €57.7 billion, which is around 40% of the EU budget. It is staggering that the money is being used predominantly to reward productivity and to increase product, and not to incentivise better businesses and improve the wider environment.

I compliment the Minister—I do not always do so—for the way in which he has handled the debate. He not only took a lot of questions, but sought to engage the House. There is broad consensus in the House on the position that the UK Government would like to get to in Europe. The tragedy is that the 27 different countries have very different farming industries. Many of them have a vested interest in having subsidies prop up their ineffective farming industries.

The key issues are on the use of funds. The right hon. Member for South East Cambridgeshire (Sir James Paice) was right to correct what I said earlier—10% modulation was compulsory and 9% was voluntary in the past. That meant a total of 19% modulation as opposed to the 15% voluntary modulation that the Government propose. The difficulty is that the 15% is 15% of less, and the 19% was 19% of more. The will have a dramatic impact on advancing the environmental stewardship schemes and the green elements of our budget will be dramatic.

I take on board the points made by the Chair of the Committee and the right hon. Member for South East Cambridgeshire about how the proposal will impact on farming businesses in the UK. This is not a zero-sum game, but if we put the money into the schemes that hon. Members would ideally like—the greening schemes that will improve our environment—we will, to an extent, disadvantage our farmers, because they compete against their counterparts in Europe with less subsidy. It is as simple as that. We might all believe that that subsidy is wrong and should not exist—subsidies should not exist to prop up failing industries—but it exists none the less, which is a disadvantage to our farmers.

I do not have time, I am afraid.

The Chair of the Committee was absolutely right to put the central question: what is the Treasury going to do? Will it allow enough funds to DEFRA to ensure that we can put the money that is needed into the environmental schemes to support the natural environment White Paper it produced last year and to support our farmers, or will DEFRA budgets be cut in such a way that our farmers and the environment suffer? That is the question.

Time will curtail what I say in the debate—I will not say all I would have liked to say, which will please most of my hon. Friends—but the House will remember that I did most of the negotiations in their early days on behalf of the UK Government. I do not recognise any of the situations that the hon. Member for Ogmore (Huw Irranca-Davies) described in his somewhat flowery rhetoric.

All hon. Members know that, whatever the outcome of the trilogue discussions, this is a wasted opportunity. For the very first time since the introduction of the CAP, the negotiations take place against a background in which the days of surpluses and dealing with over-production are behind us. We now look to a future of what Sir John Beddington called the perfect storm of increasing demand and a decline in the rate of improvement in productivity. This was therefore an opportunity to restructure the agriculture industry across Europe and equip it to meet that challenge. Only last week, the OECD produced a report stating:

“Changing fundamentals have transformed agricultural markets. These changes appear to be here to stay and will shape the evolution of agricultural markets over the medium term.”

It went on:

“Instead, with energy prices high and rising and production growth declining across the board, strong demand for food, feed, fibre and industrial uses of agricultural products is leading to structurally higher prices”.

I could not have put it better myself, although I did put the case in a similar manner in the early negotiations. This was the opportunity and background against which we could start to wean farmers off direct support, an objective that I think is shared across the House. Unfortunately, those views fell on stony ground, particularly with the Commission, which was determined to refuse to accept the opportunity and challenge, preferring to embed direct payments by greening pillar one. As the hon. Member for Brent North (Barry Gardiner) said, it is a very pale shade of green. We ended up with a set of proposals that were much more complicated, and far from the simplification that the commissioner had proposed and said he was trying to introduce.

My right hon. Friend the Prime Minister negotiated the multi-annual financial framework settlement, which was, overall, an excellent settlement for the UK. The MFF saw a reduction in the overall EU budget and a reduction in the CAP budget, which, as the then Minister, I had proclaimed. Many Agriculture Ministers around the table wanted more to be spent, yet their own Finance Ministers were singing a different tune. That could not be said of the UK Government—we stuck to the same tune. The issue was bedevilled by the Treasury’s attitude to the rebate, not that there is anything wrong with the rebate fundamentally—I strongly support it. However, the Treasury would rather have its 70p out of the rebate than allow us to claim £1 from the CAP, and that has caused immense difficulties ever since. The MFF also saw the absurdity of France and Italy, in particular, getting what can only be described as substantial, handsome bungs of an extra €1 billion to €1.5 billion.

Enough has been said about the 15% issue, but we have to emphasise that this is a single market and our farmers have to compete across Europe. I cannot say that I speak for our farmers, but I think that most would accept whatever happened to the single farm payment as long as it happened to all farmers across Europe. They are unhappy with any proposition that affects England, but not their competitors.

Greening, as has been said, should have been done in pillar two. It is important that we understand that management of ecological focus areas is more important than mere area. The transition to a flat rate needs to be achieved within the seven-year programme. It is indefensible still to be paying farmers in other parts of the UK on the basis of what they did in 2001. The rural development funding, on which there was some discussion during the speech made by my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), must include measures to help farmers to become more competitive and innovative, and not just on the environmental front.

This vital industry is part of our food supply chain and needs fair competition. I am afraid that the measure will not provide it.

I welcome the opportunity to participate in this debate on the reform of the common agricultural policy.

I represent a rural constituency in Northern Ireland where the active farmer is prominent, and there is a need to emphasise the role of the active farmer in single farm payments. Farmers have had to withstand difficult weather conditions in the past 18 months. A combination of wet weather last summer and one of the coldest springs have had an impact on agricultural production. Farmers and farming organisations in Northern Ireland, particularly those in my constituency, are looking forward to a fair wind in the CAP reform negotiations to ensure the resilience of farm practice and the business of farming in Northern Ireland.

I have had several discussions with the Minister, both in separate meetings and as a member of the Select Committee on Environment, Food and Rural Affairs. Central to the success of the growth of the agri-food industry as the bedrock of the economy is a good outcome from the CAP negotiations that will underpin our industry and farm production at all levels; make provision for new entrants; acknowledge the position of the active farmer in terms of payments; and, above all, ensure a stable income for farmers and for those who derive their livelihood from the farm base. This is a long-term political issue that will shape farming and agriculture not only in the UK, but in Ireland too.

Does the hon. Lady agree that the reforms should support production, reduce red tape, and ensure that farmers receive an adequate return from the marketplace?

I thank the hon. Gentleman for his intervention. I absolutely agree that farmers need to receive a fair income for the work they undertake, notwithstanding difficult weather conditions, soil fertility or other matters.

We must use all the levers at our disposal, including those in the EU, to achieve the best possible outcome for our farmers and our industry. Only last weekend there were some suggestions that farmers in Northern Ireland would be left at a financial disadvantage as a result of the ongoing Government negotiations. I seek assurances from the Minister that the business resilience and capacity of farms in Northern Ireland will be protected in whatever outcomes emerge from the CAP. I have spoken to the Minister’s opposite number in the Republic of Ireland, who is heading up the negotiations, and he has said that farming in Ireland, both north and south, is similar. We are looking for similar outcomes.

I am aware that some farmers involved in full-time farming inherited their farms from their fathers, but in some instances they have not inherited entitlements. What can be done in the current negotiations, and in further discussions at UK level and at devolved level, to secure a position for those farmers who have no entitlements because they did not apply for them back in 2005?

Those are the two principal issues I wanted to raise. I wish the Minister a fair wind in the negotiations. As we enter their final stages next week, the bottom line is to ensure a good outcome for agricultural communities and farm enterprises.

On a point of order, Mr Deputy Speaker. I omitted to refer to my entry in the Register of Members’ Financial Interests.

On a point of order, Mr Deputy Speaker. May I too apologise for forgetting to refer to my entry in the Register of Members’ Financial Interests?

Thank you, Mr Deputy Speaker. I am glad that my contribution has caused so much interest in the Chamber.

The shadow Minister was rather fierce in his criticism of the Minister. Only yesterday, a Minister from the Department for Environment, Food and Rural Affairs came to the House to make a statement on the common fisheries policy. That was always seen to be intractable, yet the outcome seemed to have the support of the whole Chamber. Indeed, we hope that the CAP negotiations will meet with the same success.

It has been said that little progress has been made in reforming the CAP—the hon. Member for Coventry South (Mr Cunningham), who is no longer in his place, said so at the beginning of the debate—but I must remind everybody that 25 years ago CAP expenditure amounted to 75% of EU funding, whereas it now amounts to just over 40%. In that time, the amount spent by the average UK family on food has decreased from 25% of disposable income to about 15%, although sadly that trend is moving in the opposite direction because of the increases in commodity prices. Back in the 1980s, the CAP depended on market support and intervention through export subsidies and import tariffs, which were really trade-distorting implements and very unfair on developing countries. Things moved on, however, and in 1993 the MacSharry proposals introduced direct payments that were not so trade distorting, and in 2003, the Fischler proposals decoupled support, which was another step forward.

Why do we still need a CAP? It was first introduced to ensure that people working in agriculture and the countryside had incomes comparable to those in more urban and industrial occupations. Sadly, it has been unsuccessful in doing that, and incomes in the countryside are still less than in towns. Many farming businesses in this country would be making no profit at all, if it were not for direct payments.

How concerned is the hon. Gentleman, therefore, about the drive towards a referendum on the British state’s membership of the EU based on renegotiated terms, including the repatriation of the CAP and convergence funding? How concerned is he about the impact that that would have on the industry in Wales?

I share the hon. Gentleman’s concern. The Farmers Union of Wales has made it clear that is sees EU membership as fundamental to a successful Welsh agricultural sector.

We need resilience in our farming communities and businesses. As has been pointed out, farming businesses across the country have experienced poor conditions in the past two years. The Chairman of the Environment, Food and Rural Affairs Committee pointed out that for two years now the UK has been a net importer of cereals, whereas we used to be a net exporter. We need resilience in our farming businesses, therefore, if they are to survive from one difficult period to another period in which they can rebuild their resources and capital. We will experience great difficulties with food security over the coming years. With the world population now reaching 7 billion and probably reaching 9 billion by 2050, the demand for food will increase, and it is thought that northern Europe, particularly its maritime areas, might be well placed after climate change to maintain its agricultural production. We should be looking to the CAP to ensure that.

I ask the Minister to address a number of issues that have already been raised. The first is co-financing of voluntary modulation. The UK farming community is concerned about voluntary modulation, because it would put it at a competitive disadvantage against other countries that compete with us on food production. Co-financing, if possible, could mitigate some of the problems perceived by British agriculture. Secondly, the greening proposals should be as simple and easy to follow as possible. The last thing we want are complex proposals leading to penalties being applied to individual farmers or DEFRA. I was on the EFRA Committee when the single farm payment was first introduced. The Rural Payments Agency made a terrible mess of delivering those payments and, as a result, a lot of DEFRA money had to be returned to the EU, rather than being spent on supporting our agricultural sector, so simplicity is important. Some large-scale arable and horticultural businesses would be willing to forgo the greening element—30% of the single farm payment—in order to maintain their focus on commercial activity, so what proposals does the Minister have for using those elements not taken up by businesses?

Last year, in its first report of the Session under the able chairmanship of the hon. Member for Thirsk and Malton (Miss McIntosh), the EFRA Committee stated that DEFRA had

“to put the UK’s case that the CAP should support both the agricultural sector and provide environmental protection”

and do so by engaging with reliable allies in the EU and by having the resources to put the case effectively and persuasively, so it was sad to read this week that figures from Brussels showed that the Government had not so far succeeded and had failed to protect pillar two funding.

The National Farmers Union claims that the UK will now be allocated the lowest share of funds of all member states on a per-hectare basis, meaning significant reductions compared with the current budget. It also states that in the first year of the new programme the UK’s allocation of budget will be cut by 16% and that this figure will rise to 27% in the final year, meaning that by 2020 UK farmers will see less money coming back to the UK than they contributed to the pot through the compulsory EU modulation transfers this year. This situation is exacerbated by the fact that other countries, including France, Italy and Ireland, have all managed to get a more successful deal so far.

The former Agriculture Minister, the right hon. Member for South East Cambridgeshire (Sir James Paice), echoed the concern that the Minister’s arguments will disadvantage English farmers, who will not be given a level playing field on which to compete. The Opposition want a level playing field and no advantage for our farmers.

I think the hon. Lady means that she does not want any disadvantage for our farmers. I hope she will take this opportunity to put the record straight.

I thank the hon. Gentleman for correcting me. I did not realise I had said that. I clearly meant that we did not want any disadvantage.

How can the Minister guarantee that UK farming will continue to deliver environmental and other public benefits with severe cuts to its pillar two funding? By failing to protect our farmers, the Government are putting at risk our food security, future environmental benefits, conservation, animal welfare standards and the successful promotion of access to the countryside. The Government’s current CAP negotiations are letting down not just our farmers and rural communities, but the whole country. They have to be much more effective and persuasive on our behalf.

Very briefly, I draw the House’s attention to my entry in the Register of Members’ Financial Interests, although I can confirm that I am not in receipt of any European funds at the moment.

Quite clearly this debate will have to be curtailed. The key principles set out in 2011 were high sounding and were certainly things that we would support—for instance, better targeted income support, greening measures, support for young farmers, measures to stimulate the rural economy and simpler, more efficient CAP funding. We certainly want to see those things, but it is the transition that worries me most. Because of how we did things in Wales under the last set of changes—we kept a stronger historical element than in England—we have a bigger change to make. I pay tribute to Alun Davies, the Welsh Government Minister, who has had a considerable conversation with farmers in Wales. The Welsh Government have stated that they would like a much longer transition period—ideally 10 years rather than five, but if that is not possible, at least seven—to ensure that farmers do not go out of business because of sudden, cliff-edge changes.

That is important, because when a farmer goes out of business, it is not just a catastrophe for that farmer and his or her family and a change in their way of life; it also has a detrimental effect on the rural economy, food production and our food security. Moreover, it is incredibly difficult to re-start. We all know from when we have talked about things such as foot and mouth how difficult it is to re-stock, but to re-start altogether—to go into farming, build up expertise again and build up generations of breeding to get the best animals possible—is extremely difficult these days and takes a long time, so we do not want a sudden, mass exodus. We want a cushioned transition to ensure that we do not have casualties.

The Farmers Union of Wales is absolutely right to say that the current Euroscepticism is extremely worrying. Just as we do not want to see farmers thrown out of business because of an ill-thought-out transition, we do not want them to have trouble when they go to the bank, under the shadow of our possible departure from the EU and a sudden drop in their income. We do not want farmers to have to fight for funds to invest in our food production. We do not want them suddenly finding themselves unable to encourage their sons and daughters into farming because no one can see a future in it or because they are so worried about the changes in income that might ensue if we pulled out of the EU. I therefore hope that Government Members will be able to influence some of their colleagues who are making these unhelpful noises and will ensure that Britain is at the heart of the negotiations in Europe so that we get a good deal for Britain, a smooth transition and the best possible help for our farmers in future.

I wrote my first paper on the CAP some 33 years ago. I suggested at that time that either it should be abolished or Britain should withdraw from it. I have not changed my view, even though the CAP is very different from how it was then, although it is still essentially ill designed and inefficient, and a bit of a bureaucratic monster. I was supported at that time by the Consumers Association. Having a purely urban constituency, I represent consumers rather than farmers, although I absolutely support farmers, too.

Agriculture is very different in all the member states, and in some cases the difference is quite extreme. It would be better if member states managed their own agriculture and did not rely on a supranational regime imposed by the EU. It would be better for those countries and everyone else if that happened. If we must have transfers between member states, we should run the scheme as a fiscal transfer, so that the rich pay in and the poor draw out, but not try to manipulate agriculture in the way that happens at the moment.

The report from the Select Committee on Environment, Food and Rural Affairs suggests:

“A one-size-fits-all approach is not appropriate,”

and that

“The CAP is complex and burdensome.”

I agree. Some of these points do not necessarily apply to the whole of the CAP, but they seem to fit in with the case for returning agriculture to member states. Much of what we have heard in today’s debate seems implicitly, if not explicitly, to support that case as well. Each member state ought to decide what it produces, how much of each product it should produce, whether subsidies are appropriate, what should be subsidised and, indeed, what that member state should import. Those things should be left to those countries.

In Britain, we very wisely intensified our agriculture as a result of being an island and being threatened in the second world war. We developed an efficient agriculture sector that is still with us today, even though it seems that we are currently importing wheat. We want to continue to have a strong agriculture sector in terms of production for strategic reasons. We do not want to become beholden to other countries to feed ourselves.

Last week I had the pleasure of visiting Lithuania with other members of the European Scrutiny Committee. I found to my surprise that 30% of Lithuania’s agricultural land is not being used for production. That was not the case before Lithuania joined the EU and the CAP. Strangely, for a small country that used to be mainly an agricultural nation, Lithuania has now become a net importer of food, which is all due to the distorting effects, apparently, of the CAP. Even in the poorer countries, things are not going well under the CAP regime. Surely Lithuania would be able to produce agricultural products very cheaply and sell to countries that want to import them, but it is not doing that and is now a net importer of food, which is nonsense.

If we want to redistribute wealth and income between European nations—there is a case for doing that—it should be above board and done by means of fiscal transfers. A key factor of any renegotiation of our relationship with the EU should be getting out of the common fisheries policy, getting out of the CAP and avoiding all contact with single currencies.

I am disappointed that we have such a short amount of time to debate these issues. We are talking about complex, extensive regulations that have significant implications for my constituents and everyone else who farms or works in rural industries or lives in a rural community, not just in Scotland but throughout the UK.

The Minister did an admirable job of setting out the structural flaws of the CAP, but he was a bit less forthcoming in presenting an alternative to it for the 60% of farmers who would not have a viable farm business were it not for the support they receive from the CAP. It is important to remember that the CAP is not only about market support; it is also about land stewardship, food security and sustaining resilient rural communities. I think we are all agreed that the CAP is a profoundly flawed system, but we have to be pragmatic about where we are in the negotiations and how we defend our rural communities and get the best possible deal for our farmers.

I will try to rattle through some of the issues in what is a short time frame, but I will be unable to say everything that I had hoped to say. I am pleased that there will be more flexibility for greening measures. I also think that the proposed definition of “eligible pasture”, which would include non-herbaceous grazing—in other words, heather—will be of significant benefit to upland farmers. However, I would still like more flexibility, so that people can qualify for greening measures through a number of options. I hope the Government will seek to resolve outstanding issues in the negotiations next week.

Another welcome step is the definition of an “active farmer”, which should help to tackle the long-standing problem of “slipper farmers”, whereby some people have received large sums of public money with little accountability or public benefit. I hope that will also form part of the final agreement. The flip side of the “slipper farmer” problem is that not nearly enough support was given to new entrants in the previous CAP. It is important that new entrants have a level playing field in entitlements with established farmers. Under the proposals, they should be eligible for an initial grant of entitlements in the first year of the new scheme, so long as they can show that they have been actively farming. New entrants should also be able to receive support from the national reserve.

The issue of the proposed cap on basic payments to individuals has been controversial in some quarters, but I personally think it is a progressive measure. A small number of large farm businesses receive levels of direct payments that are totally unjustifiable. We have to be transparent and accountable in how we use public money. It is only right that the redistributed surplus should be made available for more beneficial forms of rural development. I am pleased that the Commission proposes to increase CAP transparency by publishing the details of CAP beneficiaries and the money they have received.

Another controversial issue has been the use of coupled support, which I wanted to say more about. I know that progress has been made, particularly on the different views that exist across the UK about what is needed in certain circumstances. All I would say is that the beef sector is critical to the economy of north-east Scotland. It anchors hundreds of jobs in the rural economy and gives a welcome boost to exports, which is important. I have raised the issue of the compliance regime many times with Ministers over the last couple of years. I am glad that there is a more proportionate set of proposals on the table, which means that farmers will not be penalised for small oversights or administrative errors.

However, the big issue is the overall budget. In the context of austerity, we all understand that the overall pot is smaller, but the UK has negotiated itself the lowest share of the CAP budget of any EU member state. On average, member states get €72 a hectare, whereas the figure for the UK has fallen to €20. I do not think farmers want to be subsidised, but they do want to be on a level playing field and they want to be recompensed for their efforts to comply with European regulation.

I think we went into the CAP reform negotiations with a very strong case for a bigger share of the CAP budget for Scotland, but that is not what has come out. Compared with farmers in neighbouring countries—and, indeed, farmers in other countries and parts of the UK—Scottish farmers continue to get a very raw deal, even though many are stewarding land in environmentally responsible ways, providing a basis for a much bigger food and drink export industry. I do not think it is right for farmers in Scotland to get significantly lower payments than their counterparts in England, Wales and Northern Ireland. Nor do I think it right that those farming comparable land in Ireland receive €70 a hectare, in Finland €158 a hectare and in the Czech Republic €83 a hectare.

We need basic fairness in the system, and we just do not have it. Under pillar one, Scotland’s rate is so low that it means that the whole UK external convergence mechanism will benefit the UK by about €60 million. I hope that the Minister will confirm that that can come to Scotland. I hope that while we have a CAP system, we will continue to fight for the best deal for our farmers. I hope that Ministers will do that.

I have limited time to reply to a very interesting debate, including to the rather ungenerous comments of the hon. Member for Ogmore (Huw Irranca-Davies). I always know that the more flowery his language, the more he secretly agrees with the Government. When he resorts to Alfred, Lord Tennyson, I know that I have total agreement across the Dispatch Box.

Some important points were raised. One was about the opt-out for greening measures. Yes, there is in the current proposals a penalty for opting out, but we are seeking to remove it if we possibly can, so that the penalty will be the loss of income from not applying the greening measures.

Several Members—the hon. Member for Thirsk and Malton (Miss McIntosh) and many others—talked about co-financing measures. It is our view and it is the Prime Minister’s negotiating position in the budget discussions that these arrangements will not require co-financing. It is obviously always possible for the Treasury to put more money into the pot, but I have to say that I do not see the prospects for that as extraordinarily high at the moment.

The hon. Member for South Down (Ms Ritchie) mentioned farmers without entitlement. We are continuing to negotiate on that, because we see—

One and a half hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Standing Order No. 16(1)).

Question agreed to.


That this House takes note of European Union Document No. 15396/11, a draft Regulation establishing rules for direct payments to farmers under support schemes within the framework of the Common Agricultural Policy, No. 15425/11, a draft Regulation on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), No. 15397/11, relating to a draft Regulation on establishing a common organisation of the markets in agricultural products (Single CMO Regulation), and No. 15426/11, a draft Regulation on the financing, management and monitoring of the Common Agricultural Policy; and supports the Government’s continuing efforts to amend these proposals in order to secure better value for money for the taxpayer and establish a greener, simpler CAP that enables the development of an innovative, competitive and market-orientated farming industry and thriving rural communities.