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Mr. Hayes rose--

Mr. Heath: If I give way to the hon. Gentleman, that will take time from other Members. However, I shall happily do so.

Mr. Hayes: I shall be brief.

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Is that issue not indicative of a wider problem--the distortion of the food chain? The relationship between producer, retailer and consumer is distorted. Supermarkets play an important part because they carry a lot of responsibility for that distortion. That is the heart of the problem, which has not been addressed by the Government.

Mr. Heath: The hon. Gentleman is right: that is precisely the point that I was about to make. However, the problem is not a new invention by the Government. The supermarkets were given much too free a rein under the previous Government, which they took, as any commercial business would. However, there is a gross distortion in the market. As the Minister knows, I was bitterly disappointed at the outcome of the Competition Commission report on supermarkets. It did not ask the right questions, so it came up with the wrong answers.

We need to re-examine seriously the dairy supply chain. On 16 November, in answer to the hon. Member for Monmouth (Mr. Edwards), whom I am pleased to see in the Chamber, the Minister spoke about the need to establish a group to consider the current problems. The Minister also gave a heavy hint that a report would be commissioned to study in depth the milk supply chain. That cannot come soon enough, as it would enable us to take the required remedial action.

The state of the beef market in Europe is extremely serious, not just for beef producers in Europe but for beef producers in this country. We underestimate that at our peril. I do not believe that even the European Commission, in its recent assessment of the situation, has estimated properly the difficulties that we may be about to experience. It assessed the reduction in domestic markets, but they will reduce much more than is currently estimated.

There is undue optimism about the ability of European Union countries, including the United Kingdom, to find export markets outside the EU. Exactly the same barriers that Britain experienced in the past will be put up against all EU beef. That will have a hugely distorting and possibly catastrophic effect on the beef regime under EU rules. I shall give the Minister a warning. He will be tempted to try to achieve consensus on public health, veterinary health and public safety in the Council of Ministers. However, he must not be tempted to allow our farmers and our taxpayers to pay twice for that problem, as could happen.

I also hope that the Minister will not accept measures to restore confidence that are entirely unjustified in this country. One matter currently on the table is the fishmeal ban. The Minister will know that there is not a problem here with possible cross-contamination between fishmeal and meat and bonemeal. A fishmeal ban would have a disastrous effect. I have a letter from Countrywide Farmers, based in Melksham near my constituency, which estimates that a ban

because of transport costs. Those are substantial additional costs for our farmers and food producers.

Hon. Members have mentioned regulation, which is still an important issue for many of our farmers. I hear what is said about our pledge not to introduce gold-plating, but I take seriously the point made by the hon. Member for South Suffolk (Mr. Yeo) about the

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introduction of new regulations. Over-regulation stifles our farming industry, but we still do it. The 26 January edition of Farmers Weekly contains a report on the annual Lloyds TSB Scotland agricultural survey. It tells us of the estimate that farmers

That still happens after the so-called war on red tape. We must deal with the matter. We need to introduce rights of appeal, simplify appeal mechanisms and establish an agricultural ombudsman who can challenge the decisions of MAFF inspectors. We also need to consider the effects of the new meat inspection regime.

We must also consider some of the simpler issues. I have received a letter from Mr. Paul Cary of Dangerfield farm in Buckland Dinham. Mr. Cary, who is one of my constituents, speaks about the red tape associated with the slaughter premium scheme. I shall not take up time by dealing with that issue now, but I believe that it needs to be addressed and I shall write to the Minister about it.

I should like to mention the environmental schemes with which the Government have rightly pressed ahead. Countryside stewardship schemes and protection for environmentally sensitive areas should be promoted. Such schemes are in many ways the future of the common agricultural policy, and I hope that we will provide more support for those who maintain our countryside through them. However, I have serious concerns about the way in which they often operate. They must be redesigned and their scope should be increased. They need funding that is guaranteed year on year. If people enter such schemes, they must know that some bright spark in MAFF will not put a red line through the initial proposals at some later stage. The schemes must also reflect the realities of life. It is no good introducing a scheme that suddenly pays less, perhaps because the average farm income has fallen and the original investment decision was based on an assumption of income. We need to ensure that the arrangements are brought into line in order to guarantee farmers a future. We must also ensure that all such schemes have the correct design and focus.

Again, I do not want to take up too much time, but I should like briefly to refer the Minister to a study by the Environment Agency. I have enormous respect for much of the agency's work, but I am concerned about its impact statement on agriculture and the environment. If he turns to the pages on the environmental external costs of agriculture, he will see statements that, in my opinion, cannot be substantiated and do not reflect the true costs of agriculture. There is a problem with such information: if the agriculture industry can see that it is not real and that it does not reflect genuine circumstances, people will turn away in droves and we will not achieve our objectives. I invite the Minister to consider the statement and to reflect on whether its accounting is correct.

I considered the motion carefully and I believe that much of the analysis that it contains is correct. Indeed, I think that Opposition Members have identified in the motion many of the Government's failures. The problem is, however, that almost every single one of those failures could be applied to the Conservatives' term in office. It would better if they recognised that that was the case, as our memory is not as short as they would like it to be. We remember that farm incomes were in steep decline before 1997. We remember who presided over BSE and

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its aftermath and who created a completely artificial beef war that poisoned our relations with the rest of Europe. We also remember who failed to start effective CAP reform, did not utilise agrimonetary compensation and produced a rebate formula at Fontainebleau that hobbled our negotiations year after year. Incidentally, we also remember which party introduced legislation to prevent local authorities from buying British when buying British was best.

Mr. Paice: Are the Liberal Democrats against the Fontainebleau agreement and the rebate that was gained for this country? The Prime Minister applauded that rebate only yesterday and claimed its maintenance as one of his achievements.

Mr. Heath: The hon. Gentleman comes late to the debate; I have made the point many times. The Fontainebleau rebate is a poor mechanism because of the problems it has created for our farmers and other primary producers. We should have had proper equivalence in the European Union between the amount that Britain spent and the amount that we received. We need an alternative mechanism, which is better designed than the Fontainebleau agreement and achieves the same objectives without crippling our farmers. We should be negotiating for that in Europe.

We have considered the motion and the Government's amendment, and we believe that successive Governments have failed farming and the rural areas in this country. Farmers and those who live in the country deserve better.

6.16 pm

Mr. Huw Edwards (Monmouth): It is a pleasure to follow the hon. Member for Somerton and Frome (Mr. Heath), who speaks with great authority, which I remember from his service on the Committee that considered the Countryside and Rights of Way Bill. He presented a powerful reminder of the previous Government's legacy: BSE, long-term decline in incomes and Conservative Members' general anti-European instincts, which are relevant to a debate about farming.

There is no doubt that farm income has declined at least in the past five years. The weakness of the euro partly reflects the strength of the economy and the Government's good management of it. When the economy does well, agriculture tends to do badly. The reverse is also true: when agriculture does better, the economy tends to be weaker. I wish that the two cycles could coincide.

There has been a decline in the consumption of meat, and in world commodity prices, which seem to be improving now. The difficulties in Russia and Asia have also had an impact on the world economy. The Russian market is especially important for British farming. The effects of BSE and the loss of the export market have taken their toll. The Government regained the export market and removed the ban that was imposed by the European Union and other countries.

The Government have introduced regulations to improve consumer confidence. My hon. Friend the Member for Stroud (Mr. Drew) made some powerful points about the need not to overstate the significance of red tape. Many of the regulations have been introduced to ensure consumer safety.

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The Government have increased the regulatory framework for labelling. A farmer that I met recently drew my attention to the fact that when he went to his local supermarket, the new labelling rules had not been followed. I hope that the Government and the Food Standards Agency can consider that.

The Government's review of meat hygiene charges will be welcomed in the small abattoir in Raglan in the middle of my constituency. There is anxiety in my constituency about the delay in the payment of subsidies such as the suckler cow premium and the beef annual premium. The hon. Member for Somerton and Frome made the valid point that many farmers are penalised when they do not submit their applications in time, but that they suffer greatly from delays in their payments. There should be an appeals system. I know one farmer who lost £6,000 through making an inadvertent mistake. The Inland Revenue does not treat people like that, and neither should MAFF and the Rural Affairs Department of the Welsh Assembly.

Britain has higher welfare standards than other European countries and countries outside Europe. There is a thriving poultry industry in my constituency and it has suffered from the import of poultry that are fed on inferior foodstuffs, which would not be allowed in this country.

The farming community has also felt the effect of additional costs. I have sympathy for the farmers in my constituency who have been affected by rising fuel costs. Many small farmers are also small hauliers, and at a time of falling incomes, rising fuel costs were hitting them hard, especially the cost of red diesel. It is encouraging that the world oil price has gone down, and that has now reduced the cost of red diesel. The Government have also frozen fuel duties.

I am surprised by the Conservatives' motion. They have committed themselves to a saving in expenditure of at least £8 billion. They have said that they would protect the Government's commitments on education, the national health service and, apparently, policing. I wonder whether we have heard a genuine announcement tonight that they would protect the Government's future expenditure plans on agriculture. They have given no commitment that they would protect the industry budget. The biggest contribution that the Government give to industry is in agriculture, and it would be significant if the Conservatives would make a commitment on that. I suspect that they will not.

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