Pig Industry Restructuring (Capital Grant) Scheme 2001

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Ms Quin indicated dissent.

Mr. Cash: The Minister corrects me—it deals with those of United Kingdom pig producers. That only makes the problem worse. We should find more than £66 million for the UK. I suspect that the real problem was that the European Commission would not tolerate the allocation of a larger sum. I would like the Minister to tell the Committee what representations were made by the European Commission about the amount of money that it would authorise by way of state aid to the British pig industry. How does that amount compare with the amounts authorised for the industries of the countries in the European Union, and those of the African countries?

5.20 pm

Mr. Paul Tyler (North Cornwall): I am delighted to follow the hon. Member for Stone (Mr. Cash). For one glorious moment, I thought that he was going to argue that the competitive disadvantage faced by pig farmers, which is clearly due to the euro as much as it is to any factor, meant that we should join the euro as soon as possible. Pigs might fly.

I want to talk about the past for just a few minutes. I think that I am right in saying that neither the Minister nor the hon. Member for South-East Cambridgeshire (Mr. Paice), the Conservative spokesman, had Front Bench agricultural responsibilities during the last Parliament. If that is the case, the hon. Member for South-East Cambridgeshire may be forgiven for saying that the scheme was 11 months overdue. It is actually 10 years overdue.

Ever since Parliament decided—we were all involved to some extent, as electors, even if we were not elected then—that our pig sector should be subjected to a different set of regulations from those that were being implemented in other parts of what was said to be a single market, the seeds were sown for the sector's present problems. The problems did not start on 1 July 1998; they were there long before that. The current estimate is that the additional cost faced by British pig producers is roughly £5 a pig, because of those different levels of regulation and control. That regulation is of no advantage to the pig producer, but was introduced on grounds of animal welfare and public health and because of the BSE spin-off, which is extremely important.

That is the context of the scheme. That does not mean that it is not useful. I entirely endorse everything that my hon. Friend the Member for Somerton and Frome (Mr. Heath) said, but it is important to put it in context. That is why I have some sympathy for the point that the hon. Member for Stone has just raised. Will this be enough money, and will the scheme continue for long enough to deal with the major structural problems relating to the competitiveness of the sector? We do not have a level playing field in the sector, and we have not had one for many years. The seeds of the problem were sown long before the Minister took up her responsibilities or her Government came to power.

Given that the £66 million—to which reference has been made—is not just for this scheme, but for a wider range of schemes, how much money will be available for the loan support scheme? That is the big question to which no answer has yet been given. Is the amount capped? If we find that, as has been the case with organic food production, demand greatly outstrips the sum available under the scheme, will the United Kingdom Treasury or the Commission have a problem with extending it beyond 2003, when it would otherwise come to an end? What will happen beyond that date?

I am concerned about the apparent restrictions on eligibility. If, for example, a group of pig producers were to combine to form a marketing group, or any other sort of co-operative, would they be excluded by the provisions of the scheme? Such co-operation is one way forward. Hon. Members on both sides of the House are worried about the extent to which pork and pork products are effectively and accurately labelled, with good reason. Many people in the country fear that they will eat products that do not reach the standards required by the United Kingdom's regulations. Often, they cannot tell the origin of the product. We all know of examples where ``Packed in Britain'' appears in tiny print on a label that is covered with a huge Union Jack. If only smaller units were eligible to apply for the scheme under discussion, that might make firms that had formed a marketing or other co-operative scheme ineligible. Marketing happens on a much larger scale.

The scheme is good. We would not want to suggest that we oppose it. However, it has the hallmarks of a small step along a long road. I share the concern of my hon. Friend the Member for Somerton and Frome that, although the industry looks better than it did 12 months ago, it is still under considerable strain and is likely to be for a long time. Although all agricultural sectors face a difficult period, this sector is having a particularly difficult time, and has been for so long that there is no fat left to trim. There are no more reserves to use.

I hope that the bank manager will be more sympathetic to those of my constituents who have been in the sector for some time and are really up against it. However, I do not think that he will suddenly take a long-term, generous view about the prospects of the pig sector, solely on the basis of the schemes before us.

5.25 pm

Ms Quin: I welcome the support that has been expressed for the scheme by everyone who has spoken in the debate. I am glad that, overall, the scheme meets with approval.

The hon. Member for South-East Cambridgeshire (Mr. Paice) is, of course, a former pig farmer. I do not think that he qualifies as an outgoer under this particular scheme, as I imagine that he left pig production earlier than June 1998. None the less, I am sure that he empathises with outgoers, as a result of his experiences. He said that the scheme was overdue, and the hon. Member for North Cornwall (Mr. Tyler) said that it was 10 years overdue. Although I agree with the remark by the hon. Member for North Cornwall that Conservative spokespeople find it hard to remember the world before 11 months or 36 months ago—

Mr. Cash: 1066, actually.

Ms Quin: The hon. Gentleman may be correct. His party notoriously suffers from short-term memory syndrome. However, the point made by the hon. Member for North Cornwall was somewhat misleading, because he referred to several measures that had affected the pig industry, but which were not related to the scheme. The hon. Gentleman referred, as did the hon. Member for Stone, to some much wider issues, such as the extra costs that the pig industry bore because of BSE-related measures. I was being tempted to go down several paths, such as that of discussing the effect of the weak euro on the pound, or even that of making exhortations to join the single currency. I should make it clear that those remarks were made by the hon. Member for North Cornwall, not the hon. Member for Stone.

I was also asked a number of specific questions that related rather more closely to the order. In particular, I was asked about funding. As my right hon. Friend the Minister of Agriculture, Fisheries and Food discussed at the National Farmers Union meeting last week, the funding of the scheme has been complicated by the fact that it has taken a lot of time to negotiate with the European Commission. It has also been complicated by the fact that money that was allocated this year for the pig restructuring scheme has been spent to support farmers who were affected by classical swine fever. That money was spent after many negotiations with the industry. The industry was keen for us to produce a scheme to compensate pig producers for the effects of classical swine fever, and for the welfare problems associated with the outbreak of the disease. The funding for the scheme has also been complicated by the fact that spending is agreed on a year-by-year basis.

My right hon. Friend has negotiated for the underspend to be transferred to the next financial year. Therefore in the coming financial year, about £24 million will be available for the scheme. Another £20 million is in the budget for the following year.

Because the scheme started late it is important to think about ways of continuing it beyond the period that has been set, as the hon. Members for North Cornwall and for Somerton and Frome (Mr. Heath) mentioned. My right hon. Friend the Minister said that £66 million would be spent on the pig industry, and the industry will benefit from that sum. None the less, to promote the success of the scheme, and because of its late start, consideration will have to be given to rolling it over for a further year. However, hon. Members will appreciate that, as my right hon. Friend made clear when he spoke to the National Farmers Union and in a subsequent press conference, the further spending will have to be part of the next comprehensive spending review settlement.

Our idea all along has been to ensure that the pig industry will benefit from money allocated at the time of the farming summit and to show a continuing commitment to the pig industry, as I have described.

Mr. Paice: I am grateful for the clear way in which the Minister has dealt with the issues. Can she provide further confirmation and clarification of the figures? She said that next year £24 million would be available. Am I correct in assuming that that is the total available? Can the Minister be more precise? How much is the underspend that she expects to carry forward? How much of the £26 million this year has been spent on the swine fever outbreak so that it is not available for the scheme that we are considering?

Ms Quin: My understanding—I shall correct what I say subsequently, if necessary—is that the figures for classical swine fever are something of the order of £21 million or £22 million. A considerable amount has been spent, largely by agreement with the industry—although I shall not disguise the fact that the industry would have liked more—to finance the relevant measures. That leads to a rollover of £4 million to the next year of the pig industry restructuring scheme.

The £66 million will have been spent in various ways on the pig industry as a result of our work with that industry. There was an obvious danger that the money in question would be lost to the pig industry altogether if we had been unable to use this year's money to help with the classical swine fever. The money would have been in danger, under normal Treasury rules, of being lost.

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Prepared 13 February 2001