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House of Commons

Thursday 18 April 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]


Land at Palace Avenue, Kensington (Acquisition of Freehold) Bill

Read the Third time, and passed.

London Development Agency Bill (By Order)

Order for Second Reading read.

To be read a Second time on Thursday 25 April.

Oral Answers to Questions


The Secretary of State was asked—

Modulation Proposals

1. Mr. Michael Jack (Fylde): What economic appraisal her Department has made of the effect on UK agriculture of the modulation proposals contained in Sir Donald Curry's recent report. [R] [46509]

The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): In discussion with stakeholders, others in Government, and the devolved Administrations, the Department for Environment, Food and Rural Affairs is considering the implications of the Policy Commission's proposals on modulation very carefully.

Mr. Jack: I am grateful to the Secretary of State for that answer. Given the importance that Sir Donald Curry attached to modulation as a way of reforming UK agriculture, will the right hon. Lady commission some work to enable us to determine, for example, who the winners and losers are in the modulation stakes? Could she also help us by identifying the types of environmental goods that she thinks might be bought? Sir Donald tells us that there are many gains to be had in terms of the restructuring of UK agriculture and our rural development prospects by that means, but many UK farmers will be fearful that if we go the whole hog down his route, they will be trading in an uncompetitive situation, compared with their European rivals.

Margaret Beckett: We are doing the kind of work that the right hon. Gentleman seeks. Let me explain further to him and the House; with his experience, I am sure that he

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will understand. It depends on the exact nature of the schemes that are introduced who the winners and losers are and what the pattern is. Although he rightly says that the Policy Commission recommended that we consider modulation, we should bear it in mind that to a degree, that was the commission's fallback position. I do not think that I am misrepresenting the commission when I say that. It recommended that there should be a shift in the way that funding for the common agricultural policy is used; that if we were unable to obtain that shift as a result of more fundamental reform, we ought to consider using modulation more extensively; and that perhaps we should consider using modulation more than we propose at present, even in the run-up to change and reform. Of course, the right hon. Gentleman is right that these are serious issues, and the points that he raises are exactly the ones that we need to examine.

As to how the funding might be used, I remind the right hon. Gentleman that the whole point is that we would wish to change the purposes for which the funding could be used and make the scheme less bureaucratic. That would involve support for rural areas in different ways, as well as possible environmental projects.

Paddy Tipping (Sherwood): Although my right hon. Friend is right that our major target must be CAP reform, it may be some way away. Given that, is it her policy to increase modulation from the 4.5 per cent. target by 2006 to a higher percentage? If so, what hope has she of receiving extra resources to enable her to fund that?

Margaret Beckett: I always live in hope. My hon. Friend raises an important issue. As part of the work to which I referred, we are considering carefully, as the Policy Commission recommended we should, whether there would be merit in increasing the percentage of modulation to which we are committed. We have concerns about the limitations on what can be done and the bureaucracy involved in people applying to schemes at present. That is partly why the rate of modulation to which we aspire was set at that level. That was regarded as practical, but we are considering afresh the advice of the Policy Commission.

Mr. David Curry (Skipton and Ripon): The Secretary of State is rightly cautious about going down the proposed route. Does she recognise the dangers of erecting a surrogate green CAP, which would be even harder to reform than the present one, as the Royal Society for the Protection of Birds is a great deal more powerful than the National Farmers Union? Does she recognise that ill-defined public goods and complex schemes requiring intensive manpower and womanpower to monitor and yielding very little to farmers would not represent a significant reform or benefit? If we do go down that route, will she consider requiring farmers to group together to apply for the schemes, perhaps to encourage at last some collective working among British farmers, the absence of which is one of their great problems?

Margaret Beckett: The right hon. Gentleman makes an interesting point. I do not think that anyone on the Labour Benches—and probably on the Conservative Benches—would disagree that we must be careful if we are successful in getting reform not to replace the current CAP with a scheme that is equally burdensome and

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difficult. We all share that point of view. I also take his point about ways in which we might seek to use any change to encourage more co-operation in the farming community—another of the Policy Commission's many recommendations.

Mr. David Drew (Stroud): I should like to carry on in the same vein as the Chairman of the Select Committee on the Environment, Food and Rural Affairs. Surely in the aftermath of Curry, there is a great deal to be said about increasing co-operative working—an issue about which I asked my right hon. Friend during questions some weeks ago. Is there any better place to start than in the dairy industry, which clearly has significant problems regarding the scale of certain enterprises? The benefits of economies of scale can be achieved only by more co-operative working, which can be achieved in its own right only with encouragement. Will she talk to my right hon. Friend the Secretary of State for Trade and Industry to ensure that we look again at some of the structures in that industry that have not been helped by interference in the past?

Margaret Beckett: My hon. Friend makes an important point about an issue that I know is of considerable concern. I have had many conversations not only with representatives of the NFU, but with individuals in the farming community, and I am aware that his concern is widely shared. The House will be aware that many of the Policy Commission's recommendations were not for the Government, let alone my Department. One of the recommendations is that we encourage the farming community to work much more co-operatively, in whatever sphere it may be.

Mr. Peter Ainsworth (East Surrey): It is interesting to note how much more cautious the Secretary of State is now being on the question of modulation, which was the main thrust of Sir Don Curry's argument in his important report. Is this new tone of caution the reason why there was no mention in yesterday's Budget statement of modulation or the additional funding for which Sir Don called? Will she explain why the Budget offered not a shred of comfort for hard-pressed rural businesses, contained nothing to bolster economic activity in the countryside and promised only higher taxes? What comfort can she give that rural regeneration remains a top Government priority, and what does she propose to do now to rescue her credibility?

Margaret Beckett: The hon. Gentleman said that I was now displaying greater caution, but I always display caution; he must have noticed that by now. I therefore reject entirely the charge that I was reckless on this issue in the past—especially if the Treasury is listening.

The hon. Gentleman also said that there was no mention of modulation in the Budget, but I think that he and everybody else would have been very surprised if there had been, not least because, as Sir Don Curry and I made plain when the Policy Commission reported to the Government—indeed, we have continually done so ever since; I recall Sir Don doing so on "Farming Today" only a few days ago—the resources that are available are a matter for the spending review. That is not a matter for the Budget, except in terms of the very broad fiscal

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envelope for the whole Government. My right hon. Friend the Chancellor explicitly said yesterday that decisions in the spending review had yet to be made.

The hon. Gentleman said that the Budget contained nothing to bolster economic activity in rural areas. He cannot have been listening yesterday, otherwise he would have noticed the plethora of initiatives directed at assisting and supporting small businesses. Those initiatives are obviously of great value to businesses in rural areas. As to his final remarks about how I can retrieve my credibility, I do not think that they come well from somebody who does not seem to know the difference between the Budget and the spending review.

Mr. Speaker: Chris Mullin. Not here.

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