Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 1100-1119)



Mr Simpson

  1100. Secretary of State, you have identified the difference between real power and probably marginal influence!
  (Margaret Beckett) Sir Don Curry's outline of broadly what his Commission thought would be the effect of some of their proposals was to identify what the key was of an order of magnitude of about £500 million over three years, I think I am right in saying. Obviously we have tried to make some kind of assessment and it is not easy at the present time. To a certain extent it does depend on the outcome of the Spending Review. He has put forward a set of proposals which he would like us to pursue and he has given an outline indication as to what he thinks it might cost to carry out those proposals. We then have to undertake our own negotiations and then we have got to see where we can go and how we can fit them in the framework which he has identified, but I cannot really say any more to you than that.

  1101. I can understand the constraints under which you are operating, but, for example, he agreed that the very important issue, which you have touched upon, of illegal meat imports obviously has an enormous cost not just to your Department but across government. Would you agree that that is in excess of the £500 million that he identified?
  (Margaret Beckett) Well, obviously he put in place some key proposals and he suggested what he thought they would cost. I think in fact it is undoubtedly true that they did not make any specific proposals for funding for tackling illegal imports, but one of the things that I hope we will get out of the risk assessment is some kind of understanding as to whether we actually need a great deal more in the way of funding or whether we need to better target the funding that is available. The most effective thing we can probably get in terms of dealing with it is intelligence. It is possible that there are other things that one might seek to do which might be effective and which might have greater expense, but we would have to look very carefully at whether they really are effective and where the greatest risk is coming and whether that would be the most efficient use of money, so I think while recognising that yes, that is an area we did not identify, I do not think it automatically follows that it is an area where we are just going to put in greater sums as opposed to using them in a different way.

Mr Todd

  1102. Regardless of quite what you have said to the Treasury, one of the key issues is how you have argued the case for additional resources at all in this area, whether it is £500 million or a different figure. One of the critical arguments which one would expect the Treasury to be more interested in is whether you can show that additional resources investable at this time have a payback over the short to medium term.
  (Margaret Beckett) I totally agree with that.

  1103. Can you perhaps rehearse how that argument can be made without naming any figures which you might have attached to the argument?
  (Margaret Beckett) I think all I can really sensibly say at this time is that you are right to say that I think there is no merit in going to the Treasury to say, "Well, we would like you to give us some more money because we have some problems".

  1104. "Because Don Curry says it is a good idea".
  (Margaret Beckett) That has to be something that the Treasury can identify and discuss as to what the taxpayer will get back for such investment. I am very encouraged that in other previous administrations the whole idea of actually investing to save as opposed to just cutting costs to the bone has been better understood and accepted and then there comes the discussion as to whether or not there is a viable, long-term project, whether or not putting resources, say, in capital investment, as any business does, is something that will pay back and over what period of time and so on. That is the nature of the discussions that everyone has, but the Treasury is not a sort of goodwill charity.

  1105. No. There are two kinds of arguments in terms of payback. There is payback in terms of some of the things you talked about earlier of social or environmental goods which I am sure the Treasury will be interested in, but not necessarily impressed by and may feel that those things should be delivered through other means than additional public spending. There is the other element which is, "You give us this money and our budget will fall over a period of time reflecting the additional investment put in to achieve certain goals", mainly to make farming more efficient, to reconstruct certain areas of farm activity in the food chain, to achieve a situation in which they will not constantly be asking you for more cash. I am assuming that that line has been taken, but have you been able to suggest quite what savings might have been achieved over a period of time if we invest sensibly in creating a more competitive farm sector?
  (Margaret Beckett) Well, to some extent that does depend on the farmers and what we are able to achieve in terms of the mid-term review, but yes, obviously we look at the whole picture and what the potential is. Also of course is the other side of the coin which you did not identify which is a sort of precautionary approach. Let's take a different area from farming itself, let's take investment in flood defences. If we get that right, then that is to the overall long-term benefit and helps to some extent how fast you can move as a matter of practicality.

  1106. Well, from a local perspective, you will not find me arguing against that.
  (Margaret Beckett) There are substantial costs or potential substantial costs if one does not make that investment, so all of those different arguments are part of the case which can be the only sort of legitimate basis of any proposal one makes to the Treasury.

Patrick Hall

  1107. Secretary of State, Minister, could I explore this idea of some of your costs and what is competitive and what is efficient. With regards to the long-term strategy which is going to be published later this year, will that be fully costed? Will we be able to hold the Government to account over the costings, the expenditure commitments in that?
  (Margaret Beckett) Well, that decision has not been made. The key thing at the present time is to identify the broad approach of the strategy and to set it out, and whether or not we will be able to attach numbers on what clearly is ahead when the Spending Review itself only looks three years ahead even though, in concrete terms, it is more than before, so I will think about that one, but we have not yet made that decision.

  1108. Sir Don Curry's Report does include some costings.
  (Margaret Beckett) Well, in order to indicate the scale of what he thought might be required. I do not think he necessarily thought that these were the kind of hard and fast numbers. I doubt if the Commission have the capacity to do that at the moment.

  1109. Nonetheless, when we questioned him here, he did mention a figure which has already been mentioned, not as a kind of panacea, but of new spending over the three years and an example of things you need to do in terms of the long-term strategy.
  (Margaret Beckett) Well, they are, if you like, numbers in orders of magnitude.

  1110. Well, if the Government does not agree with that, presumably in its long-term strategy it needs to explain why not and indeed what is needed instead, but that does come down to costings as well, so I have made the point and you have responded.
  (Margaret Beckett) I take your point.

  1111. Can I develop that a little bit in a slightly different way. It was something the Chairman said earlier about, broadly speaking, the switch from price support and direct payments to environmental and public goods and there was some debate about what that means, but it is all justified presumably in the name of better efficiency for agriculture and increased competitiveness. I visited a farm recently, largely an arable farm, and the argument there that was put to me was that hedgerows and hedgerow trees, et cetera, copses were originally put in for economic reasons to help contain livestock. Now, where you do not have livestock anymore, there is no economic justification. The justification is perhaps biodiversity, because people have sentimental attachments to how the countryside looks, et cetera, et cetera, very important considerations, but in terms of the real efficiency and competitiveness of that farm which I visited, I was told that it would be best to remove them. The farmer had no intention of doing so. In terms of normal management, those elements were not needed, whereas if we take the example that the Chairman made of livestock farming where normal management would require walls and hedges, et cetera, do you see the switch of public subsidy from direct price support, et cetera, to environmental and other benefits being ongoing in terms of maintaining those elements which certain parts of British agriculture will argue is no longer needed in terms of competitiveness and efficiency and, therefore, it is a burden upon the units of management to maintain them? Do you see that as an ongoing possible commitment for the switch of resources and, therefore, not necessarily a long-term reduction in the use of subsidy?
  (Margaret Beckett) I think that is not impossible. I do not want to create the impression that every farmer who says, "I am only keeping these hedges because you have asked me to" will automatically receive large sums of public money, but I do accept that there is a legitimate point being made there, that what ordinary, most efficient farm management would require can change as circumstances change. I also do accept the base proposition. I was just looking for, and not finding, some figures somewhere for what has been done in terms of hedgerow replacement and things of that kind and these are exactly some of the purposes for which funding is made available even now and I think that is a very good example of the sort of legitimate argument which can be put. Now, obviously one looks at it, as one always does, on a case-by-case basis, so I think it is a valid point which is being made.
  (Lord Whitty) The dichotomy you are describing is just what Curry is trying to get over, in other words, we would be persuading farmers by the change in the subsidy structure to regard their output as in part environmental and in part market, whereas at the moment they regard the environmental side largely as a constraint of the market and your question suggests the same, but we are saying it is a legitimate output for society to recognise from farming, that the various environmental goods or the minimisation of environmental imbalance is part of the output of those who have care of our landscape. I think you need to broaden the issues. It is not an either/or, but it is part of the total operation of the farm and subsidy will help that, but it is also the approach of our farmers as to what their task is and the role of farmers in the rural economy. What foot and mouth did show us was that if you shut down farming, the knock-on effect is that the tourist trade and other businesses in the area are severely damaged. In order to maintain that, you need to maintain a high standard in the landscape and, therefore, the economic benefit in a wider sense is there, albeit that to get the farmer to produce it, we may have to give them a public subsidy.

  1112. I would agree with that and I am instinctively attracted to that way of reasoning. Looking back at the point that Mr Todd made about what may or may not impress the Treasury, if the long-term strategy does identify costs which may be attached to some of these slightly more difficult issues in terms of economic justification, nonetheless important though they are, then it would be easier, I guess, in the future to ensure that some of the mysteries in the way the Treasury operates can be exposed to more effective public scrutiny, so issues such as this are on the agenda and openly able to be tested.
  (Margaret Beckett) Let's not be too unkind to the Treasury. Even under existing circumstances, and I have found the figures now, under the Countryside Stewardship Scheme there are something like 16,000 agreements where 8,000 miles of hedges have been restored or planted and 13,000 miles of grass margins. Also the Treasury agreed, and is quite keen on, PSA targets for the Department which include trying to restore biodiversity in farmland birds, so it is not quite as restrictive, the approach they have taken, as people might sometimes assume.

Mr Jack

  1113. Before I go on to my main line of questioning about agriculture and its competitiveness, you mentioned the publication of the strategy. Will that be accompanied by a debate in the House of Commons in government time because so far attempts to have a full-scale debate on agriculture have been repelled by your successor, the current Leader of the House, and given that as we move through, we will have the time, the opportunity to discuss Curry, et al, your strategy and other matters, are we going to have a debate about this?
  (Margaret Beckett) Far be it for me as a former Leader of the House to attempt to commit my successor, but if you are saying to me do we, as the Department, accept that there is a legitimate case for such a debate once we have been able to publish the strategy so that people will have time to assess what is involved, then of course we accept that there is such a legitimate case. I would also accept that there is always a great deal of pressure on government time.

  1114. I want to move on to the question of the performance and competitiveness in British agriculture. To pick up on a point that you mentioned earlier in your remarks about reform and discussions with other European leaders, do you ever have any discussions with them about taking advantage of the natural advantages and competitive position that Member States will have? For example, people in the United Kingdom would say, "Well, we are good at growing pasture", so pasture-based agriculture will be a natural advantage. Those in northern France might well talk about their advantage in terms of pasture and wheat production and so on. Do people yearn within your discussions in Europe to take, if you like, the shackles off and allow their farmers to show just what they can do where they think they would have an advantage over others?
  (Margaret Beckett) I have never engaged in quite that kind of discussion. Certainly there are a number of us who are very keen, for example, to stick to the agreement in principle that was mentioned today about phasing out milk quotas because we do believe that it is undermining the competitive position of British farmers and they could take advantage, particularly in the value-added end of the market, if those quotas were phased out. I have never engaged in a discussion of quite the kind you suggest, although I will ask Andy in a minute to say whether he has because he has been involved in these issues for much longer than I have. I would be a little cautious about it because there is always the danger of other Member States saying, "Well, we do this terribly well, so the rest of you had better not do it at all", and I would be reluctant in any way to sort of get engaged in a discussion as to how you should fetter the choices that British farmers wish to make because somebody else in another part of the European Union says that it is easier for them to do it.
  (Mr Lebrecht) All I would say is that I do not recall any explicit discussion of the type that Mr Jack has suggested, but the issue actually underlies the whole debate within the European Union as between the liberalisers who accept the logic of comparative advantage and those who wish to maintain production controls and restrictions who would resist that, so I do not think it has ever been brought out explicitly in the way that you suggest, but it is there underlying the discussions.

  1115. Let's look specifically at the competitiveness of British agriculture. We often use the phrase "the efficient British farmer". What studies have you done, what benchmarking exercises sector by sector have you done recently to determine whether that phrase is still valid and what are the results?
  (Margaret Beckett) Again I will ask Andy to comment on any specific studies, but what I would say to you is that I do not think it is alright that there is a role maybe only to some extent for our farmers and one of the things which I think is extremely encouraging is that in the development of the Food Chain Centre and the English Collaborative Board, the basis of much of what they are doing is seeking to establish benchmarks and to encourage best practice and in many ways I think it is, as much as anything, for the industry itself and if and as the industry becomes more market-oriented, the market will do that for it. We will help to set for them what are the benchmarks, what are the bottom lines, "Are you really competitive? If you are, then you must be able to sell into the marketplace", so I think it is not necessarily just for us as government to run those studies.

  1116. I accept that you are not in the necessary business of providing a fix for the uncompetitive, but the question I actually asked was, notwithstanding the work of people like the Institute of Grocery Distribution and indeed the Food Chain Centre and those who participate, what studies have your own Department made about the competitiveness of British agriculture? You may, for example, in speeches to farmers and to the food industry want to comment on areas where you think we could do better, where we are doing very well or where things are going bad and I am interested to explore how you might inform such remarks, so I ask again whether you have done any studies on this?
  (Margaret Beckett) Sometimes there are relatively simple facts like, for example, in the organic sector where we know a very high percentage of the market in organic produce in the United Kingdom is being satisfied from overseas, so there is a clear simple fact there and you do not need a major study. I cannot give you a list of them, but I am sure we could write to you.
  (Mr Lebrecht) Clearly we do look at the overall performance of United Kingdom agriculture and that can be compared with how agriculture in other Member States may be doing because Eurostat collects quite a lot of data, but I think I would come back to the Secretary of State's point, that at the moment there is a highly regulated and managed European agriculture which results from the policies which have been in place for a very long time and it is only through changing them and allowing different parts of British agriculture to compete that you can actually get a definitive answer to your question.

  1117. Well, let's come back with another one. We have heard colleagues asking about spend to save, improving the effectiveness and efficiency of British agriculture and the Secretary of State has told us that you are looking very hard at strategic objectives. How, if you have not got any analysis of your own about the strengths and weaknesses, to put it another way, of British agriculture, will you ultimately determine your future policy and subsequent disposition of resources if you are trying to strengthen agriculture against the background of external pressures which will bear down on the amount of direct production support and may require the farmers to learn new skills with reference to marketing and production and also in terms of their environmental responsibilities, all of which could be derived from an analysis of the strengths and the weaknesses?
  (Margaret Beckett) It seems a bit elaborate, if you don't mind my saying so. Obviously we recognise that there are sectors and sometimes it is due to a whole range of different factors as to where there will be a particular weakness from time to time. We recognise that there is a general case for training to be available in order to increase the skills-base of farmers and give them greater opportunity, but really I can only go back to what I said before. We are not trying to look at agriculture to say, "Here's a sector that needs particular support more than others and here's a sector which has particular weaknesses". There is a general approach to try and strengthen people's marketing capacity, to try to make farmers think about themselves as businesses and to look to what their future market opportunities might be and how they could satisfy those market opportunities. There is not a sort of master plan and I am not sure we feel there ought to be a master plan which says that we should put more money into a particular sector.

  1118. That is the whole point. I would not expect MAFF or DEFRA, as it now, is to have a prescriptive master plan because farming is really a series of individual enterprises and you are the interface between those enterprises and the wider policy issues at the European and world levels. Coming back to a comment Mr Lebrecht made, he talked about the liberalisers, and let's try and strip out some of the complexity and make it a straightforward question. In a more liberal regime, apart from milk which we have discussed, which sectors of British agriculture do you think would most benefit?
  (Margaret Beckett) We are back to, "Will some sectors of British agriculture disappear?" I cannot tell you.

  1119. It is not like they are disappearing in a Houdini-type approach to agriculture, but I want to know who is going to gain as a result of a more liberal regime?
  (Margaret Beckett) Well, everybody who runs a successful and competitive business, and those who are not able in the long term to run a successful and competitive business will not, but I cannot categorise—

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