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7.21 p.m.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, as ever, when rural and environmental issues are discussed in your Lordships' House this has been an informed and worthwhile debate. As is customary after the gracious Speech, it has been a debate which has ranged over varied and sometimes disparate topics. We have heard two splendid maiden speeches by the noble Baroness, Lady Thomas, and the noble Lord, Lord Phillips. I join with other noble Lords in expressing the hope that we shall hear them both often. It is not fortuitous, however, that the subjects of agriculture and the environment have been combined on the Order Paper. Agriculture lies at the hub of what, to most

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people, the term "environment" signifies. It is an industry whose primary role is to produce food. But it is also the industry which, more than any other, shapes the rural landscape and influences its ecology.

That link is one which will be central to the Government's rural White Paper to which my noble friend Lord Ullswater and the noble Lord, Lord Geraint, referred. But it is also a link which has been increasingly recognised in agricultural policy. Largely at our instigation, the European Union has now adopted environmental measures as a compulsory and integral part of the common agricultural policy. Lest that statement seems like a commonplace, we would do well to remember how impossible a dream it would have sounded 10 or even fewer years ago. The example of environmentally sensitive areas, and similar imaginative schemes pioneered in the United Kingdom, demonstrated what could, and what should, be done across Europe.

However, the rural character of this country, where nearly 80 per cent. of the land is devoted to agriculture, should not lull us into overlooking the pressures upon it. Competing demands from housing, industrial and retail development and roads, as well as from agriculture itself, have to be recognised and managed; and farming can itself create environmental pressures through, for example, overgrazing, nitrate leaching, or the loss of biodiversity. Those agricultural pressures can be eased in a variety of ways: by advice from government agencies such as ADAS and English Nature or from the many active voluntary bodies such as FWAG; by regulation, such as, in the sphere of pollution; by administrative penalty—for example in the withholding of payment of CAP subsidies where farmers permit serious environmental damage (the so-called cross-compliance principle); by encouraging farmers themselves to put environmental awareness into practice through initiatives such as the LEAF movement, or through organic systems; or, lastly, by financial incentives to reward environmentally positive management going beyond good agricultural practice.

It is in the area of incentives where we can be particularly proud. This year saw the launch of the Habitat Scheme, the Organic Aid Scheme, the Countryside Access Scheme and new nitrate sensitive areas. It also saw a major expansion of the ESA Scheme with eight new ESAs being designated in England and Wales. That brings the total to 43 ESAs—15 per cent. of all agricultural land. Once those and the new schemes are fully operational, we shall be spending over £110 million a year in the UK on promoting environmentally sensitive farming. At a time of serious constraints on public expenditure, that is a significant commitment by government in addressing the main environmental needs and opportunities associated with UK agriculture. I see that my noble friend wishes to intervene. I give way.

The Earl of Clanwilliam: My Lords, I am most grateful to my noble friend for giving way. He

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mentioned £110 million for environmentally sensitive programmes. Will that mean an increase of £1 million in respect of organic farming?

Earl Howe: My Lords, I shall be turning to the subject of organic farming in just a moment. Perhaps my noble friend will be content to wait until that time.

Agricultural policy has a major part to play in pursuing the Government's aim of conserving and, where practical, enhancing biodiversity. Since the Maastricht Treaty amended the Treaty of Rome, it has been an obligation on the Community to integrate environmental protection requirements into the definition and implementation of all Community policies. In agriculture, the Government have taken a lead: we have a strong commitment to promoting further "greening" of the CAP, and continue to press for a closer linkage between agricultural and environmental policies and objectives.

We have also taken the lead in the Community in seeking to achieve rules for set-aside which maximise its potential for the environment. I believe that the noble Lord, Lord Beaumont, was quite wrong in his analysis of the effects of supply control measures on the environment. The Government successfully argued for environmental management conditions to be applied to set-aside land and we also secured the non-rotational set-aside option which allows for longer term environmental benefits. However, the Government are seeking to go further in deriving long-term benefits from set-aside by allowing arable land taken out of production under the various environmental schemes to count against a farmer's set-aside requirement—

Lord Beaumont of Whitley: My Lords, is the Minister suggesting that the existence of set-aside does not mean that farmers have a great deal more intensive agriculture on the rest of their land? If he is making that suggestion, it goes against the evidence. However, if he is not, he is not addressing himself to anything that I actually said.

Earl Howe: My Lords, the noble Lord overlooks the whole tenor of CAP reform which was to reduce the incentive to farm intensively on land that is cropped with arable produce—

Lord Beaumont of Whitley: But, my Lords—

Earl Howe: My Lords, there is evidence to show that that is what is happening. If the noble Lord cares to talk to the Royal Society for the Protection of Birds, I believe he would find that the society has most interesting things to say about the beneficial effects of set-aside on bird populations.

As I was saying, the European Commission has undertaken a study into the question to which I referred and a report is expected very soon. When that report is placed before the Council, my right honourable friend the Minister will be pressing very hard for positive action.

It might, perhaps, be useful at this stage to take stock of our experience with the CAP over the past 20 years. The CAP was one of the first common policies to be established by the EC. Despite long-standing criticisms

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from the UK and elsewhere on the grounds of its cost to taxpayers and consumers, its economic distortions and its adverse impact on trade, the coverage of the CAP has tended to expand and its cost to rise. Through the 1970s and into the early 1980s support prices were regularly increased as a result of a perceived need to maintain farmers' incomes. But insufficient allowance was made for the benefits of technological advances and structural change and, combined with that, there was excessive optimism about the growth of world markets.

Only in the mid-1980s did the direction of policies begin to shift, but the comparatively limited extent of those changes reflected the concern of most member states to preserve the essential characteristics of the CAP. There was a general desire to avoid radical change, even where significant budgetary expenditure was at stake. The 1992 reforms were more significant; but a strong influence on both the timing and content of these reforms was the GATT Uruguay Round negotiations on agriculture. It became increasingly clear as these negotiations progressed that the more trade distorting features of the CAP—excessive import protection and uncontrolled use of export subsidies—would have to be subject to limitations under any GATT agreement capable of achieving wide acceptance. The 1992 reforms were thus aimed at delivering the obligations which the Commission judged it could secure in the remainder of negotiations. In addition, some member states were concerned that the CAP was no longer capable of ensuring an acceptable income to their farmers.

The Government's principal long-term objective for the CAP is to reduce its cost both to taxpayer and consumer by reducing support levels and phasing out direct compensatory payments. However, in tune with the noble Lord, Lord Williams, and indeed the noble Lord, Lord Carter, we also seek to get the CAP operating with much more regard to environmental considerations, with a higher proportion of EC expenditure to farmers being applied to encourage more environmentally sensitive farming and with the application wherever appropriate of environmental conditions to support payments. These objectives spell out the direction in which the Government wish to see the CAP develop but within those broad objectives the first priority for the UK must be to bring down end price support. This will bring both economic and environmental benefits where current support levels are encouraging over-intensive farming systems. In doing so we should improve the balance of supply and demand, thus making redundant the raft of supply controls which, as my noble friend Lord Dixon-Smith rightly said, act as a barrier to new entrants. As the noble Lord, Lord Mackie, pointed out, it is not only the Government but the NFU and others who have been considering how change to the CAP could be brought about.

But there is one central point to remember regardless of any such changes. If our countryside is to be maintained and the land is to be kept in good heart, agriculture must continue to prosper; and for the agricultural industry to play its full part in a thriving rural economy we need to encourage landowners to offer more land for rent. There has been a long-term

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decline in the amount of rented land—now down to just one-third of the total agricultural land in England and Wales. The shortage of tenancies hinders the industry's ability to respond to market and policy changes and makes it very difficult for new blood to enter the industry.

As my noble friend Lord Ullswater has pointed out, the existing agricultural holdings legislation discourages the letting of land because of the degree of security that it confers on tenants and because of its sheer complexity. My noble friend referred to the Government's Agricultural Tenancies Bill which was introduced into your Lordships' House last week. I am glad that so many noble Lords have welcomed it, although I look forward to some interesting debates with the Benches opposite. I do not propose to devote time to this subject now as we shall have the opportunity to debate the Bill in more detail on Second Reading on Monday of next week. The main point I wish to make today is that we want to simplify the legislation for future tenancies and give parties much greater freedom to negotiate tenancy agreements which suit their own needs and circumstances. We believe that the reforms which we have proposed strike the right balance for landlords and tenants, will lead to more land being made available to rent and will benefit the future well-being of the rural economy as a whole. I am sure that the points made this afternoon, which I shall consider carefully, will feature in our debates as the Bill proceeds on its passage through the House.

Many questions arose during the course of the debate which I should now like to deal with. If I do not succeed, because of pressure of time, in covering all the questions posed by noble Lords I apologise to them in advance and either I or my noble friend will follow up such omissions by letter where appropriate. I welcomed the remarks of my noble friend Lord Crickhowell in favour of the new environment agency and in support of the appointment of my noble friend Lord De Ramsey as its chairman designate.

My noble friend has served with distinction as chairman of the NRA since its inception. It is thanks to him and his board and to all the dedicated staff under him that the standing and success of the NRA are now what they are. My noble friend has achieved the enormous task of bringing together people from the different water organisations and welding them into a cohesive, effective body to protect the water environment. We aim for the new agency to be a centre of excellence, combining in one organisation the experience and expertise which the existing bodies have built up over the years. I welcome the contribution of the NRA and its chairman and that of the other bodies, HMIP and the waste regulators, to that process.

My noble friend and my noble friend Lord Mills referred to the agency's duty to take costs and benefits into account and hoped that that would not restrict its day-to-day operation or subject it to challenge. As both my noble friends will recognise, sustainable development involves reconciling the needs of achieving both economic development and effective environmental protection. Regulators should not be able to impose costs which are not justified by the

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environmental benefits which they will bring. The provisions as drafted require the agency to consider costs and benefits in the round, including environmental costs and benefits. The provisions do not override the agency's other duties and obligations.

My noble friend Lord Crickhowell asked whether the Bill would require the agency to prepare a state of the environment report. Under the agency's pollution control duties—Clause 5 of the published draft—it states that the agency shall compile information relating to such pollution and report back to Ministers. If required by Ministers to do so, the agency will carry out assessments and prepare and send reports on those assessments. Clause 31 of the published draft also requires the agency to prepare each year a report on its activities during that year. Copies are to be sent to Ministers and must also be laid before both Houses of Parliament. The noble Lord, Lord Beaumont, expressed his worry that the NRA's environmental duties might be taken away from it when its functions are transferred to the agency. We have listened to concerns expressed that the agency is to be given a less effective duty to protect and conserve the environment than the NRA has now. We have amended the wording to make it clear that the agency is to have a strong and effective role for protecting the environment and that that is what its core functions are all about.

The noble Lord, Lord Beaumont, questioned the wisdom of the local management of waste functions being transferred from local government to the agency. It is essential that the local waste regulation function is transferred to the environment agency. It would be impossible to provide an integrated approach to the control of pollution and waste if more than 80 authorities in England and Wales continue to operate separately. This proposal was announced following the Government's consultation exercise in 1991 on the agency's core functions. But this is not to denigrate the achievements of local waste regulation authorities or any of the bodies which will be incorporated into the agency. I would expect the agency to consult and to co-operate with local authorities where this is necessary and appropriate in the context of its effective operations.

The noble Baroness, Lady Nicol, expressed criticism of the fact that there is no scientist on the advisory committee. We have appointed an advisory committee which contains a range of expertise relevant to the agency's functions, including environmental protection, business and local government. Many members of the agency's staff will of course have a scientific background and I feel sure that there will be no lack of expertise in that direction.

The noble Lord, Lord Williams, raised a questionmark over the fact that amendments to the Bill have been announced already. The provisions published by my right honourable friend on 13th October were draft provisions; clauses and schedules to set up the two new agencies reflecting the stage we had reached over a month ago. This early publication, as my noble friend Lord Crickhowell was kind enough to point out, was a new and virtually unprecedented initiative. It was intended to give interested parties a chance to inform

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themselves of the details of the proposed legislation before it is introduced into Parliament. My right honourable friend stated that the provisions would continue to be refined in the period prior to presentation to Parliament, and that is what is being done. I was grateful for the welcome which many noble Lords have given to the new wording of the clause on the agency's conservation duty.

My noble friends Lord Selborne and Lord Crickhowell referred to the polarisation of debate on the agency and other environmental measures on the question of regulation versus incentives. The Government aim to shift the emphasis away from regulation as the only means of achieving environmental objectives and targets, and to use incentives of economic instruments and voluntary environmental action to complement legislation and avoid the need for excessive and over-detailed regulation, but regulation will continue to play a vital role in protecting the environment.

Such regulations should be clear, fair and as proportionate as possible and should be implemented in a professional and consistent manner. Creating a body which will do that has been one of the Government's key aims in establishing the agency. The environment agency will be good for the environment and good for industry. It will benefit business by bringing together the different regulatory regimes in a single body, but certainly not at the expense of environmental protection.

My noble friend Lord Mills spoke about the concept of sustainable development. As my noble friend said, the agency will make an important contribution towards promoting sustainable development through the way in which it carries out its functions. It can be difficult to define in practical terms what sustainable development might mean in specific cases, although we have the guiding principle of the Brundtland definition which my noble friend quoted in his opening speech.

It is particularly difficult to define in precise legislative terms what sustainable development might mean for the agency in future years. However, it is not appropriate for the agency to have to decide what sustainable development means, nor to make policy decisions about what the overall balance of industrial development and environmental protection should be. That is a role for government. It is, however, right that the agency's aims and objectives should reflect the contribution it can make in the light of guidance from Ministers. That is what the provision in the Bill seeks to secure.

My noble friend Lord Mills also asked about resources for the agency. Transitional costs will be dependent on decisions yet to be taken on the new body's management and geographical structure, the location of offices and other management strategies. Offsetting savings will arise from efficiency gains through rationalisation. The net effect is likely to be small relative to the agency's overall budget.

The noble Baroness, Lady Hamwee, spoke about local democracy and quangos. Accountability and responsiveness to individuals' concerns do not necessarily require control through local authorities. Building on the success of the NRA, the agency will be

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a non-departmental public body accountable to Parliament through Ministers and subject to clear financial controls. We look to the new body to ensure transparency in the way it conducts its affairs and adherence to Citizen's Charter principles.

The agency will have three sets of regional and local committees concerned with environmental protection, fisheries and flood defence. We would expect a wide range of local interests to be represented.

I was sorry to hear the remarks made by the noble Lord, Lord Williams, that the relatively infrequent attenders of your Lordships' House should spare themselves the trouble of coming. Besides being somewhat ungracious to noble Lords on all sides of the House, his sentiments run directly counter to those expressed by the noble Lord the Leader of the Labour Benches when he responded to the gracious Speech last week. It is one of the strengths of this House that its expertise lies not only in those who attend every day but also in those who give us the benefit of their wisdom when time permits and when the right opportunity arises.

Many noble Lords, including my noble friend Lord Mills, made detailed points about the Government's proposals for the agency. My noble friend Lord Ullswater looks forward to dealing with those points when he speaks to the Bill at Second Reading and later stages.

The noble Baroness, Lady Thomas of Walliswood, spoke of her experience in local government and of her particular interest in transport policy. The Government are concerned that smoky emissions from badly maintained vehicles do considerable damage to the appearance of buildings, and vehicle fumes can lessen the quality of life for all who live and work within the urban environment. The claim sometimes made that 10 to 12 per cent. of motor vehicles are responsible for 50 per cent. of vehicle produced air pollution is not borne out by government research. It is likely that the contribution of the worst 10 per cent. of vehicles is somewhat closer to 25 per cent. of pollution.

However, the Government are committed to tackling the problem of gross polluters, although that alone will not solve the whole problem of traffic pollution. In October my right honourable friend the Secretary of State for Transport launched a concentrated series of roadside spot checks aimed at catching gross polluters. I am sure that the noble Baroness will welcome that.

The noble Lord, Lord Phillips, showed us how valuable a Member of the House he is likely to prove. His balanced analysis of the opportunities and problems associated with animal and plant biotechnology was one to which I am sure we will return whenever that important subject is debated over the years ahead.

We were delighted and grateful when my noble friend Lord Norrie introduced his National Parks Bill in the last Session. I became aware of the almost universal support for the Bill and the amount of good will which my noble friend generated by its introduction. He asked in particular about the revision of national park purposes in line with the recommendations of the Edwards Report. We have considered very carefully the recommendations of the Edwards Report and those put

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to us by the countryside agencies in respect of revisions to national park purposes. The national parks, as the jewels in the countryside crown, require particular care and attention. I am confident that our proposals for revised purposes reflect the special needs and qualities of those most precious areas.

The noble Lord, Lord Beaumont, expressed his concern about development in national parks. Our policy on development in the parks is set out in the planning policy guidance note on the countryside and the rural economy. That is that major development should not take place in the parks save in exceptional circumstances. Any proposals for such development should be subject to the most rigorous examination.

My noble friend Lord Crickhowell asked whether the national park clauses in the environment Bill replicate those of the Bill of my noble friend Lord Norrie last Session. I can confirm that the environment Bill replicates the provisions in my noble friend's National Parks Bill.

The noble Baroness, Lady Nicol, asked about the extent of the proposed legislation for new national parks authorities. All of our commitments to legislate will be reflected in the Bill. The Bill's provisions will set out a comprehensive framework within which the new authorities will conduct their business. We also intend to issue a circular which will fill out and expand upon that framework.

The noble Lord, Lord Palmer, and the noble Lords, Lord Mackie of Benshie and Lord Geraint, referred to the importance of hill farming. The Government remain firmly committed to the continuation of extensive livestock farming in the hills and uplands and to the HLCA scheme itself. That is demonstrated by the total estimated expenditure of around £546 million this year in subsidies to some 67,000 sheep and cattle farmers in the less favoured areas. We expect that the total subsidies on cattle and sheep in the LFAs in 1995 will amount to more than £600 million. Those are substantial sums. They demonstrate the importance that the Government attach to that sector of the farming industry and the contribution which it makes in environmental, social and economic terms to the well-being of upland areas.

The noble Lord, Lord Palmer, also spoke about the importance of alternative and industrial crops. We are keen to encourage the development of viable alternative crops. Crops for industry and energy are an exciting and positive use of set-aside land as well as a sustainable and renewable source of raw materials for industry and an opportunity for new rural enterprises. When she was Minister for Agriculture, my right honourable friend Mrs. Shephard launched a consultation document called Alternative Crops: New Markets at the Royal Show to stimulate debate on that subject. We are now looking at responses to that consultation paper. A new Alternative Crops Unit has been formed within MAFF to act as a catalyst and help bring together people with an interest in the subject.

The noble Lord, Lord Williams, asked about local government reorganisation. He suggested that it was a shambles. Far from it, my Lords. The Local Government Commission has published 19 final reports and my right

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honourable friend the Secretary of State for the Environment has announced decisions on 10 of those. We are getting on with the job of implementing the recommendations for those areas for which we have announced reorganisation in 1996. The Local Government Commission is drafting the remaining reports which are due by the end of December.

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