Previous Section Back to Table of Contents Lords Hansard Home Page

Earl Russell: My Lords, I am most grateful to the Minister for allowing me to intervene. I believe that the 1992 regulations allow the division of child benefit between separated parents with shared care. I have corresponded about that with his noble friend Lord Astor. The point I raise concerns the operation of those rules. I believe that it is not altogether satisfactory at present.

Lord Mackay of Ardbrecknish: My Lords, perhaps the noble Earl will forgive me if I first give an explanation in regard to the broad picture. I shall check later on the particular point about which he asked me. Perhaps he will allow me to finish my point.

The other working partner would be able to claim earnings top-up. We would not wish to disqualify from earnings top-up any person who has shared responsibility for the child. That means that the answer to the noble Earl's question--whatever has been the situation on previous rules or however he interprets them--is no; there ought not to be a difficulty on that point. It is either family credit or earnings top-up. There ought not to be somebody, so to speak, caught in the middle.

The noble Earl asked me about Regulation 7(4) and why only one person in a household may claim. That is simply a practical matter. Otherwise, earnings top-up would be taken into account as a resource in assessing someone else's entitlement to earnings top-up itself. I do not feel that it passes any judgment on marriage, cohabitation or anything else.

The noble Baroness suggested that family credit may take the strain of falling wages. Her argument might be more persuasive if family credit recipients remained static on the benefit for long periods. But, in fact, most couples receive family credit for only six months or a year. That rather discounts the idea that the benefit encourages low wages. But so far as concerns earnings top-up, that is one of the issues on which we shall expect the researchers to come up with some answers. That is the situation. Certainly, we have no evidence that employers take family credit into account when they decide on wage rates. We believe that employers will continue to pay what is necessary to recruit the quality, experience and skills that they need.

23 Nov 1995 : Column 438

As I expected, we came toward the territory of the minimum wage versus these in-work benefits. Some, like the noble Baroness and the noble Earl, continue to argue that the minimum wage would be a more effective way of assisting low earners.

Baroness Hollis of Heigham: My Lords, I am sorry to interrupt the noble Lord. We do believe that it is a more effective way of helping low earners. The push of our main argument was that to adopt in-work benefits without a wage floor, a minimum wage, is to ask the taxpayer to pay the Bill for falling wages.

Lord Mackay of Ardbrecknish: My Lords, I believe that I answered the question about falling wages. There is no evidence that family credit acts in that way. We believe that employers pay what is necessary to recruit the kind of workforce that they want. Indeed, in 1994 a study by the Institute of Manpower Studies showed that there was no evidence that the availability of family credit influences wage levels.

Baroness Hollis of Heigham: My Lords, I am sorry to interrupt the noble Lord again and it is kind of him to give way. The point that I am trying to make is that family credit at the moment is payable only to a small proportion of the workforce. The employer will not necessarily know which people are claiming family credit because he does not inquire into their circumstances. But when, as now, possibly every blue-collar member of a small company, whether single, in a couple or with children, would all receive a top-up benefit, then we fear that the situation would be very different. It will depress wages because the employer will know that the taxpayer is taking the strain.

Lord Mackay of Ardbrecknish: My Lords, I believe that I covered that point in some detail by saying that the wage rates and the wage position in the areas involved will be one of the factors that the researchers will be asked to examine. They will be able to make comparisons with the control areas where the pilot exercise is not taking place. I hope the noble Baroness will accept that, although we do not agree with the premise underlying her argument, we shall take steps to put the matter to the test of the researchers.

Let me return to the general argument about either underpinning in-work benefits with a minimum wage or having a minimum wage instead of in-work benefits. A recent report by the Institute of Fiscal Studies said that from tests that were done on the minimum wage:

    "the richest 30% of the population actually [have] a larger net gain than the poorest 30 per cent. This is because ... the large majority of those on very low wages are members of a family or household in which other members are earning a higher wage ... those people most affected would be young single people living at home with their parents and the wives of working husbands ... this means that the effects on poverty and inequality would be small".
I believe that the argument goes a good deal wider than that.

Perhaps I may give your Lordships two or three statistics about three countries. Country A has 68 per cent. of its population of working age in employment; it has 8·2 per cent. unemployment, as measured by the International Labour Organisation; and it has a 13·6 per cent. youth unemployment rate. Your Lordships may

23 Nov 1995 : Column 439

feel that that is not a very satisfactory position. But country B has only 60 per cent. of its working age population in work; it has 11.4 per cent. unemployment; and it has 27 per cent. youth unemployment. Country C has only 45 per cent. of its working age population in employment; it has 22·2 per cent. unemployment; and it has 40·6 per cent. youth unemployment, as measured by the International Labour Organisation.

If one were to listen to the Opposition, one would be inclined to think that country C, with the worst record, was Britain and that the Social Chapter and a minimum wage would bring us to country A. But I fear that the noble Earl will spoil my next line.

Earl Russell: My Lords, the Minister is no doubt aware that all that he is saying is that the philosophies of which we complain are international.

Lord Mackay of Ardbrecknish: My Lords, I shall come to that in a moment but perhaps I may just finish my point. In fact, country A is the country without a minimum wage and which has not signed up to the Social Chapter. It is in fact the UK. The other two countries are France and Spain. I noticed that the noble Lord, Lord Desai, seemed well aware of my point almost before I started to make it.

That brings me to my general point, which the noble Earl allows me to make. At one stage in the noble Baroness's speech she told us that all would be well--motherhood and apple pie would be in vogue--if only the Labour Party sat on these Benches, and unemployment would be non-existent. Those were great promises. But the fact is that unemployment is a world-wide problem. Governments of all complexions throughout the world have to tackle it. As I said, citing two of our close neighbours on the Continent, we have a markedly better record than they do; but we can and must do better. All the schemes that I have mentioned, including the earnings top-up, are designed to try to attack the problems of unemployment and to help those people who have low skills and low earning capacity to get into work.

We know from all the surveys--the noble Baroness has told me about it on a number of occasions and we agree absolutely--that once a person gets into work he or she has a far better chance of getting into better and higher paid work than if he remains unemployed. I believe that this pilot will help us judge whether this scheme will be a way to advance that objective.

On Question, Motion agreed to.

EC Beef and Veal Regime: ECC Report

4.50 p.m.

Lord Middleton rose to move, That this House take note of the Report of the European Communities Committee on the EC Beef and Veal Regime (13th Report, HL Paper (1994-95) 81).

The noble Lord said: My Lords, I should perhaps declare an interest in the subject of this debate in that I am a director of a farming company which produces, among other things, cattle for the beef market.

23 Nov 1995 : Column 440

Community support for beef and veal was introduced in 1968. When the European Communities Committee last reported to the House in 1989, we drew attention to the fact that, over the previous 10 years, production of beef had consistently exceeded consumption and that massive surpluses had built up. However, largely as a result of the 1992 CAP reforms, the beef mountain has been virtually eliminated. All remaining intervention stocks are expected to be sold off this year.

One may ask why we needed to hold another inquiry. It was done for these reasons. First, it is clear that if nothing further is done to reform the beef regime, surpluses may well return towards the end of the 1990s, for the reasons set out in the report. Those are that beef production is cyclical and the next peak of the beef cycle is expected by the Commission to be in 1997-98; that beef consumption has declined in the EU as well as in the UK. People are eating less beef and more pork and poultry, which are relatively cheaper. There is, too, some customer anxiety on the health aspects of meat eating. A further reason is that progressive limitation on exports are imposed under GATT which will at the same time allow for more cattle imports into the EU.

The second reason for holding the inquiry was that the regime is an extremely expensive one. After cereals it forms the next largest item in EAGGF expenditure, forecast this year to reach over 5 billion ecus. I do not need to remind your Lordships that an ecu is worth around 80p.

Thirdly, the Commission and Council of Ministers are to review all livestock quotas in 1996. Fourthly, consideration is taking place this year in the Commission of the agricultural implications of enlargement to accommodate accession by the central and eastern European countries. Fifthly, our attention was drawn to the report of the Court of Auditors which focused on the beef intervention system and the opportunities for fraud. Lastly, veal production and the export of live calves give rise to strong animal welfare concerns.

We therefore felt that, if changes are to be made to the beef regime, they are better made before surpluses begin to build up again. At this stage, perhaps I may express my gratitude to the Clerk to the European Select Committee, Mr. Pownall, for so ably seeing us through this inquiry and for his work on the report in a period when Sub-Committee D was without a clerk of its own. I am grateful too for the work and support of my sub-committee colleagues and for the response by the Ministry, which is broadly supportive of our recommendations.

I turn now to the report where Part I introduces the subject. Part II outlines the beef regime as it now is, reflecting the changes made since it was introduced. A fuller guide is provided by Annex A of the memorandum by MAFF on page 4 of the evidence section. It can be summarised as follows: the external mechanisms of the regime are import charges and export refunds. The first give protection to such an extent that imports of beef are in practice restricted to the relatively small amount of imports made under preferential access

23 Nov 1995 : Column 441

terms. Export refunds are, in effect, subsidies enabling Community surpluses to be exported competitively to countries outside the EU with lower market prices.

Internally, direct producers' assistance is provided, first, by means of the beef special premium--BSP--which is paid in two instalments on each of a producer's first 90 male beef animals within a defined age range. Expenditure on that scheme is controlled by means of a regional ceiling on claims. Secondly, it is provided through the suckler cow premium scheme payable annually on each cow forming part of a specialised beef breeding herd. There is a ceiling on the suckler cow scheme expenditure in that payments are limited by individual producer's quotas, calculated according to the number of cows in that producer's herd in 1992. Indirect or end-price support for beef consists of intervention buying whereby excess supplies are purchased and removed from the market for eventual resale.

Part II also describes the pattern of beef and veal production and the tables and figures illustrate the cost of the regime, the decline since 1992 of intervention buying and the relative production of the member states. Tables 4 and 5 illustrate the fact that the greater proportion of beef and veal originates from dairy cows.

Part III sets out the views of witnesses on the main issues raised. In that regard I thank those witnesses for the care with which they presented their evidence.

In the opinion section, Part IV of the report, we call for early reform of the regime and suggest that it should be done in a manner consistent with our previous CAP reform recommendations. We had to consider what reforms were radical enough to make an impact on the budget, but not so drastic as not to be practical and achievable. At the same time we were mindful of the relative importance of beef production in the economies of member states, especially in the UK and of Scotland in particular, where it is the single most important sector of their agriculture.

In our 1991 report on CAP reform we called for a lower degree of protection of the Community's agriculture with these words:

    "The prime means of reform should be reduction in the levels of agricultural support, progressively and to a set time scale towards World market prices".

As I said earlier, end-price support for beef and veal consists of intervention buying. The 1992 CAP reforms provided for progressive intervention price reductions (by 15 per cent. over five years) and a halving of the quantity of beef that could be brought into intervention over the same period. That was effective, as I explained, in cutting down surpluses. What we now recommend is that intervention should be phased out altogether, leaving only safety-net intervention as a last resort in an emergency.

Looking back again at our 1991 CAP reform report, we concluded that,

    "Reform of the CAP would be facilitated by the conclusion of an agreement in GATT",
and that,

    "cuts in support prices will enable adjustments to be made in the levels of export refund payments and in import controls".

23 Nov 1995 : Column 442

The recent GATT agreement will soon impose limits on the volume and value of beef exports. That and the reduction of price support by cutting out intervention in the manner we recommend will go a long way towards reducing export refunds. These, to quote again from our 1991 report,

    "are one of the most objectionable of all CAP instruments. Not only does their existence invite manipulation by fraudsters, but they seriously destabilise World markets".

The last thing that can be said about the beef special premium is that it is uncomplicated. In the UK, where we are meticulous in these matters, this scheme together with the refinements attached, such as stocking densities and extensification premiums, is very complicated and very expensive to run. Furthermore, the total cost to the EAGGF budget of the BSP alone in 1995 is forecast at £1 billion. Accordingly we recommend that the BSP scheme be abolished. We say that if that would not be negotiable, then we should at least cut out the second instalment of the premium payment. We also say that the BSP should be made easier to administer by removing the 90-head limit. That would not increase expenditure, given the regional ceiling already in place.

The suckler cow premium scheme is forecast also to cost the EAGGF budget £1 billion in 1995, so we took a very hard look at it. It too is complicated and expensive to administer. We were, however, impressed by evidence, first, that it is those herds supported by this scheme which produce the best quality beef and, secondly, that beef breeding enterprises fulfil a vital environmental and economic role in the poorer upland areas. For these reasons we recommend that the suckler cow premium scheme should remain in place, though we see merit in replacing individual quotas by regional ceilings.

The European Union provides support for the marketing and promotion of quality beef so as to stimulate and encourage demand. We commend the European quality beef scheme and recommend its extension.

On the subject of veal, we applaud the efforts made by the UK Government in giving the lead to moves towards ending the crate system of rearing veal calves and in promoting and in reaching agreement at the June agriculture council on a framework of law covering the welfare of animals transported throughout the Community. We note the very small UK market in veal, at about 2,000 tonnes compared with 700,000 tonnes in the rest of the EU. Of this 2,000 tonnes, only 400 is from British farms. Nevertheless, we applaud the efforts of MAFF and the Meat and Livestock Commission towards promoting and expanding consumption of home-produced veal. This will be uphill work until consumers are educated to accept the pink colour of veal produced in a "welfare-friendly" system.

Finally, for all the reasons which I have put before your Lordships on many occasions, the momentum of CAP reform must be kept up. I hope that this report sets out in a convincing manner why further changes to the beef and veal regime should now be made. I commend it to the House.

Moved, That this House take note of the Report of the European Communities Committee on the EC Beef and Veal Regime (13th Report, HL Paper (1994-95) 81)--(Lord Middleton.)

23 Nov 1995 : Column 443

5.4 p.m.

Baroness Robson of Kiddington: My Lords, I wish to ask your Lordships' permission to leave before the debate is over. I have to attend a memorial service of a very dear friend of mine and I should hate to miss it. I thank the noble Lord, Lord Middleton, for his comprehensive introduction of the report. It was so comprehensive that there is very little left for anyone else to add considering that we were in agreement in the committee on the recommendations put forward. I thank the noble Lord for his kind but firm chairmanship of the committee. It was a pleasure to work with him. I am sorry to say that I have now been ousted from the agriculture sub-committee, so I shall miss his chairmanship in the future.

It is always difficult to follow the introduction of a report. All I can do is highlight what I feel are some of its most important recommendations. As the noble Lord, Lord Middleton, said, people may be entitled to ask why we have inquired into the beef regime in view of the fact that the surplus beef in intervention seems to have been disposed of since the CAP reforms in 1992. However, as the noble Lord mentioned, there are disturbing forecasts of more surpluses at the end of the 1990s. An additional problem arises with regard to the implications of the enlargement of the Community to the east. It is therefore the right time to look into the beef regime. For once it would be nice if we could take action before something goes wrong rather than wait until it does as it is then much more difficult to deal with the problem.

The committee was sensitive to the problems of an industry which by its very nature requires long-term planning. You cannot switch in and out of beef production in the same way as you might switch types of cereal production or even go in and out of cereal production. In consequence, we realised that the sudden and complete abolition of the beef special premium is not feasible at this moment. However, there are strong arguments, as the report points out, for beginning the process of abolishing the beef special premium by starting with the second beef premium payment. Changing to a one-off premium would have beneficial effects but it might be necessary for a transitional period for the first premium to be somewhat increased in order to reduce the worst effects on the agricultural industry. However, that would be only for a transitional period because the aim is to abolish the beef special premium.

The reason for abolition was mentioned by the noble Lord, Lord Middleton. It would reduce the administrative burdens both on the industry and on the Government. It would therefore create savings. The second beef premium is an inducement to keep cattle longer than necessary, sometimes giving rise to the production of lower quality beef. We want to produce the highest possible quality of beef.

It would mean substantial savings for the Community budget if export refunds could be reduced--in my view, they should be abolished altogether--because the 1995 forecast of the cost of export refunds is 1.351 million ecus. That is almost one-fifth of the figure mentioned by the noble Lord, Lord Middleton. I agree with the

23 Nov 1995 : Column 444

noble Lord that perhaps the most important effect of reducing export refunds is the reduction in the risk of fraud. It would also help the administration if the limit for the payment of the beef special premium was reduced, so long as the regional ceiling on production was kept in place.

The noble Lord also mentioned the suckler cow premium. That form of support has two beneficial consequences. First, as the noble Lord mentioned, it is the source of high quality beef production. Surely that is what we want to support. Secondly, it fulfils a vital environmental and economic role in the upland areas. I presume that one could argue that the environmental and economic benefits should come from a different budget to the CAP. However, given that that does not happen at the moment, I would hate to see the support removed until we have sorted out the question of from which pocket in the Community those environmental benefits should be paid. I agree that the quota system should be abolished and replaced by a regional ceiling.

On animal welfare, I pay tribute to the Government's efforts in achieving some agreement in Europe on the transport of live cattle and for ending the veal crate system in the United Kingdom. However, we still have a long way to go. I sincerely hope that Her Majesty's Government will continue to make that effort. We must press for improvements. However, as long as we have dairy herds in this country we will produce a large number of calves. Much effort will have to go into promoting what is called "welfare friendly veal". I am told that it is difficult to persuade people that welfare friendly veal, which is not as white as imported veal, is as good or as tasty. From personal experience, I find that it has a better flavour than that funny white stuff that comes in across our borders. In particular, we must persuade the catering industry that welfare friendly veal makes very good eating. Every citizen in the country can help the farming industry. Whenever we go to a restaurant or supermarket we should ask for English veal. In that way we can do an enormous amount to help our agriculture industry. I commend the report to your Lordships.

5.14 p.m.

Lord Gallacher: My Lords, consideration of this report in your Lordships' House has been somewhat delayed yet we on these Benches regard it as still highly relevant. The report strikes a cautious note, but it is progressive in its general thinking. As always, clarity of presentation features in a report from the Select Committee on the European Communities. Only occasionally in this document do I notice what I would describe as a slightly equivocal note. The report states, for example, that the beef market is in better shape. That may be so, but the shadow of BSE is still very much with us here in Britain.

Quotas are due for review in 1996 and the Commission is forecasting a build-up of stocks in 1997 and 1998. Setting a timescale towards world market prices is not without risk given a seven-year production cycle. One recalls, if one is old enough, the serious world price fluctuations in the 1950s when the United

23 Nov 1995 : Column 445

Kingdom deficiency payments scheme applied; for example, prices of South American imports sometimes rose sharply and the additional supply estimates that were necessitated gave rise to considerable parliamentary rows.

Details of the common agricultural policy costs of the present regime for beef and veal are given in paragraph 40. The noble Lord, Lord Middleton, and the noble Baroness, Lady Robson, have already referred to them. The beef and veal regime is still costly. It is wise to emphasis the sensitivities of the regime. Current intervention usage is reduced but, in our opinion, that position could change. The evidence of the Ministry of Agriculture, Fisheries and Food (which is endorsed in the report at paragraph 48) favours further controls on the intervention mechanisms which were started in 1992. We wonder whether that is still MAFF's view.

Again, the report supports MAFF, as opposed to the arguments advanced by the farmers' unions for both England and Wales and for Scotland, in seeking to phase out quotas which were described by MAFF as both cumbersome and restraining. We note the proposal in paragraph 46 that individual suckler cow premium quota allocations should be replaced by regional ceilings.

Turning to export refunds, all parties accept that the export refund system is a potential source of fraud. Indeed, MAFF's evidence to that effect is unequivocal, even though the refund system is operated by the Intervention Board. The stability of the Community regime rests on regular exports and costs are high. The GATT agreement will ultimately restrict the volume and value of beef exports, but one wonders what effect those restrictions will have on the European Union market, especially a market perhaps augmented by east European imports. If one were to suggest that export refunds would be better controlled if the Intervention Board had its own marketing arm, one would doubtless be told that that would be contrary to the Treaty of Rome. Nevertheless, one cannot help reflecting that dire and continuously serious situations may call for drastic remedies such as a measure of direct selling.

I turn now to BSE. The slow decline in new cases following the measures taken by agriculture departments give some cause for hope. Exports, as well as domestic trade, heavily depend on the continuance of that trade.

Turning to animal welfare, we too congratulate Her Majesty's Government on their hard fight in the Agricultural Council for better rules for animal welfare during animal transport. The directive 95/29 is the result and the deadline for the implementation of that directive is 31st December 1996. The United Kingdom consultation process is now underway. Parts of the directive are straightforward; for example, on loading densities and improved enforcement methods. However, other aspects such as the licensing of transporters and competence requirements for hauliers and handlers are complex but essential. If the United Kingdom could increase exports of meat on the hook, the long-term position would be more satisfactory. That leads me to ask where the responsibility rests for the promotion of export sales on the hook as opposed to the live animal trade.

23 Nov 1995 : Column 446

The MLC has its European offices in major EU countries. Food from Britain is also export-oriented. Of course, the buyer is sovereign here as elsewhere, but marketing inducements have a part to play. One hopes that that aspect of the problem is not forgotten in the welter of information on this question which sometimes comes our way.

The changing character of our domestic retailing scene continues to emphasise the dominance of multiple supermarkets. Their share of red meat sales is now 54 per cent., and five companies supply 48 per cent. of that. That represents market power in any language, not only buying but selling, and especially in determining gross profit margins. Central packing of meat by multiples is 65 per cent. That information comes by way of the annual MLC report published a few days ago. In that connection, trading trends are also important.

I turn to veal, and I note that paras. 50 and 52 of the report refer to UK sales of veal. That question has already been touched upon by both previous speakers. Even the "welfare friendly" variety of veal has disappointing sales. While there is scope to increase sales, and while the ending of the veal crate system should help exports, if the EU can be persuaded to end that system, a surplus situation seems likely to persist and yet the production of male calves will continue.

In that connection, the work of the Hannah Research Institute in Scotland, which is government supported, is of importance. It is aimed at extending indefinitely the period of lactation, thereby obviating the need for dairy cows to produce calves annually. As the noble Earl who speaks on Scottish affairs in your Lordships' House has responsibility also for agriculture in Scotland, it may be of interest to have a progress report on that research, especially as I believe that the Select Committee on Agriculture in another place is at present undertaking a comprehensive study of the UK milk industry.

We have had an interesting debate, even if the number of speakers is disappointing. The noble Lord, Lord Middleton, presented the committee's report in an excellent way. We look forward, without any trepidation whatever, to hearing what the noble Lord has to say about the Select Committee's endeavours.

5.22 p.m.

Lord Lucas: My Lords, I should like to congratulate my noble friend Lord Middleton and his committee on the thoroughness of their analysis of this complex regime. The committee took evidence from the wide spectrum of interests involved in the beef sector. It was faced with a large number of sometimes conflicting arguments, but it has succeeded in producing a report which sets out clear views on the regime and ideas for change. The Government welcome the report and agree with its underlying theme that the beef and veal regime is expensive and badly needs to be further reformed. The Government have long been critical of it.

High support prices in the Community encourage the production of large surpluses, the disposal of which, generally for export, is exceedingly costly. Not only does that entail a very high budgetary cost but it also works against the interests of both domestic and

23 Nov 1995 : Column 447

industrial consumers. The Government believe that the long-term aim must be the development of a more market-oriented CAP with, inter alia, a planned, phased reduction in support levels, including direct compensatory payments to farmers such as the beef special premium. We also agree with the committee that export refunds are too expensive.

We therefore welcome the fact that they have been constrained by the GATT agreement and that the Commission is taking this constraint seriously. Indeed it has led to significant reductions in beef refund rates in the past few months, most recently on 18th November by 25 per cent. across the board.

We share also the committee's concerns over fraud and agree that EU controls on refunds must be sufficiently vigorous to counter that. We share the committee's concern that increased production, falling consumption and GATT limitations on exports could lead to a build-up of beef surpluses between now and the end of the century.

The 1992 reforms have certainly been successful in reducing surpluses--beef intervention stocks have fallen from over 1 million tonnes barely four years ago to less than 20,000 tonnes today, as my noble friend said, but that may be only a temporary respite. The Government therefore welcome the committee's endorsement of our proposals to limit further the use of intervention and for phasing out so-called "normal" intervention, leaving "safety net" intervention for emergencies.

We welcome the committee's support for our aim of removing the 90-head limit on beef special premium claims and for replacing individual suckler cow premium quotas with national or regional ceilings. We continue to press for those changes but have not so far gained sufficient support from other member states to make their realisation a viable negotiating possibility.

We agree also with the committee's conclusion that a further supplement to the suckler cow premium from national funds is not justifiable.

So far as the second payment of beef special premium is concerned, the Government remain to be convinced that the case for abolition has been established. In particular, we are concerned that it will be difficult to devise a support system based on a single payment which is financially acceptable to the UK. The extensive production of beef from grass, as in the UK, would be likely to be disadvantaged relative to producers rearing intensive beef on cereals, as in Germany, Spain or Italy. That extensive production should be supported was a key principle underlying the 1992 reform of the beef regime.

The Government welcome the committee's endorsement of our efforts to promote in Europe the case for "welfare-friendly" veal. The Government are continuing to work hard in seeking an end to the cruel veal crate systems across Europe. At the same time, we have been looking at the scope for increasing the market for welfare-friendly veal in this country. Together with the Meat and Livestock Commission and producers, we have been encouraging caterers and retailers to look more favourably at the welfare-friendly UK product.

23 Nov 1995 : Column 448

That work includes new recipe development and new cutting techniques to make the best use of the whole carcass.

On BSE, the Government agree with the committee that beef markets currently closed on account of unfounded fears over BSE should be opened up. British beef is safe. There is no evidence whatsoever that BSE can infect humans, and any remote theoretical risk should be eliminated by the control measures that we have taken.

On the points made by the noble Lord, Lord Gallacher, yes, BSE cases have started to reduce very quickly. They are falling by about 40 per cent. a year in total. In the younger age groups of cattle they are falling much faster than that. We believe that all our predictions on how the epidemic would pan out will be realised and that we shall see an end of it before too long.

The Government agree with the committee that the UK is well placed to meet the demand for high quality beef and they welcome the effort which the Meat and Livestock Commission has put into the European quality beef scheme. They agree also that the quality beef specification should include Fat Class 4 and will continue to argue for that in Brussels.

Regarding the committee's suggestion that the scheme should be extended, the Government have yet to be persuaded that such an extension would represent good value for money. The EC agricultural budget is already overstretched. Moreover, the evidence that the current scheme has increased beef consumption (thereby reducing expenditure on intervention and export refunds) is far from conclusive. Nevertheless, given that the EC-funded promotion scheme exists, the Government will do all in their power to maximise the UK's share of total expenditure.

The committee referred to its 1991 report on the Development and Future of the CAP. The rural White Paper makes the Government's view of the present CAP very clear: it is costly, inefficient and wasteful. It disadvantages consumers and the food industry and does not pay due regard to environmental considerations. What the Government want to see is an efficient, prosperous and outward-looking agricultural industry which is able to safeguard and enhance the rural environment. The key to achieving that lies with progressive reductions in production-related support and the eventual abolition of supply controls. Remaining support should be better targeted towards environmental and other specific objectives, such as retaining farming in the uplands.

Improving the CAP along those lines should be of benefit not only to farmers but to all sectors of the rural economy. Equally, however, one must accept that achieving change will be slow and difficult. Most member states continue to feel that the 1992 reforms were painful enough and do not want to contemplate further change. However, the Government's aim is to take every opportunity to push the CAP in the right direction, using the conclusions of the CAP Review Group to further this aim.

23 Nov 1995 : Column 449

I am conscious that I may not have replied to all the points made in the debate, in particular to some of those made by the noble Lord, Lord Gallacher. I shall read Hansard and write to the noble Lord if there is anything further I need to say.

Your Lordships' committees enjoy an excellent, unrivalled reputation in the EU. This report's thorough and effective analysis of the beef and veal regime will, we trust, prove to be a stimulus for change and a point of reference for years to come.

5.30 p.m.

Lord Middleton: My Lords, I am grateful to all noble Lords who have contributed to the debate on the report and I am grateful to the noble Lord, Lord Lucas, for his reply.

There appears to be agreement with the committee's general conclusion that the beef regime is expensive and now is the right time for a further review before surpluses begin to build up again. I was grateful to the Minister of Agriculture, Fisheries and Food for assuring us in his response to our report that the Government will continue to press the point with the Commission and with other member states. It is very important that the pressure is maintained.

The noble Lord, Lord Gallacher, referred to BSE. I did not refer to it when I spoke for the sake of brevity and because I thought that the noble Lord, Lord Lucas, would refer to it, as indeed he did. Perhaps I may add my own inexpert comment that the control measures insisted upon by the ministry are probably more than adequate provided they are properly carried out. It is in everyone's interest that the greatest care is taken that the BSE measures are rigorously supervised and enforced.

As we said in our 1991 report on CAP reform, governments in the member states must recognise that perpetuation of protectionism in agriculture is neither in the interests of society as a whole nor of the taxpayers and consumers who fund the CAP.

On Question, Motion agreed to.

Next Section Back to Table of Contents Lords Hansard Home Page