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Earl Ferrers: My Lords, perhaps I may seek clarification on that point. As the Prime Minister is Prime Minister of the whole of the United Kingdom, is the Minister saying that that guarantee applies to Scotland as well as England?

Baroness Hayman: No, my Lords, I think I was saying the exact opposite. The Prime Minister is, of course, Prime Minister of the United Kingdom. As I understand the situation, the Scottish Parliament has legislative capacity over hunting issues in Scotland--the noble Lord, Lord Mackay of Ardbrecknish, is present and will correct me if I am wrong. Therefore, it is possible that the regime in Scotland could be different from that in England. I can, therefore, give the noble Earl reassurances in regard to England, but decisions regarding the nature of any legislation on the matter in Scotland are for the Scottish Parliament.

Earl Ferrers: My Lords, perhaps I may interrupt the Minister once more. When the Prime Minister made

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that important observation, which gave succour to many people, did he realise that he was actually excluding Scotland?

Baroness Hayman: My Lords, I am not sufficiently "on message" to be able to tell the noble Earl what the Prime Minister realised or did not realise. He normally realises quite well what he is saying. I almost wish that I had not dealt with what I thought was a simple issue raised by the noble Earl. If I spend too much time on specific issues I shall not get anywhere.

The debate has been well-informed. I was especially touched by the recognition on the part of the noble Earl, Lord Peel, that there are difficult choices to be made; and that choices may need to be made in the balance between long-term and short-term measures to support agriculture. Public money cannot be used twice. There must always be priorities in terms of public spending. Most noble Lords have recognised that a great deal has been done in the short term.

I must say to the noble Lord, Lord Rotherwick, that it is wrong to suggest that anyone has ever said that all is rosy, or has denied the state of the crisis in agriculture, or not recognised the very real, very personal consequences to which the noble Lord, Lord Carlile, the noble Baroness, Lady Byford, and others drew our attention. There are, among all the statistics, personal and family tragedies, and none of us should ever deny that. The farming industry is in deep recession. That has never been denied; nor has there been any turning of our backs on measures to help in the short term.

As well as the £3½ billion that goes into the CAP year on year, I remind the House of the packages of aid that have come in since May 1997: £150 million in early 1998; £120 million in November 1998; £150 million in September 1999, including some of the areas raised during the debate; the deferral of charges for inspections in relation to specified risk material from cattle and sheep carcasses; the deferral of charges for cattle passports; the money into HLCAs; the marketing support of £1 million, which was increased in October 1999 by a further £5 million; the £10 million of extra money that has gone into organic farming, which means that since we came to power there is now three times the area in organic farming or conversion.

Concerns have been expressed about abattoirs--I am well aware of those--and the charging regime for the Meat Hygiene Service. However, we have frozen the hourly rate of MHS charges for this year, and have guaranteed that they will not rise next year more than the rate of inflation.

The Countess of Mar: My Lords, will the noble Baroness kindly give way? There is a lot of misunderstanding in this industry. Will she make absolutely clear that it is just the hourly rates that have been frozen, not the number of hours? The number of hours is likely to increase in accordance with EU requirements.

Baroness Hayman: My Lords, I believe that I did use the term "hourly rate". I was trying to be careful. The

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noble Countess is right; there are problems in dealing with and implementing the regulations. We did freeze at 1999 levels the levels of veterinary supervision in low through-put abattoirs, but that does not apply to all abattoirs.

As was mentioned in the debate, we have also seen the £1.6 billion that will go into the rural development regulation over seven years; £300 million pounds of matched funding to match the effects of modulation, allowing us to double the countryside stewardship schemes; and the other help that will be given for skills training and marketing. The issue of young farmers was raised on several occasions. Those are areas that may well be of great benefit to young farmers. There have been the three red tape reviews that we have undertaken, together with the NFU, and the acceptance of the vast majority of the recommendations and work that is ongoing in relation to those. Mention was made of the announcement about the agreement reached with the industry on the pesticides tax.

I list those matters not just to remind the House of the Government's action but that even against that background, we are having this debate. I make no apology to the noble Earl, Lord Ferrers--with whom I hesitate to cross swords at this time in the evening--for emphasising what he called the long-term stuff. The long-term stuff is enormously important in terms of the CAP. We heard a wide variety of views on solutions to problems if not an analysis of the problems themselves.

Some trenchant speeches have followed a line that was not totally parallel with everything else that was said. However, opposition to the present state of the CAP probably united the whole House on this occasion. MAFF and myself feel that it is important to change the emphasis within the CAP, with a policy shift that reduces agriculture's reliance on subsidies based on production and focuses on support for the public benefits that agriculture brings.

There is recognition of the unique quality of agriculture. It is invidious to talk about the suffering of individuals from losing their employment in industries where families have worked for generations. That can apply to a coal mining community or one that has been dependent on shipbuilding, and can be as painful as for an agricultural community. We should not leave any such communities unsupported at times of enormous change.

My right honourable friend the Prime Minister made it clear in his speech to the National Farmers' Union that we recognise the interdependence of the environment, rural economy and countryside on the agricultural industry. We must make sure that the support given recognises that interdependence and supports the environmentally beneficial aspects of agriculture, with schemes that assist the role of stewardship of the countryside rather than perverse incentives.

The English rural development plan, in which we intend to invest £1.6 billion over seven years, sets out how we will deliver on that and other policy objectives,

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such as the encouragement of restructuring for the long term. As part of that, we are promoting non-food crops--an issue to which the noble Lord, Lord Palmer, referred and which has been debated at length in your Lordships' House. We share the noble Lord's desire to see effective use made of such crops. That fledgling industry, which is one we need to encourage, is an example of diversification. Although I accept that diversification is not available to everybody, some pockets of agriculture that are not suffering are those where people have successfully diversified and found a niche market.

My reading of the PIU report was not that rural economies and communities are rosey and blooming, and that everything is perfect there in a way that is not true of urban economies. The report pointed out the complexity of the issues. The noble Lord, Lord Carlile, expressed his concerns about depopulation in rural Wales. I do not have figures for the Principality, but the population of rural England has risen 24 per cent--four times the rate of growth for the whole country. The picture is more complex than simply everyone in the countryside suffering when agriculture has a difficult time. Different parts of the countryside have different problems. There are terrible pockets of deprivation, but there are also areas where things are not so bad. My noble friend Lord Hardy referred to issues that go wider than agriculture, such as rural transport and crime, which are important for the economic welfare of people living and working in the countryside.

As to what can be done in the short term, most of the debate centred on agrimonetary compensation. I was asked to give the Government's position, but I am unable to answer tonight. The Government are still considering whether to apply for the next tranche of agrimonetary compensation. That decision will have to be made soon.

Agrimonetary compensation is not free. It does not even require simply matched funding--to which the right reverend Prelate referred. Where compensation is compulsory because of the Fontainebleau agreement, the UK pays 71p for every £1 of agrimonetary compensation. If compensation is optional, 50 per cent is paid for by the UK and 50 per cent from EU funds, so it costs the Treasury--or the British taxpayer, as my noble friend Baroness Young pointed out--85p in every £1. That level of financing requires examination of the value for money that the industry overall would enjoy and relative priorities. Something that always concerns me and which we must consider carefully is the areas that would benefit from agrimonetary compensation. It would not benefit the whole industry.

Almost as much time has been spent talking about pigs as agrimonetary compensation. The pig regime, like the poultry regime in Europe, is extremely light and there would be no benefit. Choices may have to be made in terms of spending priorities.

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