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Lord Whitty: Under the revised EU sheepmeat regime national envelopes were introduced to provide member states with an element of flexibility in how they support their sheep sectors; funds under the envelope can be used to provide extra support to producers, improve the marketing and production of sheepmeat and encourage more environmentally friendly farming practices. National envelopes can be implemented on a regional basis; this is being done in the United Kingdom.
In England, the national envelope is worth £5.4 million in 2002. There is also a provision in the revised regime permitting member states, or parts of member states, to increase the size of the national envelope by reducing the basic rate of sheep annual premium by up to one euro. This could increase the size of the envelope in England by around £5 million.
The Government issued a consultation letter in January seeking views on how the national envelope should be used in England. We have now considered the responses we received, and have reached decisions on the way forward.
For the transitional year of 2002, we intend to introduce a scheme to reduce sheep numbers in areas subject to historic overgrazing. Under the scheme the Government will purchase sheep quota from producers, who in return will be required to undertake to maintain lower stocking levels on the land in question. The scheme will operate by tender; in deciding which offers should be accepted we will take into account both price and other relevant factors such as the extent of historic overgrazing. This scheme will be open for applications in the autumn, and we hope that offers will be dealt with before the close of the next quota-trading period.
£2 million will be allocated to the quota purchase scheme in 2002. The remains of the 2002 national envelope will be paid to producers as a top-up to sheep annual premium payments; this will be worth some 46 pence per eligible animal.
For 2003, and in subsequent years, we intend to make full use of the opportunity in the new regulation to increase the size of the national envelope by reducing the rate of the sheep annual premium. This will enable us to fund a range of schemes from the national envelope.
The quota purchase scheme will be retained in 2003 and beyond; the level of resources allocated to the scheme will be decided in the light of our experience this year, but we expect it to be at least £1 million a year.
The Goverment believe that these schemes will make a major contribution towards addressing the problem of historic overgrazing in the uplands and improving the responsiveness of the sheep industry to the market. We recognise, however, that schemes funded from the national envelope can form only one element of the co-ordinated programme of measures needed to restore habitats damaged by historic overgrazing. We will be looking to English Nature to take appropriate action under the Countryside and Rights of Way Act, encouraging producers to make use of agri-environment schemes and considering what steps we can take, including use of the cross compliance rules where appropriate, to reduce stocking pressure on land in unfavourable environmental conditions.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): As of 20 June this year, the stock market had fallen in value by almost exactly one third to 4,639 points from its peak at 6,950 points in December 1999.
The overall effect of this fall on the value of pension funds is dependent on individual pension fund asset distribution, determined by individual scheme investment strategy. However, since a substantial proportion of all pension funds are invested in equities, it follows that the reduction in their value is likely to be of the same general order as the overall reduction in stock market values.
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