The Minister of State, Department for Environment, Food and Rural Affairs (Mr David Heath)
May I say how grateful I am to my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) for securing this debate, because it is extremely timely? We are about to enter probably the most intensive period of debate in Europe on common agricultural policy. There were doubts about whether we would have agreement on the overall EU budget, but that is now in place and was agreed last week. The Agriculture Committee in the European Parliament voted on its amendments last month, and I am optimistic that we will secure an agreement on CAP reform during the Irish presidency. My hon. Friend raised that point and it is important not least because we do not want our agricultural businesses and farmers to have a prolonged period of uncertainty. They need to know exactly where we are.
My hon. Friend set out to some extent the broad parameters of last week’s deal in which the Prime Minister secured a reduction in the CAP of €55 billion—13% less than the current budget. We do not need to be apologetic that we have sought a reduction in the overall budget of the European Union, as that is consonant with what taxpayers and national Governments across the European Union are experiencing. We also do not need to be apologetic that it will have consequences for the size of the agriculture budget, as no sector can be entirely immune from the process. The key is to ensure that the available funds are used in the most effective way to support agriculture across the United Kingdom.
Although my hon. Friend was concerned, I see the additional flexibility of the 50% potential transfer from the pillar one budget to pillar two as a key part of that support. He mentioned the importance of high-level environmental schemes, and I want to ensure that those continue, because they have enormous value not only for the United Kingdom but for our wider environmental responsibilities. I also believe that our rural programmes are of enormous value and want to ensure that they are still intact. My hon. Friend’s concern is whether the transfer will effectively move money out of farming and into another pot. I understand that and perhaps we need to define better our terms for pillar two and pillar one.
For instance, the definition of greening measures is very important in determining whether they lie in pillar two or pillar one, and whether there is, in effect, a transfer of funding from pillar two to pillar one that compensates for money going in the other direction. I will go on to discuss greening in a moment, but if we had a process under which other member states were required to consider what they could do to introduce in their agricultural systems environmental support schemes such as those in this country, that would improve not only the comparative competitiveness of our industry, but the environment, and most people in this country would like to see that.
What are the Government’s priorities? Of course, we want to negotiate a good deal for farmers, for taxpayers and for consumers. What about in the long run? I do not resile from the view—this is the Government’s clear policy—that we want a common agricultural policy that continues to orientate itself to the market, that increases the international competitiveness of EU agriculture, let alone our own, and that increases the capacity to deliver environmental outcomes. Ultimately, we want an efficient and responsive agricultural sector in the EU and globally, and we want the future CAP to help to achieve that. That is why it is really important that the CAP continues on the path of reform and that we reduce, in the long run, our reliance on direct subsidy.
My hon. Friend asked about the extent to which we involve the priorities of the devolved Administrations in what we argue for, and I can tell him that we involve them fundamentally. It is really important that we hear what every part of the UK agriculture has to say about CAP reform, which is why we devote a great deal of time, both at official and ministerial level, to listening to the devolved Administrations and securing, as far as we can, a common UK position, on the basis of which we then negotiate.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I am reassured to hear the Minister say that he will continue to work closely with the Scottish Government on this issue. However, I wish to put on the record the fact that the Scottish Government’s top priority has been ensuring that a fair proportion of the allocation comes to Scottish farmers. The hon. Member for Brecon and Radnorshire (Roger Williams), who has led the debate so ably this afternoon, pointed out the disparities between the different beneficiaries of this policy; a level playing field just does not exist at the moment.
Mr Heath
However, there is of course a difference between the distribution per farm and the distribution per hectare. Scotland has a distorting factor, because there are very large holdings that are “lightly farmed”; these holdings sometimes fall within a definition that I know the Scottish Minister is keen to look at to see whether they are actively farmed at all. There are specific issues to address there.
I spent the past two days in Scotland talking to Scottish farmers and to Scottish Ministers, and I was there last week. As I say, we do listen carefully, for instance on the issue relating to the highlands, the definition of permanent pasture and how heather is treated. We have now secured a workable definition, which includes heather. That is important for Scotland and for Scottish agriculture, and it was secured by the negotiations in which we took part. I assure hon. Members from all parts of the United Kingdom that we take that matter seriously and we continue to listen.
Let me give another example. In Scotland, coupled payments are still a key part of the distribution mechanism, whereas they are not in the rest of the UK. Therefore, the fact that we can provide some cover within the national ceiling from, in effect, an English contribution to enable Scotland to persist with its schemes is important.
Mr Heath
I have given way once to the hon. Lady, and as the debate was secured by my hon. Friend the Member for Brecon and Radnorshire I really need to answer the points he raised.
Let us examine some of the other issues. The first is greening, on which we still have a lot to negotiate. The one thing that all member states were agreed on was that Commissioner Ciolos’s initial thoughts were not the answer. They were far too prescriptive and far too inappropriate in many areas. They displayed a lack of recognition that hugely different farming procedures are used, even in various parts of this country, let alone in the wider European family. What we want is a continued orientation of the CAP towards rewarding farmers for the public goods they deliver, which includes environmental benefits and protecting and enhancing wildlife, but not in a form that is over-bureaucratic and over-demanding in implementation, which may result in a tick-box mentality that does not help the environment and certainly does not help farming.
We believe that some of the proposals simply do not represent good value, whereas some of our existing agri-environmental schemes do. I hope everyone agrees that what we need is flexibility to allow local definition of environmental benefits and schemes that do not force people into inappropriate farming practices. I am hopeful that we will secure that degree of flexibility, but we should not take it for granted. The other thing we do not want is duplication, so that people are paid twice for doing precisely the same thing. There is a risk that the outcome of some of the European Parliament proposals will be farmers being paid once under pillar two and once under pillar one for doing exactly what they are doing now. I doubt our taxpayers would thank us for that. It is important that we reach a successful outcome.
My hon. Friend mentioned George Lyon, who is one of the beacons of common sense on the European Parliament Agriculture Committee. I have worked closely with him, and we certainly want to continue to do so in the future.
Our concerns in relation to intervention in the market have been well rehearsed. We have been clear over the years about our desire to reduce the reliance on trade-distorting measures and the importance of the CAP sticking to that path of reform. That is where we part company with the European Parliament Agriculture Committee, because many of the amendments voted through there would move us backwards, away from market orientation, and increase budget pressures for old-style market support. There is a place for recognition of the need to support some farmers, especially hill farmers and those in less-favoured areas. I stress that and argue in favour of doing that, but when it comes to providing subsidy for European farmers to start growing tobacco again and get taxpayers’ money to do so, I draw the line, because that is clearly not in the interest of taxpayers or of the EU.
Roger Williams
The key issue is flexibility on modulation to allow some countries—people think the UK will be one of them—to move money from pillar one to pillar two, while other countries move money from pillar two to pillar one, thereby further disadvantaging UK farming.
Mr Heath
As I said, what we want is flexibility to find the right solutions for our farmers. At one point, my hon. Friend praised high-level agri-environmental schemes, and we want those to continue. We may need that flexibility to ensure that we can achieve that within our pillar two framework, but at the same time I want the level playing field with other countries that he seeks, so that they do some of the same things that we do, and do well, in their domestic agriculture. I am not convinced that they are doing that yet. The thrust of our argument is: yes, we want public money to support public good, but we do not want public money to support distortions of trade and agricultural production which result in a regression across the EU.
I am clear that to achieve that we need flexibility not only in definitions, but in being able to move cash between headings. We need to make sure that we have an appropriate period of transition—it would be disastrous for British agriculture were we to move too fast and in too rigid a way to a solution that is not appropriate for many of our farmers. We need to make sure that the implementation period is sufficiently long to allow an orderly transition, so that we do not repeat the chaos of 2005 with the Rural Payments Agency—I am determined that we will not do that again. Most of all, we need to listen to what our agriculture industry needs, relate that to what our taxpayer needs in value for money, and make sure that we have prosperous and sustainable agriculture right across the UK in the future. That is what we are trying to achieve from CAP reform, and I believe it is possible to do so, but I do not underestimate the difficulties in reaching a successful conclusion.
Question put and agreed to.