Orders of the Day — European Community (Monetary Compensatory Amounts)

Part of the debate – in the House of Commons at 12:00 am on 23rd June 1977.

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Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland 12:00 am, 23rd June 1977

If the hon. Member will contain himself, I shall come to this in dealing with the next document.

Document R/1149/77 follows with wider issues of existing and future levels of MCAs and the methods of dealing with them. I know that the Government have set their face against the original proposals of Commissioner Lardinois to have automatic reductions. The proposal in this document is a compromise away from that situation. It is first of all intended to freeze the present discrepancies. While accepting the national political and economic problems—which means goodness knows when the existing discrepancies will be reduced—the Government have set their mind against automatic changes, and it would be absolutely catastrophic to food production and industry in this country if the present level of MCAs were abolished too quickly. In terms of milk consumption, I think that the worst thing we could do would be to reduce the present level of MCAs too quickly.

I like the proposal to remove systematically any new MCAs which may arise due to currency fluctuations in future. It is a good idea to take the view "We have this discrepancy at the moment, but let us be sure that any others that arise in the future will be dealt with". We should not allow the problem to build up, and we would not quarrel with such an approach.

The Minister said that the proposal to remove annually any new discrepancy that arose would remove flexibility. That is true, but when the value of sterling is fluctuating anyway the cost of a great many foodstuffs goes up and down consequent on the changes of sterling without any flexibility, and there is nothing much we can do about it. To include in that sector of food supplies ones which are affected by MCAs is not, as the Minister seemed to imply, a fundamental step.

We do not quarrel with the proposals in Document R/1149/77. A good deal in those proposals is vague. Some Community countries have criticised the proposals for being piecemeal. I share with the Minister a feeling that many of our colleagues in the Community are unlikely to accept either of these proposals while they think that there is a chance of getting a much more fundamental approach through automatic procedures to deal with MCA levels and green pound discrepancies.

I think that the Government are wrong to dismiss out of hand any automatic adjustment. It may be a good thing for us to examine carefully the possibility of having a system of automatic adjustment, one which, I stress, does not reduce the level of the MCAs too quickly, otherwise this would have the devastating effects I described earlier.

The European unit of account is a most interesting development. I would say to the hon. Member for South Angus (Mr. Welsh) that I do not think any of us know enough about it. It is not spelt out in enough detail for us to be able to appreciate the implications, particularly countries such as the United Kingdom which find themselves outside the snake.

In the short term we want to know how these measures could be brought in to help the present crisis in the pig industry. The Government have presided over the present decline in the pig industry, which is a very important sector. They missed the boat in October in altering the methods of calculating the MCAs for pigmeat. Secondly, they brought in a 50p subsidy which had little effect on declining profits in the industry.