Common Agricultural Policy

Part of the debate – in the House of Commons at 5:41 pm on 26th March 1981.

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Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North 5:41 pm, 26th March 1981

I would only add that a considerable amount of the profit goes to a certain French Communist millionaire, who acts as a middle man. I have forgotten his name, but he is a well-known character.

The thirteenth report of the Scrutiny Committee speaks of "unprecedented quantities of butter" being sold to Russia up to January 1981. According to yesterday's Financial Times, from which my right hon. Friend the Member for Barnsley (Mr. Mason) has already quoted, sales of subsidised EEC butter and butter oil to the Soviet Union rose in the year 1980 by 60 per cent. Is that true? It would be interesting if it were, because the invasion of Afghanistan occurred in December 1979. I find it hard to believe, even of the EEC, that its response to that invasion was to increase by 60 per cent. its export of subsidised food to the Soviet Union.

It is also typical of the Brussels restrictionist mentality that, faced with the so-called surpluses, the Commission proposes not lower prices but a "co-responsibility levy" which will be applied to a number of commodities. That is the Commission's main new constructive idea. However, the prices are too high for two reasons—because they encourage excessive production and because they reduce consumption. The co-responsibility levy certainly lessens the incentive to produce, but, unlike a lower price, it does nothing to encourage a higher consumption. I have no doubt that the reason why the Commission prefers the levy to a reduction in price is that the levy diverts the proceeds to the EEC budget rather than to the consumer. It thereby increases the resources and power of the Commission. But why not let the consumer—for once—receive the benefit of the proceeds, even if he does not live in Soviet Russia?

For all these reasons, the CAP has a serious effect on the British economy. The wildly excessive price that we must pay for our food imports burdens the balance of payments, raises retail food prices and the retail price index, intensifies upward pressure on pay rates and, as a result, damages the competitive structure of British industry in exporting and competing with imports. Every year it inexorably raises the total amount of EEC budget expenditure. Let us remember that the relief gained by the Prime Minister's recent renegotiation of the budget will continue only until 1982. This week's edition of The Economist reminds us of that point.

In the long term, the CAP will inflict immense and growing damage on the British economy. In addition, it is seldom mentioned that the United Kingdom no longer receives the relief that it used to receive from falling food prices in times of world deflation or recession. That was a major relief and was one cause—in 1932 and 1952—of the recovery in the United Kingdom's economy. But now food prices in the United Kingdom can no longer fall, no matter how deep the world recession may be. That is one reason why far more violent internal deflation is needed today—in comparison with 1932 or 1952—if we are to check the rise in the retail price index.

In the past year our prospects have further worsened. Despite all that the Minister has said he cannot deny that in the past 10 years we have been repeatedly promised that if we stayed in the EEC we would be able to reform the CAP from within. We have constantly been told that. This year, two developments have shown that such a prospect is little more than an illusion. First, the Government refrained from putting forward any proposals of their own for reforming the CAP. Secondly, the Minister has been forced to abandon—as is almost inevitable under this system—even the promise to resist price increases for goods in structural surplus. The Commission's own paper is described as "Reflections on the Common Agricultural Policy", but it is an apology for the CAP rather than a proposal for reform. Not surprisingly, this week' s edition of The Economist—which is not exactly an anti-Common Market journal—states: The price of backing non-reform now will be another British crisis next year. Next year, the present budget relief will come to an end.

It is therefore more obvious than ever that the CAP will not be seriously reformed in the foreseeable future, and as long as it is not reformed there is little prospect of full recovery for the economy of Britain.