Common Agricultural Policy

Part of the debate – in the House of Commons at 9:05 pm on 26th March 1981.

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Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton 9:05 pm, 26th March 1981

It is necessary to recite some of the more alarming facts about the income of British agriculture because they are less widely known than they should be. These facts have implications for the level of economic activity in the engineering and chemical industries beyond agricultural areas.

Between 1976 and 1980 net farming income decreased by 21 per cent.—from £1,282 million to £1,025 million. Interest payments in the same period increased by 230 per cent.—from £139 million to £460 million. Total borrowing increased by 186 per cent.—from £1,109 million to £3,171 million. Those figures are bad enough when they are spread over the entire industry, but they are not spread in that way.

The section of the industry that borrowed is basically the one which went in for expansion programmes with the blessing of the national agricultural advisory service. It received grants from the Ministry of Agriculture, Fisheries and Food for so doing because it was believed to be compatible with the national interest.

I remind my colleagues that if they go to the Library to read the Agriculture Act 1947 they will find that section 1 has not been repealed or amended. That section sets out the basis of statutorily guaranteed Government policy towards the industry. According to the Library copy—Library copies are always amended to bring them up to date—it has not been amended by subsequent legislation, including the European Communities Act 1972. It still stands on the statute book in the form devised by Tom Williams when he was the Minister of Agriculture and Fisheries in the Labour Government. It has since been reinforced, if that is the right expression, by a series of White Papers, such as "Food from Our Own Resources". The only trouble is that the finance for carrying out the self-declared policies that appear in the Act has never been provided.

The reason why borrowing has increased by 186 per cent. in the past four years is undoubtedly in large measure an inability to pay the interest on existing borrowing. There has been an accretion to the capital borrowed. A section of the industry—one cannot know what proportion of the total, but it might be one-quarter of it—is now so much in debt that it looks as if whatever happens to interest rates, however low a level they may reach, the net income in future will be insufficient to write down its debts and will be sufficient only to service them. This could be a permanent indebtedness.

Naturally the section of the industry concerned asks why it is that British Leyland, the computer industry and other industries can have their debts written off at the taxpayers' expense while agriculture, the fair return for whose labour, investment and family labour is warranted in section 1 of the 1947 Act, has been brought to its present condition by, first, the failure of the Labour Government to devalue the green pound when they should have done, thereby generating a gross shortfall in income—which has necessarily resulted in borrowing money that it should never have been necessary to borrow—and, secondly, the high interest rates over the past couple of years.

I do not intend, in an agriculture debate, to go into the reasons for those high interest rates, although I am satisfied that the greatest single cause has been the wholesale nationalisation policy of successive Labour Governments, for which the taxpayer now must pay. Nationalisation policies were also carried out when the Liberal Party was keeping the Labour Government in office after they had lost their parliamentary majority. After the Lib-Lab pact was announced in 1977, five industries were nationalised. We now have the pleasure of paying for the shipbuilding industry, which was nationalised while the Liberals were keeping the Labour Government in office.

That immense drain on public funds has been the principal cause in forcing up interest rates, from which agriculture has suffered severely, as have other industries. Together with my hon. Friend the Member for Devon (Mr. Mills), who made such a distinguished speech at the opening of the Back Benchers' contributions to the debate, I do not believe that the indebtedness of this section of the industry, be it at 20 or 30 per cent., can be cured by its own income generation in the future. The sooner that is recognised, the better.

The horticulture side is often ignored in agriculture debates. The Dutch are persisting in subsidising their glasshouse industry after such subsidies have been ruled unlawful by the courts of the EEC as well as by the Commission. That highlights the difference between what the Treaty of Rome says and what happens, to which many of my hon. Friends have drawn attention.

That is exemplified in the poultry industry. In Britain, high costs are imposed on our poultry producers and packers by the EEC hygiene regulations, which are not enforced on the Continent. In French packing stations one can see the ashtrays which are fixed to the machines for the use of those who man them when smoking is supposed to be forbidden. In the egg packing stations, the inspection cubicles may be unmanned. The eggs are sent out without anyone inspecting them. Yet, in theory, they have conformed to the necessary EEC regulations.

Experience shows that it is impractical to make the EEC enforce its regulations in countries where regulations are never enforced anyway. Greece is another country where the mechanisms of government do not exist to enforce regulations on hygiene or anything else. Therefore, we shall have to reverse the path of the EEC and do away with those inspection regulations, relying on the commercial good sense and integrity of our own firms and relieving them of costs which they cannot bear in competition with other countries which do not enforce the same regulations. That is the path down which we shall have to go.

Therefore, if we consider the EEC in terms of giving domestic assistance where exterior factors have rendered our industry uncompetitive—our industry is not responsible for the interest rates which have tortured it—if our packing stations are free from the EEC hygiene requirements, and if we arrange, by remission of duty or by subsidy, for our glasshouse industry to be able to obtain energy at the same price as the Dutch until the enforcement mechanisms of the EEC prove effective, we shall have the true competition between producers in the member countries which is enshrined in the Treaty of Rome.