Cereals (Co-responsibility Levy)

– in the House of Commons at 7:09 pm on 5th November 1986.

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Photo of John Home Robertson John Home Robertson , East Lothian 7:09 pm, 5th November 1986

I beg to move, That the Cereals Co-responsibility Levy Regulations 1986 (S.I., 1986, No. 1233), dated 14th July 1986, a copy of which was laid before this House on 15th July, be revoked. For once I am reasonably confident that the House, perhaps even the Parliamentary Secretary, will agree with me. I mention the Parliamentary Secretary because his right hon. Friend the Minister, who is no doubt necessarily absent from this debate, said as recently as last Thursday: I would much rather not have had the co-responsibility levy."—[Official Report, 30 October 1986; Vol. 103, c. 439.] Today we are giving the Minister an opportunity to get rid of that levy. I suggest to the Parliamentary Secretary on this his maiden appearance that he has an opportunity to make a clean break with his recent colleagues in the Whips Office and to vote against this ludicrous levy tonight. I shall be extremely surprised if any hon. Member speaks in favour of it. I should, perhaps, declare an interest as I am a cereal producer and must pay the levy.

The one point of general agreement is that something must be done about cereal surpluses. The Intervention Board for Agricultural Produce in the United Kingdom had 4,777,446 tonnes of cereal in store last month and the position might have been considerably worse if Spain had not had to import substantial quantities of grain this year. It has been estimated that there will be 80 million tonnes of cereals in intervention stores in Europe by 1991. Therefore, it is abundantly clear that there is a need for urgent action to curtail the production of cereals and to help farmers to restructure their businesses in ways which will bring production nearer to the likely level of consumption. At the same time we must give proper consideration to the requirements of consumers and the rural economy.

That will be an extremely complicated task and the only effective, fair way of achieving those objectives is based on a quota system. It is absolutely certain that the co-responsibility levy is a completely pointless diversion from the business of controlling cereal surpluses. Apart from anything else, it just will not work.

The co-responsibility levy on milk has no impact on the production of milk. Indeed, instead of solving any of the problems of that industry, it has been yet another irritation for dairy farmers. In the case of cereals, it is worth looking at the Austrian experience. In Austria a co-responsibility levy on cereals was introduced in 1979. It has since been increased year after year up to a swingeing £25 a tonne this year. Yet the production of cereals has continued to increase. Therefore, there is no evidence that this type of levy will act as a disincentive to cereal growers. On the contrary, the marginal levy might act as a spur for marginal increases in production.

The term "co-responsibility" is one of many examples of linguistic pollution to come to us from the European Commission from time to time. It is intended to imply that the levy will pay for the cost of the intervention system and all that goes with it. It will not. The European Community's gross expenditure on cereals in 1986, including intervention and export refunds, will be £2·53 billion while the levy is supposed to yield only £323 million, so the levy will cover only about 12 per cent. of the costs of the cereals regime, and I suspect that that is an optimistic estimate.

This may be the first instance of an attempt to crack a sledgehammer with a nut and on this occasion it is a fairly unpalatable nut. There are no grounds for hoping that the levy will control the production of cereals. It seems unlikely to make any significant contribution to the cost of operating the intervention system.

But that is not the end of the story. The levy is not only useless but positively disruptive. It is riddled with discriminatory anomalies and may well turn out to be so discriminatory that it will be illegal. The Minister knows that the levy is being challenged in the courts by the European Federation of Animal Feed Manufacturers, which includes the United Kingdom Agricultural Supply Trade Association, better known as UKASTA.

It may be worth briefly exploring the way in which the levy is supposed to operate. When a load of barley or wheat is sold from a farm, the merchant who buys it will deduct 337·3p a tonne in levy from the price paid for the grain to the farmer. Incidentally, that ·3p must have been puzzling for many people's accounting systems. I understand that it arises from the conversion from ECUs to pounds sterling. It is merely the first of many complications.

The grain merchant then has various options. He may have to dry it, perhaps from 20 per cent. moisture content as it comes off the farm down to 12 per cent. That would extract moisture from the grain equivalent to 10 per cent. of the original weight, so 34p of the original levy on the tonne of grain would evaporate. The merchant would get the benefit of that much because he would have deducted it from the price paid to the farmer. That is the first of several instances where bigger farmers have an advantage over smaller farmers in the levy system.

Photo of Mr John Carlisle Mr John Carlisle , Luton North

I should correct the hon. Gentleman on that. There has been a ruling now that the levy is to be paid on the dry weight, not the wet weight, so what the hon. Gentleman has said is not strictly true.

Photo of John Home Robertson John Home Robertson , East Lothian

It may not be strictly true, but in effect it is true, because that is what is happening. [Interruption.] The hon. Gentleman can talk until he is blue in the face, but merchants are deducting the levy from the weight of the grain that is transported away from the farm. Perhaps the hon. Gentleman can explain how that can be undone.

That is one example of the way in which this system will militate against smaller farmers. In general, they do not have the drying equipment to enable them to get rid of the moisture in the first place.

To return to this theoretical batch of grain, if it is barley of malting quality or wheat of milling quality, the merchant will either sell it to a British maltster or miller, or export it, perhaps, to Germany. The British maltster or miller, as a leviable cereal user, would have to collect the levy from the merchant and pay it on in due course to the United Kingdom authority, which would forward it to the authorities in Brussels.

The bureaucracy and paperwork involved in all those transactions represent a great deal of expensive hassle to all those involved in trading in grain. That must act as a disincentive to people who should be encouraged to use grain produce here in the United Kingdom. The position is one stage worse if the grain is being exported within the Community, especially into Germany, because recent fluctuations in exchange rates mean that the effective levy on British grain would be £4·60 a tonne instead of £3·73 a tonne. That will presumably make it more difficult to export our grain to the Community. That is yet another disincentive to use our grain and yet another factor which could drive even more grain into intervention.

Life gets even more complicated with feeding grain. Some feeding grain may be sold on to someone who will mill it and feed it to his livestock somewhere within 1.5 miles of his mill. He would then be exempt from paying the levy. Theoretically, the levy should be paid back to the original producer since his grain has found its way to an exempt user. Generally, that simply cannot be done. No doubt even the hon. Member for Luton, North (Mr. Carlisle) will understand that point. When feeding barley or wheat from several farms is stored in bulk together in a merchant's silo and some of it goes to an exempt user, there is absolutely no way of establishing which producer's grain has reached the exempt end user. So that element of the levy which has been collected from the farmer will never be paid to the European Community. It will simply disappear into the system.

I spoke to one large user of feeding grain yesterday who told me that he has £15,000 of levy paid into a special bank account and that he does not know what to do with it. Since it is related to grain fed on his farm within the exemption criteria, that money is not due to be paid on to the authorities as levy. Since there is no way of establishing who produced the grain and paid the levy in the first place, it cannot be repaid to the producer. That is a genuine problem.

I imagine that similar things must apply to a number of big, integrated operations. People such as Bernard Matthews may be in a similar position. What justification can there be for devising an exemption scheme that can give substantial advantages to certain big farmers who have large integrated enterprises that produce grain, mill it and feed it to livestock and poultry, while penalising small grain producers and discriminating viciously against feed milling and compounding businesses? What on earth have these people and their customers done to deserve such disruption and unfair discrimination?

Not surprisingly, mobile milling and mixing operations are doing a roaring trade, processing feed on or near farms in order to exploit these loopholes. We could go on to discuss—and no doubt we shall—other aspects of this dotty system, such as the retrospective levy on grain traded before the system was introduced.

Photo of Derek Conway Derek Conway , Shrewsbury and Atcham

Does the hon. Gentleman accept that, to a degree, he is preaching to the converted? Even my right hon. Friend the Minister has said that he does not like the system. Bearing in mind the time limit on the debate, rather than hear more about the problems, perhaps the hon. Gentleman will tell us the Labour party's proposals that might be acceptable to the other 11 countries and possibly reassure British farmers and their interests.

Photo of John Home Robertson John Home Robertson , East Lothian

I am delighted to hear that the hon. Gentleman and, apparently, the Minister will vote against the levy. However, he must bear with me for a minute or two.

It is important to understand just how daft the system is. I referred to the fact that the levy is retrospective on grain that was traded before the system was introduced. There is the question of the levy that has to be paid on screenings that are taken out when cereal seed is dressed and the apportionment of levy on feed mixes, which include whole grain. When you eat your muesli for breakfast tomorrow morning, Mr. Deputy Speaker, you may care to ponder on the fact that the whole grain is not subject to levy while the milled grain has been subject to the levy. Then, of course, there is the whole business of getting exemption certificates on grain carried over from the previous year, which is likely to get even more complicated if the levy rate is varied next July, as seems likely. The hassle involved in this scheme is out of all proportion to what it is worth.

I suspect that the whole elaborate bureaucratic farce would do credit to the authors of "Yes, Minister", especially since the Minister has said that he is opposed to the idea of a co-responsibility levy. However, the officials at the Ministry of Agriculture, Fisheries and Food have really excelled themselves this time. They have devised such a moronic scheme that it has actually been adopted as a blueprint by the European Commission and recommended for use in other European countries.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

Before the European countries pursue the model that my hon. Friend has described, and in reference to the point made by the hon. Member for Shewsbury and Atcham (Mr. Conway), is my hon. Friend aware that after watching a programme on Central Television at the weekend, which presented a story of malpractice and fraud, I tabled a series of questions last night in which I suggested that the Minister of Agriculture, Fisheries and Food should remove the document and examine the whole policy and management of intervention grain in this country forthwith?

Photo of John Home Robertson John Home Robertson , East Lothian

I know that my hon. Friend has tabled a series of questions on this subject. He is quite right to suggest that the whole intervention system is wide open to abuse.

Speaking of abuse, I should like to refer to the way in which other countries operate within the cereals regime. For instance, we understand that the Italians have not been quite as daft as to accept this system. Instead of going to such frantic lengths to collect levy on 75 per cent. of cereals, the Italian Government have done a deal with the Commission, whereby they will simply pay a lump sum equivalent to the levy on 22 per cent. of their cereal crop. They will not bother to collect the levy from their producers or consumers. Perhaps the Minister can confirm that. In this instance, I suggest that the Italians have treated the whole idea of the co-responsibility levy with the contempt that it deserves.

I want to summarise briefly the points about the levy. It is hitting consumers as much as it is hitting producers. The psychological effect is equivalent to regarding it as a tax on grain. The levy will make it more difficult to dispose of grain. Secondly, the levy will not reduce production, so it will probably have the net effect of increasing the size of the grain mountain. Thirdly, as I have already explained, it will not cover the cost of the intervention system and the export subsidies. Finally, as I have tried to demonstrate, it is an administrative nightmare, fraught with anomalies that discriminate unfairly between producers and consumers.

There are alternatives. If we must have a levy—and we may have to have one — it should be based on acreage, or it could be collected like the Home Grown Cereals Authority levy on all farm sales, which would at least be a tax on production rather than consumption. Better still, the intervention price could be cut, which would have the combined attraction of saving taxpayers' money and penalising those producers who are growing grain that cannot be marketed.

Photo of Mr Colin Shepherd Mr Colin Shepherd , Hereford

Will the hon. Gentleman give way?

Photo of John Home Robertson John Home Robertson , East Lothian

No, I will not give way. I know that the hon. Gentleman and many other hon. Members wish to participate. I have already been generous in giving way, and I am concluding my remarks.

The levy is nonsense. The industry knows that it is nonsense, and it has been universally condemned by the representative organisations of the farming, grain trading and processing industries and those who use cereals—specifically I can cite the National Farmers Union, UKASTA and the British Poultry Federation, which has briefed all hon. Members on this point.

The Minister knows that the levy does not make sense. The House will do all concerned a great favour by flinging out the regulations tonight and telling the European Commission to come back with more intelligent proposals.

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley 7:28 pm, 5th November 1986

I thank the House for its warm reception—I hope that it is as warm when I finish my speech. I shall not speak for as long as the hon. Member for East Lothian (Mr. Home Robertson), as I know that many of my hon. Friends wish to take part in the debate. As the hon. Member for East Lothian understands, I regret that my right hon. Friend the Minister of Agriculture, Fisheries and Food is in Europe chairing the Council.

The hon. Member for East Lothian sketched the European problem. However, the world is full of cereals. The picture has changed dramatically over the past decade. China and India are now food exporters; Canada, Australia, the United States of America, Europe and other countries could produce even more, if it could be sold. The tragedy of the Third world is one of distribution and political will. That tragedy is our problem tonight and every night, but it is not the subject of this debate.

Even in my working lifetime we have imported wheat from Russia and the Sudan. Russia will not be an importer for ever. We are debating the narrow issue of Europe and the changes that were agreed at this year's price fixing. We are debating one part of one change only — the co-responsibility levy. This is not the Second Reading of a price-fixing 1986 European Bill. We are debating the regulations. The Government have accepted responsibility for the collection of the levy. Voting against the regulations concerning the mechanics will help no one.

The distortions supposedly seen by some in the new market are different, depending on their viewpoint. Voting against the regulations will change no one's viewpoint outside the House. The Government have made their position clear in Europe. Voting against the regulations will not stifle that clear voice. It will not help our negotiators in Europe, because the path has been laid out before us and to vote against the administration of the levy will be seen—because that is all that it is—as a purely United Kingdom matter.

To achieve their objective the regulations lay down a number of administrative requirements. They provide for the operation of a register of cereal processors by the Intervention Board. They enable the board to recover the levy in cases of non-payment. They require the keeping and production of necessary records, and they provide for the necessary powers of entry and for offences.

The regulations do not deal with the key issue of who pays the levy, the circumstances under which it is payable, or how much it should be. That does not mean that the Government are not listening to the many points of view and the valuable ideas expressed in the debate. Many of those points were foreshadowed in the speech by the hon. Member for East Lothian and I am sure that he has read the brief that was sent to all hon. Members.

Photo of Austin Mitchell Austin Mitchell Chair, Treasury & Civil Service Sub-Committee

Presumably the Minister is here to answer questions on something about which we will not be allowed to vote. Can he tell us why it is legitimate to tax the consumer for the faults resulting from the over-production of the producer?

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley

It is not a tax on the producer or the consumer; it is a co-responsibility levy.

The hon. Gentleman makes up his own mind when he wants to vote and then decides which side he wants to vote for. I am sure that he will put his question more clearly later. As I hinted, the co-responsibility levy was not the Government's preferred option although the hon. Gentleman will not find any quotes from me on the matter.

Photo of Mr Andrew Hunter Mr Andrew Hunter , Basingstoke

Can my hon. Friend clarify one point? Is it not right to argue that the co-responsibility levy, warts and all, formed part of an overall package of appreciable savings to the Common Market and that that is welcome?

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley

I have always wanted to say, "I am coming to that" and I can tell my hon. Friend that I am coming to that. As I said, the co-responsibility levy was not the Government's preferred option.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

Perhaps the Minister would stop being so apologetic for this proposal. The taxpayers of Europe are paying £150 million a week for the dumping, destruction and storage of food surpluses and, according to the EEC, the consumer is paying £13 a week more for his food because of the CAP. Surely it is right that producers should carry some responsibility as set out in this proposal.

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley

That is a turn-up for the book. I agree entirely with my hon. Friend. This proposal represents the first real progress we have seen to bring cereals into a better balance. The order sets out the initial framework, and a better balance will be achieved in three ways. First, charging the levy on sales into intervention means that the effective level of support is reduced. It is like a cut in the intervention price in its effect on producers. In combination with the other measures adopted at the price fixing, it is part of a package which led to a marked reduction in support levels. Secondly, we were able to avoid the discrimination against the United Kingdom which is often inherent in co-responsibility levy systems. Finally, given the importance which the Commission and some of the other member states attached to the idea, it was an essential part of a satisfactory price package for the United Kingdom.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I am listening with considerable care to the excellent argument that my hon. Friend is deploying. It would help Government Members who have agricultural interests if my hon. Friend could tell us why so many of the organisations that represent agricultural interests are opposed to the levy. As we have been told, the British Poultry Federation has issued a circular to all hon. Members urging them to vote against this order. It would help us quite immensely if my hon. Friend could tell us why there is so much opposition to the order.

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley

Many people are opposed to it because it is untried and new. The levy will not reduce production unless it is taken in conjunction with other things. The Community needs to adopt further measures, some of which were hinted at in the debate. Our countryside, our farmers and producers must be protected but there must be other measures as well. By and large, the outcome of the 1986 price fixing for cereals is quite an achievement.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

The hon. Gentleman is handling a difficult brief with a great deal of humour. May I try him again on the question put to him by his hon. Friend the Member for Macclesfield (Mr. Winterton) who said that all the poultry businesses are against this? In all the circulars that I have received the authors are arguing, at least in Scotland, that this will disturb the free market and disturb competition. It is not being operated uniformly. What is the Minister's reaction to that? The Minister would agree that his party is more wedded to the free market than mine. I am told that this is not a Scottish problem but an English problem. The Minister says it is a United Kingdom problem, but that is not the case because industrialists in Scotland say it is purely an English problem because in Scotland there is a net deficit.

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley

The representations received by the hon. Gentleman are received by all hon. Members. They come down on both sides, some supporting the case of the millers and some the case of the users. I shall come to that shortly. There are serious doubts in the minds of farmers and others, but the hon. Gentleman will appreciate that I cannot deal with them all tonight. The most important of these is the discrimination felt to be caused by exempting from the levy the grain processed into animal feed for stock on the same farm, but charging the levy on grain used by commercial compounders. We have done our best to ensure that the farms exempt from the levy on grain which they process are genuine farms. The value of the output of the feed compounding industry last year was £1·8 billion. People processing on the farm will have exemptions valued at probably less than 1 per cent. of that.

There is a strong cry for equality of misery and we have heard that cry during the debate. There may be other ways of proceeding and we shall certainly need to look carefully at the issue and its development. It is realistic to assume that the levy is here for some time. It is favoured by the Commission and by some member states because it is putting money into the coffers of the Community to the tune of £400 million. Our figures differ but not much.

The mechanism will not remain unchanged. We must look for changes that ease the burden on producers and traders in the United Kingdom. A certain, though limited, distortion is inevitable in any levy system. As I said earlier, that is one of the reasons why we have never been enthusiastic about the principle. Serious problems have arisen mainly because of the haste with which the system was introduced. In an ideal world the Community would never have set its timetable in the way it did.

Many issues needed clarification and many difficulties remain, notably the question of how to fulfil the requirement that the levy, although collected at the processing stage, should be passed back to the producer. I will not go into these now, because I want to hear what hon. Members have to say about them. With the cooperation of the industry, we have been able to sort out many problems and we shall certainly try to continue this process.

Photo of Mr Enoch Powell Mr Enoch Powell , South Down 7:39 pm, 5th November 1986

I am grateful for this brief opportunity to protest against these proposals on behalf of many of my constituents, and many in the Province of which my constituency is a part, who will suffer as a result of them.

Tonight is one of those miserable occasions to which the House has become accustomed since it resigned its powers in order to become part of the EEC, when a Minister says to the House, "I don't like this proposal. I know you don't like it either. Probably no one likes it. But you'll have to put up with it because I brought it back from the EEC." It is not surprising that in a debate beginning at 7 pm the Government have taken the unusual step of deliberately curtailing so unpleasant an occasion to an hour and a half, perhaps mistaking it for one of the Northern Ireland Orders in Council.

This is a bad tax on three grounds. First, it is unjust; secondly, it is foolish; thirdly, it is damaging. The tax is unjust because it treats differently those who are producing and consuming, according to whether they belong to the same commercial organisation. That is a blatant injustice upon the face of the proposals, and is, I understand, the cause of the main complaint against them. That, at any rate, should be eliminated in any alternative that the Government succeed in putting in the place of these proposals.

The tax is self-defeating, because it operates to reduce the base which it leaves subject to taxation. The very operation of the tax will encourage those forms of production, and those links between production and consumption which enable the tax to be avoided. As a result the level of the levy will need to be increased year after year as the period that the Minister foresaw goes on. It is a self-defeating tax, or at least a self-augmenting tax, which is perhaps the worst sort of tax.

The tax is damaging, in that it will strike against both milling and producing interests in so far as they are separate. Take, for example, in Northern Ireland one milling undertaking which directly employs no fewer than 1,600 people and is in contract with over 200 poultry producers, maintaining 6 million poultry. Both the users and producers in that relationship will be damaged and discriminated against by this measure. Inevitably, the result will be the repression of certain forms of production and certain forms of employment. That is not something that can be accepted in the rest of the United Kingdom. It is certainly not acceptable in Northern Ireland, and I shall join with those who vote against the regulations this evening.

Photo of Mr Peter Mills Mr Peter Mills , Torridge and West Devon 7:42 pm, 5th November 1986

In considering this measure, we must be honest and frank and say that the way in which the co-responsibility levy is being introduced and put into practice will make a terrible mess of things. Anomalies abound. Moreover, as has been said, there will be attempts to get round the levy. Indeed, that is only natural in the farming world.

This problem is entirely the fault of the EC. It was warned by my right hon. Friend the Minister, and no blame can attach to him. When the package deal was being worked out, he warned that there would be problems, and we are now seeing the results, which are not good. However, the original proposals were far worse, and would have been very unfair to British agriculture. The 25-acre exemption from paying the levy would have meant that the European countries were let off while we were penalised.

Unfortunately, this measure is part of the package deal. At the price review, the other parts of that deal were very good. For example, we wanted to continue the beef premium, and the devaluation of the green pound was certainly necessary. The sheepmeat regime continued, and we clearly wanted that. The Opposition and some of my hon. Friends do not seem to understand that the Minister had to steer a balance between what is desirable and what is negotiable. If the Socialists came to power and kept Britain in Europe, the same problem would still arise.

Photo of Mr Peter Mills Mr Peter Mills , Torridge and West Devon

If the hon. Gentleman will allow me to make my speech, I am sure that he will have a chance to make his in a moment.

If we are dealing with many other Ministers and want a package deal, something, somewhere, must give. But having said that, changes will have to be made. The mechanism is not working correctly, and I believe that my right hon. Friend the Minister should be told that at the next price review there will have to be a change. In the circumstances, this measure was right, but it is wrong in practice.

Photo of Mr Peter Mills Mr Peter Mills , Torridge and West Devon

I hope that my hon. Friend will have a chance to speak shortly, and that he will forgive me if I do not give way.

The most serious problem is the disadvantage to stock farmers who do not grow corn as against those who do. The difference amounts to £3·37 per tonne. A pig producer or poultry dealer who makes a small margin of profit will be put at a great disadvantage compared with the farmer who grows his grain, feeds it to his stock and does not have to pay the levy.

An old NFU friend of mine, Don Avery, of the Northern Chick Growers Association, says that it will cost his group of 140 members £250,000 extra. That is very unfair. In the south-west of England, the situation is even more serious, because we do not grow so much grain. It is purchased and brought into the area, and so we are at a disadvantage.

I shall quote from the mill manager of Dalgety Agriculture Ltd. Perhaps my hon. Friend the Minister can answer either at the end of the debate or in a letter the five serious points that he raises. The manager says:

  1. "1. The levy has not reduced the price paid by processors and the consumer gains no benefit—it is therefore a tax on consumption.
  2. 2. It does not reduce the price to the livestock feeder who is already under pressure.
  3. 3. It encourages integrated production on the large arable units of the east at the expense of the family sized farm in our area."
That is the south-west.

Photo of Austin Mitchell Austin Mitchell Chair, Treasury & Civil Service Sub-Committee

Will the hon. Gentleman be voting against the regulations?

Photo of Mr Peter Mills Mr Peter Mills , Torridge and West Devon

The hon. Gentleman must try to listen to my speech, feeble though it may be. He can then decide whether I am right. The manager continues by referring to 4. The complete shambles that has been created in terms of administration to collect the levy. That too must be altered. Finally, the manager says: At the end of the day it has done nothing to reduce production and increase consumption. Thus the principle is wrong and so is the practice. Urgent changes are required. I believe that my right hon. Friend the Minister should return at the next price review —it cannot be done here and now—and ensure that the levy is deducted from the intervention price. That seems to be fair to all, and easier to administer.

This is only one aspect of a bigger package deal for dealing with surpluses. We have to move on. We must either set aside further price reductions at the end or encourage alternative crops. — [Interruption.] Hon. Members bleat at me and ask what I would do. Action must be taken at the next price review. If hon. Members understood what has been happening, they would know that that is the solution. A further package must be agreed. I hope that the Minister will accept my view, which I believe to be the view of many of my hon. Friends, that the package is not working and needs to be changed. We accept that a package deal was agreed and that there are advantages, but there must be change.

Photo of Mr Thomas Torney Mr Thomas Torney , Bradford South 7:51 pm, 5th November 1986

I draw attention to the effect on the poultry industry of our agreeing to the levy. The Government have failed to fight hard enough for the needs of the poultry sector, which uses a tremendous amount of our cereal production. The Minister led the poultry industry to believe that there would be total exemption from the levy, but that will not happen in practice.

The legislation is bad because, although it operates in the interests of some, it could drive others out of business. Some poultry processors have to pay on all their grain, some are totally exempt from the levy and some are in between, paying an average per tonne depending on the percentage of throughput which is exempt.

There is considerable distortion of competition, which ranges from zero to £3·37 per tonne. Given the huge amount of feed tonnage used by the poultry sector, this amounts to a great deal of money and causes considerable disadvantage between British processors.

The levy, as enshrined in European legislation, is intended to run for five years. After talks with Commission officials, the industry formed the opinion that if collecting the tax were successful it would be increased. The distortion of competition will therefore be increased.

As recently as 30 October the Minister said that neither he nor the House of Commons liked the levy. Thus, a vote against the order will not be a defeat for the Government, but an expression of support for the Government in restricting the levy planned in Brussels.

The levy is supposed to dissuade cereal producers from creating surpluses. It will have the reverse effect. It will stimulate production to pay the cost of the levy.

It is a bad principle that the customer should be penalised because the producer over-supplies. Normally, over-production results in lower prices. That is in the best interests of both the poultry and cereals producer. The United Kingdom poultry meat and egg industries have been systematically attacked by continental producers. According to Ministry of Agriculture figures, it seems that once again the United Kingdom has a worse deal than other EEC countries because our producers will have to pay more in levy.

The competitive position of poultry meat and egg imports will be weakened and the jobs of poultry meat and egg workers will be put at risk, as will those of workers in the cereal sector.

The levy is discriminatory between member states which have difficult internal rules. It is discriminatory between producers because some are exempt and some are not. It is discriminatory for the poultry industry because it uses so much cereal, so support prices will remain high when world prices are falling.

The effect on the farmer of a 3 per cent. co-responsibility levy is the same as a 3 per cent. reduction in support prices. However, a 3 per cent. support price reduction would have preferred effects. It would be equal for all cereal producers in the EEC and the United Kingdom and it would cut the work of the intervention board which runs the bureaucracy to collect the levy. It would represent a saving on export restitution where grain is exported and it would encourage poultry meat and egg producers, and processors, to use grain instead of cereal substitutes.

If hon. Members vote against the levy tonight they will be voting not against the Government, but against the EEC which wants to introduce a levy which no one else likes or wants.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes 7:56 pm, 5th November 1986

It is a pleasure to see the heavyweight presence of my hon. Friend the Under-Secretary of State on the Front Bench in a speaking rather than a speechless role.

There are many major and detailed arguments against the co-responsibility regulations. The retrospection and exemptions cause unfairness and will continue to do so. Purchasers of grain are uncertain whether they are exempt from the levy. It benefits neither the producer nor the consumer, and it is bureaucratic. However, I realise that the levy produces temporary benefit for the European Community budget.

I am against the concept of the co-responsibility levy, not because it will achieve no purpose, but because it will worsen the problem with which it seeks to cope. An example was given to me by a senior member of the National Farmers Union in my county. He tells me that in Austria a co-responsibility levy has been imposed since 1979. The wheat surplus has increased from 80,000 tonnes to 1·2 million tonnes in the seven years since.

Of course, the co-responsibility levy amounts to a price cut for producers, but it is not enough to be an incentive. It is the opposite. It is an incentive only to increase production to counter the financial loss which stems from the co-responsibility levy. I believe that the problems of increased surplus production will be made worse rather than better.

The basic problem which the Community faces is that grain production has grown from 100 million tonnes to 140 million tonnes per annum in the last 10 years, whilst consumption has remained static at about 120 million tonnes. As the European Commission has said, unless drastic action is taken, about 80 million tonnes will be in intervention store by 1991. The cost of that will be unbearable.

The solution proposed by my right hon. Friend the Minister is a voluntary set-aside system. I agree that any set-aside system would be better than none, but I fear that the time for a voluntary set-aside system is past. A voluntary system will not be adequate to cope with the problem facing us. A voluntary set-aside system could, of course, be accompanied by price cuts, but it is my guess that the level of price cuts necessary to reduce production would be unacceptable to other countries within the European Community, let alone to farmers in our country.

It would be necessary to have a compulsory set-aside system plus quotas. I know that quotas create huge problems, but without them agricultural science and productive farming will steadily increase the total output. A voluntary set-aside system will alleviate the problem, but only temporarily. Therefore, we must consider a compulsory system, plus quotas.

However, I am prepared to accept that my right hon. Friend the Minister of Agriculture, Fisheries and Food has done his best to deal with a bad job and remove some of the rougher edges from the co-responsibility levy. I am therefore prepared to support the Government on the basis that next year my right hon. Friend will be fighting with his colleagues in the Council of Ministers to produce a better regime to cope with grain surpluses.

Photo of Mr Robert Maclennan Mr Robert Maclennan , Caithness and Sutherland 8:01 pm, 5th November 1986

It is a pleasure to follow the hon. Member for Devizes (Mr. Morrison) because I very much agree with his view on a long-term solution. I am happy to forestall the intervention from the hon. Member for Southend, East (Mr. Taylor), "What would you do?", by saying so. The proposals described by the hon. Member for Devizes were advanced in a White Paper published by the Social Democratic party in December 1985, and were also advanced by alliance spokesmen in the debate last January. So our proposals providing an alternative means of dealing with the endemic problem of surplus cereals within the Community have been well worked out.

I should like to welcome the Minister to his new office. His performance tonight has been amiable. However, it left more questions in our minds than it gave answers, which is becoming a pattern with Ministers who speak for the Ministry of Agriculture, Fisheries and Food. They say that they want to hear what the House has to say, but they go away and do almost the opposite of what the House said should be done.

The origins of this fiasco should be laid not at the door of the Minister, but at that of his superior whose absence tonight is quite understood. However, the Minister cannot escape blame for the imbroglio into which he has plunged almost all sectors of agriculture by his actions.

The Minister of Agriculture, Fisheries and Food described the needs of the cereals industry in a speech that he made in Berlin in January of this year. He set out his philosophy quite clearly in that speech by saying that he rejected the quota approach. In fact, he said that he favoured a free market approach. His actual words were: The alternative to the quotas is to expose the industry to more market forces. Whatever the Minister has achieved since January, it cannot be said that he has exposed the industry to more market forces. He has introduced a form of penalty which is more damaging than a simple price cut. Indeed, it has no benefits for consumers or producers and few for taxpayers.

Photo of Mr Robert Maclennan Mr Robert Maclennan , Caithness and Sutherland

No, time is limited and it would be unfair to the hon. Gentleman's colleagues to give way.

Perhaps the most serious thing that the Minister said was that it is realistic to accept that we shall have to live with the co-responsibility levy for some time. That is not necessarily the case, and would not be so if the Minister and his colleagues in the Council of Ministers took a trenchant stand and fought for a more rational system. We need only consider milk. Co-responsibility levies were quickly proved to be a wholly inadequate way of dealing with milk surpluses. The European Community came round to the recognition that quantitative limits on price support would be an appropriate and effective way of dealing with the problem of milk. The Minister will never get it right if he sets his face permanently against that approach.

However, the Minister introduced the co-responsibility levy reluctantly, and has, in a sense, tried to wash his hands of all responsibility for it. In a statement issued in mid-July after the regulations had been drawn up, he said: A levy had to be accepted in order to achieve a sensible and effective settlement on cereals as a whole. Nobody who trades in or produces cereals believes that the last price fixing resulted in a sensible and effective settlement on cereals as a whole. Nor did consumers of cereals, for example—the livestock sector—believe that the settlement was sensible or effective.

The price paid for this mess seems to have been high. It has been a system which, in the short term, greatly distorts trade. Cereal users who process on-farm can enjoy an advantage that is not available to other cereal users.

Photo of Mrs Elizabeth Shields Mrs Elizabeth Shields , Ryedale

It does discriminate because those hit hardest by the levy are those livestock farmers who do not grow their own cereals. Many have small family farms and are now at a competitive disadvantage—

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Order. I hope that the hon. Lady realises that this is a short debate and interventions must be genuine and short.

Photo of Mr Robert Maclennan Mr Robert Maclennan , Caithness and Sutherland

I am grateful to my hon. Friend the Member for Ryedale (Mrs. Shields) for making that point. The distortion is not only between different types of users, as she rightly said; there is also a regional distortion in that those who depend on grass and cannot process on-farm are suffering considerably. That is especially true of parts of Wales and the west country. Nor can it be said that the distortions are operating only on the farms. They are also operating in respect of different types of merchants—the compounders and processors are being hit hard. Nor can it be said that this has been operated with equity throughout the European Community, because under the arrangements which are operating to exempt small producers in Spain, about 90 per cent. of cereal users are totally exempt from the operations of the levy.

What will be the long-term effects of this? If the levy were to be kept at its present level, the distortions would grow as people adapt to what has happened. There would be more on-farm processing. There would be more vertical integration. There would be more use of mobile units and mixers. That would be extremely undesirable because economies will not come from that. There will be considerable diseconomies and considerable unemployment in the area of processing.

Photo of Mr Robert Maclennan Mr Robert Maclennan , Caithness and Sutherland

No, I shall not give way because, as I have already said, the debate is short.

Is all this misery worthwhile? Will it produce the results? Will it succeed in reducing the mountain? Austria has been given as an example already. The Community is unlikely to introduce a truly penal level that hits deeply, but at any conceivable level the operation of the levy would not reduce the mountain. It will simply continue to exacerbate the distortions in trade.

We must ask what the Minister will do about the anomalies that have emerged. Will the industry have to live with this for the full five years? We have been told that we must live with it for some time, but what do the Government want? Do they want to abolish it or live with it? What amendments are being discussed with the Council to remove the anomalies? Does the Minister intend to introduce an audit system to ensure that any levy deducted from growers is passed on to the Intervention Board, as has been advocated by the National Farmers Union? Does he intend quietly to acquiesce in, or even possibly to advocate, an increase in the levy in order to tackle the cereal surplus problem?

Those questions must be answered and they should be answered tonight.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

I am grateful for the brevity of the Back-Bench speeches. I remind the House that the debate will finish at 8.39 pm and that the Front Bench spokesmen hope to catch my eye at 8.35 pm.

Photo of Derek Conway Derek Conway , Shrewsbury and Atcham 8:11 pm, 5th November 1986

Last Thursday the Minister of State told the House that the cereal forecast for this year is 24·6 million tonnes. Therefore, the size of the problem is well known to hon. Members.

An interesting breakdown was given in the agricultural review. Within the cereals production for 1985 was 11·9 million tonnes for wheat, 9·6 million tonnes for barley and 0·576 million tonnes for oats. Therefore, the scale of the wheat problem in particular is put in perspective. Cereal production in Britain represents 19·4 per cent. of the gross agriculture output.

Britain's particular problem in relation to our membership of the EEC is that we produce 21 per cent. of the Common Market's wheat production and 24 per cent. of barley. Therefore, we are a major contributor to the problems that we face in the Community.

Of the different groups who have been represented so far in tonight's debate, I was fortunate enough to meet representatives of the Shropshire branch of the Country Landowners' Association on Monday. As my hon. Friends will know, the CLA is particularly worried that the levy is being imposed retroactively on contracts entered into before the levy was introduced. That is a most unfair way of treating the agricultural community. One wonders whether it is legal.

The reason given for back-dating was to prevent fraud, but that is unacceptable. Fraud should be dealt with in the normal way with the guilty party being prosecuted. The measure should not have been introduced retrospectively across the board, catching the innocent producer.

The Shropshire branch of the NFU made its views clear to me on that issue, as it does on many issues relating to agriculture. It feels that the levy will be impossible to operate fairly, and I think that that view is shared by both sides of the House. The levy will inevitably cause an imbalance for arable and livestock farmers and the exemptions will be difficult, if not impossible, to monitor. I hope that when my hon. Friend the Minister replies he will explain the Ministry's opposition to a proper audit on the deduction of levy from growers because that is a point of considerable concern to the industry.

UKASTA believes that this is an effort and expense for both trade and Government which is not justified and will leave the present problem unresolved. It is particularly concerned about the lack of consultation and preparation. I can only wish it well in its legal action against this unfortunate and hopeless measure.

The Commission's objective of a policy for quality is unlikely to be obtained. I do not think that any hon. Member thinks that it will curtail surpluses. Again, we do not believe that that will save some of the costs of sustaining those surpluses.

Therefore, we must look at the problem into which the Government have got themselves. They sought a package of measures, including price restraint and set-aside, which were not acceptable to the other 11 member states. There again, the options supported by the other 11 would have been far worse for Britain if our Ministers at the negotiating table had not been strong minded and had not fought off the proposals. The House and the Opposition must recognise that. Indeed, the industry must recognise it and give credit where it is due.

My right hon. Friend the Minister of Agriculture, Fisheries and Food, speaking in the House last week, said that he did not like the measure. My hon. Friend the Parliamentary Secretary, in his spirited defence of the Ministry tonight, has repeated that view. Therefore, that view is shared on both sides of the House. Bearing in mind the advantages that came out of that package, particularly the beef premium, we shall move forward at the next round of negotiations.

The Opposition must not try to kid the Conservative party that their motion tonight achieves anything. It has not split the Conservative party on the Back Benches and that will be reflected in the Division. Equally, as I know only too well from my meeting in Shrewsbury on Monday, it does not fool the farmers. They are aware of the problems that exist and that something must be done. Undoubtedly, we are faced tonight with a great deal of EEC gobbledegook, which is not welcome in Britain, but at the moment we have no way of getting out of it.

My message to my right hon. Friend would be to urge him in future to do it the French way—when the matter goes back to the negotiating table, make sure we follow the advice from Shropshire and put Britain's interests first, second, third and fourth in future negotiations.

Photo of Gavin Strang Gavin Strang , Edinburgh East 8:16 pm, 5th November 1986

I am not sure what is more demeaning of Parliament—a Minister who tells us that we cannot vote against this measure because it will be a meaningless gesture, or Tory Members of Parliament who tell us how much they are opposed to this and how damaging it will be to agriculture, but are not prepared to vote against it.

We are debating an important development in agriculture policy. It is a reflection of the low priority that the Government have increasingly attached to agriculture that we are having to encapsulate all the speeches and arguments within one and a half hours.

When the Minister says that it is realistic to assume that the measure will be with us for some time, by gum, he is right. First, we know that it will not necessarily stay at £3·37 a tonne. It could become an even greater imposition on our industry. Secondly, we have been down this road before. We have had the milk co-responsibility levy. In passing, may I say to our Front Bench that we shall be more enthusiastic about cereals quotas when we see them having an effect on the milk surplus after all the traumas we went through on that.

Not one hon. Member has argued that this measure will solve the problem — the common agricultural policy. That is costing us — all the member states of the Community—about £15,000 million a year, the bulk of it being wasted in intervention and storage and export subsidies.

Photo of Gavin Strang Gavin Strang , Edinburgh East

The measure will not cut the cereals surplus, which has been rising and which is costing us so much money. There seems to be a consensus on that. Yet, apparently, we are not going to reject it, judging from some of the speeches of Conservative Members. It is an imposition on our industry for a number of reasons. First, it discriminates against small farmers. In the main, small farmers use compounders while the larger farmers tend to be able to undertake their own compounding and mixing. Secondly, it discriminates against the feed compound industry, as the right hon. Member for South Down (Mr. Powell) and others have argued. It is an industry that is providing a valuable service in terms of processing and employment. It is also a serious imposition on our pig and poultry industries as it is understood that about 70 per cent. of the cost of production in these industries is accounted for by cereals.

The position of certain operators in the poultry industry will be undermined arbitrarily. We have had a successful poultry industry over the years, but it has been crippled progressively for various reasons that I shall not develop now. It can be said, however, that in this country we took a lead in the poultry industry. If a large proportion of an enterprise's poultry production is within 15 miles of its feed compound unit, it will not pay the levy on that element of the cereal input. The bulk of large producers, however, have most of their production more than 15 miles away from the feed compound unit, and these may be the most efficient producers. Through this measure, we may be discriminating against the best companies that we should be encouraging to expand.

The measure is an attack upon the poultry industry because it will in practice discriminate against British poultry producers. My hon. Friend the Member for East Lothian (Mr. Home Robertson) has said that Italy will not operate the proposed system and instead will chip in roughly the sum that the Commission reckons would be raised. In other words, Italy will forget about it. I am not sure how many Conservative Members have been to France recently or have spoken to those who have. We are always the first to develop our bureaucracy and intervention systems. We shall police the system and ensure that it is operated effectively, but is anyone pretending that the French will do that? Of course they will not. We know that and our industry knows that. That is why the measure discriminates against our producers and attacks our industry and our jobs.

The effect on trade outside the Community is not all that important because of the high cereals prices. The export subsidy to shift grain from the Community is about £80 per tonne. I note that the Minister is nodding his head. He will be aware that the world price of grain is about a third of the price at which it is being traded within the EEC. That goes back to the deal which was struck between the German and French Governments long before we joined the Community. It is a grotesque system. As I have said, about 70 per cent. of costs in the pig and poultry industries is accounted for by cereals, yet the cost of production is about three times the world price. Against that background there is no chance of our poultry industry making any impact on world markets.

This measure is nonsensical and it is not good enough for Conservative Members merely to make speeches that are critical of it. We want it to be defeated this evening.

Photo of Mr John Carlisle Mr John Carlisle , Luton North 8:24 pm, 5th November 1986

As a member of the trade, perhaps I might correct one or two of the anomalies that have developed this evening. First, the impression has been given—sadly by both sides of the House—that the trade is in utter chaos because of the co-responsibility levy, that our trade feels discriminated against in certain sectors and that prices have made us uncompetitive. That is not true. The trade does not like the levy and we support the Minister in his opposition to it. I support and welcome the spirited speech of my hon. Friend the Minister which was made in difficult circumstances.

There is no chaos but there would be if the levy were to be increased next time round, and that is my greatest fear. There has been some talk that the levy could be doubled, and if that were to happen the impact upon our producers and consumers would give effect to the fears that have been expressed this evening. The effect on the compound industry could be catastrophic. The number who mill and mix on their own farms would increase, and that would mean a serious loss of employment in the compound trade. My hon. Friend the Minister must resist any increase in the levy this time round.

An increase in the levy would encourage the use of Third world substitutes, and there is no doubt that cheap substitutes exist. If we price ourselves out of the market by putting our prices for feed wheat and feed barley above those that the trade has to pay for Third world substitutes, there would be a massive switch to those products. That would be a catastrophe for the compound industry and for feed users and for those who grow the grain.

If the levy were doubled, as has been rumoured, the evasion which has been hinted at tonight on the part of various producers would be encouraged. At present, there is no evasion and the trade is living with £3·37. It does not like the levy and farmers do not like it, but we are living with it. If the levy were increased, the impact upon the trade would be severe.

One of the reasons why we have got away with it, as it were, this time is that the price has risen for market reasons. Producers in the southern Mediterranean region had a disastrous harvest and they need our grain. As a result, the price is high. Had the price been low, the effect of the £3·37 levy would have been felt. If we had had wheat and barley on the farms at £90 a tonne, the £3·37 levy would have had a very much greater impact.

I ask my hon. Friend the Minister to resist in the price review any increase in price. Indeed, we would like to see a reduction in price if possible. Secondly, he must change the system whereby the levy is paid at the point of sale. I agree with the hon. Member for East Lothian that the fact that the levy is paid at the point of processing means that in some instances it will not be paid. In some instances, merchants may hold the money and never pay it over, or may do so only unwillingly. If we are to have this awful system, my hon. Friend must try to alter the point of sale. I hope that on these two matters my hon. Friend will get the message through to his right hon. Friend the Minister of Agriculture, Fisheries and Food.

Photo of Mr John Farr Mr John Farr , Harborough 8:28 pm, 5th November 1986

I join those who have criticised the measure that is before us, and my criticism can be boiled down to four reasons. First, I do not like the retrospective element. That is not the way that we do things in the United Kingdom. It is entirely wrong also that we should have only and hour and a half to debate such a major change. Secondly, extra policing will be required by the Ministry. We have introduced the horrible co-responsibility levy, and if the centres of operation of a farm are more than 15 miles apart the undertaking may not mill its own grain without paying the levy, but how will this be monitored? I know that many farmers, not necessarily large ones, have specialist operations that are much more than 15 miles apart. That distance is nothing, especially in the midlands where we have an excellent road system. We in Britain do not like passing regulations that we cannot enforce or monitor. I do not imagine that my hon. Friend the Minister contemplates a large increase in the Ministry's inspectorate as a result of this measure, but I think that he will get it, however. I hope that he will pay especial attention to that consequence.

Thirdly, will it be a fact that any farmer who mills his own produce will have to have a CCL 9 before he can continue to do so? Will he be exempt without an application for a CCL 9?

I shall vote for the measure. I know that the Minister fought against it in Brussels. It is part of a package, but it will be a sad day for farmers when we have a co-responsibility levy such as this. It would be better, as has been said before, and possibly will be said in future, to have a straight price cut. That is the simple approach for the House to adopt.

Photo of Mr John Townend Mr John Townend , Bridlington 8:30 pm, 5th November 1986

I congratulate the Parliamentary Secretary on his appearance at the Dispatch Box. He has had his baptism of fire—not that there has been much fire from the Opposition. It is clear, looking at the empty Labour Benches, that he will have to consider what is said behind him rather than what is said in front of him.

I have the privilege to represent the constituency in Britain with the highest number of pigs. Indeed, there are more pigs than people. To serve that industry, a number of important compound feed merchants have developed. In our area, there is considerable concern about this levy. The main criticism, as many hon. Members on both sides of the House have said, is that it is unfair. It is not evenhanded between one producer and another and, therefore, it distorts the market.

The first matter to which I should like to draw the attention of the Parliamentary Secretary concerns large pig breeders who have been buying considerable quantities of feed from efficient compound manufacturers. They will be put at a distinct disadvantage in competing with pig farmers who mill on the farm. This is discrimination. To make matters worse, I understand that there is an anomaly in the definition of "producer". It was originally assumed that the word meant a producer of cereals, but I understand that it was subsequently resolved that the definition included a livestock producer who did not produce cereals.

The second serious matter is the effect of the levy on the compound feed manufacturer. Undoubtedly, there will be an incentive to expand milling on the farm. This will affect the throughput of manufacturers, their profitability and, inevitably, if the levy continues, employment. It might be said that at £3·37 a tonne, the impact will not be great. The feeling on both sides of the House is that this levy will not achieve the objective of reducing surpluses. At the time of the next price review, there will be considerable pressure to increase the levy substantially. There has been talk in the trade of the levy going up to £10 or £15 per tonne. That would be catastrophic. The distortions and the anomalies will have a frightening and unfair effect on people in the farming and compound feed manufacturing industries.

We realise that the Government fought very hard against this levy. We appreciate that it was part of a package. There is not much that we can do about it at this stage, but we strongly urge my hon. Friend the Parliamentary Secretary and his colleagues, when they go back to the negotiating table, to get rid of the levy and sensibly attack subsidies by policies of set-aside and of price reduction. That course is very important, and I urge it upon my hon. Friend.

Photo of Mr Donald Thompson Mr Donald Thompson , Calder Valley 8:32 pm, 5th November 1986

By leave of the House, Mr. Deputy Speaker, may I say that time is short, so I will not have an opportunity to reply to all contributions to the debate. Much of the trade comment in recent weeks and some comments during the debate suggested that we would be better off without a levy. That may be so, but the Council agreed that it would be introduced. In view of its potential value in supporting the Community budget and the positive support that it enjoys in the Commission and in other member states, it would be unwise to regard its immediate elimination as a likely option.

I listened carefully to the debate. I shall draw the attention of my right hon. Friend the Minister to the wise words of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) who was supported by my hon. Friend the Member for Devizes (Mr. Morrison) and also —I thank him for his nice words—by the hon. Member for Caithness and Sunderland (Mr. Maclennan). The hon. Gentleman mentioned co-responsibility levies. The co-responsibility levy on milk continued for a long time and was not adequately supported by other measures. As I said earlier, we must make sure that we support this co-responsibility with other measures, many of which have been trailed during the debate.

My hon. Friend the Member for Shrewsbury and Atcham (Mr. Conway) mentioned retrospectivity and the legal action that is in train. He also mentioned audit. The brief on the audit matter that hon. Members received may have misled them. That matter still lies on the table. We are ready to discuss some sort of realistic, cost-effective, simple audit. Simplicity and cost-effectiveness will be difficult to achieve. The hon. Members for Edinburgh, East (Mr. Strang) and for Bradford, South (Mr. Torney) mentioned poultry with some ferocity. [Interruption.] They were not hen-pecked, of course. In real terms, grain prices are 50 per cent. lower than they were 10 years ago, and at present our grain prices are the cheapest in Europe. That does a great deal to make our poultry industry efficient.

I thank my hon. Friend the Member for Luton, North (Mr. Carlisle) for his clear and well-informed speech which set many matters straight. I listened carefully to what he said about future price reviews and point-of-sale levies. The co-responsibility levy is just one element in the policy that the Community is pursuing in the cereal sector. The Government agree that the levy on its own will not cure the sector's problems. The Community must not forget the crucial importance of maintaining a restrictive approach to overall support. The Community also needs to examine further measures to bring about structural changes which, in one way or another, are inevitable. For better or for worse, we must assume that the levy will continue to apply for some time. Annulling the regulations will do nothing to alter that.

Photo of John Home Robertson John Home Robertson , East Lothian 8:36 pm, 5th November 1986

By leave of the House, Mr. Deputy Speaker, I join other hon. Members in congratulating the Parliamentary Secretary on the way in which he has tried to hold his untenable position. He has conducted himself with characteristic charm and good humour. I suppose that those qualities have led the Minister of Agriculture, Fisheries and Food and the Minister of State to leave him here to face the music.

As I predicted at the beginning of the debate, no one expressed any degree of support for the levy. It is not good enough for people such as the hon. Member for Devizes (Mr. Morrison) to say that they will vote for the levy with a heavy heart. I say, for the benefit of Tory Members, that that kind of cop-out will not do. This levy is damaging to their constituents. They cannot get out of it in this way. We have sought to give the House an opportunity to vote against this useless and, indeed, positively harmful levy. I urge the House to vote for our prayer to revoke the regulations.

Question put:

The House divided: Ayes 105, Noes 193.

Division No. 308][8.38 pm
Adams, Allen (Paisley N)Lambie, David
Anderson, DonaldLamond, James
Archer, Rt Hon PeterLeadbitter, Ted
Ashdown, PaddyLewis, Ron (Carlisle)
Atkinson, N. (Tottenham)Lofthouse, Geoffrey
Bagier, Gordon A. T.Loyden, Edward
Barnett, GuyMacKenzie, Rt Hon Gregor
Beckett, Mrs MargaretMaclennan, Robert
Bermingham, GeraldMadden, Max
Bray, Dr JeremyMarek, Dr John
Brown, Gordon (D'f'mline E)Marshall, David (Shettleston)
Brown, N. (N'c'tle-u-Tyne E)Martin, Michael
Buchan, NormanMason, Rt Hon Roy
Caborn, RichardMaxton, John
Callaghan, Jim (Heyw'd & M)Maxwell-Hyslop, Robin
Campbell-Savours, DaleMaynard, Miss Joan
Carlile, Alexander (Montg'y)Michie, William
Clark, Dr David (S Shields)Mikardo, Ian
Clarke, ThomasMillan, Rt Hon Bruce
Clay, RobertNellist, David
Clelland, David GordonO'Brien, William
Cocks, Rt Hon M. (Bristol S)Park, George
Corbett, RobinPatchett, Terry
Corbyn, JeremyPavitt, Laurie
Cox, Thomas (Tooting)Penhaligon, David
Craigen, J. M.Powell, Rt Hon J. E.
Crowther, StanPowell, Raymond (Ogmore)
Cunliffe, LawrencePrescott, John
Davis, Terry (B'ham, H'ge H'I)Randall, Stuart
Deakins, EricRaynsford, Nick
Dewar, DonaldRedmond, Martin
Dixon, DonaldRichardson, Ms Jo
Dormand, JackRoberts, Ernest (Hackney N)
Douglas, DickRobertson, George
Dubs, AlfredRoss, Ernest (Dundee W)
Duffy, A. E. P.Shields, Mrs Elizabeth
Eadie, AlexSkinner, Dennis
Eastham, KenSnape, Peter
Fields, T. (L'pool Broad Gn)Spearing, Nigel
Fisher, MarkSteel, Rt Hon David
Flannery, MartinStewart, Rt Hon D. (W Isles)
Forrester, JohnStrang, Gavin
Foster, DerekThompson, J. (Wansbeck)
Godman, Dr NormanTorney, Tom
Gourlay, HarryWallace, James
Hamilton, James (M'well N)Wardell, Gareth (Gower)
Hamilton, W. W. (Fife Central)Wareing, Robert
Hardy, PeterWelsh, Michael
Hogg, N. (C'nauld & Kilsyth)Wigley, Dafydd
Holland, Stuart (Vauxhall)Wilson, Gordon
Home Robertson, John
Howells, GeraintTellers for the Ayes:
John, BrynmorMr. Chris Smith and
Kaufman, Rt Hon GeraldMr. John McWilliam.
Kirkwood, Archy
Alexander, RichardBellingham, Henry
Alison, Rt Hon MichaelBendall, Vivian
Amess, DavidBevan, David Gilroy
Ancram, MichaelBiggs-Davison, Sir John
Arnold, TomBlackburn, John
Ashby, DavidBoscawen, Hon Robert
Aspinwall, JackBottomley, Peter
Atkins, Robert (South Ribble)Bottomley, Mrs Virginia
Atkinson, David (B'm'th E)Bowden, Gerald (Dulwich)
Baker, Nicholas (Dorset N)Bright, Graham
Beaumont-Dark, AnthonyBrinton, Tim
Brooke, Hon PeterFraser, Peter (Angus East)
Brown, M. (Brigg & Cl'thpes)Freeman, Roger
Bruinvels, PeterFry, Peter
Bryan, Sir PaulGale, Roger
Buchanan-Smith, Rt Hon A.Galley, Roy
Budgen, NickGarel-Jones, Tristan
Butler, Rt Hon Sir AdamGow, Ian
Butterfill, JohnGreenway, Harry
Carlisle, John (Luton N)Gregory, Conal
Carlisle, Kenneth (Lincoln)Griffiths, Peter (Portsm'th N)
Carttiss, MichaelGround, Patrick
Cash, WilliamHamilton, Hon A. (Epsom)
Chalker, Mrs LyndaHamilton, Neil (Tatton)
Chapman, SydneyHampson, Dr Keith
Chope, ChristopherHanley, Jeremy
Churchill, W. S.Hannam, John
Clark, Dr Michael (Rochford)Hargreaves, Kenneth
Clarke, Rt Hon K. (Rushcliffe)Harris, David
Clegg, Sir WalterHarvey, Robert
Colvin, MichaelHaselhurst, Alan
Conway, DerekHayward, Robert
Coombs, SimonHeathcoat-Amory, David
Cope, JohnHeddle, John
Couchman, JamesHickmet, Richard
Cranborne, ViscountHirst, Michael
Currie, Mrs EdwinaHogg, Hon Douglas (Gr'th'm)
Dickens, GeoffreyHolland, Sir Philip (Gedling)
Dorrell, StephenHolt, Richard
Douglas-Hamilton, Lord J.Howarth, Alan (Stratf'd-on-A)
Dover, DenHowarth, Gerald (Cannock)
Dunn, RobertHubbard-Miles, Peter
Dykes, HughHunt, David (Wirral W)
Edwards, Rt Hon N. (P'broke)Hunt, John (Ravensbourne)
Evennett, DavidHunter, Andrew
Eyre, Sir ReginaldJessel, Toby
Fallon, MichaelJohnson Smith, Sir Geoffrey
Farr, Sir JohnJones, Gwilym (Cardiff N)
Favell, AnthonyJones, Robert (Herts W)
Fenner, Mrs PeggyJoseph, Rt Hon Sir Keith
Finsberg, Sir GeoffreyKellett-Bowman, Mrs Elaine
Fletcher, AlexanderKershaw, Sir Anthony
Fookes, Miss JanetKey, Robert
Forman, NigelKnight, Greg (Derby N)
Forsyth, Michael (Stirling)Knight, Dame Jill (Edgbaston)
Forth, EricKnox, David
Franks, CecilLang, Ian
Latham, MichaelSkeet, Sir Trevor
Lawrence, IvanSoames, Hon Nicholas
Lightbown, DavidSpeed, Keith
Lloyd, Peter (Fareham)Spencer, Derek
Lord, MichaelSpicer, Jim (Dorset W)
Macfarlane, NeilSpicer, Michael (S Worcs)
Maclean, David JohnStanbrook, Ivor
McQuarrie, AlbertStanley, Rt Hon John
Madel, DavidSteen, Anthony
Major, JohnStern, Michael
Malone, GeraldStewart, Andrew (Sherwood)
Maude, Hon FrancisStradling Thomas, Sir John
Mills, Sir Peter (West Devon)Taylor, John (Solihull)
Morrison, Hon C. (Devizes)Taylor, Teddy (S'end E)
Moynihan, Hon C.Temple-Morris, Peter
Neale, GerrardThompson, Donald (Calder V)
Neubert, MichaelThompson, Patrick (N'ich N)
Newton, TonyThorne, Neil (Ilford S)
Nicholls, PatrickThurnham, Peter
Normanton, TomTownend, John (Bridlington)
Parkinson, Rt Hon CecilTracey, Richard
Percival, Rt Hon Sir Ianvan Straubenzee, Sir W.
Pollock, AlexanderWaddington, David
Portillo, MichaelWakeham, Rt Hon John
Powley, JohnWaldegrave, Hon William
Rhodes James, RobertWalden, George
Rhys Williams, Sir BrandonWaller, Gary
Rifkind, Rt Hon MalcolmWard, John
Roberts, Wyn (Conwy)Watts, John
Robinson, Mark (N'port W)Wells, Sir John (Maidstone)
Roe, Mrs MarionWheeler, John
Rowe, AndrewWhitfield, John
Ryder, RichardWhitney, Raymond
Sackville, Hon ThomasWilkinson, John
Sainsbury, Hon TimothyWood, Timothy
Sayeed, JonathanWoodcock, Michael
Shaw, Giles (Pudsey)Yeo, Tim
Shaw, Sir Michael (Scarb')
Shelton, William (Streatham)Tellers for the Noes:
Shepherd, Colin (Hereford)Mr. Tony Durant and
Silvester, FredMr. Mark Lennox-Boyd.
Sims, Roger

Question accordingly negatived.