Orders of the Day — Agriculture Bill [Lords]

– in the House of Commons at 4:40 pm on 23 March 1993.

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Order for Second Reading read.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food 4:46, 23 March 1993

I beg to move, That the Bill be now read a Second time.

Our farmers and our food industry want to be able to compete effectively in the European Community and elsewhere in the world. The Bill will help them to do so by removing present disadvantages and bringing the industry up to date.

When the milk marketing scheme was introduced 60 years ago, its very characteristics as a monopoly were hailed as the salvation of producers. Times have changed, however, and the scheme is now the farmer's gaoler not his saviour.

What was essentially a commodity market for whole milk, butter and Cheddar cheese is now a sophisticated consumer market. Who would have thought 60 years ago that nearly half the liquid milk sold would be skimmed or semi-skimmed? In just over a decade, consumption of these types of milk has gone from 1 per cent. of the England and Wales liquid market to 44 per cent. Who would have thought, too, that butter consumption would have fallen away dramatically, while consumption of cream, yoghurt and fromage frais was rising steeply? Indeed, who in this country would even have heard of fromage frais in 1933?

There have been other changes, too. Our home market now reaches over much of western Europe, which means that, if United Kingdom-based processors are to compete, they must supply what the consumer wants, or others will do so instead. Farmers know better than anyone that we cannot produce as much milk as we should like, or even as much as we can use. Therefore, restricted by quota, we simply have to put our milk to the most productive use. We cannot go on exporting bulk commodity products and getting low prices for them, and importing huge quantities of high-value processed products, giving those who export from other countries the benefit of our market, while we do not get the proper benefit of theirs. It is ridiculous that these low-value exports should have had a priority call on the nation's milk supply, but that is part and parcel of the present system.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley Leader and Party President, Plaid Cymru

The Minister is absolutely right. The creamery in my constituency could produce four times as much cheese as it does if it had the milk. Does he accept that, whereas in the 1930s undoubtedly the state monopoly of the Milk Marketing Board worked wonders and saved the industry, there would be real dangers if we now replaced it with a private monopoly without safeguards? Can he give an assurance that, with regard to such things as national milk records and milk testing, there will not be a monopoly in the hands of Milk Marque; there will be an even-handed approach to all companies and an even pricing regime; the assets of the milk marketing boards will not be automatically transferred; and particularly that the confidential information that they have will not remain within Milk Marque, giving it an advantage in the marketplace over other companies?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman is right in his assessment of the change and of the need to make sure that, after the change, there are not unsuitable monopolistic preferences for one organisation rather than another. When the milk marketing boards produce and present their proposals, I shall look at them very carefully, and it will certainly not be my intention to give an unfair advantage to any organisation, although I shall want to ensure that there is proper continuity between the present and the future. I cannot rule on propositions that I have not yet received, but the hon. Gentleman knows me well enough to realise that I would have no intention of putting individual producers in a position in which they were unable to make a fair and reasonable decision for themselves.

As the hon. Member for Caernafon (Mr. Wigley) has said, the real question is not whether the scheme should go, but how it has lasted so long. It was excellent to begin with, but it is increasingly out of touch with reality. That is not simply the Government's assessment; the boards have long recognised that the scheme was falling apart at the seams in the face of changing markets, legal challenges and commercial pressures. Nevertheless, those 60 years of history meant that it was not easy for the boards to propose the ending of the scheme and that deserves recognition and praise.

We now have proposals for change from all five milk marketing boards. The Bill seeks to build on their initiative by enabling them to submit formal reorganisation schemes for Ministers' approval. That approach reflects the Government's desire not to sweep aside what producers have built up over the years, but to give their boards a major say in the future shape of the industry.

It has been my view all along that there is a balance to be struck between the veritable fact that these boards have had the support and encouragement of producers for many years—they have done many good things; it would not be right for us to ignore their experience or not to listen to what they have to say—and the fact that there are very real problems in the market at the moment, so we cannot, of necessity, agree in advance to accept everything that the boards suggest. There has to be a balance, and the hon. Member for Caernarfon was perfectly right in trying to reach towards such a balance; that is what we are seeking.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

Many of us represent rural constituencies which are extremely difficult to pronounce, as the Minister knows only too well. My constituency is Carrick, Cumnock and Doon Valley.

The Minister says that he does not accept everything that is put forward, but the Scottish milk marketing board put forward a scheme for a vertically integrated co-operative supported by the NFU and the producers. I was given to understand that the Under-Secretary of State for Scotland, the hon. Member for Dumfries (Sir H. Monro), who is sitting next to the Minister, also supported it. Yet because it was referred to the Monopolies and Mergers Commission, the Government said that it could not go ahead, and the whole thing was rejected. That was taking no account of what the producers think. Why have the Government taken such a dictatorial attitude in Scotland?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I do not want to start a note of dissent, and I want to stress what a mild-mannered person I am on these issues. It is all right for the hon. Gentleman to say what he did, but I thought that he supported the Monopolies and Mergers Commission and wanted there to be an arrangement whereby the consumer was protected. It was not the Government who rejected the scheme; the Monopolies and Mergers Commission's recommendation suggested that what the board proposed was not conducive to consumers' interests. That is not for me to gainsay. Since the statement was made, my hon. Friend the Under-Secretary for Scotland has in no way suggested that we should override the Monopolies and Mergers Commission. Had he or I done so and told the House that we did not agree with the Monopolies and Mergers Commission on this issue, hon. Members on both sides of the House would have objected.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I should move on, as I think I have been clear on the issue, but I shall give way to the hon. Gentleman.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

I shall not argue that there should be another Monopolies and Mergers Commission inquiry, but did not the Government refer the scheme to the Monopolies and Mergers Commission because they did not want it to go ahead? Were they not under pressure from Robert Wiseman in Scotland, which wants to undermine the scheme? No doubt that company has some influence in Scottish Conservative circles and is trying to undermine the scheme that the NFU suggested, which is supported by the vast majority if not all the milk producers.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman is not right. The board went to the Office of Fair Trading which referred the matter to the Monopolies and Mergers Commission. The hon. Gentleman should not see conspiracy where there is public accountability of a sort that has always had bipartisan support. I suggest that we accept that the proposals by the marketing boards ought to form the basis of the way in which we proceed, but that does not mean that every detail of the boards' present proposals will necessarily be approved.

There are important considerations to be taken into account as laid down in the Bill. There is the allocation of boards' assets, as the hon. Member for Caernarfon said, and the prospect for the development of competition, the interests of consumers and producers and whether the proposed trading practices of successor bodies take account of the interests of milk purchasers.

The boards' proposals must be considered on their merits when they are formally submitted to Ministers. For that reason, I am not able to tell the House whether I find any particular element of the England and Wales boards' proposals acceptable. The Secretaries of State for Scotland and for Northern Ireland will find themselves in the same position in relation to their boards' proposals and many elements of the present scheme mean that that is inevitable because of the quasi-judicial position that Ministers have in the administration of a scheme which will remain in force until it is replaced.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Has my right hon. Friend seen that it was pointed out in The Grocer of 20 March 1993 that Milk Marque had asked processors to say by 15 April this year how much milk they would want in the year 1994–95? Does he not realise that within Milk Marque there are those who have been monopolists and wish to remain monopolists, and who are rather indifferent to the interests of the industry and the consumer?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I have seen the point that my hon. Friend raises. I hope that he has seen the press release by the milk marketing boards correcting the interpretation of what they have done and making it quite clear that they have no intention of acting in a way that would be contrary to the consumers' interests. I can assure my hon. Friend that I will make sure that they continue in those terms and that the boards have recognised that that must be made absolutely clear.

My hon. Friend has raised an important point and I hope that hon. Members on both sides of the House will read carefully what the milk marketing boards have said, so that there is no mistake about what was meant by what they said and how they mean to proceed. I assure hon. Gentlemen that I shall make sure that there is no such mistake.

I am, however, confident that we shall achieve an orderly change to the more competitive marketing structure within which producers and processors alike will be able to take advantage of normal commercial freedom.

For the first time in 60 years, producers will be free to sell to whomever they want, and processors will be free to buy direct from producers or other groups. I welcome the fact that a number of competing organisations seem likely to be set up. Both Northern Foods and Nestlé announced important initiatives in this respect. It is in everyone's interests for a truly competitive market to develop, not only in Britain, and to enable those competitive bodies to sell throughout the European Community.

I do not mind at all if people in Britain buy dairy products produced in the rest of the Community, as long as we are selling at least as much in the rest of the Community. This is not a "buy British" campaign; it is a desire to see that the French have the opportunity to buy fine British products, just as we have the opportunity to buy what the French produce. We must put ourselves in a position to be able to do so effectively.

The ending of the milk marketing schemes will amount to a major deregulation measure, replacing bureaucratic control with freedom of action, and will liberate much creative potential, which is suppressed at the moment, and help our processors and producers to challenge foreign competitors to provide what the consumer wants.

Two years ago, the present change in attitude would have been unthinkable. At that time, the majority of producers were full of apprehension about the idea of change. Now the debate is not about whether change should take place, but about the form that it should take. Many producers are actively considering the new opportunities that are about to open up for them and the Labour party has changed its view on the matter, in response to that changed attitude. There is a growing consensus on the subject.

Photo of Brian H Donohoe Brian H Donohoe , Cunninghame South

At several meetings with the Scottish Dairy Trade Federation and farmers' organisations, I have heard great concern expressed about what will happen to the boards' assets on their dissolution. Can the Minister give some information or a sign of what he intends to do with their assets?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman is right to point out that concern, but I cannot make a decision until I see the proposals of the English and Welsh boards and until my hon. Friend the Under-Secretary of State for Scotland knows the views of the Scottish boards. We shall then seek to make a decision that properly reflects the interests of the various parties. We have already made a statement in England and Wales about the future of Dairy Crest's assets, which will be entirely separated from the milk marketing boards for England and Wales. A decision will have to wait until we know the boards' proposals, as they will propose different things. As that is the way in which the law is set out, it is right for us to follow that course. I assure the hon. Gentleman that I shall carefully consider the proposals and the concerns of producers, who make up the boards and have an interest in how their assets are dealt with.

Although there has been a great change in attitude on milk, the situation is different with potatoes. I appreciate that producers and others have had less time to think things through and to accept the idea of ending the potato marketing scheme.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I shall not give way yet, as I have some comments to make which I am sure that the hon. Gentleman will want to hear.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Before the Minister goes on to the subject of potatoes, could he tell us whether he has ruled out any arbitration procedure on price in the deregulated milk market?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

In advance of the boards' proposals, I would not like to say that I have ruled out anything of that sort, but I see no role at the moment for further statutory interference in the way in which the market will operate. I shall certainly not be dogmatic, as I am not a dogmatic person, but I would not want to suggest to anyone that I have that high on my list of priorities, and I do not think that I should be led down that route, although the hon. Gentleman may be able to change my mind.

On potatoes, I appreciate that there has been less time to think things through and to accept the idea of ending the potato marketing scheme, but I think that the House will agree that, in a single market, where there is no possibility of restricting imports, it would be ridiculous for our growers to be shackled by a quota system while everyone else in Europe could grow what they liked, where they liked and for as much as they liked.

I can suggest only one example to the House. Just suppose that my hon. Friend the Minister of State and I returned to the House from a meeting in Brussels saying that we had triumped and reached an agreement on vining peas, whereby every country in Europe could grow as many vining peas as it liked, except the United Kingdom, where production would be restricted. I do not think the House would regard that as a triumph. Hon. Members would say that the agreement discriminated against the United Kingdom. They would say that it would not be long before pea processors found that they had better move their processing factories from the United Kingdom, where production was restricted, to somewhere that it was not.

Frankly, I have not been fighting against discrimination for two and a half years—after those proposals of Mr. MacSharry—to reintroduce it and to cause this country self-inflicted damage, and that would not be an acceptable way to meet the needs of the potato industry.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I shall be happy to give way, but, before the hon. Gentleman gets too uptight, I just want the House to recognise that one could replace the word "potatoes" with any other agricultural or non-agricultural product. Producers in this country have to compete in a single market and one cannot prevent imports, so it would be difficult to suggest that it would be beneficial to them to reduce their ability to compete, and it does not make sense.

Photo of Alex Salmond Alex Salmond Leader, Scottish National Party

Has not the Minister almost conceded that the vehemence of the attack by him and the Minister of State on the potato marketing scheme is not widely shared in Scotland? In fact, many of us believe that it is not even shared in the Scottish Office. Are we going to hear the viewpoint of the Scottish Office, or is the Scottish Office Minister going to sit there with his face a picture of misery while the Minister once again rides roughshod over Scottish interests?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

As this is the United Kingdom, I hope to apply myself to the loss of market share for the Scottish seed potato industry, which is a matter of great concern to the United Kingdom as a whole, as it is an important part of the potato industry and an important export earner.

I hope that the hon. Member for Banff and Buchan (Mr. Salmond) will listen carefully, because I am not speaking merely on behalf of England and Wales but for the entire United Kingdom. Ministers representing the United Kingdom, including Scottish Office Ministers, are committed to a healthy potato industry throughout the United Kingdom.

The hon. Member for Banff and Buchan is a member of that great European party, the Scottish National party. Is he proposing that the single market—on which the Scottish nationalists are so keen and which they are supporting throughout Scotland and to everyone else who would hear them—will work better if one country suggests that its producers should be uniquely shackled to a system that does not affect any other country? I have rarely heard such an argument for nationalism before. It is nationalism without any advantage to the nationalists.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I shall not give way to the hon. Gentleman for one moment, as I want to read my next paragraph, which might help him.

I wish to examine carefully the proposals put forward by those who do not like my suggestion. In the single market, we need to enable our producers to compete on level terms with their continental counterparts.

Photo of John Home Robertson John Home Robertson , East Lothian

What about a level playing field?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I shall come back to that in a moment, as there was a ten-minute Bill on the subject this afternoon.

During the past 10 years, imports of processed products, which are the growth area of the market, and of seed potatoes, which are particularly important to Scottish growers, have been growing. We need to reverse that trend, and I am sure that our growers can do so if they are freed from the shackles of the quota system.

Several claims have been made about the existing scheme which need to be countered, and I wish to list them before the hon. Member for East Lothian (Mr. Home Robertson) intervenes and doubtless produces an extra claim.

The first claim is that the high consumption of potatoes in Great Britain is somehow linked to the existence of the Potato Marketing Board. The argument may seem obviously ridiculous, but I hear it regularly as I travel around the country to listen to people arguing the case. Our potato consumption is due to our historic dietary choice, and it is higher in the Republic of Ireland, which has no Potato Marketing Board. I do not think that, if we got rid of the board, or changed its functions, the people of Britain would cease to eat potatoes. That argument is bureaucratic and I think that most Conservative Members would find it unacceptable.

The second claim is that our high degree of self-sufficiency in fresh potatoes is somehow due to the board; that is just not true. That self-sufficiency is due to the fact that our producers have the advantage that it costs up to £35 per tonne to bring potatoes across the channel and, therefore, our competitors clearly start at a disadvantage with what might be inelegantly called dirty potatoes. The problem arises with the processed product, because as the value of a product rises compared to transport costs, the home producers' advantage falls. Therefore, it is not surprising that we have a high proportion of the fresh potato market, but import many processed potatoes. Surely that shows that, wherever the added value is sufficient to counteract the transport costs, our producers do less well. The effect is caused by transport costs, not the operation of the board.

The third and most persistent worry of those who wish to retain the status quo is that removal of the quota system will lead to instability in the market. The evidence does not suggest that our quota system leads to greater stability here. [Interruption.] I see that the hon. Member for East Lothian does not agree. However, I can tell the hon. Gentleman that I started off by believing that the system created stability. I had always believed that to be the case, because I had never checked the figures. I thought that I should do so.

If we compare the year-on-year prices changes in the United Kingdom with those in the other main producer states—France, Germany and the Netherlands—we see an interesting pattern. Between 1979–91, our prices were more volatile than all the others in no fewer than three years. They were more volatile than at least one of the other countries in five years, and the least Volatile in only four years. That is hardly a convincing case for the retention of a board—

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

What about prices and contracts?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I know that the hon. Gentleman's knowledge of potatoes is immense, but I shall come to the issue of contracts and prices in a moment. I am now dealing with the volatility of prices, which is a matter of considerable interest. The board always raises that issue when it argues that consumers are protected because we have a system under which our prices are much less volatile. They are not. The board apparatus has not done anything to make prices in this country less volatile than those of our major competitors.

The fourth argument is that, without the board, prices would fall dramatically. The price of potatoes for processing will have to be governed by competition, whatever we do. No board will make it possible for Britain to have higher prices for potatoes than the Dutch, Danes, Belgians, Germans or French. A single market is all about competition; if other people can produce something cheaper than we do, we cannot protect ourselves in a single market by running a bureaucratic scheme. Some people might like to do so, but we do not have to propose that suggestion—the Scottish nationalists certainly cannot do so, as they are in favour of the single market and are as enthusiastic about it as I am. I am pleased about that—it is the only thing that I can find in favour of the Scottish National party.

We must accept that the price of potatoes for processing will be fixed by the competition, not by any board. That means that the price of dirty potatoes will continue to be protected by the channel, but not the price of processed potatoes. Perhaps we should consider carefully the proposals that I understand the hon. Member for Workington (Mr. Campbell-Savours) has been working on. I put it like that because his proposals in Committee, when we discussed the potato scheme, were in skeleton form. The hon. Gentleman's proposals have also been discussed around the country as he has travelled around to try to discover whether he can make them work. I have tried hard to put together such a scheme, which is designed to distinguish between dirty potatoes and processed potatoes, with the board controlling one category but not the other.

I am looking forward to seeing how the hon. Gentleman has changed the scheme since it was first revealed. The difficulty of dividing processed and non-processed potatoes is that there is generally no difference between them. Some potatoes that are grown for processing turn out to be unsuitable for processing, so people sell them in different forms. I do not know how we would deal with potatoes for export under such a scheme. Are we to colour the potatoes, with green ones for those controlled by the board and blue ones for those that are not? Doubtless a bureaucratic mechanism can be contrived whereby we can continue to have a board that does not do anything about a situation that needs nothing done to it as the function is already served by the channel.

I realise that the Labour party is keen for the Government to get in on the act, and that it is not easy to leave the channel to its own devices. Therefore, if the hon. Member for Workington brings forward his proposals, we will listen carefully to see whether they can be used. However, I suspect that the Labour party—although it would like to gain support among those who are still unconvinced of the need to change the board—knows in its heart of hearts that the board's quota arrangements no longer fulfil a useful purpose. Therefore, we need to move towards a freer system.

Photo of John Home Robertson John Home Robertson , East Lothian

Surely the people involved in the potato market—be they producers or consumers—are better judges of what is best for that market than the Minister is, as a politician. The Minister has repeatedly said that the scheme is "shackling" potato producers in Britain. Is he suggesting that the producers, who want to maintain the scheme, are masochists?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I should have thought that the best judges were the people buying the product. They have made it clear that future investment will be where the potatoes are available and the product should be as available in this country as it is in Holland. We do not even need to ask the processors about that, as we automatically know the answer.

Even if you, Mr. Deputy Speaker, think hard and long, can you produce a single product that you could say would be protected in a single market by the fact that one part of that market had to restrict the production of the product and, at the same time, expect the consumer to buy the product where it is least available? The idea goes against every rule of economics.

Photo of Peter Tapsell Peter Tapsell , Linsey East

My right hon. Friend keeps arguing as though no one in continental Europe wants to restrict their product and the other 11 countries are unanimous in wanting a free market. He knows that that is not the case, and many of the European countries want a heavier potato regime than we have.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

My hon. Friend is right about Portugal, which has a heavier regime than we do. But we do not generally compete with Portugal for potato sales. No country in the Community has ever suggested that we should spread the British system throughout the whole of the Community. Most countries in the Community are clear that they want the lightest possible potato regime and the greatest competition.

I know my hon. Friend's views on other matters, and it seems odd that he should suggest that we should continue with such a proposition in a single market. He would be right to say that it would be worth while to argue about whether we should have a controlled or a non-controlled system if all the other 11 countries—or a significant proportion of them—wanted a system such as we have here. As someone who believes in a freer market, I think that, even in those circumstances, it would be better to have a less-controlled system. I cannot find anyone in the Community who is at all interested in having a system in which everyone is controlled.

There are those who would like Britain to continue with her system as long as they do not have to have it as well—that is one of the problems. Some people have suggested to me that we should agree to have our system. They say that, although the Commission may not like it, the rest of the countries will sign up to such a system—of course, they will. If I were a competitor, I would immediately sign up to an agreement that restricted my major competitor to a quota system.

Photo of Gavin Strang Gavin Strang , Edinburgh East

I think that the Minister might at least acknowledge that the Conservative party is deeply divided on the issue. Is he aware that an amendment to the draft European Community potato regime was carried in the Agriculture Committee this afternoon? That amendment was moved by the Conservative Member of the European Parliament for Lancashire, Central. The amendment explicitly provides for the maintenance of the national organisations. It stated: At its request, a Member State may be authorized to grant an organization established or maintained for the purpose of stabilizing the market in potatoes in the whole part of the territory of that Member State. It goes on to refer to the right to estabish production quotas for, and to levy contributions from, potato producers. It provides for a future for the Potato Marketing Board—and it was successfully moved by a Conservative Member of the European Parliament.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

Well, he is wrong—utterly wrong. The proposal would do grave damage to the British potato industry.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I do not think that the hon. Gentleman always finds every member of his party worthy of support. I have often sat here when he has been squirming while the hon. Member for Bolsover (Mr. Skinner) outlined his alternative economic policies. Although the Conservative Member of the European Parliament in this case is a man of excellent ability and remarkable standing on all other issues, on this one I beg to differ with him.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Will my right hon. Friend confirm that over the past decade there has been an increase of 300,000 tonnes in the imports of processed potatoes to this country, at a cost to the balance of payments of £125 million—a considerable cost to employment in the food processing industry?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I can certainly confirm that. That is why, if we left the potato system as it is, we would find ourselves with a steadily decreasing part of the section of the industry which is growing, but holding on to our dominance in a section of production which is bound to decrease.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown , Cirencester and Tewkesbury

Has not my hon. Friend the Member for Hendon, South (Mr. Marshall) hit the nail on the head? If a major part of the 550,000 tonnes of exported produce were repatriated to this country, it would enable our growers to grow 30,000 more acres of potatoes.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

My hon. Friend is right, but we can do that only if the processors understand that there will be a continuous supply and that they will not be hindered in ways that they would not encounter elsewhere. McDonald's uses 80,000 tonnes of potatoes in this country already. It would be extremely good if, as it expanded throughout Europe—it expects to open nearly 1,000 restaurants in Europe in the coming year—at least some of that expansion came from British-produced potato chips.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

If the company has the chance to process and produce in countries where there are no restrictions on acreage instead of in a country in which there are such restrictions, it will go to the countries where there are no restrictions. If the hon. Gentleman cannot see the obvious economic sense of that statement, I can understand why he is a socialist. Any fool can see that that will apply if production is restricted in a single market. The hon. Gentleman is a socialist and a farmer. He is also a landowner, I understand—although that is perhaps more difficult to understand. Perhaps I have discovered the answer, however: he is economically wrong. He may be socially and culturally right, but he is economically left.

Photo of John Home Robertson John Home Robertson , East Lothian

I am flattered to be described as a socialist, but cannot the Minister grasp the fact that, if there is a wonderful increase in potato sales, I have no doubt that the marketing board would cheerfully increase the quota and the basic acreage. That would overcome the problem.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman has a wonderful new economic theory, which is that the only way supply can expand to meet demand is to put in place a board that would decide when demand is going to increase so that it can tell the producers when they can increase the supply. That theory has been tried in the Soviet Union and elsewhere for a long time, and it does not work. It is the market that operates in these cases, not bureaucratic groups of people who think they know best.

Photo of John Home Robertson John Home Robertson , East Lothian

She is a socialist, too.

Photo of Ms Jean Corston Ms Jean Corston , Bristol East

Indeed. Is the Minister aware of the possible consequences of the sort of uncontrolled market which he says he favours? I cite the case of New Brunswick, where the potato industry has been virtually destroyed by companies such as McCain, which dictate the sort of potatoes that must be grown, and that means in practice the mighty chip and the crisp? Meanwhile, the Secretary of State for Health encourages people, in "The Health of the Nation", to eat potatoes of a quite different sort. Is the Minister saying that our potato market must be structured so that only the potato processors get what they want?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I think that the House is beginning to discover what the alternative is. It is that my right hon. Friend the Secretary of State for Health shall lay down the kind of potato which it is good for people to eat, whether they like it or not. Then she shall lay down the way in which those potatoes shall be cooked and processed. No doubt socialist councils will send inspectors out into people's homes to discover whether they are cooking potatoes in the requisite vegetable oil and to see that they are not using animal fats. They might also check on the number of chips fried per person per week, to see whether it is below the national maximum stipulated. No doubt there will be special derogations for those who work in heavy industry and who therefore can deal with more animal fat than can those of us in sedentary occupations.

The hon. Lady is on to the same thing that Opposition Members always want—telling other people what is good for them.[Interruption.] I know that the hon. Member for Workington is worried about the people behind him—I would be, too. He has never been outflanked on the left before. The people of Workington had better get ready for reselection. They must look for someone who is more red-blooded—perhaps a woman who will be unreconstructed in her desire to tell the people of Britain how to eat their potatoes.

Photo of Peter Tapsell Peter Tapsell , Linsey East

My right hon. Friend is being characteristically extremely amusing, witty and clever, but when all the clever economics have been voiced, the fact remains that there are many thousands of potato producers in this country, most of whom have always voted Conservative. As the Minister of Agriculture, Fisheries and Food, he needs to take their views seriously. No amount of witticism will impress them. All the producers in my constituency believe that their livelihoods will be put at risk if there is unlimited capacity throughout the EC to grow potatoes. Potato producers on the continent of Europe think the same. It is only the Ministers whom my right hon. Friend meets at Councils in Brussels who do not hold that view.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

My hon. Friend is perfectly right to raise that serious issue. I am trying to distinguish between the obvious nonsense that the hon. Member for Bristol, East (Ms Corston) introduced to the discussion and the serious issue that he raises. Many people who produce potatoes—there are many in my constituency, just as there are in my hon. Friend's—are concerned that if the board disappears there will be an uncontrolled market in which they will find it difficult to compete. I understand that.

I must tell my hon. Friend as forcefully as I can that he is not right to say that the other countries of Europe want a controlled system like ours. Some farmers might like that, but in the end it is Ministers who decide what is best for the industry—[HON. MEMBERS: "Big brother."] Not at all. All the French potato producers in the world may think one thing, but if they cannot convince their Minister, in the end he will vote as he thinks right—

Photo of Peter Tapsell Peter Tapsell , Linsey East

They have just voted him out.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

So they voted out the one person whom they might have persuaded to agree with this proposal. They have got rid of a socialist—on second thoughts, a fellow traveler—who has been thrown out all the more forcibly for that. He got a bit closer to the hon. Member for Bristol, East in his proposals. However, the French have now voted in a Government who will find it difficult to believe that the future of France lies in adopting the British potato regime. That is one thing that I do not think the new French Government will wish to do.

If there were an alternative that was supportable by the rest of Europe, my hon. Friend's argument would at least be worth continuing. I doubt, however, that I would be on the same side as him because I am not sure that the House would want ever further complications in the CAP. My hon. Friend is often one of those who point to the absurdities of having an over-regulated CAP system in other sectors. Therefore, I ask him to apply to the potato industry many of the strictures that, from time to time, he has perfectly reasonably raised about the rest of the CAP. It would not be sensible for the Government and the country to extend into another sector the very part of the CAP that, in every debate, both sides of the House object to because it is over-complicated, over-bureaucratised and over-expensive, and ends up with the taxpayer and the consumer paying even more.

Photo of John Greenway John Greenway , Ryedale

Will my right hon. Friend give way?

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I ought to continue, or there will not be time for others to speak. I had a short speech to make, but it has been interrupted on many occasions.

It is an irony that we have among our processors some of the best and most efficient companies in the world. What a terrible thing it would be if their investment were increasingly to go outside the United Kingdom. We must beware of falling into the situation of the dairy industry, where the high added-value products come increasingly from abroad, and we are left with the commodity end of the business. I am not prepared to be seen as the Minister who was so unable to confront short-term fears that he allowed an industry to destroy itself.

The House will wish to know that there will be a number of additional arrangements to be made to make the transition as smooth as possible. First, we shall not be seeking to reverse the amendments made in another place. There will merely be some tidying up of the wording. Secondly, part IV accomplishes what the Government announced in 1988—the ending of the potato guarantee. Unlike the enabling provisions of part II, ending the guarantee is a decision that has already been taken, and it will be carried out as soon as possible after Royal Assent. It is a decision already accepted by the industry and not, as far as I am aware, contentious. The third detailed point is that, as I have already pointed out, the Bill will enable the non-regulatory functions of the Potato Marketing Board to be carried out by a successor body.

I hope that the House recognises that we have to make some such change in any case, because if the European Community were to agree to a lightweight regime—the signs are, as I have tried to explain to my hon. Friends, that that will be the case—it would mean that the system would fall. It would not be able to continue. I do not want that to be the result. I want to have a system that will allow a satisfactory transition from one regime to the other. I hope that the industry will then face up to the question whether it wants a continuation of the board, which would deal, as it can, with the marketing and promotion of potatoes in generic terms and research. That would be done if a development council were the successor body to the board. If Ministers saw substantial support for that idea in the industry, they would be able to make the necessary order to allow the Potato Marketing Board to continue as a development council.

That would also enable the board to have levy-raising powers but, as there are some doubts about those powers, clause 52 improves the position by making it possible for a levy to be collected via an intermediary. That would also be helpful should the milk marketing arrangements be followed by a desire for the industry to have a development council. I am concerned that there should be no philosophical bar to the ability of the industry to decide that it wanted corporately to do some of those things for itself.

Part 3 deals with marketing grants.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Will my right hon. Friend give way?

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Could my right hon. Friend obtain clarification of the reference on line 4 of page 13 to section 53(4) of this Act", given that on page 27 there is no clause 53(4)? I do not expect him to know the answer, but it would be helpful if he could obtain it.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

I am always pleased to give way to my hon. Friend and never more so than I am now. I shall seek an answer, and I regret it if there has been a mistake.

In the detailed consideration that the Government have given to the marketing of both milk and potatoes, we have shown our concern to improve our ability to compete and to give our producers and manufacturers a better opportunity to win a larger share of the market for added-value products. In the same spirit, we introduced our marketing grants in April last year, following the seminar called by the Prime Minister in November 1991, which concluded that there was a need for farmers to develop professionally run marketing enterprises on a competitive scale.

For example, the opportunities presented by our supermarkets can be fully seized only by businesses big enough to negotiate satisfactory terms and to deliver the required quantity and quality consistently. There are some signs that, in other countries in the Community, the organisation of agricultural businesses and food processing is such that they can compete more effectively to sell into this country than we can into theirs. That is one reason why the marketing grant is so important.

Unfortunately, the existing grant scheme has its limitations, particularly in our ability to involve the businesses downstream of the producers, which are crucial to the success of the industry. Part III will enable us to introduce something more satisfactory. I have no doubt that groups of milk and potato producers will be among those applying for grant.

In part IV, there are a number of other items that the House will want me to refer to. The first is the wool guarantee. The Government announced, more than four years ago, their decision to end the wool guarantee. Clause 48 implements that decision. The guarantee was introduced in the 1950s with the reasonable aim of stabilising sheep farmers' returns from wool. Conditions are now different. Developments on the international wool market, where huge price changes can result from decisions taken in China, Russia, Australia and New Zealand, mean that the guarantee can no longer operate effectively when it is used entirely as a stabilisation measure. The sheep farmer now relies essentially on the return that he gets from the market, enhanced by the direct payments on breeding animals in the shape of annual ewe premiums and hill livestock compensatory allowances—payments which, for 1992, will total around £495 million.

In the light of the substantial support to the sector, continued Government intervention is unnecessary and simply cannot be justified. The marketing arrangements for clip wool, including the statutory monopoly on purchase, will be retained. The scheme has been administered effectively by the British wool marketing board, which will have an opportunity to build further on its achievements after the guarantee has ended.

I hope that the House will recognise that we have tried to look at each of these and get the best answers for Britain—not to apply to it some predetermined philosophical position. That is why we have insisted on keeping the scheme, because it is the one way in which we can deal, in an international market, with similar schemes that represent other people in other countries.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman must accept that what one believes is the believable, and that is entirely believable. We shall listen to his speech at the end of the evening and see how one can go beyond the bounds of belief rapidly and never return.

A further belated recognition of changed realities is the abolition of the annual review of agriculture. It is a relic of the days when farm prices were fixed in consultation between the Government and the farmers' unions. Since we have joined the Community, the focus has switched to the CAP, and in that context our close contacts with the farmers' unions and other bodies will continue. The Government will also continue to publish an annual report on agriculture, as the Bill provides. I am sure that the House will agree that that is a sensible measure to bring the legislation up to date.

Of the Bill's remaining provisions, those relating to Northern Ireland will be found in clause 57, which lists those parts of the Bill that will apply directly to the Province. They include the termination of the wool guarantee. Clause 55 deals with the procedure for extending various other provisions to the north of Ireland. In that respect, I can confirm that it is the intention of my right hon. Friend the Secretary of State to introduce an Order in Council to apply the provisions of part I so as to end the Northern Ireland milk marketing scheme.

It is the Government's purpose to do all that they can to enhance the conditions in which our food and farming industries can compete. We have identified a clear need to encourage groups of farmers and others to work together to improve the marketing of food and agricultural produce. As with the milk marketing boards, we have come to the clear conclusion that the statutory monopoly should give way to a better method of marketing milk and milk products.

Increasingly, the same conclusion comes to anyone who looks at the place of the Potato Marketing Board within the new European single market. It is not surprising, therefore, that there is mounting support for the proposals that the Government have put forward this evening.

Our aim is to help the industry do its job better, to liberate it from the shackles of the past and to realise its potential. At a time when there is so much talk of restrictions and quotas, this is a move to set the industry free. I commend the Bill to the House.

Photo of Gavin Strang Gavin Strang , Edinburgh East 5:40, 23 March 1993

There can be no doubt about the importance of the Bill to agriculture, but it is also important to the food industry and to consumers, of whom there are millions in Britain.

The Bill will make fundamental changes to the way in which milk is marketed in Britain. For most people, milk and milk products, such as butter, cheese and yoghurt, are an important part of their diet. Annual household expenditure on milk and milk products is about £6 billion. About one seventh of what the average family spends on food goes on milk or milk products.

Consumers are entitled to ask whether the Bill will improve the quality of those foods. They are entitled to ask whether it will enable milk and its processed products to be marketed at lower prices. The answer to both those questions is an unequivocal no. The milk marketed in Britain is of the highest quality in Europe, and nothing in the Bill aims to improve that. The milk marketing boards deserve a great deal of the credit for the hygienic quality of our milk. It is to be hoped that the new arrangements will allow those standards to be maintained in the future.

The abolition of the milk marketing boards and the pricing arrangements which operated with them will not reduce the price of milk—far from it. There is a real danger that, as a result of the new arrangements, there will be an unjustified increase in the price of milk for consumers.

The House does not often have the opportunity to debate agriculture and the food industries. Total annual consumption of food and drink in Britain is now in excess of £90 billion, £45 billion of which is accounted for by household food expenditure and the remainder by drink and meals out. About one eighth of household expenditure is accounted for by expenditure on food. For people on low incomes, the proportion of their income that goes on food is much higher. Food is not just another product; it is a basic essential, like shelter, water and fuel.

Agriculture is important because it is a provider of the raw materials for our food industries. Hundreds of thousands of jobs in those industries are dependent on agriculture, and millions of pounds of investment each year. Agriculture is also important as the core of the rural economy in most parts of Britain. It is not just the jobs of the farmers and farm workers that are important but all the other jobs which are created by the inputs into agriculture and the expenditure created in those rural communities. That is why it is vital that the Government should provide adequate support for our agriculture industry.

It has to be said, and it gives me no pleasure to do so, that times have been hard for the agriculture industry in recent years. We have seen a fall in investment. The Government's own publication, "Agriculture in the United Kingdom 1992", published only last week, states: The total stock of capital"— referring to investment in the industry— has gradually declined over a number of years and is slightly below its 1981–83 level. That is the measure of the extent to which the agriculture industry has been depressed for the past five or six years. It is a measure of the extent to which there has been under-investment in the industry.

There are some signs that things will improve in the future, primarily because of the devaluation of the pound, for which the Government can hardly claim credit, since they tried up to the last minute to avert it. Let us hope that that devaluation—black Wednesday, sometimes called golden Wednesday in the agricultural industry—and the subsequent alterations to the green rates, will lead not only to higher incomes for farmers and farm workers but to increased investment and an improvement in the overall jobs and standards of our agriculture industry.

Part II, dealing with milk marketing, is the most important part of the Bill. It is undoubtedly the case that the milk industry is vital to Britain. I have referred to its importance to consumers. The annual value of milk at the farm gate is about £2·8 billion. We have the best quality milk in the EC. Only Denmark has milk of comparable quality.

The milk marketing boards have provided a guaranteed outlet for British dairy farmers, no matter how remote their farms. They have also played a major part in maintaining a substantial doorstep delivery service in Britain. It is true that the amount of milk sold through the shops and supermarkets has increased, but the doorstep delivery service is at a level much higher than in any other European country. That is of benefit to Britain and something that we should seek to encourage and maintain. The milk marketing boards deserve credit for that.

There has been a suggestion recently in some quarters that the milk marketing boards have not achieved the most for the producers, that the price obtained by the producers in Britain through the boards has been less than in some other EC countries. I reject that as a criticism of the boards. I have never accepted that the purpose of the milk marketing boards was to maximise revenue. The milk marketing boards existed to strike a balance between the interests of the producers, the processing companies and the consumers. The pricing arrangements were designed to do that. They are based on a negotiation between the Dairy Trade Federation and the milk marketing boards.

The milk marketing boards have an excellent record in Britain on milk testing, on-farm milk recording, artificial insemination and all the other schemes developed and maintained by the boards which have brought substantial benefits to the British milk industry.

The milk marketing boards were established by legislation enacted in 1931 and 1933. Since then, there has been a bipartisan policy with all-party support for the milk marketing boards. There have been changes in social and economic conditions and the functions and role of the milk marketing boards have been adapted to meet them. In the 1970s, the milk marketing boards were threatened by the EC. The then Labour Government, of which I was a member, decided as a priority to secure amendments to the appropriate EC regulations to enable the milk marketing boards and their counterparts in Northern Ireland and Scotland to continue. In that, we were supported by the Conservative Opposition.

I am pleased to see in his place the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), a former Minister of Agriculture, Fisheries and Food. Speaking for the Opposition in a debate on agriculture in the House on 21 March 1978, he said: As to the future of the Milk Marketing Boards, the Conservative Party has consistently expressed its support for all our marketing boards, but we recognise that certain parts of the milk boards' activities might have to be altered. However, we believe that it is absolutely vital—we fully support the Government in their efforts—to preserve the basic functions of the milk boards and of the structure of milk marketing in this country. We think, above all, that it is right that the milk boards should preserve their powers to be the sole first buyers of milk and to have the right to pool prices.To put in another way what the Minister said, it is no coincidence that the United Kingdom is almost the only country in Europe to have such a statutory organisation, while at the same time it is the only one to have such a large market for liquid milk sold on the doorstep… However, I cannot think of any other issue on which the whole House would be unanimous in opposition but that of failing to get a satisfactory solution to the position of our milk boards."—[Official Report, 21 March 1978; Vol. 946, c. 1358–59.] We found that solution. I was privileged to be a junior Agriculture Minister in that Labour Government, and I remember sitting in the Council of Agriculture Ministers arguing for hours in an attempt to secure the changes in regulation which would enable our milk marketing boards to continue. We secured those changes, with the support of the whole House.

Since then, there have been some changes in the market place. In particular, we have witnessed the growth in low fat milks. Although the Minister did not refer to that directly in his speech, he alluded to one of the problems which developed during the 1980s—the failure of the scheme to provide properly for the production of low fat milks. The Government were told of that problem as long ago as 1986.

In 1984, the milk industry adopted a system of non-binding arbitration. The first arbiter was the late John Silkin, under whom I had the privilege of serving when he was Minister of Agriculture, Fisheries and Food. In 1986, he produced the first non-binding report relating to milk marketing arrangements, stating: The question of low fat milk and other products now outside the Scheme and on-farm manufacture will in my view assume a much greater importance as time goes by to an extent where unless care is taken they may begin to threaten the existence of the Scheme itself. It is my opinion that it is to the interest of both the MMB and the DTF that a common course of action should be resolved between them. I would not regard the solution to this question as lying within the competence of this Opinion but I believe that an inquiry ought to be undertaken among all those concerned… It is my recommendation that MAFF should undertake an internal inquiry into the problem, which, as I stated…unless care is taken, might begin to threaten the existence of the Scheme itself". Of course, Ministers did not respond to that. Although they received regular representations from the Dairy Trade Federation, no action was taken. It is hard to resist the conclusion that the Government were happy to preside over the undermining of the scheme, because they wanted it to be challenged: for dogmatic reasons, they wanted to bring about circumstances in which it would be easy for them to wind up the boards, as they are doing today.

As there is a substantial Conservative majority in the House, it is possible that the Bill will be given a Second Reading. As a constructive Opposition, we shall concentrate on the arrangements with which the Government—or, indeed, the milk marketing boards—wish to replace the existing system. Our first and fundamental criticism of the Government relates to their adication of responsibility for introducing satisfactory arrangements. Surely no food industry is more important to the country than the milk industry. It is highly efficient and a great national asset. In making such a historic change, the Government have an obligation to endure that it develops satisfactorily.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Who does the hon. Gentleman believe knows more about the milk industry—both production and processing—than the industry itself? Why should politicians decide such matters? I think that the hon. Gentleman is quite wrong.

Photo of Gavin Strang Gavin Strang , Edinburgh East

We live in a democracy, and the way in which things happen is decided by Government and by Parliament. Of course, before introducing any replacement scheme, the Government should consult not only the milk marketing board and other boards but the Dairy Trade Federation, the consumer organisations and all interested parties. That is not in dispute. None the less, it is entirely inappropriate for the milk boards to introduce the new scheme. Although that scheme should be based very much on the views of the boards, open and public consultation should have taken place. Given the importance of the industry, the Government should have accepted their responsibility to present alternative arrangements, which should then have been dealt with by affirmative resolution in both Houses of Parliament.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

Would the hon. Gentleman apply the same argument to, for example, the car industry? Does he suggest that the Government should present proposals about the way in which that industry should conduct itself, or is it better for those in the business of manufacturing cars to run that business as they think best? Is it not rather curious to suggest that the milk industry does not know its own business? I thought that the hon. Gentleman believed that ours was the best milk in the European Community. Surely the producers of the best milk in the Community can decide how best to produce it.

Photo of Gavin Strang Gavin Strang , Edinburgh East

If there were a national car marketing board with the statutory right to buy every car manufactured in the country, and if the Government were about to wind up that monopoly, I would indeed suggest that they introduce satisfactory arrangements to free the market and eliminate the monopoly.

I am not sure whether the Minister attended this morning's meeting at which Ministers examined the future of the coal industry, but I believe that there may well be a parallel not with the car industry, but with the highly regulated energy industry. When the Government sought to deregulate that industry, they tried to pretend that it was a genuinely free market; in fact, it was a market dominated by major companies and major vested interests. We are likely to see a milk market dominated by the successor to the milk marketing board—Milk Marque—which may involve 80 or 90 per cent. of producers. The Government should face up to their responsibilities. They should have had the courage to consult the industry, and to present their own proposals to free the market, if that is what they wish to do.

The European Commission has already told the milk marketing boards and the Government what they can and cannot do. The Commission has said—understandably, and I do not think that any hon. Member would necessarily dispute its view—that it would not be acceptable for the milk marketing boards and Dairy Crest, their processing arm, to be allowed to continue as a single body in a voluntary market. Such a body would be huge, not only in terms of the milk market in England and Wales but in terms of the European Community market. The Commission decided that the milk marketing boards and Dairy Crest should be separated.

At that point, the Government could have made a decision. They could have considered whether there was a case for integrated milk co-operatives, allowing the processing arm to be associated with the producers. They could have decided to set up a number of integrated producer co-operatives. I am not saying that that is the best solution; I am merely saying that it is very unsatisfactory that the Government never even considered it.

The Northern Ireland milk marketing board buys more milk than its Scottish counterpart. Surely there is a case for protecting the Northern Ireland board, which is fundamentally important to Northern Ireland's agriculture, and for helping to ensure that its processing facilities—which need help and investment—can be maintained. As my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) pointed out, the position in Scotland is ridiculous.

I refer to a report: it is not about the Scottish milk market, or about whether the processing arm of the Scottish board should remain with the board—it concerns only whether the Scottish board could acquire a dairy from the Co-operative Wholesale Society in Glasgow. Anyone reading the report may be surprised by its conclusion. I must say that I was surprised. I thought that it made a very good case, on the ground that there is a real United Kingdom milk market—not only in processed products such as butter and cheese, but in the milk that flows across the border between Scotland and England. I was amazed that the Monopolies and Mergers Commission concluded that that merger should not take place. It is unacceptable that, as a result of that report, we are being told that the processing side of the Scottish milk marketing board must be split from the producer organisation.

The European Commission does not believe that the industry in Northern Ireland and Scotland is big enough to have a distorting effect on the market for milk in Europe. Having decided to get rid of the milk marketing boards and the statutory scheme—a decision with which we disagree—it is wholly unsatisfactory that the Government did not sit down, consult the interested parties and produce arrangements that were in the best interests of the industry, the processing companies and the consumers.

I must remind the House that the arrangements are not necessarily permanent. Mr. Leon Brittan sent a letter to the Minister in October 1992 in which he commented on the scheme put forward by the milk marketing boards to replace the statutory arrangements in England and Wales. He wrote: Against this background, and on the basis of the information made available to me, I believe that there are no grounds for action under Articles 85 and 86 with regard to the proposed new co-operative for an initial period of two years". It cannot be satisfactory for the milk marketing boards to set in place arrangements which are authorised by the Commission for only two years. As the Minister is aware, as soon as the legislation is in place, the Director General of Fair Trading will be entitled to investigate the arrangements for the marketing of wholesale milk in this country. He will be entitled to refer the arrangements to the MMC within two years. It is unsatisfactory for us to go down a road to so much uncertainty.

Much concern has been expressed about the future of the assets of the milk marketing boards, other than the processing arm, Dairy Crest, which will be floated off as a separate company. I am referring to the milk testing arrangements, the national milk records and to Genus which includes the artificial insemination service and the advisory services which have served the industry so well.

It is absolutely fundamental that every producer, regardless of whether he becomes a member of Milk Marque, should have equal access to those services. Those services have been built up by all milk producers, past and present. It would be unfair if the successor to the milk marketing boards were able to take over those services and operate them in a way which discriminated against non-members of Milk Marque. The alternative would be to transfer those activities to another body. I am not suggesting that, but perhaps that point should be considered in Committee. It is crucial that those facilities should be available to all milk producers.

Quota management is another important issue which must be addressed. As a result of the boards, we have a very efficient system of quota management. The big difference between today's milk industry and the industry of 10 years ago is that we have quotas. I accept that there is alarmist talk about the effect of the changes because we have milk quotas. If a very powerful producer co-operative is established against a background of quotas, and there is an under-supply of milk in this country, that body might be able to ratchet the price of milk to unjustified levels. I can assure the Minister that the Labour party will be outraged if the price of milk for consumers is raised unnecessarily as a result of the arrangements.

The Minister described the milk boards as the milk producers' gaoler in this country. I do not know how the Minister can use that description. Only a few years ago, the boards had the overwhelming support not just of the consumers organisations and the Dairy Trade Federation, but also of the milk producers who control the boards. It is nonsense to claim that the boards are the producers' gaoler.

It is equally nonsense to claim that the Potato Marketing Board has shackled our potato producers. As my hon. Friend the Member for East Lothian (Mr. Home Robertson) said, it is amazing that the potato producers are determined to retain those shackles. The legislation in respect of potatoes is enabling. Many potato producers and, I suspect, the Potato Marketing Board, received a shock when they discovered that the Government were not simply planning to get rid of the Potato Marketing Board on the basis of EC legislation, but had decided, on the basis of their own independent judgment of what was best for the British potato industry, that the Potato Marketing Board should go.

We do not accept that. We agree with the Minister that the last thing we want is an EC regime for potatoes which includes intervention buying. Open-ended state buying is the bane of the common agricultural policy. We absolutely agree that there should be no question of the Government agreeing to a new potato regime which would allow intervention buying whereby the taxpayer buys potatoes when the market is over-supplied.

However, I do not accept the Minister's arguments. I do not accept that it is automatically a mistake for the producers in this country to choose to manage their market against the background of free trade in potatoes in Europe. There is already a free market in potatoes in the Community. As the Minister has said, the board has accepted that the last vestige of state support for the potato industry—in respect of the contribution that the Treasury is willing to make to part of the Potato Marketing Board's support buying programme—should be removed.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

I am enormously puzzled by what the hon. Gentleman has just said. He said that he would oppose a new potato regime in Europe which involved intervention buying. So far as I am aware, the Labour party has always supported the powers that the Potato Marketing Board currently has, and which it has had since the war, to support the market through acreage quotas and intervention buying. Why has the hon. Gentleman suddenly become the first Labour spokesman in my lifetime to speak against intervention buying for the potato sector?

Photo of Gavin Strang Gavin Strang , Edinburgh East

I am happy to respond to that point. It is one thing to have a support buying programme financed by a levy on producers. When the Government remove the guarantee, it will be wholly financed by the levy on the industry. We believe that that is correct and appropriate.

As the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) will acknowledge, we have always opposed intervention buying in terms of the CAP. He would probably agree that the old deficiency payments system based on guaranteed prices served this country better than intervention buying. We need only consider the beef market and the hundreds of millions of pounds that are spent buying beef, storing it, freezing it and taking it out at some point in the future. I could refer to other excesses of the CAP, all of which relate to intervention buying.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown , Cirencester and Tewkesbury

I am still rather confused. Is it Labour party policy that the taxpayer should subsidise a potato buying-up scheme?

Photo of Gavin Strang Gavin Strang , Edinburgh East

It is not our policy. We go along with any Government proposals to remove taxpayer support from the potato industry. However, the Potato Marketing Board should stay in place, and the production target area and quotas should be continued, as should all the other work that the board does. That is what the producers want. Against the background of a light EC regime, such a course should be possible.

We shall consider the Minister's arguments very carefully. We shall give close consideration to the reasons for the increased imports of chilled and frozen chips. I am sure that the right hon. Gentleman will acknowledge that it is in this area that the increase has arisen. One company accounts for 60 per cent. of production in this field. That company has excess capacity in the Netherlands, and there has been penetration of the German market, which does not have quotas, just as there has been penetration of the British market. We shall consider all the arguments objectively. The last thing the Opposition want is constraint of opportunity to invest in processing and thus to create wealth and jobs.

However, we are not persuaded by what we have heard. We agree with the Potato Marketing Board and with potato producers that the board should be allowed to continue. Developments this afternoon in the European Parliament show that there are Conservatives who agree with us and that that Parliament's Agriculture Committee is of the same opinion. It may well be that the Commission can be persuaded to add its support, and then it will be up to the Agriculture Ministers in the Council of Ministers.

I should like to deal now with the removal of the wool guarantee—a decision with which we do not agree. Our judgment is that it is particularly unfortunate that the state-guaranteed price for wool is to be removed. Many hon. Members know that the wool market grew enormously in the 1980s. But then China and Russia withdrew from the market, and there was a huge increase in wool production in New Zealand and, in particular, Australia, where intervention buying was operated. Massive quantities of wool are now held in intervention stores in Italy, and these overhang the market. When prices start to rise, this wool is released, and prices come down. The collapse of the house-building programme in this country has also resulted in a reduction of the demand for wool. Thus, this is the very worst time for removal of the guarantee, which will damage our hill farming industry. We are concerned that the price a farmer will receive for a clip from a hardy breed will be so low as to make it hardly worth his while. That will not be in the interests of his flock or of the country. There is a very real danger that this change will result in considerable damage to the sheep industry. I hope that it is not too late for the Government to think again and to consider a compromise arrangement whereby there could be some element of continued state support, even if only for a few weeks, to enable the Wool Marketing Board to continue to provide a realistic guarantee. I agree in general with what the right hon. Gentleman said about the board, which has an excellent record with the collection of wool from producers. The board has the support of buyers also.

Clause 44 relates to grants for group marketing. We support the provision. I had hoped that the Minister would announce the provision of some extra money, but in view of the state into which the Government have got the public finances of this country, it is not surprising that there is no such provision.

Finally, I refer to a minor but historic provision tucked away in schedule 5. The right hon. Gentleman himself referred to the repeal of that part of the Agriculture Act 1947 which made provision for an annual review of agriculture. Hon. Members on both sides of the House will remember the importance of the annual review. The negotiations between the farming unions and the Government preceded the setting of national support prices. After we joined the European Community, this became less and less significant, and it is not now practicable to think in terms of an annual national review.

However, the review was indeed a valuable exercise. The agricultural support policies encompassed in the 1947 Act and in the legislation of the 1950s served this country well, enabling people to buy food at world prices. Farmers and farm workers were provided with an effective system of support, and the taxpayer was given value for money.

How different the situation is today. Now, in this country and in the rest of the EC, food is sold at prices well above world levels—indeed, well above levels in the United States. Thousands of millions of pounds are spent on the most inefficient agricultural support system imaginable. Huge mountains of food are bought up, and sometimes commodities are dumped on world markets, to the disadvantage of developing countries, while the common agricultural policy fails to achieve even an adequate means of supporting farmers and the rural economy generally.

The Bill does not address any of the real issues facing the agriculture industry. At best, it fails to confront all the important issues facing agricultural producers and consumers; at worst, it creates arrangements which will be unstable and may in the long term damage consumers and producers. We believe that the milk marketing boards should be adapted, not abolished. We believe that those boards, the Potato Marketing Board and the wool guarantee could still play an important and valuable role in our agriculture industry. For those reasons, the Opposition will vote against the Bill.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale 6:15, 23 March 1993

The hon. Member for Edinburgh, East (Dr. Strang) has a good deal of knowledge of agriculture but he got himself into an awful muddle. His apparent opposition to support buying—he said that he would not support a future potato regime that involved such buying—goes wholly against the history of the Labour party in government since the war. Throughout its years in office, the Labour party promoted a support-buying regime for the Potato Marketing Board. Labour Members may say that that system was inherited, but I remind the hon. Gentleman, whose memory seems to be very short, that one of the first actions of Fred Peart, when he became Minister of Agriculture in 1964, was to introduce legislation to deal with the marketing of home-grown cereals.

Indeed, my maiden speech was delivered during a debate on the Cereals Marketing Act 1965, which set up the home-grown cereals authority, with its reserve support-buying capacity. That mechanism, which was introduced by the then Labour government, was never used, but it was available. The price of cereals never dropped to the level at which the scheme would have kicked into operation. The hon. Member for Edinburgh, East really must do his homework and must remember what his party stood for in the past.

I want to begin the substance of my speech by making two points. First, I hope that my right hon. Friend will forgive me for intervening in a debate on agriculture. As he knows, it is almost six years since I was in his seat. During that time I have had many private conversations with him and with his predecessor, both of whom served with me the Ministry. Over the years, I have very rarely intervened in public. Indeed, I take the view—perhaps rather old-fashioned—that anyone who has had the privilege and honour of holding senior office displays the grossest and most appalling bad manners by breathing down the necks of his successors, especially if they are old colleagues, as soon as they take over. These jobs are difficult enough at the best of times. I hope that my right hon. Friend will forgive me for intervening after six years. Parts of this Bill are extremely important to my constituents, and I feel that I must make certain comments.

I also want at the beginning to declare my interest—something that I have often done to the House—as a farmer and, in particular, as a grower of potatoes for the processing industry. I just say to the hon. Lady the Member for Bristol, East (Ms Corston) that her intervention, if I may say so, totally misunderstands the modern cult of agricultural marketing, whereby one finds out what the processor and the public want and then produces for that market. If the processor says that the potatoes to be grown should be Record, one grows that particular variety at his insistence, because one is growing for one's customer. That is the way in which agricultural marketing should go in the future.

All my life I have been an enthusiast for managed agricultural markets, by statute if necessary. Farmers are notoriously impossible to organise collectively into marketing their own produce to their own best advantage. The commendable individualism of the farming community is very often a real drawback when it comes to sensible marketing. All my life, therefore, I have supported the milk marketing boards, the Potato Marketing Board and the wool marketing scheme. I was extremely flattered that the Member for Edinburgh, East should have read out so much of what I said so many years ago. In my heart, I still totally subscribe to what I said at that time, and I am not ashamed of saying it.

When I was responsible for these matters, the schemes of the various boards were often attacked, sometimes by the European Commission and sometimes by some of my Cabinet colleagues. It is a matter of some pride to me that, in the four years that I was responsible for these matters, there were very few changes in the marketing boards. I recognise, however, that changes must now be made, and I thought that the hon Member for Edinburgh, East was perhaps not as fair as he might have been in recognising that changes need to be made. There have been challenges from the Community and from the courts, and the Government, quite understandably, must make these changes. It is about the nature of the changes that I want to speak.

I have a good deal of nostalgia for the schemes which are now to be changed, and I have always subscribed to the view that the devil you know is nearly always better than the devil you don't. The big question is how these essential changes can be made while leaving farmers with adequate marketing arrangements so as to give them a fair chance collectively of getting the best price for their produce.

As an example of this, we should recall that the first milk marketing board was set up in the early 1930s, and it became the saviour of thousands of farmers. In the dales and valleys of the north of England, in the west country and in Wales, many small farmers were being driven relentlessly out of business because of their weak, fragmented marketing position.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

My hon. Friend who has such experience of these matters reminds us of the paltry sums paid for milk in those days.

Today it is appropriate that somebody should pay tribute to the milk marketing boards, because they have done a fine job in spite of some difficulties. I have often thought that the boards could have done considerably better but for what I have always regarded as almost a fatal flaw in their constitution, which made it, in practice, impossible to have adequately skilled business leadership at the head of the boards. If I could have made one change in the constitution of the boards, that would have been it.

However, given the difficulties that successive boards have had, they have done a fine job, of which we can all be proud. My anxiety tonight is that some of these changes could well return dairy farmers to those bad old days. To an extent—the hon. Member for Edinburgh, East was right—that cannot happen, given the quota. The quota will make it much more difficult for the various purchasing organisations to hold farmers to ransom and to drive the price down and down, and the existence of milk quotas and the absence of surplus milk production should mean that that is unlikely to happen.

I should very much like to have seen one co-operative, covering England and Wales, to succeed the milk marketing boards, and I welcome the launch of Milk Marque, which I wish every possible success. I am particularly pleased that it has made it clear that it will not discriminate against milk producers on the grounds of size of operation and milk collection or the location of the farm.

Already, other potential buyers have appeared on the scene and, as one who believes in competition, I wish them well, but I hope that the price is not driven down by predatory buyers, as happened between the wars. I urge my right hon. Friend never to forget what happened before the Milk Marketing Board was set up, and always to be prepared to act again if the industry suffers seriously as a result of these changes.

The potato regime is a wholly different set-up. As I said in that speech I made when we were in opposition in the 1970s, the milk marketing board is a very heavy regime, as the sole first buyer of milk, whereas the potato board merely has a reserve right to support-buy. The potato scheme has worked extremely well over the years and, as a potato grower, I am much disappointed that there is a danger of the potato marketing scheme disappearing. There is a free market, which is at times fiercely competitive.

I realise the problems of getting full supplies for the processing industry in this country, and I hope, as a potato grower for processing, that we can in future supply a bigger part of it. I pay tribute to the processors, who have done a great deal to get contracts which are satisfactory to growers. My own son is on the negotiating committee of one of these arrangements. They have been very much in the interests of farmers, producers, processors and the consumer.

Under the potato scheme as it exists, producers and consumers are protected by the quota acreage regime, which has worked well over the years. The Minister has told us that none of the other Ministers in the Council is particularly enamoured of the British scheme. That is a pity, if I may say so, and I urge my right hon. Friend to try just once more to see if he can persuade them of the merits of the British scheme.

I am glad that the Potato Marketing Board supports the Bill. In a letter to me, it wrote: The PMB broadly supports the Bill, since it permits a successor body' for limited purposes, if the Potato Marketing Scheme (PMS) were to be revoked. The Minister said that he believes that the potato marketing scheme must be revoked. I was surprised to hear him being as critical of the scheme as he was in his speech. I hope that I can say this to him in a friendly way. I was surprised that he talked that way, in view of the fact that the scheme was reviewed only in 1989 and the producers decided to take up one of the options proposed by the Government at that time.

I was sorry to hear the Minister be somewhat dismissive of the way in which the Potato Marketing Board has been arranging its affairs. I hope that he will not seek to change the Government's defeat in another place. In his speech, he said that the Government would not do that, and that is welcome. It is right that, if the potato marketing scheme must be revoked, the Minister, his successor or whoever, will have to come to the House for a separate decision of the House to revoke the scheme. That is right.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

Can I put my right hon. Friend's mind at rest? I want it to be clear in this debate that I am not sheltering behind some decision of the European Community or suggesting that all the fault lies with Brussels. That would be the wrong thing to do. That meant that I had to share with the House my concerns about the future for potato producers in a single market, where it is manifest that we will have an increasing number of imports from outside the United Kingdom. Therefore, I sought to emphasise that side.

I should not like any hon. Member to think that I underestimate the important job done by the Potato Marketing Board in changing itself to be more able to meet the present circumstances. I thought that it was right that the House should not be bamboozled by some suggestion that all the fault lay with Europe and that we all had to do it that way. That would be to hide my fear for the future, on which I felt I should stand honourably when it came to discussing the issue for the benefit of the House.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

My right hon. Friend has been characteristically honest and straightforward with the House, and I am glad that he has been able to endorse what he said. Indeed, I said earlier that I recognised the difficulty of British potato producers satisfying the full demands of the processing industry. I was pleased to hear that at least two of the major processors in the United Kingdom have invested in new plant and factories. That is certainly good news. When the successor body is set up, I hope that the Minister and the growers together will be able to find a way in which the growers can fulfil a larger share of the processing market.

I should like to talk about the wool guarantee, which is of tremendous interest and importance to my constituency. I do not need to remind my right hon. Friend of the uncertainties and anxieties in the upland areas at present. He will remember the difficulties we all had when various changes were made to the regime shortly before Christmas. Mercifully and happily, most of those difficulties have been substantially resolved by the Minister being able to use other methods fully to compensate upland sheep farmers.

I simply remind the Minister that wool holds an important, if sometimes rather emotional, place in the minds of upland sheep farmers. If it is the Minister's desire to abolish the guarantee scheme, which has worked well over the years, he should be prepared to use even more sympathetically and realistically the other devices which he has to protect that vital, hard-working group of farmers who do so much to make upland Britain the glory that it is.

The Minister referred to the various devices he has—the hill sheep subsidies, the annual ewe premium and the other premiums through the environmentally sensitive areas scheme, all of which can help dramatically with regard to upland farmers. Therefore, the end of the wool guarantee is not fatal. As the Minister said, that matter will be all right, provided the other arrangements are used.

The Bill causes me some considerable anxieties, which I hope are unfounded. I hope that the Minister can steer farmers into marketing their produce in new ways, which will not seriously disadvantage them. We all understand that changes have to happen. Clearly, those changes need to be made now. Agriculture—probably above all industries in the United Kingdom since the war—has demonstrated its adaptability and inventiveness. Given the new challenges, I have no doubt that it will respond once more.

Photo of John Home Robertson John Home Robertson , East Lothian 6:36, 23 March 1993

The House has just listened to a thoughtful, knowledgeable and, I believe, genuinely worried speech from an experienced Member. The right hon. Member for Westmorland and Lonsdale (Mr. Jopling) has had wide experience as an Agriculture Minister. His speech was delivered with all the loyalty that one would expect from a former Government Chief Whip. Nevertheless, I sincerely hope that those on the Government Front Bench were listening to what he had to say, because it was worth listening to.

I must preface my comments by declaring an interest. There are no tatties growing on my farm, but the wool from a flock of more than 700 sheep rightly goes to the British Wool Marketing Board. My second interest is that of the 250 farmers in my constituency of East Lothian, including a substantial number of potato producers and sheep farmers. Sadly, nowadays there are few dairies—it is an east coast constituency.

In common with all hon. Members, my overriding interest is that of the 68,000 consumers of East Lothian whom I represent in the House. The interests of those consumers is well served by the marketing boards which are run in partnership with farming producers. I fear that this Bill could undermine those interests. No one in my constituency has expressed support for the Bill, but a significant number of constituents have expressed genuine fears that the abolition of the marketing boards and the statutory powers provided for in the Bill could be detrimental to the interests of consumers and jeopardise hard-pressed farming businesses in my part of Scotland.

I shall say a few words about milk marketing boards. I understand the genuine difficulties in the milk sector, where the expansion of the commercial activities of milk marketing boards into retailing and processing has created a situation in which independent traders find themselves competing in the retail marketplace with boards which have a statutory monopoly in the wholesale market. That situation can be especially insidious in areas where quota restrictions have created a shortage of milk. I accept that that point must be addressed, but I cannot accept that it is a justification for scrapping the statutory scheme altogether. The scheme has worked extremely well since its inception, and it seems characteristically reckless for the Minister to sweep it away and scrap it altogether.

There may be a fair debate about the detailed operation of the milk marketing boards, but there is no such controversy about either the wool guarantee or the Potato Marketing Board. The threat to destroy those arrangements seems to be undisguised doctrinaire vandalism on the part of the Government. We have seen that before, and we are seeing it again today.

I wish to concentrate on potatoes, but I begin with a few words about the wool guarantee and the statutory powers of the British Wool Marketing Board, which the Minister did not mention in his introductory speech. The Confederation of British Wool Textiles pointed out that this could not be a worse time to remove the guarantee. It warned that removal of the guarantee could lead to dumping and the disruption of the supply of wool to British industry at a time when the industry needs all the help that it can get.

From my limited experience of a hill farm, I know that one is lucky to get 2·5 kg of wool in the fleece of a hill ewe. With the present guarantee price, one gets 90p per kilo, which comes to £2·25 for the fleece of the ewe. Without that guarantee, the net income could drop to 45p per kilo, which is £1·12 for the fleece of a ewe. The sum could easily be as little as £1, or even less.

I therefore agree with my hon. Friend the Member for Edinburgh, East (Dr. Strang) that, as it can cost 50p or more to have a sheep clipped, it is not difficult to foresee circumstances in which it would not be worth while to clip sheep in view of the calculations that I have described. So, apart from disrupting the market and depriving our textiles industry of British wool, the proposal could have significant animal welfare implications. I am not aware of anyone who supports the proposal, so why on earth are the Government proceeding with it?

The same criticism can be levelled at the Government's proposals for the Potato Marketing Board. The Government conducted a major review of the potato marketing scheme back in 1989, and rightly reached the conclusion that the basic powers of the Potato Marketing Board, including the vital power to control the area planted, should be left intact. As a result of that review, the board now represents all the interests—not only producers, but processors, consumers and independent representatives. It works efficiently. In the future, the scheme will not cost the taxpayer a penny, so one may well ask why the Government seek to interfere with it.

The only new factor is the possibility of a minimalist proposal for a European Community potato regime, but that is not a genuine justification for the legislation. The potato marketing scheme does not restrict trade in potatoes across the European Community. I suggest that it is a red herring for the Minister of Agriculture or anyone else to suggest that the present system interferes with free trade.

Photo of David Curry David Curry , Skipton and Ripon

Perhaps I may clarify the position. The legislation provides for a successor body in the event of the Potato Marketing Board being wound up. If we did not include that provision in the Bill, the only choice would be to continue with the full scheme or wind up the scheme entirely and distribute the assets to the subscribers to the existing Potato Marketing Board. The Bill takes the middle course, which my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) talked about, of providing for the successor body to carry forward the best of the Potato Marketing Board's activities. I am sure that the hon. Gentleman is not against that.

Photo of John Home Robertson John Home Robertson , East Lothian

Indeed not. My concern is that the power is being established to wind up the scheme in the first place. Fair enough, in Committee we must look at ways of making the best of bad job, but my fundamental objection is to the abolition of the board and, in particular, the abolition of the statutory power to control acreage. That is an important power.

I submit that there should be no problem in maintaining our internal scheme for regulating potato production under the principle of subsidiarity which we have debated on the wretched Maastricht Bill. Spain and France also have national support schemes, which cost considerably more than ours cost, at present. As I have said, in future our support scheme would not cost anything under the provisions that the Potato Marketing Board has talked about.

We are dealing with an inherently fragile industry. The potato market is potentially highly volatile.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Does the hon. Gentleman accept that the only area of potato consumption which is growing is processed potatoes? Does he further accept that there has been a significant growth in the import of processed potatoes simply because potato processors can buy potatoes £20 per tonne cheaper in Holland than in Britain?

Photo of John Home Robertson John Home Robertson , East Lothian

I understand that the processing market is increasing. There is nothing to stop the Potato Marketing Board taking advantage of that—as I am sure it will, if it is allowed to continue.

I return to my fundamental point—that we are dealing with a fragile industry which should not be messed about for purely doctrinaire reasons. If planting in the United Kingdom increased beyond the current quota of 155,000 hectares, there would almost certainly be a glut of potatoes on the market. The market would be flooded. Fair enough, consumers would have the short-term benefit of very cheap potatoes for perhaps a year, until the inevitable shortage followed as producers were forced out of business. I fear that that would be particularly the case in the more remote areas of the country, especially Scotland, which are further from the processors to which the hon. Member for Hendon, South (Mr. Marshall) referred, and from other parts of the mass market.

Conversely, if planting fell below the quota which has been carefully calculated by the Potato Marketing Board, there would be a shortage of potatoes and market prices would rise inexorably, contrary to the interests of consumers, processors and everyone else. It is precisely to avoid such dangerous fluctuations in a capital and labour-intensive industry that the potato marketing scheme was established in the first place. I say again that it would be reckless to scrap it now.

Photo of David Curry David Curry , Skipton and Ripon

The hon. Gentleman will know that, in the present circumstances, the Potato Marketing Board is paying £10 per tonne for potatoes. In other words, the price is at rock bottom, even with the scheme in existence. It may well be the case that next year fewer potatoes will be planted, as indeed there have been fewer potato producers year on year simply as a result of the market conditions within the scheme. So the hon. Gentleman should not draw too much of a comparison between conditions inside and outside the scheme.

Photo of John Home Robertson John Home Robertson , East Lothian

I gently remind the Minister that the position is even worse in the free market paradise that he is so happy about on the other side of the English channel. The Potato Marketing Board has achieved a great deal in the way of stability. Certainly there are difficulties just now, but the position would be far worse without the safeguards that the board can provide.

The House will have gathered that I am not particularly impressed by the representations of the Potato Processors Association. There are just 33 processors. Crisping, freezing and dehydrating processes now constitute 37 per cent. of the consumer market. There may be only 33 potato processors, but they have a highly lucrative share of the market. I went downstairs earlier today and bought myself a 30 g packet of crisps. It cost 20p. According to my basic arithmetic, that comes to £6,666·66 a tonne. Compare that with what my local Co-op charges for potatoes—85p for a 51b bag. That comes to £380 a tonne, which is still a great deal more than the £10 a tonne which the Minister said was paid by the board to producers just now.

The profit margin of rogues who want to destroy the potato marketing scheme are put into fair perspective by the figures that I have given. They want an even bigger profit margin for their 37 per cent. of the market, at the risk of creating chaos in the fresh potato market which, let us not forget, is still 63 per cent. of the trade. I suggest that the processors should be seen in much the same light as the monopolistic supermarket chains. They can have an anti-competitive role and can be a bottleneck in the market, controlled by a handful of powerful companies which all too often operate against the interests of both consumers and producers.

Who are the voracious chippers and freezers who have so much influence with the Conservative Government? I understand that fully 60 per cent. of the British chip market has been cornered by a single company—McCain. I long to know how it and the 32 other members of the Potato Processors Association—a tiny group of people—have influenced the Government to undermine the interests of every housewife in the nation, not to mention every potato producer. I think it stinks. It seems to me that it is either a case of mad Minister disease or, more likely, corrupt politician disease. How much has McCain or other members of the Potato Processors Association contributed directly or indirectly to Conservative party funds? That is a subject which ought to be addressed. It is a question being put to me by potato producers in my constituency.

The potato marketing scheme is serving the interests of consumers well. It is regulating the industry. It is improving the quality and the marketing of potatoes and it will not cost the taxpayer anything at all. It would be sheer madness to destroy that scheme. To talk about "shackling the market", as the Minister did earlier, does not make sense, but sadly it is not unheard of for the Tory majority in this House—

Photo of John Home Robertson John Home Robertson , East Lothian

No, I am just concluding and I want to let other people take part.

It is not unheard of for the Tory majority in this House to vote for sheer madness, and I fear that they are going to do it again tonight.

Photo of Malcolm Moss Malcolm Moss , North East Cambridgeshire 6:50, 23 March 1993

The speech of the hon. Member for East Lothian (Mr. Home Robertson) started pleasantly enough, and was thoughtful and provoking, but then he appeared to go completely off the rails. His constituency covers the whole range of farming. I could not help feeling a little envious, because he was able to speak on potatoes, milk and wool. My constituency is a flat fenland area, and I shall restrict my remarks to the part of the Bill relating to potatoes.

Potato growing has gone through significant changes in the last decade, involving massive investment, particularly in things like cropping and husbandry, in modern refrigerated storage, in grading, packaging and marketing for the retail sector for the consumer and for the processor. Potatoes are a vital crop in arable areas such as north-east Cambridgeshire, particularly with the CAP reforms which are looming on the horizon, and also with the GATT negotiations attacking agricultural prices and the generally anticipated lower incomes from historically staple crops such as wheat, sugar beet and oil seed.

The Potato Marketing Board and the scheme have served producers and consumers extremely well. They are not perfect, but they have responded to pressures to reform in the past and are willing to do so again. It would seem quite unreasonable to revoke them under this Bill without giving them the opportunity to meet the new requirements of a modern EC marketplace.

The PMS has adapted to these changing conditions by expanding target areas to accommodate the growth sectors in the industry—notably, the export market, processing and pre-packing. As I have said, many growers have invested heavily in potato storage and specialised equipment, because this is a highly capital-intensive sector. They will feel badly let down if the Government scrap the PMS and give them a period of uncertainty. That is the last thing they need at this time of heavy investment.

The potato clauses—22 to 43—seem to have been stimulated by EC proposals to introduce a potato regime which the Council of Agriculture Ministers hopes to approve some time later this year. It is meant to be a light regime, probably intended to guard against increased imports from eastern Europe but it does not give the Commission power to intervene in the potato market and makes no mention at all of national support schemes.

If these are the main ingredients of the proposals, many people, including my potato growers and farmers, may question whether it is worth having any EC regime at all, since it will do so little. Is there a hidden agenda, I wonder, to prevent a shift into potatoes by arable farmers who may become dissatisfied, after a few years, with set-aside? After all, the EC's record is strong on quotas. How can we discount the introduction of quotas in future if these proposals lead to chronic over-production?

The EC Council regulation says: appropriate measures should therefore be taken to ensure stability of the market and a fair income for the producers concerned". Those are laudable aims, but it is highly questionable whether the proposals will achieve this.

According to the explanatory memorandum, it is proposed that a common organisation for potatoes be established, based on the following principles: The common market organisation should not interfere with the market forces". It defines this as: Only a potato market whose principal regulative is the play of supply and demand will make sure that production takes place in the most efficient way and that consumers do not have to pay unduly high prices. I ask, what is the evidence for any market distortion within the EC? After all, potatoes are freely traded. A free market already exists beyond the farm gate. In this country alone, 14,000 growers compete with each other to sell their products. Purchasing power of the supermarket chains and processors in the market place is extremely powerful. There are no restrictions on imports from other EC countries, so United Kingdom farmgate prices and quality have to remain competitive with the price and quality of imports.

The Minister mentioned the natural barrier of the channel, and transport costs of about £30 a tonne. There is no question but that there is a free market and that EC producers already have a massive hurdle to clear with the costs of transport across the channel.

The second principle is The market position of potato growers should be improved. We would all say aye to that. It says: Farmers growing potatoes should be given an incentive to market their produce through a producer group. We are now on to setting up co-operatives and it goes on later to talk about 1·5 million ecu in grant aid to enable this to happen. Nobody will say no to that either, but that does not, in any shape or form, strike against the modus operandi of the potato marketing scheme.

The third principle—this is perhaps the rub—is: There should be a common approach in trade with third countries. Imports from third countries, under normal circumstances, should not be subject to any other restriction than the Common Customs Tariff. However, if there is a significant rise in imports which could endanger the Community market then import licences may be requested. These licences serve the purpose of observing the market more closely. Does this not have a definite ring of intervention, to control supply and hence to control price? How ironic it would be if we were to replace our own successful system for price stability with one from Brussels.

Frankly, the proposals seem designed to accommodate the complaints voiced by the processors. It has been argued that processors are having to import, particularly from Holland, because United Kingdom prices are too high, but the evidence is to the contrary. In four out of the five years since 1987–88, the Great Britain average spot price for potatoes was well below that of Dutch potatoes. I have a table showing that, in 1988–89, our spot price was something like £44·93 per tonne, while in the Netherlands it was £54·79, and so it goes on.

Photo of Mr John Marshall Mr John Marshall , Hendon South

My hon. Friend might be interested in a sentence from an answer I had from our hon. Friend the Minister of State this afternoon: In the Netherlands potatoes are currently £27 to £32 per tonne compared to £25 to £50 per tonne (depending on variety) in Great Britain. It goes on to explain that that is more than doubling the level of processed imports in the past decade. Surely the figures are not as he says they are?

Photo of Malcolm Moss Malcolm Moss , North East Cambridgeshire

As the Minister of State stated, or as I stated? I am not quite sure what my hon. Friend means.

Photo of Malcolm Moss Malcolm Moss , North East Cambridgeshire

As I stated? The evidence is there for all to see. I shall be happy to supply it to my hon. Friend later.

Dutch exports are greatest to Germany, which consistently has lower prices than the Netherlands. Does that not prove that Dutch export penetration is not related to the raw potato price or to the existence of a potato marketing scheme here? Dutch success in penetrating markets is more a reflection of the overall structure and performance of the Dutch processing sector compared to that of their competitors, rather than a reflection of the price of raw potato imports.

In the current year, there has been substantial over-production in this country, and in the Netherlands, France and Belgium; hence the low prices that we are seeing. The average price from August last year to January this year in the United Kingdom was around £40 per tonne, compared with average prices in the Netherlands of £30 per tonne, France £32 and Belgium £20. Although the United Kingdom prices at this level are still well below production costs, they were held above disaster levels by the action of the PMS—first, the stabilisation effects of the quota and, secondly, grower-funded floor price intervention.

Looking at this evidence, it is very difficult to disagree with my potato growers that the potato marketing scheme works and has prevented them from suffering the catastrophic prices of their Belgian counterparts. No wonder many EC potato producers are looking enviously at our PMS system and secretly wishing for something similar.

However, I have some sympathy with the processors. I recently visited a processing factory in my constituency, known as Garden Isle Foods. They complained to me more about the security of supplies of potatoes of the right quality and in the right quantity than about the price they have to pay. They need a guaranteed supply of these potatoes to ensure proper and efficient planning of their industrial throughput. They told me that, on one occasion last year, they were unable to buy forward at any price from any merchant. The story that came down the line from the co-operatives was they had not been empowered by their directors to sell potatoes on a rising market. There is plenty of scope here for the PMS and the growers to get their act together to make sure that the processors do not come forward with unnecessary complaints.

From my discussions with my potato growers and with the processors, who are a very important part of the industrial scene in my constituency, I do not think that the two sides are a million miles apart. There needs to be better co-operation between them, and better co-ordination, and certainly increased investment by the producers and the merchants, particularly in areas such as grading and storage.

Size is of vital importance to processors. Grading is still a farm-based activity, and is often too unreliable to meet the requirements of the modern specifications of the fast food industry. Producers need to consider the market requirements in a more professional manner. It is no longer good enough to expect processors to take surplus production of the wrong types of potatoes which have been rejected as unacceptable by the supermarkets and the packers.

The potato industry, in all its parts, is working reasonably well. It is certainly profitable, given production figures over a reasonable number of years, and it works without subsidy. I have not heard any overwhelmingly persuasive arguments that this replacement by a lightweight EC regime will bring any real competitive advantages.

The Bill as it stands is certainly acceptable, but I caution the Minister against the exercise of his powers under clause 22, particularly if, as he has said, he is not responding to proposed EC regulatory changes.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock

On a point of order, Madam Deputy Speaker. I apologise for detaining the House, but earlier today, when Madam Deputy Speaker was in the Chair, I brought to her attention on a point of order the fact that the Secretary of State for the Environment proposed to hold a press conference at 10 o'clock tomorrow on the future of the east Thames corridor, and that documents were not yet available in the House of Commons Library. I drew attention to the fact that policy statements were to be made to the press before they were reported to the House.

In the past half hour, there has become available in the Library a question and reply, which I have furnished to you, Madam Deputy Speaker, which indicate that the Government's approach to the matter—that is, the east Thames corridor development—will be published tomorrow at 10 am. That coincides with the press conference of the Secretary of State for the Environment, also at 10 am, on a major development issue affecting millions of people in south-east England.

Is it not possible for Government Front-Benchers to arrange for a Minister to come here at 10 o'clock tonight and make the statement to which the House is entitled on this major issue, before it is reported to the press? It seems to me to be very important that this matter is reported and a statement made to the House, so that hon. Members on all sides can question the Minister on this development.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Further to that point of order, Madam Deputy Speaker, I wonder if you could take this up with Madam Speaker. On 17 February this year, Madam Speaker made a comment about a similar set of circumstances that had been drawn to her attention. The hon. Member for Antrim, East (Mr. Beggs) raised a point with her about hon. Members releasing to the press the content of a speech intended to be made during a debate in the Chamber and allowing it to be published as if it had been made, although it was never made in the Chamber. Madam Speaker said: If what the hon. Gentleman says is correct—I have no reason to believe otherwise—I hope that the practice will cease forthwith. I caution the House that any speech which is not published in Hansard, although it may be published elsewhere, is not a parliamentary proceeding and is therefore not privileged. All hon. Members should be made aware of that."—[Official Report, 17 February 1993; Vol. 219, c. 322.] That deals, of course, with the question of absolute privilege with regard to any action for libel, but the principle is the same. Madam Speaker was deprecating information being given outside as though it had been given here in the House. Certainly, with the response to a parliamentary question, the impression is given that it is a parliamentary occasion, whereas clearly the information is being given in a press conference. It really is contempt by the Government, who have been in office far too long, for the House since their accountability is primarily to the House, not to the media.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Further to that point of order, Madam Deputy Speaker. Is it not the case that the Secretary of State for the Environment is due here at 2.30 tomorrow afternoon to answer questions for one hour?

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

Further to that point of order Madam Deputy Speaker. I realise that you are not in a position to require Ministers to make statements, but in the past, as has been said in the House, Madam Speaker has deprecated this practice of making significant statements in that way. This is not an incident; it is a very important statement. It really shows profound disrespect to the House that we are not to have a statement from the responsible Minister tomorrow, before the press gets hold of the information.

I wonder whether, since there happens to be an Environment Minister on the Front Bench, he might seek to catch your eye so that he can explain whether we are to have an opportunity to investigate this matter tomorrow with the Minister.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

As this matter was raised with Madam Speaker earlier today, I think it best that I report to her what has been said. She will in due course, no doubt, make her views known, if she so wishes. I cannot, obviously, bind her by anything I might say. Members will be aware, of course, that it is not for the Chair to require Ministers to come to the House and make statements—a point that one hon. Member has already made.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

No. I have already dealt with the matter sufficiently. Mr. Paul Tyler.

Photo of Mr Paul Tyler Mr Paul Tyler , North Cornwall 7:07, 23 March 1993

I have no direct interest in farming, but I have a very considerable interest in the future of the rural economy, the rural environment and rural employment opportunities, and this Bill is very relevant to them.

Many farmers today, faced with the complexity, confusion and constant flux which surround their industry, must have some sympathy for the view of Gaius Petronius in the year 66 AD. I am sure that the Minister knows it well, as I believe that he studied either classics or theology and it is very relevant to both. Gaius Petronius said: We trained hard—but it seemed that every time we were beginning to form into teams, we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising, and a wonderful method it can be for creating the illusion of progress, while producing confusion, inefficiency and demoralisation. The House and the Government have indulged in that all too often.

This Bill is obviously a very important opportunity. Indeed, it may be the last best chance for the farming industry. If it is approached in the right way, it could be a springboard for real opportunity, but if it is to create a new straitjacket for restriction it will doom the industry not to better marketing opportunities but to worse ones. That is why we Liberal Democrats come to the debate in a spirit of reasoned amendment rather than outright opposition.

One of the most unpleasant and unfortunate implications of the proposals before us is that because it is so difficult to plan ahead in this industry in the very uncertain world of agricultural marketing the Minister has had to take to himself a number of enabling powers for implementation at a later date. We understand the problem, and let us not fool ourselves that it is easy to get around it, but the House is entitled to know the circumstances in which the enabling powers will be exercised; that is the crux of the issue. If it is to be in the context of an increasing discrepancy between farm gate prices and the prices that the consumer pays, and of nothing being done to reduce that discrepancy, the Bill will be counter-productive.

In the past 10 years, retail food prices have risen by 52 per cent., but the retail price index has risen by 70 per cent., which means that in the past decade food prices have actually fallen in real terms. As any farmer knows, in the same period farm gate prices have increased by only 18 per cent., so farmers have contributed greatly to United Kingdom consumers' standard of living by helping to reduce the real cost of food.

Farm gate prices actually fell in the years 1985, 1988 and 1991, but in no year in the past decade have retail prices fallen. In the decade 1982 to 1992 the producer price of milk, the central feature of the Bill, has increased by 45·5 per cent., but over the same period the shop price has increased by more than 70 per cent., so the margin has increased rather than reduced.

The farm gate prices for lamb—which are relevant to the income from wool—have decreased, but the shopper has not seen a similar reduction, as the retail price has increased by 26·5 per cent. or more than a third. Against that background, concerns have been expressed in all parts of the House about the impact of the Bill on the viability and vitality of the agriculture industry. In the past decade there has been low or even no growth in real farm incomes in most sectors. Last week's Ministry figures showed that: In real terms cash flow has remained virtually unchanged". Throughout the decade there have been considerable and continuous supermarket price rises. Despite the recession, food retailing has been one of the most successful and profitable sectors of the economy. It has also been one of the most generous contributors to Conservative party election funds.

The effect of the Bill on individual sectors will clearly be the litmus test for many farmers and for the consumer, and I turn to the three sectors principally covered by the Bill. The hon. Member for East Lindsey (Sir P. Tapsell), the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) and the hon. Member for Cambridgeshire, North-East (Mr. Moss) all raised serious concerns about potatoes. It is clear that there is no imperative from Brussels for the scrapping of the board or the scheme. The Minister has been clear, open and honest about that, but there seems to be some doubt in the minds of some of his hon. Friends, because every so often up pops the ogre of Brussels as the rationale for change.

The Minister, as President of the Council of Agriculture Ministers in the latter six months of last year a very important person, was in an extremely important position to drive forward the Community's own regime. The problem now is not so much the merits of the present scheme versus the new scheme as the fact that we are being asked to buy what could be decribed as a potato in a poke. We do not know what regime will operate. It it possible that in the long term it could be very satisfactory, but there is an old saying, "If it works, don't fix it." Until we see a real improvement in the type of regime that is developed, it is open to many people to express scepticism about the nature of the transition, its speed and its timing.

We heard sensible cautionary words from a number of Conservative Members about the nature of the successor body, which is not specified at this time. We welcome the fact that Ministers have agreed to maintain—in substance, they say—the good work of our noble Friends in another place, but many of us will be concerned to ensure that parliamentary scrutiny is guaranteed and will not be watered down.

At the end of the day, there seem to be remarkably few people in any part of the industry—producers, consumers, retailers or wholesalers—apart from the processors, who want to make the proposed change. As a number of hon. Members on all sides of the House have said, there seem to be some major question marks about the way in which the potato scheme is being driven forward. We need reassurance.

We all know that in areas such as my constituency in the south-west, and the constituency of the right hon. Member for Westmorland and Lonsdale, wool now represents only a small part of the overall income of sheep and hill farmers, but taking away the guaranteed price will halve what is already a very low price. The average price paid to farmers at the moment is 117p per kilo, which will drop to about 60p per kilo when the world market price is introduced. There are still 98,000 wool producers in Britain, many of them clinging on in a difficult situation, eking out a minimal existence. Farming in the hills and the least-favoured areas continues to be one of the most vulnerable sectors of the farming industry. To lose the security of that small part of their income at this stage would be extremely unfortunate.

As the right hon. Member for Westmorland and Lonsdale said with characteristic understatement, there was some concern and anxiety from those parts of the country about the hill livestock compensatory allowances, but it was a great deal more than that. There was real anger from those areas because they felt that their interests were not being understood and that the position they came from, which was a steady deterioration in their income, although it was increasing somewhat in the current year, was not widely recognised within the Ministry.

We know that the proposal is not new and has been widely forecast, but for the Government at this time to take powers in the Bill to destroy what is left of the guaranteed wool market when it is at its weakest, without anything to take its place, seems to give precisely the wrong signals to the most vulnerable sector in the farming community. I remind the Minister that, according to his Department's figures published last week, there have been only modest rises in the incomes of hill livestock farmers, while in Scotland they have continued to fall for the second year running. As a minimum, the sector is entitled to ask that revocation be delayed for two years to allow the market to recover.

It is rumoured that the Government are planning to circumvent the whole process of parliamentary scrutiny and to use a statutory instrument to lower wool guaranteed prices to zero prior to the passage of the Bill. It is not for us to insist that the timing of the Bill should be brought forward—that is up to the Minister—but we could legitimately ask for a delay until that specific issue has been debated properly. It seems unlikely that the Bill will be enacted before the end of April, so surely the guarantee should continue for a full clip year and avoid disruption and unfair treatment to sheep farmers.

On the main issue in the Bill—milk—it is of critical importance that a "very heavy regime", to use the words of one hon. Member, should be replaced with an equally effective regime, if all the advances in the sector are not to be put at risk. If the Bill provides an effective co-operative organisation for the dairy sector, with real muscle in the marketplace—comparable with the co-operatives which work so well for producers in most other member states of the Community—it could be the springboard for the improvement that I referred to at the outset.

We accept that the vertical integration of the English and Welsh boards into a single co-operative would create a body which had the potential to be too monopolistic. In principle, the proposals of the milk marketing boards for Milk Marque are therefore along the right lines. We do not believe that Dairy Crest can be incorporated within that organisation and agree that it should be floated, but there is a problem with timing. If the Diary Crest flotation is delayed beyond the vesting day for Milk Marque, the market could be distorted during the transitional period. We must have safeguards to ensure that that does not happen, and that there is no conflict of interest. Too long a transitional period could be damaging and could fatally compromise the new system.

Scotland is very different. The latest figures from the Ministry show that dairy farming incomes in Scotland continue to fall, in contrast with other areas. With the three boards, the proportional and actual scale of operations are somewhat different. Despite earlier exchanges, I believe that there is a good case for the Minister to seek the co-operation of his colleague the President of the Board of Trade, who has just set a precedent by overturning an Office of Fair Trading recommendation on Owners Abroad, to reconsider the reference to the Monopolies and Mergers Commission and the provision that the Scottish milk marketing boards should not be allowed to engage in any production. It must be obvious that the milk production set-up in Scotland must be different from that in England and Wales, not merely for historic reasons but because of the state of that sector of the industry north of the border. I hope that the Minister will also be able to reassure us that the Government will allow the constitution of a separate Scottish development council for milk.

The last thing we want is for the new milk co-operatives to be so constrained from the outset that they are not able to work for the full benefit of their members, to enable them to survive and to compete in the single market. Since January, the economic context of the industry has completely changed and it must surely be only a matter of time before some of the enterprising producer cooperatives in other member states target our market. After all, many cases of them have generous backing from investment by their Governments.

It is extremely important to us that the Minister, with other Ministers in the Community, should consider the problems of quota allocations now. It is a high priority, which should be resolved before completion of the change to the new marketing system. Either more quota should be allocated to member states such as the United Kingdom, whose home market suffers from a major deficit—we are importing liquid milk now into this country—or we should allow quota to be traded across member state boundaries, which might prove preferable. If our dairy industry is as efficient and productive as it has shown itself to be in the recent past—which I believe to be the case—that could only work to our advantage, and we should consider it urgently.

Photo of John Gummer John Gummer Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman's second suggestion is Government policy. We are in favour of trading quotas across borders. That is one way in which one can make the quota system more flexible and sensible and make it react properly to the market. The sadness is that we are unique. That is a European view, and as good Europeans we ought to do that to attempt to ensure that milk production takes place in those countries most suited to it. I hope that the hon. Gentleman will help us by ensuring that members of his fellow parties in Europe start to support that policy, as until now they have been implacably opposed to it.

Photo of Mr Paul Tyler Mr Paul Tyler , North Cornwall

I am grateful to the Minister for his intervention—and all power to his elbow during the negotiations. It is a great pity that more advance was not made in that direction when he was in the driving seat in the Council of Ministers. Surely with the change in our milk marketing we can start to press for such an initiative.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Perhaps the policy that we have adopted—which, as I understand it, is the free movement of unrestricted quotas—has been the problem with our European partners. If the Government were to take the view that there should be some control and restriction on the amount of quota which could move across boundaries, our European partners might be more amenable to the suggestion.

Photo of Mr Paul Tyler Mr Paul Tyler , North Cornwall

I am grateful to the hon. Gentleman. No doubt he will develop that theme later in the debate, and it may be better for me to leave it to him to do so.

Quota management is an important issue. I think that it is fair to say that the sector was orginally sceptical of the value of the introduction of quotas, but the system is now working reasonably well and therefore any major change in quota management will inevitably cause concern for the reasons that I have advanced. For that reason—in Committee, or by whatever means appropriate—I hope that the Minister will be able to guide us on the current thinking on quota management before the Bill reaches the statute book. Little guidance is given in the Bill or in any statements made by Ministers during its passage in the other place or today to guide us on how it will operate, and clearly there are different views of the extent to which Milk Marque, as the successor body but one which does not represent 100 per cent. of producers, should be involved in the exercise.

We want a producer co-operative, but not as a fallback position: we want a potential ground breaker which will establish itself as a strong marketing co-operative to match those in other member states. From our experience of agriculture in other member states, we know how effective producer co-operatives are. They are prepared to use their marketing muscle in the market place and to prevent the sort of domination of buying power which results in this country from a small number of processors and supermarkets. A co-operative with the ability to compete in the world of the giants—the supermarket chains and food processors—would be a benefit to producers arid consumers. By cutting back on the bargaining power of the middle men there is no reason why retail food prices should not fall.

Speaking with all the authority of a former Minister, the right hon. Member for Westmorland and Lonsdale referred to the individualistic tendencies of farming communities, and there are no more individualistic farmers than those in my area of Cornwall. This is the time for us to stimulate, encourage and cajole, by every means possible, to ensure that they work together in co-operation.

In the long term, the Milk Marque pioneer should be able to expand into other commodities. Why should it not expand into potatoes, wool or eggs, where we desperately need producer co-operatives to give more muscle to producers vis-a-vis those who buy from them? By that means, we could develop a multi-product group to market the best of British produce, and it would certainly command more confidence and respect than the inadequately funded Food from Britain organisation.

The Minister referred to liberating creative potential, and there are opportunities to do that. In the case of both potatoes and wool, however, the Bill seems to be too early, too drastic, and lacking in realistic provisions to enable a transition to a well-managed market. On milk, the Bill is still too sketchy and the sector is understandably concerned about what may happen. The Bill retains a distinctive whiff of Thatcherite philosophy, offering little prospect of real competition to the dominance of the supermarkets, and putting too much potential power into the hands of the Minister. It will need radical revision in Committee.

This is not the Bill for which we hoped and expected. If we are presented with a real Bill which achieves the sort of objectives about which hon. Members have been talking today, we can all support it. I hope that the House or the Standing Committee will be able to improve the Bill, but I have no more confidence in the Government's policies at present than, I believe, agriculture has.

Photo of Mrs Elizabeth Peacock Mrs Elizabeth Peacock , Batley and Spen 7:30, 23 March 1993

My interest in manufacturing and industrial issues, as well as, of course, consumer matters is well known, and leads me to contribute to today's debate in two ways—first, in relation to wool, as chairman of the all-party wool textile group and, secondly, in relation to milk, as someone who has been closely involved with the industry for many years. I declare an interest as my husband is employed by one of Britain's largest dairy companies, with which I am in regular contact on a range of issues. I am happy to leave the future of the potato board to my hon. Friend the Member for Cambridgeshire, North-East (Mr. Moss), who made an interesting speech on that subject.

At first glance, the Bill, as it relates to wool, milk and potatoes, seems straightforward with no controversial issues—but nothing could be further from the truth. The bill is a privatisation Bill to remove Government involvement from the market for those commodities. I fully support privatisation as it gives a new boost to industry, but if we privatise, we must do so properly—something which the Bill does not appear to do.

One aspect of the Bill will have a serious effect on the wool industry and wool producers, which will, in turn, affect our textile industry—the measure to terminate the guaranteed wool price from 1 May this year. As has been said, that guaranteed wool price will disappear before the Bill has completed its passage through the House. The main purpose of the guaranteed price has been to give stability to wool producers, which it has done for 40 years. The cost to the Government has been small, and the stability continued until the world collapse in wool prices in 1990.

The stability created by the guaranteed price has allowed the British wool clip to improve in quality and image, and turn itself into an internationally recognised fibre. There are licensees all over the world, and there is representation in Japan, which is now one of the biggest consumers of British wool. The existence of the guaranteed price has helped to develop an efficient structure for the collection, distribution and promotion of British wool. That structure is the envy of many European countries and it was the basis of the system now operating in South Africa.

The guaranteed price has served producers in the less-favoured and remote areas of this country particularly well. More than half of British wool is exported, either in greasy, scoured or top form. Much of the processing takes place in Yorkshire, and Scotland and the borders. The stability created by the guaranteed price has ensured a constant supply of wool into the wool industry which, at present, is increasing its exports, both in terms of value and quantity. The guaranteed price has helped to secure employment in those areas. That has been a particularly important factor as the textile industry has declined over the years.

The existence of the guaranteed price has been of great value in preserving the environment and countryside. The British Wool Marketing Board, the Confederation of British Wool Textiles and the National Farmers Union have repeatedly asked the Government to maintain the guaranteed price until 1995 to allow time for the industry to recover from the unprecedented difficulties resulting from the international wool crisis of 1990–91.

There is still a big discrepancy between supply and demand, and the reduction in world stockpiles could take two or three more years. If the guaranteed wool price is removed this year, as proposed, producer returns will fall by almost half, which will compound the hardship recently experienced by sheep farmers. There could not be a worse time to remove the guaranteed price as, due to the international stock piles, world prices are at their lowest level in real terms.

At today's market prices, many grades or breeds of wool have no commercial value. They could disappear and be lost from the market when prices recover. Like the milk cheque, the wool cheque is important to farmers, even though it does not amount to much. It is an important source of income to producers, particularly those in hill and remote areas.

The sheep industry has been depressed and uncertain for some years. The loss of the guaranteed price will compound the problems. As many sheep farmers say, their incomes are being reduced. I understand that a farmer in Bedfordshire—an area that you, Mr. Deputy Speaker, will know well—receives less for a whole lamb complete with fleece than I pay for one leg in the butchers. That discrepancy shows that there is something wrong in the market.

Production will be lost to third world countries, which will affect textile manufacturing output, and employment in areas that are already suffering due to competition from cheap overseas labour. Exports will be lost and there will be an increase in imported wool. Both factors will affect the balance of payments. There may even be a switch back to synthetic fibres, which could cause environmental problems. Shearing and dipping will be discouraged—we have already heard about the cost of shearing sheep—which will have an effect on the general welfare of the national flock. Environmental problems could be caused as sheep shed their wool all over the countryside. We all know the importance of maintaining the countryside, but it could suffer.

The importance of sheep farming should not be understated. The quality and image of the clip will suffer, and the present system of collection, distribution and promotion could be undermined. We all know that promotion is important—both the British Wool Marketing Board at its headquarters at Clayton, Bradford, and the Confederation of British Wool Textiles must both be complimented on their work in that sector. If the British Wool Marketing Board carries large stockpiles of wool into a post-guarantee period, producers will have to bear the cost of holding stocks inherited from the guaranteed price regime.

I shall call on the Minister—when he returns to his seat—to reconsider the issue and, at the very least, to extend the scheme until May 1995 when we hope that the wool market will be in better shape. Wool producers need the Minister's help, and they need it now. Perhaps as the Minister is busy in discussions, he will read Hansard tomorrow to see what I am saying.

When we see how milk is treated in the Bill, its true nature comes to light. It is an enabling Bill which leaves the action to the Minister. It is a sort of Arthur Daley Bill which suggests, "Trust me, guv'nor." I am not sure that many of us would buy a used car from Arthur Daley, and I leave my colleagues to gather the inference from my words.

Surprisingly, the Bill requires only the milk marketing boards to come up with schemes to reorganise the industry—the Minister then has to agree to those schemes. The Minister has no obligation to publish the schemes or consult anyone else in the industry. That does not constitute democracy, but provides a potential abuse of power.

I hear that there is already a mood within the milk marketing boards merely to change the letterhead, repaint the trucks, get rid of a few troublesome milk producers and carry on as before. That is patently unsatisfactory. The Minister should be obliged to consult the milk purchasers, retailers and consumer organisations. We are all consumers. Perhaps not all my colleagues do the weekly shopping, but their partners, wives, sons and daughters may do so—we are all consumers and all ultimately pay the prices. Such groups should be consulted by the Minister before he gives his approval to a reorganisation scheme. I am sure that, if the Minister were advising me on the reorganisation of my now infamous mythical whelk stall, he would at least take into account—I hope—the views of my customers. I suggest that he does the same in this case.

I should like to spend a moment discussing the competition aspects of the Bill. It is here that the issue of privatisation comes into play. The milk marketing board in England and Wales has already proposed that it should be converted to a milk brokerage, Milk Marque, aiming to control 80 per cent. of milk from farms. Its equivalent in Scotland proposes to operate an integrated milk brokerage and dairy business, with more than 50 per cent. of the market in Scotland. Clearly, we have competition on our hands, and it could be an issue from the very first vesting day.

It reminds me of the problems that we have had with privatisation in the energy market. We have privatised gas and we are allowing a monopoly to continue, restricted only by an efficient and tough regulator—and even he suggests change. In the electricity industry, there is an inefficient regulator who has been unable to prevent the industry from falling into disorder. If I were to use any more such examples, I am sure that the Chair would quickly rule me out of order, but we have adequate supplies of energy in this country, and a great deal of milk, so we should not have to import either.

I am advised that Milk Marque, the potential monopoly, has already announced the non-negotiated price at which it will supply dairies as from 1994. I understand the proposed price is 20 per cent. higher than current prices. I cannot see the British housewife wanting to pay 20 per cent. more for milk just because the Government are allowing a monopoly to develop. I trust that the consumer organisations will pick up this point and discuss it forcefully with the Minister.

Not only will Milk Marque attempt to set prices that bear no relation to the market; it also reserves the right to ration supplies, presumably to impose its own prices. That strikes me as a potential abuse of a monopoly position, and we do not want references to the Office of Fair Trading or the Monopolies and Mergers Commission early in the new scheme. I sincerely hope that it will not encourage British dairies to import raw material supplies from northern France, as we do with French electricity, or British farmers will be very cross. I know that the chairman of Northern Foods has already described the massive investment that that company will make in plant in this country once he knows what the Minister's views and actions will be. I would certainly not want him to go away with the idea that it would be much better if he invested money in jobs in northern France rather than here.

We want our industry here. I want British electricity in our power system and British milk on my cornflakes. I expect the Minister to ensure that I and future generations will have it.

The Bill must deal with the competition aspect. We cannot just leave it to the Minister to sort out the industry as best he can. Limits must be placed on the size and form of any milk marketing board successor established as a result of the Bill. The Bill must also set limits on the size of any future milk brokerage. We cannot rely on a regulator with the title of Ofmilk. That would do nothing to encourage our British industry. In any case, our regulators are only partly successful, and there is no reason to suppose that they would do any better in this industry.

We have made a botch of some of our privatisations, and we must not make a botch of milk reorganisation. Most people need milk every day of their lives and like it delivered to their doorsteps, so the legislation needs to be framed to promote competition and prevent the need for intervention by the OFT or the EC Commission.

I understand that certain services are of significance to British dairy farmers and the dairy industry. They have already been mentioned, but I shall mention them again so as to leave the Minister in no doubt about the concern felt. The services are artificial insemination, milk testing and milk recording. These services are currently provided by the milk marketing boards. I understand that Milk Marque has assumed that they and their assets would be vested in the new organisation.

That would be unsatisfactory. Some milk producers will not be trading with Milk Marque. They will sell to other organisations or direct to dairies—but they will need the benefit of those services. For reasons of commercial confidentiality, those producers will be reluctant to use the services if they remain within Milk Marqueßžand who could blame them?

Moreover, the same farmers have a claim on the assets used by all those services, in the form of farms, offices, laboratories and means of transport. Milk producers have contributed to their cost for many years, so they should remain freely available for use by all milk producers. The services are critical to British dairy farming and should therefore be moved to independent control—to the Agricultural Development Advisory Service, to a commercial organisation or even to a non-profit-making trust.

The milk producers who do not trade with Milk Marque also have a claim on other MMB assets—the land and property at Thames Ditton, at regional offices and at depots and farms around the country. The property belongs to all milk producers; they have all paid for it over the years they have been members of the scheme. It would be most unfair if the benefit of these properties fell into the lap of a single milk brokerage.

Photo of Mr William Ross Mr William Ross , East Londonderry

The hon. Lady will be aware that many people have stopped producing milk. How can they get their share of all this back?

Photo of Mrs Elizabeth Peacock Mrs Elizabeth Peacock , Batley and Spen

The hon. Gentleman, who has been in the House longer than I have, knows how to tackle the Minister on that question. It was a good point, but I cannot answer it. I hope that the Minister will. I suggest that the Bill be amended to require the sale of these properties and the distribution of the proceeds to all producers. If Milk Marque requires them for future activities, they could be leased back.

I hope that the Minister will listen carefully to what I and my colleagues have to say, because the Bill is flawed. That is why I may oppose it if it stays in its present form. I was quite surprised that it emerged from the other place without major amendment. We have only partly heard what Opposition Members think of it, but I suggest that change is needed. The producers want change, and the wool and dairy industries recognise that change is inevitable. So I am prepared to vote for the Bill on Second Reading if I have the Minister's assurance that these points will be dealt with in Committee. When the Bill returns to the House it must then stand or fall on its merits, and I trust that it will be significantly amended.

Photo of Ms Jean Corston Ms Jean Corston , Bristol East 7:47, 23 March 1993

Three themes run through the Bill—themes to which we have become accustomed in the past 14 years. One is the accretion of ministerial power. Another is a preliminary failure to consult. The third is the consequent creation of a monopoly. Legislation on education, health and local government has exhibited a growing concentration of power in Ministers' hands. The idea seems to be that it is easier to confer power on a Minister than to mess about with democratic or statutory bodies. It is also handy because it enables Ministers to evade parliamentary scrutiny by means of delegated legislation. The upshot is that Minister, take decisions that used to be taken by people with more expertise and experience.

The explanatory memorandum tells us that clause 3 and schedule 1 give Ministers powers. Clause 4 enables Ministers, clause 5 enables Ministers, clause 6 empowers Ministers, clause 7 gives Ministers power, clause 9 enables Ministers, clause 13 confers powers on Ministers, clause 16 empowers Ministers, as does clause 20. Clause 22 enables Ministers. Clauses 24 to 27 and schedule 3 set out Ministers' functions. Clause 44 empowers Ministers. The Bill is a perfect illustration of practices that we have got used to, but which have not worked.

My second theme is the failure to consult and I address my comments specifically to the milk industry. While Bristol, East is not well-known as an agricultural constituency, my constituents eat food and drink milk and there is a large dairy, which is a major employer. In particular, there has been a failure to consult interested parties, other than the successor body, about the milk regime. That is a major flaw.

There should have been a specific provision for consultation with all the parties affected. For example, there should have been consultation over reorganisation schemes for the board and before the winding up of the residuary body, and over the conditions under which the development council will operate. Those are all major failures to consult people who have expertise in the industry.

The Government say that they believe in competition, but, so far, their privatisation policies have created only monopolies. What has that to do with a free market, even if it was a good idea? We have seen it with gas, electricity, water and British Telecom. The new body, Milk Marque, is, as I understand the Bill, to be a private co-operative. There is concern in my constituency over how that will operate, because the Government have said that competition legislation will protect milk producers from any abuse by Milk Marque of its dominant position in the market. However, as co-operatives enjoy exemption, particularly on price restrictions, under the Restrictive Trade Practices Acts, it is important to make further legislative provision to prevent abuse. I hope that that matter is addressed in Committee.

Photo of David Curry David Curry , Skipton and Ripon

The milk marketing boards are exempt from the operation of the monopolies and mergers regulations, so the Director General of Fair Trading cannot be referred to. When Milk Marque comes into existence, that immunity will be removed and it will be subject to the full rigour of the Office of Fair Trading and possible reference.

Photo of Ms Jean Corston Ms Jean Corston , Bristol East

There is all the difference in the world between a statutory body, for which there is a possibility of parliamentary scrutiny and of input from the general public, and a private, horizontally integrated co-operative, which is what we are talking about.

The Dairy Trade Federation, no less, has expressed concern that Milk Marque proposes to increase the price of milk by 20 per cent., a fact to which the hon. Member for Batley and Spen (Mrs. Peacock) referred. On 9 March, the Dairy Trade Federation asked for independent supervision of this dominant monopoly". As I read it, there is nothing in the Bill to provide proper transitional arrangements on price, sales, a disputes procedure and continuity of supply, all of which are important. Hon. Members on both sides of the House have spoken already of the dispersal of the milk marketing boards' assets. That should not confer an unfair advantage on, or improperly influence, farmers to join the successor body rather than supply milk direct to a company.

Other hon. Members have already spoken about the important national assets held by the boards and I make no apology for referring to them again. They include, among other things, the national milk record centre, the Genus farm service—that is vital for ensuring a healthy stock and for research into genetics, artificial insemination and other matters—the central testing laboratories, and the milk collection vehicles. The statutory arrangements are the best, but if there is to be a change, it is vital to ensure that there is no discrimination against bodies or companies other than Milk Marque in the use of these national assets. It would be more appropriate if there were a transfer of those functions and services to an independent national body.

It is vital that the flotation of Dairy Crest takes place as soon as possible, because it should be treated by Milk Marque in the same way as any other customer for its milk. That would only be fair to other competitors, if competition is, as it is supposed to be, at the heart of the Bill. There should be either safeguards to ensure effective scrutiny of the milk marketing board-Dairy Crest relationship or a separation of Dairy Crest and Milk Marque.

Photo of David Curry David Curry , Skipton and Ripon

Let me make it clear that Dairy Crest cannot be owned by Milk Marque in the interim period after the end of the scheme, or by the residuary body of the milk marketing boards. Therefore, if Dairy Crest could not be floated in advance, it would be necessary to propose a means to deal with the short-term problem of ownershipßžperhaps through a trust arrangement. It would not be acceptable for Milk Marque, by accident or design, effectively to control Dairy Crest, even for the transitional period, and alternative arrangements would have to be made.

Photo of Ms Jean Corston Ms Jean Corston , Bristol East

Although I am grateful for the Minister's explanation, it would have been helpful if that had been made clear at an earlier stage, rather than only now.

At the heart of the Bill, and anything that the House considers, there should be basic tenet. To quote a former Foreign Secretary, Lord Healey, "If it ain't broke, don't fix it." The milk marketing board has worked well and the Government should have fought for it in the way that Governments have supported it and fought for it in the past. European Community legislation did not oblige us to wind it up.

The Labour Members are not the only people opposed to the new regime. I understand that there is concern in Ambridge. Phil Archer has said how worried he is about the winding up of the milk marketing board, which he described as a trusted friend. He spoke about the uncertainty of a new regime and how opposed he was to it.

Photo of Ms Jean Corston Ms Jean Corston , Bristol East

Watch this space.

All producers can sell their milk to, and have confidence in, the milk marketing board. Anything put in its place should provide the same opportunities and give the same confidence. The proposals threaten the livelihood of farmers and those in the dairy industry. There is already a great deal of concentration of power in that industry. Some 79 per cent. of the United Kingdom dairy products market is in the hands of multiple retailers, and four of the largest monopolies have no less than 75 per cent. of that market.

It is vital that we protect the milk industry in the interests of those who work in it, and of the consumers of milk and milk products. Members of Parliament have the primary duty of protecting the interests of our constituents, who are consumers. Other organisations have professional bodies to represent them, but we are here to make sure that whatever we do through legislation On food is in the interests of consumers. Judged by that criterion, the Bill signally fails. That is why the Labour party would be right to vote against it and try to get it amended in Committee.

Several hon. Members:


Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. As the wind-up speeches will commence at 9.15 pm, I appeal to hon. Members to make relatively brief speeches so that more can be called.

Photo of William Hague William Hague , Richmond (Yorks) 7:59, 23 March 1993

I am grateful, Mr. Deputy Speaker, for the opportunity to take part in the debate, and I shall heed your request for speeches to be relatively brief.

This is a debate of great interest to my constituents. I have enjoyed listening to the speeches made so far, most notably that of my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), with which I concur in many respects, not only because of its content but because of the measured way in which my right hon. Friend criticised some aspects of the Bill, striking a more appropriate note than that struck by one or two Opposition Members who attributed the Government policies on the Potato Marketing Board to potato processors' donations to Conservative party funds.

To make such an accusation in the very month that the Duke of Westminster has resigned from the Conservative party because his views were apparently ignored on the Housing and Urban Development Bill, and against a Government who proceeded with their reforms of competition in the brewing industry against the most vociferous complaints of many of the party's principal contributors is extraordinary. If the Conservative party evolves its policies in order to please its contributors, it does so in a way that can only be described as bizarre.

I welcome many of the provisions in the Bill, particularly those relating to group marketing grants. Marketing is important for British agriculture. Improved marketing of our products is essential. We have one of the most efficient agriculture industries in the world, but, compared with the marketing of products from other countries at international food exhibitions, our industry often falls down at the crucial marketing stage. I hope that the group marketing grants will be the spark for many new ideas and projects. They will not revolutionise the industry, but they will begin to show the way and address one of the great weaknesses of our industry.

I hope that my hon. Friend the Minister of State will be able to say a little more about which organisations have expressed interest in those grants so far, what level of interest there has been, what he can do to encourage co-operatives, as well as other ad hoc groups of producers, and how the measures will proceed. The measures are obviously welcome, permitting recovery procedures in the event of the breach of the scheme conditions, enabling grants to relate to the whole of Britain, and so on.

I also give a broad welcome to the provisions relating to the milk marketing boards and the revocation of the milk marketing scheme. Like my right hon. Friend the Member for Westmorland and Lonsdale, I think that the milk marketing boards did a good and useful job for a long time, but it is right to revoke the scheme now. If we did riot do so, it would probably collapse under its own weight. It is under challenge in the courts, there are all kinds of constraints on Dairy Crest, which do not apply to its competitors, and the pricing and allocation system for milk has clearly failed in Britain during the past 10 years or so, causing consumers to pay a high price for their milk while producers receive a low price when they supply it.

The margins of manufacturers are artificially protected and that has led to an insufficient incentive to go for high value-added products. Often there is not the availability of milk in the United Kingdom to make high value-added products because of the protection of milk for export for lower value-added products.

That particularly came home to me in my constituency where there has been great controversy recently over the future of a dairy in Hawes which Dairy Crest attempted to close. After the valiant and, I am pleased to say, successful efforts of many of my constituents, it has been brought from Diary Crest and is once again churning out true Wensleydale cheese which I hope hon. Members will join me in consuming in the Dining Room at every possible opportunity.

But what really brought home to me the problems in the milk marketing scheme was studying the economics of that dairy and seeing that it was gravely affected by the fact that milk simply was not available on many days of the year for it to produce at all. We have the extraordinary situation where milk is not directed to those customers who value it most. It is not available even to businesses who want to buy it and are prepared to pay for it. That cannot be the right way to run an industry. The result is inefficiency and import penetration of high value-added products. Clearly, this scheme must go.

Photo of Nick Ainger Nick Ainger , Pembroke

Does the hon. Gentleman accept that the problem of supply to processors, to producers of cheese and so on, is not just inefficiency within the milk marketing boards, but the fact that we are allowed to produce only 80 per cent. of the total market. It was the disastrous deal that his right hon. and hon. Friends brought back from Europe in the early 1980s that caused that problem.

Photo of William Hague William Hague , Richmond (Yorks)

Milk quotas are a restraint on our national production, but my right hon. and hon. Friends who negotiated that deal had to start from where they were. They could not suddenly demand huge shares of the European market for milk at the expense of other countries already producing it. In fact, what was done in the 1980s now turns out to have provided an important safeguard for small producers. Like my right hon. Friend the Member for Westmorland and Lonsdale, I am inevitably concerned that small producers should not be driven out of business but should be given the chance to compete. They are to some extent safeguarded by the existence of milk quotas, even though they were savagely denounced when they were introduced. My right hon. Friend has been vindicated by events.

Like my right hon. Friend, I welcome the creation of Milk Marque. I hope that it is a success and that a high percentage of producers join it. Without being a monopoly, it will have great bargaining power if it succeeds. It will help to ensure that there are fair negotiations, particularly with large supermarket chains. I hope that many farmers will join it. However, I agree with my hon. Friend the Member for Batley and Spen (Mrs. Peacock) because I cannot see why such things as artificial insemination, other breeding services and milk recording services must be part of Milk Marque. That does not necessarily follow.

I hope that Milk Marque will stick to the promise that it made in correspondence sent to me and other hon. Members that it will have milk pricing that is market driven and responsive to supply and demand, and will allow easy access for new businesses, encourage the development of new high value-added products, allow rapid and flexible response to the demands of consumers, meet the challenge of foreign imports and provide export opportunities. If it can do those things, it will be a great success and it will do a great service to British agriculture and the British balance of payments. If it succeeds and makes a voluntary co-operative work, it will set a valuable example to the rest of the industry. I endorse and enthusiastically applaud that part of the Bill.

But that brings me to the other major part of the Bill, concerned with potatoes. Again, like my right hon. Friend the Member for Westmorland and Lonsdale and my hon. Friend the Member for Cambridgeshire, North-East (Mr. Moss), I must sound a cautionary note and say that I am worried about what is proposed. I have yet to be convinced that it is the right course of action.

The milk industry has suffered because of rigid price arrangements, the absence of competition and the existence of a monopoly purchaser, but the same is not true of the potato industry. The Potato Marketing Board is different. There is no monopoly purchaser, there is free competition beyond the farm gate, producers compete with each other making contracts with whomever they want and there are no restrictions on imports so British producers have to be competitive.

Therefore, we should be cautious before we sweep away the system. There is a danger in trying to be neat and deal with all the marketing boards at the same time and in tinkering and interfering too much with arrangements that have worked reasonably well. I share with my hon. Friends a natural bias against marketing boards, quotas and restrictions of any kind, but we must look carefully at how the arrangements work.

What is the case against the Potato Marketing Board? First, we are told that it leads to higher prices: indeed, I have heard many people say that it must do that or producers would not want to be part of it. It is true that prices have tended to be lower in some countries, particularly France and Germany; yet, in many recent years, Dutch prices have been higher than spot prices in the United Kingdom—and, after all, we should compare our prices most rigorously with those of Holland, which seems to be the source of most of the imports.

One of the problems generated by today's debate is the existence of tables of statistics that can prove almost any point that hon. Members wish to illustrate. The potato market is very complicated; there are many different grades of potato, and various places and seasons are involved. The price moves all the time. It is possible to construct a table to demonstrate and validate almost any point—but, for what it is worth, I have a table that shows the spot potato price in the Netherlands to have been higher than the United Kingdom price in 1988–89, 1989–90 and 1990–91, and marginally higher, by a few pence per tonne, in 1991–92.

The basic premise that price is at the heart of the matter and that people will pay to be part of the Potato Marketing Board only if they receive a higher price as a result, is not necessarily valid. People pay not just for a higher price, but for a reduction in the risk, regardless of price. The only conclusion that I can draw from the contradictory data that are available is that although the potato market scheme sometimes leads to a higher price in this country, at other times it leads to a lower price. Sometimes the product is scarcer than it would be if the market were completely deregulated, but sometimes supply is made more secure.

After all, producers are liable for a penalty if they do not take up all their quota in any given year: they will lose on their quota allocation in the following year. The potato marketing scheme can act to maintain supply, rather than depressing it in a way that would be characteristic of a damaging monopolistic arrangement. I do not consider the price arguments sufficient justification for sweeping the scheme away.

Another argument used against the scheme is that processing capacity will move abroad. A slight handicap of that argument is the fact that new processing capacity has recently been built in this country. A bigger problem for the industry seems to be the availability of excess processing capacity in Holland, which has led the companies that own that capacity to discount heavily in order to make maximum use of it. Such a development should not be mistaken for a relentless move abroad.

If the scheme's failings have led to more processed imports, why are there more such imports from the Netherlands into many other European countries—countries that have no potato marketing schemes? Perhaps the problem is not so much that processors are moving out of Britain; perhaps it has more to do with inadequate competition among processors in Britain. I feel that my right hon. and hon. Friends in the Ministry of Agriculture, Fisheries and Food must conduct and present a much clearer analysis of the industry and its workings—after all, it is a very complex matter—before they can persuade us that the potato marketing scheme needs to be abolished for the reasons they have given.

It is said that the removal of the scheme would result in generally freer and fairer competition, but can we speak of freer competition when Dutch producers seem to be combined into a few large co-operatives with the ability to control plantings and negotiate prices far more effectively than individual, fragmented producers in other countries? Are Ministers sure that this would be the only country in which producers joined to agree on how much should be planted? Are they certain that it would be against our interests to be the only country with such a scheme?

I am very much in favour of free and fair trade, but I am not sure that the outright and rapid abolition of the Potato Marketing Board is the way to achieve it. I think that the other place was sensible to insert one or two provisions in the Bill, and I welcome the Government's announcement that they will not try to reverse those decisions. I also welcome the provisions to ensure the creation of a successor body. I think, however, that there is a strong case for giving the Potato Marketing Board longer to show that it can make things work—that it can work with processors to reduce the percentage of the processed potato market taken by imports, and do more to meet the right specifications with better grading and the like.

I believe that my right hon. and hon. Friends in the Ministry should pause to reflect before overturning the current arrangements, and I hope that the debate will give them some cause to do so.

Photo of Nick Ainger Nick Ainger , Pembroke 8:15, 23 March 1993

My constituency has interests in all three areas covered by the Bill: wool, potatoes—particularly the early potatoes for which it is famous—and, of course, milk and the proposed abolition of the milk marketing boards.

Recently, I have engaged in extensive discussions both with my local branch of the National Farmers Union and with the Farmers Union of Wales. Both organisations—as well as individual farmers—have expressed grave concern. As my hon. Friend the Member for Bristol, East (Ms Corston) pointed out, we have here an organisation which appears not to be broke, so why on earth try to fix it? This is especially relevant to constituencies such as mine, which is 60 miles from the nearest city and has serious transport problems. We have one or two buyers in the milk industry—processors—and the local farmers fear that, if Milk Marque is not a success, they will be under pressure from those processors. They are afraid that prices will be forced down in the local market because Milk Marque has failed nationally.

Having expressed those reservations, I must say that in the main both unions welcome the idea of Milk Marque. They see certain advantages in it. They recognise that Dairy Crest should perhaps have been separated from the milk marketing boards many years ago, and that if that had been done we might not be faced with this Bill now.

The subject of wool was touched on briefly in our debate some weeks ago on hill livestock compensatory allowances. My farmers on the hills of Preseli quoted figures showing that the price that they now receive for their wool is less than half the price that they received 10 years ago. Wool is no longer a reasonable product for them to sell; it is hardly worth shearing the sheep. In the light of that, it is a great shame that the Government have decided to remove the guarantee price: there is now no bottom to the market, and prices are set to plummet.

Many hon. Members have referred to both milk and sheep, but as Pembrokeshire has a special interest in new potatoes, and a special sector of the market I shall speak mostly about the possible abolition of the Potato Marketing Board. Last year, 35,000 tonnes of early potatoes were produced in Pembrokeshire, and that produce alone put a significant amount into our local economy. In 1989, nearly £6 million was pumped into the local economy by sales of early potatoes. In 1990, the figure fell to £4·3 million; in 1991, it went up to £6 million; in 1992, it fell to £3·1 million. It would have fallen much further if the Potato Marketing Board had not intervened and placed a bottom on the market.

The season last year was unusual because the Cypriot, Moroccan and Egyptian early potatoes came in much later and the early English potatoes, because of a mild winter, came, in much earlier. The traditional time for the Pembrokeshire potato was extremely limited. Fortunately, the Potato Marketing Board intervened with about £450,000 for Pembrokeshire growers last year. That is a good example of why we need the board to continue to prevent such enormous fluctuations. To illustrate the price ranges, the House might like to know that the average price paid for Pembrokeshire early potatoes in 1989 was£171 per tonne while the average price last year was £95 per tonne.

The Minister told us that he wanted to break the shackles imposed on producers by the Potato Marketing Board. However, in my discussions with growers and with the NFU, no one has said that they want to see the end of the board or that they want to break free of its shackles. To illustrate that point, I want to quote from a letter—not from a sado-masochist, but from John Davies of Herbrandston Hall, a member of the NFU potato committee and one of the largest early potato producers in Pembrokeshire. He writes: If quotas were removed the bulk of growers in Wales would stop growing. This would be because without stability we would have years of shortage and high prices followed by large surpluses. In those years because of the carryover of the main crop from the previous year potatoes in Pembrokeshire would not be sold at all. Rather than cope with this they would leave potato growing and reduce their overheads and fixed costs.There was no early potato industry in Pembrokeshire before the formation of the Potato Marketing Board. Pembrokeshire is the largest supplier of early potatoes in the UK market during May and the first half of June. If the area was substantially reduced it would not be so easy to influence the market and marketing would be very much less effective. The effect of this happening would be an increase in imports of first early potatoes. The home growers have reduced imports from 385,000 tonnes in 1978 to 264,000 tonnes in 1992. This is one of our great successes in import substitution. That is a good illustration of how, as a result of the Potato Marketing Board and a regime, we have been able to stop imports or to reduce them significantly.

Mr. Davies also referred to the importance of the potato industry to the local economy in respect of the provision of casual and permanent labour. He wrote: Potato growers in Wales spend approximately £1·2 million on seasonal labour which is very important to rural economies. About 350 potato growers employ regular farm workers. If they stopped growing potatoes and returned to cereal production they would no longer need this labour. It is clear that the Government have completely failed to make the case for the abolition of the Potato Marketing Board. I have yet to hear a speech from the Opposition Benches or from the Conservative Benches in favour of its abolition. I certainly did not hear such a speech from the Minister. He seemed confused as to whether it was a good British idea to get rid of the Potato Marketing Board or a bad European one. We have already heard that the Spanish and French operate intervention policies. Hon. Members on both sides of the Chamber accept that with the removal of the 50,000 tonnes Government limit, leaving the Potato Marketing Board to intervene to the tune of 450,000 tonnes maximum a year, we would have a totally self-financing scheme which would cost the taxpayer nothing.

Why are the Government proposing to legislate away the Potato Marketing Board? The only answer I can think of is that, unfortunately, they seem determined to get rid of any whiff of an organised market which has worked so very well. They are now virtually in the pockets of the only people who will benefit from the board's abolition—the major potato processors.

It is a great shame that the Government have ignored the success of the Potato Marketing Board. I hope that they will listen to the contributions that have been made in the debate, particularly those from Conservative Back Benchers.

Photo of Mr Paul Marland Mr Paul Marland , Gloucestershire West 8:25, 23 March 1993

We are in some considerable danger of under-estimating farmers in this debate. The Bill is important, and it offers a great opportunity for farmers and manufacturers to look forward to a more successful future.

There is no doubt that the attitude of most British farmers is changing. They realise that they must move closer to the marketplace and, to do that, they must adapt their businesses. It is perfectly understandable that most people find it difficult to come to grips with change. There is nothing more alarming than change. People fear change itself, rather than what it may bring. However, farmers are business men and many of them take a great pride in being not only good husbandry men, but also good business men.

As David Naish, the president of the National Farmers Union said at this year's annual general meeting: We must face up to change and make it work for us. That is a realistic approach and I applaud David Naish for it.

I believe that Government intervention in markets, in agriculture or elsewhere, leads to the most almighty muddle. It usually results in trouble. Unmolested markets, certainly in agriculture, are by far the most dynamic, as we can see from the pig and poultry industries. The only way in which the Government should interfere in any of those markets or businesses is to ensure fair play. Let us return to a level playing field.

For as long as I can remember, farmers have always mistrusted supermarkets and end use sellers. Just this morning, I had a conversation with a dairy farmer in my constituency. He told me a story about a large-scale strawberry producer who, when there was a glut, picked strawberries to send to a supermarket. The supermarket scrutineers went to the farm and said, "We are very sorry, but we can't take your produce because you have one too few portable loos in this field for the number of strawberry pickers that you have here."

Supermarkets and large-scale end users are very anxious to build bridges with farmers. They have an important selling job to perform. However, I believe that farmers are beginning to realise that the future looks much better with a joint venture with a large retailer, and that a spirit of co-operation and trust between the two parties is essential if they are to go forward together.

Those of us who have already been approached by end users will be aware that Nestle already buys milk all over Europe direct from farmers, and that Unigate buys milk direct from farmers in Ireland. That has been achieved with very little difficulty, and the farmers are extremely enthusiastic about that regime.

It is early days to talk about how appalling the situation will be if these boards are swept away. There are stepping stones that show the way, in which the spirit of co-operation between farmer and end user or retailer is developing. On a previous occasion, I mentioned the Strathclyde food initiative. This is an arrangement between Safeways, which is a very large retail group, together with Allied Lyons, Rank Hovis, Unigate and other big operators in the market. If the group finds a farmer who is producing something that it thinks would be of interest to its customers, it approaches him.

Let us suppose that we are talking about someone in Cornwall producing 30 wind-dried hams a week. The farmer is told that the group will send in its experts to show him how to expand his business so that he can produce, say 300 hams a week. He is told that he will be helped to secure larger premises, and that he will be given a five-year contract under which all the wind-dried hams that he can produce will be bought. I use wind-dried hams as an example, although judging from your expression, Mr. Deputy Speaker, they sound delicious to you. That is why retailers are interested in trying to produce more of them.

Obviously there is a way forward for people who are able to develop businesses in this way. As we have seen today, interest rates are coming down. This too gives farmers an opportunity to develop their own marketing enterprises and secure a place alongside the big retailers.

I am extremely pleased that the interest rate under the loan guarantee scheme for small businesses has been dropped by two percentage points and that farmers who came forward with marketing schemes are eligible, as they are eligible for group marketing grants. I am glad that my right hon. Friend is setting up a review to make the scheme more flexible and to ensure that the rules under which it operates are a great deal more straightforward.

In the Ministry of Agriculture, there is a tremendous move afoot to slash red tape. I am very pleased about that, as we hear daily about how much difficulty there is. There is the annual sheep premium. There is the change in the date for claiming headage payments, and support for suckler herds is becoming more and more arduous. Farmers are expected to do more to claim grants, and I understand that in some markets, to cover the cost of veterinary inspection in slaughterhouses, a surcharge is being imposed on farmers who sell their produce in those markets.

That is not right, and I hope that this drive to sweep away regulation and make the farmer's lot a little easier will be continued with gusto. Change is rolling forward. More and more farmers are realising that their best future depends on the changes proposed in the Bill. Opportunities are to be found in a freer market, as David Naish says.

I turn now to milk marketing. In the past few weeks, hon. Members who are interested in this subject and in other agricultural matters, have been approached by the milk marketing boards, or Milk Marque—my hon. Friend the Member for Batley and Spen (Mrs. Peacock) has spoken with some passion about this matter—and we have been approached by Nestle and Unigate. Every meeting has been interesting and has helped us to understand some of the opportunities that lie ahead for the farmers. Milk Marque has spoken with great confidence about the future and about its hope of persuading many farmers to stay with it.

It is quite right that many of them should gain more confidence by doing just that. The milk marketing organisation has behind it 60 years of history and of service to the farmer. However, we are concerned not about the last 60 years but about the next 60. The milk marketing boards have a fine reputation and a large following of dedicated farmers, but they must be careful not to sully their reputation by trying to persuade farmers to jump into trading with them, come what may. Historically, they have been rather wooden in their efforts to increase farmers' returns.

There is no doubt that Dairy Crest has been favoured with surplus milk. Dairy Crest deals only in low-value products—milk powder and butter. At least, that is one of its main interests. This is what has been done with the surplus milk. It is the cheapest means of getting rid of it. But, as the milk marketing boards have said in the past, "Milk is milk, and if you want to buy from us you will have to take what we give you." In no way have the boards been willing to tailor milk to what the end user requires. The days of milk being just milk are coming to an end. Much more attention must be paid to the opportunities to increase the returns to the farmer.

I was rather shocked by something that my farmer friend said to me on the telephone this morning. He said that the milk marketing board is currently paying him 21p a litre but that it proposes, from April next year, to pay 27p a litre. I should like to know why this man, who is never slow to express his opinions to me, did not chase the board to give him 27p a litre now. What is going to change between now and next April, apart from the fact that the board will have to face up to the real world?

As other hon. Members have said, there is a feeling that the milk marketing boards are giving an uncompetitive edge to Milk Marque, as they are picking up the cost of promoting it. We have heard about the transport fleet, the property currently owned by the boards, including the large office in Thames Ditton and many depots throughout the country, and I understand that they own three large farms. How will those who do not opt in to Milk Marque share in these assets, to which they have contributed?

There are the questions of Genus, central testing and national milk recording. My farmer friend, who is going to join Milk Marque, says that the visits made by the national milk recording staff do not matter—lots of people visit his farm—but the visits of the milk recorders are very intimate matters. A recorder knows precisely what a farmer's cows are producing and how his costings are arranged, and that will give Milk Marque an unfair advantage. As other hon. Members have said, the assets should be separated from Milk Marque, and all those who are to share in the flotation of Dairy Crest should share in them.

Another matter that has come to my attention has rather alarmed me. A circular that the milk marketing organisation has sent to some of its existing buyers says: 1. We may not be able to supply you with any milk at all if you have declined to submit an intention to purchase form.2. Your priority return may be scaled down or ignored if it appears not to be a bona fide estimate of your own business needs.3. We will regard it as part of our responsibility to establish a fair rationing system amongst our customers if there should prove to be a shortage of milk. If that is not an attempt to put the elbow on some users and on some farmers by saying that they will have a share in the assets to which I have referred, I should like to know what would be. I hope that my right hon. Friend the Minister, in summing up, will be able to say something about this matter.

I am sure that Milk Marque, whatever form it takes, will be successful. If it captures, say, 88 per cent. of the market, who will regulate the market? My right hon. Friend spoke of his distaste for the concept of Ofmilk but said that his mind was still open. Some comment on this question in the summing-up speech would be very helpful. We should like to hear exactly what my right hon. Friend's thoughts are now.

I should like to refer to some other points that were put to my hon. Friends and myself at our meetings with the processors. They all feel that there are great opportunities ahead for producers, and, of course, for themselves, to promote British food. The manufacturers want to trade direct with farmers, and will be able to pay them a premium if they tailor the milk they produce to what is needed for the manufacturing process.

We know that there are creameries and manufacturing establishments in isolated areas throughout the country—for example, in St. Erth and Haverfordwest, where Unigate has large manufacturing plants. If these plants are to have a successful future in difficult circumstances, and if the farmers are to have a premium, persuading them to deal direct and produce tailor-made milk will reduce the costs of the manufacturer and enhance the returns.

People talk also about the possibility of imported milk. At the moment, the only liquid milk imported into this country is treated milk and, as I understand it, the cost of moving liquid milk is very high or, at least, is a large proportion of the cost of what is a fairly low value product. That is not on. Many other fears that are being expressed by the farmers about manufacturers going abroad to buy liquid milk are, I believe, ill founded, because I really do not believe they will.

Northern Milk Partnership is another company with which we have been having discussions. It has issued thousands of prospectuses, it tells us, of details that it will send out for its contracts, and good luck to it.

The milk manufacturers have told hon. Members that, it they can achieve a satisfactory transition, the United Kingdom consumer can look forward to greater price stability, and even wider range of innovative and good-quality, added-value products, made here in the United Kingdom and, I hope, an end to having to depend on the French so much to send in the more exciting and unusual milk products that we have been consuming in this country.

I turn to the potato board for a moment, although I do not have many potato growers in my constituency. The hon. Member for Pembroke (Mr. Ainger) read out a letter from a potato grower in his constituency. May I read out part of a letter I received from the secretary of the Potato Growers Action Group? He says: Large numbers of farmers now oppose the PMB since it lost import controls in 1979. From that date, its main aim of matching supply to demand became obsolete. By imposing restrictive quotas on UK growers, all it has done is create a gap for imports to fill. This gap has been filled at the end of the food chain by imported foreign processed potatoes. This is especially disappointing as processed potatoes is where the major growth is in the potato market, and importing processed potatoes denies manufacturers in this country the opportunity of creating work for our own citizens.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

The hon. Gentleman has mentioned an action group. Will he accept that a letter was recently published in the farming press from an organisation of that name? It was immediately denounced in following editions of the paper by a great many individual potato producers, who made it clear, as has the National Farmers Union, that the majority of potato processors support the PMB and feel that it has done a very good job for the producers. Does he accept that it is a minority view that he is putting to the House?

Photo of Mr Paul Marland Mr Paul Marland , Gloucestershire West

No, it is not a minority view. We have had discussions with potato producers, and a number of them are very sceptical of the benefits of the potato board. They are not such a small number.

To carry on with the letter: The Board contradicts itself in claiming low prices to consumers and high prices to growers, depending upon whom it is speaking to at the time. In fact, the weather has a greater effect on price than the Board. To be quite honest, not one potato grower has contacted me to say that he is anxious to see the continuation of the potato marketing board.

The Bill heralds a new era of opportunity for farmers, manufacturers and consumers and will, I hope, ensure that more high-quality, added-value products are made in Britain, to be eaten in Britain and exported to Europe and to the rest of the world.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn 8:43, 23 March 1993

We have heard a number of interesting contributions tonight. I must tell the hon. Member for Gloucestershire, West (Mr. Marland), with whom I share space on the Select Committee on Agriculture, that his was the first voice tonight in favour of the abolition of the Potato Marketing Board. The vast majority of hon. Members who have spoken in the debate have supported its retention, at least for a period. His was a minority view.

What has united both sides of the House is the tributes paid to the milk marketing board and its work over the 60 years of its existence. During that time, it has served the milk sector extremely well. We should not forget the circumstances which lead to its creation as a statutory body in the 1930s. At that time, many farmers faced a crisis of monumental proportions. Bankruptcies were commonplace, and small farmers were at the mercy of the free market. Many were driven to the wall.

It is not surprising, therefore, against that background, that many in the industry view the demise of the board as a statutory body with considerable dismay. It has served milk producers very well. The monthly pay cheque, guaranteed, with regular collection throughout the year, irrespective of location, has been an anchor of certainty in an industry which has seen its fair share of turbulence in recent years.

However, it has been clear for some time that the dairy sector itself is going through a period of profound change and the uncertainty which that inevitably involves. The main changes have been happening in the marketplace. As was said in another place on Second Reading: The days are long since gone when British milk was consumed almost exclusively as butter, cheddar cheese and silver, top milk."—[Official Report, House of Lords, 23 November 1992, Vol. 540, c. 798.] The dairy market has seen enormous changes in consumer demand and preferences. We now eat considerably more yoghurt and a large range of other products—for example, soft cheeses, which are now consumed in vast quantities—and over 40 per cent. of drinking milk in England and Wales is purchased in skimmed or semi-skimmed form. We have even seen a sharp decline in the doorstep delivery of milk.

Since a question mark exists over the MMB's exclusive purchasing right of low fat milk, there is no doubt that the board as currently constituted stands at a crossroads. Should the board's powers be amended to take into account these changes in consumer demand or should the statutory powers be abolished? Many producers will feel worried by the approach that has been adopted by the Government but, given that they have adopted this approach, we need to consider the impact of the changes.

Many small producers, in particular, will welcome the proposal to establish a voluntary co-operative for England and Wales—it gives them relative security in the short term. However, they will need assurances on a continuing commitment to collection and regular payment, wherever their farms are located. Farmers located in isolated rural areas, such as those that I represent, will feel vulnerable and will fear that their collection costs will increase over time. This could lead to an increasing concentration of milk production on the fringes of urban areas where collection and delivery costs are much lower. We need some assurances on this matter.

In recent years, when farmers have asked me for my advice as to whether they should dispose of their milk quota, I have told them that on no account should they do so, since it gives them a regular cheque and provides them with certainty in a market which is changing rapidly. However, those who will maintain milk production in isolated rural areas need assurances about the new regime.

One of the most telling arguments in favour of a powerful voluntary co-op is the strength of the multiple retailers. It is a fact that 79 per cent. of the United Kingdom market for dairy products is in the hands of the multiple retailers, and that four of the largest multiples command no less than 75 per cent. of the market. Farmers, therefore, operating through co-ops, have considerable strength to negotiate with retailers; standing outside a co-operative, they face the danger of being picked off one by one.

We must not forget the position of small producer co-operatives; their interests also need to be protected. Many have complained that they have had difficulty in obtaining sufficient milk and that, under new arrangements, they must be given opportunities to secure sufficient quantities of milk for their plants. Many play a valuable role in maintaining the economy of rural areas and provide much needed jobs in those areas. We would welcome an assurance from the Minister which built on his intervention to the hon. Member for Carmarthen (Mr. Williams).

It is important that Milk Marque, or whichever successor body is set up, does not administer the quota system. It should be transferred to an independent body, which would also maintain an important statistical database. That would ensure the maintenance of commercial confidentiality.

Research and development are regarded as important by the farming industry. The idea of a development council is a good one. Proper research and development are vital for any industry, especially the milk industry, which faces great challenges. Can the Government give an assurance about their commitment to the continuation of research and development and ensure, if necessary, that sufficient funding is given to that end? The lack of proper research and development is hampering much of the industry in the United Kingdom today.

On potato marketing, hon. Members from both sides of the House have said that it is extremely premature for the Government to call for the demise of the potato marketing scheme. Farming unions, as well as potato producers, oppose the Government's decision to revoke the scheme. A former Minister of Agriculture, the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) said that, since 1989, the potato marketing scheme has adapted to changing conditions and that targeted areas for potatoes have been expanded specifically to accommodate growth sectors in industry. Many growers have invested heavily in potato storage following the Government's review in 1989, and they would be let down badly by an early end to the scheme.

I regret the Government's decision to terminate the existing guarantees for wool. A sudden ending of the wool guarantee this year will have a damaging effect on the income of wool producers at a time when world market prices are depressed and sheep farmers face cuts in hill livestock compensatory allowance payments. We should remember that the economy of many areas where there are hill farmers is extremely fragile, and that to withdraw the wool guarantee this year would be a severe mistake. The way in which it will be withdrawn has been deplored by the farming unions. We should at least have proper parliamentary scrutiny of the decision. We believe that the wool guarantee should be retained at least for the time being, to enable the industry to stabilise.

I have highlighted several matters of great concern to hon. Members who represent farmers in Wales. I hope that the Government will take those matters on board.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow 8:52, 23 March 1993

I thank you, Mr. Deputy Speaker, for calling me at a time in the debate when the Front Bench is full. I thank my right hon. Friend the Minister for obtaining the information which I requested earlier. I understand that, for clause 53(4), we should read 54(4).

I do not underestimate the Government's difficulties in these considerations. It is always much easier to take an industry into state control than to liberate it from the shackles of such control. Essentially, this Bill is about liberating the food and farming industry from certain aspects which could, broadly speaking, be termed state control. The Minister must be pleased that the Bill is generally, if not always enthusiastically, welcomed.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

If the hon. Gentleman wants to make interventions from a sedentary position, I will do my best to deal with them if he speaks up, but it would be much easier if he made them in a more formal way.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. No hon. Member should be making sedentary interventions.

Photo of John Home Robertson John Home Robertson , East Lothian

Perhaps the hon. Member for Ludlow (Mr. Gill) can tell me exactly who on earth welcomes the provisions of the Bill?

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Many hon. Members have welcomed many aspects of the Bill, and I stand before the House doing exactly that. However, I point out to the Minister that many safeguards will be sought and, especially in the case of the milk and dairy industries, must be given. I hope that the safeguards and assurances that the industry seek will be forthcoming. I am confident that my right hon. Friend the Minister recognises that failure to accommodate the major concerns of the industry will lead to investment plans being delayed, cancelled or even taken abroad.

I recognise the dilemma that my right hon. Friend the Minister faces in trying to reconcile his free market views and instincts within the straightjacket of the managed market imposed by the common agricultural policy. That is nowhere more apparent than in the dairy sector, where a structural deficit of milk in the United Kingdom will tend to inhibit entrepreneurial activity and import substitution. My right hon. Friend reminded the House that the United Kingdom must put its milk to the best use, and he instanced how the Bill would liberate the creative potential of our industry to do just that.

In the context of the views and opinions of people who add value to the product—the processors—I want to make a few further comments. My right hon. Friend said that we must not be left with the commodity end of the business. Obviously, we must concentrate on adding value wherever we can. The concern of the processing industry is well expressed by the Food and Drink Federation, which makes the point that milk and dairy products are major and essential ingredients for food and drink manufacture and that the availability of supplies and the price of milk and dairy products are central to the ability of manufacturers to meet consumer demands.

Manufacturers are seeking a marketing system which ensures regular availability of high quality supplies and which is as open, competitive, efficient and genuinely market based as possible, given the constraints of the European Community milk quota system. They are highly concerned, however, that if the Bill's provisions are introduced in their present form a free market for milk will not be the end result. Manufacturers seek assurances that the terms of transfer of the assets of the milk marketing boards will not be such as to press milk producers unduly to join only successor bodies to the milk marketing boards.

Manufacturers with plant in Scotland and Northern Ireland are concerned that if, as is currently envisaged, the milk marketing boards in those regions are permitted to retain their processor capacity, users will face unfair competition. They also seek assurances that the reorganisation in milk marketing will ensure the development of competition in the market, and about how that will be supervised. The Bill will have failed manufacturers and consumers if it results in a statutory monopoly to market milk being replaced with an uncontrolled voluntary monopoly. Lastly, manufacturers want the Bill to provide full consultation for all interested parties on details of successor schemes. Of course, that theme has been repeated in other speeches today.

I support the amendments introduced in another place in relation to potatoes. In common with other right hon. and hon. Members who have spoken today, I welcome the asssurance by my right hon. Friend the Minister of Agriculture that he will not seek to reverse those amendments.

In my experience, the potato industry has difficulty in accepting the end of the potato quota at a time when the quota system has been extended into other sectors of agriculture. I query the premise that the price of potatoes will not fluctuate widely in a totally free market. I draw the attention of the House to what happens in another totally free and unsubsidised sector of the food and farming industry. Twelve months ago the price of pigmeat was about 128p per kilo, whereas eight months previously it has been about 79p per kilo. In an eight-month period, there was a massive fluctuation of about 62 per cent. in the price of that raw material. I repeat that that was in a market which is totally unsubsidised, free and subject to market forces.

Photo of David Curry David Curry , Skipton and Ripon

None the less, I do not think that the hon. Gentleman has heard any pig producers asking for a heavy intervention regime in pigmeat. They appear to think that that system, with all its fluctuations, is still the best.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

My hon. Friend is right. Those who are associated with the pig industry on either side of the farm gate take that view. They support the concept of earning a living by the market, they accept the workings of the market and market forces, but it is difficult to run an industry in which the raw material has such volatility. In my experience, it means that when the producer is making money, the processor is probably losing money. Conversely, when the producer is losing money, the processor is probably making money.

For a long time, I have believed that, for many agricultural products, there is only one profit in the whole production and processing cycle. I was pleased to hear that view supported by Sir Alistair Grant, the chairman of Safeway, speaking on the farming programme this morning. I am led to the conclusion that I should support the opinion of potato growers in the Ludlow constituency, as endorsed by the National Farmers Union nationally, that the potato marketing scheme should not be summarily dismissed and that, under the principle of subsidiarity, the Government should support the concept of allowing the British potato industry to work out its own salvation over a reasonable period.

Will my hon. Friend the Minister please investigate the system of area and plant royalty levies, which threatens to put seed potato producers such as Shropshire Highland Seeds in my constituency out of business when a free market in potatoes is created?

Another aspect of the Bill is grants for marketing. A curious belief still persists that there is a continuing willingness on the part of the taxpayer to fund such operations. I express some disappointment at the apparent lack of faith in market solutions to essentially market problems. I remind my right hon. and hon. Friends of the old maxim that the road to hell is paved with good intentions. I ask them to consider the effect of earlier grant schemes, particularly on the production side of our industry, which led to serious structural surpluses and over-capacity, all at a huge cost to the taxpayer. As often as not, that has been to the benefit of big businesses rather than, as perhaps was intended, to the benefit of small farmers and small businesses.

I recognise that the Bill is an enabling Bill, and I am, of course, conscious of a previous enabling Bill. I refer to the Food Safety Bill, which I supported with enthusiasm. I remember saying at the time that it contained nothing to which a bona fide food handler could possibly take exception. Had anyone told me that, as a result of the plethora of regulations it triggered, farmers' wives in my constituency wishing to provide bed-and-breakfast accommodation would have to have their kitchens completely revamped, I might have taken a contrary view.

I draw the attention of the House to clause 54 of the Bill, which says: An order or regulations under this Act may include such supplementary, incidental, consequential or transitional provisions as appear to the person making it to be necessary or expedient". I remind Ministers that we are committed as a Government to deregulation and that this industry and other industries—one might say the butcher, the baker and the candlestick maker—are fed up with too many rules and regulations. The Government simply have to get off the backs of the wealth creators or risk killing the goose that lays the golden eggs.

Photo of Mr William Ross Mr William Ross , East Londonderry 9:05, 23 March 1993

I intervene in this debate simply because it is intended to extend this Bill by prayable order to Northern Ireland and that is not something that either I or anyone else on this Bench ever welcome.

We should not allow the somewhat bland language of the Bill to conceal the fact that in it we are transferring from this House to Europe a very large authority—and one of the final chunks—that we have remaining over agriculture in this country. That has not so far been mentioned in the debate.

If we are to end these sytems which have served agriculture so well, they should be replaced only by a system which keeps the strengths given to the primary producer by the present schemes.

I expect to hear calls from the processors. They are protesting loudly about vertical integration but I do not hear similar protests about vertical integration when the beneficiaries are the retailers or those who process in that vertical integration. The protests arise because the intention seems to be that this would be a primary producer controlled vertical integration and I, as an ex-farmer, applaud that.

I find it amazing that, when the Minister was introducing the Bill today he was busily talking about abolishing quotas on potatoes but said not a word about abolishing milk quotas or quotas or other goods. He said that we would get rid of quotas on potatoes but keep them on other goods. Why is there this divided opinion on the Government Bench? There must be some reason for it. Perhaps we could have an explanation.

There is no point in talking about a competitive situation in milk and complaining about problems of supply when the shortages of supply about which there are complaints simply arise from the quotas on production of milk in this country. If one wants a really competitive supply, one has to get rid of quotas, and that is mighty difficult to do. That is the reality of the situation that no one here wants to face.

There is real concern about the powers being given to Ministers over any successor organisations. That concern is widespread in the agriculture community.

A number of hon. Members opposite also seem to have forgotten that we have a land frontier in this nation, and it is a land frontier across which raw milk has flowed in considerable quantities over the past few years. That concerns many people in Northern Ireland because we are concerned about how the Northern Ireland milk processing industry will develop and whether any of it will move into the hands of a foreign state which would use it to the benefit of their farmers, so that we would be exporting jobs along with the milk processing.

We are entering a free market situation. Milk is one of the foundation stones of Ulster agriculture and we wish to protect it because it is vital to the whole farming community there. We want a system which is co-operative, firmly based on Northern Ireland producers and controlled by them because they will have the wit to look after their own welfare rather than leaving it in the hands of processors when processing can be sold, right, left and centre to anyone in the world who will use it purely for their own benefit without any concern for the agricultural community.

I understand that the milk marketing board in Northern Ireland wants to effect the change as soon as possible. There is a time scale problem here, because even if the Bill gets Royal assent by July, the Northern Ireland order may not come until the autumn. That will mean that we are at least three months behind and it will be almost impossible to make the conversion date of 1 April next year. I understand that there were problems with the Scottish milk marketing board, with the Monopolies and Mergers Commission and the Office of Fair Trading; I ask the Northern Ireland Minister, who is present on the Front Bench, to remember that there is a great difference in the way in which the milk is split up and handled in the Province.

As for potatoes, I know a fair bit about them because for many years we grew the basic seed propagation for the whole of Northern Ireland on our farm, and I have probably seen more varieties of potatoes than most hon. Members—the reality is that they are a high-cost crop with very variable costs.

There is the problem in Northern Ireland that the potatoes which we grow are very often seed potatoes. They are seed varieties which are of no use in Northern Ireland because they are not grown to produce ware in the British climate; they are grown to produce a ware crop in a continental or north African climate. The Minister is well aware of that. Therefore, we find ourselves this year with a huge number of seed potatoes, while the market has collapsed completely from a sale of £18 million to £9 million. They are potatoes which nobody wants; they are totally useless.

We are also caught by the fact that, although we produce very high quality seed, this year's ware is a very high yield. The seed has not gone, but is sitting there. I know of one farmer in my constituency who has 4,000 tonnes in stock; it is perfectly good seed, but nobody wants it. There is such a huge variation in the price of varieties in Northern Ireland that a stock scheme simply cannot be triggered. There are potatoes in Northern Ireland which are selling at a perfectly good price. The English growers have the salvation of a £35 differential for shipping across the Channel from the continent. We have the problem of shipping them over here and we need some sort of a stockfeed scheme very rapidly indeed.

I know that the Minister has been given all the figures and is aware of the problem. I hope that he will make some effort to help seed potato growers in Northern Ireland, because that is a trade which will come back. Those people who buy our seed potatoes have disease problems after a year or so and have to come back to the northern producers to get healthy stock. They will be back, and I do not want them to come back and find nothing there.

I do not think that the Government have been very helpful to the Northern Ireland producers this year. I understand that 2,000 tonnes of seed potatoes were sent out by the Overseas Development Agency—a Government agency—to Bosnia. They did not go to tender for these, and the price was £140 per tonne. Apparently they all came from one source in Scotland—a perfectly good source I have no doubt, but if they had gone to Northern Ireland they could have had 2,000 tonnes in two days for a lot less than £140 a tonne. I understand that the producers in Scotland got £70 a tonne, so somebody was making a lot of money out of Bosnia. The Government have not handled that one very well and we are most unhappy about it, but we hope that they will do somewhat better in the future.

There is much more that not only I but other hon. Members would like to have said in this debate, but time has run out. I have tried to touch very briefly on the concerns we have, and I hope that we shall get satisfactory answers before the day is done.

Photo of Peter Atkinson Peter Atkinson , Hexham 9:13, 23 March 1993

I realise that I am up against the clock and I will make my intervention extremely brief so that the wind-up speeches can start on time.

I share the opinion of other Conservative Members about what will happen to the residue of the milk marketing boards, in particular testing, national data recording and Genus. I agree that it would be wrong to pass those over to Milk Marque.

I have a solution that I can offer briefly to my right hon. Friend about what he should do, particularly with regard to national milk recording. If it is freed from the milk marketing boards, it will be able to sit very well in the new animal data centre which the National Centre for Animal Statistics wants to set up for the livestock industry. The NCAS is based in my constituency and the new centre will be well worth supporting. The danger is that if we go ahead without moving the milk records away from Milk Marque, the records will be scattered all over the place. It is vital for the livestock industry in Britain that those records are kept together.

I believe that, under a development council, the animal data centre could provide the livestock industry with an extremely valuable database and be of immeasurable value to future generations, and I urge my right hon. Friend to consider that when he sorts out the final details of the milk marketing boards.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington 9:16, 23 March 1993

We have had an interesting debate, including a chirpy little speech from the Minister which I am sure the burghers of Peckham will well enjoy.

It has been a delayed debate because the Bill has been a casualty of Maastricht. Last week's Farming News went as far as suggesting that the Government were pulling the Bill out—no such luck. The overwhelming view of the House tonight has been that the marketing boards—in particular the milk marketing boards—have served the country well.

Lest we forget the measure of stability that the milk marketing board has brought to British agriculture, we need do no more than read Hansard debates of the early 1930s prior to the original scheme being set up. The horror stories of milk production difficulties in the 1920s and early 1930s are legion in the industry and those days must never be allowed to return.

The milk marketing boards' cheque has saved the British dairy industry: that point was put eloquently by the right hon. Member for Westmorland and Lonsdale (Mr. Jopling).

One of the biggest threats to the boards was in 1978. I pay tribute to the shadow Minister of Agriculture, my hon. Friend the Member for Edinburgh, East (Dr. Strang) who, with the late John Silkin, successfully secured concessions enabling the milk marketing board to survive. I know that the entire British dairy industry is grateful to my hon. Friend.

Marketing boards in the United Kingdom have been enormously successful, not least the Potato Marketing Board which was alluded to by my hon. Friend the Member for East Lothian (Mr. Home Robertson). Despite occasional difficulties, it has been an important component in market stability over a large number of years; a tightly policed target area, combined with intervention arrangements—the existence of a non-tariff barrier, in the form of a £32-plus channel crossing charge on imports, to which the Minister referred—have produced a relatively stable potato sector.

The problem is that the processors are not getting what they need at the right price and we acknowledge the difficulty. A way round that dilemma has to be found, as the hon. Member for Cambridgeshire, North-East (Mr. Moss) said. However, I am not convinced that the Government's proposals for a totally free market provide the answer. The official Opposition cannot sit on their hands and watch a part of the British potato industry driven into bankruptcy on the altar of Government ideology. We will therefore go into Committee primed to respond to, or to initiate, any compromise suggestion that secures the survival of the board, perhaps under a revised scheme.

It is a pity that the industry—that, is the producers and the processors—has not been able to draw up a revised scheme that the Minister could sell to the Community. However, we must avoid at all costs a scheme based on intervention which costs the taxpayer money. I know that that has been discussed by the industry in recent weeks, but I make it absolutely clear that it is not on Labour's agenda and I understand that it is not on the Government's.

The sight of potato mountains being destroyed in France and, to some extent, in Northern Ireland may invite calls for public subsidy, and there is evidence to suggest that that is precisely what is happening in Europe, but that is not the answer. Where quotas avoid state intervention and public subsidy we should never be too hasty, to remove them, which is why we see some merit in the revision of the scheme, rather than its abolition.

The official Opposition are deeply concerned about the Government's proposals for wool—a matter which the hon. Member for Batley and Spen (Mrs. Peacock) alluded to in an interesting contribution. We are acutely conscious of the problems faced by Britain's sheep farmers. As I said during the most recent debate on hill livestock compensatory allowance payments, we believe that, to some extent, that problem can be dealt with in the marketplace, with an assault by Britain's lamb producers on the European sheep markets where prices are substantially higher. Nevertheless, until higher lamb prices are available to farmers, we strongly believe in the principle of a wool scheme that supplements low incomes in much of the sheep sector.

On milk and the Government's proposals for reorganisation, we believe that the milk marketing boards could have survived and would have done so under a Labour Government. We recognise that a number of difficulties have arisen, all of which have been alluded to during the debate. A series of challenges to the boards' powers have effectively undermined its strategic position in the marketplace.

The activities of Botfari, the Cheshire company acting as a contract processor, having eaten into the board's powers as a monopoly purchaser. Equally, the heat-treated and low-fat milk cases, while being pursued with various degrees of success and failure, served to challenge the role of the milk marketing board as exclusive purchaser in the market place. We are, therefore, faced with the need to address a reality—a real change in circumstances—and it is in that light, and with that in mind, that the official Opposition will play a highly constructive role during the debate in Committee.

Photo of Mr Mark Robinson Mr Mark Robinson , Somerton and Frome

Can the hon. Member enlighten me that I am hearing correctly? From what he is saying, the Government had no choice but to introduce the Agriculture Bill.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I have not said that—indeed, we shall oppose the Bill. I have suggested that we could have retained the milk marketing board but amended its powers. In Committee we shall argue that case.

We want a strong Milk Marque and a level playing field for processors to organise contracts with producers. We have set ourselves a number of objectives for the Committee stage, all of which are founded on the need to retain an orderly market in the supply of milk. We are acutely aware of the need for legislation to be framed in such a way as to balance carefully the interests of direct contract processors and of Milk Marque, acting as a broker. In that light, we shall wish to ensure that the successor organisation to the milk marketing board is not able to manipulate the market through the abuse of its market share or through the restricted availability of any of its retained assets.

The legislation, if properly framed at the enabling stage and in any subsequent orders, should relieve the Dairy Trade Federation or its members of the need to go to the Office of Fair Trading or to the competition authorities in the European Community.

One measure of the success of the Bill will be whether it can be implemented without driving the processors into appeal procedures on reorganisation of the market.

My hon. Friend the Member for Bristol, East (Ms Corston) emphasised the concerns of processors in her constituency about that issue. We shall want to ensure that the Bill provides for the widest possible consultation with producers and processors of milk prior to any reorganisation schemes being approved by Ministers. We are tabling a number of amendments to deal with that process.

We believe that the Dairy Trade Federation has argued fairly for a number of co-operatives to be established under alternative arrangements. It may well be that, as the market develops, a number of new co-operatives will be formed. The question is whether, at the legislative stage, Ministers should have those other arrangements in mind when deciding whether or not to approve the board's proposals.

Photo of Martyn Jones Martyn Jones , Clwyd South West

I am sorry to disturb my hon. Friend in full flow, but is not one problem for producers, particularly in less-favoured areas such as mine, that they could be picked off by a buyer other than the milk marketing board's successor? Those producers would then be forced out of business because their milk could not be cross-subsidised by the milk marketing board's successor.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

My hon. Friend raises an important issue, with which I shall deal later.

Some people argue that for Milk Marque to be strong in the marketplace it does not necessarily need 80 per cent. of the milk suppliers. We shall no doubt debate such matters at length in Committee.

The hon. Member for Cornwall, North (Mr. Tyler) raised the issue of consumer interests. Before Second Reading, the debate has been characterised by far too little consideration of that vital interest. Apart from comments by the National Consumer Council, there has been almost no discussion in the industry on those subjects. The result has been that a number of developments are proposed which, combined with devaluation of the green pound, have major implications for the processing industry in the United Kingdom.

The formidable and confidence-inspiring Mr. Andrew Dare, chief executive of the English and Welsh milk marketing board, is making statements that cause much concern. Two weeks ago he announced on the radio that Milk Marque would be charging more than 27p per litre. In that interview he failed to say that, within the 15-month period between December 1992 and April 1994, the manufacturing milk price—if one takes the Milk Marque proposed supply price and the green pound devaluation into account—will have risen by almost 35 per cent. for butter powdered milk, almost 35 per cent. for Cheddar cheese milk and almost 37 per cent. for short-life products such as yoghurt and cream.

In the processing industry, milk forms 35 per cent. of the production cost for yoghurt, 40 to 45 per cent. for the liquid milk and 75 to 80 per cent. for butter and skimmed milk powder production. It is clear that increases of that magnitude, which will be imposed on processors and passed on to the consumer, will have major implications, not only for jobs in the processing industry, but for the housewife who will pay more.

Devaluation is one thing, but a predatory Milk Marque acting against the public interest is another. Those early attempts to manipulate the price of milk—which the board justified on the basis of guide pricing—and attempts to influence the flow of contracts, point to Milk Marque effectively becoming a voluntary monopoly. That is unacceptable. We want a strong Milk Marque, but not one that means that free and effective arbitration procedures can drive up the price of milk in conditions of deficit milk supply and then undermine employment in the processing industry.

I should like to quote an article in The Grocer of earlier this year. Under the heading, Milk price increases take toll on trade", it says: Cheshire cheese manufacturers are turning tankers away in an effort to limit losses resulting from this year's £330 a tonne increase in the milk price. The £100 a tonne extra they received from buyers in January merely compensated for raw material cost rises last autumn". That was the increase gained from the green pound devaluation. John Fishburne, chairman of Crewe-based Hankelow Foods, went on to say, 'Recouping the remainder from competitive retailers is not easy. In order to keep loss-making stocks to a minimum, Hankelow is only taking four tankers a week into its dairy instead of the usual seven'. So the writing is on the wall; let the market beware.

There has been a price hike, in this case arising out of the devaluation of the green pound. The next price hike arises out of deregulation and the abolition of the milk marketing scheme. A number of processors in the United Kingdom find their viability at risk unless there is a restraining factor in the marketplace—that is why I asked the Minister my question about arbitration in the market.

Although I accept that the single European market, following devaluation, brings new opportunities for British dairy exports, an inflated milk price can only cause harm to domestic markets. It is likely that we will have to find some means of arbitration in the new deregulated market. These are matters for Committee. The response of the processors, despite the DTF's protests, has been muted. It seems that they do not want to upset Milk Marque and the formidable Mr. Dare. Equally, they seem to believe that the consumer, faced with no other choice, will simply bear the price increases.

This is just not good enough. A great deal of concern—to answer the point raised by my hon. Friend the Member for Clwyd, South-West (Mr. Jones)—has been expressed about the position of low volume milk producers and those who run dairy operations away from processing plants in the more remote parts of the United Kingdom. I was particularly struck by some polling data from the south-west of England, where marginality is such an issue that farmers feel that they must support Milk Marque. Mr. Dare's apparent announcement that Milk Marque will remain, in effect, the buyer of last resort, although helpful as a reassurance to the industry, needs fleshing out and reinforcing in Committee, where we shall press these matters.

We shall also press the case for new entrants to the processing industry who, we hope, within the dynamics of the new marketplace, will have access to sensibly priced milk supplies—a point made by the hon. Member for Richmond, Yorks (Mr. Hague).

We accept that innovation is invariably sparked off in conditions of competitive risk, but competition should not snuff out the potential for such innovation. Much debate has taken place on the milk marketing board's assets and there has been a great deal of exaggeration outside the House of the asset value of Dairy Crest and of the size of the cheque that the producers can expect when it is floated. The Scottish milk marketing board has fought fiercely for vertical integration, and I have much sympathy with its argument—which, in the light of recent rulings, it would appear to have lost. Northern Ireland has similarly argued its corner; no doubt in Committee we shall pursue the cases put by these boards in greater detail. I give the hon. Member for Londonderry, East (Mr. Ross) that assurance.

There is also, however, the question of the other assets held by the MMB—especially Genus, national milk records and central testing. The instinct of Labour Members favours supporting the retention of many of these assets in the successor body, but that position is not engraved on tablets of stone. We believe that the Committee stage provides some opportunity for further detailed consideration. We hope that the Government, while not having to approve schemes at this stage, will sound out the views of Committee members before taking any decisions.

It would be quite improper of the Government to argue that these matters are for Milk Marque. In our view, those are matters for the Government, in that the wrong decision on approvals could distort the flow of contracts between producers, processors and Milk Marque—a point raised by the hon. Members for Gloucestershire, West (Mr. Marland) and for Ludlow (Mr. Gill). They expressed deep concern on those matters, which we shall be following up in Committee.

The Bill is interesting, but it is highly controversial. There are major flaws at its heart. First, it winds up the wool marketing scheme without paying any regard to the problems of sheep farming incomes in the United Kingdom. Amendments to mitigate the damage were moved in the Lords, but they were rejected. We shall try again in the Commons.

Secondly, the Bill abolishes the potato marketing scheme and will drive the United Kingdom's potato producers into a free market. The inevitable consequence of that policy will be widespread bankruptcies. A number of hon. Members have made that point, if not used that language. That includes my hon. Friends the Members for East Lothian and for Pembroke (Mr. Ainger), the right hon. Member for Westmoreland and Lonsdale and the hon. Members for Richmond, Yorks, for East Lindsey (Sir P. Tapsell) and for Cambridgeshire, North-East. All have emphasised the damage that could be done to the industry if the Government go down the route that they have selected.

Thirdly, the Bill leaves the pricing of milk to free market forces, with major implications for the consumer and the processor. We are most uneasy about that approach. Jobs may be at stake. With those considerations in mind, we feel that we have no option but to divide the House. I ask hon. Members to join us in opposing the Bill.

Photo of David Curry David Curry , Skipton and Ripon 9:36, 23 March 1993

The speech of the hon. Member for Workington (Mr. Campbell-Savours) boded well for the Committee because it seemed that we would have a genuine debate about the Bill. The Bill is about how markets operate—a fascinating subject. Only in his last few moments did the hon. Gentleman revert to an apocalyptic vision of what he thinks will happen. I am sure that we will be able to reassure him that that will not be the case. After all, apocalypse now is what the dairy producers predicted when reform of the milk marketing system was first considered. Now, that argument has been won and people are talking merely about how we get from here to where everybody acknowledges we should be. The argument has been won on milk and the arguments on potatoes is one which we will win, and win by persuasion.

We have been debating three major commodities—milk, potatoes and wool. I join all hon. Members who have paid tribute to the long generations of milk marketing boards. We recognise the role that they have played both in rescuing the industry in the 1930s and in carrying it forward. It is no part of the Bill to confer a denigratory obituary on the scheme. However, the concerns of farmers in 1933 and those of farmers in 1993 are different, and the situation has changed.

As my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) said, certain new factors radically alter the situation. There are milk quotas—and quotas that have a high value. Farmers are in a sellers' market. After all, Milk Marque, Nestle and Northern Milk Partnership are fighting their way to the farm gate, competing for the milk. That is a happy situation. Milk Marque appears to intend to offer an equalised price to farmers, with the sort of guarantees that farmers enjoy under the existing system.

For those few hon. Members who suggested that we should be defending the status quo, I must point out that the status quo is beyond defence, not because of actions by the Government but simply because the situation and the market position have changed so much, and the legal challenges to semi-processed products are such that the threat was that the board would implode. No reasonable body—whether those running the board or those in government with a responsibility for agriculture—could take the chance of waiting for that to happen.

Therefore, sensible successor arrangements had to be worked out and it was important that the initiative and the proposals should come from the board. The hon. Gentleman says that the Government are responsible and that is true, but the proposal should be put forward by the board and we should then exercise our responsibility and our judgment in our response to that.

Hon. Members have said that there should be a process of consultation and the Bill provides for that. Before my right hon. Friend the Minister makes an order which would trigger the changes, he is obliged to consult all the people who might be concerned, whether processors, consumers, retailers or producers. That safeguard is already there.

I recognise that people on the other side of the argument have been concerned about the possible abuse of position by a successor body. The quota administration will not be in the hands of Milk Marque. We are discussing where that responsibility should lie. It might lie with the agricultural Departments or with the intervention board, but it will not lie with Milk Marque. That is clear.

Secondly, Dairy Crest must be floated before vesting day for Milk Marque. That is the largest part of the assets that will be distributed to dairy farmers. If, by mischance, it cannot be floated by that date, it must be put in neutral hands, such as a trust, to see it through until it can be launched upon its independent career. Therefore, we have taken care of that possibility. Prices will be set by the market. The milk marketing board, after the letter to which many hon. Members have referred, has issued a press release setting the record straight.

There is a triple safeguard against the abuse of dominant market position. First, there has to be ministerial approval. We shall look hard at what is put in front of us. There is no prior commitment to accept whatever Milk Marque does or whatever the milk board has put forward. We must consider whether it is a reasonable way of handling the question.

Secondly, there will be surveillance by Brussels. I see nothing wrong in there being provisional agreement to what is happening. It is natural that it should ensure that there is no abuse of market position. As I said earlier, the immunity from scrutiny by the Office of Fair Trading that the board enjoys because it is a co-operative organisation will be removed the second Milk Marque comes into existence. Therefore, Milk Marque will be subject to such scrutiny. Any hint that Milk Marque harbours monopolistic nostalgia will bring down the competition authorities before we can say "pinta". I am sure that the board know that that is the case.

Photo of Mr Mark Robinson Mr Mark Robinson , Somerton and Frome

I thank my hon. Friend for giving way, particularly as I have a major distribution company in my constituency, Wincanton Distribution, which will be affected by the proposals. What is worrying people is that the process of regulation by the Office of Fair Trading is a cumbersome one. To many, the presence of a regulator will overcome that problem. I hope that my hon. Friend will not close his mind to that problem as the Bill goes through Committee.

Photo of David Curry David Curry , Skipton and Ripon

I hear what my hon. Friend says, but he will appreciate that the safeguards that I have outlined provide a sufficient framework, given that there will be severe competition in the marketplace. At all events, the board, which is responsible for putting the proposals forward, will have heard what my hon. Friend says and what many other hon. Members have said about the situation of the assets and their eventual fate.

I said that the board had, to put it politely, issued a clarification of its earlier circular, saying clearly that there was no attempt to intimidate future purchasers. It was not trying to wave the big stick over them. It understands that people who do not sign up can do so subsequently. It is not trying to create the impression among farmers that it is offering a surrogate monopoly. There is genuine concern, and I think that the board will have learnt from the episode that that is the wrong way in which to go about things. However, I appreciate its anxiety to reassure those who will buy milk, and the farmers who may sign up, that there will be a fundamental stability in the market place rather than a great dislocation.

I appreciate the concerns expressed about wool, perhaps more than many other people. My hon. Friend the Member for Batley and Spen (Mrs. Peacock) and others have mentioned hill farmers, a good many of whom I represent. Let me outline the steps that have been taken. It has not been disputed that four years' notice was given of the ending of the wool guarantee, and the British Wool Marketing Board is not among the organisations quoted as having asked for a prolongation of that guarantee. I have engaged in long and detailed discussions with the board, and it appreciates that it is time to draw a line under the scheme.

We have helped to establish a £10 million reserve fund by exempting the board from interest charges and reducing the levies that it pays to the Treasury. We have recognised the need for a float. We have also urged the board—I have been personally involved in this—to take account of the need for a reorganisation of its structure. It has been presented with a report on how it can adapt itself to cope with the more competitive world in which it may be moving, but it has addressed the question with a certain lack of urgency. My hon. Friend the Member for Batley and Spen would perform a service by encouraging it to make its decisions a little more rapidly.

Photo of Mrs Elizabeth Peacock Mrs Elizabeth Peacock , Batley and Spen

I hear what my hon. Friend is saying, but does he recall a conversation that he had with Donald Holdsworth, chairman of the Confederation of British Wool Textiles? Mr. Holdsworth and the confederation's members took a different view from that expressed by my hon. Friend on behalf of the wool marketing board, and I feel that that view should be addressed.

Photo of David Curry David Curry , Skipton and Ripon

Having met Mr. Holdsworth twice, I clearly recollect the points that he put. I would say to him—as I say to my hon. Friend—that the balance has now swung towards farm support from the Community. Sheep farm wool plays a very marginal role in incomes. This year, total payments for farmers with hardy breeds in the less favoured areas amount to £30·50 per sheep from all sources in public support alone. Market prices are high, partly because of the buoyancy of the continental market. The hon. Member for Workington said that he wanted us to capture the continental markets, and he is right. One third of all the lambs that we produce on British hillsides are going straight into the overseas market place, benefiting the French consumer. I am delighted about that.

There is also an entirely new factor, which was not there even a few months ago: the ewe quota now has a value. We have seen the first sales, and a singificant new capital asset value has gone into the hills. We may not wish to capitalise and monetarise everything, but the fact remains that that development may well provide the security with which the dairy quota has provided dairy farmers.

Photo of Mr Paul Tyler Mr Paul Tyler , North Cornwall

Will the Minister give an assurance that the guaranteed wool price will not be abolished before the Bill is enacted?

Photo of David Curry David Curry , Skipton and Ripon

No, I cannot do that. Royal Assent was expected to be rather earlier than it will be, for reasons that I need not spell out. It will not now happen before May, when provision for that financial guarantee will end. If we extended it, we should merely have to extend it until Royal Assent, which would lead to a pretty chaotic situation in the market. We shall therefore introduce a statutory instrument to end the guarantee—but it will only end the setting of the guarantee for this year, whereas the Bill removes the requirement to set a guarantee. The statutory instrument will not pre-empt the Bill, but it will get us out of a corner. I put it in those terms because that is the truth. No doubt the hon. Gentleman will appreciate my frankness. It is a timetabling problem—[Interruption.] Hon. Members would expect fairly basic language from Agriculture Ministers.

What the Bill does in respect of potatoes is very clear. It permits the Potato Marketing Board to nominate or suggest a successor organisation which can then take forward the essense of the board's work in terms of research and development and promotion. If that provision were not in the Bill and the board had to be wound up because of Community regulations, we should have no choice but to wind it up on the spot and to distribute the assets. We do not want that. The important research and development role should be taken forward and there should be continuity for the security of potato producers.

In addition, I anticipate that if farmers wish to organise themselves as potato marketing groups, they may well apply for marketing grants to which my hon. Friend the Member for Richmond, Yorks (Mr. Hague) referred. No doubt we should look at such applications closely to see whether we could help.

We must be very careful. The Potato Marketing Board is a curiously named organisation. It is actually a potato non-marketing board. It does not market potatoes. It polices quotas for which farmers pay £86·50 a hectare in levy. If a farmer plants potatoes for commercial reasons outside the board's scheme, he commits a criminal offence. That is something of an anomaly in today's circumstances.

There are two threads in our thinking about potatoes. My right hon. Friend the Minister of Agriculture, Fisheries and Food and I could easily say that it was all a Brussels problem. We could say that the proposals came from Brussels and that we did not ask for them. We could say that they came forward because the Commission felt that they were part of the completion of the single market. We could say, "Well, sorry, it's all very unfortunate, but we are going to be forced to adopt this and that's the end of the argument."

Very few member states want something other than a very lightweight regime. Our present area quotas and intervention would be incompatible with the proposal. As my right hon. Friend the Minister has said, we believe that it would be difficult to argue in Brussels, in respect of the one commodity for which there is no regime and no Communitywide intervention, for intervention or that we should retain limits on our producers when no one else in the Community will face such limits. That concept would be rather difficult to sell.

The second thread is the economic argument. I admit that there are questions about whether the surplus scheme serves the United Kingdom interest now.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Will the Minister give a frank response to this question? I understand that Ministers have received information from several sources about subsidies paid to processors and producers of potatoes from various countries within the Community. Will the Minister give an undertaking at the Dispatch Box that he will provide all that information to the members of the Standing Committee that will consider the Bill?

Photo of David Curry David Curry , Skipton and Ripon

The hon. Gentleman can have any information that I have. However, I do not recall receiving any brown envelopes containing that information.

There are genuine questions about whether the surplus scheme serves the United Kingdom interest in respect of the loss of market share in seed potatoes, the migration of opportunity and fears of loss of manufacturing capacity in the processed sector.

The market has shifted. In 1975, we consumed 143 lb of potatoes per head. That is a lot of potatoes. That figure declined to 110 lb per head last year. However, the consumption of crisps and potato products has risen from 7 lb per head to nearly 17 lb per head and consumption of frozen chips has risen from 4·7 lb per head to nearly 18 lb per head. We must consider those figures in the context of a slightly declining market in potatoes overall.

The market is shifting. We are anxious that where there are high-value opportunities the United Kingdom should maintain its very significant lead in what is a high-tech part of the industry. This is at the heart of our concern about the present scheme. We know that potato producers are concerned, and we do not wish to have a long period of uncertainty. We should like to settle the issue with the Community and get agreement on the scheme. That is why the Bill contains provisions to avoid an hiatus between any agreement in Brussels and the creation of a successor organisation in the United Kingdom. Even though the structures are to change, we shall be able to assure farmers of the continuity that is essential to their business.

The processors, whom some people regard as the demons at the feast, have an interest in maintaining the loyalty of the people who sell to them. They certainly have no interest in disregarding the producers who have sold to them for years and in going to an entirely different marketplace. As many hon. Members have said, potatoes are a high-tech business. Farmers have to be properly equipped. The efficient producer may well expand his acreage. Over the years we have seen consolidation and a declining number of producers. This measure may merely emphasise a tendency. I shall be surprised if, ultimately, it has a more draconian effect.

My hon. Friend the Member for Richmond, Yorks said that investment is taking place already. Of course it is. Nobody is suggesting that absolutely nothing is happening, that the system is frozen rigid. It is quite clear that processors are investing in Britain despite this scheme, not because of it. They will be able to anticipate increased investment in the event of the freeing of the marketplace. We believe that that argument must be taken seriously. The export of acreage and of added value is of genuine concern to us. However, we want to ensure that we advance in a positive and sensible manner so that there will be a future for potato growing in England and that we shall have an expanded share of the market.

The marketing grants are an uncontroversial but important aspect of the Bill. The grant schemes were deliberately launched in a fairly low key. We were not out for some sort of big bang. We have looked very hard at the schemes to ensure that they are viable. The problem arises from the fact that the current legislative framework is inadequate. We cannot look at the sectors that involve more processing, and processors cannot be brought into schemes very efficiently. Thus, we want more room for manoeuvre. We want marketing schemes that will enable us to respond more satisfactorily to the problems that are experienced in the marketplace. I am sure that this will be welcomed as a sensible addition to our armoury.

All hon. Members agree that British food is extremely good. We want to see more of it being eaten. We want to see more of our own products capturing our markets, as well as getting into the export markets. As I said earlier, one third of our lamb goes overseas, and we have a significant export trade in beef and in pigmeat. At the same time, in several high-value processed sectors, commodities are being imported into Britain, while, to some extent, commodities are produced in Britain and exported.

There is little that we can do with milk, in the sense that we have quotas. Because of the quotas, we are unable to increase our output and, thereby, reconquer the whole of our market. Therefore, we are trying to focus production where added value is to be found, where the jobs are and where the future technology lies. With potatoes, we have the opposite situation. We do not have a quota crisis. If we can get our act together, we shall be able to satisfy all our own needs. That is what we are aiming for. In respect of wool, the marketing situation has changed dramatically in recent years. We do not think that the fears that have been expressed will be realised.

The Bill is about opportunity—opportunity for farmers, opportunity for industry, and opportunity for producers to have better access to British products. It is a Bill about deregulation. My hon. Friend the Member for Ludlow (Mr. Gill) vetoed the Hedgerows Bill on the ground that it was too regulatory. I am sure that he will welcome deregulation of some of the current marketing scene. The Bill is about competition, but, above all, it is about the future of British agriculture. I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 287, Noes 243.

Division No. 198][9.59 pm
Adley, RobertCarrington, Matthew
Ainsworth, Peter (East Surrey)Carttiss, Michael
Aitken, JonathanCash, William
Alexander, RichardChurchill, Mr
Allason, Rupert (Torbay)Clark, Dr Michael (Rochford)
Amess, DavidClarke, Rt Hon Kenneth (Ruclif)
Ancram, MichaelClifton-Brown, Geoffrey
Arbuthnot, JamesCoe, Sebastian
Arnold, Jacques (Gravesham)Colvin, Michael
Arnold, Sir Thomas (Hazel Grv)Congdon, David
Ashby, DavidConway, Derek
Atkins, RobertCoombs, Anthony (Wyre For'st)
Atkinson, Peter (Hexham)Coombs, Simon (Swindon)
Baker, Rt Hon K. (Mole Valley)Cope, Rt Hon Sir John
Baker, Nicholas (Dorset North)Cormack, Patrick
Baldry, TonyCouchman, James
Banks, Matthew (Southport)Cran, James
Banks, Robert (Harrogate)Currie, Mrs Edwina (S D'by'ire)
Bates, MichaelCurry, David (Skipton & Ripon)
Batiste, SpencerDavis, David (Boothferry)
Bellingham, HenryDay, Stephen
Bendall, VivianDeva, Nirj Joseph
Beresford, Sir PaulDickens, Geoffrey
Biffen, Rt Hon JohnDorrell, Stephen
Blackburn, Dr John G.Douglas-Hamilton, Lord James
Bonsor, Sir NicholasDover, Den
Booth, HartleyDuncan, Alan
Boswell, TimDuncan-Smith, Iain
Bottomley, Peter (Eltham)Dunn, Bob
Bottomley, Rt Hon VirginiaDurant, Sir Anthony
Bowden, AndrewEggar, Tim
Bowis, JohnElletson, Harold
Boyson, Rt Hon Sir RhodesEmery, Rt Hon Sir Peter
Brandreth, GylesEvans, David (Welwyn Hatfield)
Brazier, JulianEvans, Jonathan (Brecon)
Bright, GrahamEvans, Roger (Monmouth)
Brown, M. (Brigg & Cl'thorpes)Evennett, David
Browning, Mrs. AngelaFaber, David
Bruce, Ian (S Dorset)Fabricant, Michael
Budgen, NicholasFenner, Dame Peggy
Burns, SimonField, Barry (Isle of Wight)
Burt, AlistairFishburn, Dudley
Butcher, JohnForsyth, Michael (Stirling)
Butterfill, JohnForth, Eric
Carlisle, John (Luton North)Fowler, Rt Hon Sir Norman
Carlisle, Kenneth (Lincoln)Fox, Dr Liam (Woodspring)
Fox, Sir Marcus (Shipley)Maclean, David
Freeman, RogerMcLoughlin, Patrick
French, DouglasMcNair-Wilson, Sir Patrick
Gale, RogerMaitland, Lady Olga
Gallie, PhilMalone, Gerald
Gardiner, Sir GeorgeMans, Keith
Garel-Jones, Rt Hon TristanMarland, Paul
Garnier, EdwardMarshall, John (Hendon S)
Gill, ChristopherMarshall, Sir Michael (Arundel)
Gillan, CherylMartin, David (Portsmouth S)
Goodson-Wickes, Dr CharlesMawhinney, Dr Brian
Gorman, Mrs TeresaMerchant, Piers
Gorst, JohnMilligan, Stephen
Grant, Sir Anthony (Cambs SW)Mills, Iain
Greenway, Harry (Ealing N)Mitchell, Andrew (Gedling)
Greenway, John (Ryedale)Monro, Sir Hector
Griffiths, Peter (Portsmouth, N)Moss, Malcolm
Grylls, Sir MichaelNeedham, Richard
Gummer, Rt Hon John SelwynNelson, Anthony
Hague, WilliamNeubert, Sir Michael
Hamilton, Rt Hon Archie (Epsom)Newton, Rt Hon Tony
Hamilton, Neil (Tatton)Nicholls, Patrick
Hampson, Dr KeithNicholson, David (Taunton)
Hanley, JeremyNicholson, Emma (Devon West)
Hannam, Sir JohnNorris, Steve
Hargreaves, AndrewOnslow, Rt Hon Sir Cranley
Hawkins, NickOppenheim, Phillip
Hawksley, WarrenOttaway, Richard
Hayes, JerryPage, Richard
Heald, OliverPaice, James
Heath, Rt Hon Sir EdwardPatnick, Irvine
Heathcoat-Amory, DavidPatten, Rt Hon John
Hendry, CharlesPattie, Rt Hon Sir Geoffrey
Heseltine, Rt Hon MichaelPawsey, James
Higgins, Rt Hon Sir Terence L.Peacock, Mrs Elizabeth
Hill, James (Southampton Test)Pickles, Eric
Hogg, Rt Hon Douglas (G'tham)Porter, Barry (Wirral S)
Horam, JohnPorter, David (Waveney)
Hordern, Rt Hon Sir PeterPortillo, Rt Hon Michael
Howard, Rt Hon MichaelPowell, William (Corby)
Howarth, Alan (Strat'rd-on-A)Rathbone, Tim
Hughes Robert G. (Harrow W)Redwood, John
Hunt, Rt Hon David (Wirral W)Renton, Rt Hon Tim
Hunt, Sir John (Ravensbourne)Richards, Rod
Hunter, AndrewRiddick, Graham
Hurd, Rt Hon DouglasRobathan, Andrew
Jack, MichaelRoberts, Rt Hon Sir Wyn
Jackson, Robert (Wantage)Robertson, Raymond (Ab'd'n S)
Jenkin, BernardRobinson, Mark (Somerton)
Jessel, TobyRowe, Andrew (Mid Kent)
Johnson Smith, Sir GeoffreyRumbold, Rt Hon Dame Angela
Jones, Gwilym (Cardiff N)Ryder, Rt Hon Richard
Jones, Robert B. (W Hertfdshr)Sackville, Tom
Jopling, Rt Hon MichaelScott, Rt Hon Nicholas
Kellett-Bowman, Dame ElaineShaw, David (Dover)
Kilfedder, Sir JamesShaw, Sir Giles (Pudsey)
King, Rt Hon TomShephard, Rt Hon Gillian
Kirkhope, TimothyShepherd, Colin (Hereford)
Knapman, RogerShersby, Michael
Knight, Mrs Angela (Erewash)Skeet, Sir Trevor
Knight, Greg (Derby N)Smith, Tim (Beaconsfield)
Knight, Dame Jill (Bir'm E'st'n)Soames, Nicholas
Knox, DavidSpencer, Sir Derek
Kynoch, George (Kincardine)Spicer, Sir James (W Dorset)
Lait, Mrs JacquiSpicer, Michael (S Worcs)
Lamont, Rt Hon NormanSpink, Dr Robert
Lang, Rt Hon IanSpring, Richard
Lawrence, Sir IvanSproat, Iain
Legg, BarrySquire, Robin (Hornchurch)
Leigh, EdwardStanley, Rt Hon Sir John
Lennox-Boyd, MarkStephen, Michael
Lester, Jim (Broxtowe)Stern, Michael
Lidington, DavidStewart, Allan
Lilley, Rt Hon PeterStreeter, Gary
Lloyd, Peter (Fareham)Sumberg, David
Lord, MichaelSweeney, Walter
Luff, PeterSykes, John
Lyell, Rt Hon Sir NicholasTapsell, Sir Peter
MacGregor, Rt Hon JohnTaylor, Ian (Esher)
MacKay, AndrewTaylor, John M. (Solihull)
Taylor, Sir Teddy (Southend, E)Waterson, Nigel
Temple-Morris, PeterWatts, John
Thomason, RoyWells, Bowen
Thompson, Sir Donald (C'er V)Wheeler, Rt Hon Sir John
Thompson, Patrick (Norwich N)Whitney, Ray
Thornton, Sir MalcolmWhittingdale, John
Thurnham, PeterWiddecombe, Ann
Townend, John (Bridlington)Wiggin, Sir Jerry
Townsend, Cyril D. (Bexl'yh'th)Willetts, David
Tracey, RichardWinterton, Mrs Ann (Congleton)
Tredinnick, DavidWinterton, Nicholas (Macc'f'ld)
Trotter, NevilleWolfson, Mark
Twinn, Dr IanWood, Timothy
Vaughan, Sir GerardYeo, Tim
Viggers, PeterYoung, Sir George (Acton)
Waldegrave, Rt Hon William
Walden, GeorgeTellers for the Ayes:
Walker, Bill (N Tayside)Mr. David Lightbown and
Waller, GaryMr. Sydney Chapman
Wardle, Charles (Bexhill)
Abbott, Ms DianeDavies, Bryan (Oldham C'tral)
Adams, Mrs IreneDavies, Ron (Caerphilly)
Ainger, NickDavis, Terry (B'ham, H'dge H'l)
Ainsworth, Robert (Cov'try NE)Denham, John
Allen, GrahamDewar, Donald
Alton, DavidDixon, Don
Anderson, Donald (Swansea E)Dobson, Frank
Anderson, Ms Janet (Ros'dale)Donohoe, Brian H.
Armstrong, HilaryDowd, Jim
Ashton, JoeDunwoody, Mrs Gwyneth
Barnes, HarryEagle, Ms Angela
Barron, KevinEastham, Ken
Battle, JohnEtherington, Bill
Bayley, HughEvans, John (St Helens N)
Beckett, Rt Hon MargaretFatchett, Derek
Bell, StuartField, Frank (Birkenhead)
Benn, Rt Hon TonyFisher, Mark
Bennett, Andrew F.Flynn, Paul
Bermingham, GeraldFoster, Rt Hon Derek
Berry, Dr. RogerFoster, Don (Bath)
Betts, CliveFoulkes, George
Blunkett, DavidFraser, John
Boyes, RolandFyfe, Maria
Bradley, KeithGalbraith, Sam
Bray, Dr JeremyGapes, Mike
Bruce, Malcolm (Gordon)Garrett, John
Burden, RichardGerrard, Neil
Byers, StephenGilbert, Rt Hon Dr John
Caborn, RichardGodman, Dr Norman A.
Callaghan, JimGodsiff, Roger
Campbell, Mrs Anne (C'bridge)Golding, Mrs Llin
Campbell, Menzies (Fife NE)Gould, Bryan
Campbell-Savours, D. N.Grant, Bernie (Tottenham)
Canavan, DennisGriffiths, Nigel (Edinburgh S)
Cann, JamieGriffiths, Win (Bridgend)
Carlile, Alexander (Montgomry)Grocott, Bruce
Chisholm, MalcolmGunnell, John
Clapham, MichaelHain, Peter
Clark, Dr David (South Shields)Hall, Mike
Clarke, Eric (Midlothian)Hanson, David
Clarke, Tom (Monklands W)Henderson, Doug
Clelland, DavidHeppell, John
Clwyd, Mrs AnnHill, Keith (Streatham)
Cohen, HarryHinchliffe, David
Connarty, MichaelHoey, Kate
Cook, Frank (Stockton N)Hogg, Norman (Cumbernauld)
Corbett, RobinHome Robertson, John
Corbyn, JeremyHoon, Geoffrey
Corston, Ms JeanHowarth, George (Knowsley N)
Cousins, JimHowells, Dr. Kim (Pontypridd)
Cryer, BobHoyle, Doug
Cummings, JohnHughes, Kevin (Doncaster N)
Cunliffe, LawrenceHughes, Robert (Aberdeen N)
Cunningham, Jim (Covy SE)Hughes, Roy (Newport E)
Dafis, CynogHutton, John
Dalyell, TamIngram, Adam
Darling, AlistairJackson, Glenda (H'stead)
Davidson, IanJackson, Helen (Shef'ld, H)
Jamieson, DavidPike, Peter L.
Janner, GrevillePope, Greg
Johnston, Sir RussellPowell, Ray (Ogmore)
Jones, Barry (Alyn and D'side)Prentice, Ms Bridget (Lew'm E)
Jones, Ieuan Wyn (Ynys Môn)Prentice, Gordon (Pendle)
Jones, Jon Owen (Cardiff C)Prescott, John
Jones, Lynne (B'ham S O)Primarolo, Dawn
Jones, Martyn (Clwyd, SW)Purchase, Ken
Jones, Nigel (Cheltenham)Quin, Ms Joyce
Kaufman, Rt Hon GeraldRandall, Stuart
Keen, AlanReid, Dr John
Kennedy, Charles (Ross,C&S)Robertson, George (Hamilton)
Kennedy, Jane (Lpool Brdgn)Robinson, Geoffrey (Co'try NW)
Khabra, Piara S.Robinson, Peter (Belfast E)
Kilfoyle, PeterRoche, Mrs. Barbara
Kinnock, Rt Hon Neil (Islwyn)Rogers, Allan
Kirkwood, ArchyRooker, Jeff
Litherland, RobertRooney, Terry
Livingstone, KenRoss, Ernie (Dundee W)
Lloyd, Tony (Stretford)Rowlands, Ted
Llwyd, ElfynRuddock, Joan
Loyden, EddieSalmond, Alex
Lynne, Ms LizSedgemore, Brian
McAllion, JohnSheerman, Barry
McAvoy, ThomasSheldon, Rt Hon Robert
McCartney, IanShore, Rt Hon Peter
McFall, JohnShort, Clare
McKelvey, WilliamSimpson, Alan
Mackinlay, AndrewSkinner, Dennis
McLeish, HenrySmith, Andrew (Oxford E)
Maclennan, RobertSmith, C. (Isl'ton S & F'sbury)
McMaster, GordonSmith, Llew (Blaenau Gwent)
McWilliam, JohnSnape, Peter
Madden, MaxSoley, Clive
Mahon, AliceSteel, Rt Hon Sir David
Mandelson, PeterSteinberg, Gerry
Marek, Dr JohnStevenson, George
Marshall, David (Shettleston)Stott, Roger
Marshall, Jim (Leicester, S)Strang, Dr. Gavin
Martin, Michael J. (Springburn)Straw, Jack
Martlew, EricTaylor, Mrs Ann (Dewsbury)
Maxton, JohnTaylor, Matthew (Truro)
Meacher, MichaelTurner, Dennis
Michael, AlunTyler, Paul
Michie, Bill (Sheffield Heeley)Vaz, Keith
Michie, Mrs Ray (Argyll Bute)Walker, Rt Hon Sir Harold
Milburn, AlanWallace, James
Miller, AndrewWalley, Joan
Moonie, Dr LewisWardell, Gareth (Gower)
Morgan, RhodriWareing, Robert N
Morley, ElliotWatson, Mike
Morris, Rt Hon A. (Wy'nshawe)Welsh, Andrew
Morris, Estelle (B'ham Yardley)Wicks, Malcolm
Morris, Rt Hon J. (Aberavon)Wigley, Dafydd
Mullin, ChrisWilliams, Rt Hon Alan (Sw'n W)
Murphy, PaulWilliams, Alan W (Carmarthen)
Oakes, Rt Hon GordonWilson, Brian
O'Brien, Michael (N W'kshire)Winnick, David
O'Hara, EdwardWorthington, Tony
Olner, WilliamWray, Jimmy
O'Neill, MartinWright, Dr Tony
Orme, Rt Hon Stanley
Parry, RobertTellers for the Noes:
Pendry, TomMr. Eric Illsley and
Pickthall, ColinMr. Alan Meale.

Question accordingly agreed to.

Bill read a Second time and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

It being after Ten o'clock, MADAM SPEAKER proceeded to put forthwith the Questions which she was directed to put at that hour, pursuant to Order [19 March].