Second Standing Committee on Statutory Instruments, &c.


Tuesday 2 May 1989



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The Committee consisted of the following Members:

Chairman: Sir Anthony Meyer

Carlisle, Mr. Kenneth (Lincoln)

Douglas, Mr. Dick (Dunfermline, West)

Home Robertson, Mr. John (East Lothian)

King, Mr. Roger (Birmingham, Northfield)

Macdonald, Mr. Calum (Western Isles)

Martlew, Mr. Eric (Carlisle)

Morley, Mr. Elliot (Glanford and Scunthorpe)

Peacock, Mrs. Elizabeth (Batley and Spen)

Porter, Mr. David (Waveney)

Raffan, Mr. Keith (Delyn)

Rathbone, Mr. Tim (Lewes)

Redwood, Mr. John (Wokingham)

Riddick, Mr. Graham (Colne Valley)

Shelton, Sir William (Streatham)

Shepherd, Mr. Richard (Aldridge-Brownhills)

Thompson, Mr. Donald (Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food)

Thompson, Mr. Jack (Wansbeck)

Welsh, Mr. Andrew (Angus, East)

Mr. J. R. Rose, Committee Clerk

3 Second Standing Committee on Statutory Instruments, &c. Tuesday 2 May 1989

[SIR ANTHONY MEYER in the Chair]

Beef Special Premium (Protection of Payments) Order 1989

4.30 pm

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Donald Thompson):I beg to move, That the Committee has considered the Beef Special Premium (Protection of Payments) Order 1989. The order gives effect to the provisions of European Community law on the payment of the Community special premium to beef producers. The premium is 40 ecu, or £29.19 at the current exchange rate. It is payable on male cattle up to a limit of 90 head per producer in any calendar year. The premium may be paid only once on any male animal. Animals on which the premium is claimed must be permanently marked. Member states may choose to pay the premium on farm, at slaughter or on sale through live auction markets for slaughter. In the last case, animals on which the premium has been claimed must be slaughtered within 21 days of sale. At first, the premium scheme will operate at slaughter and at live markets in Great Britain, because that method was used under the variable premium system and proved efficient, allowing the first payment to farmers to be made earlier. Hon. Members will have read the statutory instrument carefully, so I shall not go through it in detail. Article 3 states that producers may present up to 90 head for premium. The animals will be inspected to determine whether they are male. If they are to be sold live, they must weigh at least 370 kg. If they are to be sold dead, they must weigh at least 200 kg, and their ears should not have any premium marks. Carcases that meet the scheme's conditions will be marked to ensure that they are not represented. The article also provides for applications for premium on animals to be exported to other European Community countries or to third countries. Such animals must be at least nine months old, have been kept by the producer for at least two months and be marked. Articles 4 and 5 deal with the records to be kept. Records are essential to ensure that the premium that the premium has been paid to those who produce beef and that the headage limit and other rules have been observed. Checks may be made long after the original claim was made. The documentation provided by the scheme will provide producers with much of the necessary information, but movement records and other farm accounts may also be relevant during checks. 4 Article 6 will implement a requirement of Community law that animals for which the premium is claimed must be slaughtered within 21 days of sale. The Joint Committee on Statutory Instruments has suggested that that requirement could be tightened, and we intend to do so. However, we are satisfied that the provision will work because every approved liveweight centre will have to display a notice advertising the fact that marked animals must be slaughtered within 21 days of sale. The hon. Member for East Lothian (Mr. Home Robertson) looks puzzled. I assure him that it is a drafting error and that it will be put right. Article 7 is essentially an anti-fraud measure. It allows marking officers to have the ears removed from a carcase at the deadweight centre to prevent the carcase being presented twice. Article 9 gives authorised officers of the intervention board or of agriculture departments the power to enter land and buildings used or claimed to have been used for the production or sale of beef cattle, or for slaughter. The powers of entry, which subsist for three years following the year in which the claim is made, are very wide, and we have examined them carefully. It is important that the regulation is properly enforced and that there is no deliberate fraud. We have not taken such powers lightly, but without them we could not carry out the checks required by Community law. The Joint Committee on Statutory Instruments found another minor drafting error in article 2(2). The paragraph was intended to exclude those officers from the Meat and Livestock Commission who act as agents of the intervention board from the powers of entry conferred on the board's authorised officers by article 9. By an oversight, what should have been a reference to article 9 is a reference to article 8. Such errors are unfortunate, but they testify to the speed at which we were forced to introduce a workable scheme. I do not wish to give the Committee the idea that the scheme is ideal. We argued fiercely, as any member of the Committee from either side would have done, against a headage limit. I do not believe that it will curtail beef production in the Community. It may affect one or two farmers, but I am sure that they will comply with the regulations stringently. There have, of course, been teething troubles. We have already had one meeting about markets and abattoirs. We shall re-examine the new arrangements in the light of experience, but the transition has been smooth. The credit for that goes to those most closely involved—the auctioneers at liveweight centres, the staff of the Meat and Livestock Commission and the abattoir owners at deadweight centres. I recognise that many people would have preferred us to operate the scheme on-farm. But, given the entirely new practical arrangements that that would have entailed, I am confident that the transition would not have been as smooth.

Mr. John Home Robertson(East Lothian): It would have been an even bigger shambles.

Mr. Thompson: Two small errors in drafting which can be put right, the careful hearing given to opinions 5 on the documentation and the fact that payments have already been made, do not in any way constitute a shambles.

4.39 pm

Mr. Home Robertson: Before I embark on the substance of the order, I should like to pay tribute to the House authorities and, for once, to the Ministry of Agriculture, Fisheries and Food for the welcome move to hold a debate on a statutory instrument at 4.30 pm. Opposition Members have thus been able to spend May day at home with their families or in their constituencies without having to dash back to London to take part in a 10.30 am sitting. The Minister admitted that the scheme was not ideal. He also referred to drafting errors. I would not go as far as my hon. Friend the Member for Wansbeck (Mr. Thompson), who suggested, sotto voce, that those responsible should have their ears cut off. Nevertheless, procedures have not been processed as efficiently as they might have been. The Minister frankly acknowledged that the system with which we are saddled as a result of agreements imposed by a majority in the EC was less satisfactory and less beneficial than the beef variable premium system which preceded it. The debate is about the protection of payments made to beef producers. It has been decided both in this country and throughout the EC—whether we agree or not—that such payments to support beef production are necessary and desirable. Therefore we should ensure that the benefits are well targeted and consider whether the Government's scheme is the most effective way of achieving that. Frankly, I doubt it. Restrictions are imposed by European criteria which both limit payments to cover bull calves only and restrict numbers to 90 per unit. That immediately discriminates against specialist producers and abolishes the incentive to produce quality beef. The order's restrictions will undermine the benefits of the previous scheme. Worse, the Government have opted to pay the premium at slaughter. Many breeders—the people who produce the cattle—will not reap much benefit from the new scheme, especially in the less-favoured areas where most stock is sold as stores when it is only nine months or one year old. The Government propose to make the payment to those who present fat cattle at slaughter. Such people are often dealers, auctioneers or meat wholesalers. Unfortunately, the small farmer or breeder in the worst areas will be no better off. That is a serious shortcoming. The Government could have chosen to operate the scheme differently. I emphasise again that it is the dealers who will have access to the premium—a nice little luck penny for them, to use the Scottish term. They will be able to claim up to £21.19 on each steer, up to a maximum of 90, which is up to £2,627.10 annually. That is fine for big-time dealers, who can spend the money on holidays abroad. But my worry is that that money will be siphoned off by such dealers and fail to reach the people who need it most. The complexity of the 6 system will also deter many farmers from claiming the premium. They could lose track of their stock as it went through the chain of auction market, dealer and meat wholesaler. Neither the consumer nor the primary producer will benefit. I recognise the administrative problems, which go even beyond those to which the Minister referred. There is a discrepancy between the forms made available to claimants and the criteria set out in the schedule to the order. The National Farmers Union drew that to our attention. Will the Minister confirm that the discrepancy will be resolved in the review? The premium should be given to the breeders, the producers and, especially, those in less-favoured areas, as intended by the Community and Parliament. That could be achieved, but not under the order. It has been recommended to the Government that the premium be made on farm, rather than at slaughter. That could be achieved simply by linking the scheme to the suckler cow premium system, which requires producers and breeders to keep records. Dairy and other farms, which are eligible for the premium, are already required by statute to keep movement records. That is essential on health grounds, because of the anxiety that exists about BSE and other diseases. Why do not the Government use the existing machinery to pay the beef premium to the producers and breeders, for whom it was intended?

4.47 pm

Mr. Andrew Welsh(Angus, East): The past year has been bleak for Scottish agriculture. The industry is caught in a vicious cost-revenue squeeze, for which the Government are largely responsible. Interest rates are at twice the level of those of our competitors, and £1 billion plus has been borrowed. Yet farm incomes have fallen, as have EC farm prices. The 5 per cent. hike in interest rates which the Government introduced last year has wiped out any green pound gains in the recently-negotiated deal with the Common Market. The statutory instrument, together with the termination of the beef variable premium, means a further loss of £20 million to Scottish agriculture. The beef special premium is worth only £9 million this year, which means a haemorrhaging of finance from an industry that is already under financial siege. A limit of 90 steers per business means a substantial erosion of support payments for Scottish farm areas. I do not believe that the primary producer will receive a proper proportion of the beef premium. However, the major proportion of the variable premium was reflected in the prices paid for suckler calves. In order to overcome that discrimination, and the exclusion of heifers from the new premium, there should be a maximum suckler cow premium of £46.18. That is a more realistic figure which I hope that the Government will consider. Will the Minister assure the Committee that, given the 90-steer limit, on-farm payment will replace at-slaughter payment? That would allow the maximum number of male cattle in Scotland to qualify for the premium. The permanent at-slaughter scheme, 7 favoured by the Government, is opposed by almost everyone connected with Scottish agriculture. The Minister said that he could not have got a better deal from the Common Market. My response is, "Go back and do better for the industry." I hope that the Government will better heed the problems of an agricultural industry that has been hammered and which has suffered the impact of lean years. The Government should provide the maximum amount of financial input to allow Scottish farmers to reorganise and prepare for the stormy financial years ahead. The order could create a more stable future for Scotland's farming industry if it provided a greater financial boost. I regret that it does not.

4.50 pm

Mr. Tim Rathbone(Lewes): I thank my hon. Friend the Minister for his detailed explanation, which should have allayed all fears, except that the premium scheme flys in the face of the Government's intention to encourage a return to historical farming methods. That applies especially in my Sussex constituency. We must move away from the system of premiums, which are applied across the whole front in farming. We should be ready to use taxpayers' money on the environmental aspects of farming. They are all that differentiate farming from other industries. The hon. Member for East Lothian (Mr. Home Robertson) referred to the paperwork for the scheme. The NFU brought that matter to my attention, and probably to that of other hon. Members. There is such confusion about the paperwork that some farmers will innocently contravene the premium scheme rules. Will they be penalised, or will there be provision for appeals in special cases?

4.52 pm

Mr. Richard Shepherd(Aldridge-Brownhills): I have no interest in farming to declare, but I noted the patrician farmer's view of the hon. Member for East Lothian (Mr. Home Robertson)

Mr. Home Robertson: The hon. Gentleman is suggesting that I have a direct interest in the order. I assure the Committee that I do not. Whatever else I may have on my property, I do not have any cattle.

Mr. Shepherd: I did not suggest any such thing. I merely noted the hon. Gentleman's patrician farmer's view. Measures such as this always put the emphasis on the producer rather than the consumer. My anxiety, especially as a constituency Member of Parliament, is for the consumer. The order is woeful extravagance of the most mindless sort. We have heard the view of the NFU. The order does not help the economic regeneration of the country. It is a rigorous tax on every consumer, whether covertly, directly or through the medium of the green pound. The latest estimate is that the absurd policy of subsidies costs the average family in the 8 United Kingdom—indeed, in the Community—£14 a week. That is an attack on our living standards.

Mr. Home Robertson: Will the hon. Gentleman join me in condemning the Government's surrender of the beef variable premium, which the order will replace and which benefited consumers and producers alike?

Mr. Shepherd: When world beef prices are manifestly lower than those set by the Community, I find it difficult to argue that the premium system and the rest of the common agricultural policy are in the interests of the consumer. I tried to identify the total cost of the CAP to the family. The order is part of that mishmash. I was startled and depressed to hear the hon. Member for East Lothian complain that the maximum sum to be made from the scheme was only £2,500. It is enough for two holidays. That is the spirit that infuses farming in Britain, at the grander level. If I am being provocative it is because many people are frustrated that billions of pounds are poured out in uneconomic subsidies to no good purpose. The Committee is a rubber stamp, accommodating the system. Britain could have some of the finest beef and dairy producing land in the whole Community and we could stand on our own in a free market, to the benefit of us all. But, because of the mishmash of subsidies across the Community, milk and other products are being produced in areas that are not competitive with British greenlands or grasslands. I have made my point. The order is nonsense. I deeply regret that we are assembled in Committee to accept such nonsense, and I protest against it.

4.55 am

Mr. John Redwood(Wokingham): Like my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), I am pleased to be invited to the wake for the beef variable premium, but less ecstatic to be in the maternity ward to see the birth of the beef special premium, which I agree is generous to a fault. If too much subsidy is offered for a specific agricultural product, overproduction will result. Fraud may be perpetrated in the meantime, and imbalances in the system may require further policies to straighten out the mishmash. I am not convinced that recommendations embodied in the order are fraud proof, although I welcome the idea that fraud protection be built into the rules, as many people both inside and outside the House are worried about the extensive wrongdoing revealed by audit and other investigations into EC agricultural support. I also welcome further moves to reduce agricultural subsidy around the world. The current system is a stab in the back for Third-world countries trying to export against increasing trade barriers. It does nothing to alleviate world poverty. Ironically, the EC spends more on agricultural support than it distributes in alms to the Third world. The one more than negates the generous impact of the other. 9 I wish that the EC would make a better response to America, which, in the latest GATT round, has offered multi-lateral disarmament of agricultural subsidies—a; cause that I wholeheartedly support. I can deal with my conscience by saying that I am glad that Opposition Members believe that the proposals are not generous enough—

Mr. Home Robertson:Who said that?

Mr. Redwood: It was said. I have philosophical reservations, which I want to put on record.

4.51 am

Mr. Donald Thompson: Both my hon. Friends the Members for Wokingham (Mr. Redwood) and for Aldridge-Brownhills (Mr. Shepherd) have expressed views not uncommon throughout the United Kingdom and among some members of the Conservative party. We must ensure that British and European agriculture remains in good heart, but we must not rebuild the mountains now reducing, or refill the lakes now draining. That would be ridiculous. I am pleased that my right hon. Friend the Minister for Agriculture, Fisheries and Food is taking the lead in the EC on the question of fraud. I spend a great deal of time ensuring that there is as little fraud as possible. My hon. Friend the Minister for Overseas Development does much to help the Third-world, and my hon. Friend the Minister for Wokingham will realise that the United Kingdom spends more on Third-world aid than any other country in Europe. We have tried time and again to find ways of distributing food effectively. However, food aid is not the best way to help. As my hon. Friend the Minister for Aldridge-Brownhills said, the best way is to awaken other countries' agriculture as we have in India and China. He was also right to say that, given a free market, the United Kingdom can do as well as anybody. Our poultry and pigs compete very well in Europe. The nearer that we can move to a free market, the better it will be.

Mr. Home Robertson: Who mentioned poultry?

Mr. Thompson:I did. My hon. Friend the Minister for Aldridge-Brownhills is right. The farmer is the guardian of the environment. Everything that we see as we drive from Angus—and what a day it must be there today—through Brighouse and down to Lewes is beautiful. That beauty was made, carefully and gently, by the farmers for their commercial gain. The farmers made what the conservationists are now trying to conserve. There is merit in what my hon. Friend said about conservationist as opposed to expansionist measures. The Government have done a great deal in that regard with farm woodlands planting, set-aside and other provisions. There has already been one meeting to discuss the format of the application form. I met the Meat and Livestock Commission informally again last week when I was at the pig exhibition at the Royal 10 Showground. We shall talk to the NFU and the rest so that the form can be made as clear and as sensible as possible. My hon. Friend the Member for Lewes (Mr. Rathbone) was right. The disputes will start in three years' time, when people feel that they have been cheated by poor administration or because the forms were badly designed or incorrectly completed. We need to address our minds to that problem from the outset of the scheme. The hon. Member for Angus, East (Mr. Welsh) made a typically anti-Government speech. He omitted much of the good work that the Government have done, for instance for the sheep industry, which is prominent in his part of the world. The sheep industry is one of our greatest assets, thanks to the labours of Scottish farmers. The hon. Gentleman talks about many lean years. The cereal men have had two lean years after some good ones, and, although we all look forward to a bumper harvest, hill livestock compensation is still being paid. We wanted a fast and efficient scheme. The hon. Member for Angus, East expressed his fear that the special premium would not reach all the qualifying farmers who rear the animals. We are monitoring the scheme and its administration carefully, as well as looking at alternatives that are cost-effective both to the farmer and to the Government. I am surprised that the hon. Member for East Lothian (Mr. Robertson), who knows so much about farming, should have forgotten that for a generation the man selling his store lambs always knew that the man who sold them into the slaughterhouse or market would get the variable premium. Sheep were sold in Hawes and elsewhere in the north country before coming south to be fattened. The premium has always been counted in, and the same thing will now happen with beef. No canny Scottish farmer will be gormless enough to let the premium of £29.19 slip through his fingers at whatever stage he sells his lambs.

Mr. Home Robertson: Lambs?

Mr. Thompson: Sorry, his beef. The hon. Gentleman knows that the two are analogous. The order contains a provision that the cattle should be kept for two months before they are sold for final slaughter. I fully understand the worries shared by the hon. Members for East Lothian and for Angus, East that some farmers will not get all the money to which they are entitled. We shall examine that carefully.

Mr. Home Robertson: Will the Government consider amending the scheme so that the producers receive the premium directly, rather than through the market?

Mr. Thompson: The premium will be paid directly to producers in Northern Ireland, because on-farm schemes for calves and a farm inspection system already exist there. The subject will be discussed later by the Select Committee on Agriculture. Operating an on-farm scheme could mean visiting more than one farm two 11 or three times a year, because of the nonsensical headage limit. Counting heads costs money. I did not say, as suggested by the hon. Member for Angus, East—and I thank him if he did not mean it—that we could not have got a better deal, because I know that we could. We voted against the deal and we were supported by the Dutch and the Irish. But it was a majority verdict. I promise the Committee that we 12 shall examine the scheme carefully on a day-to-day basis.

Question put and agreed to.

Resolved, "That the Committee has considered the Beef Special Premium (Protection of Payments) Order 1989.

Committee rose at six minutes past Five o'clock.


Meyer Sir Anthony(Chairman)

Carlisle, Mr. Kenneth

Home Robertson, Mr.

Peacock, Mrs.

Porter, Mr. David

Rathbone, Mr.

Redwood, Mr.

Riddick, Mr.

Shepherd, Mr.Richard

Thompson, Mr.Jack

Welsh, Mr.Andrew