Sixth Standing Committee on Statutory Instruments, &c.


Thursday 15 July 1993

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The Committee consisted of the following Members:


Campbell-Savours, Mr. D. N. (Workington)

Conway, Mr. Derek (Shrewsbury and Atcham)

Cunningham, Mr. Jim (Coventry, South-East)

Davies, Mr. Bryan (Oldham, Central and Royton)

Enright, Mr. Derek (Hemsworth)

Gapes, Mr. Mike (Ilford, South)

Gould, Mr. Bryan (Dagenham)

Hain, Mr. Peter (Neath)

Jack, Mr. Michael (Minister of State, Ministry of Agriculture, Fisheries and Food)

Nicholson, Miss Emma (Torridge and Devon, West)

Speed, Sir Keith (Ashford)

Stanley, Sir John (Tonbridge and Malling)

Sumberg, Mr. David (Bury, South)

Taylor, Mr. Ian (Esher)

Thomason, Mr. Roy (Bromsgrove)

Twinn, Dr. Ian (Edmonton)

Tyler, Mr. Paul (North Cornwall)

Wilshire, Mr. David (Spelthorne)

Dr. P. C. Seaward, Committee Clerk

3 Sixth Standing Committee on Statutory Instruments, &c. Thursday 15 July 1993

[MR. MARTYN JONES in the Chair]

Draft Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1993

10.30 am

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Michael Jack): I beg to move, That the Committee has considered the Draft Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1993. It is a delight to be under your chairmanship, Mr. Jones, for the fist time, to debate this order. It might help the Committee if I said something about the background to the order. The Meat and Livestock Commission was set up under the Agriculture Act 1967. Opposition Members may need reminding that, at that time, they were in government. I know that that was an awfully long time ago but it is worth reminding the Opposition that the MLC is a creature of their creation. Having said that, we must be benevolent about its activities and point out that it was designed to promote greater efficiency in the livestock industry and to improve the demand for meat and meat products. Its work ranges from improving the efficiency of production on farms and elsewhere in the meat marketing chain to developing the market for meat. Many members of the Committee may have seen the MLC's advertisements, its in-store promotions, or its magazine articles. All are designed to promote the consumption of meat. The Commission also supplies chargeable services to the industry, including carcase classification in abattoirs, grading of livestock in markets and on-farm herd and flock recording schemes. The order has two features, as set out in the schedule. Paragraph 2 of the schedule would amend the levy ceilings, and paragraphs 3 to 6 would enable exporters of live animals, who pay their levy direct to the MLC, to recover parts of it from their suppliers—farmers or auctioneers. I shall begin by explaining the changes in the levy ceilings, which are the first since 1990. The levy has two components: first, a general levy to finance the running of the MLC and the generic promotion of meat and, secondly, a species levy to finance specific promotions of beef, pork, bacon and lamb. The MLC sets its levies each year within the ceilings set out in orders such as this one. Responsibility for advising the commission on specific activity with beef, pork and lamb rests with the species promotion councils. Each one consists of producers, and others in the meat trade, who decide on the sort of promotion campaign they wish for their product and make recommendations about the level of finance necessary to pay for it. In respect of levies, this order does two things. First, it raises the ceilings for the general levies, which have 4 remained unchanged since 1990. This does not mean that the levies themselves will be changed. If the MLC wished to raise any of them, it would be obliged, before making such a change, to consult the industry. Secondly, the order doubles the ceiling for the pigs promotion levy. The pork and bacon promotion council wants to increase its promotion work on pigmeat. The proposed doubling of the levy ceiling would give it headroom in which to raise necessary additional finance. The beef and lamb promotion levy ceilings are not affected by the order. The second part of the schedule to the order provides for exporters of livestock to be able to recover levy from the persons from whom they have purchased their animals. That right is already enjoyed by slaughterers. Since the levy was extended to live exports in 1979, exporters have passed the levy back by agreement, with few problems. However, it is right to give a more formal power to recover this money now that exports account for a significant proportion of the market. Having outlined the overall extent of the order, I shall reflect for a moment on the benefits that a properly funded MLC can achieve. Those benefits are very much reflected in export successes. Beef exports are 30 per cent. higher than they were at the same time last year. They amounted to £265 million in 1992. Pork exports have also risen sharply, with particular growth in sales of pork cuts to France, the Netherlands, Portugal and Italy. Sheep exports in 1992 were 22 per cent. up on the previous year, and the trend is rising in 1993. The MLC estimates that exports are 38 per cent. up on the same period in 1992. In spite of the MLC's success to date, it is right that its future policy and expenditure plans should be reviewed. To that end, it is currently undergoing a quinquennial scrutiny review. That gives the meat trade interests a further opportunity to have their say about the future of promotion and marketing for their industry. The order is about the use of money for that purpose. It would, however, be wrong to conclude the review before making this order. The pig industry wants to increase its spending now on meat promotion and this order would allow it to do so. The proposal to extend to exporters the right to recover levy from their suppliers would achieve a necessary and consistent treatment between exporters and slaughterers. Before I leave this point, I want to put an important issue before the Committee. Despite our attempts to deal with the recovery of the levy on exporters, I am aware that a group of exporters is concerned about the effect which the MLC has on its business. It has made strong and cogent representations to the Department. I am referring, in particular, to the British Association of Sheep Exporters whose case about the relevance of the MLC to its export trade merits close examination. The association has meticulously identified the characteristics of sheep exports and has identified problems concerning the relevance of levies under the single market arrangements. Its chairman, who has spoken to officials in my Department, was pleased with the way in which the quinquennial review has been conducted. He was kind enough to say that the review was objective. When debating the order, it is right to tell all members of the Committee that there is merit in the case put forward by the association and that we want to consider it carefully, in terms of the review. 5 The measures have been broadly welcomed by the industry in two rounds of consultation and I commend them to the Committee.

Mr. D. N. Campbell-Savours (Workington): Before the Minister sits down, may I ask him a question? He said that the review is taking place. The British Association of Sheep Exporters and, I understand, the National Sheep Association, asked for the draft order to be withdrawn until the review has been completed in order to deal with the issue to which the Minister alluded. How will it be possible to implement the order and at the same time protect their position?

Mr. Jack: It is clear that some exporters will benefit. I explained in my opening remarks that those who had been involved in the export of sheep had drawn our attention to their concerns. It is important at this stage to regularise the position so that slaughterers have a legal right to recover levy along the chain, as they do at present. Exporters need to be in the same legal position. Some exporters, as I said, have entered into informal arrangements to recover levy moneys. They are happy to do that. The hon. Member for Workington (Mr. Campbell-Savours) will be aware that the registration of exporters is not always universally adhered to. Therefore, it may be that some exports are taking place without the necessary provision for the recovery of levy moneys. We want to ensure that the law is consistent across the meat trade. Slaughterers and exporters should be in the same legal position. It is also important that the order is agreed to at this time because it is relevant to pig promotion.

Mr. Campbell-Savours: It may help the Committee if I ask questions in this way, rather than that there should be a general debate, which would waste the Committee's time. The Minister said that we have to introduce the order now. Would not it have been better to split the order? Are not there two separate issues—the arrangements for exporters and the raising of the permissible limits. If not the levy payable? The permissible limits have to be reviewed from time to time and are prompted on this occasion by the pig producers problem. I remain concerned that, if we approve the order today, we shall establish the very system that several organisations say cannot work, because they will be penalised. I seek assurance that they will not be penalised, that the review will deal with that question and that those people will be exempt from any difficulties that may arise.

Mr. Jack: I think I have already made it clear to the hon. Gentleman that some people involved in the export of live animals already have informal arrangements for the recovery of levies. There is a group of people who do not believe that they are disadvantaged. One group—those involved in the export of sheep—has tried to make a particular point. The hon. Gentleman will be aware of a recent court case dealing with that matter. That issue has been put to us in considerable detail. The hon. Member for Workington will also understand that certain characteristics of the trade in sheep—for example, the distinction between fat lambs and those going for store—add a further dimension to the issue. I 6 would not unequivocally say that the order could not have been split, but, because of the way in which it has been constructed, it would, I believe, have been difficult to present it in any other way, especially bearing in mind the point that I was making before I gave way to the hon. Gentleman about the need to ensure that those in the pork and bacon business can get additional funding for their promotional work. We have had informal arrangements which clearly have not upset some people in the live animal export business. We want to put those people on the same basis, in legal terms, as other groups—in this case, slaughterers. I think I have gone as far as is right at this stage. There has been a quinquennial review. These matters affect the revenues of the MLC and its ability to do its job. I hope that the figures I have mentioned illustrate that it is a successful body in terms of its contribution towards expanding new markets for British meat. If changes were deemed to be necessary in future, it would be right for us to consider them very carefully.

Mr. Campbell-Savours: Let me be blunter. How can we avoid recognising the difficulty that has been drawn to the Committee's attention: individual sheep being subject to two levies—that is, the same levy raised twice—because they have been pooled in the wrong way at auction?

Mr. Jack: The point that the hon. Gentleman raises illustrates one of the real problems of a single market arrangement; levy and the recovery thereof. That is one of the central points that has been put to my Department as part of the review. That is why I thought it only right to put our wares on display at the beginning of the debate, to illustrate to the Committee that we were aware of that problem, which has been presented extremely well, and which, unlike some representations, we want to study very carefully. However, I am sure that the hon. Gentleman would not expect us, just because we have received representations immediately to say whether we agree or disagree. That would be unfair to those who have put their views to us. In addition, as I have said, there are the financial implications of any change to the levy arrangements. Finally, I, too, want carefully to consider that proposition in the round. By praying in aid the case of one group of animal exporters, the hon. Gentleman cannot ignore the fact that others have been reasonably content with the informal arrangements for recovering levy. They felt uncomfortable, however, about not having a legal base for its recovery. We want to correct that anomaly. If changes must be made, we can meet again at another time to consider the matter, but we are not trying to ignore the powerful and well argued representations of those in the sheep export business. We genuinely want to examine them and I assure the hon. Gentleman that I shall involve myself in the review of the arguments.

10.45 am

Mr. Campbell-Savours: I shall not detain the Committee for long. I simply want to put on the record the Opposition's strong support for the work done by the Meat and Livestock Commission, which fulfils a valuable role, especially in meat export. The order should have been split in two. It covers a practice which already exists, though not yet within a 7 statutory framework. The Minister seems to be under no pressure to introduce paragraphs 3, 4, 5 and 6 of the schedule to the order, but I understand the pressure to introduce provisions covering the limits and recognise that there was no way of avoiding their introduction today.


Question put and agreed to.

Resolved, That the Committee has considered the draft Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1993.

Committee rose at fourteen minutes to Eleven o'clock.


Jones, Mr. Martyn (Chairman)>

Campbell-Savours, Mr.

Conway, Mr.

Enright, Mr.

Hain, Mr.

Jack, Mr.

Stanley, Sir John

Taylor, Mr. Ian

Thomason, Mr.

Twinn, Dr.

Wilshire, Mr.