EUC Report: Agriculture

Baroness Sharp of Guildford Excerpts

Monday 6th February 2012 Grand Committee

[Baroness Sharp of Guildford]

My Lords, I, too, declare an interest as a member of the sub-committee that produced the report. As the noble Baroness, Lady Byford, has just said, it is an extremely interesting report to participate in. In many senses it was a logical development from some of the other reports that we have been working on in the sub-committee. This is my fourth session on the sub-committee so I shall roll off. During this time we have looked at, among other things, the development of forestry and the impact of climate change on agriculture. Central to our deliberations has been the common agricultural policy and the reform of that policy. Innovation fitted in extremely well with all those reports and now we are looking at water, which is yet another aspect of the problems that we currently face and fits in with the whole question of innovation in agriculture. Above all, this report picks up on the challenge of climate change to agriculture. Our previous report on climate change and agriculture led us to be aware of the need to renew the research effort, not only in this country but in Europe as a whole, and to develop new processes and new technologies for agriculture.

We have been very much aware of the challenges facing the global environment. As the sub-committee chairman the noble Lord, Lord Carter, mentioned, we began by looking at the Foresight report on global food and farming futures, on which one of our witnesses, Professor Charles Godfray, had been the leading researcher. Of course, that report picks up what the Chief Scientific Adviser, Sir John Beddington, has described as the “perfect storm” now confronting the global environment through the combination of four elements: global population growth, which we have already mentioned and which is expected by 2050 to increase to 9 billion from the current 7 billion; the fact that climate change will shift the potential of different areas around the world to produce food; the exhaustion of fossil fuel energy sources; and the increasing competition for water resources. As all four of those issues coincide and come together in the course of the next 30 to 50 years, that will create a real urgency about how we are to feed all these people.

Therefore, the whole question of food security will become not only an issue but a very urgent issue. It is interesting that when we came to look at our report summary, we strengthened some of the conclusions. In relation to this challenge, we said:

“The response to this challenge has to start now. Decisions have to be taken, and actions implemented, with urgency”.

The issue of food security is an urgent issue that needs to be addressed and we have not time to dilly-dally for too long in responding to it.

It is interesting to reflect that, in the course of the 20th century we faced a similar population increase and, during that century, we fed that population really very amply. We used fossil fuel energy and made extensive use of fertilisers, but we also brought into play large amounts of land—on the one hand, through the destruction of rainforests and, on the other, through the expansion into wilderness areas. In much the same vein, we have used water to irrigate agricultural areas where water is scarce. For example, one need only look at how important irrigation is to Spanish agriculture and the Spanish fruit and food industry to recognise the difficulties that people will face as a result of climate change, given the problems that arise even with current water resources. However, we can no longer resort to the solutions that we had in the 20th century, as we now need our forests and our wilderness areas to absorb the CO₂ emissions that we are creating, and we are running out of fossil fuel energy. In any case, the pollution caused by the excessive use of fossil fuels creates its own problems and, in terms of CO₂, our water resources are increasingly scarce and costly to clean up.

Nevertheless, as has already been reflected in our discussion, those who have studied this issue are relatively optimistic that we can feed the increased population. As my noble friend Lady Parminter mentioned, one-third of the food we produce is wasted. If only we made use of what is wasted, we would have little difficulty feeding the mouths where hunger currently pervades. There is an enormous amount to be done. As the noble Lord, Lord Carter, mentioned, what is termed sustainable intensification of agriculture is required. Essentially, we can produce more from the same resources. The definition given of sustainable intensification is increasing agricultural yields without adverse impact on the environment and without bringing more land into cultivation. As Professor Godfray told us, it makes innovation critical to sustainability. If only we make use of the technologies and the processes out there, the combination of saving what we currently waste and making use of new technology gives us the answer to how we can feed the increasing population. If we can harness the potential of those new technologies and developments in agriculture, we are quite capable of feeding the growing global population.

The noble Lord, Lord Carter, mentioned projections of agricultural productivity: in Brazil, an increase of 40 per cent, in the USA, of between 15 and 20 per cent, but in Europe, 4 per cent. We asked ourselves: why is the potential productivity increase in Europe so low? Why, as Mr Häusler mentioned, is Europe such a hostile environment for innovation? The answer we came to is that it is a complex issue, a mix of very different things.

Traditionally, the CAP aimed to increase production more or less regardless of cost in order to make Europe as self-sufficient as possible—indeed, at one point, Europe was well more than self-sufficient—hence the heavy direct subsidy to the production regime. That was not broken until the early 1990s, 15 or 20 years ago, since when, if anything, the swing has been in the other direction towards limiting production and increasing the emphasis on public goods of agriculture: carbon sequestration, landscape and biodiversity. The new support mechanisms in that direction—Pillar 2, as we call them—were nevertheless still dominated by the old support mechanism, Pillar 1, which paid farmers directly in relation to their production. That gives farmers a degree of security—one issue that we have been debating in our committee in relation to CAP reform—but does it also breed complacency, and is that complacency in itself a barrier to innovation?

Another barrier to innovation is that Europe has a large number of small farms in relation to North America, South America and Australasia—but not in relation to Asia, which has many very small holdings—so despite subsidies, there are low incomes. Farmers cannot afford to innovate and experiment with new ideas; they are innately conservative. The European Commission is well aware of this challenge and currently consulting on reform of the CAP. Our report has been grist to that mill. It sees it as a timely input into the debate.

The report came up with five main solutions, which have already been mentioned. The first was to boost research; mention has been made of the fact that of the €400 billion spent on the CAP in the current financial framework, only €2 billion is spent on agricultural research. As we have also heard, in the next framework, which will be called Horizon 2020 instead of “Framework Programme 8”, it is projected that that will more than double to €4.5 billion and will be characterised not only by joint programmes but by the development of the European innovation programmes and various joint programme initiatives that are to take place.

That will still be just over 1 per cent of the total spend on agriculture. As a whole, the EU has a target of spending 3 per cent of GDP on research and development. If we were to spend 3 per cent of what is spent on agricultural support by the CAP, it would be something like €12 billion. If we were looking to spend 3 per cent as a whole, the total within the EU would rise considerably.

Much research is financed at member state level rather than funded by the Commission. As others have mentioned, the BBSRC, spending somewhere in the region of just less than £500 million a year, is one of the big spenders. France and Germany spend more. In the UK, much of the money from the BBSRC is for what I call the top end of the research—a great deal of genetics and genomics research—and not very much is for applied research. We highlighted the fact that it would be a good idea if more were spent on microbiology and research into soil.

Much money is spent at member state level but there is not nearly enough co-ordination. This was something that we were very much aware of, particularly the concept of the European innovation programme and the joint programme initiatives. As I understand it, the joint programme initiatives are bilateral whereas the European innovation programmes are promoted by the Commission and are essentially to bring member states together and allow them to co-ordinate and collaborate. We were aware of how very fragmented the effort was at the moment, and for that reason we very much welcomed the input of Incrops and the model that it suggested for how the European innovation programmes might be put to work and how they might work themselves out.

Is collaboration itself enough? We noted the example of the Netherlands, which has targeted excellence in the agrifood sector as a national objective and developed a very clear strategy nationally to achieve this. Do we want something stronger from the Commission, a European strategy for the agrifood sector that puts agricultural innovation within the broader context?

Is research itself enough? If it is going to be useful, it must be used—hence the emphasis that we put on knowledge transfer and, above all, knowledge exchange. Those using the developments in science and technology must be able to understand and, for that matter, influence the research so that it is user-friendly. That is why we put so much emphasis on the development of the Farm Advisory Service. Here, it is a mixed picture across the European Union and within the UK itself. Some countries, such as Denmark, France and the Netherlands, have very strong advisory services that help farmers adapt and develop new products and processes. In the UK we found much disappointment at the dismantling of the old ADAS service and its replacement with the mixed-consultant industry-based services, and much hope that the new levy-based AHDB and the new integrated advice pilot would work themselves out.

Generally, the government response seems to have been positive, backing up our recommendations. As the noble Lord, Lord Carter, has emphasised, the key issue is that of carrying through the recommendations into the reform of the CAP. I am particularly glad that the Government have responded so positively to our suggestion that we need to look at research within the broader strategic framework and the reorganisation of farm advisory services.

There is danger in assuming that the market will deliver when necessary. Sadly, the market has chosen the way often only after crises have overtaken events. To go back to where we started, innovation is the key to developing a sustainable agriculture sector, which in turn is the key to future food security.

[The Deputy Chairman of Committees (Lord Colwyn)]

My Lords, there is a Division, but I have a feeling that the noble Baroness is coming to the end of her remarks. Would she like to finish in 30 seconds?

[Baroness Sharp of Guildford]

Yes. If we wait too long, we may have lost the opportunity to prevent that crisis.

Subsidiarity Assessment: Food Distribution (EUC Report)

Baroness Sharp of Guildford Excerpts

Monday 28th November 2011 Lords Chamber

[The Earl of Caithness]

My Lords, I am delighted to follow and to support everything that has been said by the noble Lord, Lord Carter of Coles; our committee chairman the noble Lord, Lord Roper; and the noble Lord, Lord Williamson, particularly with his experience of dealing with the situation when it was entirely different. I propose to add nothing to what they say, but to ask a few questions of my noble friend. Does he agree with me that this is a serious matter? As far as I understand it, this is only the third reasoned opinion that this House has given, but it is identical to the one we passed on 3 November. Why are reasoned opinions passed by this House taken so lightly by the Commission? What negotiations has the Minister had with the Commission? What was its reaction to our previous reasoned opinion?

It is all very well for the Commission to make a slight tweak to what it presents to us because the European Court of Justice ruled it out of order, but that does not satisfy me. I want to know what the Commission has done to take on board our concerns. I hope my noble friend will update me on that. If the Commission does not take on board member states’ concerns about reasoned opinion, there is no point in us producing reasoned opinion. If it is as dismissive as it has been to date, it will only intensify the disregard and dislike of the Commission that many in this country have.

May I also ask the Minister about the current state of negotiations? I was appalled to read the letter from his fellow Minister, Mr Paice, of 15 November, in which the Germans seem to have decided with the French in, if no longer smoke-filled rooms, the corridors of power to do some dirty deal and produce a draft joint minute telling the rest of the European Union’s members what they can accept from the Germans and the French. That is pretty unacceptable, too. I hope that he has made strong representation to the Germans about this. Surely it is wrong in principle, as has been well said, for some sort of shady deal in which this matter is done at European level rather than at member-state level to the end of 2013. Let us hope that in negotiations about what will happen after that, when the French will be keen to continue this into the next round, the Germans will be in a weaker position than they would be if they remained firm and principled.

[Baroness Sharp of Guildford]

I should declare an interest as a member of the EU Sub-Committee D, which has brought forward this opinion. It has now considered this and similar proposals from the Commission on three occasions. On all three, it has taken the view that the proposal has little justification now that intervention stocks have more or less disappeared. Redistribution to deprived groups within society to relieve their poverty is essentially, we maintain, a matter for member states, not for the Union, and it is really ridiculous that CAP funds—€500 million—should be used to buy foodstuffs on the markets for such redistribution. If anything, such purchases would tend to drive prices up and exacerbate food poverty rather than the reverse.

Higher Education White Paper

Baroness Sharp of Guildford Excerpts

Tuesday 28th June 2011 Lords Chamber

[Baroness Sharp of Guildford]

My Lords, I thank my noble friend for repeating the Statement, which has been extremely useful. It clears up a degree of uncertainty that there has been around universities for a very long time. As the noble Lord said, it has taken a long time for the White Paper to come to us, rather than a short time. I also welcome a number of other aspects of it. The opening up of the university system and the creation of a far greater diversity of routes for higher education are thoroughly good things for this country. As many noble Lords around the House will know, I have for a long time advocated the facilitation of the part-time route so that those who want to earn and learn can do so and have access to support equivalent to that for full-time undergraduates. That is extremely important. The Minister will know that one or two minor issues arise here and I will raise them with him in due course. However, on the whole I think that this is a thoroughly worthwhile development. I also welcome the reintroduction of sandwich courses.

Can the Minister provide clarification about the AAB issue, which the noble Lord, Lord Stevenson, raised? At the moment, as I recall, we provide somewhere in the region of 350,000 undergraduate places every year. As I understand it, 65,000 of those places are going to be put into a pot to be bid for by any university, according to what students want to do, and a university will then be allowed to exceed its quota if an AAB student wants to attend. The other 20,000 places are for institutions that charge less than £7,500 per year. This is not creating new places; they are existing places. In effect, as I said, 65,000 places are being taken out of the pot at one end and 20,000 at the other end. I worry about that slightly. The noble Lord is quite right that the problem is that our secondary schools perhaps do not produce enough AAB students. However, there is a real problem here. There was an experiment by King’s College in which medical students worked with local secondary schools in south-east London, bringing forward pupils who were not achieving at that level. However, by the time those pupils had been through the degree course, they achieved just as highly as the others, which shows what potential there is. Universities need to have flexibility in that sense. There is a danger that we shall expand the universities taking the top-achieving students, thus depriving some of the lower-achieving students. I confess that that worries me.

Finally, the noble Lord, Lord Stevenson, referred to the cost. As the White Paper says, the Government reckon that by 2014-15 the scheme is going to cost more. As the Minister will know, the cost of loans is going to be very considerable, and it looks as though the Government may well end up spending more on the loan scheme than they are putting in at the moment in direct grants.

[Lord Henley]

My Lords, I am very grateful for the comments of my noble friend Lady Sharp, particularly regarding the fact that the White Paper has cleared up uncertainty, and for her emphasis that we—or, rather, my honourable friends in another place and in BIS—have taken time over it. I am also grateful for what she said about the need for diversity in higher education. We should always remember that higher education is not just hallowed colleges in Oxford or Cambridge but a whole range of different things. I was grateful that she mentioned part-time students at the Open University and matters of that sort. I think that something like a third of all students are part time, although I shall have to check that figure. I was trying to find it in my briefing pack but could not. I was also grateful for what she said about the fact that we want to put more emphasis on sandwich courses. We will certainly look to see what Sir Tim has to say about that.

On the AAB cohort which we were talking about and which I mentioned in the Statement, the figure that I have is of the order of 300,000 students coming in each year, not 350,000, but we will not quibble about 50,000.

Higher Education: Funding

Baroness Sharp of Guildford Excerpts

Wednesday 18th May 2011 Lords Chamber

[Lord Henley]

My Lords, as the noble Lord rightly said, we made the assumption in December of an average fee of roughly £7,500, with a 90 per cent take-up by students. However, it is up to higher education institutions to decide what application they should put in, and for the Office of Fair Access to look at that and make recommendations. As we made clear, there will be a number of bursaries and waivers, so we think that the average figure will come down well below the maximum of £9,000. I remind the noble Lord also that merely because a university puts in an application to charge £9,000 for one course, this does not mean that all courses will cost £9,000. I am afraid that the noble Lord will have to wait and see. As my right honourable friend Mr Willetts said in another place, we see no reason at the moment to amend the broad estimate that we put before the House last autumn.

[Baroness Sharp of Guildford]

What is the Government's estimate of how many students will not repay their debts after 30 years? In the light of that, are the Government continuing the policy of wanting to securitise the debt, and what sort of discount do they expect on such securitisation?

[Lord Henley]

My Lords, I have no estimates of the numbers of students who will not repay their loan. We hope very much that all those who benefit from higher education will, as we have made clear, have a higher earning potential throughout their working life. Therefore, it is likely that the vast majority will be able to repay their debt.

Adapting to Climate Change: EU Agriculture and Forestry (EUC Report)

Baroness Sharp of Guildford Excerpts

Thursday 24th March 2011 Lords Chamber

Moved By

[Baroness Sharp of Guildford]

To move that this House takes note of the Report of the European Union Committee on Adapting to climate change: EU agriculture and forestry (8th Report, Session 2009–10, HL Paper 91)

[Baroness Sharp of Guildford]

My Lords, it is a year now since the European Union Committee published our report on adapting EU agriculture and forestry to climate change. In that report, we acknowledged that there had been changes to the climate in the past and repeated the widely shared concern that current projections of climate change indicate a far higher level of uncertainty in the future. We quoted from a November 2009 statement made jointly by the Met Office, the Natural Environment Research Council and the Royal Society which said that scientific evidence of dangerous, long-term and potentially irreversible climate change had significantly strengthened since 2007. The statement went on:

“In the UK, we will be affected both directly and indirectly, through the effects of climate change on, for example, global markets (notably in food), health, extent of flooding and sea levels”.

Indeed, your Lordships will recall what happened in Cumbria in November 2009 when unprecedented levels of rainfall caused flooding that devastated much of the area’s infrastructure. Water levels in Cockermouth, for example, reached over eight feet at their worst point. Estimates suggest that the cost of the damage to homes, businesses and infrastructure has amounted to more than a quarter of a billion pounds. Your Lordships will also be well aware of the recent Foresight report entitled The Future of Food and Farming which identifies climate change as one of the major challenges that our global agriculture and food system face.

We carried out our inquiry against this wider background, but more specifically in relation to the White Paper, Adapting to climate change: towards a European framework for action, which the European Commission had published in April 2009, together with a linked paper, The challenge for European agriculture and rural areas. In general, and perhaps even more so in the light of the Foresight report, our feeling was that the White Paper failed to emphasise the urgency of these issues. Perhaps I may also say that we felt that also to be true of the Government’s response. The White Paper was rather too long on aspiration and on getting together to prepare models and strategies, but somewhat short on action.

The main focus of our report is on the actions that the UK and our EU partners can and should take to face the challenges posed to agriculture. This in turn sets the discussion in the context of the common agricultural policy, where there is a larger debate now under way about reform after 2013. I should also mention that our report related to forestry as well as agriculture. Because the Commission published its Green Paper, Forest Protection and Information in the EU: Preparing forests for climate change, only in March 2010 when we were concluding our inquiry, we returned to the forestry aspects of our inquiry in July of last year when we responded to the Green Paper. My remarks today will take account of that response as well.

The Commission White Paper of April 2009 foresaw a two-stage approach on adaptation measures. Phase 1, from 2009 to 2012, would prepare the ground for a more comprehensive EU adaptation strategy. Phase 2, from 2013 onwards, would see that strategy implemented. Emphasis was rightly placed on action at the national and local level, while the Commission’s role was essentially that of strategy setting.

As regards agriculture and forestry, in phase 1 the Commission proposed that measures for adaptation and water management be embedded in national rural development programmes from 2007 to 2013. We explain in our report that those rural development and environmental programmes are supported under Pillar 2 of the CAP, which at present makes up some 20 per cent of the CAP spend—some €96 billion over that seven-year period. There was an interim review of the CAP in 2008—the health check—which, among other things, led to an agreement by member states that several “new challenges” should be seen as priorities for funding under the second pillar. Among those were measures towards the mitigation of, and adaptation to, climate change.

We heard from witnesses to our inquiry, including a representative of the Commission's Directorate-General for Agriculture and Rural Development, that after the health check the take-up of climate change measures had been very disappointing, with only some 14 per cent of funds available used for this purpose and the bulk of the funding used by countries that had already been giving priority to such measures. We felt that there was much room here for greater transparency—perhaps a little naming and shaming—and recommended that member states should be required to spell out what they had done to promote measures for adaptation to climate change in the annual rural development programme reports which they are required to provide to the Commission.

In the White Paper the Commission also proposed that, before 2013, there should be an examination of the capacity of the CAP's farm advisory service to reinforce knowledge and adoption of new technologies that facilitate adaptation. That issue is very much at the heart of our concern about the future of agriculture in this country and in the EU more generally. One chapter in our March 2010 report deals with what we call research and knowledge transfer; and we are clear that the double challenge of feeding the world's growing population, at a time when climate change is likely to restrict the landmass that can usefully be cultivated, demands both developing new and innovative technologies and making use of those that already exist but where farmers need help with putting them into practice.

The White Paper proposed that by 2011 the EU should set up what it called a “clearing house mechanism” to serve as a database on climate change impact, vulnerability and best practices on adaptation. That is fine as far as it goes. However, more widely, we are concerned by the evidence that we received suggesting significant neglect of scientific research into agriculture generally and specifically into adapting agriculture and forestry to climate change. That was particularly true of the UK. We heard, for example, that between 1970 and 2010 there had been a significant fall in the number of agricultural research institutes in the UK, and in the number of university departments of agriculture and land management, paralleled by a large drop in the number of students in these subjects.

In our report, we therefore call on the Government to ensure that the UK's research capacity is strengthened. We also make clear our view that there is an important role for the EU to identify the research gaps, and to look to fill them with research supported by the Commission through the framework programme as well as by co-operative efforts between member states. Since our report, I am pleased to note progress in that respect. In March 2010, when our report was published, the first steps were being taken to set up a very promising co-operation between the UK's Biotechnology and Biological Services Research Council, the BBSRC, and France's National Institute for Agricultural Research, INRA, to carry out joint research into agriculture, climate change and food security.

A commitment to generating new knowledge is essential but not sufficient. It is also essential that such knowledge is translated into new products and techniques and that it can be applied in practice. Since last autumn our committee has been conducting a further inquiry, into innovation in EU agriculture. We were stimulated to undertake this latest inquiry by our work on adaptation to climate change and the seeming deficiencies in both the volume of agricultural R&D and the means of spreading best practice. In the past few months, we have learnt a great deal about the state of advisory systems in the UK and in other EU member states. In particular, I want to draw your Lordships' attention to the farm advisory system which all member states have been required to provide under the CAP over the past decade.

This requirement was introduced in parallel with the introduction of so-called “cross-compliance” obligations on farmers receiving direct payments under the CAP—obligations to meet certain conditions relating to environmental protection in their agricultural practice. Different member states have acted on the farm advisory system requirement in different ways. We have heard that, in some countries, FAS representatives are found to offer a very helpful service, while in others they are seen, in effect, as agricultural policemen.

We know that the Commission is reconsidering the role and functions of the farm advisory system and that the UK Government are looking again at arrangements in this country. We are clear that there is an unacceptable gap in the provision of advice to farmers—and that agricultural advisers could, and should, act as conduits for the application of research advances to farming practices. We look to the Minister to tell us more about the Government’s intentions in this respect.

The Commission’s White Paper looked to the period from 2013, the phase 2, for the implementation of strategies on adaptation to climate change. This coincides with the next funding period for the CAP, hence the shape of the CAP after the further reform which is now under discussion. In our report we said that the defining characteristics of the future CAP should be the “sustainable intensification” of agriculture, a term which was persuasively advanced in the Royal Society’s 2009 report, Reaping the Benefits.

In November last year, the Commission published a communication, The CAP towards 2020: Meeting the food, natural resources and territorial challenges of the future. We responded to it with a letter which drew heavily on our report on adaptation to climate change. In it we said that we welcomed the idea of the “greening” of Pillar 1 of the CAP, which would imply making some of the income support funding contingent on the delivery of environmental public goods. We have suggested that eligible activities might include incentives to mitigate agriculture's contribution to climate change and to adapt the impact of climate change on agriculture. We reiterated our view that there is no case for payments to be made available without an environmental justification. Again, we have stressed that better integration of environmental considerations in Pillar 1 must go hand in hand with vastly improved knowledge transfer systems.

I must say just a few words about the committee’s views on forestry in the context of concerns about climate change. In our July 2010 response to the Commission’s Green Paper, we agreed that there was no need to give the EU competence for forestry to match the competence which it has in relation to agriculture, while accepting that this still left scope for valuable action to be taken by the EU. Forests can play a key role in combating climate change, both as a carbon sink and as a source of renewable energy. We were much influenced by the evidence that we received from Professor Read, which suggested that restoring the proportion of UK land devoted to forestry to the 16 per cent at which it stood in 1980—compared with 12 per cent of our landmass today—could reduce UK carbon emissions by some 10 per cent, which is a very substantial amount.

However, we made clear our concern that the economics of forestry could prove the greatest obstacle to such policies. Given the wide range of experience across the EU, we recommended that the Commission should work with member states to exchange experience and develop an economic assessment of the viability of providing significant additional afforestation. I have to say that, so far, we have seen no strong signs of support from the Government for such a policy. I would welcome some comment from the Minister today on this recommendation.

Mr Jim Paice MP, the Minister of State at Defra, wrote to us at the end of June 2010 to set out the Government’s response to our report. I am glad to say that there is quite clearly a lot in common between our views and those of the Government on the issues with which we dealt in the report—not least on the longer-term shape of the future CAP. However, as I have indicated, we have not so far been able to persuade the Government in relation to our recommendations for future action on research and knowledge transfer. For example, in their response, the Government commented that,

“the number of agricultural institutes is not a good measure of agricultural research output”.

We accept that—but it could still be a debating point. There is certainly a whiff of complacency about such an answer, particularly in light of the widespread concern, as we heard from our witnesses, that there has been a significant decline in agricultural research in this country and a major failure in knowledge transfer down to farm level.

The Government also commented that,

“communication to farmers and land managers is important to ensure that research and knowledge are used on the ground”.

Given our analysis that in England such communication currently falls short of what is required to enable farmers to put innovative knowledge into practice, we expect the Government to take on board the need to make farm advisory services more effective. In June 2010, the response said that Defra was mapping advisory services “to inform future decisions”. I hope that the Minister will be able today to say something more positive about those decisions .

We have also received a response to our report from European Commissioner Sefcovic in a letter dated 7 September 2010. We were encouraged to read that the Commission agreed with most of our views and recommendations. It is fair to say, however, that the evidence of the extent of its agreement will come when there are more specific legislative proposals for the future of the CAP.

My remarks this afternoon have shown how intensive a debate is now under way in relation to the future of the CAP, in Brussels and in the capitals of the EU member states. As our report of March 2010 makes clear, however, the sustainable intensification of agriculture must be a key determinant of the future CAP and must include a range of measures aimed at adaptation to climate change. It is important that these measures are put into effect in not too distant a time. I beg to move.

--- Later in debate ---

[Baroness Sharp of Guildford]

My Lords, I thank all noble Lords who have participated in the debate and, in particular, join others in congratulating the noble Lord, Lord Framlingham, on his excellent and very amusing maiden speech. Like the noble Baroness, Lady Quin, I shall treasure his words that trees are one of the world's blessings. That was one of the themes of our debate. With the exception of my noble friend Lord Caithness, who is somewhat of a sceptic on these things, all noble Lords who have spoken have stressed how vital the subject of the adaptation to and mitigation of climate change in European agriculture is to the future of the planet.

Noble Lords have spoken not only about the CAP but about water and soil management, forestry, research and its applications, and the role of GM technologies in raising productivity. All those issues are relevant and extremely important. I thank noble Lords for bringing them to the attention of the House; and I thank the Minister for his comprehensive response.

It has been a good and wide-ranging debate. With those thanks, I commend the Motion.

Motion agreed.

Higher Education (Basic Amount) (England) Regulations 2010

Baroness Sharp of Guildford Excerpts

Tuesday 14th December 2010 Lords Chamber

If we are all in it together, it would appear that this and subsequent generations of students will be in it more than most. It is an issue of justice when some of the poorest young people in our society are deterred from contributing through further and higher education to the common good of all by withdrawal of, as has been referred to, the education maintenance allowances for further education and, as is the subject of this debate, the hiking of tuition fees to pay for a higher education. For all these reasons, this proposed way forward for the funding of higher education in this country is deeply flawed. The long-term costs of such a short-term gain are hardly to be countenanced, even in the most straitened of financial circumstances.

[Baroness Sharp of Guildford]

My Lords, the noble Lord, Lord Triesman, taunted those of us on these Benches with the fact that, in the 2004 debate, we argued for, and gained the right for, Parliament being able to debate any change in the level of fees and fee regulation. This is precisely what we are doing today.

Like the noble Lord, Lord Bilimoria, and the right reverend Prelate the Bishop of Lincoln, I regret the degree to which the present debate over fees has ignored the wider cultural and social benefits that stem from our much praised universities. “Learning is for earning” was one of the headlines that followed the report issued by the noble Lord, Lord Browne. We have to some extent lost the carefully balanced and nuanced approach taken by the late Lord Dearing in his report 13 years ago. The Dearing report suggested that university education has three beneficiaries: society as represented by the Government, the student and industry. That report also suggested that the costs of such an education should be shared among the three.

I have some sympathy with the package of proposals being put forward by my honourable friend the Secretary of State for Business, Innovation and Skills in the other place. The proposals have a number of distinct advantages over the present situation. First, what is on offer is undoubtedly more progressive than the current system in that the less well-off—those coming from poor households and earning low salaries—will get a bigger maintenance grant and more advantageous loan conditions than under the present fees system. The richer students, specifically those earning higher salaries, will pay more than under the present system. Therefore, as my honourable friend has claimed, the proposed scheme is more progressive than the current scheme.

I also welcome, as all noble Lords have done, the extension of loans to part-time students, which rights a long-running and major inequity in our system. For much too long, the system of loan and maintenance grants has favoured and given a very positive incentive to students to study full time. The reforms open the way to make our higher education system much more flexible, so that the student can mix part-time and full-time courses and mix distance learning with campus-based studies. In the long run, those changes will transform our university system and make it much more like the American system, which many people wish it to be. In that sense, I agree wholeheartedly both with the Minister, who said that the measure will, in essence, change how universities will move, and with the noble Lord, Lord Triesman, that the measure is a game-changing proposal.

As is now well known, I have some substantial reservations with the package being put forward. Although the new package is, as I have said, undoubtedly more progressive than the current provision, we cannot get away from the fact that, with the rise in fees possibly to as high as £9,000 a year, the size of the outstanding loans on graduation will be larger. With maintenance loans as well as the fee loans, most students will be looking to debts of between £30,000 and £40,000 a year. If two graduates set up household together, the total debt will be from £60,000 to £80,000. Whatever people say about students now being used to debts, the work undertaken by the Sutton Trust and Sir Peter Lampl shows clearly that such a sharp hike in fees may well make students very uncertain about whether they wish to go through to university.

Because the loans will be larger, they will also be less likely to be repaid. Indeed, any person earning less than £41,000 will not even be paying off the interest due on the loans. Only graduates earning more than about £50,000 will pay off substantial amounts of capital. It is estimated by a number of organisations, such as HEPI and the IFS, that something like 50 per cent of graduates will never pay off their loans. Disproportionately, those will be women, who earn less and are more likely to go part-time or to take a period out of earnings.

One good thing about the package being proposed is that, unlike credit card debts or mortgages, when a graduate’s earnings go down the payments will also go down. However, the debt will not go away. For anyone earning more than £21,000, 9 per cent of anything that they earn will be subtracted through PAYE on top of their income tax and national insurance—and that will last for 30 years. If you do not repay your debt, 9 per cent on top of your income tax and national insurance will be extracted from your pay package on anything you earn over £21,000. In effect—my honourable friend has said this—the loan will become a graduate tax of 9 per cent. Personally, I feel that that is a very high level of graduate tax. I feel very strongly that those of us who benefited from having no tuition fees and generous maintenance grants in the 1960s, 1970s, 1980s and 1990s, are landing on young people of today—the next generation—quite disproportionate costs in that respect.

My second objection is an arcane point that relates to the financing mechanism. Loans do not come for free and substantial loans will be needed to back up the payments being made to the students. The Student Loans Company is funded by the Exchequer, which in turns borrows the money that it lends to the Student Loans Company. The Student Loans Company will then sell the debt on, on the grounds that one person’s debt becomes another person’s asset. However, because so many students will never pay off their debts, the value of those loans when sold on has to be discounted. The Treasury figure for that discount is 28 per cent, but HEPI, the IFS and London Economics all think that that underestimates the repayment issues. Even if we accept the Treasury figure, the annual cost of fee loans and maintenance loans combined to the Treasury will be roughly £2.8 billion for every £10 billion tranche, so the cost to the Treasury down the line will be just about the same as is being taken out of the higher education budget—£2.9 billion. I find myself asking why we are taking that money out of the higher education budget if down the line we will need to meet that cost, which will be more or less exactly the same. The answer, of course, is that doing so conveniently takes the sum off the current account and, through the Student Loans Company, switches it into part of the capital account that is not part of the national debt. Therefore, the cost is in effect taken off the books. That is very convenient, but it will come back on to the national debt at a later point.

Those are my reservations about the package. For all the merits of the proposed system, I end up thinking that it will be unfair to low and middle income students, who will have to pay 9 per cent on top of national insurance and income tax for a very long time. However, I have very little sympathy with Labour’s position, which I find somewhat hypocritical. The Labour Government introduced student fees after a pledge not to do so back in the 2000s. Not only did the Labour Government set up this loans system that is now being extended, they commissioned the Browne report and set its terms of reference while deliberately ducking from taking any decision on what they would do with the report until after the election. Having rejected the idea of a graduate tax when it was put to them in 2004, they are now arguing that a graduate tax would be a fairer system.

I do not hide the fact that I find myself in a dilemma. There are elements of this package that are very fair, very right and very proper. My honourable friend has lent over backwards to make it into a fair package. However, I end up feeling that there are other elements in it that I do not understand and that are unfair.

[Lord Giddens]

My Lords, I speak in this debate not primarily as a Labour Peer but as an educator and a former director of the London School of Economics. I have worked in universities the whole of my adult life and in a considerable diversity of universities. I believe that the Government’s legislation will be highly damaging for the university system and, as an educator, I should like to explain why.

The flaws in the legislation come from two sources. The noble Lord, Lord Browne, will forgive me, but the first is the erroneous view of the Browne report that higher education is a private benefit rather than a public good. The right reverend Prelate, the Bishop of Lincoln, rightly drew attention to that in a forceful fashion. In contributing to the values of good citizenship and civic culture, the public role of universities ranges far beyond the areas identified in the report. Secondly, the decision to cut the teaching grant by 80 per cent is way in excess of what is necessary or sensible. I do not feel that Labour is being hypocritical in saying that, because the Government must be obliged to look at the proposals again.

No other university system in the world will charge students such a high level of fees with such inadequate safeguards to protect those from poorer and middle-level backgrounds. Comparison has been made with the American system, but the system that is proposed is not like that. We will get the worst of the American system without the safeguards that US universities have. Perhaps I might list those briefly, because they are very substantial and show that the public domain is far more representative in American universities than will be the case in the system that the Government seek to introduce.