European Union Committee: Multiannual Financial Framework

Lord Carter of Coles Excerpts

Tuesday 19th June 2012 Grand Committee

[Lord Carter of Coles]

My Lords, as chairman of the Agriculture, Fisheries, Environment and—now—Energy Sub-Committee of the EU Select Committee, I will focus my remarks on the aspects of the MFF that relate to agriculture, fisheries and the environment. Since they account for more than 40% of the EU budget, it is a significant matter. I shall also stray into the important areas of research, development and innovation. I declare an interest as a farmer and landowner.

In its consideration of the proposed MFF, the sub-committee was clear that, in the light of current economic challenges, new approaches were required. It is a matter of strong regret that the opportunity to introduce them appears to have been missed. The risk of even greater disruption to the European economy cannot be ignored. Were this to materialise, long-standing budgetary models such as the CAP could become obsolete overnight.

The proposals to reform the common agricultural policy, for which the framework is set by the MFF, fall far short of the commitment to radical change that is needed. We consider that the commissioners missed the opportunity to introduce new approaches. There is a sense that the Commission is sometimes rather like a dog watching television. It can see it but it does not quite get it. We need to see these changes brought forward to reform the whole programme. Simply, we favour a reduction in the overall agricultural budget and, within that smaller budget, a redistribution of funding away from direct payments towards environmental protection and sustainable innovation.

There are three specific areas where we see a need for greater emphasis. The first is that of agricultural research. We are pleased to note the very positive proposal to double the funding to €5.1 billion, which will make a significant difference. However, set in the context of the total Pillar 1 payments—the direct payment of €280 billion in the period—it is still relatively modest.

Secondly, we should like to see much greater emphasis on rural development, the diversification of the rural economy and a much more ambitious transfer of funds from Pillar 1 to Pillar 2. One key aspect of Pillar 2 is the funding of farm advice, which has not been done very well in England recently. On the other hand, it is comforting that other parts of the UK have done better and it will be interesting to hear what the Minister has to say about recent progress, which we hope is being made in that area.

Thirdly, the environmental impact of farming is critical. Historically, this has been very much a Pillar 2 issue and the mechanisms have been used in that context. However, it is proposed to green Pillar 1—which is, I know, a matter of great concern to many of your Lordships—by tying 30% of the direct payments to cross-compliance. We just hope that that ambition is rigorous enough in its introduction when it comes. We are also concerned that the rather centralist view—the “one size fits all” approach that is being proposed by the Commission, particularly for greening—may be better dealt with if the mechanism for these direct payments could be identified at a national or, even better, regional level. This is a matter of some debate in Brussels. The noises that we hear from there indicate that these views are held more widely. The Minister may wish to comment on this matter when he sums up.

Turning to fisheries, your Lordships will recall that the committee has been extremely robust over the years in calling for radical reform of the common fisheries policy. The new European maritime and fisheries fund does not quite do it. Discussions about these reforms are ongoing. We are clear that the new fund must support a reform policy. We are concerned that the proposed fund is too broad and insufficiently targeted. It certainly needs to be more focused on conservation objectives such as discard reduction. We want to see the objectives and the instrument narrowed so that money will not be spent on some of the things it has been in the past, such as infrastructure and fish farming, at the expense of conservation. Sadly, I have to say that in correspondence with the Government we have made little headway with them on this matter. Perhaps the Minister will update us today.

Finally, I offer some comments on the financial instruments for climate change and the environment. We see a future characterised by risk and uncertainty. There are several aspects to that: economic uncertainty, great demographic change and challenge, and of course the risks linked to climate change, which we regard as very significant. For that reason, we support the distinct sub-programme for climate change, which is an innovation of this instrument for the new MFF. We have argued that there is a strong case for an increased budget for this programme in order to address the challenges of biodiversity and climate change. Climate change is an important issue. The €0.9 billion over seven years will go some way towards meeting the challenges but we regard it as insufficient, even though it has received a marginal increase.

The consideration of climate change throughout the EU budget and the issue of mainstreaming are therefore of great importance. One example may be the use of the European Social Fund to boost training in the renewable energies area. It is in the sort of way that I hope the whole EU budget can be used as a tool to make significant steps towards a green economy. There are those who believe that one of the ways through the economic challenge that we face is to build on the expertise of the green economy and develop world-class industries in that area.

In conclusion, I return to agriculture, where I started. A central recommendation of both the reports we are debating today is to support a substantial reduction in the agricultural budget and a much greater focus on innovation. I totally agree with that. However, this is not about impoverishing farmers across Europe. We were recently told by the chairman of the European Parliament’s Agriculture Committee, Mr Paolo De Castro, that,

“agriculture is at the centre of an Innovation Union and the new global challenge”.

I think what he meant by that was that in order for Europe to prosper in a very important sector, we have to innovate and invest. We cannot work that much harder but we probably have to work a great deal smarter. The question on the final deal for the MFF is whether we are going to let innovation flourish and encourage it, or whether we are going to revert to the old EU policies of suppressing innovation and have seven further sterile years.