Common Agricultural Policy Debate
Full Debate: Read Full DebateBaroness McIntosh of Pickering
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(12 years, 1 month ago)
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Welcome to the proceedings, Mr Chope. It is a great honour and a pleasure to serve under your chairmanship. On behalf of the Select Committee on Environment, Food and Rural Affairs, I am delighted to have secured this timely debate. Before I go any further, I draw colleagues’ attention to my modest entry in the Register of Members’ Financial Interests, which is pertinent to this debate.
We are discussing our first report of this Session, which I commend to the House, on greening the common agricultural policy, and the Government response. Our debate is timely for a number of reasons. The next round of CAP reforms will build on those achieved by Commissioner MacSharry and Commissioner Fischler, and now on the proposals launched by Commissioner Ciolos. The European Commission package introduces numerous greening measures with which farmers will be asked to comply. One of the first conclusions of the Committee was that there is insufficient detail for us to do an in-depth analysis, although we managed as best we could. Some of the problems that I will discuss include potential problems of cross-compliance, the possibility that the proposals might overcomplicate rather than simplify the CAP, and our main concern that it should not be a one-size-fits-all policy.
The backdrop includes the unprecedented weather conditions faced by UK farmers this year. We started with a drought that then became the wettest drought, followed by a late harvest in which many crops rotted in the ground, and our current potato crop is virtually impossible to harvest. I recognise that not only the farmers in my community, but those across Britain and the whole of Europe, have suffered. That will affect falling farm incomes.
I am delighted to see the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath), in his place, and I welcome him to his new position. The Department for Environment, Food and Rural Affairs will not publish farm incomes until January. I shall certainly watch them closely to see what the impact has been. One study on the area of northern England in which I grew up—I am sure that it is not dissimilar to the area that I now live in and represent—shows that hill farmers’ incomes have fallen to £8,000, which is unsustainable.
Two challenges form the backdrop for the next round of CAP reform: food security and climate change. Those twin challenges were identified by the outgoing Labour Administration. The Committee conclusions state that we believe that the Commission should allow member states to tailor environmental measures to their local environmental and agricultural conditions. I commend successive British Governments’ approach; we have a raft of agri-environmental measures that place our farmers ahead of many other European farmers. I believe that our agri-environmental schemes, among the best in Europe, deliver meaningful year-on-year environmental benefits. The Committee concluded that those benefits must not be watered down or diminished by the Commission’s greening proposals.
I commend the hon. Lady on her introductory remarks to this debate. It is a good opportunity. I agree entirely with her comments about flexibility. We support the Minister in seeking to achieve that flexibility for UK farming, but farmers in other EU nations should not be allowed any sort of opt-out. That would add further inequality to the playing field that we are trying to level.
I absolutely take the hon. Gentleman’s point. It is essential that farmers in other European countries should catch us up. I will come to in-depth issues such as modulation in a moment.
I hope that the Minister will tell us where we are procedurally. I had the opportunity to visit Brussels last month, and I understand that MEPs have tabled about 7,000 amendments to the Commission proposals to reform the CAP. The agriculture committee in the European Parliament now has co-decision. It is vital that all of us with an interest snuggle up to MEPs of all nationalities and try to influence them to use that new power responsibly.
The European Parliament agriculture committee has set itself a deadline of the end of November for negotiating and voting on compromise amendments. Given the challenges that we face nationally—due to weather, falling incomes, rising fuel and feed costs—and globally, we must increase production significantly. We are asking farmers to do so by using both land and chemicals more responsibly, and by using less water.
Will the Minister consider the budget and procedure? The EU budget as part of the multi-annual financial framework proposes—I hope I am not being too controversial; I think we all agree that we must reduce overall expenditure on the CAP—that spending on the CAP will fall from 37% of the total EU budget in 2014 to 27% by 2020. It will still total €38.3 billion. I had understood that structural funds would undergo wholesale reform and would fall, but they are set to rise by 18% by 2020, to a total of €76.6 billion.
What will the impact be if we do not secure a freeze but move to annual budgets? What will the implications be for reaching agreement on the farm reforms if the debate on the multi-annual financial framework is delayed from November to December? The message that I am hearing loudly and clearly from farmers in my constituency—I am sure this is shared across the country—is that they need an element of certainty. They need to know what the reforms will be and they need sufficient time to implement them. Lead-in time is crucial.
The UK food system faces other problems. As I mentioned, prices are rising. I am told that food price inflation is running at 4%, but farm incomes are falling. We must grasp that.
Will the Minister say more about what will happen to the rural development programme for England? Is that programme bound up with the negotiations? Again, will farmers have an element of certainty?
I recognise that we have a new Minister and a new Secretary of State, but it would be helpful if the Minister set out the UK’s negotiating position. What discussions have been held with the devolved Administrations? Who are our main allies in the Council of Ministers and, just as importantly, the European Parliament? Will he update hon. Members on Commissioner Ciolos’s response to the original proposals and the British negotiating position? Does the Minister agree with the Select Committee’s view, which we set out clearly in our report, that the Commission
“should set the high-level objectives for the CAP and provide for flexibility of approach through delegating the details to Member States while ensuring that there are…safeguards to protect the competitive position of UK farmers”?
Does the Minister agree that the CAP is complex and burdensome? Will he agree to press for further simplification of the CAP? Does he share our concern that the proposals on ecological focus areas and the definition of “smaller farmer” will lead to farmers having a less clear understanding of the conditions with which they have to comply? Will he ensure that the policy is implemented and provides value for money for the British taxpayer?
What is the Minister’s response to the Danish bid for a rebate? Returning to the budget, will he confirm that the implications of the loss of the British rebate in the Blair negotiations are severe? The rebate was lost on the non-agricultural element, which, in the scenario I set out earlier, is due to increase, and the rebate that we kept is only on agricultural spending, which is due to decrease from 37% to 27%. The implications for farmers are very serious.
Will the Minister further ensure that the reforms to the CAP are coherent with the UK’s existing agri-environment schemes? Any greening requirement should take account of environmentally beneficial activities undertaken by a farmer under an agri-environment scheme.
To protect the competitive position of UK farmers, the Select Committee would say that modulation has gone far enough. In powerful evidence to the Committee, the national farming unions said that English farmers are already subject to a higher modulation rate, whereas continental farmers enjoy a higher direct payment rate. Obviously, if we are modulating to a 19% rate in England and 11% to 14% in the devolved Administrations, whereas most other EU countries are modulating only to 10%, the implications of the Government’s proposal to transfer money between pillar one—direct payments—and pillar two are extremely serious. Farmers told us in a previous inquiry that the higher rate of modulation creates unfair competition, and they advocated either equal rates or no modulation. DEFRA seems to argue that higher rates of modulation are needed in England to fund environmental stewardship schemes. How can the Minister convince hon. Members that, by doing that, we are not disadvantaging our farmers?
One of my main concerns is about the Government’s response to the CAP report, particularly to recommendation 28 that
“farmers currently in agri-environment schemes will receive no penalty for leaving…should either the design of or payments under those schemes alter as a result of ‘greening’.”
The Government response states:
“However, there is no legal basis for allowing farmers wishing to withdraw from their agreements ahead of the new programme (and before the five or ten years of their agreements has expired) and they would be required to return all payments received during the life of their agreements, plus interest, in the normal way.”
That seems flatly to contradict the Minister’s predecessor, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), who told the Committee that no farmer will suffer a penalty from the new greening measures if they have entered a new 10-year scheme. That is a real and present problem, because our farmers are under great pressure to sign up to new agri-environment schemes.
The hon. Lady is pursuing an important point, and I would be concerned if there was some contradiction, but does she agree that if protection is afforded by the Minister in the EU negotiations for those farmers who are in agreements, to ensure that they do not lose out and are not penalised, reciprocally we should expect them to continue in those agreements as long as they are not penalised? That is signally different from possible future schemes. We want people to continue in agri-environment schemes for the wider public good.
That is the case, but farmers who are coming to the end of a 10-year agreement now face the prospect of receiving no agri-environmental moneys. What should we recommend to each individual farmer who comes to our surgery or whom we meet at auction marts on a regular basis? What is our advice to them? Will the Minister give a commitment that they will not be penalised? My recommendation is not that they exit a scheme that is still running, but my request is for confirmation that if they enter a new 10-year scheme, which I understand the Government are encouraging them to do—farmers would currently benefit from existing EU agricultural moneys—they will not be penalised. That is precisely the response that the previous Minister gave. I am afraid that the Government’s response set off alarm bells.
There are a number of other issues that I, and I am sure the Select Committee, wish to flag up. We need to ensure that the reforms do not damage food security and that we do not, as a result of the greening reforms, take land out of food production. I do not think that is the Government’s wish, but it could be the consequence of the Commission’s reforms. We want assurance that this country’s agricultural sector will remain competitive and viable so that our farmers do not lose out to competition from devolved areas of the UK or other EU countries.
Will DEFRA set out more clearly how it will reduce reliance on direct payments, and outline the tools it needs to do so? I have absolute confidence in the ability of the British farmer to go out, match and compete with the best in Europe and the world, but if we are taking our farmers out of direct payments, we want an assurance that other EU farmers are also coming out of direct payments and that there is that elusive level playing field.
If the Minister can give us new ideas on how to make UK farming more competitive, that will be welcome. I hope he will reject the Commission’s one-size-fits-all policy. The Committee favours greater flexibility for member states to develop measures that are better tailored to local environmental and agricultural circumstances, and we believe that any greening policy should enable that to happen. We also advocate that the Commission limit itself to setting out the high-level objectives, thereby allowing member states to implement how they will apply on the ground in each country. We also make the plea that DEFRA must stop gold-plating the regulations—something first identified by my noble Friend Lord Heseltine. I commend the work that DEFRA has done through the Macdonald taskforce. We watch with interest to see precisely which regulations will be removed or renegotiated. However, when the new proposals come before the House to be implemented at the end of the process, we must not gold-plate them. We must have a categorical assurance from the Government—from the Minister today—that that will not happen.
We set out our concerns relating to crop diversification and the Government responded, so I think they are alert to them. There were also issues relating to the retention of permanent pasture and ecological focus areas. I have a particular concern, which is shared by those who represent upland farmers and reflected in the Committee’s conclusions, about the role of tenant farmers in agriculture. Will the Minister ensure that any negative impact of CAP reform does not disproportionately affect them? I welcome the Government’s response, which states that the definition should relate to active farming of land, rather than the type of organisation. I mentioned the potential exit. I urge the Government to take the opportunity to explain how the exit strategy will work for those farmers who are signing up to new agreements.
On the definition of public good, I have to mention—colleagues would be disappointed if I did not—the project in my own area, the Pickering pilot scheme, which enjoys funding from a number of sources. If the scheme works, it could be rolled out across the rest of the country. I therefore hope that the Minister will look favourably on that type of project, under the definition of public good, and that the negotiations will allow that to happen.
The reforms greening the CAP have to balance the twin challenges of food security and climate change. The absolute bottom line is that greening the CAP should not damage the competitive position of UK farmers. I hope the Minister will respond positively to the debate, clarify the Government’s response to our report on the issues I have mentioned, update the House on the proposed timetable, and give us an assurance that the CAP will be agreed before the end of the Irish presidency, allowing enough time for our farmers to prepare and have the certainty of knowing when the reforms will be implemented.
DEFRA has a big agenda: CAP reforms, common fisheries policy reform, bovine TB, dairy package and so on—I will not list them all. However, EU plans to impose new environmental regulations must not damage the very good work that our farmers have undertaken to green our land. I hope the message will go out that we are very European and very green, and that we will not allow the Commission proposals to damage the work that our farmers have done. There should not be a one-size-fits-all policy. We cannot expect farmers from Finland through Britain to Sicily to be tied down by rules that are too prescriptive. We hope that the Department will not compound that with gold-plating. I commend our report to the House.
I absolutely agree. In fisheries, the developments and techniques on maximum sustainable yield and how they are calculated and measured, with all their complexities, have come a long way. That should be the guiding philosophy of the common agricultural policy. The US has a statute that states that there cannot be overfishing beyond the maximum sustainable yield, and we could look at something like that at a European level. I accept what the hon. Gentleman says, but I am talking more about the implementation to deliver maximum sustainable yield in fisheries, how we could devolve management of that and how we could do the same for the common agricultural policy. We could set clear objectives to enhance animal welfare, biodiversity and environmental protection, but give individual countries much more scope to work out how best to achieve them.
I am interested in another area that has always struck me as a missed opportunity. The Committee took evidence on the natural environment White Paper proposals, which the Government launched soon after the election. Some of that evidence made it clear that putting a value on biodiversity and the natural environment was a powerful idea that had a great deal of potential. There were interesting proposals in the White Paper, but the big thing that held them back was the lack of funding to make them a reality and to make such a market a reality. A huge amount of money—the best part of 40% of the EU budget—is tied up in the common agricultural policy, but there is no really thoughtful, innovative policy in it. There are interesting ideas in the White Paper, but no money for them. Could we somehow marry the two and use some of that CAP money to make a reality of the natural environment White Paper?
Welcome to the proceedings, Mr Havard.
My hon. Friend did not hear my opening remarks when I highlighted the fact that funds under the CAP are going to the projects that he mentioned. Perhaps the Minister will clarify whether those will continue under the revised rural development programme for England and possibly the agricultural environment schemes as well. Does my hon. Friend the Member for Camborne and Redruth (George Eustice) agree that we heard powerful evidence that this could be achieved through private enterprises, such as water companies, which might be a better route and attract more investment?
There are a number of routes that we could pursue to bring this forward. My point is that there is a huge amount of money tied up in the CAP. There are funds, as my hon. Friend said, in pillar two. If we are serious about greening pillar one, we could try to transform it into a market, with state funds available to do that, to promote environmental schemes, so it could be almost a transferable obligation. The lettuce grower on the Cambridgeshire fens might choose not to participate. Another farmer might choose to participate in quite a big way, so we would get some critical mass. We would have wildlife corridors and make a genuine difference rather than making token gestures.
A lot of the proposals are probably beyond the scope of the CAP negotiations. It was ever thus. One of the big problems with the CAP is that it always tends to be about 10 years behind where it needs to be. It is now focusing on the environment when it probably ought to be paying, as my hon. Friend the Member for Tiverton and Honiton said, a little more attention to food security. However, I know there is room for negotiation and an understanding that greater flexibility needs to be included in some of the proposals. We should at least be arguing for them, and not be afraid of arguing for them just because we do not think that we have enough allies at this point.
Indeed. The hon. Member for Tiverton and Honiton (Neil Parish) spoke with expertise, as always. He described how we got here with the CAP, and spoke about the diversity of approaches to payments in the UK. That will be a major factor for the Minister as he tries to steer a way forward. The hon. Member for Tiverton and Honiton also spoke of his worry that his infatuation with the CAP and farming meant that the men in white coats would soon be coming. I assume he is not referring to officers of the Animal Health and Veterinary Laboratories Agency. He also referred to the madness of some of the Commission’s proposals, so there seems to be a running theme in his contribution.
My hon. Friend the Member for Glasgow North East (Mr Bain) widened the debate significantly and spoke with a great deal of expertise about the increasing speculation in food markets by those who, frankly, have never set foot in a field or run a farm—other than a health farm, so that they could have their limbs massaged alongside their profit margins. There is a world of difference between commodity trading by farmers to enhance their profit margins and pure speculation, which my hon. Friend mentioned, which lines the pockets of traders to the complete disadvantage of not only farmers, but consumers, because it is undoubtedly having an effect on prices.
My hon. Friend also talked about the overriding priorities that we should be focusing on: food security, food price stability and removing trade barriers. Removing such barriers will help the competitiveness of our UK farmers and improve the viability of those in developing nations. It will help us to tackle the global food supply and shortage problems. He talked about innovation and the priorities affecting food supply chains, and their role in climate change, as well as the big social justice issues that we often miss when we talk about CAP reform. He also reminded us specifically of the market distortions of CAP, and their impact on developing nations in particular—the reason we are trying to change it and move away from it.
My hon. Friend the Member for Bristol East (Kerry McCarthy), with a little instigation from me, introduced the concept of one-nation CAP reform, for which I thank her. The basic premise is simple: CAP reform is not only to do with farmers. It is to do with wider public benefits, and taxpayers have a prominent stake in it, as do consumers, NGOs and farmers. It must be a subject that inspires debate beyond the agricultural or food-processing community and this Chamber. My hon. Friend called for genuine environmental benefits, not greenwashing. I am sure that the Minister heard her, and I hope that that call is also heard in the European Parliament. It is a valid concern and brings us back to my initial point: let us have good reform, not just any old reform. One Europe-wide organisation, BirdLife, said that the rather purist original Luxembourg proposals
“would signal the end of any legitimacy of EU direct payments to farmers”.
I think we all agree that we need to avoid that result at all costs and explain to people the wide variety of reasons why it is valid to put those funds back into farming, not least of which is the environmental and wider public benefits.
The hon. Member for Camborne and Redruth (George Eustice), the closing Back-Bench speaker after a wide range of contributions, raised the issue of green tape, as opposed to red tape, and complexity. I agree with him that we need to find ways of simplifying things. He engaged with the detail of proposals and interestingly discussed the cap on CAP payments. That raises the question, for me, of what additional benefits in public goods for the taxpayer can come from very high-level payments. They might take the form of increased productivity on the part of the largest recipients of CAP payments. There is an increasing necessity to explain to taxpayers, day by day, why their money is being used as it is. We can do that, but we need, with the Minister’s help, to explain why it is a good use of money, and what extra we get from it, as opposed to large volumes of production.
The hon. Member for Camborne and Redruth also dwelt on the potential for greater regional management and subsidiarity, which is the direction under the common fisheries policy; I think it is slightly ahead of the CAP in that respect. It took a fair deal of persuasion to get where we are on the CFP, and NGOs, alongside fisheries people, did a lot of good work to articulate the fact that the approach could work scientifically as well as commercially. I think we will win in that case, and I hope that the process continues. Perhaps, some time in the future, we can reach the point of much more ownership, regionally and locally, among the farming communities, NGOs and others, of how we take things forward. Sustainability underpins all that is happening, and the scientific evidence. The hon. Gentleman also introduced the interesting concept, which raised quizzical looks between me and the Minister, of transferable obligations. That strikes me as having some similarities with carbon trading, which has advantages, but also loopholes and disadvantages. The concept is interesting, and worthy of further consideration.
The UK has long been in the lead among the more progressive nations on CAP reform. I am thankful for the leadership shown under successive Governments, in successive negotiations, including by my right hon. Friend the Member for Leeds Central (Hilary Benn) when he was Secretary of State. At the forefront of like-minded and progressive nations, he advocated strong reform of the CAP, to bring about enduring benefits for farmers, consumers, taxpayers and the environment from bold, ambitious, green reform—good reform.
I should take this opportunity to thank all the witnesses to the inquiry, which I did not do before. There is a long list, as the hon. Gentleman mentioned. On the point about negotiations under successive Governments, it is important to recognise that this is the first time that co-decision has rested with MEPs and the Council of Ministers. Like my hon. Friend the Member for Tiverton and Honiton (Neil Parish), I served in the European Parliament, for 10 years, and—this is a secret, so I know it will not go beyond this Chamber—for six months as a stagiaire with the Commission, so I have even more chance of being carried off by the boys and girls in white coats. I am concerned that we may we overlook this point: MEPs so often feel ignored and neglected, and among the 7,000 amendments there will be some sensible ones on which we can possibly do business. It is incumbent on us all to use whatever contacts we can, in the most platonic of ways.
The hon. Lady raises a strong point and is right. Although co-decision brings more challenges in negotiation, I welcome the fact that it is a great enhancement of democratic engagement beyond what has been referred to as the bureaucrats. It puts things into the hands of people who are democratically elected, and can speak up for their regions, including on international issues and trade. They can speak up for wildlife and farmers. We need to engage with and influence those individuals.
I was delighted that the head of the agriculture committee came to Westminster for a seminar, attended by various organisations, that brought us up to speed on the 7,000-odd amendments. He has his plate full, because he must work through the various Members who have tabled them and come up with his priorities, just as Ministers do. It is almost like adding a new but very democratic level to the previous tripartite arrangement. However, the hon. Lady is right that it gives an opportunity for a different means of influence. We should use that. Towards the end of the month, I shall be going out to meet European parliamentarians to discuss that very issue. I shall treat that as being as important as meeting the Commissioner.
We continue to believe that farmers should be supported by the Government for the public goods for which the market will not automatically reward them. As my hon. Friend the Member for Wakefield (Mary Creagh), the shadow Secretary of State for Environment, Food and Rural Affairs, has said:
“Labour wants CAP reform to encourage growth, a secure food supply and environmental benefits”.
As the Environment, Food and Rural Affairs Committee notes, those sometimes apparently contradictory aims can be difficult to reconcile, not least in the minutiae of EU negotiations, made more complex, as we have just heard, by democratic co-decision. However, we must reconcile them if we are to have good reform, not just any old reform—and especially not the old-style reform, which did not take us as far as we wanted. To do that we must have friends, and work with them, so I ask the Minister, as the hon. Member for Thirsk and Malton did, to update us on progress on the greening proposals of the more progressive, like-minded states—our friends, including the Danish and Swedish Ministers—and on the extent to which their influence is being felt among the clamour of competing voices, some of which may be arguing for a more retro approach to CAP reform, a “déjà vu all over again” approach of protectionism and old-style production subsidy. By the way, the accidental use of the imported term “déjà vu” in no way indicates any one specific nation that may advocate a less bold set of reforms.
What would be helpful is a letter of clarification. Perhaps I am misinterpreting the Government response, but when it so clearly states that
“there is no legal basis for allowing farmers wishing to withdraw”,
does that refer to an existing scheme or a new scheme that they are about to sign up to, which will then be an existing scheme from which they may wish to withdraw if the greener proposals are more advantageous to them? As I say, a letter clarifying that issue, which we could place in the Library, would be most helpful.
I am happy to give my hon. Friend a letter. Again—I am not trying to avoid the question—there may be some uncertainties at the moment, as we are discussing transition, a key issue, with the Commission. It is giving us all sorts of potential headaches in the administration of schemes. We have a limited time horizon, and we simply do not know at what point new arrangements will kick in and what those new arrangements will be. Until we know that, it is difficult to make longer-term plans. However, I will happily write to her and set that out if it is helpful.
The hon. Gentleman has grasped that we need to understand from the Commission what will and will not be acceptable. We need to know how we can make a satisfactory transition. I assure him and my hon. Friend that my intentions are to maintain that continuity in a way that is fair to everybody. I am not resiling from the difficulties; I am simply saying that we are trying to find ways of ensuring that that is the case.
To make it simple for the Minister, we want an assurance that he is saying what the outgoing Minister for Agriculture said: that farmers will be able to exit. I am detecting a change of position.
There is no change in position. I am simply saying that we certainly want to ensure that people are not penalised. However, we will not be happy if people enter stewardship schemes and then try to exit for no good reason when there is no substantive change from the new arrangements—if they simply say, “We signed up for 10 years, but we now think that it is in our interests to bail out after two,” for unconnected reasons. I will write to my hon. Friend and copy in the hon. Member for Ogmore to ensure that there are no difficulties in understanding. Perhaps I am not expressing myself well.
I never close my mind to anything. I am always open to a discussion, but the hon. Gentleman’s proposal is not that different—if, indeed, it is different at all—from something that the Commission proposed right at the start of the negotiations.
There are difficulties, but I am happy to have further discussions with the hon. Gentleman, because I never rule out proposals until I can see clearly that they are not in the wider interest. In return, I ask him to consider the potentially significant problems with artificially fragmenting landholdings or artificially transferring titles, which are not helpful things to encourage.
If there is a consensus among member states, it is that greening is too complex an issue on which to rush to agreement. I have already indicated that, in setting out the timetable, there are still wide differences in approach, and few support the proposals as they stand. It seems to me that there is still a lot of work to be done, and the negotiations need to continue. The one thing in the Select Committee’s report that I would take slight issue with is the implied criticism that Ministers and DEFRA have not been as active as we might be in Brussels on greening. I simply do not recognise that in the case of my right hon. Friends the Members for Meriden (Mrs Spelman) and for South East Cambridgeshire (Sir James Paice), who are the predecessors of the Secretary of State and me. They were very active in Brussels on CAP reform in general and on greening in particular. The Secretary of State and I are taking that forward and engaging at all levels. We are working with the Commission, the European Parliament and other member states.
My hon. Friend the Member for Thirsk and Malton enjoined me to cuddle up to MEPs. I do not know about cuddling up, but I do have conversations.