Groceries Code Adjudicator Bill [Lords]

George Eustice Excerpts

Tuesday 26th February 2013 Commons Chamber

[Mr Spencer]

I recognise that. I pay tribute to the hon. Gentleman, who has worked on this matter since before I became a Member. Perhaps that is something that the adjudicator could look at as we move forward. There is this ability to put a film between parties and cause an issue. That comes back to small suppliers, who supply the middlemen.

New clause 3 would cause the Bill to expire after seven years. It would be disappointing if it did so. Using the analogy of a football match, if we get to half time and the referee has not needed to issue a yellow card, no one suggests that we do not need a referee in the second half.

[George Eustice (Camborne and Redruth) (Con)]

We have had plenty of time to understand how supermarkets deal with their suppliers and it is precisely because of that that everyone who has looked seriously at this issue has concluded that we need an adjudicator.

[Mr Spencer]

I am happy to agree with my hon. Friend and I pay tribute to the work that he has done to bring the legislation to this point.

EU Fisheries Negotiations

George Eustice Excerpts

Tuesday 8th January 2013 Commons Chamber

[Richard Benyon]

My hon. Friend is absolutely right, and that is really important. I am not in the business of proposing restrictions for our vessels only to see vessels from other countries entering the restricted areas in our waters and fishing in a way that our fishermen cannot. We must have the matter agreed at European level, and I have already had discussions with my French counterpart on it. We will have further discussions to ensure that it is completely clear at every level that we are not imposing a restriction on ourselves that will not be recognised by other countries.

[George Eustice (Camborne and Redruth) (Con)]

I welcome the Minister’s success in getting the scientific evidence heard, particularly when it comes to haddock in the south-west. Why were the Commission’s original proposals so far wide of the mark, and why is it apparently so dysfunctional on the issue and so deaf to the evidence?

[Richard Benyon]

The issue of haddock in the south-west is a product of the situation that I mentioned earlier, whereby the International Council for the Exploration of the Sea simply examines one stock on its own. In most of the UK waters we have mixed fisheries, and there is a danger that we can—I have already used this expression in Committee today—make the perfect the enemy of the good. If we are tied to one species, in this case a “choke species”, it can result in more discards and worsen the sustainability of wider stocks. That was why we argued successfully for a reduction in the cut.

Groceries Code Adjudicator Bill [Lords]

George Eustice Excerpts

Monday 19th November 2012 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I welcome this Bill’s Second Reading. As Conservatives, we believe in free and fair markets, but we rigorously oppose the abuse of dominant market power, which is why the Bill is essential.

Before entering politics, I worked in the farming industry for 10 years. We were a major supplier of strawberries to a number of supermarkets, and I experienced first-hand some of the sharp practices that the Bill is designed to deal with. They ranged from forcing suppliers to use third party contractors, for things such as packaging and haulage, who would then charge suppliers more than the market rate. I experienced the retrospective clawing back of costs resulting from wastage on the shelf. Supermarkets would claw back not just what they paid, but the margin that they expected from a product. Growers were frequently forced to participate, often unwillingly, in supermarket promotions, and were expected to sell their produce for below the market rate.

I saw many instances of supermarkets rejecting stock when they had simply made an error in orders. That was a particular problem with the strawberry industry, because a supermarket buyer would place an order for a batch of strawberries, unaware that it would begin to pour with rain the following day. When it pours with rain, strawberry sales collapse and supermarkets are reluctant to take the orders that they have placed, so they do all that they can to find an excuse to reject batches of fruit that have been supplied to them.

I have been out of the industry for 10 years, and I thought that perhaps things had changed, but other practices have crept in. Only last year, I was talking to a supplier who explained that he was required to show his annual financial accounts to the supermarket as a condition of supply. Ostensibly, that is to check that the business is financially secure, but we all know that in reality it is to see what its profit margin is, and how much further supermarkets can drive it down into the ground without killing it altogether.

[Andrew Bingham (High Peak) (Con)]

The problem, as my hon. Friend sets out, is very serious—it is almost commercial bullying. Does he agree that that is why it is so important that the adjudicator can now receive referrals from third parties, such as trade associations and so on, to protect anonymity and stop future bullying?

[George Eustice]

I absolutely agree. One of the big improvements made to the Bill in the Lords was the extension of its scope so that that could happen—so that anonymous complaints could be made and so that whistleblowers and third party trade organisations could be involved in the process. The evidence we heard in the Environment, Food and Rural Affairs Committee made it very clear that many suppliers are incredibly fearful of the supermarkets they supply. They are conscious that it is easy for suppliers to be identified as there will sometimes be only a handful of them for a particular product line to a given supermarket. It is therefore very important that the Bill has that extra scope.

I also recently spoke to another supplier who told me about a problem that he had encountered with supermarkets putting him under huge pressure to fulfil the terms written into a contract and supply the volumes that he was no longer able to source due to bad weather or a crop failure. In negotiations, he was put under huge pressure by a supermarket to buy the product from abroad and sell it at a massive loss so that he could fulfil his contract. That is unacceptable behaviour. When prices change, supermarkets should also change their prices.

[Mark Tami (Alyn and Deeside) (Lab)]

Does the hon. Gentleman accept that it also happens the other way? I have come across cases in which supermarkets have turned around and said that they do not want an order any more at very short notice. The supermarkets have the power to say to smaller suppliers, “Take it or leave it, because we can go elsewhere and you cannot.”

[George Eustice]

I absolutely agree, and that is why the Bill is so important. Over the past 20 years, there has been huge growth in the power of a handful of very powerful retailers who have huge market clout and have, frankly, abused their power. If we want proper market conditions back, in which people are paid a fair market price for their goods, the Bill and the groceries code adjudicator will be vital.

Let me move on to the issue of the financial penalties, which have featured heavily in the debate so far. As my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural Affairs Committee, has said, our Committee concluded that there was a case for making those fines available to the groceries code adjudicator from the start rather than waiting for it to become necessary for another order to be introduced by the Secretary of State.

The question of fines is important and I agree with the Minister that naming and shaming might be adequate for some minor breaches, but I take issue with the claim that naming and shaming might be a more powerful deterrent than a fine. The British Retail Consortium might say that we should name and shame, because that is more powerful than a fine, but that is a bit of a clue. When the retailers say that what really scares them is naming and shaming, even though they do not want fines, the Minister ought to be a little more suspicious than she has been.

It is important to have an escalating scale of penalties. Why remove an important tool from the box? It would be possible for the Government to craft guidance on when a fine would be appropriate and what size that fine should be. It could stress that fines should be used sparingly and that other sanctions, such as naming and shaming, should be the preferred route. I think it is wrong, however, to rule fines out at this stage because of the question of what should happen if there is one persistent offender out of the 10 supermarkets caught by the groceries code adjudicator. What if that one offender, however many times they are named and shamed, sticks up two fingers to the adjudicator and says, “We really don’t care.”? That is unfair on the remaining nine, who might be abiding by the code, and it risks making the whole initiative unstable.

The groceries code adjudicator is more likely to succeed if the power to fine is there from the beginning and more likely to fail if it is not. For the adjudicator to work, we need to ensure that its introduction will change the behaviour of the supermarkets. It is not just about having investigations all over the place—we need people to be fearful of a fine, so that they moderate their behaviour.

There is a real problem in the serious mismatch between what a Minister might be told by the public affairs officers who work for the supermarkets and what she would experience if she was a carrot grower supplying supermarkets and dealing with buyers daily. The truth is that public affairs officers for the supermarkets will often strike a paternalistic pose and say, “It is not in our interest to upset our suppliers. We want happy suppliers,” and they will have pictures in their supermarkets of happy farmers’ children working out in the fields. It all sounds great, but the buyers have very different incentives that focus on margins, profit and exercising control over their suppliers. The Minister said that the market for supermarkets was fiercely competitive, and she is right. That is why my fear is that when Parliament’s back is turned, the incentives that motivate the buyers will prevail because it is ultimately their profit margins that they will seek to protect.

The possibility of third party complaints has been raised and is an important power. The industry has a part to play in this. Although it says that we need anonymity and that it is important for complaints to be made without the complainant being identified, the industry has to play its part in helping the supermarket adjudicator identify bad practices. One of the proposals that I have made to the NFU, which keeps telling me that it is under consideration, though I have not heard that it has been taken up fully yet, is the idea of what I have termed a farm-fair index. That would be based on a panel of 500 farmers and suppliers across a range of sectors. Each quarter they would be given a questionnaire asking a series of questions that measured the adherence of each of the 10 supermarkets to the groceries code. There would be a league table of the 10 supermarkets and they would be scored according to which of them abided by the code the most and which departed from it the most. If a particular supermarket was at the bottom of that league table for two consecutive quarters, an automatic investigation by the groceries code adjudicator would be triggered. That would be a good way of ensuring that vexatious complaints were filtered out. A broad panel—the same 500 farmers and suppliers each quarter—who could score the adherence of the supermarkets to their own code would provide an important tool to help the adjudicator identify bad practice.

In conclusion, I welcome the Bill. It is a positive step forward and will improve relations between farmers and their supermarket customers, but I wish the Government would take another look at the issue of financial penalties.

Common Agricultural Policy

George Eustice Excerpts

Thursday 1st November 2012 Westminster Hall

[Neil Parish]

I understand exactly where the hon. Lady is coming from, but looking at Scotland, dare I question whether the highlands and the bare rocks need the same payment as some land that can be farmed, such as grasslands? Averages of payment throughout Scotland are interesting. How I dare even suggest such things, I do not know—I do not want to get into a war with Scotland—but there are statistics and statistics.

We are at a crossroads, and at a place where Britain is well in advance of others, with regard to environment payments. We need to ensure that we can pay for those payments. I agree with my hon. Friend the Member for Thirsk and Malton that modulation is unfair to British farmers. However, I also know that the Treasury is not noted for its generosity, and if we do not modulate, we will not have enough money to pay for our stewardship schemes. If the Minister and the Secretary of State with responsibility for agriculture went cap in hand to the Treasury, saying, “We already receive £2 billion or £3 billion from the CAP, but we need more money from the Treasury to prop up stewardship schemes,” I suspect that they would be told in good Anglo-Saxon terms to go on their way. As we negotiate the new agricultural policy, we must ensure that those stewardship schemes are funded through it in some shape or form. We must be careful when we say that we will throw the modulation out with the bathwater, because that may not be the right way forward.

This debate is a great opportunity, and I wish Ministers well in their negotiations. The argument in Europe is always that we should have an agricultural policy for the whole of Europe and a budget to fit that policy, but in the real politics of the European Union, there is a budget for agriculture, and agricultural policy is then fitted to that budget. That is exactly what will happen this time.

We must get the best deal for our farmers and the environment. I wish our new Minister and the Secretary of State well in their negotiations with our European partners. We must be tough to ensure that we move our agriculture forward to competitive food production and a green agriculture policy, but we must not lose sight of the fact that in the end, much of the food that our farmers produce is also part of the green environment.

[George Eustice (Camborne and Redruth) (Con)]

Does my hon. Friend agree that a problem with a one-size-fits-all policy such as the CAP is that it is difficult to have policy innovation, because any such innovation is stifled by the need for negotiations between 27 member states? Does he think it might be better gradually to move to a system with a common agricultural policy with common objectives—safeguarding the environment, improving animal welfare, and food security—so that those policies are increasingly delivered on the ground by national Governments from their own budgets, and we do not recycle funds through the EU in the first place?

[Neil Parish]

Yes. My hon. Friend raises a good point. What needs to be brought in is not only a policy, but co-financing, because each member state would then pay for its own agricultural policy, and might not be quite so keen on throwing money away on strange projects, as some countries do. Olive oil is produced in Greece, and reindeer are supported in north Finland and Sweden. Wheat and barley are grown across much of Europe, and rice is grown in parts of Italy and Greece. It is difficult to support a policy and have one aim. It would be much better to ensure that member states had their own money. The downside of that is that we do not want the French throwing all its money into supporting suckler cows and beef production, and that highly subsidised beef then coming across the channel to compete with our beef, which may not be subsidised in the same way.

[George Eustice]

I completely accept that point, but does my hon. Friend agree that for any other goods, and in any other part of the single market, state aid rules, which the European Court of Justice enforces, prevent that from happening? It would be possible to have an agricultural policy with common objectives, but delivered nationally, with those state aid rules to prevent the sort of behaviour he mentioned.

[Neil Parish]

My hon. Friend has heard the phrase, “The law works for the law-abiding,” and we can be certain that the French would find every reason to distort the market in their favour, wait until that was challenged by the European Commission, and drag it through the European courts for years, so I am not as sure as he is that state aid rules will stop the French or anyone else distorting the market. We must be careful if we go down that route. State aid rules are a blunt weapon, and I believe the Anglo-Saxons in Europe conform to them more closely than those in other parts of the European Union. State aid rules alone will not be enough.

We must ensure that CAP reform is done in a way that does not distort the market further. We should green it, but have food production, and ensure that as we deal with farmers in this country, we have food production on the best land and increase it sustainably, but have conservation on our more marginal land. That is the way forward, and that is where we must be careful in our negotiations on the greening of the CAP. I look forward to Ministers doing a good job.

--- Later in debate ---

[George Eustice (Camborne and Redruth) (Con)]

Thank you for allowing me to speak, Mr Chope. I am conscious that I was not here for the opening of the debate. The title of the Select Committee’s report is “Greening the Common Agricultural Policy,” but more specifically the Commission’s proposals are about greening pillar one of the CAP. It is worth noting that supporting the greening of pillar one represents quite a significant departure from the long-standing British foreign policy position, which is that we should gradually phase out pillar one and direct payments all together and put our support into pillar two, so that we can have more tailored local and national support for environmental stewardship schemes.

My concern is that by going for the greening of pillar one, we will end up with what is already being called in some circles green taping—rather than red tape, we will have green tape. There will be quite bureaucratic and centralised diktats coming out about what farmers can and cannot do, which invariably will not have been thought through properly. We might lose the opportunity to achieve the more satisfactory long-term objective of removing pillar one altogether and having effective, well thought through countryside stewardship schemes. In recent decades, British Governments of all colours have led the way in developing some of the successful ones. The entry-level and higher-level stewardship schemes are held up as exemplars for others to follow. There is a danger that we will lose that momentum towards a more sensible CAP and end up reverting to and getting bogged down in, again, quite a bureaucratic process.

I shall highlight a few key problems that I see with some of the proposals. There is the idea that we should go back to set-aside. We moved away from set-aside 15 or 20 years ago because it was not working. The point was made by my hon. Friend the Member for Tiverton and Honiton (Neil Parish) that it is not always right to have just 7% of every farmholding set aside and not farmed intensively. The evidence is that if we really want to encourage wildlife, we should have wildlife corridors. Some parts of the country where the agricultural value of the land is lower might opt to do more of these environmental schemes—

[Neil Parish]

My hon. Friend is absolutely right about the set-aside argument. Do we get value for money in greening with set-aside, counterbalancing the fact that we are taking out a lot of land that could be used for food production? There is a moral duty to produce food as well as taking land out for so-called environmental set-aside.

[George Eustice]

That is right. The environmental stewardship schemes in pillar two are much more proactive about encouraging wildlife and improving biodiversity, whereas the problem with set-aside is that it becomes something that has to be done and everyone finds all sorts of ways around the rules so that, for instance, they can graze a particular type of goat on the land and get away with it. There is an issue with the bureaucratic system of set-aside.

My hon. Friend the Member for Tiverton and Honiton also alluded to the crop rotation requirement. Anyone who has been a farmer, as I once was, knows that crop rotation is a good thing. A farmer who farms without rotating their crops, particularly in the arable or vegetable sectors, will soon run into problems, such as crop disease, which causes a great deal more expense than any subsidy would have been worth. I question the value of insisting, in the latest proposals, that each farmholding must grow three crops. It proves that whoever came up with the idea is not a farmer; they are a bureaucrat. One could grow three brassicas—cabbage, oilseed rape and cauliflower—which would satisfy the three-crop rule, but the farmer would have clubroot disease in all those crops within two or three years.

I understand why some would regard the proposal to cap subsidies to individual farmholdings as superficially attractive; they think, “Why should we give a huge amount of money to very large farms?” However, no one has thought through the likely impact. Large farmholdings might break themselves into small farmholdings to get around the rules. There would be all sorts of avoidance problems, which would need a suite of anti-avoidance measures and people to ensure that farmers did not break up their holdings to circumvent the provisions. There would be major problems with that, so one must question what we are trying to achieve. If an objective of the CAP always has been and should be to promote food security and competitive farming, why would we want a policy designed to undermine the most productive and efficient farms in Europe and reward the least efficient? Although I understand why some would find the proposal superficially attractive, it is a mistake.

[Huw Irranca-Davies]

What are the hon. Gentleman’s thoughts on the proposal I floated earlier? Farms receiving the very high CAP payments are on the most productive land, but they need to be more productive because we face food security challenges. The very high CAP level should recognise additional investment in innovation, targeted farming, research and so on, so that it was based not purely on production volume, but on increased production.

[George Eustice]

That is an interesting proposal, which I would like to look at more closely. I have previously argued that we could develop a system in which environmental obligations became transferable in some regards. The lettuce grower on the Cambridgeshire fens, who has a model that getting the single farm payment is irrelevant to, might forgo the payment, which could instead go to a farmer on more marginal land in, let us say, Wales—I do not want to offend anyone with a Welsh background. Such schemes could therefore receive more investment.

A problem that we all recognise in the EU negotiating process, which I alluded to in my question to my hon. Friend the Member for Tiverton and Honiton, is that rather than going into negotiations saying, “What is the best possible agricultural policy we could design?” and “What is the optimum policy we could pursue?” we are always hamstrung by voices in DEFRA and the civil service that say, “You can’t do that because Denmark won’t agree. If you advance this idea France will reject it, and we will lose our allies in Poland and eastern Europe.” Everything about agricultural policy ends up being seen through the prism of an incredibly complicated 27-way negotiation, which frankly leads to a poverty of vision of what our agricultural policy could become. We instead plod along like a blinkered horse, trying to achieve what we can. It is all about the lowest common denominator, rather than genuinely successful and thoughtful policy. Pillar two is a classic case of that.

[Mr Dai Havard in the Chair]

In the last Parliament, our Committee, before I was on it, criticised the Labour Government for arguing that we should phase out pillar one and have pillar two only, because it was not achievable and undermined our negotiating position. If we do not even articulate what we believe because we are concerned that doing so will undermine our negotiating position, there is a problem.

I would like a much looser CAP in future: a common policy about common objectives. We could set common objectives for improving animal welfare, safeguarding the environment, enhancing biodiversity and promoting food security. There could be much looser policies and arrangements centrally and much more decision making and responsibility for implementation devolved to national Governments.

[Neil Parish]

This will tempt my hon. Friend further from the topic of debate, but would a looser common agricultural policy, or an agriculture policy, be part of a new relationship that we might negotiate with Europe?

[Mr Dai Havard (in the Chair)]

Do not be tempted too far, Mr Eustice.

[George Eustice]

It might be, if we get to that point, but I do not want to be distracted by that now.

There is potential and it is not unrealistic, because that is the direction of the common fisheries policy. The Commission, under Commissioner Damanaki, is buying into ideas that will effectively lead to a partial repatriation —of sorts—of the management of individual waters and fisheries only to those groups of countries that share that fishing water. That is a sensible plan.

[Huw Irranca-Davies]

The hon. Gentleman has graciously given way. He tempted me in because I was the Minister who oversaw the instigation of that regionalisation of the common fisheries policy. It is a good approach, but it must be balanced against the imperative to achieve sustainability of fisheries in sea areas. In the same way, we are talking about the long-term sustainability of agriculture and getting more out from less in. There cannot simply be devolved management and let-loose chaos; it must be well planned and managed by individuals and organisations on the ground or on the seas.

[George Eustice]

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?

[Miss McIntosh]

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?

[George Eustice]

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.

Common Agricultural Policy

George Eustice Excerpts

Thursday 8th March 2012 Westminster Hall

[George Eustice (Camborne and Redruth) (Con)]

It is a pleasure to follow the previous speakers.

I am a member of the EFRA Committee, and I agree very much with many of the points made by its Chair, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh). In particular, I agree with her criticism of the current direction of the reforms. The Committee is a broad Church, however, and it would probably be fair to say that I am less critical of the stance the Government have adopted, for the simple reason that all British Governments face the same problem on the CAP: ultimately, the policy is not their decision.

There are complicated negotiations between 27 member states, so our negotiating stance constantly comes up against opposition from other countries. That makes it quite difficult to set out a clear view of what we want to do; indeed, the previous Select Committee criticised the Labour Government for wanting to see everything in the long term done in pillar two, and for wanting pillar one to be phased out. The Committee said that it was unrealistic to suggest that in negotiations and that it was wrong for the Government even to have a vision of where they wanted to end up.

I disagree, and farm policy is a good example of what happens when we stop making decisions at a national level and subject ourselves to the spirit-crushing process of endless negotiations with 26 other countries. We end up with a poverty of vision right across Europe about what a good agricultural policy should look like, and I will say more about that in a moment.

[Roger Williams]

I thank the hon. Gentleman for making that point, but does he not agree that if we are to have a common market and a trade in food between our nations, we need commonality and a common agricultural policy?

[George Eustice]

As I will say later, we need common objectives, but not necessarily a common policy. We also need clear state aid rules, as we have in other sectors. In that way, we can have a proper functioning single market and protect it, even though we do not have a common uniform policy across Europe.

The most important point about the proposals on the table is that they are a backward step for the CAP. The aim was to simplify it, and simplification has been the buzz word for many years, but the proposals will make it more complicated. As the Chair of the Committee said, we are effectively seeing a return to set-aside, with suggestions that 7% of people’s land should be set aside. At a time when food security, which should be a key objective of a common agricultural policy, is a growing issue, that is a step backwards.

I also object to the cap proposed on payments to farmers. If we want to encourage farmers to become less dependent on subsidies in the long term, we need to support consolidation and more efficient farms. A cap on payments would force farmers to break up holdings into collections of smaller holdings so that they still qualify for the subsidy, but that makes no sense. If we want a more efficient agricultural industry, why penalise the larger, more efficient farms?

There are some ludicrous things in the proposals. For instance, in an attempt to achieve crop rotation, there is some suggestion that farmers grow at least three crops to qualify for a subsidy. We can tell that the proposal was written by people who do not understand farming, because insisting on growing three separate crops will not necessarily bring the benefits we seek from crop rotation. For instance, somebody might grow cabbages, cauliflowers and oilseed rape to ensure they have their three crops, but those crops all come from the same brassica family, and are all subject to similar diseases, so a farmer who grew them would soon run into serious problems on their land.

What should a new CAP look like? We should start moving towards something that is about common objectives, rather than a unified common policy. The CAP should have key objectives, such as enhancing biodiversity, improving animal welfare and delivering food security. However, we should then give national Governments much more freedom to innovate, try new policies and adopt approaches that work in their countryside, rather than trying to have a uniform approach that works from Scotland all the way down to Greece, which is clearly difficult to achieve.

Allied to that, we would have a clear set of state aid rules that were specific to the agricultural sector, just as we have clear state aid rules for the single market in every other sector. Such rules would prevent, say, France from subsidising its farmers more than the UK Government and thereby putting our farmers at a disadvantage. Provided that we got those rules right, we could protect a single market in agricultural produce.

The key benefit of such an approach is that it would be more fluid. We would be able to hold the UK Government to account and say, “Why aren’t you trying this great new idea that is working so well in France? Surely, it would work here.” Instead, the best we can do now is to say, “How many meetings have you had with Poland to try to outmanoeuvre France?” That is not a good way forward.

When we make such proposals, people immediately think, “That’s a good idea, but it’s not realistic in the current time horizon.” I have heard that, too. Indeed, when I put these ideas to the Secretary of State last week, the answer was that they were ahead of their time, which is a flattering way of saying, “No, we’re not going to do that.”

[Huw Irranca-Davies (Ogmore) (Lab)]

The hon. Gentleman has great experience in the European Parliament, and I want to put one point to him. What he describes is already the direction of travel in the common fisheries policy, where there is a strong push from the UK Government, as there was under the previous Government, to move towards a more dynamic, regional-management approach, with much greater subsidiarity and local decision making, albeit in an overall framework. The hon. Gentleman may be ahead of his time on this issue, but practice in other areas is catching up with him.

[George Eustice]

The hon. Gentleman is right, except that I was not actually in the European Parliament. I was a candidate in the 1999 European elections, although unsuccessfully—and for a different party, I should add. However, I have followed these issues closely, and the hon. Gentleman is right. The EFRA Committee has, separately, been looking at the common fisheries policy, and there are proposals on the table not only to have a common framework and common objectives, but to give much more devolved power to groups of national Governments so that they can manage their own waters. It remains to be seen whether we get those reforms through, but the Government have been quite successful in getting the Commission to adopt them. That also shows the difference a different Commissioner can make. In Commissioner Damanaki, we have someone who is much more open to such proposals in relation to the common fisheries policy.

I want to question the idea that it is impossible to do what I am talking about. Alongside taking evidence on the CAP, the Committee has been looking at the natural environment White Paper. The striking thing about the CAP is that we hear people say, “We want to green pillar one in a flexible way. All this money is going into it; we need to get some public good out of it and green it.” However, they do not really know where to start, and the current proposals have run into a bit of a muddle.

On the other hand, we have the natural environment White Paper, which everybody says is very coherent and really well thought through, as well as having lots of interesting proposals about valuing natural capital and creating markets in which we can mitigate and offset environmental damage in some areas through improvements in others. The problem is that there is not enough money to bring life to those ideas.

Is it really beyond the wit of man to connect the two? Let us take some of the principles from the natural environment White Paper, link them to the funding in pillar one and see if we can make that work. What would that look like? It would mean replacing the single farm payment with some kind of market in transferable environmental obligations. A farmer on the fens who grows lettuces, and who does not really require the single farm payment for his business model to work, might say, “I don’t want to set aside 7% of my land. I don’t want to get into that. I just grow lettuces, and that’s my business model.”

In contrast, a farmer on marginal land in Wales, for instance—I have nothing against Wales, and there are patches of good soil there—may decide to opt into environmental obligations on a larger scale. That can bring benefit, with the establishment of wildlife corridors, and with critical mass in some areas for improved wildlife habitats. That might actually work, rather than a piecemeal approach with 7% of every farm’s land set aside.

Such a transferable obligations system could also be extended to issues such as animal welfare. For instance, in the case of livestock farmers who pursue less intensive systems that are better for animal welfare, rather than having to fight in the market for recognition for their extra work to improve animal welfare, they could be given that recognition by the Government; we could make them eligible for payments for which those who pursue intensive systems would not be eligible. There are lots of interesting things that could be done with such a system of transferable obligations.

As for pillar two, the Select Committee Chair mentioned the problem of its needing to be co-financed; sometimes the Government have been reluctant to buy into those things. To my mind, the answer is perhaps to bring back even greater control of pillar two, so that it does not become co-financed, but we do not send the money to the EU in the first place, and then have it come back with strings attached: in fact, we try to finance that as an agricultural fund that focuses on several key areas. Developing farm competitiveness is an important one that we should try for.

I also agree with the point that was made earlier about encouraging new entrants into farming. There was an interesting project, piloted in Cornwall, called the Fresh Start project, which aimed to encourage new entrants to the industry. The average age of farmers is incredibly high. I think that two thirds of farmers in Europe are over 60, which is a shocking figure. We need new entrants. The Welsh Government have also started interesting schemes to encourage new entrants to the industry. Pillar two could focus on improving competitiveness and encouraging new entrants, as well as keeping going with schemes such as the entry level and higher level stewardship schemes.

Those two policies, to return to what I said at the outset, prove the point that if a national Government are given the scope, freedom and head room to think through what a good policy looks like, they can get it right. The ELS and HLS are good examples of that. Britain is a trailblazer in that respect, because we have been able just to do the right thing. We have not had to go behind closed doors and haggle about it with 27 other countries. If we could do that in more areas of agricultural policy, our farming would be stronger.

[Ian Paisley (North Antrim) (DUP)]

At the outset, I thank the hon. Member for Thirsk and Malton (Miss McIntosh) for the way in which she introduced what is one of the most important subjects Parliament deals with—the production of food. It is one of the nation’s most important industries. It has been taken for granted too often, and for too long, and cast as a secondary issue, but it is crucial, and it is right and proper for the House to have the opportunity to debate it.

I think that we are all on a common page, if not a common agricultural policy, and that page is headed “The system doesn’t work.” As the Irishman said: “But you wouldn’t start from here”; but the trouble is, we are here. We are at this point after years of implementation of a policy that was initially flawed anyway, and which created huge butter mountains and a waste of food. There is virtually nothing we can do about where we are now. Those who suggest that we can suddenly end this, and everything will be all right for the industry, are just barmy. That is just silly. If anyone were to say that about any other sector of the economy, they would realise how daft it sounds. From time to time, people cry out, “What about New Zealand? It did it.” It took New Zealand nearly 20 years to get things right, and there was a lot of pain in the process. Those who advocate moving away from subsidised agricultural production need to get a grip, and to make comments relevant to the needs of the sector.

[George Eustice]

Does the hon. Gentleman recognise that when New Zealand abandoned its subsidies it substantially devalued its currency at the same time, so that farmers lost subsidies but gained a dramatic increase in price for their produce?

[Ian Paisley]

That is an interesting debate in its own right; there could be a good examination of what has happened in countries that have tried to reform their agri-food sector. The New Zealand question is not a debate for today, but we should always have it at the back of our mind.

No matter what we try to do, it will be pain for someone. Most importantly and obviously, it will be pain for the farming community. We must ask ourselves whether we want to put that community through pain. Let us put the matter in perspective: agri-food production in this nation is a £20 billion industry. Milk production alone represents more than £8 billion in the industry. Good, clean, traceable food, that the consumer wants to put into their body, is a positive and beneficial product. If we start to mess about with it and ruin the stability of the industry, we must be careful to understand the consequences. The production of food that the public do not feel comfortable with, or about whose production they do not feel confident, will destroy a positive and powerful economic factor for our nation. We always need to bear that in mind when we deal with agriculture; because it goes by the way, which sickens me. We need to get a grip on the fact that agri-food production is, as I said, one of the most important industries, if not the most important, in which this nation is involved.

In Northern Ireland, agriculture is a key driver in our economy. Indeed, the agri-food sector represents approximately 20% of the total private sector employment in Northern Ireland. The food and drink sector contributes £3.2 billion to our little country’s national turnover. At a time of economic difficulty, agri-food production is in a state of growth, whereas other sectors of the industry are either stagnant or in minus figures. The sector is positively growing. Agri-food production will be a crucial factor in rebalancing our local economy away from total reliance on the public sector. The key to achieving those goals is driving an export-led growth in the agri-food sector in Northern Ireland.

Given the importance of the common agricultural policy to the Northern Ireland economy, and its cross-cutting nature across the majority of Government Departments, including not only Agriculture and Rural and Development, but Enterprise, Trade and Investment, and Environment, a formal agreement should be reached at Northern Ireland Executive level on how the reformed common agricultural policy will be implemented in Northern Ireland. The implementation of the reformed policy must deliver the objectives of the draft Northern Ireland Executive programme for Government. In bringing that about, it is vital that our Minister, locally in Northern Ireland, should up the game and engage directly with the ministerial team here, nationally.

Let us face it, the Minister present today, and his team, will negotiate the CAP package, no matter what form it takes. I want him to be on my side, and to argue the case for Northern Ireland. He will know that case, and how it affects the part of the United Kingdom I come from, if our Minister in Northern Ireland ups the game and engages more directly with him. I hope that that happens. The challenge is a serious one, because time is against us. The clock is ticking. The Minister needs to know all the permutations and ramifications of each decision that he will take at the CAP reform meetings, and how they will affect my part of the United Kingdom. There is a duty on politicians now to lobby hard, and that is why I welcome the debate. It sets some pretty important touchstones, which need to be recognised, and I think are being recognised, to a greater or lesser degree.

We also need to ensure that Northern Ireland gets its fair share of the UK CAP budget. It is a point that we need to negotiate directly. I do not want to do that against Scotland’s interest. Scotland has every right to make its case too—as does, of course, the great Welsh Principality, which has to be saluted at every opportunity in this place. We must ensure that there is regional flexibility within the United Kingdom. I understand that there could be a degree of flexibility across the regions of Europe. I want flexibility in the UK, so that the Department can ensure that it shares—parcels out—the money fairly and appropriately, understanding the unique circumstances in all parts of the UK. As a politician, I believe that the draft reform proposals outlined by the European Commission are deeply flawed, because they fail to address those peculiar, necessary needs and could have a major negative impact on our major industry in Northern Ireland, which would be proportionately much more significant than in any other part of the UK.

People should stop for a moment, pinch themselves and imagine a United Kingdom economy that does not have an agri-sector. If they do that, they will realise that without that sector we would be bereft of a culture and a way of life for many people and bereft of a powerful, important industry which, as I have mentioned, contributes a £20 billion value. We need to do that to recognise what is at stake and to ensure that we go out there and campaign, lobby for and achieve a settlement under the CAP that is beneficial for the whole kingdom.

The Commission’s CAP proposals will cause a huge redistribution of moneys within Northern Ireland, from lowland to hill farmers—similar to the constituency of the hon. Member for Thirsk and Malton. That will impact greatly on those who are able to make food production sustain a community and sustain a way of life. Under those proposals, they will lose out and will be disincentivised from becoming competitive. We have to put the finger on that and recognise that the policy drivers that Europe is pursuing are upside down. The speed of transition is too fast and will not allow adequate time for the industry to adjust from a 30% flat-rate payment to a 40% transition in direct payments in one year. That is too much. A slow, proportionate transition period is ultimately required.

There should be regional flexibility within the 27 regions that comprise Europe, and internal flexibility. At regional level, it is important that Northern Ireland receives its fair percentage. I mentioned earlier fair distribution between pillar one and pillar two. It will be difficult for us to argue for fair distribution when the Government’s policy appears to be a reduction in CAP money anyway, but the money that we get must be fairly distributed, when we get it, between the two pillars. I will not go into detail in respect of my views on the active farmer, but I agree with the points made by the hon. Member for Banff and Buchan (Dr Whiteford), who made that case exceptionally well.

The 7% set-aside rule is nonsense in light of the increasing global population and the increase that we have witnessed in westernised eating habits. In that regard, I should like to reflect particularly on the dairy sector, which is worth more than £8 billion to the UK economy and employs more than 80,000. We are the third largest milk producer in the European Community and the ninth largest in the world. Our products can be found in 98% of UK households.

Jim Begg, the director general of Dairy UK, wrote a pamphlet that has been distributed called “Action for growth”, in which he deals with how the CAP should address the needs of the milk producers:

“A requirement for ecological set aside of 7% of arable land will reduce the area available to dairy farmers for feed crops. Maintenance of permanent grassland will also restrict the ability to increase the production of home grown feed. The termination of historic payment calculation method will disadvantage dairy farmers in particular.

It is imperative that the UK ensures the distribution of payments in the EU and the UK does not discriminate against UK farmers or undermine their productive potential.”

A hearty “Hear, hear!” to that. The milk industry needs that security of tenure. We should not be doing something that upsets an already difficult market, in which prices can be difficult.

I make my comments as a representative of my constituency, in which the single largest employer is the poultry sector. One factory alone employs 1,100 people. Unfortunately, today it announced 19 redundancies, but in the scale of things—in the current economic climate—that could, of course, have been an awful lot worse. Poultry production is incredibly successful in Northern Ireland, but the fact that it, too, is feeling the squeeze at present and is having to announce re-jigs and evaluate job-shares makes it clear that even the most successful parts of our industries face a crisis at present. Heaping CAP reforms on such businesses does not address their real, genuine needs and is a flawed way for us to proceed.

--- Later in debate ---

[Barry Gardiner (Brent North) (Lab)]

It is a pleasure to speak in the debate, Mr Weir, particularly under your knowledgeable chairmanship on this subject. I pay tribute to the Chair of the Select Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), for obtaining the debate.

I do not wish to go over ground already outlined by hon. Members this afternoon. They have made many serious and important points, most of which I agree with. I want to restate a few basic facts, however, and €57 billion is one of them—40% of the entire European Union budget. This is a fix such as no heroin junkie has ever been on, and it is difficult, in the words of the hon. Member for Tiverton and Honiton (Neil Parish), to wean farmers off it, sometimes for the good reasons that he outlined.

The CAP provides support in three distinct elements to agricultural producers and rural areas. We should not forget that we are talking about not just farmers, but other land managers and the whole rural community. The three elements are direct income support, market measures and the rural development programme. As we have found, the key point is that the RDP must be co-financed, and we will return to that bugbear.

Given the enormous subsidy, is it not appropriate to consider what the CAP’s objectives are? Our Committee heard five objectives, the first of which should be

“to maintain or enhance the EU capacity to produce safe and high-quality food.”

The second objective should be to enhance

“the competitiveness and viability of the EU agricultural sector”

because a

“competitive and viable EU agricultural sector is the key to producing more while having less impact”—

detrimental impact—

“on the environment and to reducing farmers’ reliance on income support from taxpayers in the long-term.”

The third objective should be

“to ensure the sustainable management of the EU’s natural resources, biodiversity and landscapes, recognising that farmers are the managers of over half of the…land area”

of Europe. The fourth objective

“should be to help to maintain agricultural activity in areas where it delivers significant public benefits, such as the maintenance of biodiversity and cultural landscapes”

such as those that were mentioned earlier. However,

“the CAP should not aim to deliver an acceptable standard of living to every farmer in the EU through income support alone”—

that was a key finding by the Committee and is in the report—and

“farmers should be encouraged to look to the market for their”

fundamental returns.

The aim of this CAP reform should be to enable farmers to achieve the sustainable intensification that is required to meet the global challenge of feeding a world population that will rise from the 7 billion that it reached just a month ago to the 9 billion that it will reach in 2050, but to do so without destroying the very things that it is predicated upon: our biodiversity and our natural landscapes. The Government’s position on CAP reform must be coherent in its strategy for ensuring food security, and DEFRA must decide—I am keen to hear from the Minister on this point—whether and, if so, how it intends to implement the previous Government’s “Food 2030” strategy, taking into account the recommendations from the Foresight report on “The Future of Food and Farming” by John Beddington and co. and the UK’s position on the future of the common agricultural policy.

In the interests of fair trade and the long term, the EU should argue more strongly for a recognition of standards of production in trade agreements, including animal welfare, the use of water and greenhouse gas emissions. That is essential to achieve the global shift towards sustainable intensification that “The Future of Food and Farming” report recommended.

The Commission’s proposals to green pillar one have been at the heart of the discussion throughout Europe and our debate today. There is a suspicion that that was a sop and a way to try to justify the subsidy and support. The proposals did not receive strong support from any of our witnesses. There was concern that they would make the CAP more complicated to administer, as other hon. Members have said, and that they would confuse the logic of the two-pillar structure.

[Jim Sheridan in the Chair]

Several witnesses expressed concern about expanding pillar two, and that is DEFRA’s alternative to the expansion of pillar one. The central issue seems to be the difficulty of achieving political support in Europe, and I want to tell a story about what happened when I was in Europe just last week. I had gone over there, as had the hon. Member for Thirsk and Malton, to join in the parliamentary debate that the Commissioner with responsibility for reform of the common fisheries policy had called. I spoke to several members from throughout Europe and tried to persuade them of the UK’s good ideas on CFP and CAP reform. I was told universally that although some of those ideas were good, for God’s sake, I should not let the British Government suggest them because they are the most toxic brand in Europe at the moment and suggestions will not garner political support if they come from the UK.

We must consider seriously how the Government have engaged in Europe, and how they have got themselves into a position when even good ideas will not be accepted because we suggest them. Perhaps we should get other people to suggest our good ideas, and then take a back seat.

[George Eustice]

If the UK is putting forward good ideas and they are ignored because they come from us, the failure is on the part of those countries that adopt that stance. Clearly, if an idea is good, they should adopt it.

[Barry Gardiner]

Of course, in principle, we should all work from a basis of fact, science and what is rational and reasonable. The hon. Gentleman and I are totally at one on that, but we are both politicians as well, and we know that alliances are important in politics. We know that sometimes the issue is not having the right idea or the best idea; it is stacking up the votes to get that idea not only on the table, but accepted. That is what the Government have singularly failed to do. They have singularly isolated themselves in Europe, and that is a real problem for our farmers, because many of the ideas are good.

Another aspect is how, as the hon. Member for Tiverton and Honiton said, we go about weaning farmers off the subsidies of pillar one. If we are to do that by 2020, or shortly thereafter—perhaps the Minister will clarify when—it sounds a bit like saying, “Make me virtuous Lord, but not yet.” In this round of CAP reform, we should try to get the Commission to set a date for when it will happen. Without a deadline, hon. Members know as well as I do what will happen. Come 2020, we will all be in the same position, saying, “Yes, make me virtuous Lord. Let us wean ourselves off the subsidy, but in 2027, or 2032.” We must bite the bullet. We cannot continue with this junkie habit, because it is damaging the prosperity of Europe as a whole.

It was interesting that one witness told us that the problem with shifting the policy to pillar two was that, when the opportunity was offered to member states with voluntary modulation, all but the UK ignored it, because they did not want to put additional money into match funding and co-financing. In principle, we may be in favour of co-finance in pillar two and putting more into it, but the political reality is that many do not have the money to do so. Another witness told us that expanding pillar two risked creating a very uncommon market. New member states cannot afford their share of the finance, so they cannot draw down European money.

I think we have the right nostrums. We should move away from pillar one and into pillar two, for all the reasons that hon. Members have outlined. However, regional flexibility is a problem. With pillar two, as Members have said, there is a problem of how to ensure, from Finland to Greece and Romania to Ireland, that the measures adopted are appropriate. Inevitably, as we all know, countries try to fix things in their own favour. If it is simply a smorgasbord created by an individual country, that smorgasbord will be arranged to give maximum benefit, advantage and subsidy to the country’s own farmers. Therefore, what is needed within Europe is recognition that although a regionalised, smorgasbord approach is the right one, parity must be ensured through something that we seem to have left out of this debate: sound science.

We believe in evidence-based and science-based policy. We must ensure that the benefits to the environment and the benefits that each country would bring to that regional smorgasbord are established on some sort of points system to show that they are equivalent to what other countries are offering, and therefore that the financial reward that follows from them is likewise rewarded. That is not new to DEFRA. It is already doing that in the UK national biodiversity strategy. It is considering different points for different elements of biodiversity. Why can we not propose that in Europe for adoption there? It is right to move towards a more regional approach and from pillar one to pillar two, but we must do so on the basis of sound science and public good, which must be assessed independently to ensure genuine parity.

Water Industry (Financial Assistance) Bill

George Eustice Excerpts

Tuesday 6th March 2012 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

Let me begin by welcoming this Bill. We all know the historical causes of high water bills in the south-west. They go right back to the time of privatisation, when insufficient account was taken of the lack of sewerage infrastructure and the pressure that this would put on companies such as South West Water to provide such infrastructure in the future. In Cornwall and the south-west, we also have just 3% of the country’s population looking after some 33% of the coast.

I have always argued that we have spent way too long in recent years talking about the problems and not enough time talking about the solution. I am delighted that we now have a solution to the unfairness of high water bills in the south-west, through the measure in this Bill to deliver a £50 discount on all household bills. I pay credit to the Minister for all the work that he has done to make that a reality. He has managed to deliver a policy where the previous Government were unable to do so. I remember talking to Labour candidates even at the last general election who said that although there was a problem, nothing could really be done about it. We have proved that something can be done, and where there is the political will, there is a way. I hope that the Minister does not feel that Devon and Cornwall MPs have lobbied him too ferociously on this issue. I feel there were times when he saw a Devon or Cornwall MP approaching him that his face dropped somewhat, as he knew the subject that was up for discussion. I hope that has not put him off the counties of Devon and Cornwall, because this move is very much welcomed by everybody there.

There has been some discussion about whether the £50 rebate is enough. However, it is important to remember where we were just a year ago. There was not going to be a Government-funded discount; in fact, the discussion at that time was very much about what might be achievable through a national social tariff. That would effectively mean having a pot of money funded by all the water companies, at the expense of water bill payers across the country, with resources allocated on the basis of affordability. That would have disproportionately helped those in the south-west—it would have helped some in other parts of the country as well—but it would have been paid for by water bill payers across the country. The decision that the Government have finally come up with—to find public money to fund the discount, so that it does not cost water bill payers elsewhere in the country money—is a sensible solution. Importantly, it separates the historical unfairness of high water bills in the south-west from affordability, which it seeks to address through the company social tariff. That is the right approach, and we should welcome it. We in the south-west should not look a gift horse in the mouth and say, “This isn’t enough,” because I think that £50 is a significant discount, which we should all welcome.

I would like to pick up on what my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) said about the projected rise in water bills from South West Water. This is an issue, because with the Government having done their bit and finding some money to create a genuine discount for people in the south-west, it would be a dreadful state of affairs if it was all swallowed up by water bills in the south-west being increased anyway. As my hon. Friend said, that could take up around half the discount. However, the Government have done their bit and found the money; we now need South West Water to do its bit by showing restraint in the bills it issues and by developing the social tariff. Most importantly, we need Ofwat to do its bit. I very much hope that the Minister—if he can do one last thing—will hold its feet to the fire, and keep the pressure on Ofwat to ensure that it keeps those bills under control.

Finally, I want to touch on how we might create downward pressure on water bills in the longer term. I am encouraged by what I have seen on that issue in the remainder of the White Paper, which deals with the development of proper competition on the retail side, particularly in the business sector. Businesses will not benefit from the £50 discount, but if we can increase competition at the retail end, we should be able to achieve downward pressure on their bills. I welcome these proposals.

--- Later in debate ---

[Dan Rogerson]

I think we can point to the time before the Labour Government, during the early days of the privatised industry, when, although there was a preponderance of MPs in the area from the Government party, we did not get anything. We have to recognise that there has been a problem and that it is being dealt with to some extent.

The company still has work to do, so we are not looking at a static position. We are looking at the fact that, as the hon. Member for Hendon (Mr Offord) said in his excellent contribution in our previous debate on this issue, raw sewage is still being washed out. That happens in London, as the hon. Member for Hammersmith has described, and in coastal locations such as Trevone, which I mentioned in an intervention. Water companies argue that that is a very rare event, happening two or three times a year, but the statistics show that it happens far more than that. Rainfall patterns are changing and development patterns have changed. We have, fortunately, got some affordable housing and market housing built in some of those communities, but that has added to the burden on the sewerage systems, which are just not up to the job. South West Water still has work to do and it also has to take responsibility for taking over the private sewerage systems. I welcome that change, but it will add to the costs going forward. The measures are long overdue and will, I hope, help to offset some of the burden on bill payers.

I have some concerns about the debt model that has been agreed between Ofwat and the water companies. The debt that has been taken on over previous decades to provide infrastructure is not being paid off to any significant degree. Under the debt model, those loans are repackaged periodically.

The water companies and Ofwat argue that that is a great deal because it keeps the cost of borrowing down—if we were to start to pay off these things now, we would put bills up even higher. I see that, but I am concerned that, essentially, we are saying that the Government’s sensible proposal will have to continue for ever, because we will never, ever pay off some of the significant debt that has been arrived at to put in the infrastructure. I hope that Ofwat will continue to look at the issue, because my constituents come to me and say, “At least we must have paid off a lot of this money by now and we must be getting to the point where the bills will start to go down.” No we are not, because the debt is constantly repackaged. That issue perhaps needs to be examined.

Hon. Members have talked about national WaterSure, or social tariffs. I know that the advice from the Treasury is that that effectively amounts to a tax—we need to examine that—but any scheme that seeks to help those who are struggling the most ought to do so regardless of where those people live. Even after the welcome investment in tackling inequality in bills across the country, people in my constituency and in other constituencies across Devon and Cornwall—because of low income, high housing costs, and high water and sewage costs—will still be worse off than people in other parts of the country.

I accept that other hon. Members will say, “Come on, you are getting this and surely you must be satisfied with it,” but I will be satisfied when I think there is a fair deal for people in my constituency and in neighbouring constituencies. As I said in a Westminster Hall debate earlier this year—or perhaps at the end of last year; memory fails me—I hope that we reconsider having some sort of national tariff. If measures are kept within region, the pressure on the other bill payers will be so high that those measures will not be allowed to be significant enough to meet the need.

We also need to keep a close eye on the profits of the water companies. In an excellent contribution to the first part of the Second Reading debate, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned the sometimes arcane business models and the layers of companies that manage to pass on significant dividends. Ofwat could do more to look at the profits there. As my hon. Friend the Member for St Ives said, the leadership at South West Water is far better than it was and those people have engaged hugely with the campaign to deliver on this issue. They are being open and realistic about what is achievable, but all water companies need to consider the contribution that they, too, could make to perhaps providing a more generous WaterSure or social tariff scheme. We need to be vigilant about that.

[George Eustice]

Does the hon. Gentleman agree that another shortcoming of the WaterSure tariff is the fact that it is available only to those who are on meters? That is good if it encourages people to go on to a meter, but there is a problem with blocks of flats where it is not practical for people to go on to a meter. Some of those people are in temporary rented accommodation, and it is not their call whether they go on to a meter.

[Dan Rogerson]

The hon. Gentleman is absolutely right, and we might be talking about some of the people who are worst off, because they live in smaller flats or houses in multiple occupation. I hope that as the Government move forward with their review of water policy they will consider whether any resource could be put into finding technological solutions to overcome those problems. At a time when we are considering smart metering and all sorts of things to do with energy, there must surely be a solution that allows metering for all water consumers, no matter where they are. A small investment, perhaps in that, or some encouragement to companies that might be coming up with such ideas, would help to deal with the issue. The sooner we can get everybody on to a meter, the sooner we will take the burden from those who, thus far, have been unable to take advantage of metering. The hon. Gentleman makes a strong point.

I should perhaps conclude by returning to the issue of fairness and who these measures are designed to help. South West Water feels strongly that it would like to see help for small businesses—it is concerned about that. I sympathise with that point of view, although we have to be realistic about how much money there is, and therefore about the support that will be available to residential customers if businesses are covered as well. It is difficult to distinguish between the smaller and the larger businesses, some of which are national and quite profitable. They would see a benefit that was nothing to them, but which would suck up money that could go to a residential customer down the road.

Second homes are an issue, as one might expect me to say. The Government’s proposals contain a careful appraisal to make sure that nobody gets £50 off their bill if they are currently paying less than £50, or we would be giving them money. I suspect that many in that category are people on water meters who are not using much water because the property is empty much of the time, as a second home. If, as the Bill moves beyond Second Reading, anything more could be done to examine the issue and make sure that it targets people who live in the area and pay higher water bills, I would welcome that.

I am delighted that the Government are moving on the matter at last. I hope they continue to examine ways in which we could help the very poorest consumers through social tariffs. I congratulate the Minister on tiptoeing through the various minefields surrounding the subject and coming up with the Bill that we are debating. I look forward to it making progress and becoming an Act.

Oral Answers to Questions

George Eustice Excerpts

Thursday 1st March 2012 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

6. What recent discussions she has had on reform of the common agricultural policy; and if she will make a statement.

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

The proposals for reform of the common agricultural policy are being negotiated by member states in the Agriculture Council and, for the first time, by co-decision in the European Parliament. We take every opportunity to discuss the UK’s concerns in detail with other Agriculture Ministers at Agriculture Council meetings and in the course of bilateral meetings. I had the opportunity to do that with the EU Agriculture Commissioner, Dacian Ciolos, both with Ministers from the devolved Administrations and, separately, with the National Farmers Union, most recently at the annual general meeting.

[George Eustice]

I am grateful for that answer. A report published this week by the think-tank Open Europe concluded that the best way to green the pillar one payments in a flexible way would be to replace the single farm payment with a market in transferable environmental obligations, so that we can use pillar one funding to bring to life some of the ambitions in the Natural England White Paper. Is that a proposal that the Secretary of State might take to the negotiating table?

[Mrs Spelman]

My hon. Friend wrote an interesting article about CAP reform where he expressed the idea—which he calls “common objectives”—of introducing greater flexibility through the creation of a market in tradable biodiversity obligations. He is ahead of his time with this thinking. He has heard Ministers talk about the future importance of supporting ecosystem management through agriculture, although we are dealing with reform proposals as they stand. At this stage of reform, I am sure he would share with me the view that it is important that the CAP should be greened and that taxpayers should see other public goods for the support they provide.

Rio+20 Summit

George Eustice Excerpts

Tuesday 28th February 2012 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

As this debate has shown, there is considerable scepticism about the prospect of getting much change. The hon. Member for Gower (Martin Caton) said that in recent evidence sessions there has been a downbeat response about what has happened over the past 20 years. The media coverage of the build-up to Rio has revealed concern about the fact that the summit will last for only three days, rather than the 14 days of the original summit. Many people are saying in insistent tones that this must not just be a talking shop, which points to the horrible possibility that it might end up being precisely that.

We must ask why we always seem to end up in such a situation when addressing these issues. We feel very optimistic and set great targets, but a few years down the line we find ourselves wringing our hands and asking why nothing has happened. I am a great believer in the UN and I think it is fantastic that we can pull countries together to discuss common challenges, but we must also be honest with ourselves about some of the UN’s limitations. It can bring people together to agree goals and targets, but it cannot take final decisions on policy or implement policies in individual countries.

My hon. Friend the Member for Beverley and Holderness (Mr Stuart) talked about the idea of holding a summit of global legislators. I support that, and wish him the best of luck in making it work. There is something more fundamental that we need to try to do alongside that, however: we must lead by example. We must come up with good ideas, implement them and demonstrate that they can work so that they become, as it were, contagious and spread around the world and other Governments adopt them, too.

[Mr Spencer]

One of the major challenges that we, as a western democracy, face is that some of the things that we are trying to achieve are not very popular. For example, we are addicted to consuming, but we need to reduce our consumption. Does my hon. Friend therefore agree that education of the next generation to ensure that they are better than we have been in such regards will be key?

--- Later in debate ---

[George Eustice]

I absolutely agree with that, and I was going to discuss it, because we do not spend anywhere near enough time addressing these issues of our environment and biodiversity, and that is a great shame.

The green campaign groups have been so incredibly successful at highlighting the problem of climate change that there has almost been an unintended consequence that has been unhelpful to the cause: the creation of a sense of resignation among people that there is nothing that they can do, there is huge impending doom and no person on their own can make a difference. That is a dangerous thing to encourage.

The over-emphasis on climate change in the environmental debate has been in danger of eclipsing other equally important issues, such as biodiversity. I have encountered green campaigners who say, “Yes, but tackling climate change is the key to improving biodiversity. If we solve climate change, we solve a lot of other things.” That is true up to a point, because climate change is a factor in undermining biodiversity, but we must recognise that a range of other issues, such as sustainable farming and deforestation, get neglected and overlooked.

The danger of focusing too much on climate change in this debate is that it will not energise the public in a way that other things can. Fundraisers at bodies such as the WWF do not put complicated issues to do with carbon footprints on the front covers of their magazines; they use pictures of baby tigers under threat of extinction, and there is a reason for that. People care about our environment and about issues such as species extinction and biodiversity, so we are missing a trick by not broadening the debate out to engage people more.

For those reasons, I welcome the fact that the Secretary of State and the Government have put the idea of valuing our natural capital front and centre in their approach to this summit, because that is the key message we should get across. There are lots of other conflicting messages, but the one thing we can do is highlight how we can place a value on our natural capital, and some marvellous ideas have been set out in the natural environment White Paper. One example cited has been that pollinators can be worth £400 million a year to our economy. As a former fruit farmer, I can vouch for that, because without the honey bees, the crop cannot be pollinated.

Emotionally, I have a slight problem with some of these ideas, as I think that we should value the intrinsic things about nature and the natural environment. An element of me thinks, “Isn’t it sad that it all has to be about bean counters trying to add up how much money a sparrow might be worth, rather than just valuing it intrinsically?” That said, when the limits of regulation have been reached and innovative solutions are needed, sophisticated ideas of offsetting and environmental plans to mitigate damage that might be caused in other areas can play an important role. There is huge potential in this area.

That is why I wish to finish by outlining one idea that tries to combine all these things. How do we demonstrate that individuals can do things, so that people can see that they can make a difference? We heard a fascinating suggestion in a Select Committee on Environment, Food and Rural Affairs evidence session on the natural environment White Paper. Professor Hill, one of the leading authorities in this area, suggested that we try to link some of the ambitions of the White Paper with current proposals for the reform of the common agricultural policy, because some of the criticisms of the White Paper’s objectives are that there is not really enough money to make it work on the scale required, yet there is a huge amount of money in pillar 1 of the CAP. We could have discussions about how that might be “greened” and it should not be beyond the wit of man to design a clever system—a market in environmental obligations—whereby some farmers might be able to transfer their environmental obligations to others. That may lead, in some of the more marginal land in less favoured areas, to a critical mass of wildlife and wildlife corridors. We might, thus, create the habitats that will allow wildlife to flourish in a much larger number than we will with a piecemeal approach.

We have heard some interesting ideas and I welcome the fact that the Government have put this idea of valuing capital at the heart of their proposals. The really important thing is for us to implement something that works. We will then be able to go back to other countries and not just talk about goals, but demonstrate how they can achieve those goals. That is what will be needed to move things forward.

Bovine TB

George Eustice Excerpts

Wednesday 14th December 2011 Commons Chamber

[Mrs Spelman]

It will take some time—many years—before we can finally assess the effectiveness of the vaccination trial in Gloucestershire, but I went and saw it for myself and, as much as anything, it was about the practicalities of trapping and caging the badgers prior to injecting with the only vaccine that is available. There are considerable practical difficulties with the procedure, but today I have tried to make available a fund to help those voluntary groups that want to participate in the vaccination programme.

[George Eustice (Camborne and Redruth) (Con)]

I welcome the Secretary of State’s proportionate and measured approach to this very contentious issue, and it will be respected by farmers in the west country, many of whom have suffered tragic losses from their herd. I welcome also the long-term commitment to developing a vaccine, but does my right hon. Friend agree that one of the problems with the current vaccine is that it will only inoculate healthy badgers against future infection and cannot cure badgers that already have the disease?

[Mrs Spelman]

My hon. Friend, who is very knowledgeable, has hit on the problem that the vaccine is effective only in badgers that are clear of the disease. That is one reason why vaccination takes so much longer than the method of controlled reduction by controlled shooting, but I reiterate that the Government have committed £20 million to the ongoing quest to find an oral vaccine for badgers. It has been effective in treating other diseases such as rabies, and if only we could find one, we would all, I am sure, be delighted.

Royal Assent

Water White Paper

George Eustice Excerpts

Thursday 8th December 2011 Commons Chamber

[Richard Benyon]

Deephams is vital to the infrastructure that we need. The hon. Gentleman is right to suggest that it will have an impact on people’s bills. It is the job of the Government, working with Thames Water and Ofwat, to ensure that that cost is as low as possible. There is a large contingency in the Thames tideway project, which every experience of large-scale environmental projects shows is necessary. I hope that we can work with Thames Water to ensure that these infrastructure projects are produced at as reasonable a cost as possible and with as little impact on charge payers as we can achieve.

[George Eustice (Camborne and Redruth) (Con)]

I, too, welcome the measures outlined in the White Paper to deal with the affordability of water bills in the south-west. As the Minister said, this issue has been discussed for more than a decade and nothing has been done. It is good finally to see action. In respect of the concerns about whether this sets a precedent for the Thames tideway project, does he agree that a major difference is that the population of the Thames Water area is far greater than that of the South West Water area, so the overall impact of the infrastructure improvements on bills will be far lower?

[Richard Benyon]

It is no comfort to my constituents or the constituents of other hon. Members in the Thames Water area to say that their bills are likely to go up. However, when they do go up, our projection is that they will be at about the national average. My hon. Friend’s constituents will continue to pay bills of about £100 over the national average. We have made a considerable investment to try to right the wrong that they have lived with for a long time. It is never easy, but I assure him that I will continue to work with Ofwat and others. I am grateful for his contribution and that of other hon. Members from the south-west in this difficult process. I hope that it is appreciated that we are getting somewhere.