Mr Heath's expensive belt and braces
The politics of farming are full of snares for the unwary. Next week the leaders of the European Community meet •in The- Hague to try and find a way of escape from the illogicalities of their common acricultural system. Nearer home, while the entire British press has been revelling in the massacre at `Pinkville'—an event, vile as it is, which proves nothing that was not already known about the way some human beings, of whatever nationality, are capable of behaving in the heat of battle— the Conservative party has discreetly fallen flat on its face before the skilful lobbying of the National Farmers' Union.
Agriculture was the subject of the party's first major policy revision after its defeat in the 1964 election. Haunted by the realisation that entry into the European Community, to which he was deeply com- mitted, would involve the abandonment of our entire postwar system of subsidies for farmers and free entry for foodstuffs, Mr Heath decided to make a virtue of neces- sity. The party announced that, when re- turned to power, it would institute—of its own volition—a gradual changeover to the continental method of taxing imported food and allowing the farmer to obtain gis return from the market.
The change was justified on its merits. It was pointed out that it would at the same time encourage home production, thereby reducing the bill for imported food, and cut the tax bill. The restraints imposed by the Treasury on the expansion of home agriculture, because of its open-ended obligation to refund the British farmer when domestic prices slumped, would dis- appear. The money spent on the price guarantees would be saved, and on top of this the Treasury would receive the pro- ceeds from levies on imported food, which could be used to reduce taxation in other directions.
From the start the party managers feared the reactions of the public to the prospect of food price increases which the switch in policy implied. What they did not expect was denunciation from the NFU. But this is what they got.
So the official Opposition spokesman on farming, the amiable Mr Joe Godber, was dispatched to Agriculture House to parley. Eventually, last autumn, he returned with the offer of 'support buying programmes', to be financed partly by the Government and partly by the farmers themselves, to drain off excessive supplies and allow them to come to the market in an orderly way. This in itself was a major infringement of the policy originally announced. If at any time there were a substantial glut of home-produced grain or beef, the cost of support buying would soon have made an alarming inroad into the tax saving Mr Heath had promised. But the farmers were unimpressed. Furthermore the Tory party itself, watching with alarm the spiralling cost of 'support buying' on the other side of the Channel, began to have second thoughts.
The farmers argued that if the levy system was as foolproof as the Tories said it would be, then it would cost nothing to maintain the system of guaranteed prices for their main crops as well. Mr Heath accused them of wanting 'a belt and braces': they pleaded guilty to the charge. This, they were told, was too much. Yet last week this is precisely what Mr Godber conceded.
Admittedly, Mr Godber sought to pre- sent the concession as one of marginal importance: and judging by the comment which his announcement provoked, he has so far succeeded. Yet it is not a marginal change at all. For either the price levels at which the guarantees are eventually set will be so low as to be meaningless, in which case the farmers will quite reason- ably denounce the retention of the guaran- tees as a fraud. Or the guarantees will be high enough to be effective, in which case both the tax savings and the removal of Treasury control over the level of home production will fail to materialise—in other words, the entire raison d'inre of the change of policy in the first place will disappear. Closer scrutiny suggests that it is the second result which is the more likely. For Mr Godber has committed his party to setting long-term limits to its own freedom to lower the price guarantees, and he has also agreed that the actual level of the guarantees will be subject to negotiation with the farming unions at the annual price review. So Mr Heath had better hurry up and find an alternative source for the £250 million of tax savings which he was hoping to obtain from the change in farming policy.
There was, of course, a basic fallacy in the NFU'S argument that, if the levy system is as good as it is cracked up to be, it would cost nothing to retain the guarantees as well. For the purpose of import levies is to insulate the home producers from com- petition from cheap imported food. It is not intended to protect them from the con- sequences of over-production or disorderly marketing at home, nor should it. But the Tory party, having failed to expose this illogicality, is left with its policy in shreds.
This may be a blessing in disguise. For as the Conservative party's official com- mitment to the continental system of farm protection has hardened, so it has had to watch with embarrassment as a growing volume of continental opinion has swung round to the view that the traditional British system had much to commend it after all. It almost begins to look as if Mr Heath will be going continental just as the continentals are going British.
Experience suggests that the ideal method of supporting farm production in western Europe without placing an exces- sive burden on the consumer would in fact be a judicious mixture of the British and continental systems. Broadly speaking, the continental way is the more effective at raising home production and reducing the bill for imported food--at a price; while the British way is the more effective at dis- couraging over-production, at the cost of an avoidable burden on the balance of payments. The logical solution for an en- larged European Community would be to combine guaranteed prices and tax sub- sidies for the commodities in which it is at, or near, self-sufficiency, with levies and an open market for the commodities which are imported in bulk. But to have both systems running in parallel over the entire range, which is what official Conservative policy now amounts to, is not only a non- sense: it lays the party wide open to the charge of planning dearer food without any compensating tax cuts.
The future of the Common Market's ramshackle and ruinously expensive com- mon agricultural policy may be clearer after next week's summit. Fundamental changes are needed, and if the French manage to block them then the outlook for any negotiation with Britain is bleak in any case. Having allowed the British farmers' lobby to make a monkey of his party's original proposals, Mr Heath should now lose no time in announcing that they are to be withdrawn altogether— for reconsideration in the light of eventual developments in Europe.
This would, of course, necessitate a search for other economies to finance the tax reduction to which the Tory party is pledged. But then perhaps that might not be a bad thing either.
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