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How Maggie's rebate has cost our farmers dear

Jun 15 2005
Steve Dube, Western Mail

Tony Blair is currently standing firm against Europe, arguing that France's call for an end to the UK rebate has to be linked to wider negotiations on the EU budget. But, as Farming Editor Steve Dubeargues here, the rebate has done little or nothing for Welsh agriculture

EARLIER this year a representative of a Welsh farming union managed to secure a meeting with the UK minister of agriculture and rural affairs, Margaret Beckett.

Shown into her office, he recalls, she did not even look up from her papers, let alone say hello or offer him a chair.

He broke the silence, explaining how he wanted to make sure she was aware of the views of Welsh farmers.

Still without raising her eyes, Mrs Beckett answered that if she wanted to know the views of farmers she would ask her officials at Defra. The union man walked out. "There was no point in staying," he recalled.

The fact that a metallurgist by training, whose capital is invested in urban property to rent, is in charge of British farming, while the French President is someone who built his political career supporting French agriculture, says much about the priorities of the two countries, and about the current dispute over the European Union budget.

It's all besmirched with politics, of course. Prime Minister Blair wants to be seen standing tall on a foreign stage fighting for Britain - and 4bn. President Chirac is desperate to cleanse a reputation stained by a lost referendum.

It's 24 to one against, but the one is Blair and he holds a veto he will use unless the whole Common Agricultural Policy is added to the negotiations.

The arithmetic looks simple. Over 40% of the EU budget goes on the CAP, supporting a shrinking industry that accounts for less than 4% of GDP in Europe as a whole and only 2% in Britain.

But there's another equation to take into account. In 1984 Britain was the third poorest member of the union. Now it is the second richest, above Germany, the Netherlands and Sweden, all of which pay more per head into the budget. Britain opposes rebates for them.

And as the costs of EU enlargement kick in, the UK rebate will get bigger. The 4bn a year now will become 7bn by 2013.

With the EU offering to end the export subsidies that cripple Africa, renegotiating the rebate could cure two injustices for the price of one.

Or should that be three injustices. For the British rebate, achieved by the Thatcher administration at Fontainebleau in 1984, has benefited the Treasury to the disadvantage of anyone living in the British countryside.

The British rebate

has cost British farming and rural economy billions of pounds in the past 20 years and undermined the level playing field essential to the operation of a free market.

It means agricultural compensation and rural development grants are not applied for, because some two thirds of it would have to come from the Treasury.

It means every farmer in Europe has an early retirement package - except the British farmer - one reason why the average age of the British farmer is as high as 58.

It meant that during successive farm crises in Britain - swine fever, BSE, foot-and-mouth - the British Government refused to draw down the compensation available from the EU. The lament from the Treasury was always the same: it would cost too much.

As the then Minister of Agriculture Jack Cunningham told MPs in 1998, Fontainebleau means that 86 of every 100 of EU rural development funds spent in Britain above a low allocation effectively is from the Treasury.

Under the deal that Tony Blair is defending this week, Britain's allocation is just 3% of the EU rural development budget - and that includes farm subsidies.

It compares with, for example, Ireland's 9% and France's 17%. Ever wondered why the rural areas of Ireland and France appear so prosperous? Now you know.

In the world's first industrialised state, where the countryside is seen as a leisure zone and farmers as freeloaders, the votes that matter are in the cities.

Fontainebleau in 1984 carved that perception into stone and called it a rebate.