Twelfth Standing Committee on Delegated Legislation
Tuesday 11 May 1999
[Mr. Jimmy Hood in the Chair]
Draft Potato Industry Development Council (Amendment) Order 1999
4.30 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I beg to move,
That the Committee has considered the Potato Industry
Development Council (Amendment) Order 1999.
I am pleased to see you in the Chair, Mr. Hood. I shall
begin with a little background on the British Potato
Council. It is responsible for commissioning or assisting
research and development, the collection and
dissemination of statistical and marketing information, the
development of exports and the generic promotion of
potatoes, including seed potatoes.
The council is fairly new. It was established in May
1997 under the provisions of the Potato Industry
Development Council Order 1997. Unlike its predecessor,
the Potato Marketing Board, which was a producer
organisation, the council covers all sectors of the potato
industry, including growers, merchants, packers,
processors, marketing and distribution and employees.
The chairman of the council is independent and there is a
second independent member. It has 16 members, nine of
whom are growers; three are from the industry outside the
growing sector, two are independent and there are
employee and marketing specialists. The Minister of
Agriculture, Fisheries and Food appoints them all.
The council is an executive non-departmental public
body, which is funded by a statutory dual levy on growers
and first purchasers. There is no public funding of the
council, although the Ministry of Agriculture, Fisheries
and Food purchases statistical information from it.
In its short history, the council has won the support and
respect of all sectors of the industry. It has reviewed its
work and rationalised its activities in the light of the
essential job to be done. There has been a sliming down
of the organisation, with a move to more compact offices.
That has achieved considerable savings in annual costs.
Over the past year, some £3 million has been spent by
the council on marketing and provision of information to
the industry and consumers. Investment in research and
development over the same period was £1.9 million. A
successful potato technology event was held in May 1998,
and followed by several technology transfer meetings
around the country. In September this year, the British
Potato 99 event will offer a mixture of machinery
demonstrations, trade exhibitions, demonstration plots of
potato crops grown under differing conditions and
information transfer seminars.
The council has also enjoyed success on the export
promotion side, aided by its new database of British
exporters which directs overseas buyers to those best
placed to meet their requirements. Export missions
introduce British exporters to buyers in target markets.
They are often followed by inward missions, where
potential buyers with Department of Trade and Industry
sponsorship view Great Britain production at first hand.
All that activity has certainly paid off, and that is a
tribute to the industry. Although the pound has been
strong and prices for the current season's crops are high
one cannot say that about many agricultural products
exports are currently more than 157,000 tonnes, an
increase of well over 7,000 tonnes compared to the same
time last year. That is a success under any test.
On the marketing and promotion side, the major event
was a new potato campaign that involved potato "dashes"
to major centres, including the House, where potatoes
were cooked by celebrity chefs. They were followed up
with promotional recipes on GMTV.
"British Potatoes in the New Millennium" will launch
the current season in London on 19 May and in Glasgow
on 15 June. The council also sponsors British chip week
and, with the Sea Fish Industry Authority, the fish and
chip shop of the year competition.
Turning to the order, as I mentioned earlier, the British
Potato Council is currently financed by a statutory dual
levy on growers and first purchasers. The area levy
applies to producers of one hectare or more of potatoes.
The purchaser levy is paid by first purchasers of
100 tonnes or more of potatoes per annum and is known
as the tonnage levy. Co-operatives and commission agents
may recover the tonnage levy from the next purchaser.
The tonnage levy arrangement has proven unpopular with
the majority of merchants, who complain that it can give
a competitor an unfair advantage if he is not a first
purchaser.
In response to the large number of complaints received
by the council, it undertook to review the tonnage levy
arrangements and develop a fairer system. Although this
issue could have been addressed at the first statutory
review of the British Potato Council in 2000, the strength
of feeling among those paying the tonnage levy was such
that the council completed its review in 1998 and asked
that the proposed levy arrangements be introduced for the
levy year commencing 1 July 1999. It would have liked
it earlier than that, but consultation takes time.
The order covers the amended tonnage levy
arrangement. It removes the right of recovery of the
tonnage levy by co-operatives and commission agents and
requires that the levy is paid each time that potatoes
are sold, except where the purchaser is a catering
establishment or a retail seller of potatoes unless such
purchasers buy direct from the farm. As potatoes move
through the chain, they will attract the levy at least once,
but sometimes more often. Agriculture Departments
consulted the industry on these proposals and the majority
was in favour of them.
The rate of levy is set each year following industry
consultation and agreement by agriculture Ministers. The
1998-99 tonnage levy was 20p per tonne. The council
estimates that changes to the tonnage levy would add
300 extra purchasers to the levy base, which will allow
them to reduce this levy while providing an equivalent
level of income. There is no intention to raise more
money: the proposal is cost-neutral across the industry.
To that end, for the 1999-2000 levy year, and anticipating
the amendment order coming into force, the council
asked agriculture Ministers to approve a tonnage levy of
15p per tonne. The current levy is 20p per tonne. Without
the order, the council would have sought an increase on
a smaller base of 1p per tonne.
Mr. Austin Mitchell (Great Grimsby): I am following
my hon. Friend the Minister's argument and enjoying the
excitement of an order that is so important to a fishing
port such as Grimsby. Essentially, the levy stops at the
catering level the point at which the customer buys
the cooked product. The customer does not have to pay
the levy. In that case, why does article 3(a) not include
chip shops in its definition of catering establishments? It
includes
"restaurant, canteen, club, public house, school, hospital or similar
establishment" ,
but not the unique chip shop. Some chip shops like Harry
Ramsden's buy several tonnes of potatoes. If chip shops
are not specifically included in the list, there could be a
danger of the levy being applied to them, when it certainly
should not be.
Mr. Rooker: I will take advice on that. I suspect that
the chip shop, which is not a catering establishment, but
which sells the product and buys many tonnes of potatoes
over a year may be covered. However, I will provide my
hon. Friends with a fuller answer to his question.
The order also enables the council to add around
300 additional purchasers to its register and to obtain the
required information and returns statistical information,
some of which is sold to the Ministry of Agriculture,
Fisheries and Food. Finally, article 8 is an additional
provision requested by the council on advice from its
Scottish lawyers. Under Scots law, there is a need to
clarify the position on evidential provision with regard
to approvals given by Ministers. Article 8 accomplishes
that and for completeness, and to permit the documents to
be treated as prima facie evidence, the amendment also
applies to England and Wales.
No public money is involved in the matter although
Ministers appoint the council. Full Nolan principles apply
in respect of advertising, sifting of applications, and
appointment of members. The Ministry of Agriculture,
Fisheries and Food contributes to research in the industry.
At present it is funding some 22 projects on potatoes at a
cost of £1.2 million, two of which, hon. Members may
wish to know, involve genetically modified technology.
To reply to my hon. Friend the Member for Great
Grimsby (Mr. Mitchell), lawyers advise I was told to
take account of m'learned friends' advice, unless one
disagreed with them that the definition includes chip
shops, but I am not sure whether that includes places
where one can eat in. There are, of course, different VAT
arrangements, it becomes a different animal
Mr. Charles Wardle (Bexhill and Battle): Perhaps I
can help the hon. Gentleman. I have just been prompted
to read article 3(a), which the hon. Member for Great
Grimsby raised, in greater detail. It states:
"or similar establishment ... where, in the course of a business,
food is prepared for delivery to the ultimate consumer and is ready
for consumption without further preparation;".
People walk into a fish and chip shop and buy chips. The
only further preparation, which is a matter of taste and
choice, is adding salt, vinegar or both. Surely, in that case,
those shops are bound to fall within the definition of 3(a).
Mr. Rooker: I will check again. It may depend on
whether one eats the chips from a plate with a knife and
fork in the shop, which turns it into a catering
establishment. The idea that a chip shop is not a catering
establishment might come as a bit of a shock, but I suspect
that if the shop has no tables it probably does not
constitute such an establishment because of the VAT
arrangements. I am no expert on such matters, but the
finest chip shop I know I must not advertise, so I will
not say where it is has a few tables and some people eat
on the premises. That alters a shop's VAT arrangements,
so it may change the legal definition of the end of the
levy in the order. The matter must have been discussed
before, given the current levy arrangements. There should
be a clear-cut, simple answer, which I shall try to give the
Committee before the end of our sitting.
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