Agriculture Bill (Second sitting)

Thangam Debbonaire Excerpts

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 11th February 2020 Public Bill Committees

[The Chair]

Thank you.

[Thangam Debbonaire (Bristol West) (Lab)]

I am sorry, but I wonder if we could ask the witnesses to speak up slightly.

[The Chair]

The acoustics in this room are appalling, which is nobody’s fault apart from the architect’s. If witnesses and members of the Committee could speak up, we would all be grateful. Thank you.

--- Later in debate ---

[Fay Jones (Brecon and Radnorshire) (Con)]

Q I repeat my declaration of interest: I was an employee of the National Farmers Union, and indeed of the Ulster Farmers Union when I was working in its office in Brussels a few years ago. I want to pick up on the points that were raised about divergence. On the point you just made about maintaining an area-based payment in case of volatility, what would be the consequence of different agricultural payment schemes operating throughout the UK?

Norman Fulton: Again, this is something that all Administrations need to be very mindful of in the choices they make. Agriculture is a devolved matter, so each of the Administrations can set their own policy direction and agenda. Under the protocol, which we will now be operating under, certain restrictions will apply in the case of Northern Ireland. We will have an overall envelope for state aid cover, but within that a percentage will have to be green box. That will put certain restrictions on the choices we make in future policy. That does not necessarily apply elsewhere in the UK. Scotland, Wales and England will all be able to set their own policy choices.

Again, we need to be careful that we do not start to open up distortions in competition, which could arise from all this. Although these matters are devolved, GB/UK is our domestic market, and we need to make sure we do not end up trying to undercut each other by using our support mechanisms to facilitate that. There is a great deal of responsibility on all the Administrations on this matter.

Ivor Ferguson: I fully agree with Norman. If we take Northern Ireland at the moment, we would like to think that we will have the same level of support. We will certainly need the same level of support. The fact that it is paid in a different way should not distort our market all that much, if there is the same level of money that comes in. We have to be mindful that our farming colleagues in southern Ireland will have a basic payment too, so we need a level playing field. We have to be very mindful of that going forward.

[Thangam Debbonaire]

Q This question may be just for Mr Fulton, but both of you may care to comment. Agriculture is devolved, as you said, but the World Trade Organisation requirements for the agreement on agriculture are deemed to have been reserved. Will you comment further on whether schedule 6 gives DAERA the powers you need to meet the flexible requirements for Northern Ireland’s specific needs? Do you have anything to add to your comments in answer to the question from Fay Jones on how that regional variance will play out?

Norman Fulton: The schedule is primarily about rolling forward what we have, with options for simplification and options to keep pace with potential changes that may have happened elsewhere. It is not really about setting our future policy direction, which is something that we now need to take forward ourselves in the Northern Ireland Assembly, now that Ministers are back and we have an Executive.

On the WTO issue, yes, that is a reserved matter, but there is nothing in the Bill that we feel will constrain our ability to set our policy agenda. For example, there are no restrictions on green box support in WTO rules, and none at this time on blue box support—for example, headage payments. Hopefully, the UK’s share of the amber box coming out of EU will be well in excess of what any region, or the UK as a whole, could ever hope to spend on agriculture, so we do not see that as a practical restriction on our room to manoeuvre in any way.

Your final point was around distortion in the UK?

[Thangam Debbonaire]

Q You started to comment in response to Fay’s question about regional variations. Is there anything you want to add to that?

Norman Fulton: It is something we all need to recognise. For example, if a region were to decide to go back to something we had in the past, a slaughter premium, you could easily see how that could attract animals for slaughter into that area. You would be starting to distort the movement and processing of livestock. A region probably would not want to do that because you would end up spending your regional support to support farmers located outside your region. Those are the types of things that could happen in theory, but I hope in practice they will not.

[Thangam Debbonaire]

Q You mentioned the word “hope” twice there. I am also hopeful, but we are here to deal with legislation. Do you think anything else needs to be added to the legislation to reduce the reliance on hope? Is the hope about negotiating aims, or is there something that should be in the Bill that currently is not?

Norman Fulton: That is a very difficult question, because at the end of the day agriculture policy is devolved, so all the Administrations have the flexibility to deploy the budget that is at their disposal. I do not think there is a lot more you can do in the Bill to address that. It is more in the area of the common frameworks that govern how the regions co-operate across this area .

Ivor Ferguson: I will just add that we are mindful of regional variations across our areas. The future trade policy to be worked out will have an effect on that. If we diverge a lot, product coming from Northern Ireland into the GB market and vice versa will have added costs with the border inspection posts, or whatever you want to call them. There will be added costs. That is something that, if a trade deal did not go for us, or if there was a large-scale divergence, that would add a lot to our costs and we would need extra funding. We are very aware of that.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

Q I seem to recall that in Northern Ireland, unlike in England, BPS payments have a maximum cut-off. That means that, although I assume you have to have cross-compliance on your entire holding, there is a maximum payment you can get. Might switching to more agri-environmental schemes result in some farms not delivering the public goods that they could deliver, because you would be limited in the amount you could give them? Do you think that, at that point, it would be worthwhile getting rid of the cap and allowing farms to participate fully on the all the land they have?

Norman Fulton: There is an overall cap on the current area-based system, but very few holdings hit that limit at this point in time. Again, those are the sorts of things we will need to consider in relation to the architecture we put in place. Certainly, if you were talking about large areas of land that needed to be brought back into good management and good condition, you would want that to be encouraged and incentivised, and any disincentive that might arise from a cap would have to be considered very carefully. At this point in time, there is no cap on agri-environment—well, there are caps on the amount that individual farmers can get. I know it is an issue that some farmers want to do more, and that is something we will have to consider in our next iteration of agri-environment.

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[Danny Kruger (Devizes) (Con)]

Q Mr von Westenholz, the suggestion of insisting in the Bill that we only import food produced to the same standards as our farmers produce is absolutely the right principle, and the Government are committed to that in principle, but can you just talk us through the practicalities of what the relevant change to the legislation would be? I am just concerned about what it actually means to insist on equivalent standards. How would that be articulated in the Bill? Is that insistence not more appropriate to the trade negotiations, which will get into the actual detail of different sectors, important exports and so on? How would you frame that piece of legislation in a way that did not just open the door to all sorts of challenges on a concept that is not well defined?

Nick von Westenholz: It is a fair point, because the question of how you compare standards in this country with those in other countries is very complicated. I think there is a way that you can still build requirements into the Bill that address those concerns. Basically, you can provide safeguards to the Government’s stated aim on these issues. I should add that that is one reason that we very strongly called for a commission with the Government, stakeholders and industry to be set up that would examine these very difficult issues and make clear recommendations for precisely how the Government can safeguard our standards in future.

In terms of the Bill, you could require the Government to produce a register, for example, of what our food and farming standards are, or certainly the ones that we are keen to safeguard. We can then put in a requirement that imports should meet those standards or should have to demonstrate that they do, and possibly some sort of reporting mechanism to demonstrate whether imports are meeting those standards. There have been several amendments to this Bill and the last Bill to attempt to address that.

You could introduce amendments that are much more explicit. For example, they could set out the sorts of veterinary medicines—whatever it might be—that are prohibited and would not be allowed to be put on the market, as well as goods treated with those medicines that could not be put on the market in this country. That would be a very clear and straightforward legislative safeguard on standards, but you would be looking at quite a lot of text if you were to go completely across the board. There are a number of options.

[Thangam Debbonaire]

Q I am not quite sure, but this question is possibly to both witnesses. The Bill is to a great extent an enabling Bill, and the words “the Secretary of State may” appear frequently. I wonder whether, were you going through the Bill with a red pen, you would change any of those mays to musts. In particular, I am looking at how we make the move from having been a full member of the EU and part of the WTO by virtue of that to completely being just on sole membership terms with the requirements of the agreement on agriculture. I am looking at any mays to musts and how to get to compliance with the agreement on agriculture.

Nick von Westenholz: I think as a point of principle, we would not just argue that any mays need to be turned into musts. We recognise that this is an enabling Bill and the merit of the Government’s having legislation that gives them flexibility. There would probably be some points where we would be more forceful than others, such as the powers around exceptional market conditions. At the moment, there is a “may” power for Government intervention when exceptional market conditions are adversely impacting agriculture—this speaks to that point I was making about volatility, as agriculture, probably more than other economic sector, can be subject to climate volatility, weather volatility, market volatility and so on—but we think there should be a trigger there that requires a “must” for intervention. I know some have argued that there should be more of a “must” clause around the financial assistance powers. I am not sure whether that would do the trick, because it could still be an inadequate amount of financial assistance that is provided.

The new clauses addressing multi-year financial plans and reporting are important and we are pleased to see them; we think that those, alongside the Government’s guarantee on the total budget, are just as important in giving farmers certainty and the ability to plan for the long term.

I did not quite understand the question on the WTO agreement.

[Thangam Debbonaire]

Q I wanted to emphasise those provisions of the Bill that pertain to the WTO and ask whether any of those “mays” to “musts” were in that area.

Nick von Westenholz: Not that we have identified, but I will have another look at it after the session.

[Virginia Crosbie (Ynys Môn) (Con)]

Q Mr Goodwin, in relation to the next generation of farmers, I would be interested to hear whether you have had any feedback from institutions and how you are working with universities and colleges to ensure that the next generation take advantage of this new legislation.

David Goodwin: We are working closely with various county agricultural colleges at the moment. We have just run an event in the north—I have forgotten the name of the college—in association with DEFRA, through our DEFRA grant holder, to engage with our members about this Bill in particular and the ELMSs that are coming forward. That is a project that we were looking to roll out considerably further; unfortunately, our timescale was put back when Parliament was prorogued and we had to postpone a lot of events that we were planning to run. Agricultural colleges lend themselves well to setting up and running events with our members and our target audience of potential members and people who are looking to come into the industry. We are certainly doing as much work as we can with county colleges and the universities, which are all struggling a little bit for students at the moment.

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[Simon Jupp (East Devon) (Con)]

Q How much confidence does the Bill and the general direction of travel give your members to renew tenancies?

George Dunn: The majority of my members are looking for longer terms; they want security. The average length of term on a farm business tenancy today is 2.9 years. Think of agriculture in terms of its long-term need to look at soil management, agri-environment schemes and so on. If you take land that has buildings it goes up to about seven, if you have land with housing, it is up to about 10 or 11, but we would expect those later ones to be even longer than that. Our members consistently ask for greater length of security of tenure. For example, if you go to a bank to borrow money to invest in your business and you can only show a three-year or a four-year time horizon, why would the bank lend you money to do any substantial investment if it only has a four-year period to pay that back? Even those tenancies that the CLA often claim get renewed year after year, are only for annual security. How do you go to a bank asking for support for something where you have annual security? We think there is a great deal of appetite for longer-term tenancies.

Judicaelle Hammond: I think my members want good tenants who look after the land and can pay their rents. They want tenants who are willing to innovate and continue to develop their business. It requires flexibility on both sides. I understand the appetite for longer tenancies and that can be agreed. However, what we do not want is a third party determining how two parties who are free to contract, contract.

Rolling tenancies happen and I therefore think that the figure of 2.9 years is a little misleading. We want a system that works for both parties, particularly in times of uncertainty. I would add that an awful lot of my members are somebody else’s tenant. They have land of their own, but they might add to it, for scale, for example.

George Dunn: In a situation where we have 90% of all farm business tenancies in England now being let for periods of five years or less, there is market failure here, which the Government need to address.

[Thangam Debbonaire]

Q I would like to push you a little further on the security question. I recognise there are some differences here, but I think it is partly being presented as a question of equality, of a negotiation between equals. It does not quite seem that way from where I am sitting. Can we explore further whether more measures could go into the Bill to get the balance right for members of both organisations, but particularly Mr Dunn’s members, for whom it is presumably harder to get land if they are moved from a particular piece of land than it is from Ms Hammond’s members to get new tenants if the tenant has moved. Forgive me if I have got that wrong.

George Dunn: From our end of the spectrum, we do not want the Bill to have a minimum term for agricultural tenancies, because that will not help our sector at all. We want to see the ability for landlords, where they let long term or where they are nervous about letting long term, in case they get a tenant who they do not get on with or who does not pay their rent, or who does something to the historic landscape, if the landlord is the National Trust, to feel confident to let for a longer time, because they know they can get the land back early if there is a problem. We are absolutely on the money with that. There is what might be called an oven-ready amendment that could go into the Bill to achieve that.

[Thangam Debbonaire]

Oh, please don’t call it that!

George Dunn: More widely, we think the taxation system needs to be looked at to incentivise longer-term tenancies and penalise shorter-term ones through the taxation system. Ireland has done some good things on the income tax side, which the Treasury could look at, but that is not something that would be put in the Bill.

Judicaelle Hammond: You will not be surprised to hear that I do not agree with that. I do not see that there is a market failure. There might be things in the market that are happening at the moment, because of the way that the system works, that may be unsustainable. We will see what happens when the BPS ends. If you look at some of the reforms that have been made, not in Ireland but in Scotland, it all but killed the rental market. That would not be good for my members or for George’s. We need to be extremely cautious about putting things in legislation and rushing them through without proper consideration of the consequences for both parties. That could lead to a market that is even more nervous than it is now and, as a result, becomes ossified. I do not think that would be good.

George Dunn: We certainly need to learn the lessons of what happened—what is happening—north of the border, but that should not be an excuse to do nothing south of the border.

[Theo Clarke]

Q Mr Dunn, I was struck by your comment about tenancies being too short and the fact that people are just staying 2.9 years and not longer. In my constituency I have a lot of county farms, but I also have a real problem with the lack of a new generation coming through. One thing farmers have raised with me is that because the subsidies will not necessarily continue beyond this Parliament, they can plan for five years, but not for 10 years. Is there anything specific we can add into the Bill to address that specific problem? I totally agree that this longer-term issue is the problem. If I am a county farmer in Stafford, I cannot submit a 10-year business plan because the Government are only guaranteeing it for the first Parliament term. Is there anything specific we can do to address that?

George Dunn: All businesses operate within a sphere of uncertainty about the future for their market and how they intend to run their businesses in the long term. Anybody who thinks they can do a 10-year business plan and stick to it after year five is thinking wishfully. The idea of having multi-annual plans is really good, but they need to highlight how much money will be spent and how it will be spent through those plans, rather than just vague indications of the way in which the financial systems powers will be played. If farmers had a reasonable five-year horizon to work through, that is as much as I think they would be looking for.

Judicaelle Hammond: I totally agree with the TFA that the more certainty in the future, the better. Part of the problem we have at the moment is that we do not have certainty past next year. Although there have been commitments to maintaining the current level of funding, so far they are, unfortunately, just commitments. We would welcome a quantification as part of the multi-annual financial assistance frameworks.