Telecommunications Infrastructure (Leasehold Property) Bill (First sitting)
Tuesday 11th February 2020
(4 years, 2 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 February 2020 - (11 Feb 2020)
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Chair
I have a few preliminary points. Please switch electronic devices to silent. Tea, coffee and other hot beverages are not allowed during sittings. We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication. I hope that we can take those matters without too much debate. I call the Minister to move the programme motion, which was agreed by the Programming Sub-Committee yesterday.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 11 February) meet—
(a) at 2.00 pm on Tuesday 11 February;
(b) at 11.30 am and 2.00 pm on Thursday 13 February;
(2) the proceedings shall be taken in the following order: Clauses 1 to 2; the Schedule; Clause 3; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 13 February.—(Matt Warman.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Matt Warman.)
The Chair
Copies of written evidence that the Committee receives will be made available in the room.
We will now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped for debate. Grouped amendments are generally on the same or similar lines. Please note that decisions on amendments take place in the order not in which they are debated, but in which they appear on the amendment paper. The selection list shows the order of debate. The decision on an amendment is taken when we come to the clause that it affects.
I have the pleasure of calling Chi Onwurah to move amendment 9 to clause 1 and to make some brief general remarks.
Clause 1
Code rights in respect of land connected to leased premises
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I beg to move amendment 9, in clause 1, page 1, line 17, at end insert—
“(c) the operator intends to provide an electronic telecommunications service that can deliver an average download speed of at least one gigabit per second.”
This amendment is intended to ensure that operators could apply for Part 4A order only if they intended to provide gigabit-capable broadband.
It is a great pleasure to serve under your chairmanship for the first time, Mr Davies. This is my first time on a Public Bill Committee for a number of years, so I hope that you will be, if not indulgent, at least understanding of any errors that I should make.
It is also a pleasure to serve on such an important Committee. We are often told by Government Ministers and by wide-eyed techno optimists that we are going through a digital revolution in this country. When hon. Members are uploading videos to TikTok, and centuries-old parliamentary regulations are accessible via an Android app, it is hard not to feel that we have entered a brave new world of connectivity.
That is the case not just in this place, of course; the internet is central to our lives and those of our constituents. Some 99% of adults under 45, and 81% of the adult population as a whole, use it regularly. Those are impressive figures, so let us hear some more: 98%, 97%, 8%. Those numbers represent the full-fibre coverage of, respectively, Japan, South Korea and the United Kingdom.
The previous Labour Government brought first-generation broadband to 50% of all households within 10 years. Over a similar timespan, Conservative Governments have managed to bring full-fibre broadband, the current generation of technology, to only 8% of households, while our economic competitors have been achieving full-fibre coverage. We are 35th out of 37 in the OECD rankings of broadband connectivity. When it comes to broadband, the only global race that the Government are running is a race to the bottom.
In the past 10 years we have witnessed a lost decade for telecoms infrastructure. The Government have repeatedly left our national infrastructure needs to the market, resulting in a deepening of our country’s regional divide, which was already the worst in western Europe. Regional studies show a 30% gap in internet usage between the south-east and the north-west. In London, 85% of the population are internet users compared with 64% in my city of Newcastle. It is welcome that the Government have finally woken up to this problem, but I am still none the wiser about what “levelling up” actually means in this case.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
My hon. Friend is making important points, particularly about the regional disparities and inequalities. Is she aware of any differences in who is using the internet? There might be differences in relation to children being able to study at home and people being able to work at home, which is critical for self-employment and for small businesses that might be starting up.
Chi Onwurah
My hon. Friend makes an excellent point, and her past experience in the IT sector leads her to understand and see the divides that exist—for example, people on lower incomes are less likely to use the internet and have access to broadband. There is also a real rural divide, with our rural telecoms infrastructure not enabling the kind of economic success stories of small businesses that she mentions. Unfortunately, the Bill does not address that. Indeed, many of the operators, such as TalkTalk, Mobile UK and Hyperoptic, have said that we need to upgrade our infrastructure, but the Bill does not address that.
In the last six months the Prime Minister has held three different positions on what kind of telecoms infrastructure we need: when he was standing to lead his party, he promised to deliver “full-fibre connectivity” to all households by 2025; the Government manifesto talked of “gigabit-capable connectivity” by 2025; and the Queen’s Speech dropped the 2025 reference altogether, promising instead to accelerate the roll-out. Will the Minister clarify exactly what the Government’s target is for broadband connectivity? Whatever the target is, and whatever the lofty ambitions are, I am afraid that the Bill will not achieve them.
The Bill is designed to enable people who live in flats and apartment blocks to receive gigabit-capable connections where their landlord repeatedly fails to respond to telecom operators’ requests for permission to install their infrastructure. The network builders say they face significant challenges in connecting people living in flats and apartment blocks when they do not receive a response from the building owner to requests for access. According to Openreach, 76% of multi-dwelling units miss out on initial efforts to deploy fibre because of challenges in gaining access.
The Bill provides a bespoke process for telecoms operators to gain access to MDUs in order to deploy, upgrade or maintain fixed-line broadband connections in cases where a tenant has requested an electronic communications service but the landlord has repeatedly failed to respond to an operator’s request for access. For a telecoms company to install equipment such as cables on public or private land, formal permission through an access agreement with the landowner/occupier is required. Under such an agreement, the landowner grants the communication provider a licence to install, access and maintain equipment on their land. The Bill takes into account the fact that landlords are not always responsive or eager to meet their tenants’ needs.
The measures in the Bill are welcome and the Opposition will not be voting against it. In the context of the lost decade, however, we are truly dismayed by the Bill’s limited scope. It proposes only minor measures to ease infrastructure build-out by giving operators more powers to access apartment blocks when tenants request service. The sector has welcomed the Bill but without any great enthusiasm, saying that the difference it will make will be marginal. The trade body for the tech industry, techUK, says it does not go far enough, stating that
“from new builds to street works”,
many issues
“have not been tackled by the Government’s Bill.”
We have tabled several amendments to improve the Bill, but before I speak to amendment 9, I will briefly mention additional flaws that the Opposition have not sought to fix through amendments. There is the matter of consistency with other regulations. The internet is now an essential utility for modern life and, as such, telecoms operators should possess the same powers as those who provide other utilities, but the Bill does not go far enough on that. We appreciate that the Government acknowledge the necessity of broadening the rights of telecoms providers, but they have not actually done so in the Bill. They have given no statutory rights of access to telecoms companies and placed no obligations on landlords to facilitate access.
Do the Government recognise that the internet is an essential utility, and do they believe that telecoms should be brought into line with other utilities, for which forced entry is permitted on the grounds of ensuring that there is no threat to life or safety? Obviously, that might not be the case with telecoms, but I want to understand the comparison that the Government make between the telecoms utility and other utilities.
The amendment is intended to ensure that operators can apply for a part 4A order only if they intend to supply gigabit-capable broadband. Of course, we need to understand what gigabit-capable broadband is, but I am sure that the Minister will relieve us of that uncertainty. As I said, we have suffered 10 wasted years under Conservative Governments of various types, a unifying theme of which has been a misunderstanding of technology interspersed with a misuse of it.
Given that the Prime Minister has expressed three different positions in six months, what is the aim of the Bill? Does it aim to provide gigabit broadband? On Second Reading the Minister said that the legislation will be a “hammer blow” to crack our woeful broadband nut. I can only assume therefore that the legislation does not serve simply to give operators opportunities to lock in my constituents to slow broadband. The Minister said that it must deliver gigabit-capable broadband, so I cannot imagine that he will have any objections to enshrining that in the legislation by supporting the amendment.
I also seek clarification on whether anything in the Bill confines it to fixed-line operators. Will the Minister confirm whether, under the terms set out in the Bill, it would be possible for a mobile operator to install a mobile base station, for example, for the purposes of delivering gigabit-capable broadband, either to one building or another? How does the Bill ensure, in the case of wireless or mobile broadband, that services are limited to a particular building only?
The amendment would make it clear that the Government are proceeding with their commitment to deliver on gigabit-capable broadband and that the Bill cannot be used to deliver slower broadband, so it will contribute to our broadband infrastructure.
The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)
It is a pleasure to serve under your chairmanship, Mr Davies. I welcome the hon. Lady’s acceptance that the Bill is an important part of the Government’s programme to deliver gigabit-capable broadband as quickly and as far across the country as possible. She is right that we have not got the numbers that some of our European competitors have, although we are now up to 3 million premises with full-fibre broadband in this country—the latest figure is 11%, rather than the 8% that she quoted. None the less, the Government are significantly more ambitious than that, so today we are delivering this narrowly focused Bill that will quickly address a pressing issue that the industry faces. As she also said, the industry has broadly welcomed it.
I will address the main parts of the Bill in the stand part debate later. As the hon. Lady has said, the Bill will introduce, when demanded by occupants of a building, a right for communications providers to access a building to provide a service that is fit for the 21st century when landlords have been unresponsive. It is, as she has said, a pressing issue for the industry that has affected too many tenants already and in part has affected too many tenants because the existing process is overly cumbersome. The Bill introduces a process that is far more speedy and cost-effective for operators.
Seema Malhotra
One issue that is not clear to me in the Bill or the explanatory notes is whether there is a time limit within which the operator might need to respond to a request from a tenant. There is more about the operator giving notices to the landlord—the grantor—but what about a deadline by which an operator might need to respond to a request from a tenant?
Matt Warman
There is no set deadline imposed on a private commercial organisation because individual operators are not all regulated in the same way. For instance, Openreach is regulated differently. It is a commercial decision for them, and the Government will do all that they can through processes such as this to try to encourage a speedy response. It is for Ofcom to regulate responses, as it does in the complaints procedure. As the legislation comes into force, Ofcom will consider whether response times to complaints might be thought of in the same way.
Seema Malhotra
Currently, in the way that the implementation of the Bill is envisaged, if an operator chooses not to respond or takes many months, is there anything in place to sanction or challenge that?
Matt Warman
The answer is that at the moment that is one of the problems. The Bill introduces the process by which we might look at whether the responsiveness to requests is something that Ofcom might look at. However, the hon. Lady is right to ask. We want to see a speedy roll-out, and the response from operators is an important part of a speedy roll-out. We are very much on the same page. We would not want to see operators ignoring the requests of potential customers, and I hope that neither would the operators, because in many cases they have a potential commercial opportunity.
Let me address the two specific questions asked by the hon. Member for Newcastle upon Tyne Central. As discussed on Second Reading, we see broadband as an important utility but, as she acknowledged in that debate, it is not the same as other utilities. It is obvious that as time goes on more and more essential services will depend on connectivity. As that situation evolves, we will need to keep it under review. However, she is accurate when she says that the threat posed by a lack of water is different from that posed by a lack of broadband. We should treat them differently; it is horses for courses.
Matt Warman
Yes, I am not sure how I would cope myself, but the principle is the same.
We sympathise with the spirit of the amendment. There is currently little evidence that anyone seeks to install services that are not gigabit capable; if one goes into an MDU, it is almost always fibre that is being installed. However, as the hon. Lady said on Second Reading, being technology-neutral is important and might enable the speedier roll-out of a service. If a group of residents or a telecoms operator sought to install a service that was not gigabit capable, although that is extremely unlikely, I do not think the Government should seek to withhold better broadband from a block of flats, for instance, simply because that is the only option available. Nor do I think, to be fair to the hon. Lady, that that is her intention. We should maintain technology neutrality and the commitment to speed and a possible service sooner rather than later, rather than have the Bill restrict it, when it is in most instances a hypothetical problem—we are not aware of a situation in which a slower service would have been suggested or provided by an operator.
On the hon. Lady’s point about mobile base stations, again the Bill is technology-neutral, but it is important to note that placing a base station on the top of one building usually benefits the buildings around it, as she knows, rather than that building itself. The triggering of the request that the Bill covers would not necessarily be valid because it would be a different building. It does not imply rights to install equipment on a connected piece of land rather than on the building itself. That is an issue we discussed at some length earlier. Both points indicate that although the measure is technology-neutral, it is more likely that it will not apply to either 5G or to base stations.
Chi Onwurah
I appreciate the points that the Minister is making, and the tone with which he is making them. Gigabit-capable broadband is technology-neutral. That is the only justification for having the full-fibre broadband that the Prime Minister initially promised. I therefore still do not understand why the Government are reluctant to put that in the Bill. As the Minister says, although there is no evidence of a desire to roll out a network that is less than gigabit capable now, once we have competition for a gigabit-capable network, some operators might seek to capture buildings and deliver broadband that, although better than what we have in some of our areas—the broadband in some areas is very poor—is not actually gigabit capable.
Matt Warman
I genuinely sympathise with what the hon. Lady is seeking to do, but her amendment also constrains a Bill that benefits from taking the approach that it does. Technically what she proposes would amend only one part, but amendment 9 would not amend the circumstances under which the part 4A order can be made because they are set out in paragraph 27B. There is a logical inconsistency in what she proposes, but the principle is very much the same as what the Government are seeking.
The hon. Lady would also inadvertently be delaying the roll-out of a service that would be a significant improvement even if it were not gigabit capable, and she undermines the principle of aspects of technology neutrality. Our intention has always been for the whole code to be technology-neutral. There would be no direct benefit from her amendment, although we very much share her ambitions. We want the Bill to benefit tenants whatever the service they request and, with that in mind, although the Government sympathise with her ambitions—
Seema Malhotra
I would like some clarification on a couple of points. What might the minimum speed be and would it be out of scope for a part 4A order to be used to upgrade broadband from copper networks to fibre, for example, if broadband were not fast enough for whatever reason? Do these plans sit alongside, or are they separate from, plans to implement the universal service obligation for a decent service broadband speed of 10 megabits per second, which is clearly much less than 1,000 megabits per second?
Matt Warman
I thank the hon. Lady for intervening just as I was finishing my remarks. There is no legislative flaw on the speed of a service that a commercial operator might seek to install, but the market is obviously going upwards rather than downwards. We have seen no evidence that anyone is seeking to install copper, for instance. The direction of travel in the market is clear across the country. When the USO comes into force, it will sit above this legislation. On her question about the scope of the Bill, I can confirm that those matters would be out of scope.
The Government want all networks to be gigabit capable, and through the work that we and Ofcom are doing, everything is moving in that direction, in terms of both market forces and the Government’s legislative programme. Although I sympathise with the spirit of what the hon. Member for Newcastle upon Tyne Central is seeking to do, I ask her to withdraw the amendment.
Chi Onwurah
I am grateful to the Minister both for his response and for his sympathy with what we are trying to do, despite his inexplicable reluctance to actually do it.
Part of the Minister’s critique of the amendment is that it is not comprehensive in amending other aspects of the legislation. He is actually critiquing his own Government’s approach, because the problem is that we do not have a comprehensive strategy—or any kind of strategy or plan—to deliver the gigabit-capable broadband of which he and the Prime Minister have spoken. I remain concerned that the legislation may well be used to deliver broadband that does not meet the expectations or the just deserts of British citizens, whether or not they live in apartment blocks.
I look forward to the Minister setting out at some point a plan that enshrines gigabit broadband in our lives, just as the Prime Minister enshrines it in his speeches. I do not believe that it is worth pressing the amendment to a vote. I note that the Minister’s commitment to gigabit broadband is on the record, as is his expectation that the legislation will be used to deliver it. That will have to suffice for today. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Chi Onwurah
I beg to move amendment 7, in clause 1, page 2, line 1, after “lessee in occupation” insert
“, or a person who is a legal occupant of the property and who is in a contractual relationship with the lessee or freeholder,”.
This amendment is intended to expand the definition of persons who can request an operator to provide an electronic telecommunications service to include rental tenants and other legal occupants who may not own the lease to the property they occupy.
The Chair
With this it will be convenient to discuss amendment 4, in clause 1, page 2, line 2, after “premises”, insert
“or an operator requests to provide an electronic communications service to the target premises,”.
This amendment would provide for situations where the request for access is initiated by the operator.
Chi Onwurah
These amendments seek to improve the legislation to enable others to make requests. As I understand it—I hope the Minister will clarify this— only freeholders and leaseholders can use the legislation as it stands.
Mr Chairman, I will not try your patience by expounding at length on the dire state of both home ownership and leasehold, or “fleecehold”, as many of my constituents call it. Home ownership rates among young people are a third lower than in the noughties, and for far too many, the leasehold system is broken. There are now 4.5 million households in the private rented sector, a jump of 63% in a decade, and we also know that tenants can easily find themselves in precarious and insecure circumstances through no fault of their own, or even with nowhere to live via a section 21 notice. All of this makes tenants dependent on the whim, or the pleasure, of their landlord. The upshot is that a large proportion of our population is condemned to renting for life, but with few rights and less certainty. We in this Committee can do something about that, at least when it comes to broadband.
Amendment 7 is intended to expand the definition of persons who can request an operator to provide an electronic telecommunications service to include rental tenants and other legal occupants who may not own the lease to the property they occupy. As the Bill stands—the Minister will correct me if I am wrong, I hope—only the freeholder or the leaseholder can make that request, so what of the poor tenant who is desperate for gigabit broadband to enable them to work from home or grow their business? What if their landlord is difficult to reach or indifferent to their predicament? Should the person actually living in the building not have some rights here?
Furthermore—while we are considering who can make these requests—why are businesses left in the cold, particularly those in business parks, where there has often been great unmet demand for broadband? I hope the Minister will provide clarity as to whether business tenants and traders based in properties can use this legislation to upgrade their infrastructure and grow their business.
Amendment 4 is more of a probing amendment, designed to understand whether the Government know what they are doing when it comes to broadband deployment. Before I entered Parliament, I spent a significant number of years rolling out broadband networks in the UK, France, the US, Nigeria, Singapore and Australia, so I know that building out a telecom network requires a plan; it would be nice if the Government understood that keeping networks secure requires a plan, too, but we will come on to that later. In any case, building out a telecom network requires a plan with a business case, predicted revenues, and—well, I am sure the Minister gets the picture.
As the Bill stands, the operators can plan to pass a building, but they cannot plan on getting any revenue from that building, because they cannot make the request to access the buildings that they pass. If the landlords do not respond, the operators cannot use this legislation unless and until a leaseholder or freeholder makes the request.
Seema Malhotra
My hon. Friend is making an important point, on which I would like to support her. The situation has been very different on the ground, and from the experience I have had with leaseholders in blocks, it is sometimes very difficult to get individuals to come forward. When they talk privately with each other, they say that they do want something to happen, and they want an operator to take the lead. In order to provide some flexibility to achieve the outcome we want to see, does she agree that it would be worth considering the right of operators to make the requests?
Chi Onwurah
My hon. Friend is right. I seek to understand whether the Government have considered that, and what their plans are to reflect it. As my hon. Friend says, it may be that tenants and leaseholders do want broadband access. We all have busy lives and are not full-time network engineers. They are not necessarily going to focus on that, whereas a mobile operator has the resources and expertise to make such a request. Tenants may feel that they do not want to annoy their landlord further in case they find themselves subject to an eviction notice or something similar. Mobile operators are in a better position to take on the power of the landlord in making that request. Operators acknowledged that potential logjam in the consultation on the Bill. Virgin stated that they would recommend that the Bill remove the requirement for tenant requests to trigger the process and that they typically
“will not attempt to seek a wayleave from a landlord unless…convinced of the prospect of selling services to the tenants within the MDU.”
Virgin also stated that demonstrating a tenant’s interest added another layer of administration to an already costly and bureaucratic process.
The Internet Service Providers’ Association, a trade body, also recommended an amendment to allow operators to use this mechanism where they are met with an “unresponsive” landlord, regardless of a tenant’s requests. ISPA would further recommend that all landlords be compelled to engage meaningfully with the code, regardless of any tenant request.
Why have the Government apparently ignored or rejected the industry’s requests? There may be a number of reasons. Perhaps the Government do not trust telecoms operators to make credible requests, perhaps they are afraid that big operators—given their deep pockets and big legal departments—will capture all the buildings. Perhaps they simply want to reduce the legislation’s scope so that it is less effective than it would otherwise be. Amendment 7 seeks clarification from the Minister of why the circumstances in which requests are initiated are so limited, and why the Minister has not given operators the opportunity to also make the request.
Matt Warman
Once again, I absolutely understand the spirit in which the hon. Lady raises the amendment, and I admire her gymnastic ability to bring all the points about leasehold into a telecommunications Bill. It is admirable. She is right to address her point specifically on business parks, and will know that the Bill does include the power for the Secretary of State to expand the types of land covered by the Bill, when there is evidence, to business parks, for instance. We do not have all the necessary evidence to do that. The issue of speedily fixing the problem for MDUs while also having the opportunity to fix the problem for business parks in the future is in the spirit of the Bill. I hope that she understands that it makes sense. She knows that there are almost half a million MDUs in this country. It is important to address that problem as soon as we can.
She will know that the Bill is ultimately about a relationship between a telecommunications provider and an unresponsive landlord. The provision can be triggered by a tenant of a building. That is an important factor. However, she will also be aware that the Bill contains the important concept of the “required grantor”. Proposed new paragraph 27B(1)(c) of schedule 3A to the Communications Act 2003, with which I know we are all intimately familiar, confers on the operator a code right in respect of connected land, or allows a person to be bound by such a code right exercised by the operator. In practice, that means that anyone with an interest in the land will have to be contacted. Therefore, when it comes to the operation of the Bill, there will be an opportunity for communications providers in practice to work with anyone in a building to seek to trigger what they would hope to go on through improved provision of broadband. Ultimately, however, the relationship is between the communications provider and the landlord, or the unresponsive landlord.
I think the hon. Lady seeks to expand the number of people who can have an impact on the process. Obviously, the consent of a freeholder, for instance, would still be required even though the property was sub-let. I hope she understands that, while we envisage everyone being able to trigger the process, the legal mechanism under which it operates ultimately is between the communications provider and the landlord—or the unresponsive landlord or the tribunal.
Chi Onwurah
I thank the Minister for giving way. I should say that I am familiar with the electronic communications code, having worked for years with it on my desk at Ofcom. It certainly is not a piece of regulation that I would expect tenants of buildings to be familiar with. Will the Minister clarify whether he is saying that the tenant can make the request, or that the tenant can work with the leaseholder, the freeholder and the telecoms operator to make the request? Can the tenant make the request?
Matt Warman
Ultimately, it is for the telecommunications provider to make the request, having been contacted by people with an interest in the building. However, it is important that it does that in the context of the person who is the leaseholder or the freeholder in any particular building. Obviously, there is nothing to stop an individual getting in touch with a potential telecommunications provider and saying they would be interested in taking up a service, but the formal relationship ultimately has to be with the person who has the leasehold or the freehold. It has to be between the communications provider and, in due course, the landlord, responsive or otherwise. I hope that clarifies some of what the hon. Lady asked about.
I appreciate that amendment 4 is probing, and I understand what the hon. Lady seeks to do. In the usual course of business, any communications provider would seek to expand its network because it knew there was demand. To enable a provider to seek to expand its network without doing any work with a potential tenant that may, in due course, trigger the code would expand that process significantly.
We have tried to take a balanced approach to accessing land to deploy or maintain networks, and it is essential that we try to keep that balance. We believe that allowing operators to access property without the landlord’s agreement is justifiable only in limited circumstances—where a customer has expressly requested a service, or where the operator has taken the steps outlined in the Bill to evidence that it has tried repeatedly to contact the landlord. It seems to me that that combination is the fair and balanced approach, and that if we allowed operators to do that without the consent, in effect, of either an absentee landlord or the people in a building, we would go further than we would reasonably want to. Actually, I think in some ways that would go further than what the hon. Lady suggested, but that would be the consequence of amendment 4.
We remain mindful of striking a careful balance between the rights of both landowners and telecoms operators. The need for a request to come from a tenant is an important element of that careful balance. Ultimately, a tenant, under whatever type of leasehold or contract can make that request. With that balance in mind, I hope that the hon. Lady is content to withdraw both amendment 7 and amendment 4.
Chi Onwurah
I thank the Minister for his response, which has given some more clarity, but I am afraid he has not clarified what the situation will be.
Amendment 4 highlights the lack of a coherent telecoms industrial strategy and a plan for the delivery of gigabit broadband to the country. Opening it up to mobile operators could have unforeseen consequences, which the Government apparently have not had the foresight to investigate fully. While limiting it in this way could be detrimental, I see no alternative but not to press amendment 4, because the Government have apparently not investigated the best way of opening this up to mobile operators.
In relation to amendment 7 the Minister talked about leaseholders, freeholders, tenants and customers, but I remain unclear whether tenants—those who are not the leaseholder or freeholder but are occupying the building or the land—who make a request for service from a broadband provider are within the scope of this legislation.
Matt Warman
They can make the request but, within the scope of the Bill, there is also a requirement for consent from the freeholder, for instance.
Chi Onwurah
I thank the Minister for that. Will he point to where in the Bill it says that a tenant can make the request? I am sorry to put him on the spot, but the Bill seems to refer to leaseholders and freeholders, and I do not see tenants there. That is the reason for amendment 7. On that basis, and in order to provide clarity, I would like to press the amendment to a vote.
Matt Warman
My understanding is that, within the context of this Bill, a tenant would absolutely be within the legal definition. I am not pretending that I am wholly answering the hon. Lady’s question, because there is still a requirement for the freeholder, for instance, to be a part of the process.
Question put, That the amendment be made.
Chi Onwurah
I beg to move amendment 8, in clause 1, page 2, line 14, at end insert—
“(f) the proportion of the operator’s network which uses vendors defined by the National Cyber Security Centre as high risk vendors does not exceed 35%.”
This amendment would prevent operators which heavily use high risk vendors from being granted Part 4A orders.
I want to move to an issue that has dominated our discussions on telecoms infrastructure for the past 18 months and is not reflected in the Bill at all: the role of high-risk vendors such as Huawei in the UK’s full-fibre, 5G and gigabit-capable future. The Foreign Secretary recently said that he wanted to
“legislate at the earliest opportunity to introduce a new, comprehensive telecoms security regime to be overseen by the regulator, Ofcom, and Government.”
He also said that the Government would
“legislate at the earliest opportunity to limit and control the presence of high-risk vendors in the UK network, and to allow us to respond as technology changes.”—[Official Report, 28 January 2020; Vol. 670, c. 709-711.]
Just this weekend the Minister’s senior colleagues on the Back Benches continued to express dismay at the rejection of our technological sovereignty.
I therefore want to give the Minister an opportunity to do what the Foreign Secretary called for—I hope that the Minister agrees that a Bill on telecoms infrastructure might be considered the earliest opportunity to legislate—by taking the first step in achieving the aim of limiting the role of high-risk vendors in our telecommunications networks. The amendment would limit the use of high-risk vendors so that
“the proportion of the operator’s network which uses vendors defined by the National Cyber Security Centre as high risk vendors does not exceed 35%.”
The National Cyber Security Centre stated in a recent report that for mobile operators security does not pay, and that market incentives had to be changed to deliver on security. It also made it clear that having high-risk vendors in the network was a risk, which seems obvious, but that the risk could be mitigated if the Government took certain steps, such as limiting the vendors to 35% of the network. The Government have yet to make clear the 35% of which network, when it should happen by and what enforcement powers would apply to the operators that do not meet the requirements. Although the Bill focuses on fixed-line operators, I am sure that the Minister and the Committee are aware that with the convergence of fixed-line and mobile operators, the core networks and aspects of the access network can be shared.
The amendment would prevent operators that heavily use high-risk vendors from being granted rights under code powers. It would therefore send out a clear signal that the Government are serious about following the recommendations of the National Cyber Security Centre, and as a consequence would lead to some monitoring of what is already in place and some reporting of that in order to meet the requirements.
Mr Davies, I am sure you agree—and I hope the Committee agrees—that nothing is more important than our national security. I am equally sure that you will not allow me to set out all the issues raised by the challenges of national security and our mobile networks. I will test your patience by saying that I have been highlighting for years the fact that there is a hole the size of a mobile network in the Government’s cyber-security strategy.
The NCSC says that the market is broken. Well, the Minister will not be able to fix it today, but I do expect him to answer some questions. Will he at least give some practical detail regarding how the recommendations of the National Cyber Security Centre will be implemented? Also, can he confirm that operators that heavily use high-risk vendors will not benefit from code powers, including those enabled by the legislation?
Matt Warman
I once again admire the hon. Lady’s ability to get national security matters into the discussion, as she herself to some extent implied, although her doing so was a lot less gymnastic than her peroration on leasehold. Although today is the first opportunity that we have had to talk about telecommunications since the announcement, there will be a far broader important debate on national security and high-risk vendors. That legislation will, of course, overarch many pieces of legislation, including this Bill.
We have listened carefully to the broad debate, both on high-risk vendors and on the amendment. I know that Members are interested in this matter, following the Government’s decision. In that decision, it was made clear that there will be new controls across the board on high-risk vendors, who will be excluded from all safety-related and safety-critical networks in critical national infrastructure, excluded from the security-critical core network functions, limited to a minority presence of up to 35% in the other parts of the network, and subjected to tight restrictions, including exclusions from sensitive geographic locations.
The Government made the decision on high-risk vendors after considering all the necessary information and analysis from the NCSC, industry and our international partners. It was an evidence-based decision, taken on a comprehensive security assessment, and noting the realities of the telecoms market. Members will be given a full opportunity to contribute to the important debate on high-risk vendors when the relevant legislation is brought before Parliament. However, as I think the hon. Member for Newcastle upon Tyne Central knows, to do so for this piece of legislation risks introducing a degree of incoherence in what is an important debate. We will do it in a coherent, sensible way in due course, and I hope that Members are reassured that the Government remain committed to working with Parliament as a whole to protect our future telecoms network, important though this Committee is.
Seema Malhotra
This is indeed a very important area. I slightly disagree with the Minister on whether referring to high-risk vendors is to extend the debate on today’s legislation. However, in terms of the implementation of the legislation, and operators and leaseholders going through the process, assuming that those operators obtain permission from the granters, will it be Ofcom that works to ensure that they abide by today’s legislation and the future high-risk vendor legislation?
Matt Warman
The hon. Member asks me to pre-empt what will be an important piece of legislation. What I can say is that we will ensure that nothing in today’s legislation could be used to circumvent that broader and more important piece of legislation, because obviously we have to ensure that 35% means 35% in whatever context.
I hope that Members understand that this is a hugely important issue. The Government are intent on doing things in a coherent and sensible way, so that we deal with matters of national security in the appropriate place rather than in a patchwork of measures with bespoke things in such places as this legislation. I therefore hope that the hon. Member for Newcastle upon Tyne Central will withdraw her amendment.
Chi Onwurah
I thank the Minister for his response. I understand that he is in a difficult position. He talked of a coherent response from the Government, but it is the lack of any coherence in our telecoms infrastructure that has placed us in this position. My deep and real concern is when the Minister says “in due course”. We know that this form of language avoids any precision as to whether something will happen in the next few weeks, months or years. Telecoms infrastructure providers are taking decisions on their equipment suppliers as we speak. Customers and businesses, but also the public more broadly, are concerned about the security of their broadband networks. The Government have said that there will be a plan to ensure that security, but the only detail we have is that it will come forth “in due course”. Will he give a little more precision?
Matt Warman
The hon. Lady asks for coherence, but when I offer it to her she says that she does not like it. It is important to say that guidance from the NCSC is already out there, and the Government are seeking to put that on a statutory footing as soon as possible. The idea that information is not already out there is unfair, not least on the NCSC, which has worked incredibly hard on this. It is now the Government’s role to have a parliamentary debate and put that on the statute book.
Chi Onwurah
I thank the Minister for that response. He is right that I am seeking coherence in a plan, rather than coherence in rejecting changes to the legislation. The important point is that the NCSC guidance mainly takes the form of excellent blogs written by the technical director, which are very helpful in many ways but do not go into detail about, for example, what the 35% means in practice, how it will be measured, how it will be enforced, who will regulate it and at what point these enforcement measures will start.
I accept that “as soon as possible” is slightly more enthusiastic than “in due course”, and I recognise the difficult position that the Minister is in. While noting my real concerns that to deliver on our gigabit-capable infrastructure we need greater clarity on the role of high-risk vendors as soon as possible, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Chi Onwurah
I beg to move amendment 5, in clause 1, page 3, line 23, at end insert—
“(9) The Secretary of State must by regulations define—
(a) what constitutes a request notice for the purposes of paragraph 27B (1) (d)
(b) what constitutes a response for the purposes of paragraph 27B (1) (e).”
This amendment would require the Government to define what constitutes a legitimate request and a legitimate response, as asked for both by landlords and telecoms companies.
We are coming close to the end of our amendments—I know that the Committee is saddened by that prospect. After almost 10 years in this place, this is one of the few occasions we have had to discuss in detail our telecoms infrastructure. It is not possible to say too much on this subject. However, with your indulgence and guidance, Mr Davies, I will confine myself to two more amendments.
Amendment 5 seeks clarity from the Government on the legislation’s general references to “a legitimate request” and “a legitimate response”. During the consultation phase and after it, landlords and telecoms companies asked for greater clarity about what would constitute a legitimate request and a legitimate response, particularly from a landlord. For example, if a landlord responds to a request with an out-of-office reply, saying “I’ll be back in six months”, does that constitute a legitimate response? Would that mean that the operator could not move on to request the access powers enshrined in this legislation?
Will the Minister set out here, or in the legislation, what constitutes a request notice for the purposes of proposed new paragraph 27B(1) and what constitutes a response for the purposes of proposed new paragraph 27B(1)(e)?
Matt Warman
I do not wish to sound less conciliatory than previously, but those matters are already defined in the Bill. I will briefly go through them, but the definitions that the hon. Lady seeks are already in the Bill, which renders the amendment unnecessary.
First, new paragraph 27B(1)(d) makes it clear that a request notice is a notice in accordance with paragraph 20(2) of the electronic communications code. That sub-paragraph is clear that it constitutes a notice in writing from the operator to a person setting out the code, rights and terms of agreement sought by the operator. The notice states that the operator is seeking the person’s agreement to those terms. In addition, the hon. Lady will know that Ofcom already produces template paragraph 20 request notices to ease the burden. I am confident that the request notice is already defined.
Secondly, the hon. Lady asks about the response. That answer lies in new paragraph 27B(4), which makes provision for how the required grantor—the landlord, as we might say in common parlance—responds to the operator. That provision states clearly two ways in which a landlord can respond: he or she either
“agrees or refuses, in writing”
or
“otherwise acknowledges the request notice in writing.”
That makes it straightforward and transparent for landlords. The amendment risks upsetting that balance by unnecessarily introducing additional regulations.
I am confident that those terms are already defined and I consider that it would be unhelpful for us to make additional requirements.
Chi Onwurah
I thank the Minister for his clarification regarding the request. I acknowledge that there is detail on requests, as requests have been required previously, as the Minister said. With regard to the response, the term “otherwise acknowledges” is quite broad. Given that the next step is to go to a tribunal, which will incur costs, it would be helpful to have greater clarity on that term.
Matt Warman
The important point is that there has to be a formal response “in writing”. By definition, in responding a landlord ceases to be unresponsive. This legislation aims to deal with unresponsive landlords.
Seema Malhotra
It would be an interesting exercise to go through all the different ways in which one could respond, but we would then be here for the afternoon session. The purpose of the Bill is to speed up the process for residents to secure superfast broadband. New paragraph 27B(4)(a) reads
“agrees or refuses, in writing, to confer or otherwise be bound by the code”
and so on. A response will surely be either an agreement or a refusal, or a point of clarification. The “otherwise acknowledges” could be as simple as an email saying, “I have received your notice.” For the purpose of speeding things up rather than providing new ways in which blocks could be put in place, it is important that the Minister provides further explanation of what is intended to be covered by “otherwise acknowledges” and how it helps, given the clarity of 27B(4)(a).
Matt Warman
I come back to my central point, which is that the Bill addresses the problem of landlords who do not respond. Ultimately, it does not confer a right to install equipment against the will of a landlord. Once a landlord engages with the process, they are not considered unresponsive and are not covered by the Bill. Obviously, a landlord has the right to prevent access—either through prevarication or by withholding permission—in almost all circumstances, whether for telecommunications infrastructure or for anything else.
I completely understand what the hon. Member for Newcastle upon Tyne Central is seeking to do, but ultimately the things that she wants defined are already defined on the face of the Bill, and they will clearly not benefit from being separately defined again. It is important that we are consistent with the electronic communications code and, although I sympathise with the hon. Lady’s desire to see broadband rolled out wherever it can be, I ask her to withdraw the amendment.
Chi Onwurah
I thank the Minister for his response. He said that the Bill does not confer a right to install equipment against a landlord’s will, and I am concerned that that effectively means that tenants do not have a right to superfast or gigabit-capable broadband, which I would argue is an increasingly important part of modern life. We joked earlier about the difference between access to water and access to broadband, but for many people broadband is an absolutely essential part of their working and social lives, and a forward-looking Government would ensure that citizens have a right to gigabit-capable broadband. Although the universal service obligation confers some rights, it does not deal with recalcitrant or unwilling landlords.
Seema Malhotra
Does my hon. Friend agree that there could be a compromise or third way on this? The terms of new paragraph 27B(4)(b)—
“otherwise acknowledges the request notice in writing”—
are superfluous if a landlord is seeking to push action further down the road. If that is an incentive for landlords to engage less positively with those seeking to build networks, would the Minister at least consider reviewing—if not deleting—sub-paragraph (4)(b)? If responses from landlords fall considerably under that option, rather than agreeing or refusing with the reasons that one would expect in a positive dialogue, will the Minister consider whether that option should stay in the Bill?
The Chair
As a matter of procedure, the Minister may wish to respond to the intervention by way of intervention, which I would welcome.
Chi Onwurah
Thank you for that guidance, Mr Davies. I want to emphasise that my hon. Friend makes an excellent point. I am sure that the Minister will agree that the Committee should look for a compromise that allows this important legislation to pass. Landlords may be eccentric and unwilling in their responses, and people’s gigabit-capable broadband should not depend on that. If the Minister is interested in intervening, I will happily give way.
Matt Warman
I am delighted to intervene spontaneously. Essentially we are having a conversation about whether there is a universal right to internet access, and whether that should be something that people can request by one means or another. That concept has been widely explored in many ways. It is surely not right to introduce a universal right of access for people who happen to live in blocks of flats via a small route intended to speed up one process. If we wanted to do that, we would surely seek to do it in a coherent and wide-ranging way, rather than in an incoherent way that I am sure the hon. Lady would criticise at great length.
Chi Onwurah
That is an interesting response from the Minister, because having coherent legislation—I think the Opposition called it a “digital bill of rights”—was exactly what we sought, in order to protect citizens and offer them the kinds of digital rights that are required in the digital age. We have not had such a response from the Government; we have incoherent and ad hoc legislation. That was one part of the argument being made.
My hon. Friend the Member for Feltham and Heston mentioned another part of the argument. Landlords are individuals, and we have all had experience—I certainly have—of landlords who were eccentric or who responded in ways that were unresponsive. Perhaps it would be a positive step to consider how the legislation works in practice. If unresponsive landlords are an issue, will the Minister at least commit to reviewing the situation?
The Chair
Obviously the Minister is free to intervene, but we will have to move on. Do you want to withdraw the amendment or press it to a vote?
Chi Onwurah
Given the debate that we have had, and given that we have registered our concerns on the record, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Chi Onwurah
I beg to move amendment 6, in clause 1, page 5, line 12, at end insert—
“(8) Any operator exercising Part 4A code rights is obliged to ensure that alternative operators can easily install the hardware needed to provide their own electronic communications service.
(9) The definition of “easily” in sub-paragraph (8) is to be provided by Ofcom.”
This amendment is intended to ensure that tenants are not “locked in” to using services provided by a single operator.
This is a key amendment, and the fact that it is necessary highlights why the past 10 years have been such a wasted opportunity for telecoms infrastructure. The Opposition are ready to help the Government implement a long-term telecoms industrial strategy. It is a long-held basic tenet of telecoms deployment that infrastructure competition drives investment, innovation and choice. That is the reason why, under Labour, first-generation infrastructure was rolled out to half of all households within 10 years. Under this Government, by contrast, full-fibre broadband has reached only 11% of households, according to the Minister. I believe that the figure is 8% but, either way, it is barely one in 10 households. That is over the same time frame of a decade. With the advice of Ofcom, the previous Labour Government realised that we had to enable infrastructure competition. That was what unbundled local loop was—bringing infrastructure competition to first-generation broadband deployment. You may find it strange, Mr Davies, for a Labour Member of Parliament to be giving instructions to a Conservative Government in competitive market economics.
Chi Onwurah
Well, I am glad you do not find it strange, because it reflects what I am afraid experience has taught me—that the present generation of Conservatives appears to be willing to sacrifice competition to vested interests. Under the Bill one operator could capture a building, roll out infrastructure to that apartment block and fleece the tenants there for ever—having had the first mover advantage in a block, and/or having installed infrastructure so that other competitors cannot install further infrastructure. Examples of that might be using very small ducts, or taking up all the equipment space in a basement.
The amendment would ensure that tenants could not be locked into a particular operator, by requiring that it should be possible for the infrastructure to be shared easily. It would give Ofcom the duty to define what “easily” means. Having worked for Ofcom, as I have said, I know that that can be done quite easily.
Other countries require shared access to building infrastructure. Has the Minister looked at that? Both France and the Netherlands have a much higher proportion of apartment blocks than we do in the UK. As I am sure Members of the Committee are aware from visiting those countries, proportionately many more people live in apartment blocks, and their approach to broadband regulation has ensured that there is better access for competition through a requirement for infrastructure sharing. Could not the Government take stock of those pre-existing solutions, just across the channel, to respond to some of our competition concerns?
Ofcom is taking steps to promote infrastructure competition in what is known as ducts and poles. At this point I should probably declare another interest, in that I was responsible for Ofcom’s 2009 survey of the availability of duct and pole infrastructure. I hoped that it might be taken up a little more quickly than this. Companies laying high-speed fibre cables for broadband and mobile networks may benefit from greater access to Openreach’s telegraph poles and underground tunnels under decisions announced last year by Ofcom, so I would like the Minister to confirm whether similar ease of access can be a part of the Bill. The opportunity to let rival companies access the new buildings when a company such as Openreach provides access represents a real opportunity to increase competition in the market and avoid operator lock-in for what is an essential utility, as the Minister has said. Will the Minister confirm, therefore, that in the spirit of recent Ofcom initiatives we can also extend the scope of the Bill?
Matt Warman
I can return to my conciliatory tone, in the sense that in this case we are interested, through both Ofcom and the Department, to see what can be done on infrastructure sharing. The hon. Lady is right that it is potentially a hugely important initiative, and I enjoyed her account of her 2009 duct and pole work; but she is also right to say that the work is still ongoing, because it is a hard thing to do and it is important that we take a coherent approach to it. In that spirit, I am afraid I would argue that we should be coherent in our approach to infrastructure sharing across the piece, rather than simply introducing a separate regime for people living in multiple dwelling units.
The Bill aims to support leaseholders to access the services they request from the providers they want. It already ensures that leaseholders are not per se locked in to services provided by a single provider; nothing in the Bill prevents a leaseholder with an existing gigabit-capable connection from one service requesting an alternative network to come in and request code rights as well. The Government cannot and should not compel independent commercial companies to alter the way they choose to deliver their services unless there is evidence that a problem exists. That problem is one that we are looking at more broadly.
Far from improving competition in access to gigabit services, the amendment may actually have the unintended consequence of doing the opposite. As the hon. Member knows, much of the cost of connecting premises is in the initial installation. The amendment could therefore seriously undermine the case for operators to make that initial installation, as they risk being undercut by second or third movers who would not have to bear the same costs. Forcing network builders to deploy in a way that allows competitors easy access is likely to benefit only the largest players in the market.
While I sympathise with the aim of the amendment, I do not think the hon. Member seeks to entrench the position of any one large operator further. Part 3 of the code already provides for operators to be able to upgrade electronic communication apparatus and to share use of such apparatus with another operator, should they wish.
The hon. Member might alternatively be seeking to test our thinking about the terms of what an agreement to be imposed might look like. It is worth saying that the process of that agreement is dictated in paragraph 27E(6) of the code, which makes it clear that before we make regulations in relation to the terms that she has discussed, which will be under the affirmative resolution procedure, we must consult interested parties, including operators. The Bill already envisages that the views of interested parties such as other operators will be invited before the details of a regulation are made.
I hope that the hon. Lady understands that we are looking at this more broadly, that we are seeking to do it in the coherent way that I know she is so keen on and that we are going to look at making sure that that is fair and compatible with our other approach. It would surely not be right potentially to restrict the advantage of investment in a particular MDU in a way that could actually discourage that investment in the first place and leave people stranded without the broadband that the whole Bill is intended to produce. With that in mind, while I sympathise with what the hon. Lady is seeking to do, I hope she understands that what she is proposing does not actually do what she seeks to do and could hold back some of the progress that we seek to make with the Bill. I ask that she withdraw the amendment.
Chi Onwurah
I want to continue in the conciliatory tone that the Minister has returned to, so I start by saying that I welcome his clarification that nothing in the Bill prevents a tenant who already has a broadband service from making a request for another broadband service and so invoking the code rights that the Bill gives. I know that that will be welcomed by tenants who have an unacceptable service or receive bad customer service, of which there are unfortunately far too many.
I welcome that clarification, but I cannot be so welcoming of the rest of the Minister’s speech, which raises many issues of competition and economics within the telecoms network sector, with which I am very familiar. When he says that the amendment would not do what I am looking to do, I am afraid that we will have to agree to differ on that. I find it strange that I should say this to him, but the key difference is that Opposition Members do not believe that there is a contradiction between investment and competition, which was the implication of his comment that the amendment, by opening up access to competitors, might chill investment. All the evidence shows—I again refer him to Labour’s example of unbundling local loop—that competition drives investment; it does not chill investment.
I think the Minister was trying to say that a small operator looking to put infrastructure into a 100-apartment block would do so only if it knew that it had exclusive access to that building for a number of years, to recoup its investment, which means that he acknowledges that tenants of that block would likely be locked into using that operator. However, smaller operators could benefit from having easy access to infrastructure installed by larger operators.
On that basis, the Minister’s comments do not reassure me. I gently say to him and the Government that saying that we cannot take measures now because at some point in the future we will have a coherent framework is partially what got us into this position of incoherent ad hoc responses to legislation that is obviously obsolete. While we cannot solve all problems with this legislation, we can at least help to solve problems for tenants and leaseholders in apartment blocks by ensuring greater opportunities for competition. As such, I will press my amendment to a Division.
Question put, That the amendment be made.
The Chair
We now come to the question that the clause stand part of the Bill. Members who have not spoken may want to make a short speech, but I am not requesting it.
Question proposed, That the clause stand part of the Bill.
Matt Warman
I will be considerably briefer than I would be in a normal stand part debate, because we covered a lot of ground in discussing the amendments. However, suffice it to say that the purpose of the Bill is to create a bespoke process for telecoms operators to seek access to leased premises, starting with MDUs in cases where a landlord repeatedly fails to respond to an operator’s requests for access. As we have discussed, part 4A is the crux of the Bill. To be brief, new paragraph 27A is an introductory provision that explains the ambition of a court making an order imposing an agreement that provides rights under the code between an operator and a landlord. That will be where: first, those rights are required in respect of land that is connected to the lease premises; and secondly, the occupier or another person with an interest in the land has not responded to repeated notices given by the operator seeking agreement to confer or otherwise be bound by those rights.
The Bill sets out the time period between giving and receiving notices, and it is only in the case of unresponsiveness that an operator is able to apply for a part 4A order. Crucially, an effect of new paragraph 27D is that a landlord who responds in writing to any of the operator’s notices will come out of the scope of the part 4A process, as we discussed at some length earlier. The Bill makes it clear that access rights may be used only for the purposes of providing an electronic communications service to the target premises.
Therefore, I hope that you will agree, Mr Davies, that this clause, in terms of both its length and the matters contained within it, is central to the Bill and to the policy underpinning it. It provides a much-needed process that will play a large part in ensuring that many tenants are part of this Government’s nationwide gigabit broadband upgrade.
Chi Onwurah
I am disappointed that the Minister has not seen fit to accept any of the amendments that we have put forward.
Chi Onwurah
The Minister indicates from a sedentary position that he has accepted the spirit, and I welcome his conciliatory tone in that respect. I hope that the clause will achieve its objectives by making it easier for telecoms operators to gain access in order to deploy gigabit infrastructure. I remain convinced that this will not do much to make up for the time lost in deploying gigabit-capable infrastructure and that, in rejecting our amendments, the Minister has lost an opportunity to improve the Bill. However, we accept that the Bill is positive and will support the clause.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Related amendments
Question proposed, that the clause stand part of the Bill.
Matt Warman
Clause 2 is a brief but important clause that introduces the schedule that makes related amendments to two pieces of legislation to complement the Bill. That legislation is the Communications Act 2003 and, contained within it, the electronic communications code and its related jurisdiction rights.
Chi Onwurah
I rise simply to say that we are happy for clause 2 to stand part of the Bill.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Schedule
Related amendments
Matt Warman
I beg to move amendment 2, in the schedule, page 9, line 17, at end insert—
“(10A) In paragraph 95(1), after paragraph (a) insert—
(aa) in relation to Wales, the First-tier Tribunal, but only in connection with proceedings under Part 4A;”.
This amendment is consequential on Amendment 3.
The Chair
With this it will be convenient to discuss the following:
Government amendments 3 and 1.
New clause 1—Report on resources to deal with proceedings arising under Part 4A of the code—
“The Secretary of State must prepare and publish a report on the adequacy of the resources available to First-tier Tribunal to deal with proceedings arising under Part 4A of the electronic communications code and must lay a copy of the report before Parliament within six months of this Act receiving Royal Assent.”
Matt Warman
At its heart, the Bill is about making it faster and cheaper for digital infrastructure providers to seek rights to install their services in leasehold properties. The Bill is also concerned with not permitting consistently unresponsive landlords to stand in the way of receiving the connectivity that households need. The Government have tabled three amendments that respond to helpful suggestions, first made by the senior judiciary of both the first-tier and upper tribunals. Our amendments also respond to the welcome interventions made by hon. Members on Second Reading—I am glad to see some of those Members here today.
Without these amendments, applications would commence in the upper tribunal in England and Wales and the Lands Tribunal for Scotland, and would be dealt with in the county court in Northern Ireland. Commencing cases in the upper tribunal is a reasonable route, because it aligns the new process with the electronic communications code. The process still works in principle, but we should also ensure that it works as well as possible in the real world to deliver the faster, cheaper outcomes that we seek. We continue to be mindful that, with up to an estimated 2,650 cases per year in England and Wales, we need to hear cases at the most appropriate level.
Presently, the upper tribunal hears cases and makes determinations in respect of disputes concerning the interpretation. As such, the Government need to continue to work with that tribunal and its equivalents elsewhere. The need to ensure that the upper tribunal has the capacity to deal with the part 4A applications was raised on Second Reading. The matter has also been the subject of discussion between my officials and their counterparts at the Ministry of Justice, as well as senior members of the judiciary from the relevant chambers of the first-tier and upper tribunals.
The number of part 4A cases is estimated to be significant. The upper tribunal, with just two judges, would not have the bandwidth to deal with that volume of cases, regardless of the fact that the applications are expected to be relatively straightforward. While the process as drafted continues to work in principle, therefore, in practice we agree with the representations that we have heard that placing an additional burden on the upper tribunal would not necessarily provide us with the resources that we need. We are grateful to senior members of the judiciary from the first-tier and upper tribunals with whom my officials met.
In the light of those considerations, the amendments provide for applications for part 4A orders to commence in the first-tier tribunal in England and Wales and the sheriff court in Scotland. I hope that Committee members agree with that important change. In comparison with the small number of judges that I mentioned, 15 salaried judges and an additional 125 fee-paid judges sit in five courts across England, and 142 sheriffs preside over 39 courts in Scotland, so the change significantly increases the resources available and addresses some of the concerns expressed, sensibly, by hon. Members from both sides of the House on Second Reading. I am glad that we have found a sensible way forward that increases the resources available. It is a sensible and pragmatic move that has a significant effect but does not alter the principle of the Bill.
New clause 1 proposes that a report be made to make it clear that we have the necessary resources. As I said, we are confident that applications for part 4A orders will, in due course, be heard on the papers—without the need for an oral hearing—and our intention is for the process to be as low in burden as possible. Of course, we will monitor the resourcing of the first-tier tribunal to ensure that it has the capacity to dispense with those cases. Ultimately, that information can be obtained in a number of ways, such as by tabling parliamentary questions or through the fact that the proceedings are public.
Again, we sympathise with the intentions of the hon. Member for Newcastle upon Tyne Central, but it is clear from the amendments tabled in my name that we are already addressing the substance of what she asks. Ultimately, the information that she seeks is already widely available in equivalent cases and will continue to be in future, so introducing an additional administrative burden would neither provide more information nor be a sensible use of resources. I hope that she will withdraw the new clause in that spirit.
Chi Onwurah
It is a pleasure to respond positively, and not just in spirit but in practice, to the Minister’s amendments. They respond to concerns that we raised on Second Reading and those raised by others about increasing resources. The number of judges available to consider those requests and cases leaves much to be desired. Hopefully the Government’s amendments will make the limited scope of the Bill more effective, so we are happy to accept them.
New clause 1 responds to that by acknowledging that our judiciary is under severe strain at every stage. The new clause is designed with accountability and transparency in mind, so that we can see the impact of the new legislation on the resources available. The legislation sets out new legal functions. As with all good legislation, we must ensure that the new mechanisms are robust and well-resourced to ensure that the legislation does what it is meant to do, and does not fail when it makes contact with reality.
The new clause would require a report on resources to deal with proceedings arising under part 4A of the code be prepared and published within six months of the Act receiving Royal Assent. It aims to ensure that we see the impact on our judiciary. Although the information may be available, I am sure that the Minister is aware that nothing concentrates minds as much as laying a report before Parliament for scrutiny by right hon. and hon. Members. That gives an opportunity to see how the legislation works in practice. I am sure the Minister is proud of the legislation and the impact it will have, so he must welcome the opportunity to speak to that in the House.
We do not have an impact assessment for this legislation. It is a short Bill, but that does not mean that its impact may not be important. When I spoke to operators, they estimated that it might cost around £30,000 to take a request through the tribunal. That is their estimate—I have not seen any Government figures to confirm whether they consider that to be high or low, but that would have been a welcome part of an impact assessment. The sum of £30,000 for a tribunal to access an apartment block with 10 apartments means an additional cost to the operator of £3,000 per customer. That has an impact on the business case for that investment in the first place.
Seema Malhotra
I am not seeking to incur the Minister’s displeasure by bringing in wider issues on leaseholding, but when landlords may be taken to court for any matter, they potentially charge their fees back to their leaseholders. Perhaps we should make sure that there is some protection.
Chi Onwurah
My hon. Friend makes an excellent point. Without raising all the concerns surrounding leasehold, it is well known that freeholders may charge the leaseholders for the costs they incur when seeking legal judgments. In addition to the £30,000 that the operator would put on to the cost of the service deployment, therefore, the leaseholders and ultimately the tenants may also find themselves facing the costs incurred by the freeholder going to tribunal.
Matt Warman
I take the hint, Mr Davies. I will briefly address a couple of issues raised by the hon. Lady. The cost of an application by an operator will be determined by the court, but we anticipate that the application fee will be under £500. She might have been including the cost of investment, which by definition is an investment that the operator is seeking to make by applying through the code.
Chi Onwurah
To clarify, I am not including the cost of investment. From talking to operators, on top of the cost of applying they will have lawyers’ fees and internal costs. Those are the costs that I have been told about—not the cost of the infrastructure, but the cost of going to tribunal for an organisation, as part of its daily operating costs.
Matt Warman
None the less, the legislation cuts a tribunal process from several tens of thousands of pounds to a £500 fee, which is indisputably a significant reduction.
The hon. Lady talked about focusing the minds of Ministers. I would say gently that parliamentary questions, oral questions and indeed Westminster Hall debates also focus minds. I look forward to celebrating the success of the Bill through that means, rather than through the proposal set out in the new clause.
Amendment 2 agreed to.
Amendment made: 3, in the schedule, page 9, line 22, leave out paragraphs 4 and 5 and insert—
“4 The Electronic Communications Code (Jurisdiction) Regulations 2017 are amended as follows.
4A In regulation 2(1) (interpretation), after the definition of “the code” insert—
‘“Part 4A proceedings” means proceedings under Part 4A of the code;’.
4B (1) Regulation 3 (conferral of jurisdiction on tribunals) is amended as follows.
(2) The existing text becomes paragraph (1).
(3) In that paragraph—
(a) in the words before sub-paragraph (a), after “Subject to” insert “paragraph (2) and”;
(b) for sub-paragraphs (a) and (b) (including the final “and”) substitute—
“(aa) in relation to England and Wales, the First-tier Tribunal and the Upper Tribunal, and”;
(c) omit the words after sub-paragraph (c).
(4) After that paragraph insert—
“(2) Functions are exercisable by the First-tier Tribunal under paragraph (1)(aa) only—
(a) in connection with relevant proceedings in relation to England that have been transferred to the First-tier Tribunal by the Upper Tribunal, and
(b) in connection with Part 4A proceedings (whether in relation to England or Wales).
(3) Any provision of the code which confers a function on the court is, to the extent that the function is exercisable by a tribunal under this regulation, to be read as if the reference to the court included reference to that tribunal.”
4C (1) Regulation 4 (jurisdiction for commencement of proceedings) is amended as follows.
(2) In the heading, for “relevant” substitute “certain”.
(3) The existing text becomes paragraph (1).
(4) After that paragraph insert—
“(2) Part 4A proceedings must be commenced—
(a) in relation to England and Wales, in the First-tier Tribunal, or
(b) in relation to Scotland, in the sheriff court.”
5 The amendments made by paragraphs 4 to 4C do not limit the provision that may be made by regulations under paragraph 95 of the code.” —(Matt Warman.)
This amendment provides that proceedings under new Part 4A of the Code must be commenced in the First-tier Tribunal (in relation to England and Wales) or in the sheriff court (in relation to Scotland), instead of in the Upper Tribunal or the Lands Tribunal for Scotland respectively.
Question proposed, That the schedule, as amended, be the schedule to the Bill.
Matt Warman
I shall be brief. The schedule sets out related amendments to other legislation which were introduced by clause 2. It contains the amendments to section 402 of, and schedule 3A to, the Communications Act 2003, also amending the electronic communications code. We have already discussed the consequences of the schedule so, with that, I commend it to the Committee.
Question put and agreed to.
Schedule, as amended, accordingly agreed to.
Clause 3
Extent, commencement and short title
Amendment made: 1, in clause 3, page 7, line 21, leave out—
“amendment made by paragraph 4 of the Schedule extends”
and insert—
“amendments made by paragraphs 4 to 4C of the Schedule extend”.—(Matt Warman.)
This amendment is consequential on Amendment 3.
Question proposed, That the clause, as amended, stand part of the Bill.
Matt Warman
The clause makes an important provision in respect of the Bill’s territorial extent and commencement. As Members may be aware, telecommunications is a reserved matter in all three of the devolution settlements. The territorial extent of the Bill is to England and Wales, Scotland, and Northern Ireland, but there is one exception: the amendment made by paragraph 4 of the schedule, which extends only to England and Wales, and Scotland because the statutory instrument being amended by paragraph 4 does not extent do Northern Ireland. It is important to have that on the record. I commend the clause to the Committee.
Question put and agreed to.
Clause 3, as amended, accordingly ordered to stand part of the Bill.
Matt Warman
On a point of order, Mr Davies. I will briefly do the customary thing of thanking the Bill Committee members who have had such a full and compressed day. I also thank all the officials who have worked so hard on the Bill and you, Mr Davies, for such brilliant chairmanship.
Chi Onwurah
Further to that point of order, Mr Davies. I echo the Minister’s thanks. I also thank the officials who have helped us in drafting and tabling our amendments.
The Chair
Let us hope that the broadband is as quick as this Committee.
Bill, as amended, to be reported.
Agriculture Bill (First sitting)
Tuesday 11th February 2020
(4 years, 2 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 February 2020 - (11 Feb 2020)
The Chair
Before we begin, I have a few preliminary points. Please switch off mobile phones. Tea and coffee is not allowed; that is not me being pompous—the Speaker does not allow tea or coffee in the Committee Rooms. Until that changes, Lent has come early and it is definitely water only.
We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication and then a motion to allow us to deliberate in private about our questions before the oral evidence session. In view of the limited time available, I hope we can take those matters without too much debate.
The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
I beg to move, Date Time Witness Tuesday 11 February Until no later than 10.30 am Nature Friendly Farming Network; Farmwel; LEAF; British Growers Association Tuesday 11 February Until no later than 11.25 am RSPB; RSPCA; Rare Breed Survival Trust; Traceability Design User Group; Livestock Information Ltd Tuesday 11 February Until no later than 2.30 pm Ulster Farmers Union; DAERA Tuesday 11 February Until no later than 3.00 pm NFU; National Federation of Young Farmers Clubs Tuesday 11 February Until no later than 3.30 pm Cooperatives UK Tuesday 11 February Until no later than 4.15 pm Campaign to Protect Rural England; Kings Crops; Holkham Estate Tuesday 11 February Until no later than 5.00 pm Country Land and Business Association; Tenant Farmers Association Thursday 13 February Until no later than 12.15 pm NFU Cymru; Farmers’ Union of Wales; Welsh Government Thursday 13 February Until no later than 1.00 pm Soil Association Thursday 13 February Until no later than 2.30 pm NFU Scotland; Quality Meat Scotland; Scottish Government Thursday 13 February Until no later than 3.00 pm George Monbiot, The Guardian Thursday 13 February Until no later than 3.30 pm Professor Bill Keevil, University of Southampton Thursday 13 February Until no later than 4.00 pm Unite; Landworkers Alliance Thursday 13 February Until no later than 4.30 pm Sustain; Compassion in World Farming Thursday 13 February Until no later than 5.00 pm Which?
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 11 February) meet—
(a) at 2.00 pm on Tuesday 11 February;
(b) at 11.30 am and 2.00 pm on Thursday 13 February;
(c) at 9.25 am and 2.00 pm on Tuesday 25 February;
(d) at 11.30 am and 2.00 pm on Thursday 27 February;
(e) at 9.25 am and 2.00 pm on Tuesday 3 March;
(f) at 11.30 am and 2.00 pm on Thursday 5 March;
(g) at 9.25 am and 2.00 pm on Tuesday 10 March;
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 28; Schedule 1; Clause 29; Schedule 2; Clauses 30 to 34; Schedule 3; Clause 35; Schedule 4; Clauses 36 to 43; Schedule 5; Clauses 44 and 45; Schedule 6; Clauses 46 to 49; Schedule 7; Clauses 50 to 54; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 10 March.
The programme motion was agreed by the Programming Sub-Committee yesterday. I hope we are all agreed on the programme motion, and I look forward to hearing evidence from witnesses in the order set out.
Question put and agreed to.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(George Eustice.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room. Colleagues can get papers on that table over there. The helpful Clerks will indicate where they are; if Members go around, behind me or the witnesses, they can pick up the papers.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(George Eustice.)
The Chair
Q
Jack Ward: My name is Jack Ward, and I am the chief executive of the British Growers Association, which predominantly operates in the fresh produce sector—fresh fruit and fresh vegetables.
Caroline Drummond: I am Caroline Drummond, the chief executive of LEAF—Linking Environment and Farming—a farming environment charity promoting more sustainable agriculture and a whole-farm approach, with demonstration farms, the LEAF marque and a public outreach area. I am also married to a dairy farmer.
ffinlo Costain: I am ffinlo Costain, the chief executive of Farmwel, which was established to develop a really positive outlook on reform of the common agricultural policy post Brexit. We work very closely with the FAI—Food Animal Initiative—farm in Oxford, which is one of the world’s largest food sustainability consultancies.
Martin Lines: I am Martin Lines, an arable farmer from Cambridgeshire. I am the UK chair of the Nature Friendly Farming Network. We have farm membership across the UK, as well as public membership and organisations that support the network.
The Chair
May I say to our witnesses, if you have never previously appeared before a Committee, that there is nothing at all to be worried about? My colleagues are very friendly. They are just trying to get information from you to use during the Committee stage of our proceedings. The session ends at 10.30 am, so it will go very quickly.
George Eustice
Q
ffinlo Costain: One of the key challenges with the common agricultural policy is that it has largely rewarded farmers for owning land, and it has presided over an enormous disconnect between farmers, other people in the countryside, and customers, and often the supply chain as well. The huge advantage of the new legislation is that, in changing the funding system to public funds for public goods, we will be able to deliver the changes that we need—the farm animal welfare improvements, the sustainability improvements, the climate mitigation, and the biodiversity restoration, which has been so degraded under the common agricultural policy.
Make no bones about it: we are facing a climate and nature emergency that is upon us now, not tomorrow. It is critical that we get this right. For me, getting land use right is the golden ticket. Having the opportunity at this time to reform land use—so that we can continue producing good food and good nutrition, delivering national security in that way, which is critically important, as well as delivering climate mitigation, land adaption to help with climate change, and biodiversity restoration—is absolutely critical. The Bill comes at the perfect time, and it is well set up. There are some challenges within it, and some issues that I think we will address, but in general terms it is very positive.
Martin Lines: As a farm owner and a tenant, under the current system, with the single farm payment, I am encouraged to farm to the very edge of fields. Biodiversity and other bits of the landscape are not rewarded. As a tenant, my landlord takes away most if not all of my single farm payment on top of the rent. If we move to a public goods model, I actually get rewarded for the delivery of services as a land manager—as a farmer—so we would move into a system that better supports actual farmers, rather than the ownership and management of the landscape.
Caroline Drummond: One of the real challenges of the past system was the capability to drive ambition for farmers. It was a “Tell me what I’m doing” type of approach, so going forward, we have a real opportunity to demonstrate leadership, vision and ambition for our farming sector. Ensuring that we get the right governance is going to be really important. There needs to be partnership and development of trust between Governments, from voluntary approaches that are externally, independently verified such as farm assurance schemes, right through to building on some of the success stories of capability and innovation that we have seen among some of the farmers who are already thriving and doing very well in this country.
Jack Ward: The fresh produce industry has not benefited that greatly from the CAP. We are about 170,000 hectares; we have an output of about £2 billion from that area, and the contribution from the basic payment scheme is about £40 million. However, the contribution from the producer organisation scheme, which is broadly equivalent, has been incredibly important. I think we would like to see that continue in some shape or form.
In terms of opportunities, there is a terrific opportunity to increase the amount of fruit and veg that we currently produce. In some sectors, such as tomatoes, we are very dependent on imports. We import eight out of 10 tomatoes that we consume in the UK; we must be able to do better than that.
Daniel Zeichner (Cambridge) (Lab)
Q
ffinlo Costain: It is really important for Government to set a framework, but if there is a criticism of the way that Europe and the common agricultural policy have worked in the past, it is that it has been way too prescriptive. That has meant that, to a large extent, farmers have learned to do what they are told, rather than to properly understand and integrate what they are doing on their land.
My own view is that Government should become more goal-centred. They need to set the right metrics and to understand what outcomes they are trying to achieve, but then they need to take a step back and allow farmers to farm. Farmers understand their land, and if they have a funding model that supports environmental excellence and other public goods—restoration of soil health and so on—they can work out ways to do that. I would hate to see a situation where there is a continuing prescriptive approach, but it is focused on the environment rather than on how to produce cattle, and we end up with farmers still not really understanding what they are doing and simply farming the subsidy.
We need ownership of change, and farmers can do that. Farmers understand their land; they know their land, and if we give them the freedom to work within that public goods model, they will deliver the outcomes. They will step up. They are a standing army out there, ready to do this, and they will step up and do it.
Martin Lines: I have concerns about what the ELM for England would look like, the transition period, and how the funding is going to work. We need more detail about what the future will be, so that the farmers can start changing and adapting now to the model of what is coming. There is some concern, particularly about the transition period. As we go into the new system and payments under the current system tail off, what is going to bridge the lull in the middle, and how do we get farmers to step across to the new system at speed?
Caroline Drummond: I agree. There needs to be the policy documentation, so we can identify what this is going to look like and how the knitting all joins up—there are lots of balls of wool, but what are we trying to knit at the end of the day? Not much has been left out of the Bill, which is really key, but we need to know how it will be interpreted and how the ELMS projects will be carried out. There are a lot of them going on, and we need to know how they will be brought together to demonstrate the delivery against metrics, outcomes and, ultimately, impact. Ultimately, the Government have to deliver against the global and national targets around the sustainable development goals, the Paris agreement, and so on, but the farming sector has the opportunity to support us in demonstrating that we are helping on issues around climate change, biodiversity, soil improvement and those matters.
The Chair
Before bringing in Danny Kruger, I should have told new Members that, when they start questioning—they do not have to do it every time—they should declare any financial interest they have in these areas.
Danny Kruger (Devizes) (Con)
Q
Martin Lines: For many of the tenancies, the price per hectare per area went up, compared with the payment, so they see that as a benefit of owning the land. Many landlords get the payment directly and the farmer has to manage, which disconnects the reward from managing the landscape, so the current system does not benefit the farmer. It challenges cash flow, because as a tenant I am paying rent for six to 12 months before I get it back under the payments system, so there a problem with cash flow, particularly with late payments. There is a big issue with the new system about payment timings. There are huge challenges under the new system.
Under the current system, we know that some landlords are trying to get the stewardship payment, or parts of it, but under the new system, if you are delivering habitat, or pollen and nectar, bits and pieces, you are the farmer doing the work. You should be getting the reward. There will be an increase in capital, and the landlord will be rewarded for capital aspects and other things that are delivered on the landscape.
The Bill should be about encouraging the whole-farm approach of better farm land management and looking at all aspects, not just food production—pollination, flood mitigation, soil health improvement and public access. The farmer’s role is not just about food production; it is about providing goods and services. The definition of a farmer is someone who manages land to deliver goods and services. One of those is food, but many other things can be delivered, and if we move the system, we can be rewarded for those and create a better system.
Kerry McCarthy (Bristol East) (Lab)
Q
ffinlo Costain: I think you are quite right about the key concern that I and other colleagues I have spoken with have. There has to be a whole-farm approach. If public goods are being delivered, it has to be a combination of public goods and we need baseline assessments supporting that around carbon and biodiversity that are whole-farm. From our perspective, it would be horrible if we go through all this work and have all this ambition but end up with a sparing approach, where we have one bit of land put off for sequestration with Sitka spruce, creating the various challenges that that does, another bit for rewilding, and another bit for ever-more intensive food production. It is critically important that we face the challenges of the whole-farm approach. The best and most efficient way to make progress is for every hectare, as far as possible, to deliver good, nutritious food, climate mitigation and adaptation, and biodiversity restoration. A whole-farm approach is absolutely critical, and we would welcome an amendment that crystallises that and makes it clearer in the Bill.
Martin Lines: The only concern is with those who do not engage in the system and choose not to take public goods money. How are they going to be legislated for against the minimum standards?
Kerry McCarthy
Q
Martin Lines: Under the current system we have cross-compliance. With those who choose not to engage in the system, because they want to push for productivity, how is the system going to legislate for and regulate the basic standards? Who is going to be the policeman for the countryside, to raise standards and make sure they are enforced? We have seen many problems already with soil health degradation and other environmental issues that are not being addressed.
Kerry McCarthy
Q
Martin Lines: We are not sure who is going to be holding them to account or what kind of standards there are. Nor do we know how those who choose not to engage in the system will be held to account, because you cannot withhold a payment if they are not receiving a public goods payment. We need to make sure that that standards system is in place.
Caroline Drummond: I think there are some nuances, in terms of the “mays” and the “musts”—there should be a bit more “must” in some areas. Whole-farm approaches are absolutely critical. I have been an advocate of the whole-farm approach for the last 30 years, and I think it is absolutely key to making sure that soil management, climate change mitigation and biodiversity, and indeed landscape and cluster-type approaches, are driven in. That is where the ELMS projects will be really vital. A lot of their design is based around land management plans, which I imagine will be whole-farm. A lot of the third tier is proposed to be around cluster groups and landscape scale-type approaches. It goes back to this question of farmers choosing not to be engaged at all, how do we account for that? How do we really drive and match the ELMS within the ambition of the Bill?
Jack Ward: While there is a lot of focus on public money for public goods, making sure that UK agriculture is inherently profitable is hugely important, because no amount of public funding is going to supplement an overall lack of profitability. If in five years’ time we have an inherently unprofitable farming industry for whatever reason, I just do not think there is going to be enough public funding available to make good that shortfall. Alongside public money for public goods, we really have to ensure that basic agriculture can wash its face.
The Chair
Mr Costain, and then we really must move on.
ffinlo Costain: The issue of eligibility for public funds is really critical. What Wales is planning is interesting. It is planning that there will be a requirement for baseline assessments on carbon and biodiversity before farmers are even eligible for the public goods payment. That will take place annually to continue that eligibility. That is a really positive approach, and it is important. Whole-farm, getting the eligibility, making sure of that baseline and continued monitoring of metrics are critical.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Q
Caroline Drummond: I am not too sure. It is interesting that there is a lot about livestock production in here, but a lot of that level of detail will have to come through the policy support, because upland farmers are under a huge amount of pressure. There are discussions around the meat challenges of Veganuary and climate change mitigation, but we should look at what they offer in terms of tourism and capability to manage. For those very sensitive land areas, right through to some of the high-value peat areas, I think there will be the need to get some really good ELM projects to better understand how we can support those farmers. Exeter University is doing a lot of work in this area at the moment to find out how those farmers, as Jack just said, can actually make a profit at the end of the day. There are a lot of social services, public goods, environmental goods, tourism and additionalities that these farmers offer on incredibly tight margins.
Martin Lines: I think there will be movement with payments. As an arable farmer in Cambridgeshire on a large field system, the productivity of my landscape is really good. Most years it is quite a good, profitable system. If you are in the marginal areas—the uplands, in the west country where there is a smaller field-scale system—the public goods should be rewarding you more. I will probably receive less public goods money, but that will be moved, hopefully, across to the uplands and those cherished areas that cannot deliver more productivity, but need to be supported to deliver the public goods and with the landscape delivery stuff. It should be swings and roundabouts, but it should be fair. The detail is not in there and we need to see that transition. It is going to be about the journey if we move from one to the other and give farmers confidence about the future.
ffinlo Costain: I understand your point, Mr Goodwill. There is one farmer we work with in Northumberland with 1,000-odd acres on a sheep farm. When we have run the metrics of looking at his carbon footprint with GWP*—global warming potential “star”—the new accurate way of accounting for methane, which is very different from the way methane was accounted for 18 months ago and was recognised in the Committee on Climate Change land report just a couple of weeks ago, his farm impact is less than the average household of four, which is astonishing. We want to make sure that farm continues to get the funding as well.
We have proposed in the past that an acreage basis for that continuing maintenance of excellence could be a way to go because we need to make sure—exactly as I think you are saying—that we do not just restore biodiversity, we do not just mitigate climate change, but we hold and maintain that excellence afterwards. I hope that, within public goods applications, farmers will be able to make the case that they are continuing to deliver excellence. All farms can be better managed. We never achieve sustainability; it is a journey. However, if farmers can make the case that they are delivering public goods and continuing to deliver that—I would like to hear from Ministers on that—I hope they will continue to be eligible.
Jack Ward: From the fresh produce industry, in terms of sector, I think there is a lot of interest in what the ELMS might offer. Just coming back to the earlier question: until we see the detail it is difficult to make a judgment.
Deidre Brock (Edinburgh North and Leith) (SNP)
Q
Martin Lines: If we do not have the rug taken from under our feet: we are told to produce to a standard, but if different standards are allowed to be imported, how can we compete? Our costs are different. If the standard is positive across the platform, we can compete. It may be a different price model, but we can compete with that standard. We should export our environmental footprint. We can bring in produce from around the world to the same standard, so other people’s standards can increase. There is huge risk because if we are told to produce goods to a standard, then yes, there needs to be something in the Bill or an assessment of the amount of stuff allowed in that is below our standards. We already allow in a lot of products below our standards. We are not allowed to use neonicotinoid treatments or genetically modified processes in the UK, but we import huge quantities. So there needs to be that sort of balance. I would struggle to say none, but there needs to be balance and fairness for the whole farming industry.
Caroline Drummond: It would be fair to say they are extremely concerned, and I think the majority of farmers are very concerned about not undercutting the capability and the investment that they have made. We are very fortunate. We work with a lot of can-do farmers who have made a huge investment in making sure they reach the level of trying to be more sustainable; trying to ensure that welfare standards are meeting and going beyond the regulation; and driving for new innovation and ways of improving and doing things. As Martin has said, offshoring the environmental and animal welfare delivery and the learnings we have made from those practices that are just not acceptable—not only to our farmers but to our customers—is not good news. There is a double whammy because although many countries say they do not support their farmers, they do in many different ways. That will be through investments and free advice. You just have to go on to the United States Department of Agriculture website to see the substantial amount of money that is going to support marketing, drainage schemes, flood alleviation, irrigation and so on. We need to be very careful. There is that second hit of not only importing produce that potentially does not meet the standards or requirements of our farmers, but in addition to that is also being supported through different ways.
Jack Ward: In the fresh produce industry, we already import from about 90 countries, so there is a fair degree of free trade within fresh produce. I think the areas that would concern our growers are particularly around production systems that would be unlawful in the UK. That is particularly around crop protection and labour welfare standards. Those are two very key areas for the sector.
ffinlo Costain: I think it is terribly important, exactly as everybody else has said, but there are two sides to this particular coin. I understand, hear and welcome what Ministers have said repeatedly, that standards will not be lowered and that trade deals will not allow that to happen but, in terms of farmer and public confidence, it needs to be written in the Bill. I think it is really important that it is there.
I think that partly because of the impact that it could have on food, but also because of the impact it has on the industry that grows up around excellence: the marketing, the branding, the new technology, which Britain can become excellent and fantastic in. Associated with that—the other side of it—is what does brand GB look like? What are we exporting?
The opportunity here is to get something right in Britain, to do something excellent in terms of food production and the environment, and to export that knowledge and those brands and that technology around the world. When I look at Ireland, with Origin Green, it is the only example that exists of a national scheme of metrics. In Ireland, it is only around carbon; it does not yet incorporate GWP*, so it is flawed. It does not include biodiversity.
There is an opportunity for Britain when we get the metrics right, when we are collecting these at a national level, which also, by the way, means that we can better inform policy making in future, that this can underpin the British brand. If we allow food in that is undercutting our standards, it undermines our brand. It not only undermines our farmers, but the industry as a whole.
Caroline Drummond: We operate a global standard with LEAF marque; 40% of UK fruit and veg is LEAF marque certified. The fresh produce and the farmers that we work with on a global scale are meeting the same requirements demanded of our farmers in this country.
The Chair
We are now halfway through the evidence session. I have lots of colleagues who want to ask questions and I want to ensure that they are all called.
Miss Sarah Dines (Derbyshire Dales) (Con)
Q
Martin Lines: It would be a mixture of both. Many of the tenancies that are currently written are too short, with many of three to five years, because of the uncertainty ahead. They would be rewritten and reframed. The person doing the job— the work, the delivery of those public goods—should receive the income.
If it is about land, natural capital and something infrastructure-wise of trees, the landowner may get some of that. If it is about the delivery of habitat and flood mitigation, so that you are losing crop yield or change of land use, the tenant can manage some of that. It will be a redefining, but I think the industry will cope with it. We just need the timeframe for how we deliver it.
Daniel Zeichner
Q
Caroline Drummond: I think potentially farmers will walk away from supporting them ultimately, if the marketplace is not delivering against the requirements expected of the imported produce and farmers are increasingly required to deliver against goods that are costing them from a business perspective. That is one of the big dangers. A bigger issue is offshoring, and the fact that we have nine years to deliver against the sustainable development goals. We have the Paris agreements. We have a fantastic opportunity with the conference of the parties talks on climate change being held in this country later this year to herald our ambitions for delivering and demonstrating leadership in environmental delivery and in climate change mitigation delivery.
We might think we can compete on a global level in terms of a huge productivity market, but actually we are just small producers on a global scale. Our real opportunity lies in being the best at what we do. We already have such a good background: despite all the criticism that farmers get for delivering or not delivering against the environment, they have been hugely committed since 2001, after foot and mouth, through entry level stewardship and higher level stewardship agreements, to deliver vast changes and improvements, with strong ownership in how farmers are farming in this country. It would be a real shame to lose that. The Bill is an opportunity to build on that backbone and to place our farmers in a position whereby we continue to be world leading, but with more focused ambition and strong clarity on what we deliver from an environmental perspective.
Jack Ward: In terms of delivering environmental outcomes, we are looking at a balance between a farmer or grower’s own investment and public money. If you start to cut away at the farmer’s ability to invest as an individual, you lose an important part of the funding that will deliver the overall environmental improvements that you are looking for.
ffinlo Costain: I think the future for UK farmers has to be in quality. Volume production will increasingly become a mug’s game. I would not advise farmers to go into it. It should be about environmental excellence, animal welfare excellence and sustainability excellence. The danger is that if it comes into the country, some customers—perhaps quite a lot of customers—will buy it. That is where the undermining happens: it undermines our ability to develop that comprehensive basis for environmental excellence, and it will challenge emerging supply chains in particular. Part of our big challenge over the next 10 years is to shorten supply chains and to make sure that farmers are better able to claim decent farm-gate prices by selling direct or through many fewer cogs before they reach the customer. I worry about those smaller and emerging supply chains being undermined.
Alicia Kearns (Rutland and Melton) (Con)
How do you assess that the security of food supply will be improved by the Bill? What do you see as the UK’s greatest threat to food security?
Martin Lines: Food security can only come from healthy soil and a healthy environment. If we over-produce from our soils, we degrade them and there will be no food security for future generations. We need a balance of how we manage our landscape and how much we can produce from that balanced landscape. We can then consider what products we need to import, and whether we need to do other things or change diets or change tjhe system. There needs to be an assessment of how our landscape looks, with a joined-up approach to landscape productivity.
ffinlo Costain: Traditionally, food security has been about volume and about being able to feed everybody. That has led us to the challenges we now face, which Martin just referred to. Food security comes from being able to produce good, nutritious, diverse and seasonally available food. That means we need to restore soil, have good water management, and good community dynamics, with complexity returned to our swards and landscapes where nature works with farmers to produce that food.
Looking forward 40 years to how society could break down as a result of climate change and biodiversity loss, food is the critical factor. If you look around the world at conflicts, including Syria, food is the critical factor that creates conflict. The way that we deliver national security is not by producing volume, but by ensuring that every hectare of our land can produce really good food, and by maintaining the rural economies and the ability of farmers to farm that land. That is why it is critical that we do not go down the route of sequestration here, wilding there, and food here. We need to be able to build broad diversity so that we have national food security in the future.
Caroline Drummond: There is often a lot of confusion around food security. There is the issue of our capability to grow, and having the infrastructure to support farmers with seed, fertiliser, tractor tyres, and investment in that area. There is the issue of what we actually mean by self-sufficiency, how we build our targets, and whether we are ambitious enough. There is food safety. We have some concerns about imported produce in terms of food safety challenges. That has been well heralded. There is also the issue of food defence—our capability to trade confidently, and to have the opportunity to receive food where we do not have self-sufficiency or sufficient produce.
It is a highly complex area. I think it is one area in the Bill where we would report every five years. Perhaps that could be amended to reporting every year, because it is so important.
Jack Ward: In the fresh produce industry, we are very dependent on imports to meet our needs. Arguably, it is the one area of food production where we want to increase consumption. Ultimately, the ability to increase our food security is down to grower confidence, and a willingness by growers to keep investing, and the returns that they can generate from that activity. The last six months have not done great things for grower confidence.
Daniel Zeichner
Q
Martin Lines: If I am producing wheat, I can increase my yield by putting more products on, but that has a higher environmental risk, because a lot of those nitrates and products will leave the soil, because the crop has not used them in some years. If we hit the sweet spot with the productivity of our landscape, we can produce what the landscape can cope with, and push it some years, when needed, as well as ease off. It is about finding the balance point. We know from many livestock farmers that reducing livestock numbers actually makes them healthier, better animals, and they produce quicker because there are fewer there and the grass is better.
We have focused for so long just on yield and output, not profitability. Reducing my overall output gives me more profit at the end of the day. It is a funny way to look at how it works, but you end up spending more than you get in return. You chase the extra yield by spending more money. We need to find the place where we deliver as much as we can. Sometimes we can push that if we need to—if there are weather challenges, or other issues—but we should not be out there just to push it, doing environmental damage as a consequence of my farming operations.
ffinlo Costain: The most intensive food systems are environmentally damaging. They are damaging in terms of farm animal welfare, and often just in terms of the jobs that are provided for people, which are not pleasant. The death knell needs to be rung for those sorts of farms.
There is an assumption that with environmental excellence, because of our association with going from mainstream to organic, comes a reduction in yield. There does not need to be a reduction. There are so many examples, here and around the world—Martin being one—of regenerative agriculture, which is giving environmental excellence and social excellence. Farm animal welfare is not an issue on his farm, but elsewhere there are regenerative beef and cattle systems where yield is being maintained in terms of mainstream amounts, and even increased.
There is an assumption that high environmental standards mean a reduction in yield; that is not necessarily the case. It is not just about looking at volume; it is about looking at a whole range of different changes. We need a dietary shift in Britain. That does not mean no meat and dairy, but it probably does mean a bit less meat and dairy as we go forward, and a bit more fruit and vegetables. We can deliver that, with agroforestry approaches and regenerative approaches. We can more than sufficiently provide food for the people of this country—I have no doubt about that—but it will mean changes in diet, and a little bit of change in the way that we farm, at the same time as focusing on multiple outcomes, rather than simply the outcome of producing lots of food. It is food, climate and biodiversity.
Caroline Drummond: We have a tremendous amount of evidence and case studies to demonstrate the importance of integrated farm management practices and how farmers have increasingly adopted them, in terms of economic viability, good performance and optimising the capability of the land. That is a really strong driver. One of the big keys will be how we link the Agriculture Bill with the Environment Bill and the national food strategy—this is such an opportunity for really trying to work out what it is that we want to develop and to balance and to build in what we grow, how we grow it and how we improve the health of our nation as well.
Virginia Crosbie (Ynys Môn) (Con)
Q
ffinlo Costain: My hope is that we would see growth in all of those areas. In order to have farming excellence we need to have working farms. In the future, there may be fewer farmers spending their days on tractors, but there will be more farmers doing more high-value jobs and more marketing within the countryside. If we look at cattle and shortening supply chains, we ought to be supporting—we can through the Bill—new infrastructure, such as local abattoirs and co-operatively owned abattoirs. That creates new jobs and infrastructure within the countryside, which can then be sold with the marketing and branding jobs that go along with that. I want to see good-quality jobs, not just jobs, and there is the opportunity here, if we get it right, to create good-quality jobs, and more of them.
Caroline Drummond: Maybe I missed it, but I do not know whether the Bill itself would be the driver for more people to say, “Yay, I want to go into agriculture.” There is an opportunity to go into agriculture, with exciting innovations and technology, and the fact that we touch each of the five senses, which no other industry does. We do a lot of education programmes at LEAF. We run Open Farm Sunday. From that point of view, it is about getting more people more connected with their food. Some of the supporting information around things like the national food strategy and the 25-year environment plan have to help to support and drive enthusiasm—have to help to inspire a younger generation to recognise that the food sector, the farming sector and its associated industries are really fantastic. We have fewer young people coming through and we just have to compete a little bit harder than every other industry.
Jack Ward: There will be more competition for labour, and trying to attract people into the industry will be more difficult. Certainly, within our sector there will be a big drive towards automation to take labour out of the equation, because it will be harder to come by. As earlier speakers have alluded to, as a consequence we will see higher-value jobs. We will see more technologists and more people designing and managing systems, rather than doing some of the manual work that we have seen them do over the past 25 years.
The Chair
We have 15 minutes left and at least five colleagues want to ask questions. I call Kerry McCarthy.
Kerry McCarthy
Q
ffinlo Costain: The first thing that needs to happen is that the metrics need to be right. At the moment, the Government are still wedded to GWP100—global warming potential over 100 years—which is focused on emissions, rather than warming from emissions. That is critical, because it really changes the role of cattle and sheep.
Oxford Martin brought out science by Professor Myles Allen, who was an author on the IPCC’s 1.5° C report. We now have an accurate metric for accounting for methane, and it changes things. By and large, the warming impact of cattle and sheep farms will be about 75% down in terms of methane. If we focus on emissions, it drives very different actions. If we focus on warming, we see that cattle and sheep on grazing land that is really well managed, ideally in a regenerative way, can contribute to the climate mitigation, climate adaptation and biodiversity that we are all talking about.
Before we start talking about hard targets, we need to make sure that those metrics are there, because at the moment, farmers are being undermined because they do not trust the metrics. That is critical. The Government clearly have ambitions and goals for net zero elsewhere. Farmers are working towards their own goals. We are working with farmers in Northumberland who control most of the national park there. They are committed to net zero by 2030. We can deliver it rapidly when we get the metrics right.
Fay Jones (Brecon and Radnorshire) (Con)
Q
Martin Lines: Yes, there is a risk. It is not clear how that regulatory authority and the baseline will work, who will police it, and how that will be transferred across the four nations. If you are farming either side of a border, will you have two different standards? How will you compete with those together?
A lot of what is in the Bill is focused on England. We are waiting for Wales, Northern Ireland and Scotland to develop their plans. It is about how we link it together, not race away with just England, because if you are farming both sides of the border, move from one side to the other, or move products from one side to the other, you will have real complications. We do not see that journey of who is going to manage that regulatory authority and baseline.
Jack Ward: If I may chip in on producer organisations, it would be helpful if we could have commonality within producer organisations, and not have one system in Scotland, another in Northern Ireland and another in England.
ffinlo Costain: This touches on non-regression from EU rules, which is really important. I would feel more comfortable if it were stated that there was going to be non-regression on standards.
Regulations are a safety net; they are there so that nobody goes below them. I want farmers to go above them, to tell customers about how they are going above them and delivering, and to brand around that. Theoretically, it should not be an issue, if farmers are going above, stepping beyond, managing to deliver what Kerry was talking about with net zero at an earlier stage, and telling customers about that. The fact that there is a safety net there, and that there may be a bit of divergence between different nations, is less important than the fact that people are going beyond it and they are making money because they are telling customers about it and customers are buying it.
Caroline Drummond: Ultimately, there is the opportunity to create a new governance, in terms of how the Government work with the industry and non-governmental organisations through to farmers and landowners. Some of the reporting that came out of Dame Glenys Stacey’s report demonstrated that there may be new ways for us to make it move forwards effectively.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
Q
Caroline Drummond: Potentially, that all goes back to the metrics, and what we are looking to ultimately deliver. The Environment Bill has set out some of the requirements in that area, although that obviously goes beyond farming as well. The 25-year environment plan also covers that area. We have seen, through things like the sustainable development goals and all our global commitments, that there are some really good opportunities to align our ambition here in the UK with delivering against some of those areas. It all depends on how ELMS are going to be managed and developed, but this is where some good environmental performance metrics and targets are starting to come through—hopefully from some of the targets that farmers are setting and working with Government on in a particular area.
ffinlo Costain: There are two aspects to your question. The first is what those measures are. As many Members here and Ministers know, we have been working very closely with Government, particularly on the farm animal welfare metrics and how those relate to the environment. That is critical; what those metrics are is really important, and Government needs to start collecting those.
Then there is the question of the mechanisms—who collects those metrics, and how. From that perspective, Government could work much more closely with assurance schemes to make sure that the metrics that they are collecting are good proxies for what Government wants, and that the new metrics that the Government are looking at are then embedded within those assurance schemes, so that assurance schemes that are already going on farm can do that metrics collection. Then farmers can sign to say that they are happy for some of those metrics to be self-reported. For example, RSPCA Assured may be collecting 500 metrics, perhaps in terms of pigs or sheep, but Government does not want all of those. There are perhaps 15 key ones that Government wants, and farmers need to tick a box to say that they are happy for those to be self-reported, perhaps through the assurance schemes. So there is what the metrics are, and the mechanisms for collection.
Caroline Drummond: We have already earned recognition with the Environment Agency, Red Tractor and LEAF Marque, in terms of helping support that relationship.
Theo Clarke (Stafford) (Con)
Q
Martin Lines: We need guaranteed long-term funding or the ambition to deliver it. On a five-year rolling plan, I am planning eight or 10-year rotations in farm planning. If you are taking on tenancies for longer than that, the business risk is huge. It is about that long-term development. In the transition that we are going to have from one system to the other, we need to be clear and transparent about how that will fit and how we can move. It has become clearer that if we can enter into a stewardship agreement now, we will be able to move into the ELMS when it becomes available, before the end of the period. It is about how we are flexible within those schemes. The current system has been delayed payments, with a nightmare bureaucracy. It has over-measured and over-regulated, and there has been no trust in the farmer to deliver. We need to build that into the new scheme, and build trust with farmers to work to that system.
ffinlo Costain: Countryside stewardship has been very input-focused. Often farmers have done something because there is a box to tick—because they are getting paid for x, rather than because it necessarily delivers the outcome. I think that is what Martin was alluding to. It is not the most successful scheme. There is this five-year transition, where the basic payments are going out. In that time, it is for farmers to step up and understand how to deliver these outcomes, and to develop, either individually or across landscapes, proposals that deliver those public goods. So long as we are focused on outcomes rather than inputs, we will make progress. Farmers should be absolutely at the forefront of that.
Caroline Drummond: A little bit more security and clarity in the timescale is really important. Obviously, farmers do not make decisions today for tomorrow; many decisions are made three or four years in advance. Many crops are grown for nine or 10 months—for livestock, it is a longer time span—before you get any level of return. That timescale is at the moment not 100% clear, because decisions could be made at the very last minute. That is a big concern.
We must not forget that although a lot of the stewardship has not been ideal, for every pound that farmers get from support mechanisms they are delivering so much more from an environmental perspective, because it is good for their business and because, obviously, they fundamentally believe it. We do need to build confidence that the system will work, and that farmers really want to adopt it. We are involved in some of the trials for the ELMS project, and it is really encouraging to see farmers very much embracing it and saying, “Yeah, we want to be involved.”
ffinlo Costain: I said earlier that land use—the way we farm—is the golden ticket for getting us out of the challenges we face and continuing to support food production. I want to give you a couple of statistics. Funding for agriculture is £3.1 billion, but that is tiny in terms of Government expenditure. For every citizen in Britain, we are paying less than £1 per week to farmers for all the good work they do, which we have been talking about. Compare that with £42 per citizen per week for the NHS. Just administrating central Government is £3.57 a week per citizen, so farming is getting very little.
In terms of managing the transition and making sure that farmers can deliver, somebody has to say it: farmers should be getting more because they are doing such a good job. In the future we will be expecting so much more, and I would like the budget to increase.
Nadia Whittome (Nottingham East) (Lab)
Q
Jack Ward: I think the two are largely unrelated. One is an income issue, and there is a separate farming issue. Conflating the two is a problem because the food we produce is often not leaving the farm at a sustainable price, and the opportunity to drive that price down is very limited.
Martin Lines: We need clear transparency within the supply chains, and parts of the Bill address that. Who is getting the benefit out of the produce? Farmers are selling at a gate price that is way lower than the retail price, so who benefits? How can we join up the supply chains to shorten them and give farmers the opportunity to market more directly? There will be lots of exciting technologies and systems that may be able to do that, but it is about incentivising that opportunity.
ffinlo Costain: I think you have highlighted a real challenge, and I am not quite sure how we address it within the Bill. We do not want to see farmers in Britain uniformly producing high-quality produce that just fuels middle-class meals and those of affluent people. We need to recognise that an awful lot of people live in poverty or relatively close to poverty, and we need to be able to feed those people as well. But I do not think that we do that just by continuing with the model that we currently have, which involves ever more intensive volume production and low-nutrition food. We need good food. That is about the supply chain. As Martin said, it is about how we connect people who are living in more disadvantaged areas, with food. Often, if you are buying directly—if you are buying food and making meals yourself—it is a hell of a lot cheaper than living on Pot Noodle or whatever else.
Caroline Drummond: One of the scary facts is that 50.8% of the food we eat in this country is ultra-processed; in France, it is 14%. We do not know about the sustainability of highly processed food, and we often do not know its country of origin. This is where the national food strategy is such a core part of trying to understand what our ambition is for the health and the connection of what we grow. It is out of kilter at the moment and in a very difficult place.
Going back to Jack’s comment, the Bill is about trying to drive the ambition for a highly productive, responsible and sustainable farming system. We need to be very careful. There is often confusion. Poverty is a social issue, rather than necessarily an issue that farmers can respond to, and we need to be very careful that, as an industry, we are not subsidising the social challenge of poverty.
Nadia Whittome
Q
ffinlo Costain: Funding of infrastructure, which is partly in the Bill. It is perhaps about broadening the definition of “infrastructure”. In the same way that people ought to be able to apply for funding to put up the local abattoir that will make a big difference to the farmers, the land that they are presenting, the prices that they are getting and their ability to sell directly to the public locally, you are perhaps right to say that there needs to be support for those sorts of schemes as well.
Caroline Drummond: Interestingly, food productivity is mentioned in here. One would hope that that is going to be the link in terms of trying to define what the national food strategy looks like, because—
The Chair
Order. I am afraid that brings us to the end of this session, but on behalf of the Committee, many thanks to our witnesses. You gave us invaluable information. Thank you very much indeed.
Examination of Witnesses
Thomas Lancaster, John Cross, Simon Hall, Christopher Price and David Bowles gave evidence.
The Chair
Q
Thomas Lancaster: My name is Tom Lancaster. I am the acting head of land, seas and climate policy at the RSPB, so I oversee our work on the Agriculture Bill, but also lots of our work on forestry, climate change, marine policy and similar issues.
Simon Hall: I am Simon Hall. I am the managing director of Livestock Information Ltd, which is a very new company, set up on 1 October, with a remit to design and implement a new multi-species livestock traceability service in England, but also to potentially provide some UK capabilities. Just so you know my background, I am on secondment into this role from DEFRA, so I am substantively a civil servant, but on secondment for the next two years to deliver this programme.
John Cross: I am John Cross. My roots are in farming, and I still have a farming business. For the past three years, I have chaired a pan-industry and Government design working group that has worked with Simon to co-create the new traceability system that will be delivered by LI Ltd. For the sake of openness, I should say that I have just been appointed as chair of that company, so I will be working with Simon, who is the managing director.
Christopher Price: My name is Christopher Price. I am chief executive of the Rare Breeds Survival Trust, an organisation that exists to promote and conserve the use of native breed livestock.
David Bowles: I am David Bowles. I am the assistant director of public affairs at the RSPCA. The RSPCA writes the standards for RSPCA Assured, which is the UK’s only higher welfare assurance scheme.
The Chair
I know that at least one of you has given evidence to these sessions before—maybe two or three of you—but please enjoy the session, which runs until 11.25 am.
George Eustice
Q
Christopher Price: I speak particularly on behalf of native breeds, rather than livestock generally, but I think that promoting our native breeds is hugely important. Dealing with economics first of all, you have pointed to the uplands as an area where it is harder to grow crops and where people therefore keep livestock, but that does not rule out having livestock elsewhere. If we have the right sort of livestock, grazed at the right density and in the right place, we are providing environmental benefits because we are creating the sorts of habitats we want. We are keeping down import costs—that helps the climate—which reduce farm incomes. There is a business and an environmental side to livestock, which are an important landscape feature as well. There is something exciting about seeing interesting animals wandering around our farms. It all helps towards tourism, and a sense of place and location. There are huge arguments to support increased livestock use.
John Cross: I speak as a mixed arable and livestock farmer, as opposed to my involvement with Livestock Information. There is absolutely no doubt that the combination of livestock on arable land has a profound effect. It is something that I would encourage the whole industry to look at, because as soon as you start to improve the organic matter levels, the vibrancy and the life within the soil, you realise the benefits that come with drought resistance and inherent fertility. In particular, if you involve a blend of, say, pigs and ruminants on arable land, you also have a profound effect on the birdlife that then decides to come to live on that farm. It is something that I believe in passionately, and it works, but certainly—as I heard referred to in the earlier session this morning—you have to be mindful of stocking densities. In particular, it is a matter of making good use of grazing legumes, which we are pioneering. It is a valuable mission that the Bill mentions, because we need more organic matter in arable land.
David Bowles: Just picking up on that point, I have been working on CAP issues for 20 years, and this is the first time that we have had the opportunity to get animal welfare into the new farm support system. We have only ever had one animal welfare scheme in the last 20 years, which was in Scotland, so it is really important that we start to get animal welfare payments into the system and, particularly on the stocking point, make sure that farmers are paid to go higher than the welfare standards they have at the moment. I think you will get win-win situations, with benefits to animal welfare, benefits to the environment, benefits to rare breeds, et cetera.
Thomas Lancaster: The RSPB is a big landowner and farmer—we have 30,000 livestock across our estate. In a lot of cases, those livestock are essential to the public goods that we deliver, particularly the high nature value farming systems that, again, have been a key feature of many CAP schemes in the past. We want to see future schemes in England supporting those high nature value farming systems. Extensive livestock production will be a key feature of those systems in future and is important in supporting species such as curlew and other breeding waders, or habitats such as upland hay meadows.
John’s point about densities is absolutely right, because overgrazing is a major problem for a lot of our designated sites and habitats. The opportunity we have in the Agriculture Bill, and with environmental land management schemes specifically, is to support farmers to find that optimum balance, which Martin Lines talked about a lot in the previous session and which can go hand in hand with a more profitable livestock farming system as well.
George Eustice
Q
David Bowles: There are huge opportunities. We have only ever had one scheme in the UK, but we have had something like 52 schemes over the 28 EU member states. The RSPCA Assured scheme is very successful in certain areas, such as laying hens, where we probably have 55% of production, but it is very unsuccessful in other areas, such as sheep, beef, dairy and even chickens, which are all sectors where we have under 5% and in some areas under 1%. The market is therefore not delivering the higher welfare assurance schemes that we want in that particular market.
That is the exciting thing about the Bill, because it will provide the opportunity to give farmers a leg up through, for example, one-off capital grants, and then provide them with payments to ensure that, where the market does not deliver, they can deliver those higher welfare schemes. The RSPCA is very happy that the Bill provides for that two-step process. We think there are very exciting times here for farmers, particularly in those areas where we have not traditionally gone into higher welfare schemes. For instance, at the moment, 0% of ducks in the UK have access to full-body water. The expression “taking a duck to water” does not exist for UK duck farming. That is a tragedy, not just for ducks, but for UK farming.
Simon Hall: There are undoubtedly opportunities in the marketplace if we can evidence welfare standards, provenance, and so on. The Livestock Information programme will put in place a new multi-species traceability service that brings together data based on animals, keepership—the people who have been responsible for the animal throughout its life—and location, the farm where it is based. The whole proposition of the programme that we are delivering is about using that data not only to better inform Government responses to animal disease control and ensuring food safety, but to enable the industry to take advantage of that data to evidence its standards and demonstrate to its consumers, domestically or internationally, the standards to that livestock is produced, the provenance of the animals and so on in real data. Working in partnership with Government and industry, there is an opportunity to set out our stall in a world-leading manner.
Christopher Price: To build on what has been said, an important aspect of the Livestock Information service—if it goes as far as I hope it does—is that it will give greater recognition to individual breeds. It will make it clear that what you are buying is a saddleback or whatever. At the moment, it is very difficult for the consumer to know that what he or she is buying is what the butcher or supermarket purports it to be, or to know when they use nebulous language to imply that it has a particular provenance. If we can get to a system whereby people are promoting particular breeds associated with a particular area, we will do well to create a much stronger sense of place and local identity, which will help with creating new markets.
Daniel Zeichner
Q
David Bowles: For the RSPCA, this is probably the biggest omission in the Bill. The Government have resisted putting anything in the Bill that says that we will not import produce or food to lower standards than those of the UK. I cannot see why they have resisted that. The Secretary of State said, “Trust me, because it’s in the manifesto.” Frankly, I do not think that is good enough. Last year the Government tabled their own amendment to the Trade Bill that said exactly that. I hope they do the same here, because if they do not, they will leave British farmers who are producing to those higher welfare standards open to US imports.
For instance, 55% of the pork meat and bacon that we eat is imported. Virtually all that comes from the EU. If you start importing that from the USA, where they still have sow stalls, where they still give their pigs ractopamine, which is an illegal drug in UK pig farming, you are opening up to cheaper imports coming in, particularly if you do not have consumer information and labelling. I am pleased that labelling is in the Agriculture Bill, but this needs to be part of a matrix. You need to have the same standards for food coming in. The RSPCA is not afraid of higher welfare food coming in. What we are afraid of is food coming in that is illegal to produce in the UK.
Christopher Price: I agree with everything that has been said, but I think we need to be careful about putting too much trust in labelling. I cannot see that people are going to make many purchasing decisions on the basis of labelling. Something like less than 5% of decisions nowadays are based on labelling, which includes all the various organic and assurance schemes. This has to be dealt with by legislation and regulation. You cannot leave it to consumer good will in the supermarket.
Thomas Lancaster: I agree with all that. We worked very closely with the NFU to co-ordinate that letter. We view assurance around import standards as a foundational element of the whole future farming policy and as really important to farmers’ ability to invest in public goods schemes with confidence.
The letter not only touched on a defensive ask, but pushed a more aspirational agenda around a role for the UK to set out a world-leading trade policy that takes account of societal demands such as climate change, biodiversity and all those sorts of issues, which are not reflected in modern international trade policy, and certainly not at the World Trade Organisation.
This is often reported as: “We want protection.” Actually, as David said, we want to be able to compete on common standards. No UK farmers are calling for protectionism for its own sake, but there is an opportunity to call for a more sustainable trade policy that has a bit more imagination regarding how we can fight the climate and environment emergency, while embarking upon a new international trade policy, as we now will.
John Cross: It has been very well addressed already, but briefly, if society is sincere about animal welfare and is aspirational—which it should be—then it should not look for one set of standards domestically and, to a certain extent, export its conscience and accept lower standards from elsewhere. You should be consistent in your attitude to animals.
Simon Jupp (East Devon) (Con)
Q
David Bowles: Yes; the RSPCA, as I said earlier, is delighted that for the first time we have the opportunity to provide financial assistance to farmers. One of the things that is missing from the Bill—it says it in the explanatory notes, but it is not explicit—is that financial assistance should be given only to those above baseline standards. We had a system where farmers could have been paid even if they were doing things that were illegal. I do not want to replicate that in the new farm support system.
There are a lot of things that we would like the Government to introduce to give farmers a leg up—for instance, providing brushes for cattle, hoof-trimming for cattle to reduce lameness, rubber matting for cattle to give farmers a leg up to farm at higher welfare standards, and then giving them the opportunity to get money that is not provided by the marketplace, which is the difference between farming at higher welfare and what the marketplace delivers.
There is a whole range and suite of issues that could be gathered. The RSPCA is delighted that the Government are looking at them seriously, and we hope that some can be trialled in the next year.
Christopher Price: There are two aspects to your question. The first is whether we have got the regulations right in the first place. Although we might have the right standards, I think that most people on our side of the table would hope that Dame Glenys Stacey’s report is implemented, if not in full, then to a large extent. It might be useful to expand a bit on that in a moment.
In terms of paying for meeting regulatory standards per se, I think this is something that applies throughout. Farming will go through the most immense structural change over the next four or five years, as we move to an unsubsidised, more market-facing world. There will be an incredible variety of costs for people as a result. I do not think that there is anything untoward about the Government helping people to make that transition over the short term. I am talking about significant short-term capital expenditure on the Government’s part, to get the industry match-fit—not only in terms of welfare, but in terms of having the right business processes and practices in place. After that, you can say, “Now you’re on your own. We’ve helped you to get up to the standard that we expected of you. Now it’s for the market to support you going forward.”
Ruth Jones (Newport West) (Lab)
Q
Christopher Price: Most legislation nowadays gives powers not duties. There is nothing unusual about the Agriculture Bill in that regard. The Bill is about the tool used to implement the policy; it is not the policy in itself. It would be useful to have the Government’s policy, to know what they are going to try to implement.
Having said all that, we are talking about some really quite complicated stuff. Food production, which is fundamental to our existence, is all based on natural processes that are really complicated. We are going through huge structural changes and as a country we have not been great at managing structural change. Bearing all that in mind, it is important that Government have a full range of tools to do as they see fit, in consultation with stakeholders. I would hate the idea that, for reasons of legislative propriety or whatever, we ended up constraining Government so much that they could not do things that, in a few months’ time, we might decide are absolutely essential.
Thomas Lancaster: We are very sympathetic to having more duties to balance the range of powers. A report from the Delegated Powers and Regulatory Reform Committee the last time the Bill was in Parliament was quite scathing on that point. Clauses 4 to 6 are a positive step in setting out strategic objectives and they come with a range of duties on Ministers to have multi-annual financial plans, set objectives for those and have regard to those objectives when setting the budget for those plans. That is a big step forward in this Bill on the duties-not-powers point.
We would like to see a duty in the Bill to have an environment and land management scheme. At the moment, it is a legal requirement under CAP-funded rural development programmes to have an agri-environment scheme—you cannot not have one anywhere across the UK. We want to see that duty replicated in the Bill.
It would be interesting to look at other areas in the Bill as well. There are lots of powers in the Bill around fair dealing provisions and supply chain transparency, but there are no duties on Ministers to use those to improve supply chain transparency. That is another area where you could include a duty to clarify how those powers were going to be used and that they were going to be used.
David Bowles: Clause 1(1) says:
“The Secretary of State may give”—
and then it lists the public goods. We would like to see a “must”, and the RSPCA would like to see that too. The Secretary of State would still be applying the letter of the law if £1 went to animal welfare in the next five-year period. We would like to see some minimum payments under those particular public goods.
Fay Jones
Q
John Cross: I had quite a lengthy history in the levy sector. The complexity around this issue is really quite deep, because it depends on where the benefit of the levy investment is secured, where the products derived from the industry are consumed and where the supported supply chains sit. As for the desire to capture and formalise a more even-handed distribution back to the devolved regions: from what I have seen of it, it does do enough. We live in a very complex domestic market; 50% of Scottish beef production is consumed within the M25. That illustrates how complex the mix is. The red meat levy is designed—yes, funded by farmers and processors—to make the best of a supply chain and to deliver business enhancement throughout for the good of consumers and producers. It is quite a complex issue and it is not just as simple as three separate lots of industry all wanting to do their own thing in isolation, because they are all interdependent.
Deidre Brock
Q
John Cross: I will leave some of the technical detail to Simon, but in principle, this is how we arrived where we are now. Yes, we have established traceability systems in this country and they work but, as we speak, they still tend to be a blend of paper and digital—sometimes both at the same time. They work but they are high-maintenance. They are sub-optimal and they take a lot of resource to keep them going. They were, of course, designed to hoard data on behalf of statutory obligations, as opposed to share data, so the design principle needed to be completely different.
I think it is fair to say that Government was faced with the reality of having to achieve an IT refresh at some stage, with some fairly urgent timescales. For a long time, industry has wanted to have the benefit of the use of its own data. Data was being collected about the industry, but the industry could not use it to enhance itself.
We came to a moment after the referendum where the industry and Government were faced with a series of scenarios that required them to think differently and start to think together—this is where the principle of co-creation came in—right across DEFRA and all its dependencies, the Food Standards Agency, the Rural Payments Agency and the others, and right across the industry to form a think-tank as to how you design, hopefully, the optimum traceability and information system that enables Government to fulfil its statutory obligations, but better and faster, while allowing industry to start adding value to itself with information.
If it is a matter of exploring global markets, you can evidence a brand vastly better. In the global marketplace, traceability is king. In that area, you have huge opportunity. Similarly, from the viewpoint of the industry looking to eradicate non-notifiable endemic production diseases, again, to tackle disease risk you need information—you need data. As soon as you have got a unique identification of any one animal, the information you can attach to that provides almost endless opportunity.
Deidre Brock
Q
John Cross: This is an English system; yes.
Simon Hall: But it is in the context of a UK story. This is quite complex. In the current situation, traceability services are delivered through a bit of a mixed economy in the UK. Northern Ireland has a multi-species service operating there for cattle, sheep and pigs. Scotland has a traceability service for sheep and pigs. Wales has a traceability service for sheep. England operates a GB service for cattle, and we operate a pig service for England and Wales, and a sheep service in England.
So, it’s quite complicated. Then, within that, there is a mix of services and databases that come together to provide a UK view of that traceability data, so that colleagues at the Animal and Plant Health Agency, for example, can use that data to respond to an animal disease outbreak or a food safety concern, or whatever.
We have an ambition in England to create a single multi-species traceability service, or a single service capability, including help desk and so on, a single IT system, underpinned by the ambition to exploit data, not only for the benefit of Government and statutory disease control, but to deliver a range of outcomes externally. In that context, the Scottish Government and Welsh Government have decided to bring the cattle services into their own Administrations, and in the case of Wales, to bring the pig service in-house as well.
We are all moving at the same time to a position that respects devolution, where every Administration will have its own multi-species traceability service. Particularly in the context of cattle, that creates a new requirement to ensure that we have a really good UK view of cattle, recognising that we are disaggregating services that are currently delivered through one service, so we need to ensure that that comes together.
DEFRA has asked Livestock Information Ltd, as part of the process of designing and implementing the traceability service in England, also to ensure that there is a way—a mechanism, a service—to ensure that we have good visibility of that UK data. That approach is supported by UK CVOs and so on.
We are, though, at a very early stage of designing exactly how that would work. So, we do not have a technology strategy yet for exactly how that would work and whether that means that Livestock Information Ltd would have a copy of all the UK traceability data, or whether it is just providing a window into each of the services and each of the Administrations for the Animal and Plant Health Agency to look at, for example.
We have really good relationships with colleagues in each of the UK Administrations and we are having regular dialogue around how this would work and whether there would need to be some specific governance arrangements around the UK view, and so on.
Deidre Brock
Q
Simon Hall: Quite the reverse.
Deidre Brock
As you have elaborated, they already have quite developed traceability schemes
Simon Hall: This is seeing a move to devolve traceability services that comes together seamlessly at a UK level, recognising that disease and food contamination does not respect borders.
Deidre Brock
Q
Simon Hall: There are two questions there. The first is easy: our governance arrangements are that Livestock Information Ltd is a subsidiary of the Agriculture and Horticulture Development Board, which is the levy body in England. AHDB is a non-departmental public body of DEFRA, so it is accountable to DEFRA but funded by the levy payer, and therefore responsible to the farmer, grower and processor in England.
For us, the attraction of using AHDB as the parent body for this company is the way in which we can embed the traceability service as close to industry as possible, while retaining the sufficient control needed by Government. That model has already been adopted in Scotland, Wales and further afield, in Australia. Livestock Information Ltd is a company limited by a guarantee; it is a subsidiary of AHDB; it has a 49% ownership stake from DEFRA directly—DEFRA is important, but if it wants to exert control it does so through the levy body.
Deidre Brock
Q
Simon Hall: The business case has been approved; we have funding in place; we have procured IT systems; we have a team of around 50 people delivering; we are working very closely with devolved Administrations, and we are aiming for implementation from the autumn. There is lots to do. There is lots of complexity. The No. 1 thing we must not do when we effect this change is compromise our quality of traceability. If we are not ready, we will delay, but there is no indication that we will need to at the moment. We are planning for implementation from the autumn, starting with cattle, sheep next year and pigs later next year.
John Cross: A parting message: the important thing for us is to be smart and collaborative with the devolved regions, because disease pathogens—whether notifiable or not—and disease outbreaks do not recognise any political boundaries. We have to be smart and have a UK view on disease. If you look around the globe, on the international trade stage we are seen as the UK. It is a UK story if a product goes out, so from the point of view of access, wherever you go internationally, the UK is the recognised body. It is important that we have a smart, collegiate view on this.
Simon Hall: This Agriculture Bill does support the delivery of the programme in the way we set out. In part 4, clause 32 talks about granting additional functions to AHDB that will allow it to deliver that English traceability service through the subsidiary body. It currently has the function to deliver the programme and to design and implement the future service, but not to run it. The Bill provides the functions to do that, and the flexibility to provide any UK functions required, or that are sensible. For example, one might imagine that allocating a unique identity for an individual animal might be something that we choose to do once only in the UK, and we may choose to do it from here or from somewhere else.
The Bill provides the functions that we need to deliver this programme in the way that we want in the future service; it also provides some flexibility, should we work together and decide that we want to carry out some UK responsibilities.
Danny Kruger
Q
My question is on behalf of our producers. The paradox is that everybody complains about the complexity of CAP, and farmers have a tough time filling in the forms. Of course, the principle of CAP is very simple: you just pay for the amount of land that you have. We are proposing to introduce a system with a lot more complex objectives—quite rightly—for all the different public goods. I share Ms Whittome’s point about the opportunity for community-based markets and more locally based producers—more local sourcing. Do we think that those community groups and small farmers will be able to navigate what sounds to an outsider like a very complex set of objectives, and therefore potentially some complex subsidy systems?
John Cross: I can make a comment as a farmer rather than chair of Livestock Information. You make a very good point: we are entering a very different scenario. Some farmers will need considerable help in changing that mindset and getting used to a new environment, because it will require a lot more proactivity from the point of view of seeking rewards for those public goods. It will be a more complex—
Danny Kruger
Q
Thomas Lancaster: Advice is a really important part of the story. We would like to see more clarity from DEFRA as to what advice will be made available to farmers, particularly during that transition period. We also understand that the evidence base around environmental advice is a really good investment. All the evidence, particularly from work commissioned by DEFRA and Natural England, suggests that providing advice to farmers as to how they can meet environmental outcomes and navigate some of the paperwork necessary to access the public money is well worth the investment in terms of the outcomes. We know that outcomes supported by advice are better than outcomes not supported by advice.
We have done some social science research recently on farmers’ experience of those schemes with farmers that we have been working with in south Devon for 30 years on species recovery projects for the cirl bunting. That social science shows really strongly that advice is the key element, not just in getting that environmental outcome but in ensuring that farmers are bought in to the schemes, that they understand the outcomes that they are seeking to deliver, and that they are able to get past some of the bureaucracy, which is an inevitable element of this.
Although direct payments sound simple in concept, you have the eligibility rules, particularly the land eligibility rules; the land parcel identification system; and the fact that you have to measure things to four decimal places. The fact that it is a very poor use of public money and no one really knows what it is for any more, drives a lot of those eligibility rules, because you have to provide some controls around it.
Our experience of the best agri-environment schemes in England, particularly higher level stewardship, is that, supported by advice, they are much more intuitively understandable for farmers—as to why they are receiving that money—than direct payments. Analysis that we have done of Natural England data, which we have not published but will probably publish in the coming months, suggests that payment rates for small farms, on the first 30 hectares or so of agreements, are higher than for larger farms, which is obviously not the case with direct payments. We know that small farms, again when supported by advice, can profit from public goods schemes, given our understanding of higher level stewardship and similar schemes in the past.
Christopher Price: It is important to recognise just how much farming is going to change. It is not just a matter of changing the subsidy rules; it is a much bigger structural change. Farmers will be producing much more to the market, which means that we will have a different type of farmer. We are already starting to see those people—people who do not necessarily come from a farming background, who have made a bit of money doing something more commercial, who are coming to farming with business and marketing skills, and who are making a go of things in a very different way. You will know some of them—Lynbreck Croft, the Good Life Meat Company, Hilltop Farm.
People are already doing it and they have quite a big presence. They think in a different way. It is not just about who can take the biggest beast to the market every week or month. It is about sweating all your assets, so you will be selling the meat, but you will be selling meat with a good provenance, to high welfare standards and with a low environmental impact. If you are savvy, you will be finding markets for the skins, the wool, the horns. It may not be much money per item, but together it starts to create more produce with more of a brand.
If you start thinking in terms of your public goods as well—many farms are starting to—and working out what has a benefit, what you can do to improve your soil or your water quality, what plants you can grow that have biodiversity or climate benefits, and start ticking off those, you can get there. It does not need to be particularly complex. In many ways, although I hear what Tom says about the importance of advice, the way that most farmers learn is from other farmers. It is about encouraging farmers to go and see what their neighbour is doing, and not thinking of their neighbour as being their competitor, but as someone who can be a source of guidance.
So, I do not think we need be worried about complexity. Conceptually, what is being promised is more straight- forward. Of course there will be compliance requirements, but many of us think that a lot of the previous compliance requirements were more to do with EU standardisation across 28 member states rather than being particularly necessary to ensure the efficient use of public money. So, I think we can be optimistic about what is happening.
Kerry McCarthy
Q
Thomas Lancaster: We, the Wildlife Trusts and WWF commissioned the report from IEEP, who are independent consultants, to look at a future regulatory framework. Because the Bill includes provisions to move away from cross-compliance, and in particular to delink payments from land, that potentially opens up gaps in aspects of current environmental regulatory protections that exist only in cross-compliance, particularly around soils and hedgerows—for example, cutting of hedgerows during birds’ breeding season and hedgerow buffer strips. We think there is a gap in the Bill in terms of powers necessary for Ministers to bring forward regulatory protections for soils, hedgerows and other environmental features, and we would like to see the Bill amended to plug that gap.
There is a big opportunity coming off Dame Glenys Stacey’s review. The farm inspection and regulation review the Government commissioned reported in 2018. It called for a more comprehensive regulatory framework that enables a more advice-led approach to enforcement, so that, rather than farmers being penalised but not really understanding the underlying issue and therefore not able to address it, the approach would seek to blend penalties with advice and incentives to ensure that you get better environmental outcomes.
There is an existing model of that in the Scottish Environment Protection Agency and its approach. When a breach is detected, there is a visit from an adviser or a member of staff, who says, “You have to address this breach. You can either go and seek advice or invest in infrastructure if necessary.” They come back a second time. If the breach has been addressed, everything is fine; if it is not, they give them a third visit and, if it is still there, then they penalise them. That approach, which Dame Glenys Stacey supported, and we supported at the time, gets better environmental outcomes in a way that farmers also appreciate and can understand, whereas at the moment our regulatory enforcement is very substandard, it is fair to say.
Again, Dame Glenys Stacey found that of 10,600 staff at the Environment Agency, only 40 do farm inspections. As a farmer, you have a one in 200 chance of being inspected by the Environment Agency, and we know that the agency is again cutting back on some of those regulatory compliance visits. There is a huge challenge in the future, not just in how we reward good practice but in how we ensure a level playing field so that the progressive best farmers out there are not undercut by, effectively, cowboys—unfortunately, there are some. The Bill is silent on that, and for us that is one of the biggest gaps and omissions.
John Cross: The only comment I would make—again as a farmer—is that any more regulation would need to be fit for purpose, logical, proportionate and enforceable. Regulation is fine, but unless it is logical so people can understand it, and it is relatively easy to comply with, it is just a source of frustration to everyone. Certainly, the industry is very keen to move towards an outcome-based form of regulation as opposed to constantly arguing about whether a particular margin is six inches too narrow or not. The industry would be interested in seeing a much more outcome-focused approach.
David Bowles: The EU has been moving towards an outcomes approach, but obviously leaving the EU gives us huge opportunities in the animal welfare sectors, such as sheep, beef and dairy, where there are no specific baseline species standards at the moment. There is a real opportunity to introduce those baseline standards, which will help not just the Bill, but in establishing what the baseline is—and then establishing how to move farmers up the scale, through capital inputs or through specific measures, and paying them where the market does not deliver. There are huge opportunities to improve the baseline regulatory standards in those areas where they do not exist now.
Alicia Kearns
Q
Christopher Price: I will take the second part first. Should we be supporting rare breeds? Yes, we should. You probably expected me to say that.
Alicia Kearns
I thought you might, but you never know.
Christopher Price: We should do it, first, for economic reasons. These breeds were bred to be in a British landscape. They can survive in parts of the country that other breeds cannot, or cannot without significant inputs. In many parts of the country, people are farming the wrong animals and are doing so expensively, because they are using certain inputs to support them. We need some help in getting farmers to transition away from the old way of doing things into going back to native breeds.
Native breeds can also provide a wider range of products than many other breeds. I mentioned wools, skins, horns and so on, which all have markets, if people think about it, or are incentivised to start thinking about it rather more. There is a role for Government in that.
Then there is the environmental side of things. The grassland habitats that we so cherish are there because they were grazed by certain animals over generations. If we are going to restore those habitats, the easiest, most straightforward way to do it is by using the animals that created them in the first place.
Lastly, there is the social side. Many of these breeds are part of our history. White Park cows came over Dogger island from mainland Europe before Stonehenge was built. They were part of the Cistercian monks’ currency. Some of the earliest Welsh laws are about how you regulate and use those animals. Herdwick sheep were bred to live on top of hills in the Lake district. Swaledales were bred to be a bit further down the fells. They are an immense part of our culture.
Those are all reasons for supporting them. In terms of how you support them, I would be reluctant for us to go down a simple headage route; I think that would just create the wrong sort of incentives. If a farmer chooses to use native breeds to graze for particular conservation purposes that do not bring him or her a direct financial benefit, that is about the public benefit, which should be rewarded, but it is more about making sure that we have the right infrastructure in place.
There is a lot to do with promoting local produce. We have talked a bit about creating local markets. Some of the more savvy farmers I was talking about are doing an excellent job of that, and part of their brand is selling local breeds and local products from those breeds within a fairly narrow radius—30-odd miles. That is where the premium comes from. It is not for everyone, but people are starting to do it, which is interesting.
Perhaps the single most important thing—we touched on this a bit in the earlier session—is abattoirs. For many of the people that I work for and represent, abattoirs are at least as important an issue as support going forward. We have huge numbers of people who are producing the right animals to the right standards in a very environmentally friendly way. You hear people talking about how their motivation in life is to ensure that their animals have a life worth living and then only one bad day—the day they go to the abattoir—and you have people who want to buy the products, but the whole thing is being stymied in significant parts of the country because there is no abattoir that can cope. If there is an abattoir, it generally will not be able to take the small numbers of non-standard animals and give you back the by-products—the horns, the skins and so on. In many cases, there is no abattoir at all.
If we are talking about short-term Government capital investments, it seems to me that there is a desperate need to invest in pop-up abattoirs or mobile abattoirs. There are practical problems with all of that, but if I could get anything across to the Committee, it would be the need to make sure that we have an abattoir network that is fit for purpose over the next few years, and for the Government to invest in creating that. It does not need to be a long-term investment; once it is there, the market can function and support it, but it is getting us there that matters.
Daniel Zeichner
Q
Thomas Lancaster: We have supported in the past, and would still support, a sector-specific target for net zero by 2040, to reflect the ambition of the NFU and others. We would support an amendment to that effect in Committee and beyond. As a statement of intent and clarity on the role that the sector could play in that climate emergency, it is still a really useful thing to look at. We would also stress that, although this is the Agriculture Bill, in the climate change world there is a lot of talk about nature-based solutions such as peatland restoration, coastal habitats and woodland creation, and the Agriculture Bill, particularly through the land management schemes that flow from it, will be the central mechanism for delivering those nature-based solutions and the aims of the Environment Bill.
Thinking about how public money for public goods can support more sustainable food production that is also carbon and climate friendly, it has an important role to play in building soil carbon, potentially supporting minimum tillage systems, cover crops and other land management interventions that build resilience to climate change in the future. We see climate change running through public money for public goods, from farmed and non-farmed landscapes, and the Agriculture Bill is one of the most important pieces of legislation that we have had in the past decade or probably will have for decades to come in helping to meet the climate emergency that we all face.
Christopher Price: I would support—
The Chair
I am going to interrupt, because there are two colleagues who have been asking to put questions very quickly, Robert Goodwill and then Virginia Crosbie. Please put your questions to everyone.
Mr Goodwill
Q
Virginia Crosbie
Q
Thomas Lancaster: I will pick up on Robert Goodwill’s question. There is a lot of debate about payment for actions and payment for results. On payment for results, we would see it as the logical thing to pay for the habitat condition, not the number of species or number of birds, because that is not something that is necessarily within the farmer’s control.
There is potentially a role for predator control in future schemes, but there are a lot of steps that need to be gone through before we get to that point, because often predation pressure is a proximate cause, not an ultimate one. The ultimate cause might be forestry providing a reservoir of foxes, crows and other predators on breeding waders on neighbouring moorlands, so removing a block of conifer might be the one thing that you need to do, not investing in very expensive predator control in perpetuity. Getting an understanding of those landscape dynamics is an important part of that question.
Christopher Price: In response to the question about selling farming, to a large extent that is up to the individual farmer. It is the farmer who creates their brand, and you would hope that their brand would focus on all the good things they are doing—high welfare standards, low environmental impact, sense of place, provenance and so on. Many of the new-style farmers that I was talking about are doing that; it is fundamental to them.
Having said that, there is a role for Government at the higher level in “Brand GB”, and one thing we might want to look at is greater use of geographical indicators. There are certain breeds that are associated with Wales that the Government—possibly the Welsh Government, I am not sure—have a role in promoting and helping businesses with.
David Bowles: Just before the clock ticks over, method of production labelling is an opportunity in the Bill to give the consumer that link in to the farmer.
The Chair
I thank our witnesses very much for the time you have spent with us. The Committee is very grateful. If you feel that you were not given time to respond to colleagues’ questions, you can still submit evidence about those answers. The room will be locked, colleagues, and we start again at two o’clock in this room, where Mr Stringer will be in the Chair.
Agriculture Bill (Second sitting)
Tuesday 11th February 2020
(4 years, 2 months ago)
Public Bill CommitteesRead Full debate Agriculture Act 2020 View all Agriculture Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 February 2020 - (11 Feb 2020)
The Chair
We will now hear oral evidence from the Ulster Farmers Union and the Department of Agriculture, Environment and Rural Affairs. Thank you very much for coming today. We have until 2.30 pm for this session. I would be grateful if you introduced yourselves for the record.
Norman Fulton: My name is Norman Fulton. I am deputy secretary within the Department of Agriculture, Environment and Rural Affairs for Northern Ireland. I head up the food and farming group within the Department.
Ivor Ferguson: I am Ivor Ferguson, the president of the Ulster Farmers Union. We are an organisation in Northern Ireland with roughly 11,500 members spread across all sectors.
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.
The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
Q
Norman Fulton: Our motivation in drafting the schedule was to retain options for incoming Ministers—obviously this was done in the absence of an Executive—so we developed it to be able to preserve the ability to continue to make payments to farmers under pillar 1 and to enable us both to continue to deliver schemes under pillar 2, until such a time as Ministers wish to change those measures, and to keep pace with appropriate changes elsewhere in the UK. So it was really to provide that framework for incoming Ministers but not really to set out any particular direction in policy, which is clearly something that Ministers will need to take a lead on. There is some scope for simplification in the powers we propose, but it is really for Ministers to decide which of those powers they might want to move forward on.
In terms of the future direction of policy, we engaged with our major stakeholders from the farming, food and environmental sides, and we produced a draft outline framework for agriculture, which we published for consultation in August 2018, really around the four pillars of resilience, environmental sustainability, productivity and supply chain functionality. It is a very high-level document and it received a good response from our stakeholders. Now that we have a Minister and an Executive in place, we need to work to flesh that out and to start to chart a way forward in the longer term.
Ivor Ferguson: From the farmers’ point of view, we had negotiations with our farmers and discussions on how we would like to see payments going forward. We produced a discussion document. We felt that we were quite happy for farmers to be rewarded for activity, whether that be agricultural production or environmental activity. We were quite happy with that because a large number of farmers were not fully happy with area-based payments, in that they felt that the landlord or people who owned vast areas of land received most of the benefit. Our farmers will be quite happy to have money directed to people who are engaged in activity, be it production or environmental.
Having said that, we would not want to see area-based payments disappear completely. We would like to keep that in the form of a resilience or volatility payment, bearing in mind that we have a land border with the Republic of Ireland where they will still receive land-based payments. We could not be disadvantaged in any way with our farming colleagues in southern Ireland.
From that point of view, we would like to see some form of a resilience or volatility payment. If we look at the recent farm income figures for Northern Ireland, the profitability figure has fallen from well over £300 million down to £290 million. That is a similar figure to what comes in in farm support to Northern Ireland. It is a stark reminder of how dependent some sectors are on basic payments.
George Eustice
Q
Ivor Ferguson: If there were vast changes in the market for whatever reason, we would certainly need more support. This resilience payment would be much less than the payment today—perhaps 30%, 40% or at the most 50%. We have not put a figure on that yet; it is something we would have to discuss with our farmers fairly quickly now.
Daniel Zeichner (Cambridge) (Lab)
Q
Norman Fulton: This is certainly an issue of concern to us. We have to be mindful of the fact that we now have the Ireland/Northern Ireland protocol under the withdrawal agreement, which means we will need to align with the European systems, whereas those in the rest of the UK could diverge. Therefore, we would be concerned that, within what will be the single UK market, there could be different approaches to marketing standards, for example. Obviously, that is something that we will all need to be mindful of. I suppose it will be managed through common frameworks across the UK. A lot of work needs to go into thinking through how we will operate across the UK, to ensure that the UK market is not distorted in any way and there is a level playing field for all players in that market.
Daniel Zeichner
Q
Norman Fulton: Well, we are very clearly in one system, so we do not have the scope to change under the protocol. In the schedule, you will see that on marketing standards, for example, we have taken the ability to set standards, but that was drafted in advance of the withdrawal agreement, so it would not be enabled. At some point in the future, if we ever left the protocol, it could be brought into play. For now, our future is pretty much mapped out when it comes to marketing standards, but that is not the case elsewhere in the UK. Although we know what our standards will be, they may change elsewhere. That will create the issue of how we ensure that there is a level playing field within the UK/GB, which remains our biggest market.
Ivor Ferguson: As Norman just said, it is our most important market. At least 50% of what we farmers in Northern Ireland produce goes to the mainland GB market, and in some sectors it is 70% or 80%. If we were to diverge and the standards were to lower in the GB market, lower standards means lower cost of production, and we would be tied to the cost of production within the EU system in Northern Ireland, so it would be very difficult for us to compete in that market. From that point of view, it would be a disaster for us if the standards changed or diverged a great deal away from where we are today.
Daniel Zeichner
Q
Ivor Ferguson: Take the beef sector in Northern Ireland. All the products that we produce, or 95% of them, are produced to Red Tractor quality-assured standards. A lot of them go to the major retailers in the UK, which support us well with the Red Tractor standards. For beef production in Northern Ireland, the returns to farmers are down in the last 12 months by £36 million, so there is no profit in the job at the present time. We could not accept a lower price for product, so a lot of our farmers at the moment are finding it very difficult to stay in business. If there were a lowering of the price in the marketplace, that would be a disaster for us.
Fay Jones (Brecon and Radnorshire) (Con)
Q
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
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
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
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
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.
Mr Goodwill
Q
Norman Fulton: It is a bit of a mixed picture. Certainly, it has encouraged conversations around the farm table that would not otherwise have happened. We actually put in place in addition—it was an optional addition to that measure—a requirement for the young farmer to have a level 2 qualification in agriculture, so it was a way of bringing young farmers into the whole area of technology transfer. Some, who had perhaps gone out and got jobs in other professions or trades, were coming back to the farm but did not really have the agricultural training in place, so this got them on to the stepladder. Quite a proportion then decided they would go on and take on further training and qualifications, so it was very positive from that perspective as well. The motivations on that one were good, but I think we could improve on it by looking at the restrictions and issues facing young farmers, and at how we can tailor a package to help generational renewal on farms.
Mr Goodwill
Q
Ivor Ferguson: Yes indeed. Coming back to the discussion document we produced after some consultation with our farmers, our idea was that when we moved away from the basic payment to a payment for productivity and environmental measures, it would mean that some of the farmers who wanted to do extra environmental schemes on their farms would be able to avail themselves of a grant to do that, so it would encourage environmental measures as well as production measures. That is something we are very happy about.
On the young farmers scheme, as Norman said, some young farmers certainly benefited from the scheme and it does encourage young farmers. However, going a bit further, we would like to see a succession plan put in place for older farmers to pass on to the next generation, and we would like to see some incentives, like they have in southern Ireland, such as tax incentives and that sort of thing. That would make the transition from the older generation to the next generation a lot easier, and it would be more encouraging for our young farmers.
Deidre Brock (Edinburgh North and Leith) (SNP)
Q
Norman Fulton: Yes. I think the frameworks will be important. Up to now, we have operated within a regulatory framework, the CAP, which gave us a degree of flexibility, although it was ultimately constrained. Going forward, we will no longer have that regulatory framework. It then comes back to the politics of devolution and the fact that agriculture is fully devolved. I think all the devolved Administrations will jealously preserve that flexibility, but they will also need to recognise that we will operate within a single market, and that there will therefore have to be ground rules—
Deidre Brock
Q
Norman Fulton: Of the UK, yes, which is obviously of utmost importance for everyone.
Ivor Ferguson: I agree. For us in the Ulster Farmers’ Union, we would certainly have to have some ground rules. We meet our colleagues in the NFUs in England, Scotland and Wales on a regular basis, and we certainly discuss all those matters. We fully agree that we will have to have some ground rules, but we do keep in touch with farmers in the other regions.
Deidre Brock
Q
Ivor Ferguson: Yes.
Ruth Jones (Newport West) (Lab)
Q
Ivor Ferguson: We certainly would not be happy at all with a review every five years. We would certainly want to see this reviewed at least once a year. Especially in the transition, as we move forward, we would think that five years would be far too long a period, and that it will have to be reviewed a lot sooner than that—at least annually.
The Chair
If there are no further questions, we have finished two minutes early. Thank you for your time.
Examination of Witnesses
Nick von Westenholz and David Goodwin gave evidence.
The Chair
We will now hear evidence from the NFU and the National Federation of Young Farmers’ Clubs. For this session, we have until 3 pm. Would you please introduce yourselves?
Nick von Westenholz: Nick von Westenholz, director of EU exit and international trade at the National Farmers Union.
David Goodwin: David Goodwin, chair of agriculture and rural issues for the National Federation of Young Farmers’ Clubs, and I farm in south Northamptonshire.
George Eustice
Q
Nick von Westenholz: First and foremost, the content or focus of those simplifications is not as important as giving information to farmers. During the previous Parliament, as the previous Bill was going through, there was increasing anxiety that, while simplification may or may not be coming down the line this year, farmers would not be informed about what those simplifications were, and therefore would be unable to properly prepare in order to meet the requirements of whatever the scheme is. First and foremost, farmers need early guidance about the requirements of the scheme they will be subject to, well in advance of that scheme year beginning. That information is almost as important as what the simplifications might be.
In terms of what the simplifications are, we are engaging with officials at the Department for Environment, Food and Rural Affairs, as you will know. It will not surprise you that some of the current requirements, such as the three-crop rule, have been criticised by many farmers as overly bureaucratic without really achieving the greening aims it may have hoped to address; that one comes up most often in our conversation with members.
David Goodwin: All our members are keen to get on and farm. That is what we are hearing a lot of at the moment. They hope that this Bill will enable them to do that, to look for opportunities and to expand their businesses. We keep talking about simplification; anything we can simplify will be a good thing. There is a real worry that we will not meet environmental and welfare aims. We need to ensure we maintain our high standards and do not let them slip.
George Eustice
Q
David Goodwin: Access to land is obviously a key concern for our members, but access to land is good only as long as the land they are looking to farm is profitable and viable. Finding ways to enable that is also important. From that point of view, a subsidy system of some description, where farmers are rewarded for the good work they are doing, is still quite high on our agenda.
George Eustice
Q
Nick von Westenholz: I am not aware that we have looked at that sort of detail on where land rents might sit. It is an interesting question and one we probably ought to look at.
Daniel Zeichner
Q
Nick von Westenholz: The obvious omission from the Bill, in our view, is anything around import standards. It is absolutely right that that should be in the Bill, because if the Government are trying to promote, which we would support, more sustainable production and food systems domestically in the future, which is the core aim of the Bill—to provide a support framework for farming in a high welfare, environmentally sustainable way—they will be fundamentally undermined in that objective if there is not a concurrent trade policy that prevents farm businesses from being undercut by substandard imports. A two-pronged approach in policy terms—trade policy and domestic policy—is needed to prevent undermining that sort of farming, in which UK farmers excel.
The detail of how the Bill is amended or of the terms of the legislation that can achieve that may be quite complicated and something that the Committee needs to consider as it goes through the Bill line by line, but at the core there must be a requirement that if the UK is going to import food, that imported food meets the same standards of environmental protection, animal welfare and food safety as UK producers are required to meet. Of course, the Government have been very reassuring on that point in recent weeks and have given some guarantees in that regard, but we feel that that needs to be underpinned by legislation, because there are real technical challenges in doing this that any Government, whether this Government or a future Government, are going to come up against as they negotiate trade deals and as they pursue a new role for us as an independent member of the WTO.
Fay Jones
Q
David Goodwin: There has been a lot of talk within our membership about support for schemes whereby we are looking at contract and share farming arrangements, particularly in the livestock sector, to enable young farmers to come on to land alongside an existing farmer who is perhaps getting a bit older and does not want to do it himself. Quite how the framework for those sorts of things fits and how you make them work has always been a challenge. I have just come back from New Zealand, and it is interesting to talk to farmers out there. There is a lot more progression on units and farmers do not seem to be so static. I think that is perhaps the other issue in UK agriculture: it is very parochial—which is traditional. It is difficult to really say how we could break that mould, but certainly from our members’ point of view, any new, innovative ways we can find to get young people on to the land—not necessarily as managers or owners, but also as good skilled workers—would be good.
Fay Jones
Q
David Goodwin: It seems to be very quick. I would repeat Nick’s point from earlier: for things to happen in farming, we need to remember how long some of the cycles in agriculture are. For farmers and farm businesses to prepare for that, they need to know what they are preparing for, and they need to know what they are preparing for a long time in advance of it happening. If you are putting a bull in today, you are not going to be selling the calves, potentially, for three years. We just need to be mindful of how agriculture works and how that fits with the legislation’s aims.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
Q
Nick von Westenholz: I think, taking a view of what the Bill is trying to achieve in totality in terms of a sustainable food production system, that the need to provide consumers with affordable and safe food must remain fundamental to that.
One concern we have is that a singular focus on some of the public goods aspects might lead to the food production aspect being overlooked. Indeed, that was a criticism we made of the original Bill. That is not to downplay the importance of the clause 1 public goods elements and the development of the land management scheme, but we have been clear from the outset of the process, some years ago, that a really comprehensive agricultural policy needs to be built of three key blocks. You need a sustainable, environmental block—the sort of stuff that this Bill does very well—but you also need to keep in mind the need to produce food, which is what farmers do as well. You need to encourage increased and improved productivity in the farming sector. Again, the Bill provides the powers to do that, although we are waiting for details from DEFRA about exactly what schemes and measures might be introduced to achieve that.
We also have a concern around what we call volatility, or what might be called stability. That is the stuff that farm support systems around the world generally do, which is underpin the farming sector as food producers to provide a certain degree of food security and affordable food for their country. Obviously, there are new, welcome food security clauses in the Bill. Our concern is that as we go into the next few years, direct payments will be reduced and replaced with a scheme that is focused on environmental land management, and we will potentially be in a very difficult trading environment, depending on how the next 10 and a half months of trade negotiations go. That perfect storm will seriously undermine our ability to provide food. We try to make clear that this system needs to be as much about providing food for the country as it is about looking after our countryside and our farmed animals.
The Chair
Before you do, I have a large number of people indicating that they wish to speak. Please could Members and witnesses be brief.
Abena Oppong-Asare
Q
Nick von Westenholz: Yes. We have good communication with DEFRA officials and conversations are ongoing. Given the immediacy of some of the changes coming in, we are looking for assurance that schemes are going to be developed and deployable quickly. There are concerns over that.
Theo Clarke (Stafford) (Con)
Q
Nick von Westenholz: As far as they go, we are pleased with the inclusion of the tenancy clauses in the Bill. They are quite technical and we are looking to develop some amendments to strengthen them, which we will be happy to share with members of the Committee. In particular, we want to bring in more of the recommendations of the tenancy reform industry group, which has been up and running and working for some years now, so that those are properly reflected in the Bill. We will suggest some improvements, but we generally welcome the clauses that have been introduced in this Bill that were not in the last one.
Kerry McCarthy (Bristol East) (Lab)
Q
David Goodwin: Yes, very much so. County farms have been a shining light for getting younger people into holdings. In the counties where it works well, it works very well. Obviously, there are counties where there are challenges and more pressures on estates. Unfortunately, we see those in the news regularly at the moment. There are some good examples. The number of county estate farms is very small, compared with the number of people who are perhaps looking for opportunities. Some of those individual holdings are very small and do not always offer the stepping stone that is needed. Going on from there, there is still a lack, particularly with tenanted farms, of progressional farms to go on to from a county starter farm.
Danny Kruger (Devizes) (Con)
Q
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
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
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
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.
Abena Oppong-Asare
Q
David Goodwin: As we have touched on at various points in this session, the crux of the matter is this Bill’s enabling farmers to run effective, efficient and sustainable businesses, both environmentally and economically. From a young farmer’s point of view, the foundation of all this must be a strong, stable agricultural industry. The only way to attract young people into agriculture is to offer them opportunity; it is difficult to sell the idea of working 150 hours a week and being paid less than the minimum wage to people who are not necessarily in love with agriculture. There are no specifics that spring to mind, but anything we can do to support agriculture is a positive.
George Eustice
Q
David Goodwin: I have a very quick point on that, specifically pertaining to the lamb industry. We have had quite a lot of feedback from our members about lack of transparency: under the sheep legislation as it is at the moment, we are forced to electronically tag and identify all the sheep, but currently the abattoirs and processors are not required to pass that information back down the chain or identify those carcases as pertaining to those animals. There is a perceived transparency issue with some processes. It is not that potentially we are not being paid the right amounts, but I think people would like to know what our killing out percentages are, so that we can improve performance and make better informed decisions.
Nick von Westenholz: We are working through our commodity boards, which is the way we cover the different steps in the NFU to address exactly how the powers will be used. We are pleased that those powers are in the Bill, but lots of them rely on secondary legislation to operate, so it seems that potentially there is still quite a job to do once the Bill is enacted to ensure that the powers can be used properly to do what they are supposed to do. We look forward to working with officials to work out exactly how those powers can be deployed once the Bill is enacted—that is a feature of the enabling aspect of the Bill. We certainly think the focus on improving the supply chain is a critical bit of the Bill.
Daniel Zeichner
Q
Nick von Westenholz: Yes, absolutely. We would like more detail. We understand there was an intention to consult on them at some point under the last Bill, so presumably that will still happen. You are absolutely right that there are potential unintended consequences, not least because those aspects of the Bill relate to England, and there could be a very different way forward in other parts of the UK. That would potentially lead to a very different looking system between England and other parts of the UK. We need to understand the details. Some people might be attracted to the implications of delinking, superficially. Once you delink—particularly with the potential to move to lump sum payments, which is one of the reasons for doing so—you are moving away from some of the things I spoke about earlier, such as being able to manage the transition for the next few years, particularly in the volatile circumstances that might arise for farming. So yes, the long-winded answer is that we would like more detail.
David Goodwin: We tend to agree on the whole. There is a feeling of quiet optimism that it might offer opportunities for young people to come into agriculture. Without some detail to see exactly how that might work and whether it is feasible, people are keeping it at arm’s length.
Daniel Zeichner
Q
Nick von Westenholz: The main parts of the Bill that are relevant are around the transition. Currently, the Bill still has the timetable of beginning to phase out of BPS next year and going over a seven-year period. We have called, as have others, for a delay in that process. That is still absolutely right because we are unlikely to know the trading environment in which farming will operate until potentially very late this year, possibly even into next year, yet the schedule has us beginning to phase out of BPS next year. As David mentioned, agriculture works on very long timeframes.
While we do not know what the future looks like, delaying that is important, not least because this Bill, the previous Bill and the health and harmony consultation that it was predicated on, all took place in a very different political environment where the future relationship with the EU and some other aspects were envisaged very differently. Things have changed, and the Bill and the transition period should also change. We could face some very volatile times ahead and we need to be able to manage that.
The Chair
Order. I am afraid that brings us to the end of the time allotted for this session. I thank the two witnesses on behalf of the Committee. We will move on to the next evidence session.
Examination of Witness
Richard Self gave evidence.
The Chair
We will now hear oral evidence from Co-operatives UK, and we have until 3.30 pm. Welcome. Would you like to introduce yourself?
Richard Self: I am Richard Self, agriculture manager with Co-operatives UK, supporting our farmer co-operatives up and down the country.
George Eustice
Q
Richard Self: We are broadly happy with the way the Bill is set out. The detail will come in secondary legislation for the areas of co-operation and collaboration that we are interested in. The main concern is around exemptions. The exemptions are currently very supportive of co-operatives, but there is some room in the Bill for that to be narrowed, and we need to ensure that the current exemptions are carried through to this new environment. We want to encourage our co-operatives, not discourage them.
On subsidy payments, we accept that. It will create a new environment and a new world for farmers to operate in. Again, co-operation and collaboration can help farmers become productive and efficient within that new world.
George Eustice
Q
Richard Self: It is an interesting area. I am not an expert on the dairy sector, but in milk co-operatives the first-stage processor is owned by the farmers. If that processor takes a high price, farmers will get that back at some stage; in another situation where they do not own the processor, they will not. Therefore, it inhibits them from reacting to the market, because ultimately in a situation where the farmer owns the processor, the benefits will eventually come back to the farmer because they own the business.
Daniel Zeichner
Q
Richard Self: Producer organisations have done a good job, but I think some people would say they could do a better job if they were better organised. I think we could have made better use of them in the past—other countries have made very good use of their POs. One concern we have around POs is that they might be too narrow. We want to ensure that all types of co-operative have the chance to be a PO, and that extra hoops and barriers are not put in the way of existing co-operatives, making it more difficult for them to get to that PO status.
Daniel Zeichner
Q
Richard Self: Other countries have taken those funds that they get through being a PO, and the help with their technology, productivity and so on, but they have also changed their business models. What is important is to get the right business model in place, where you can add value, capture it and bring it back to the primary producer. I think what we have done is just take the money for the grants, if you like, as opposed to changing the business model and the way that the supply chain works.
Daniel Zeichner
Q
Richard Self: I think it can do. As I said, I think the detail will be in the secondary stage to this, and how that is built up, but the foundations are there. We can make that PO scheme work, as long as we are inclusive of all the different co-operative structures that we have got within that, and do not create extra barriers and hoops for people to jump through to get into the PO scheme.
Daniel Zeichner
Q
Richard Self: There is nothing specific that I would like to see. At this stage, it is about trying to keep it as wide as possible, so that we keep our options open and look at every stage of making the environment right for co-operatives to thrive and succeed.
The UK is well behind most other developed agricultural systems in its use of farmer co-operatives. France, Germany and the USA are all developing a number of co-operatives, while the number of our co-operatives is reducing. We need to change that balance around. Our market share of co-operatives, based on my most recent figures from a few years ago, is about 6%, compared with Germany’s 17%. I think France has something like 55% and Denmark somewhere over 60%. Their market share is much greater. The value added that those co-operatives bring is returned to the primary producer.
The other advantage with co-operatives is that they make the markets less volatile. That is one of the things we are worried about in the future—volatile markets. A co-operative can help balance out that market to make it work well, so that there is less volatility in the price of goods—the primary produce. It also makes sure that the supply chains are fairer for the farmer because they are working together.
Mr Goodwill
Q
Do you think that, under the old system as part of the European Union, we have in many ways been trying to squeeze a square peg into a round hole, and fit what is going on here into the way that we can access funds? How do you think in future we can actually produce a system to encourage co-operatives, of the sort that would maybe work in the UK, rather than trying to emulate those across the water?
Richard Self: Generally, we have some very good co-operatives out there. The governance angle of co-operatives is the key thing. If we get that right, and get them well managed at the leadership level, that will help to address the sort of thing that we have had in the past.
We have large farmers in our country, compared with some of the others, but in fact it is the small farmers who do not tend to collaborate so much. I think the larger farmers tend to be very professional in what they are doing, and they are looking at this as a business arrangement, as opposed to the smaller farmers, who want to do things themselves. The evidence I have seen basically says that we need to target smaller farmers probably more than we do the larger farmers.
Danny Kruger
Q
Richard Self: No; that was a good point. Education is good point. I looked at this last year. I looked at our universities and colleges, and they do not do anything on the co-operative business model and how it works round the world, and how farmers benefit from getting engaged. Last year, the Royal Agricultural University did some work for us. It highlighted the lack of understanding of how the business model works and brings benefit back to the farmers—it is about adding and capturing that value and bringing it back. Some farmers have said to me, “Is there any point in us adding value, because someone else captures it?”, whereas a co-operative makes sure that that value is brought back.
We need to educate—“inform” might be a better word in some ways. We do proper case studies and show how, around the world, co-operatives are used in such an effective way, and how their use continues to be developed as they go forward. We were doing quite a lot of work after the Curry Commission report. I was involved in Share to Grow initiatives to get production collaboration going, and we were making some good ground, but then 2008 happened and the cash—the support—stopped. Since then, progress has basically stopped. We have probably moved backwards, if anything, since then in terms of the level of collaboration and co-operation. External support is required to make this happen; it will not happen without that external support to carry it through.
George Eustice
Q
Richard Self: Obviously, marketing and consolidating products to make efficiencies in the supply chain are really important, but as we move forward, there are lots of other opportunities for co-operatives to get involved and for farmers to work together. Data is one—we talk about “big data”—and co-operatives are in an excellent position to harvest that data and to use it, not just for their benefit, but for the benefit of the whole supply chain. It will be important, going forward, that we have really efficient supply chains, so that we compete with external supply chains. Working with a co-operative at the centre of that, at the production level, is important both upstream and downstream. If we can have PO schemes that run across different areas and different sections of that supply chain, it would be good.
George Eustice
Q
Richard Self: I think that the existing competition law that we enjoy now—or did, under EU law—would be good to carry through. That is how I understand it, although I am not an expert in this area. The worry is that it might be narrower in the future, so that the onus comes to fall on the co-operative to show that it is not competing unfairly, whereas at the moment it can say, “We’re a co-operative,” and then someone else has to prove that it is competing unfairly. The problem with that is that co-operatives would have more risk and more uncertainty when they were trying to grow a particular business and so on. That is why we would like to keep it as it is at the moment.
George Eustice
Q
Richard Self: I think that would be sensible. It would be a good aspiration for some areas.
Ruth Jones
Q
Richard Self: I am probably not qualified to say how well the Bill does in that sense, but I believe that if we can have a policy with an almost horizontal theme of collaboration and co-operation that runs through the environmental or production side of it, or anything else, it would be good to improve that. In particular, that strengthens up the position of the primary producer working in a co-operative, in terms of balancing out.
Some processors and suppliers are worried about this, if farmers get together. In some situations, they have—how should we say?—been proactively discouraging it, and we need to avoid that happening. It is to the benefit of the whole supply chain if it works with that co-operative—they can get economies of scale, help manage supply and demand, and use the branding of the co-operative, if you like, to get to the end consumer to show the traceability, the welfare and the quality of the product when working with a co-operative. There are win-win situations for both co-operatives and businesses up and down the supply chain if it is looked at the right way. They can see it as a threat to their profitability.
Miss Sarah Dines (Derbyshire Dales) (Con)
Q
Richard Self: I think the only thing I would change is to make sure that the exemptions are firmed up and protected over the next few years. We are worried about that, in terms of suddenly making it more risky for our co-operatives to develop.
Miss Dines
Q
Richard Self: There is a two-year period on this. It could be managed more flexibly, so it would be good if that could be extended for two years.
Miss Dines
Q
Richard Self: Five years would seem like a good period, but I do not have significant knowledge on that front.
Theo Clarke
Q
Richard Self: I’m sorry; what would that be?
Theo Clarke
Q
Richard Self: I probably do not know enough about that. The code does a good job in helping the process. Co-operatives are my area of expertise. It would be good if that included co-operation and collaboration as it would help redress some of the balance of fairness within the supply chain, but would be for the benefit of the whole supply chain if handled the right way.
George Eustice
Q
Richard Self: Obviously, there is a democratic process within the co-operatives in which you can vote people on who have a particular stance. The idea is to help control your own co-operative in doing what the membership wants. A co-operative should have a process in place whereby that can be fed into the co-operative to get the criteria right for that membership. The process of democracy within the co-operative should allow for that. I cannot comment on an individual case, but it is up to the members how they run their business. They should be able to set it up the way they want it.
George Eustice
Q
Richard Self: I would hope so, yes. But I am not an expert in the dairy industry, so I would need to investigate that further; we are happy to look into that. I have good contacts with our dairy co-operatives and can help feed that into the system.
Daniel Zeichner
Q
Richard Self: Increasingly, farmers will have better data on their anticipated crop yields, milk yields or whatever. They can collect that raw data, and farmers can trust their co-operative to handle it in the right way for them. That data is useful and is worth money to others in the supply chain. It is a question of how they can work together to maximise the use of that data for the benefit of the supply chains they are working in.
Daniel Zeichner
Q
Richard Self: Obviously, the more data you have across an area—information on yields, or even perhaps on the supply side, on agrochemical use and the anticipated use of crop-protection products—the more it helps you to manage supply and demand going forward, which helps improve efficiency and productivity. Co-operatives are in a really strong place because they are working on behalf of their farmer members, and they can use that data in the right way to help the whole supply chain.
Fay Jones
Q
Richard Self: On risk management, the problem is that you put your crops in the ground or start to produce your animals well ahead, and you do not know what you will get for them. Mechanisms to control those risks against unforeseen events and so on are really important. If they could be built in, that would be very useful. Again, co-operatives have a role in that: you can pool your crops or your fertiliser payments to average out prices within a co-operative. That is the sort of thing that helps to manage risk. If you have a known price for a thing, or you get an average price over a period, you do not get hit hard if the price suddenly goes up or down.
Danny Kruger
Q
Richard Self: I would say both.
Danny Kruger
Q
Richard Self: I think there are some wins there for local things, but if we really want to make a difference, it has to be about getting a good market share of UK supply chains and then working with those groups to see how we can develop export markets around the world for high-value, high-welfare, quality products. There are some opportunities for that. It is a difficult area to get into—obviously, it is highly competitive—but with the story we have through our production methods and so on, we should be able to do that. Again, the point is that you need the right business model to add that value but then capture it back to the primary producer. The problem is that when a farmer produces something and it just goes off on a lorry and they do not know where it is going, they are price-takers and somebody else is capturing the value they have created. That is why we need to get the business model right for those groups.
The Chair
If there are no more questions, I thank Mr Self, and we will move on to the next panel.
Examination of Witnesses
Graeme Willis, Jim Egan and Jake Fiennes gave evidence.
The Chair
We will now hear evidence from the Campaign to Protect Rural England, Kings Crops and the Holkham Estate. We have until 4.15 pm. Would the witnesses like to introduce themselves first?
Jake Fiennes: I am Jake Fiennes, the general manager of conservation at Holkham Estate in north Norfolk.
The Chair
Before I move on to Mr Egan, may I say that this is a huge room and the acoustics are terrible, so can people speak up?
Jim Egan: I am Jim Egan, technical advisor for Kings Crops.
Graeme Willis: I am Graeme Willis, agricultural lead for CPRE, the countryside charity.
George Eustice
Q
Jim Egan: From my perspective, one shortcoming is that the current system does not allow fully integrated environmental and farming management. It does not let the whole lot sit together, which causes issues. One of the biggest shortcomings of the current system is its administration in my specialised area, agri-environment schemes, which will put people off, as it has in the past. I do not really want to go much further than that, Minister. There are lots of things, but that is my area of expertise.
In terms of modifying in the short term, my personal view would be not to, particularly on countryside stewardship. I do a lot of work directly with farmers on getting stewardship schemes in, and I have never seen so much demand as this year. I already have 65 people on my books wanting to do the modified schemes. There are obviously things pushing them towards that, but the simplification of the actual stewardship process has been good. We just need to get the payments and other things right in the short term, to provide certainty.
If I was going to modify anything within the wider BPS system, I would perhaps modify the three-crop rule, so I could say that we had done something. However, I think people are used to it, and it is actually very important, in a time of turbulence, that we keep it as stable as we can at the moment.
Sorry; what was your third question?
George Eustice
Do you support the general thrust of the future policy, moving from subsidy on land tenure to—
Jim Egan: Yes.
Jake Fiennes: If we split it into pillar 1 and pillar 2, the current BPS is rather clumsy and, in places, overly simplistic. We have the ecological focus area ruling within that, which, as Jim refers to, is cumbersome. The three-crop rule and hedge-cutting dates sort of tie farmers into a knot; they are unable to be flexible.
In the short term, farmers are preparing for a transition period, which will start in 2021, according to the current Secretary of State, although I know that some are pushing for that to be extended, because we have just seen a delay of this whole process. However, farmers are slowly taking on board that there will be seismic change within their business. It has happened over a very static two years, but we have seen a real momentum, and there is a general acceptance among those within the industry that this is coming around the corner. If they have an ability to prepare their businesses by going into the current schemes—I think the new stewardship scheme was opened today. I have not looked at it, but I think the detail made it easier and more user-friendly.
We have to put the past aside, with all the issues that we had with the RPA, Natural England and late payments. I think we have moved on from that, and I think this year was an example of the RPA demonstrating very swift payments, and the current stewardship payments are being rolled out as we speak. That is all very positive. Again, I see a greater uptake of the current schemes—the countryside stewardship higher tier and middle tier, and also the simplified scheme.
That will get farmers ready through the transition period, which comes on to the Minister’s third point, where I am in full favour of it. A slight redrafting of the Bill—talking about soil and productivity—basically got the entire land-based community on board.
Graeme Willis: I think it is well attested that the CAP scheme is inefficient, ineffective and inequitable. People such as Allan Buckwell and Alan Matthews have made that point, and DEFRA’s own research has shown that, and there have been statements, so we very much support that view. In terms of the current countryside stewardship schemes, as Jim said, it is very important that farmers keep faith with those schemes. The simplification has been very helpful.
Certainly within DEFRA, I have been making the point that those schemes are probably under-commented on, because we have a 2030 deadline for addressing climate change by cutting emissions very significantly. Four years through to when ELMs beds in is a very important period in which to get trees in the ground and to get peatland and other high-carbon soils restored. It is very important in this phase to keep putting money in and investing in farming. It is very important that farmers keep faith with that, and the schemes have been expanding, which is very welcome after a rocky start.
We believe that public goods for public money is the right way forward. It is the absolute crux for enhancing the environment, obviously addressing climate change and biodiversity issues. But, as Jim said, it is very important to harmonise what farmers do in producing food and other goods with environmental improvements which we know are very necessary. Bringing those two together is critical so that they are not seem as oppositional.
George Eustice
Q
Jake Fiennes: Are we referring to the blueprint of ELM?
George Eustice
Yes, in the new scheme.
Jake Fiennes: We have the regulatory payment. I hear of calls for up to 30% of existing payments that farmers receive, which is about £200 per hectare. I am certainly not in favour of that, because it will not encourage stakeholders to go into the middle tier and I think you will see a great uptake in the middle tier. On the final tier, which is landscape restoration, whether it is on a catchment basis, if we are going to have sustainable, functional land use, it has to be at scale and deliver all the climate change issues and soil regeneration. All these processes will go into the final tier and, having listened to some of the comments earlier about the smaller farmers not working well together but the bigger ones working better, we are seeing a great uptake of facilitation funds and cluster groups. This whole movement is happening. I would not encourage the lower payment to be a major factor, because we would basically go back to a reverse BPS system.
Jim Egan: My way of answering that would be to look at the fact that in the majority of lowland England, if you split it that way, you will find farmers taking up more than you think, if it is properly rewarded, if it is linked in by the rest of the industry and it is linked together. You quite commonly talk to farmers now who take out anything between 5% and 15% of their land to manage it “for the environment” and also recognise the real benefits of changing what they do: introducing grass lanes to help with grass weed control and to build soil fertility, which helps with cleaner water and so on.
I agree wholeheartedly with Jake that there is a sea change coming. A lot of people stood back, because of the political uncertainty, but they are ready for that. The higher extremes you referenced, such as peat restoration, will be a focus in an area where it can happen, getting those landowners together and talking about it. It will take time. I do not think they are completely divorced and different.
On woodland, it will fit when people start to see natural capital, particularly the natural capital potential of their land, and they have choices of what to do. Then woodland will start to happen, especially where you can get people working together and you can make the links. I would be positive about that.
Daniel Zeichner
Q
Graeme Willis: In terms of maintaining standards, we are very concerned—I know that statements have been made about supporting high standards—that undercutting those standards through imports would undermine farmers’ incomes, as well as their ability to perform environmental management. I know that an amendment previously tabled to the Bill sought to introduce a broad requirement that any international trade agreement that was to be ratified must be compliant with UK standards. We think that is a major omission and one of the major things that needs to be addressed in the legislation. We have a common cause with the whole of the farming sector on that. The whole of the NGO environmental sector takes that view. It is a very important element and condition.
Daniel Zeichner
Q
Jim Egan: Regarding possible current uptake this year, I have always been positive, and I have been proved wrong, year on year, as I am often told by DEFRA’s agri-environment group. This year, in particular, people have heard for a long time that BPS will start going down. They have seen their neighbours’ farms going into the simplified scheme, although not in huge numbers. I work with a company that provides agronomy advice, and the agronomists are starting to understand it.
The weather this year in the east midlands, my patch of the country, has meant that there are farms with no combinable crops in the ground at all—not 5% or 10%, but none. That has made people think. It has made people think about sustainable income streams, support, unproductive areas and what they could do differently. There is a whole raft of different things. There is also a question of who sells it. If you sell it directly and positively, people will do it. If you are negative and you harp on about late payments and so on, the meeting will leave you. I tend to be positive about it. Perhaps that is why I have a long list of people wanting to work with it.
Jake Fiennes: When you put economically sustainable agriculture to a farmer, he may have had 47 years of being paid just to produce food, irrespective of the quality, quantity and yield he produces on his land. They must realign their business. If we see this transition period take place as of next year, some famers will lose anything from 5% to 20% of their support income.
Agri-environment helps them through the transition period financially, but it also gets them to understand. At the moment, farmers lack good agricultural environmental advice. That is what we don’t see enough of: advice on the ground. Farmers are a particularly fickle community. They are wary of individuals they do not know, so the advice has to come from individuals with whom they have had previous relationships, whether through their agronomy, because we are seeing agronomy become more open to environmental delivery, the Farming and Wildlife Advisory Groups throughout the country, or Natural England, which changed the game of agri-environment 20 years ago. The advice on the ground is key.
If farmers are sold an economic reason and then have an ability to deliver the environmental goods, whatever they may be, through sound advice, we will see greater uptake. The reason we had the stop-start scenario with agri-environment was, as Jim referred to, late payments—“Am I going to get paid for it?”—or commodity prices. We have seen the volatility in commodity prices. If I am getting £200 a tonne for my milling wheat, why do I need to go to an agri-environment scheme when I have already invested in the men, the machinery and the infrastructure to deliver that crop? It is an evolving, moving process, but they are definitely coming more on board with it.
Daniel Zeichner
Q
Jim Egan: I think there is underlying capacity out there. There are enough people to do it. There will be a change of mindset in some sectors, but bear in mind that business is seeing some of the opportunities here as well. Jake is right: it needs to be somebody the farmer trusts—there is a wide range of advisers trusted by farmers—and the advisers need to believe in the scheme. Many advisers have not sold environmental work for the past five years, because they do not believe in the scheme; they do not want to put their name on the line when the payments are late, and when the agreement does not turn up for a year after you have entered into it.
You should not underestimate the impact that that has, because if your adviser walks up the drive and says, “I can’t put my name to that, because I can’t advise you about that future income and part of your business,” it puts people off. We are starting to get a lot of certainty now about stewardship. I know it will change and evolve, but we need that certainty of scheme and of process. The advice is there; people just need to believe in it.
Mr Goodwill
Q
Graeme Willis: Referring to uplands, we have signed a letter to say that we want peatland burning to end rapidly, and the Committee on Climate Change has taken the same view. I want those landscapes to be managed in a re-wetted form, which might help different forms of game. It might not be the same kinds of game management.
Mr Goodwill
Q
Graeme Willis: The blanket bog, essentially. That could be re-wetted and improved upon, and I think you would get different game. You would not necessarily get the same driven grouse shooting, but it is important to take into account what game management could do in those areas and how it might adapt to that. It would be a different form of activity, but very important. I take the point about large estates, but Jake can say far more about that; it is important that you maintain that kind of management. It has a lot of environmental benefits, certainly in integrating woodland into those environments and into the farming.
Jim Egan: I have no experience of upland, so I will not try that one. I used to work at the Allerton project for GWCT, and my experience of lowland game management is that, where it is done very well, it is very good. It encourages woodland management, habitat management and the provision of wild bird seed mixes, pollen and nectar. You are right to reference the fact that many of those estates were doing that work before agri-environment and working with agri-environment. We need to be careful to ensure that that management is positive and good, because, like everything in life, there are good and bad shooting estates. For me, it comes back to farming and the environment, completely melded and meshed together. Sporting activity is part of the rural environment and needs to mesh in with it.
Jake Fiennes: It is an Agriculture Bill and game is not agriculture. We have to remove game, because it is just a landscape pastime. The environment can benefit game. The game community has enough issues to deal with on its table, but we can see that game interests have evolved over the centuries. They will be more crucial in the delivery of environmental goods. Those with a history of managing with a game interest see the benefits. The Allerton project is a great example. The Duke of Norfolk’s estate in Peppering is specifically targeting game, but the benefits to the wider environment are huge. All the game interests form part of an agri-environment scheme, so they are sort of intrinsically linked. Where it is done well, it is done very well, and where it is done badly, it is an environmental disaster. Those with game interests will have to change, which is no different from how those with food production interests will have to change.
Mr Goodwill
Q
Jake Fiennes: I think the ELM schemes will do exactly that. If we can demonstrate better land use for our land that is less productive—use for the environment, biodiversity, carbon storage, cleaner water and cleaner air—everyone gets to benefit.
Kerry McCarthy
Q
Jake Fiennes: Game is not agriculture. Game has never been part of agriculture. Forestry is agriculture; farming, dairying and beef production are agriculture, but game sort of sits on the sidelines and is not part of agriculture.
Kerry McCarthy
Q
Jake Fiennes: It is a technicality, but game has never been—
Kerry McCarthy
Q
Jake Fiennes: But a game farmer is not a farmer. He is not a poultry producer either, strangely. Sorry, but it is a real technical difference.
Kerry McCarthy
Q
My other question is that you mentioned your views about county farms, and I am keen to see what you think should be in the Bill. I think there is general support for the idea that county farms are a good thing, but that does not necessarily mean that they need to go into the Bill. Can you say what you think needs to be in the Bill on that front?
Graeme Willis: On peatland, it interesting how broad that goes in terms of land management. Going back to the Minister’s question, I would imagine that large-scale restoration might well be part of ELM. The public goods statements are quite broadly framed, but they do talk about soil, and the supporting position statement talks about soil and peat.
Kerry McCarthy
Q
Graeme Willis: Yes, climate change being one of the objectives. It is very important, given we know the level of emissions from upland peat, that the intentions of the Bill should cover those areas and ELM should be able to deliver on that within that wider land restoration component, if that be. I think that will be very important, because where else will the resource come from to do that? The 25-year plan had a £10 million fund. Scotland has committed £250 million for restoration, so we need money to be identified that can go towards that restoration over the longer period. There is an issue about the viability of those peatlands in the long term in a warming climate if they are managed in a different way. That makes things even more contentious.
I am pleased that you mentioned county farms. I am not a specialist on entrants, but I think something on supporting new entrants should be in the Bill through an amendment to that effect. The Minister has spoken about investing in county farms on several occasions and to the EFRA Committee. He welcomed the idea as a very interesting development. The farms could be invested in so that they can produce more peri-urban horticulture, for example, which might be one way to make smaller units viable. As was referred to earlier, there is an economic question around those. An amendment to invest and fund—or to give the Secretary of State powers to invest and fund—county farms to be developed and improved for wider purposes, would be great.
We would also consider asking for a protective lock on county farm estates while they can develop new wider sets of purposes, so that they can be invested in for the future. Wider purposes in terms of mitigating and adapting to climate change, supporting connection to the countryside, access to land and landscapes and the realities of farming, would be very welcome.
Virginia Crosbie
Q
Jim Egan: When you are on the receiving end of the inspection regime does not seem proportionate at all at the moment. It is heavy-handed. We all accept that there must be rules and that there has to be an inspection, but you are working on a farm, on a shop floor that has no straight edges. When somebody can come and deduct a payment for being four decimal places out in area, which is what it could go to, it does not feel right. It actually puts an awful lot of people off engaging with agri-environment schemes and measures because of the pure fear of the inspection. The inspectors are great people—they are doing a job—but they do not engage during their inspection process. There is a finality to the inspection process that says, “Mr Egan, you are wrong.” There is an appeals process, but there is no face to face. That is not a very nice place to be.
It would be better if it was done in a much more approachable way. We all accept that a lot of money goes into the industry, but we should be approachable. We should be able to say, “Oh, I didn’t quite get that right.” If it is a minor infringement, it is nothing. There will be something else on the farm that delivers above and beyond what it was intended to, but it is never taken into account.
When I worked at the Allerton project, we had three inspections in seven years. That is in a place where there is a board of trustees, a management team and we all get on. There is a lot of pressure on the people responsible for that. Imagine being on a farm on your own. It is not a good place. It needs to be more human and a better process.
As for success for me, do you mean in terms of the scheme or the inspection regime?
Virginia Crosbie
In terms of the scheme.
Jim Egan: In terms of the scheme, it would be everybody engaging, and engaging willingly and talking about it.
Deidre Brock
Q
Jake Fiennes: I don’t think I was referring to grouse moors specifically. I was referring to game shooting as a community.
Deidre Brock
Q
Jake Fiennes: Well, no, I think there are clear benefits from grouse shooting. We can see greater biodiversity on well managed grouse moors. If we look at the burning of peatlands, on Saddleworth Moor last year a huge area of moor had very deep burning within the peat; that was an area of moor that was not managed for grouse, because the heather was very poor, and it was a tinderbox that caught fire very quickly. We must understand the benefits of well managed grouse moors to a landscape that is iconic to the English uplands: 70% of the world’s heather moorland is in England, so it is a key habitat. Admittedly, there are some quite extreme management techniques in places, which we are quite aware of, and the industry is looking inward on how to address that.
Deidre Brock
Q
Jake Fiennes: A payment system that rewards farmers and land occupiers for delivering public goods should not exclude anyone. As Jim just said, this has to be open to everyone.
Deidre Brock
Q
Jim Egan: I do not get involved in policy; I have never worked in it.
Graeme Willis: In terms of the breadth of it, I think it is still open to question as to how wide it goes. I am on the stakeholder engagement group, so I am limited in what I can say because of confidentiality about that. However, I have certainly seen a slide that shows how wide it might go, and there might be questions around whether it includes, for example, airport operators, which have large tracts of open grassland that they need to manage to keep trees off. Could they do positive things with that?
I think there is a very important question about the amount of resource available and whether those are the right people to receive that resource, as against farmers, given the context we talked about, the viability issues going forward and the cuts to basic payments during the transition. However, something to address the issues across a broad landscape is very important.
On whole-farm areas, we would not want large areas of farmland managed very intensively within a system in which other areas are just managed for public goods. I think they need to be combined and harmonised, as we said before, so that land is shared and used in the very best way, for the environmental benefits and for good, sustainable food production.
George Eustice
Q
One thing we have described for the future scheme is that you would instead leave all that behind, and individual farms would have a trusted, accredited adviser on agri-environment schemes. That could be a trusted, accredited agronomist, or someone who works for the Wildlife Trust or the RSPB, and they would be trained to help put the schemes together. They would visit the farm, walk the farm with their boots on and then sit around the kitchen table and help an individual farmer construct a scheme.
We are obviously testing and piloting and trialling that now. If that system could be made to work—an altogether more human system, as you said, because a trusted adviser would do the initial agreement and would maybe visit the farm three or four times a year, not to inspect but to be a point of advice—how many farms can a single agri-environment adviser with that type of remit realistically do?
Jim Egan: It would depend very much on type, size, place, aspect and everything. I do not think you can put a number on the people that you could hold as clients. I actually do not know how many clients my agronomy colleagues have, because I am new to that business. However, where I work, I would be perfectly comfortable managing 40 or 50 clients and working through with them.
The main premise is not to overlook that that process of walking the farm with a trusted adviser already happens for countryside stewardship. Most farmers will take advice and will rely on somebody working with them. The opportunity that comes from splitting out and putting everything into ELMS—including all the basic payment elements, so that it is one big agricultural and environmental processing scheme—actually means that you can widen that advice and make it broader. The trick will be that those advisers will have to have knowledge of the farming business and will have to talk to others within the business. Even on a small dairy farming unit, they will have to talk to the vet, the feed merchant and the farmer. It is a facilitation skill as much as anything else, and it will require an understanding of how those farming sectors work.
This is definitely the right way to go. We will need professional advice to do that. A farmer doesn’t grow an arable crop without an agronomist. You don’t grow beef cattle without a vet or a feed merchant. So why should you not have what I would call environmental facilitators?
George Eustice
Q
Jim Egan: First, I do not think they should be recruited by Natural England or the RPA. Within the supply chain, there are probably sufficient people. An agronomist has to be trained and to get your agronomy diploma you have to do a BETA—biodiversity and environmental training for advisers—certificate in conservation management. It is only a three-day course, but it is about awareness. Whoever is drawing up the scheme will need to pull on other skills and pull and bring the environmental community and the farming community together. A good person does that already. I do not think you need a new qualification. The qualifications are there. The BETA certificate in conservation management and that type of approach already addresses some of the issues. It would probably need an upland module and a little bit more focus on grassland, because it is an arable-focused course.
I also believe that it is Natural England or the RPA’s responsibility, if they get a bad application, to send it back. I went to DEFRA and Natural England about eight years ago and asked for that to happen and it never did. Natural England continues to re-work bad applications. Once you do that, the farming community will soon know not to go to that person. It doesn’t need degree level; it needs an element of a qualification, a CV and management by a managing authority that is not afraid to take people off the list if they are not doing the job properly.
Fay Jones
Q
Jake Fiennes: If I am brutally honest, I do not think the Treasury would sign up to that. If we all opted out, we couldn’t afford it. I am intrigued that that is still on the table.
Earlier you referred to land values. How to devalue very quickly? Everyone opts out and land values plummet —in an industry that is generally reliant on that support in the way it currently manages land.
Graeme Willis: When I heard about this in the original Agriculture Bill, I was concerned that no constraints were placed on that money. I was not clear about the rationale for that. If the rationale is for new entrants, there is an issue if that is only done through land prices falling. I am not convinced that we can guarantee that when a farm is sold, a new entrant will get that farm. There is no control over that, so it seems too broadbrush. It also seems somewhat a hostage to fortune because large amounts of public money being paid out for what is not a clear set of purposes could play very badly with the public; other people have raised that concern. If that were tied to some investment into the farm, there is an element of advantage there to having a lump sum to invest that could meet the other purposes to improve the farm’s environmental performance and productivity. Also, it could be good if it were tied in some shape or form to supporting new entrants.
Earlier, there was a mention of share farming—some form of succession where there is no son or daughter to pass the farm on to, some mechanism where that was locked in to ensure that a new entrant could get on to a farmstead and actually learn. You mentioned skills: they could learn from the skills of the farmer on that farm and not lose the knowledge of the land, the aspect, the farming and the culture of that farm, and pass that on to a new, younger or older person with a different set of skills. That would be really interesting.
I see it as too broadbrush and not clear at the moment, and I have concerns. I understand that that will be consulted on, but I am not sure whether that is clear from the Bill as it stands, or whether that can be clarified.
Miss Dines
Q
Jim Egan: I think it can be achieved. The current example of facilitation funds in cluster groups is an absolute classic for that type of farming. I think that there is a facilitation fund in your constituency; there is certainly one not far away. Those farmers could come together. I am not a believer in “one farm, one advice”. If there are six people who farm together with smaller farming units who want to go into a scheme, and will achieve better environmental outputs if they all work together, we can give one set of advice to all of them.
We need to think really differently about where we are going now. It is not just about one-to-one advice; it is about one-to-six advice. It is about, when you put the scheme together, providing the training to those six to implement the measures. I think that it is completely affordable, and it works. We just need to think differently about how we put these things together.
Daniel Zeichner
Q
Graeme Willis: On where those targets are expressed, we know that the Environment Bill has been laid before Parliament. The relationship between the Agriculture Bill, the Environment Bill and all the other policy instruments is very interesting, and remains to be resolved. If you had gone in the right order, it might have been that you had the Environment Bill, then the 25-year environment plan, and then the Agriculture Bill, because the main funding mechanism seems to be environmental land management, which would deliver on the kind of targets that you set through the 25-year plan. That can be established through the legislation in the Environment Bill.
I am not sure whether it is right to put a target in this Bill at the moment—it may be a commitment by the Minister—but I think there is a possibility of introducing further regulation that might address that. Obviously, there is the Environment Bill. One of the complicated issues is whether the Agriculture Bill could reference the Environment Bill, because it has not received Royal Assent. There is a question about how we address targets, and whether that is set out through the Office for Environmental Protection, for example. It is a complicated relationship.
I think that the situation has changed, and therefore what the Agriculture Bill is able to do, and the amount of funding that comes forward to deliver on those targets, is critical. Clarity about the long-term funding arrangements is therefore very important, as well as how those would seek to address the climate change issue.
Daniel Zeichner
Q
Graeme Willis: A target for the sector would be very interesting. I know that the NFU has come up with its own leadership statement of a 2040 target. It would be interesting for the sector. I would flag up that when emissions from agriculture are referenced they are land use, land-use change and forestry emissions, which relate to agriculture. Peatland use, particularly, is not mentioned, which is very high indeed—particularly on lowland peat. Those need to be factored in. It is of great concern that those do not get mentioned adequately. I think there are powers within the Bill to address those.
I suspect that if you had sector targets for agriculture you would argue for targets for other sectors. I am not sure whether those are in place. In the agriculture sector, I think that there will be ambition, given the right funding, to do a lot more on climate change, certainly in terms of locking carbon up in soils, where it belongs, rather than losing it to the air. There is great potential for that.
Mr Goodwill
Q
Jake Fiennes: There could be a technical mechanism relating to tenant’s dilapidations from the landlord’s perspective. The landlord could seek to recoup that if he was going to devalue the land by taking those future payments away. There is a technical mechanism that allows that to happen. That strengthens the landlord’s ability to retain that land to rent to others or to new entrants. It is important that there is some kind of mechanism within the Bill for that. Potentially there would be land abandonment because it has no value, or we would see deep intensification of land areas that have no support mechanism. Then we are trying to deliver environmental land management on a landscape scale, and we have these blackspots in between with no support mechanism. That would be my concern.
George Eustice
Q
Jake Fiennes: Land rents are artificially high based on the support mechanism. We will see that slowly diminish. Commodity prices will periodically affect land prices. The horticultural sector does not rely on support at all. The average age of the British farmer is 62: land rents are overly high and they will be reduced, thereby suddenly allowing new entrants to come in who will be more open to environmental land management and public goods proposals. We will see a wholesale change. We are expecting a recession in agriculture through this transition period, for all the reasons being discussed today. Where there is change there is opportunity, and the opportunities are there for another generation to move in and manage land environmentally, economically and sustainably.
Chair
We will now hear evidence from the Country Land and Business Association and the Tenant Farmers Association. We have until 5pm. Welcome; please introduce yourselves.
Judicaelle Hammond: I am Judicaelle Hammond. I am the director of policy and advice of the Country Land and Business Association.
George Dunn: I am George Dunn. I am the chief executive of the Tenant Farmers Association of England and Wales.
George Eustice
Q
George Dunn: That is an interesting question, and one to which there is no simple answer. There are two codes of tenancy in play. One is the code under the Agricultural Holdings Act 1986, and one is under the Agricultural Tenancies Act 1995. The 1986 Act has a formulaic approach to rent. It steers you away from the market. In my view, if you look at the rents that are on Agricultural Holdings Act tenancies, they are probably more akin to an affordable level of rent. We are seeing around £80 per acre on arable, £50 to £60 per acre on grass and up to £100 per acre on dairy.
The farm business tenancy rents, which are driven by tender rents quite a lot, are far too high. We often see rents for arable ground in excess of £200 per acre and over £200 per acre for dairy ground. Those are clearly unsustainable. I would direct the Committee to look at the sorts of evidence you would get from the 1986 Act as to what a reasonable level of rent is.
Judicaelle Hammond: I do not think it is that easy. As George was saying, several things make up land rents. One of them is what you can get for what you do with that land. It is right that it should be left to the market. It may well be that some of the rent levels are unsustainable. I think they will probably adjust as we change regimes, but I do not think that being bound by a formulaic rent system is a good idea in a system where there is uncertainty in trading conditions and there needs to be some flexibility.
George Dunn: To add to that, the problem with an open market system is that the market is so slim, and the evidence is so hard to come by. Therefore, you tend to be driven by the froth in the system—the tender rents. If you look at DEFRA’s own figures, the average farm business tenancy rent on an arable farm is about £100 per acre, but the tender rents suggest they should be double that. I just think we need to ensure that we are not wholly going with the market level.
George Eustice
Q
George Dunn: On that point, we would see the farm business tenancy rents under the 1995 Act move more towards the level of rents we would see under the 1986 Act. They might fall a little bit, but because they take into consideration the productive and related earning capacity of the holding, that would reflect better what that holding can physically produce.
George Eustice
Q
Judicaelle Hammond: There is no easy answer to that, because the circumstances will vary. I think it very much depends on what the person who owns that land wants to do with their holding. It may well be that, due to questions other than just land rents, they want to bring it in hand. It may be that there are other things they want to do on that land—for example, tourism or something completely different to agriculture—or it may be that renting the land to tenants suits them and they will continue doing that. That will vary according to the owners’ vision for the land and the stage they are at in terms of their business.
George Eustice
Q
Judicaelle Hammond: We would totally agree, as the CLA, that this move is the right move. We have been a proponent of moving towards payment for public good for a while now. The Bill is welcome. We also welcome the inclusion of soil quality, for example, and the consideration of sustainable food production and food security in the Bill. The fact that there is now going to be a multi-annual framework for financial assistance is also important, as is assistance for productivity improvement.
Regarding what we would want to see, there are two main aspects, as well as a number of other improvements, which I might talk about later. One is making sure that the transition is right. At the moment, we are missing information, not just about what is going to happen next year, but about residual payments for individual businesses over the rest of the transition years. We are missing the kinds of details about ELMS that will make it possible for those businesses to make decisions about where they want to take their business, and in particular, of course, about payment rates. In the absence of those details, and given the uncertainty in trading conditions, we would like the start of the transition period to be pushed back by one year without moving the start of ELMS.
The other issue that we have is about trade standards, which the NFU and others have spoken about. We certainly share their concerns.
George Dunn: I would take you back a little bit, Minister, and just say that we need to be really careful. Despite the fact that there is a great deal of criticism of the CAP, and the way in which the basic payment scheme operates and its impact on rents, we need to be clear that those payments are being received by individual farms right up and down the country that are doing the right things on the environment, animal welfare, consumer safety and all those issues. If we simply remove the BPS payment without properly thinking through the changes that we need to make, we risk the good work that we are doing. That is why we have been saying that we are making changes for a generation, and they need to be done well rather than quickly, so we support the CLA’s stance on delaying the transition. We think that we have concertinaed the work on ELMS, for example, too much to try to bring that forward into a sensible place.
Also, while we support the general move towards public payments for public goods, we see that move alongside the productivity elements, which we believe are really important as well. The Bill has a couple of lines on productivity, but we want to see much more about how that can work alongside creating resilience within farm businesses. There are also the trading elements and ensuring that we are not undercut by cheap imports from abroad, produced to standards that are illegal here; the fair dealing practices; and the issue of access to the tenanted sector. Schedule 3 goes some way towards addressing that sector, but it needs a little bit of work.
Daniel Zeichner
Q
Judicaelle Hammond: The main one, as I said—I will not labour the point—is the delay in the start of the transition. It also seems to us that a couple of other things would be improved if they were done differently. For example, the multi-annual framework for financial assistance is five years. I can see why it has been done like that, but that means that it is at risk of being entangled with the political and election cycles. As far as I know, farmers in the EU—which is going to be our closest competitor—will still have seven years to plan. That is closer to the business cycle in agriculture, so we would favour lengthening the period covered by the multi-annual financial assistance framework.
The other thing that could be added to the Bill is a provision on rural development and, in particular, socioeconomic funding schemes. In the new world, that is going to be done via the UK shared prosperity fund, but that is not due to arrive until 2022 at the earliest. What would happen if that got delayed, or got into other difficulties? We would like to see some provision to make sure that it is possible for Government to continue socioeconomic schemes.
Those are two important improvements. We would also want to make sure that any moneys that are recouped from direct payment, particularly in the early part of the transitions, are used for productivity and ELMS pilots and do not go back to the Treasury.
George Dunn: We agree on the issue of trade standards. We think we need to nail that wholly into the Bill to ensure that we are not undercutting our high standards here and offshoring our issues abroad.
While there have been some helpful statements from the Government, we are concerned about some of the rhetoric that appears to be emerging, particularly from the Prime Minister’s Greenwich speech, where there was an indication that we would not necessarily insist on our laws being protected in trade deals, which is rather worrying. Of course we were also promised free and frictionless trade with the EU on leaving the European Union, but we hear the Chancellor of the Duchy of Lancaster saying today that we need to prepare for issues at the border when we end our implementation period.
On the fair dealing section of the Bill, we should nail down the fact that that should be regulated by the Groceries Code Adjudicator. The Bill leaves it hanging as to who should be the regulator. There is a suggestion that the Rural Payments Agency has a role to play; I would disagree. As the CLA has said, we need a delay in the transition period by one year, which will give us sufficient time to think about these things more deeply.
The access for tenants to schemes needs to be addressed, because schedule 3 to the Bill provides a provision only on a “may” basis. We want it to be a “must” basis that the authorities come forward with regulations. Currently, that applies only to the 1986 Act tenants, not the 1995 Act tenants. As that is half the tenanted sector in agriculture in England, we think that should be changed.
On the food security section, we want the report to be annual, not five yearly. Finally, in the financial assistance plans, the missing thing is the word “financial”. There is no commitment to say what the finances are going to be in any one year over the five-year period. That needs to be nailed into those plans as well.
Daniel Zeichner
Q
George Dunn: There is nothing in the Bill that will affect the lengths of tenancies per se. Obviously there is the welcome inclusion of soil health within the public payments for public goods element of the Bill, which might encourage people to go for longer tenancies, depending on how the ELMS fits into that, but there is nothing specific that will do anything about the lengths of tenancies.
The Tenancy Reform Industry Group made a suggestion, because one of the things that landlords are concerned about is how they get land back if the tenant goes into breach. We are not interested in protecting tenants who are in breach. If we had easier-to-use provisions that allowed landlords to take land back if they had let for a long period of time, that might make them freer to do that.
There is also a need to look at the taxation framework, which goes beyond the Bill, but we hope that the Chancellor might say something about that on 11 March.
Judicaelle Hammond: Interestingly enough, we would support the introduction of provisions that enabled landlords, as you might expect, to get possession of the land in the case of breach. The question for us is whether there should be a threshold on that. Our answer would be that two years or more would be better than any arbitrary longer threshold. That is certainly an additional provision that we could support if there were not an arbitrary threshold.
George Dunn: Our view would be that there would be no public policy use for such a short-term clause. If we are looking at longer tenancies, we need to find a way of encouraging them, so it needs to apply to tenancies that are of 10 years or more.
Danny Kruger
Q
Judicaelle Hammond: It is really important to understand that, in most cases, we would expect agreement to be found. I think the reason why we do not like one of the particular provisions in schedule 3, which has to do with arbitration in case of disputes, is that at the moment it very much looks at the interests of the tenants, who might be gaining financially quite a lot, without necessarily having a balance of the interest of the landlord.
I will give you a few examples of why landlords might withhold consent. It might be about landscape protection. For example, the National Trust will have properties where they want to make sure that the landscape continues to be enjoyed as it is. Or it might be that something does not fit with the business planned for the whole of the holding—in particular, if you are looking at other areas of the holding that are currently in hand or are farmed by somebody else, which might be better suited to planting trees, because trees cannot grow very well in all places. Or it might be about putting buildings on land in order to create new activities.
As drafted, the schedule would mean that, in the case of a dispute, it would go to an arbitrator, and then the decision is binding on the landlord. That means that there could be really long-term and possibly irreversible decisions being imposed on the landlord. We see that as a really fundamental infringement of property rights, and that worries us. It is the absence of balance that worries us.
Danny Kruger
Q
Judicaelle Hammond: Ideally, we would not want this in the Bill at all. Certainly, if it were to stay in the Bill, we would want to see assurances that would redress that imbalance.
George Dunn: Just to correct something that you might have said in your question, for the basic payment scheme, which is being phased out, in 99.9% of the cases that would be going to the tenant, the occupier, who has the land at their disposal.
Obviously, within some of the newer farm business tenancies under the 1995 Act—which I referred to earlier, following the Minister’s question—a landlord might expect to receive at least the basic payment scheme in rent, plus more, in terms of the tenant’s willingness to pay rent on that basis, so there is a secondary move of the payment to the landlord, but the claimant is the tenant, and that is what the regulations say.
The bigger area that we have concerns about is the agri-environment scheme, where there has been this idea that you could have dual use, where a landlord could claim countryside stewardship and environmental stewardship while the tenant is claiming the BPS. We think that is wholly inappropriate, and we will ask for amendments to the Bill to define the rightful recipient of some of this money. It should be the active farmer who is in occupation of the land.
Responding to what Judicaelle said about the need for tenants to have access, all of Judicaelle’s members will be entirely reasonable and will give consent to our members to go into these things, but we are looking for those beyond the CLA’s membership, who are not always as reasonable. Sadly, we do see landlords withholding reasonable consent very frequently. “Reasonable” is the key word here. We are looking for a set of regulations. The Bill provides that there should be regulations, and those regulations will set out what are the reasonable terms upon which a tenant should be able to apply and insist upon a consent, for either fixed equipment or for access to a scheme.
If we take the issue of trees, for example, trees are normally reserved out of tenancy agreements. It is the landlords who hold the trees, so if there are any carbon credits available under the Bill, they will not be accessible by the tenant because those trees are reserved to the landlord. Perhaps that is something that needs to be thought through, if trees are going to be a really important part of the Government’s policy going forward.
Simon Jupp (East Devon) (Con)
Q
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
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
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.
Theo Clarke
Q
Judicaelle Hammond: I am sure it could be improved.
Theo Clarke
Q
Judicaelle Hammond: I think that my lawyers would probably have my guts for garters if I tried to answer that question on the spot.
George Dunn: I think it is good that there is the facility to pause or extend. One would hope that there would be close consultation with the stakeholders to consider that. There is a doubt as to whether we can reverse, which might be possible. There is also the issue, which I know other witnesses have raised, that if you are taking money out of the BPS, and, for whatever reason, we are not ready to spend that through the new public payments for public goods or productivity schemes, that money needs to be paid back to the recipients from whom it has been removed, until such time as the Government are ready to commit to that expenditure.
Mr Goodwill
Q
George Dunn: Yes, and I think that is what the Bill intends. My reading of the Bill would suggest that that is what would happen under those circumstances. To go back to the previous question, if money was taken out of the system that was not able to be spent through the new arrangements, that would have to be paid back, in our view.
George Eustice
Q
George Dunn: My view is that the answer you were given was nonsense. There would have to be a very specific clause in a tenancy agreement that provided for the circumstances that you are describing—for a landlord to be able to dilapidate a tenant for taking away the payment, which is rightfully theirs anyway, because it is their entitlement to do with that what they will.
We are actually quite excited by the provisions on the lump sum and the extent to which that could generate some really good restructuring within the sector. I do not think there will be an impact on land values as was suggested, because land values are driven by much more than the agricultural return, which is about 2% of the average land value, when you look at how agriculture operates. There might be an impact on rent, which could be a good thing for the sector in terms of productivity and margin and efficiency, but we think that the lump sum elements are certainly something worth pursuing.
Judicaelle Hammond: I think we are a little bit more cautious without more detail. We look forward to the consultation that will happen on the secondary legislation. It is hard to say how it would work and whether there would be any unintended consequences without more detail. The same thing is true of the lump sum. We can see opportunities, both for retirement and investment in the farm, but at the moment, we also see that it could have all sorts of unforeseen consequences. We really do need to have a thought-through view of how the system would work.
George Eustice
Q
George Dunn: Minister, you would be surprised to hear me say that we are absolutely content and there are no other changes that we would want to make, and I am not going to say that. There are elements that we think need to be added—for example, what we were talking about earlier in terms of the provision for farm business tenancies, for encouraging longer-term lets, to give landlords the option of ending those early, but only for those who are letting for a long time. We think that the provisions in relation to tenants’ access to diversification, financial assistance and fixed equipment need to be extended to include 1995 Act tenancies.
I noticed that a question was raised by a Member on Second Reading about widening the franchise of succession to include nephews, nieces and grandchildren, which was not adequately answered by the Secretary of State. Perhaps there is an amendment that could be brought to look at widening the franchise. Very often, it is the nephews and nieces and grandchildren, rather than the sons and daughters, of farmers, who are the active individuals. So there are certain changes that we will promote through amendments to the Bill.
Judicaelle Hammond: What I have said before about schedule 3 stands. We do not particularly like the commercial unit test removal; we think that it is actually well worth having and it should be strengthened. Why would individuals who are already successfully farming elsewhere have the privilege of reduced rent? It does not seem fair and it does not make sense. Apart from that, my significant concern is with the arbitration proposal for dispute resolution on landlord’s consent.
There are a number of things that the CLA welcomes in there, for example provisions relating to landlord investments, which we think will provide protection for both the landlord and tenant, and the removal of the minimum retirement age of 65 and also the widening of the pool of potential arbitrators. We are not opposed to the whole of schedule 3, but we certainly have significant concern with what is in there at the moment. We certainly would not favour any extension to the AHA tenancies, which we regard in this day and age, and given the flexibility that the market requires, as an outdated system, which certainly should not be prolonged.
George Dunn: You would not expect me not to disagree with what Judicaelle has said about AHA tenancies. If we trusted the landlord community with farm business tenancies to deliver sustainable, long-term, sensible tenancies, we would not be hanging on to the AHA tenancies as much as we are. Sadly, the landlord community has not played the game well in terms of farm business tenancies, in the way that they have delivered those.
The commercial unit test that Judicaelle talked about is a capricious test. It hits people when there is a death out of time, or people who are badly advised. That is all. It is a very expensive test to have advisers help you through. In essence, the Bill is about productivity and increasing efficiency. Having the commercial unit test in place hits those individuals who have been go-ahead, and have been looking to get themselves on rather than waiting for dad or mum to die in order to get the tenancy of the farm. Why should they be penalised when they have been the ones who have been go-ahead, and those who are not so go-ahead get the opportunity to succeed?
Ruth Jones
Q
George Dunn: We are in discussions with Welsh Government officials, as you might expect. This morning, I was having discussions with their policy lead on tenancies. Certainly, I would take from the discussions that we have had to date that there is a real understanding of the need to ensure that they are moving at a pace that allows tenants to have access to the new arrangements.
In the context of having devolved Government, there is no point in having devolved Government if you just do what England does, so there will be specific things for Wales that we will need to look at. I know that the Welsh Agriculture Minister has some aspirations for that in Wales. We are waiting for a White Paper from the Welsh Government that is coming later this year. We are having input into that White Paper. Obviously, they have not reserved the rights for the financial assistance powers within the Bill, but the agricultural tenancy section—schedule 3—applies to Wales and England equally.
Judicaelle Hammond: We represent farmers and landowners in Wales as well. I think that, given the framework of devolution, there needs to be some flexibility. Like previous witnesses, we are a bit concerned where either the implementation of the Bill or, indeed, the way that the money is allocated across the UK changes to such an extent that we see intra-UK market disturbances. We would certainly argue that that should be avoided.
The Chair
If there are no more questions for Members, I thank the witnesses for giving evidence this afternoon.
Ordered, That further consideration be now adjourned. —(James Morris.)