Draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019 Draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 Draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 Draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019

David Drew Excerpts

Monday 25th March 2019 General Committees

[Dr David Drew (Stroud) (Lab/Co-op)]

I am delighted to serve under your chairmanship, Mr Hanson, and to welcome the Minister and the former Minister to their places. We are going to get doubled-barrelled explanations of everything that is going on.

I thought that last week I was getting to the nadir of my understanding of things, but these SIs are complex. In many respects, they are not controversial, but then, as the Minister rightly touched on, we get to the red meat levy. Those of us who were on the Committee in question spent a lot of time arguing whether it was appropriate, and the devolved Administrations do not necessarily agree with England on the issue. It would be interesting to know whether that has been properly worked through.

I refer back to the European Statutory Instruments Committee, which looked at the issue on 4 December. Its report quoted the instrument, which explains:

“Removing this levy will ensure that, following EU Exit, there will be equal treatment between the EU and the rest of the world for animals imported for slaughter. Defra’s estimate of the maximum financial impact to the AHDB caused by this change is a loss of c. £1,000 per year in levy, although it is believed that the amount actually collected by the AHDB in relation to the rest of the world imports are far lower than this and are probably nil.”

The Minister touched on that. The moneys exchanged seem very limited. I do not know why we have any regulation relating to that, if it is so unimportant. Can he enlighten us a little?

I will start with some general questions, because some points need to be brought out early on. I hope the Minister will get some help from somewhere to answer them. I am always willing to accept written contributions, although I have not received any yet. We have had rather a lot of SI Committees, and so far I am yet to have anyone write to me saying, “You should look at this to understand that,” or, “The Government intend to do this to move to that.” It would be useful to get some contributions so that I at least know that I am along the right lines, or that the Government have done it in the right way.

Under the common agricultural policy, there are payment windows. We have a lot of arguments over them, because they are often breached, and farmers or landowners do not get the money that they should currently get within those windows. Do these regulations in any way change those payment windows? It would be interesting to know what the Government’s contingency is if we were to crash out of the EU. Much of this is predicated on our having an Agriculture Bill in place. Sadly, it does not appear that there will be such a Bill in place, which has caused some consternation among the Opposition—let alone among Government Members—about what will happen if we are no further forward.

[George Eustice (Camborne and Redruth) (Con)]

On that point, the hon. Gentleman is wrong. The Agriculture Bill is all about developing a future policy; these regulations, in common with all such regulations under the EU withdrawal Act, are about ensuring that the current EU scheme and retained EU law—including the common agricultural policy and all its provisions—are operable in the interim period.

[Dr Drew]

I agree with the hon. Gentleman, but there was supposed to be a seamless move from one to the other. It does not seem very seamless anymore; it seems rather senseless that we are unclear about where we are today—let alone where we will be in a week’s time—in relation to where we would possibly be going in terms of the Agriculture Bill, of which we have heard nothing. We suppose that it will crash out of the Government’s programme this year and we will have to revisit it again next year. We are not really going forward at a rate of knots.

Those who criticise the common agricultural policy—no doubt there are many in this room today—will question the fitness of the legislation as it stands and as it will stand tomorrow should these regulations go through. Farmers are calling for improved systems, so was this not the opportunity—notwithstanding what I said about payment windows—to look at how the system would be improved? Throughout the Agriculture Bill, I have called for the scrapping of the Rural Payments Agency and for its replacement with a new, purpose-built body. Unfortunately, we do not seem to have got any further with that.

My next question is about the limited consultation. Yes, it is true that farming organisations were consulted. However, given that we are moving towards environmental payments, it was really quite a narrow consultation. What about the different environmental organisations that have contributed, largely through the Green Alliance? As the Minister knows, they are very critical of this process and how it has been taken forward. Why were they not directly consulted about these statutory instruments? That would at least have been commensurate with the direction of travel.

I will make two more general points, before I comment on specific bits of legislation. Given our learned experience from having been a member of the CAP for 43 years, it would be useful to know why these SIs could not take account of some of the direction of change.

My last general point is about what the Minister said about there being a series of technical amendments. But this involves direct payments, which is one of the more controversial areas—as we know, through the Agriculture Bill—between the four home countries. When I talked to the Ulster Farmers Union and said, “Of course, we will be removing direct payments,” its representatives basically intimated: “Over our dead bodies!” They believe that direct payments have a strong and continuing role to play in keeping people on the land in Northern Ireland. Since we debated the issue during the Agriculture Bill, have we got any further forward on how we intend to deal with a very different approach? [Interruption.] If the Minister wants to intervene—

[George Eustice]

indicated dissent.

[Dr Drew]

Sorry, the former Minister; I am still getting used to all the different roles being played.

I am intrigued about where we are with those four different approaches: Scotland has its own approach and did not want to make its statement through the Agriculture Bill; Wales is largely in common with England, but has made its own contribution to the changes; and, because there is no Administration in Belfast, we are not at all sure what Northern Ireland is doing. But let us go on to the three bits of legislation.

The draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 again come down to money. I am interested to know whether the Government, through the SIs, will commit to exactly the same moneys being available today and tomorrow, regardless of what happens next week. It would be useful to know whether the Government are prepared to make that commitment of the £3.1 billion or £3.2 billion, which would work its way through to the system. As I said, the Ulster Farmers Union in particular is very clear about wishing to continue with direct payments. How does that impact on the way in which the other parts of the UK will respond?

The Soil Association, although not part of the direct consultation, looked at the issue. It is clear about welcoming the Government’s direction of travel but, again, questions whether the draft SI makes any difference to the programme under which, starting in 2021, we gradually run down direct payments. That would be interesting to know in connection with the draft SIs, given that we have no Agriculture Bill coming through. We are only talking about 18 months away now, so it is not way in the future—this is in the foreseeable future, and farmers are already making calculations about their investments.

The National Farmers Union brought up the point, which the Minister did not mention, that there are now criminal offences for breaching financial assistance schemes. Will he say something about that? The NFU is unhappy about it. Will these SIs mean that obstruction of a person acting in pursuance of the regulations could result in the farmer or landowner facing a financial penalty or worse? Again, some of the conflicts that arise out there are difficult to resolve without clarity of thinking and a much clearer explanation of the impact of these SIs.

The draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 largely concern the budget and the income-support system. One presumes that in the short run we will carry on with the existing structure, because we have no Agriculture Bill and because unless we give farmers the moneys that they thought they were getting, they would be at a distinct disadvantage in competing with other parts of the European Union—in particular in Ireland; Northern Ireland would not want to be at any disadvantage.

We laid down some pretty strong targets in the Agriculture Bill, but how does that relate to the draft statutory instruments? The Nature Friendly Farming Network, for example, wants much longer-term commitments on moves towards soil management, protection of water and the rest of it. Again, that is all wrapped up in the environmental management schemes, which are not part of these SIs, but unless we get things right, farmers will be at a disadvantage in the meantime.

The last instrument is the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019. This has been mapped out and spoken about on many occasions by the Secretary of State, but the real issue is how to move from direct payments to environmental payments. Sustain in particular was worried about whether the new shared prosperity fund—the Minister will say that it is not affected by the SI, but that is contingent on the Government’s direction of travel—will be administered by DEFRA or go to the Ministry of Housing, Communities and Local Government, as Sustain fears it might. Where will the moneys for environmental payments be set aside in the interim?

The Ramblers’ Association has made some points about how cross-compliance will essentially alter things, come what may, because of how the Rural Payments Agency has itself been reformed. We know that there is a problem with countryside stewardship for various landowners—the hon. Member for Camborne and Redruth talked about that on the Agriculture Bill Committee, when he was the Minister. It would be interesting to know how that cross-compliance will operate not only through the new Bill, but with respect to the regulations before the Committee. They constitute the interim policy; if we do not get that right, farmers, landowners and environmentalists will be disadvantaged.

--- Later in debate ---

[Mr Goodwill]

To put it simply, officials went through the regulations, and every time they saw a reference to an EU body, they changed it to a reference to a UK relevant body, whether that was in England, Northern Ireland, Scotland or Wales. I share the disappointment felt by many people that we have not had an agreement in Northern Ireland and a return to devolved administration; at the moment, civil servants are making the decisions, based on decisions taken in the past. As a former member of the Select Committee on Northern Ireland Affairs, I know how tough the job of those civil servants is; the longer it is since there was a devolved Administration in Northern Ireland, the more difficult it is to make decisions based on political policies that were decided at that time. I hope that all the political parties in Northern Ireland will get together to participate fully in the democratic process and give the people of Northern Ireland their voice once again through the devolved settlement, delivering on the Good Friday agreement—the Belfast agreement.

The hon. Member for Stroud asked some general questions about payment windows. There will be no changes to the scheme, but given the performance of the last Labour Government, I have to say that people in glass houses should not throw too many stones. The Labour party must take some responsibility for the complexity of the system introduced in England, which contrasts with the much more workable system in Scotland. We are often critical of European legislation, but if we gold-plate it ourselves, we must take some of the blame.

The hon. Gentleman also talked about new schemes. Obviously, under the new policies that we will introduce once the Agriculture Bill is on the statute book, we will be in a position to facilitate new schemes. We will have an improved system that will allow us to base our agriculture policy and agricultural support on UK priorities, rather than on the often compromised priorities that emerge when we negotiate within the European Union.

The hon. Gentleman talked about consultation. In a debate on a previous statutory instrument, I gave a long list of those whom we have spoken to and who have not expressed concerns. There are no concrete changes; as I have said already, in most cases we are substituting EU bodies with UK bodies.

The hon. Gentleman asked whether we should make modifications at this stage to take account of the directions of change that we discussed in debates on the Agriculture Bill. The answer is no; this is a “business as usual” measure. If he wants to make changes, the first thing he needs to do is vote for the deal, so that we can actually leave the European Union. The Agriculture Bill will create those opportunities, but that will be possible only with a deal. I hope that we can work closely with the devolved Administrations as well.

The hon. Gentleman asked a question about the red meat levy. The exemption that we are concerned with relates only to livestock imported into the UK and slaughtered in England within two to three months of arrival. There are believed to be very few cases, if any, in that category. The overall red meat levy is payable on all livestock slaughtered in England for the human food chain and raises approximately £26 million a year. Extending the exemption to imports from beyond the EU might affect the KPA. No exemptions were sought for such imports last year.

The hon. Gentleman mentioned the Soil Association. I can reassure the association that we are maintaining the status quo. As I say, the Agriculture Bill will give us great opportunities in the delivery of organic production, for example.

I was asked about future funding arrangements: as agriculture is devolved, who will pay for what? I reassure the Committee that the Government have pledged to continue to commit the same cash total in funds to farm support until the end of this Parliament, which is expected to be in 2022.

[Dr Drew]

Will the Minister give way on that point?

[Mr Goodwill]

I know what the hon. Gentleman is going to ask, and I will try to cover it.

That includes all funding provided for farm support under both pillar one and pillar two of the current CAP. Obviously, if there were an early election—of course, under the Fixed-term Parliaments Act 2011, that is not as straightforward as it used to be—since no Government can tie the hands of a future Government, it would be up to the parties standing in that election to put their plans in their manifesto and then deliver on that when elected.

--- Later in debate ---

[Mr Goodwill]

I am certainly not going to rush my fences and write the next manifesto on the hoof, particularly as we do not expect to go to the people again until 2022. The last time we consulted the people on what we should do was in the referendum, and we have not delivered on that one yet, so perhaps we should get on with the work in hand.

[Dr Drew]

Will the Minister give way?

[Mr Goodwill]

I will make a point about the Barnett formula before I give way. We have also committed that the Barnett formula will not simply be applied to DEFRA’s agriculture budget in 2022. That means that farmers in Wales, Scotland and Northern Ireland will not just be allocated funding according to the population of each nation. Each is significantly smaller than England, but they have large areas of agricultural interest. In October 2018, the Government announced an intra-UK allocations review, which will look into the factors that should inform the allocation of convergence funding from 2020 to 2022. The review will report ahead of the 2019 spending review, and its recommendations will be available to Treasury Ministers when future funding decisions are made.

Did I answer the hon. Gentleman’s point? I thought I had.

[Dr Drew]

I was actually going to make another point. Since I think we must assume that the Agriculture Bill will be delayed, these SIs are quite important. The starting point for the reduction of direct payments is 2021—that is in the plan, not in the Bill itself. Will the Minister assure me that if there is a delay, the seven-year transition period will move with it? Or are we going to try to reduce that transition period? Obviously, that would cause those who need direct payments even more difficulty.

[Mr Goodwill]

I thank the hon. Gentleman for that question. We are keen to make progress on the Agriculture Bill. We will get it on the statute book as soon as possible, and it will certainly be on the statute book as and when it is required.

I was asked about cross-compliance. The European Union (Withdrawal) Act 2018 does not give us the power to make wholesale policy changes, and we do not think it would be appropriate to use the powers in the Act to omit cross-compliance from retained CAP legislation. Instead, we have the flexibility to amend cross-compliance within the confines of the current legislative framework. Further substantive changes to cross-compliance will be able to be made through the Agriculture Bill.

I was also asked why the devolved Administrations have taken a different approach to agriculture. Agriculture is a devolved policy area, and the devolved Administrations are currently able to operate CAP schemes within the legislative framework. It is for each Administration to decide how these EU regulations should be made operable.

The hon. Member for Plymouth, Sutton and Devonport raised issues to do with EMFF funding and the Fisheries Bill. I had been doing so well, but that is one that I will need to write to him about, as it is quite a technical issue and I do not want to get it wrong—similarly with the dispute mechanism, although of course that is one of the things for the future. As I said, at the moment, we are keeping measures in place as they are; there is no change.

The hon. Gentleman mentioned the exchange rate. The exchange rate for payments is fixed in September. That has been the case for some time. He also mentioned fixed-term Parliaments. As I said, no Government can tie the hands of a future Government, and it will be up to the parties what they put in their manifestos.