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

George Eustice 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.

[George Eustice]

I welcome my right hon. Friend the Member for Scarborough and Whitby to his post. I offered to take part in these Committees specifically because I am largely to blame for some of their content and have signed some of the statements.

I pay tribute to the DEFRA officials, who have had to work incredibly hard on this and all other similar SIs. Hon. Members who read those SIs will quickly establish that to fillet through every piece of EU legislation, literally exchanging the words “Member States” for “relevant authority”—that is predominantly what these statutory instruments do—is not the most attractive of jobs. It requires somebody to go through a huge amount of legislative text. A huge amount of work has gone into all those instruments and it is important to recognise that their purpose is simply to make retained EU law operable.

The shadow Minister made the point that as we are not changing policies, we should surely have drafted the regulations to make them a bridge to the direction of future policy. The European Union (Withdrawal) Act 2018 was explicitly clear that that should not be done. The purpose of that Act was simply to allow for retained EU law to continue to function as closely as possible to the way that it does currently. It was clear that any future changes in policy should, as a general rule, require future legislation. Of course, we have the Agriculture Bill for that.

It is also worthy of note that section 2(2) of European Communities Act 1972 is probably the most pernicious Henry VIII power in this country in modern history. It is used, particularly by a Department such as DEFRA, to drive a coach and horses through all sorts of pieces of domestic legislation, often without much more than passing a statutory instrument via the negative procedure. The irony with all these SIs is that we expend a great deal of effort to judge whether we are happy to swap the words “Member State” for “relevant authority”, but those powers were simply imposed on us, generally by delegated legislation or by Acts implementing European Union legislation.

When we looked at the AHDB levy—particularly the exemption from the levy for EU animals, which was raised by the shadow Minister—we had two things to consider. The first was whether we should go for a strict interpretation, seeking legislative continuity, in which case we might have said, strictly speaking, that the EU was now a third country and should therefore be treated as such. The second was whether we should adopt an approach to provide continuity for producers in the closest way possible. Had we taken the former approach, we would have required abattoirs up and down the country to suddenly start trying to design and implement systems so that they knew when they were dealing with an animal that might have come from the European Union and could apply a levy to it. As the shadow Minister noted, we apply a levy to animals from outside the EU, but not those within the EU. We concluded that the best way to provide continuity was simply to extend that exemption to everyone in the world, which meant that operators could carry on broadly as they do now.

I do not have a lot of affection for the horizontal regulation in the EU, which one of the SIs relates to. It led to lots of administrative problems for DEFRA to do with how we had to interpret penalties and implement audit processes. It is far from perfect, but the Agriculture Bill has a sweeping power to modify it once we leave the European Union. But for now, in keeping with the ethos of the European Union (Withdrawal) Act, we should retain it, which is what the regulation does. On financial discipline, in England we decided that we wanted to retain the power to make use of some of the pillar one payments for a crisis reserve, so there would be funds to support agriculture at times of great need in the year ahead before we have introduced our own crisis measures through the Agriculture Bill.

Finally, the shadow Minister mentioned a couple of points about criminal proceedings. We debated that during the Agriculture Bill, and I gave an undertaking to look at the issue. My understanding is that we have never used that power; it has been in our enforcement powers for the EU regulations—that is why it is retained for now, although obviously it can be looked at in the context of the future Bill. As he knows full well, because we debated it at length in Committee, the budget will stay the same in cash terms until 2022. I predict that will cover the timescale for these regulations under retained EU law, because long before that I hope we will have our Agriculture Bill in place.