Draft State Aid (Agriculture and Fisheries) (Amendment) (EU Exit) Regulations 2019

(Limited Text - Ministerial Extracts only)

Tuesday 19th March 2019 General Committees

[The Minister for Agriculture, Fisheries and Food (Mr Robert Goodwill)]

I beg to move,

That the Committee has considered the draft State Aid (Agriculture and Fisheries) (Amendment) (EU Exit) Regulations 2019.

I make my debut, once again, Mr Robertson; the Government are very much in favour of recycling, and here I am.

The regulations are one of a number of affirmative statutory instruments to be considered as the UK leaves the EU, made under the European Union (Withdrawal) Act 2018. The SI makes technical, legal amendments to maintain the effectiveness and continuity of retained EU legislation, so that following our exit from the EU the law will continue to operate effectively. I assure the Committee that the adjustments contain no policy changes, nor will they have any significant impact on businesses or the public.

The instrument refers to specific state aid regulations on agriculture and fisheries. It does not make provision for the broader domestic state aid framework, which is addressed in the State Aid (EU Exit) Regulations 2019. That instrument, laid by the Department for Business, Energy and Industrial Strategy, passed through the upper House last week. It transfers monitoring and reporting functions from the European Commission to the UK domestic state aid regulator, the Competition and Markets Authority—ably chaired by our former colleague, the now Lord Tyrie—and provides the framework for the instrument we are discussing today. I hope, Mr Robertson, you will agree that wider questions about the new domestic state aid regime are not, therefore, within the scope of the debate. I will endeavour not to be tempted if right hon. and hon. Members raise questions along those lines. The House will have the opportunity to debate the BEIS framework state aid instrument in due course.

The relevant EU regulations covered by the instrument we are discussing fall into three groups. The first consists of two block exemption regulations that currently exempt certain categories of agricultural and fisheries funding from the state aid requirement under articles 107 and 108 of the treaty on the functioning of the European Union: Nos. 702/2014, the agricultural block exemption regulation, and 1388/2014, the fisheries block exemption regulation. With the second group, the amended legislation provides that agricultural and fisheries aid under a certain de minimis threshold does not constitute state aid under agricultural, and fisheries, de minimis regulations, Nos. 1408/2013 and 717/2014 respectively.

Finally, the statutory instrument amends state aid clauses in some of the common agricultural policy regulations, exempting funding provided under those regulations from the state aid requirement under articles 107 and 108 of the treaty on the functioning of the EU, and also ensures the proper operation of those funding arrangements. Those regulations are 1303/2013, the CAP common provisions regulation; 1305/2013, the rural development regulation; 1307/2013, the direct payments regulation; and 808/2014, the implementing regulation under the rural development regulation.

The statutory instrument corrects deficient references throughout the retained agriculture and fisheries state aid regulations to, for example, the Commission, member states and the internal market. For instance, in regulation 5 of the agricultural block exemption regulation, references to “Commission notices” are being replaced with references to “Competition and Markets Authority statements of policy”.

The SI also transfers a number of minor Commission functions to the domestic regulator. For example, regulation 1(4)(a) of the agricultural block exemption regulation provides that when the UK has exceeded its annual state aid budget certain categories of aid are exempted from state aid rules for six months only, unless the Commission extends the period, and the SI gives the Competition and Markets Authority the power to extend that period.

I emphasise that the instrument corrects deficient references in retained EU regulations from day one. We have not made any substantive policy changes. I underline the fact that the legislation ensures that all exemptions continue. As we leave the EU, the amended regulations will ensure that the agriculture and fisheries state aid exemptions are operable in the UK, which will give continuity and greater certainty to businesses across the UK. I therefore commend the instrument to the Committee.

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[Mr Goodwill]

I thank the hon. Member for Plymouth, Sutton and Devonport for the constructive way that he has approached this matter. The questions he asked me were precisely those that I asked my officials, to be reassured that nothing is changing.

The hon. Gentleman spoke about the speed and volume of the SIs. I apologise that there is so much legislation that we must transfer from the competence of the European Union so that we can take back control of some of these measures. I can reassure him that there are no missed nuggets. Indeed, one nugget that we did spot was the change that is under way in the European Commission to increase the de minimis fishing limit from €25,000 to €30,000 and we have managed to include that.[Official Report, 29 March 2019, Vol. 657 c. 5MC.]

The hon. Gentleman talked about progress on the Agriculture Bill and the Fisheries Bill. I am also keen to make progress and this SI relates to some of the measures that we could implement through the Agriculture Bill in particular, so that we can deploy taxpayers’ resource to deliver those public goods that we all want to see as a way to continue agricultural support. We are keen to schedule that business and particularly keen, as I discussed earlier, not to lose all the hard work that has been done.

The hon. Gentleman also talked about resources for the CMA. I can reassure him that the CMA has been allocated £20 million for 2019-20 to prepare for EU exit, which includes resources for setting up its new state aid function. That is in addition to the £23.6 million allocated for the financial year 2018-19. The SI heads off potential challenges to the CMA over what could be described as illegal state aid because it now makes it legal state aid. I am talking about, for example, the subsidies that farmers get—the greening schemes and the aid for the fishing industry—and the SI allows for that without its being illegal state aid.

The hon. Gentleman talked about the impact assessment. We did not do one because nothing has changed. All we are doing is transferring responsibilities from the European Commission to the CMA. If we did not pass the measure today, that would change and there would be additional work for the CMA. On rural development, we intend to maintain the aims of the work that is being done. We are not making any changes as we leave the EU. We will maintain the status quo as we leave. The rural development regulations are being rolled over by other SIs.

The hon. Gentleman talked about the EMFF. The Secretary of State announced on 10 December four schemes comparable with the EMFF to support industry from 2021 onwards. The funding quantum will be set following the spending review in 2019.

The hon. Member for West Dunbartonshire is understandably concerned that the measure might be seen as a land grab by the Westminster Government, but if he peruses page 4 of the document he will be reassured to read that article 2B states:

“In relation to Scotland, in respect of areas within devolved competence, the competent authority is the Scottish Ministers”,

and the same will apply to Wales. As somebody who has just finished being a member of the Northern Ireland Affairs Committee, I share his concerns about the need for a restoration of the devolved Administration in Northern Ireland so that they can make the decisions. Currently the civil service in Northern Ireland—the Department of Agriculture, Environment and Rural Affairs in the case of agricultural policy—is in effect on automatic pilot. It is becoming more and more difficult for it to navigate a way forward, given that the co-ordinates it is using were set when there was an Administration in place.

[Martin Docherty-Hughes]

I am grateful to the Minister for what he has said, but I ask him again: has his Department discussed the SI with the civil service in Northern Ireland?

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[Mr Goodwill]

Yes. We continue to have close contact with the devolved Administrations, whether they have been democratically founded or whether we have the situation that exists in Northern Ireland. I can reassure the hon. Gentleman that I spoke to Fergus Ewing, who is responsible for this matter in Scotland, and I look forward to having a productive and cordial relationship with Mr Ewing, whom I found to be very positive about what we can do together to deliver not only for Scottish agriculture, but for Scottish fishermen.

I think I have covered the points made.

Question put and agreed to.