Agriculture and Horticulture Development Board (Amendment) Order 2020
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Lord Gardiner of Kimble
That the Grand Committee do consider the Agriculture and Horticulture Development Board (Amendment) Order 2020.
Relevant document: 35th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)
My Lords, I declare my farming interests as set out in the register. The matters in these instruments are closely related, as they are the first produced using the powers of the Agriculture Act 2020. They lay the groundwork for our new agricultural policy.
First, the Agriculture and Horticulture Development Board (Amendment) Order 2020 assigns additional functions to the Agriculture and Horticulture Development Board, or AHDB, enabling it to run the new livestock information service—LIS—effectively. The LIS will operate in England, while the AHDB will be able to collect, manage and make available information regarding the identification, movement and health of animals, and to allocate unique identification codes for the means of identifying animals.
Livestock are currently identified through three separate livestock traceability services: one for cattle, one covering sheep and goats, and one for pigs. As existing systems are species-specific, keepers with more than one species of livestock must switch between databases. The LIS replaces these separate systems with a single multi-species system. The existing sheep service in England is expected to transition to the new arrangements in spring 2021. Cattle and pig services are due to transition in 2022. The service will be more cost-effective and user-friendly; it will allow faster, more accurate livestock traceability, enabling us to manage disease and protect human health better, giving confidence to trading partners. The LIS will use cloud-based IT infrastructure, ensuring that the system has capacity to scale up response when user demand is high.
Although the LIS operates in England, an important part of the service is working with the devolved Administrations to ensure that we can share data, allowing seamless livestock movement and traceability throughout the UK. Defra and the devolved Administrations will enter into an agreement to control and share data. Each territory’s traceability systems will be able to communicate with each other, supporting day-to-day business operations such as cross-border moves. This is called the UK view. The ability for veterinary officials across the UK to be able to access the UK view is essential to ensuring a rapid, targeted response in disease-control situations.
The AHDB will also run a unique number identification service on behalf of England and Wales, controlling the issuing of official individual identification numbers to animals. The new system will also allow for value-added services where submitted data can be used to generate information in wider areas, such as livestock productivity and disease management.
The Direct Payments to Farmers (England) (Amendment) Regulations 2020 amend and update direct payments legislation as it applies in England. The legislation governing direct payment schemes contains financial ceilings to calculate direct payments to farmers. However, it only includes financial ceilings up to and including the 2020 claim year. This instrument specifies how the Secretary of State will set financial ceilings for England beyond 2020. Once these provisions on financial ceilings have come into force, 2021 ceilings for England can be set. This will be done by the end of this year. Ceilings for future years will be equivalent to England’s share of the 2020 UK national ceiling. This is because the ceilings are the starting point for payment calculations, before any reductions are applied to payments to phase them out.
The regulations also make minor changes to ensure that schemes continue to work effectively in England beyond 2020. This includes replacing dates specific to the 2020 scheme year with equivalent dates that are not year specific. The regulations also remove rules that are not applied in England, such as those relating to voluntary coupled support, which is operated in Scotland.
No substantive policy changes are made by these regulations. They ensure that direct payment schemes in England can continue beyond the end of the 2020 scheme and are largely technical. The Government remain committed to beginning to phase out direct payments from 2021 as part of their ambitious agricultural reforms in England. We will bring forward a separate instrument to apply reductions to the payments so that we can phase them out over a seven-year transition period. Devolved Administrations plan to make their own legislation in relation to their direct payment schemes.
The World Trade Organisation Agreement on Agriculture (Domestic Support) Regulations 2020 are UK-wide. The instrument ensures that after the end of the transition period, the UK continues to comply with its international obligations under the WTO Agreement on Agriculture in relation to classification and notification of domestic support and its commitment to reduce its aggregate measurement of support. Compliance with the agreement was previously managed by the EU on the UK’s behalf. This instrument is limited in scope to ensuring continued compliance with the agreement. This is a reserved issue because individual nations of the UK do not have legislative competence to act in these matters for other parts of the UK.
The Agreement on Agriculture divides domestic support into “green box”, “blue box” or “amber box”, depending on the potential to distort trade. Under the agreement, each country must limit the amount of trade-distorting amber box domestic support given to agricultural producers. The UK’s overall amber box spending limit remains unchanged after EU exit. These regulations specify the amounts of amber box payments that may be given in each UK nation. Limits have been set, following consultation with devolved Administrations, at a level not constraining policy choices, meaning that there will be no impact on farmers.
The regulations also outline the procedure for classifying such schemes and permit the Secretary of State to request information from devolved Administrations where needed to enable the UK to satisfy Agreement on Agriculture obligations. The regulations outline the transparent and objective process by which UK constituent nations will share information on proposed support schemes in order to establish their classification and ensure timely and accurate notification of domestic support to the WTO.
These instruments implement provisions provided for by the Agriculture Act 2020 and I beg to move.
Lord Gardiner of Kimble (Con)
My Lords, I thank all noble Lords for contributing to this debate. I think we all regret that my noble friend Lord Naseby was not in the earlier consideration debate on plant health and plant products. I agree with him that there is considerable opportunity for growing in Britain. What I would say is that this particular instrument relates to adding further functions for the AHDB, but of course the AHDB currently serves six agricultural and horticultural sectors. From that point of view, today’s work is about the livestock information service specifically. Bees and poultry are not engaged in this order, and in fact the existing AHDB order does not include bees or poultry.
I turn to some of the questions, particularly on the governance structure. The noble Baronesses, Lady Jones of Whitchurch and Lady Bakewell of Hardington Mandeville, raised this. The LIS will be run by Livestock Information Ltd—LI Ltd—a subsidiary body of the AHDB. LI Ltd is wholly separate from AHDB levy schemes, and it is not funded by them. LI Ltd is a not-for-profit company, limited by guarantee by the AHDB and Defra. It will not charge fees to keepers for providing livestock traceability services. Movement reporting is a statutory requirement, and the service will be fully paid for by Defra, as existing services are now. LI Ltd may in the future charge for offering value-added services above and beyond statutory requirements. Any such services would be agreed with industry. It could thus include services which could help reduce or eradicate endemic disease.
I absolutely understand the point the noble Baronesses made about a new system and its readiness. The underpinning information technology has been in development over a longer time period ahead of the new company launching in October 2019. Defra receives regular updates, and LI Ltd is currently on track to lead with live services in spring 2021. Defra actively monitors delivery and would not decommission existing traceability services until the new one was ready. Indeed, I say to both noble Baronesses that the transition to the new service will be incremental, so there will be periods with old and new systems running. All changes will be carefully managed so that keepers will have to enter their data only once; in other words, a pragmatic solution.
My noble friend Lord Naseby and the noble Baroness, Lady Jones of Whitchurch, asked about the separation of traceability services for each Administration, and I absolutely agree: they need to be compatible, and I confirm that this is the case. Any livestock movement between UK nations should allow the full continuity of traceability. Defra is working closely with devolved Administrations and data-sharing agreements will govern information moving with the animals.
I turn to the direct payment instrument. The noble Baroness, Lady Jones of Whitchurch, asked about the direct payment legislation, the 2020 scheme and the earlier legislation. Indeed, the Direct Payments to Farmers (Legislative Continuity) Act 2020 provided continuity of payments for the 2020 scheme year. The Act was focused on providing direct payments for farmers as the UK left the EU, not on extending the scope of the regulations beyond 2020. This instrument uses powers in the Agriculture Act 2020, always designed as the vehicle for our agricultural reforms, including making substantive amendments to retained EU law. That allowed post-2020 changes, including the power to extend direct payments beyond 2020, to be debated together. To those who asked whether we will need new statutory instruments for direct payments each year, I say that the changes made via this instrument are not specific to 2021. It will not be necessary to lay further instruments to continue existing direct payment schemes for future years.
The noble Baroness, Lady Bakewell, and other noble Lords asked about the reductions in 2021 and thereafter. We intend to legislate for the reductions to 2021 direct payments in an affirmative statutory instrument early next year. Simplifications to the scheme will be made through a separate statutory instrument that was laid on 1 December.
The EU rules on active farmers have not been applied in England since 2017. They were thought to have added burdens and caused confusion for farmers. This statutory instrument does not change the requirement that you must be a farmer in order to claim direct payments.
Forgive me for being so punctilious about the impact assessment, but this statutory instrument allows existing direct payment schemes in England to continue beyond 2020. An impact assessment of this instrument is not necessary as the instrument does not introduce changes for farmers, make policy changes or set reductions for phasing out the payments for agricultural transition. I will take questions on this in a separate statutory instrument debate, but it is important to say it here.
The noble Baroness, Lady Jones, also asked about the UK internal market. We all know that agriculture is devolved. The approach to direct payments in each UK nation is a matter for each Administration. Direct payments are largely decoupled from production and should not, therefore, distort trade. There are already significant differences in the implementation of direct payment schemes within the United Kingdom.
On the WTO instrument, the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Naseby asked about disputes between any of the UK nations. These regulations set out a transparent and objective decision-making process for classifying schemes according to WTO definitions. The devolved Administrations will be able to design their own policies and schemes, propose WTO classifications for these schemes and provide evidence in support of the proposed classifications. All four UK Administrations will then discuss their proposed support schemes and how to reach agreement on their classification according to WTO criteria before they are introduced. The provisions allow for a dispute resolution process, but this would be used only in the unlikely event that agreement could not be reached on classification of a new and amended domestic support scheme. If agreement cannot be reached there is provision for the Secretary of State to make the final decision. I should emphasise that it is expected that the vast majority of issues will be agreed. The objective is that any disputes should be resolved through discussion and collaboration between the four Administrations.
The noble Baroness, Lady Bakewell, asked how limits are calculated. The “amber box” limits are equivalent to the average annual level of all domestic support—green, blue and amber—given to agricultural producers in England, Wales, Scotland and Northern Ireland between 2014 and 2017. The amber box limits therefore accommodate current levels of green, blue and amber box support, meaning that policy choices in England, Wales, Scotland and Northern Ireland are not constrained. The limits are expressed as a percentage of the current UK aggregate measurement of support, as set out in the UK goods schedule at the WTO.
The noble Baroness, Lady Bakewell, also asked about direct payments. The English share of the UK direct payments financial ceiling is €2.07 billion, which equates to £1.8 billion and will be used as the basis for setting the direct payment financial ceiling in future years. Since agriculture is devolved, it will be up to each devolved Administration to determine their own approach to the direct payment schemes.
I will look at Hansard in case there are other points which I have missed. The noble Lord, Lord Bhatia, made one or two other remarks to which I shall attend. In the meantime, these instruments are worthy of your Lordships’ support. I beg to move.