Considered in Grand Committee
That the Grand Committee do consider the Wine (Amendment) Regulations 2021.
Relevant document: 23rd Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, these regulations will ensure that the UK meets its legal obligation to implement the provisions in Annexe 15 to the TCA concerning the trade in wine. The amendments made by this instrument concern lot marking and transitional marketing arrangements. They will remove the requirement for VI-1 certificates to accompany imports of wine into Great Britain and put in place provisions underpinning the simplified certification arrangements for exports of GB wine to the EU.
Turning first to the measures that concern VI-1 certificates, these regulations will make changes to retained EU Regulation 1308/2013 of the European Parliament and the Council and make consequential changes to retained EU Regulation 2018/273. This will remove the requirement for a wine imported into GB to be accompanied by a VI-1 certificate, or a simplified form of that certificate, where that wine has been produced in line with our regulatory framework for wine.
This change will apply to wine imports from the EU. We are exercising a choice not to introduce unnecessary trade barriers in the form of self-certificates of the type mentioned in Article 3 of Annexe 15 to the TCA. This decision will ensure that wine products originating in the EU will continue to have free and unfettered access to the GB market. This will help to support an industry worth more than £1 billion per annum and maintain the UK as a global hub for the wine trade.
In parallel, we will also remove the VI-1 requirement for imports of wine from all other countries, such as Australia, Chile, New Zealand and the USA. This will be done on the basis that they, too, meet our regulatory requirements. These wines represent about 50% of the wines on our shelves and, due to EU rules, have been subject to a VI-1 certificate to be marketed in Great Britain.
The removal of VI-1 certification represents a positive first step in simplifying our wine regulations to remove aspects of the bureaucratic and discriminatory regime that we inherited from the EU. I offer my thanks to the wine trade and noble Lords for continuing to make such a compelling case for removing VI-1 certificates. The Government have listened and acted to remove this unnecessary piece of red tape that we inherited from the EU.
This SI will also make changes to retained EU law to ensure that wines produced in GB are subject to the appropriate supervision, inspection and authentication checks necessary to underpin the use of the new simplified certification arrangements for exports of GB wine to the EU. These proposals will also introduce provisions to ensure that the lot code arrangements for wines will continue to operate between GB and the EU. This will implement Article 4(3) of the TCA and will be done by amending the Food (Lot Marking) Regulations 1996. The changes will ensure that a wine bearing a lot code that complies with EU law in a member state can continue to be marketed in Great Britain. Lot codes are an important tool to help to trace wine products that have been prepared or packaged under the same conditions.
Finally, these regulations will implement Article 5 of Annexe 15 to the TCA concerning transitional arrangements for the marketing of wine products. Amendments will be made to the Wine Regulations 2011 and the Food Information Regulations 2014 that will allow for the marketing of wine products that, at the date of entry into force of the TCA—1 May 2021—had been produced, described and labelled in accordance with the rules existing at that time. The provisions allow two years from 1 May 2021 for wine stocks to be run down at the producer and wholesale levels, while stocks at a retail level can continue to be sold until they are exhausted. Transitional labelling arrangements are an important consideration in the wine sector where products can have an extended shelf life and their quality can appreciate over prolonged periods of time.
Overall, this instrument is primarily concerned with introducing the changes necessary to implement Annexe 15 to the TCA. It is important as this helps to underpin our relationship with the EU, which, collectively, is the most important wine-producing and trading region on the planet. However, this instrument also marks an important first step in freeing up our wine trade from unnecessary inherited red tape.
We have a flourishing wine and viticulture sector. Through this instrument, the Government are delivering on the levelling-up agenda by making regulatory changes that support wine importers, bottling plants and exporters across the country. From Accolade Wines in Avonmouth and Kingsland in Manchester to Greencroft in County Durham, we are removing a burdensome technical barrier to trade. Defra will continue to work with the industry and across government to ensure that we have the best possible regulatory regime for wine. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I thank the Minister for his time and that of his officials in the briefing, as well as for his introduction to this relatively straightforward instrument.
The Explanatory Memorandum gives clear detail. Paragraph 7.3 refers to wine that has been stored and appreciated in value, and is then marketed later when it may not have the requisite information details that we are introducing in this IS; the Minister referred to this. Ensuring that this does not happen is referred to, in the last sentence of paragraph 7.3,
“by amending the Wine Regulations 2011 (S.I. 2011/2936) and the Food Information Regulations 2014 (S.I. 2014/1855).”
The Minister referred to those statutory instruments. However, there is no indication of when this might happen. Can he say whether a date has been given for that action?
Paragraph 7.8 gives details of the trade in wine with Northern Ireland and the effect of the Northern Ireland protocol on the wine industry. It makes the claim that, although the instrument
“will be looked at again once those negotiations have been concluded”,
there will be no
“significant effect on the trade in wine between Great Britain and Northern Ireland.”
Is the Minister sure that there will be no significant effect? The wording of the EM implies that there will be an effect but it will not be significant. I know that this is straining at gnats, but it would be helpful to have clarification.
Consultation with the industry, including the Wine and Spirit Trade Association, WineGB, the Food Standards Agency and Food Standards Scotland, has taken place. Not surprisingly, since the VI-1 wine import certificates are to be abandoned and the process simplified, there was general satisfaction in the process to be instituted and followed. It will reduce costs, which is good for business.
However, I am somewhat concerned that the consequent reduction in the price of wine could lead to harm from increased alcoholism, especially among young people, due to it being cheaper. Although a glass of wine is an enjoyable thing for most adults, the cheaper it is for those on low incomes, the more likely it is to be tempting to consume more than is healthy. Addictions of all type are a strain on the health service, and alcohol addiction can lead to anti-social behaviour and violence. I am not suggesting for one minute that the reduction in the price of wine will lead to wholesale disorder on the streets, but it is a consideration for young people.
The Secondary Legislation Scrutiny Committee has produced information paragraphs on this SI, having consulted Defra. There is a transition period, to which the Minister referred, of two years for producers and wholesalers of wine, and until stocks have been exhausted for retailers. Can the Minister say whether an estimate has been made of how long it might be before stocks of wine imported under the TCA before the lot codes came in might be exhausted? Is it likely to be sooner than two years, or might stocks be left at the end of the two years? If so, what arrangements will be made to ensure that these wines can still be marketed although they will not have the lot codes in place?
Lastly—I am sorry but this is a bee in my bonnet— I note that no impact assessment was produced. It is clear from the EM that there are likely to be impacts; it would have been helpful for these to be gathered together in one place. Apart from these minor comments, I am satisfied with this SI. I can see that it will be very good for business and will improve the movement of wine between GB and the EU, so I support it.
Baroness Hayman of Ullock (Lab)
My Lords, I, too, begin by thanking the Minister and his officials for taking the time to meet me and the noble Baroness, Lady Bakewell, to go through these amending regulations in advance. It was very helpful. I also thank him for clearly explaining the purpose of the detailed statutory instrument that we are looking at. As he explained, these regulations will ensure that the United Kingdom meets its legal obligations to implement the provisions in Annexe 15 to the trade and co-operation agreement, which deals with the trade in, and of, wine. Specifically, they will amend rules concerning lot marking and the import and export certification arrangements for wine products, as well as putting in place the transitional marketing arrangements, which are important.
However, I will concentrate on the removal of VI-1 certificates. As we have heard, the instrument proposes changes to ensure that wines from the EU and other third countries imported into GB will not require a certificate and analysis report any more. Defra has said that VI-1 certificates
“serve no purpose to business or the consumer, and simply add unnecessary costs to the trade in wine.”
After considering options for the future of wine certification, the Government announced on 25 July their intention to remove the requirement for VI-1 certificates on all imported wine into Great Britain, as the statutory instrument before us is intended to do. We have heard that this measure is also likely to reduce costs for our wine importers while increasing the global attractiveness and competitiveness of the UK as a hub for the wine trade. We understand that this change has been much welcomed by the wine industry, which estimates that it will save it around £100 million every year, so we also support this statutory instrument and welcome the changes it brings in.
We would also like to acknowledge the work of the Wine and Spirit Trade Association, mentioned by the Minister, in pressing the Government to alter their previous position. Noble Lords may remember that that was initially just to roll over the European Union rules and regulations on wine imports. It is very welcome that the Government have listened to the industry and brought in these changes.
Leaving the EU made a significant difference because the EU’s rationale for bringing in an import document—effectively, a technical barrier to trade—was, in reality, to protect its own wine industry. Whatever our views on our departure from the European Union, for us, as a net importer of wine, it made little sense to maintain the rules designed to disadvantage our imports. While I pay tribute to the UK’s many excellent wine producers, we import more than 99% of the wine that we consume in this country, and around half of those imports are from the EU.
Again, it is good that, following industry engagement, the UK Government initially introduced a much-welcomed grace period for VI-1 forms for all wine imported from EU countries, meaning that the forms have never actually been required for EU wine imported into the UK. That is why we now support the Government’s intention to remove this documentation from 1 January next year.
Having said all that, we have a few questions and concerns that I want to draw to the Minister’s attention. First, there is the impact on Northern Ireland, as raised by the noble Baroness, Lady Bakewell of Hardington Mandeville. As we heard, the SI does not extend to Northern Ireland, given the operation of the Northern Ireland protocol and the ongoing UK-EU negotiations on it. Paragraph 7.8 of the Explanatory Memorandum, which the noble Baroness mentioned, says that relevant provisions will be brought forward
“once those negotiations have been concluded.”
Does this mean that the Government have no intention to trigger Article 16? If that is the case, why have the Government given the impression that they might actually do so?
The Explanatory Memorandum continues:
“In the meantime, we do not anticipate this will have any significant effect”—
as the noble Baroness, Lady Bakewell of Hardington Mandeville, stressed—
“on trade in wine between Great Britain and Northern Ireland.”
To me, this is all a bit unsatisfactory and unlikely. Can the Minister tell us how that conclusion was reached? What discussions took place with the Northern Ireland Executive before that conclusion was reached? What engagement was there with colleagues in the Irish Government in Dublin? As the noble Baroness said when talking about the implications for Northern Ireland, clarification in this area would be extremely helpful.
I am also aware that the Government held a three-week consultation on the proposals before us. In response to this consultation, a particular concern was raised by the Alcohol Health Alliance UK, or AHA, on the likelihood that removal of import certification would reduce the cost of alcohol. It is worried that this could increase alcohol harm, noting that the price of alcohol is closely linked to harm: the more affordable it is, the more alcohol is consumed, and therefore the more harm is caused, as was also raised by the noble Baroness, Lady Bakewell.
The AHA referenced the UK Health Security Agency evidence review that encourages the reduction of alcohol affordability. The AHA has urged the department to commit to producing an impact assessment on how the removal of the VI-1 certificates will affect alcohol harm and its associated costs. Does the Minister acknowledge those concerns, what discussions has his department had with the AHA to address them and are there any plans to produce the requested impact assessment?
Transitions to trading arrangements have not always been easy following Brexit, and Covid-19 has been hard on many businesses, so I end by saying that it is good that the Government have listened to the concerns of the wine industry in bringing forward this SI, which we strongly support. I also hope that the Minister is looking forward, as am I, to safely enjoying a few glasses of wine at Christmas.
Lord Benyon (Con)
I am very grateful to both noble Baronesses for their contributions, questions and broad support for this measure. To take the noble Baroness’s last point first, I wish the same on everyone else over Christmas. I think we all deserve an extra glass of wine—drunk in moderation, no doubt.
The noble Baroness, Lady Bakewell, asked when the provisions will be introduced. It is intended that they will come into force on 1 January 2022, in a few weeks’ time. This will include the provisions to amend the Wine Regulations 2011. Longer term, the Government will consider consolidating and updating the Wine Regulations 2011 as part of our general review of domestic wine policy.
Both noble Baronesses asked about Northern Ireland, and quite rightly so. The statutory instrument does not apply in Northern Ireland, as they correctly pointed out, and will not result in any changes to the certification of GB-produced wine sent to Northern Ireland. Obviously, Northern Ireland will continue to follow the rules for VI-1 certification set out in the protocol. Most movements of GB wine to Northern Ireland have fallen within the scheme for temporary agri-food movements to Northern Ireland, and movements of GB wine to Northern Ireland are very small. They often fall below the 100 litre de minimis requirements for a VI-1 certificate set out in EU law.
The noble Baroness, Lady Hayman, asked about the Northern Ireland protocol. It is an absolute priority for the Government. She will be aware of the negotiations that my noble friend Lord Frost is leading. We very much hope that they will be successful and that the circumstances of the Northern Ireland protocol, which must change, will be understood and accepted on both sides. I cannot give her an up-to-date assessment of those negotiations but it is very much hoped that we can reach agreement without resort to any attempt to trigger Article 16. That would be a failure of negotiation, and we are working hard with our European partners. That is very relevant to this, because it is a massive industry for France, Spain, Germany and Italy, and we want to continue to have it here.
Both noble Baronesses asked about the impact of the measure. They rightly raised concerns about the cost of wine and asked whether that would have an impact on increased usage. Industry estimates that the cost savings due to the removal of VI-1 certificates would amount to around 10p per bottle of wine for an averagely priced bottle of around £6. That would represent a saving of approximately 1.7% of the retail price or 1% for a bottle of £10 wine.
However, this would most likely not trickle down to consumers. I hope it does, but that is a matter for the trade. The Wine and Spirit Trade Association pointed out in discussions today that the marketplace is limited because of the cost of complying with the VI-1 certificates; it costs about £350 every time you go to a laboratory for analysis for the correct certification. The loss of that cost will mean that a wider choice is available to the public, but I hope everyone will agree that it is not a dramatic reduction that is likely to impact on the wrong kind of alcohol use.
The point on the impact assessment was very well made. The primary objective of this instrument is to bring in measures to enable the UK to implement the TCA, which has already been agreed and ratified. The only aspect that goes beyond options set out in the TCA is removing the requirement for wine imports from the rest of the world to produce a VI-1 certificate. We accumulated significant evidence that this decision would be widely welcomed by the wine trade. The need to conduct an impact assessment was deemed unnecessary, and this view was supported by the Department of Health and Social Care.
The noble Baroness, Lady Hayman, made a general point about supporting the wine industry. We are working closely with the industry to promote English and Welsh wine. Defra is working closely with the FCDO to ensure that Great British wines are served at our embassies around the world and doing a lot to promote what was in our lifetimes a nascent and very small industry but is now developing extremely well. We want it to be an option for land managers to look at new vineyards but also a means of helping our exports.
I thank all noble Lords who have contributed to this debate. I will look in Hansard to see whether there are some points I have missed. In the meantime, I remind noble Lords of the positive changes contained in this instrument. The regulatory changes we are introducing enable us to meet our international obligations and implement the 15th annexe of the TCA concerning the trade in wine with the EU.
We have listened to the wine trade and your Lordships and have removed the requirement for VI-1s, not only for our imports from the EU but for those from other excellent wine-producing nations across the world. I hope noble Lords will therefore agree that this instrument is worthy of your Lordships’ support. I beg to move.