Grand Committee

Monday 21st March 2022 Grand Committee

Monday 21 March 2022

15:45

Arrangement of Business

Monday 21st March 2022 Grand Committee

Announcement

15:45

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, it seems a little unnecessary to make the following observation, but I will make it none the less: Members are encouraged to leave some distance between themselves and others, which everybody seems to have done. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume a few minutes later, having allowed time for Members to record their votes.

Direct Payment to Farmers (Reductions) (England) Regulations 2022

Monday 21st March 2022 Grand Committee

Considered in Grand Committee

15:45

Moved by

[Lord Goldsmith of Richmond Park]

That the Grand Committee do consider the Direct Payment to Farmers (Reductions) (England) Regulations 2022.

Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Department for the Environment, Food and Rural Affairs and Foreign, Commonwealth and Development Office (Lord Goldsmith of Richmond Park) (Con)]

My Lords, I hope it will be useful to your Lordships if I speak to all the instruments, beginning with the draft Direct Payment to Farmers (Reductions) (England) Regulations 2022, which were laid before this House on 3 February 2022. The matters in these instruments are closely related. Made using powers under the Agriculture Act 2020, they implement important aspects of our new agricultural policy, as set out in the agricultural transition plan published in November 2020 and updated in June 2021. The three instruments apply only in relation to England.

The Direct Payments to Farmers (Reductions) (England) Regulations 2022 apply progressive reductions to direct payments to farmers in England for the 2022 scheme year. By doing so, it continues the process of phasing out direct payments in England which began in the 2021 scheme year. The Government remain committed to phasing out direct payments in England over the seven-year agricultural transition period. We are doing so as area-based payments are unfair: they go primarily to larger landowners, artificially inflate land rents, stand in the way of new entrants to farming getting access to land, and offer little return for the taxpayer.

To help farmers plan, we initially committed in 2018 to phase out direct payments. The specific reductions provided for in this instrument were announced in November 2020. As was the case for 2021, higher percentage reductions will be applied to payment amounts in higher payment bands.

Although direct payments are reducing, total funding to farmers is not. We will make money from the reductions available to targeted schemes, which will increase farm productivity, improve the health and welfare of animals, and enhance the natural environment. In the coming year, that reallocated money will be used to meet the rising demand from farmers for countryside stewardship, our current environmental offer, which has seen a 40% increase in applications. That funding will also be used in the launch of the first of our new environmental land management schemes: the sustainable farming incentive. Further, we will also fund the initial wave of the landscape recovery scheme, with projects focused on supporting native species and restoring rivers.

We are also making available free business advice to farmers and will continue to offer a range of popular grant offers so that farmers can invest in their businesses and become more efficient and sustainable. We will also be offering a new suite of opportunities for farmers, supply chains and researchers to collaborate on researching and developing innovative but practical solutions to the challenges and opportunities that farming faces. This is an essential reform that puts England on track to meet its legally binding environmental and net-zero targets, while creating a thriving and self-reliant farming sector.

The Agriculture (Financial Assistance) (Amendment) Regulations 2022 amend the Agriculture (Financial Assistance) Regulations 2021, approved by this House on 22 March 2021. Those regulations put in place financial data publication and enforcement and monitoring requirements for four new financial assistance schemes established under the Agriculture Act 2020. This amending instrument extends the range of financial assistance schemes covered by the 2021 regulations to ensure that any new financial assistance scheme launched in 2022 and thereafter is subject to the same checking, monitoring and enforcement requirements that applied to the original schemes launched in 2021.

The 2021 regulations gave Defra the opportunity to test, refine and develop these new requirements. The amendments made by this instrument will now allow the Government to move on to the next stage of agricultural policy set out in the agricultural transition plan.

This instrument also strengthens the investigative powers in the 2021 regulations to ensure that where there are suspicions of offences in connection with financial assistance —for example, fraud offences—the Secretary of State can, where appropriate, fully investigate the matter. The amendment will allow the Secretary of State to investigate not only agreement holders but applicants, and in certain circumstances the employees or agents of an applicant or agreement holder. These investigative powers mirror powers Defra holds in relation to CAP schemes, while allowing Defra to use them in a more proportionate manner, reflecting the objectives of the Agriculture Act.

This instrument also removes a reference to grants in Regulation 13 of the 2021 regulations. The amendment will ensure that “financial assistance” is not limited to grants and can include other forms of assistance, as provided for in Section 2(1) of the Agriculture Act.

In drafting the 2021 regulations, Defra engaged with key stakeholders in a targeted consultation exercise between 4 August and 1 September 2020, giving stakeholders the opportunity to review Defra’s proposed approach and express their views. Feedback gathered during the consultation exercise was used to inform the content of the 2021 regulations and this amending instrument.

I turn to the Agriculture (Lump Sum Payment) (England) Regulations 2022. As part of our wider agricultural reforms, we want to support farmers who wish to leave the industry, as well as those who want to stay. We know that some farmers would like to retire or leave farming but have found it difficult to do so for financial reasons. That is why this instrument allows a scheme to be introduced in 2022 which provides lump sum payments to farmers in England who wish to leave the sector. These payments will be in place of any further direct payments to the recipient during the remainder of the agricultural transition. This is not new money and will not impact the funding of other schemes. This scheme should also free up land, creating more opportunities for new entrants and farmers who wish to expand.

These instruments implement provisions in the Agriculture Act 2020. They continue the transition away from the inefficient direct payments model of the CAP and they build upon the already implemented financial assistance framework to cover new schemes, in line with the agricultural transition plan. I beg to move.

[Baroness McIntosh of Pickering (Con)]

I thank my noble friend for introducing these regulations. I would like to put one or two questions about each in turn.

Could my noble friend the Minister clarify an issue that has been raised? The Secretary of State for Environment, Food and Rural Affairs said at Blackpool, if I have understood correctly, that farmers have more than made up for any income lost since these new provisions came in—or, in fact, since we left the European Union. My contacts told me over the weekend that is anything but the case. It would be welcome to know the basis for the Secretary of State’s remarks; perhaps there is something I am misunderstanding.

Regarding direct payments to farmers, the subject of the first regulation before us, as my noble friend said, this is putting us on the path to reducing the direct payments until we eventually come into ELMS. What has been identified, I think by the CLA especially, is that there will potentially be a 50% gap in the funding that farmers have been receiving between the regulations before us this afternoon and the end of the transition period. If that is the case, and I am sure my noble friend’s department will be aware of that, I would like to understand how that gap will be filled so that farmers do not lose out.

I am concerned that there is a lack of understanding. We are meant to be levelling up the economy and unleashing the rural economy. I think, at the moment, the rural economy is performing below par. One reason is that we simply do not have the tools.

I will take the North Yorkshire moors as an example, or the Yorkshire Dales, where my brother lives: we still have woeful broadband internet connections there and the mobile signal contacts are often potentially extremely dangerous. We learned at a recent meeting that masts have apparently been put in by two providers—I believe it is O₂ and EE—but these have not been linked up in this rather broad area of North Yorkshire. My noble friend’s department is responsible for rural affairs—it is in its title—so perhaps he could use his good offices to ensure that, as we leave direct payments and move to an alternative form, farmers will be given the tools to do the job.

To conclude on the first regulations, there is also a lack of understanding that tenants are unable to qualify under the new schemes. I would be interested to know to what extent that is reflected in contacts that the department has had with tenants. I know that our honourable friend the Farming Minister in the other place, Victoria Prentis, is aware of this. I commend the work of the Rock review on tenant farmers, but tenants are being evicted as we speak. There simply will not be that many of them left, if we carry on at this pace, when we reach the end of the transitional stage for direct payments to farmers.

I make a plea to my noble friend: will he help me to understand how, when it is gone, the direct payments relief will be replaced for those tenants who cannot claim for anything other than farm schemes owing to the nature of their farm tenancy agreements? Those are enshrined in a great many agricultural Acts, not least the 1947 Act. Can he put my mind at rest on the plight of tenant farmers?

I add that on common land graziers and those with shooting rights are trying to compete side by side. I am sure my noble friend will be aware that there is currently an issue with food security, not least because we understand that Ukrainians have been picking most of our fruit and vegetables in the last two or three years. It appears that, added to the cost of wheat, we may perhaps soon have in this country a local shortage of such staples. I wonder how my noble friend expects to address that.

I turn briefly to the Agriculture (Financial Assistance) (Amendment) Regulations. Paragraph 7.6 of the Explanatory Memorandum says that the department will perhaps try to look more favourably and proportionately on how the offences are to be inspected; I think my noble friend alluded to this. However, the first sentence does not entirely fill me with confidence. It states:

“The instrument also expands the power of the Secretary of State to investigate suspected offences in connection with applications for, or receipt of financial assistance.”


That will not go down well, particularly with the owners of small family farms, who have said at every turn how they are finding that, if anything, the administrative burdens are increasing. I would like to hear a little more detail from my noble friend about how these regulations will applied. How will the full force of Defra be applied more proportionately?

The third and final instrument before us states clearly that direct payments are to be replaced. My noble friend referred to a lump sum payment. This might seem very attractive, particularly to older farmers. I refer again to my experience of North Yorkshire in this regard. The difficulty they have asked me about is: if they apply for this lump sum grant, how will that affect their tax situation? Did I understand my noble friend to say that it could be up to £100,000?

We have a shortage of affordable homes in the countryside. Very few new houses being built across North Yorkshire—and, as far as I can see, in other rural areas of England—are one- or two-bedroom, which would be ideal for farmers who have moved off the farm and want to stay in a village. If we do not make it more attractive for them, we will prevent newer, younger farmers coming in, which is a desire of Defra. With those few remarks, I look forward to my noble friend’s responses.

16:00

[Lord Carrington (CB)]

My Lords, I declare my interests as a farmer and landowner, as set out in the register. I am broadly supportive of the Agriculture Act and the introduction of the new system of public funds for public goods, but I need to hear what the Government have to say about the very different circumstances that apply today from when the Act was passed.

Like other noble Lords, and this was referred to by the noble Baroness, Lady McIntosh, I am most concerned with how the Secretary of State is reported to have said that rising input prices will be matched by rising output prices. This demonstrates a lack of understanding, particularly of businesses. The consultant Andersons has calculated that, whereas the average rate of inflation for consumers is 5.5%, it is 10% for farmers, when it is recognised that their principal inputs are fuel, feed, fertiliser, seeds and labour.

The Financial Times reported yesterday that the European Union is

“reviewing the bloc’s sustainable food strategy after a concerted push against the planned reforms by national governments, farmers and the agriculture industry.”

Is this debate happening here? Surely, in the unfolding circumstances of inflation and Ukraine it would be sensible, as a minimum, to delay the planned cuts in BPS payments for this year and maybe next. This would not involve additional government funding, only a delay to the introduction of the new schemes.

The new sustainable farming incentive support is, after all, a fraction of what farmers are due to lose in the BPS. This is important for smaller farmers with weaker balance sheets, as the stronger cash flow provided by the BPS would enable them to purchase inputs, such as fertiliser, on a more timely basis.

In this country, the Food and Drink Federation is now calling for a national food security council, which could work alongside the industry to enable a collective response to supply chain disruptions caused by immediate issues such as rising energy, CO₂ and fertiliser prices. Please could the Minister give us some indication of what the Government are doing to address all these important issues?

Finally, on the regulation on lump sum payments, I believe the payment is totally inadequate to encourage farmers to retire. It is also a disincentive for new farmers to enter the industry. A payment of up to £100,000 is attractive only if the farmer owns his own house, particularly in the south of England. This excludes most tenant farmers. Nothing is achieved if the farmer rents from the landowner the farmhouse he has been living in, at an open market rent, as this could be the same or more than his farming rent.

As a means to free up land for new farmers, this scheme suffers from the basic problem that the BPS is not available any more, while the other funding that is available is much smaller. The only likely “beneficiary”—in inverted commas—both from the reduction of the BPS and from the lump sum scheme is the well-financed larger farm. From a farming, environmental and social point of view, this is not what we want to achieve.

[The Duke of Montrose (Con)]

My Lords, I thank my noble friend the Minister for galloping us through these measures. The challenge for us in this Committee is not to detain him too long, so as to allow him to resume all the work he is doing. I echo much of what the noble Lord, Lord Carrington, said. I declare my peripheral interests; my agriculture and land are all in Scotland so I am not directly involved.

The rationale for this process of cuts is the same as when this was carried out in New Zealand. All input costs and other things—my noble friend the Minister mentioned rents—dropped in parallel with the cuts in government funding. In the current economic situation, there is no way that fertiliser companies have the slack to cut prices. They are being forced up, as my noble friend the Minister will know, by 200% or more. Will the Government be monitoring how this works out in practice and will they create powers to delay the introduction? It will stretch the lump sum payments if they are the only remedy that is available, and people are going to be forced out of business.

My noble friend the Minister has promised that there will be no reduction in payments to farmers, and I am sure he believes that, but what proportion are the Government expecting to go to conservation projects that are not related to farming? Will that considered to be part of the payment or are they going to be financed from elsewhere?

[The Duke of Wellington (CB)]

My Lords, I declare my agricultural interests as detailed in the register, although they are not particularly relevant to the point I want to make.

I do not think the Minister was in this House when we considered the Agriculture Bill in 2019—I cannot quite remember but I hope I am right about that. During the passage of that Bill, there was quite a lot of comment from many parts of the House about the position of smaller farmers, particularly hill and livestock farmers, most of whom are marginally profitable, if at all, and nearly all of whom depend wholly or almost wholly on the public subsidy that they receive. I made a plea at that point for the Government to consider not reducing the lowest band of the direct payments because those are directed only at the relatively small farmer.

I see in the regulations in front of us that, in fact, the smaller farmers—that is, those receiving £30,000 or less—are to receive a cut of 20%. That seems rather harsh. Although I am perfectly aware that there is no possibility of this regulation being amended, I wonder whether the two Ministers here would discuss with their ministerial colleagues the state of the small farms in this country. I do not believe that this Conservative Government really want to see small farms eased out of business. I am really worried about them.

The larger farms will get by. They have efficiencies, they are usually better capitalised; they will probably be all right under changed circumstances. But the small family farms, in many cases tenanted farms and/or livestock farms, are struggling and will struggle even more with these proposed cuts. I just do not feel that Ministers are sufficiently sympathetic to the position of small farmers at the moment. I would be grateful if the Minister could comment on that.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for his introduction to these three statutory instruments dealing with proposals for the transition to the new financial support payments for farmers in England post Brexit.

The first SI, which deals with direct payments and reductions, has been well publicised since Brexit and during the passage of the Agriculture Bill. Farmers’ payments under CAP have already started to decrease and this year will see a further reduction in their payments, from 20% for those on £30,000 up to 40% for those in receipt of more than £150,000. This sliding scale has been well trailed and there should be no surprise among farmers about its further reduction. What is more problematic for them is the lack of the implementation of ELMS to replace this lost income. Small farmers will be hit particularly hard.

Consultation on the transfer took place back in February to May 2018 and the new arrangement is now beginning to bite. Are the Government considering a further consultation on the actual effects of the sliding scale of reduction in direct payments, especially as the implementation of ELMS is only slowly coming into effect during the transition period? Meanwhile, food security is moving rapidly up the agenda.

While it is to be welcomed that the Government are focused on biodiversity and carbon sequestration targets, the knotty issue of food production is somewhat ignored. The British farmer is very disillusioned at the trade deals with countries on the other side of the globe which have a very different landscape in which to produce their livestock and huge economies of scale that are not open to British farmers. They also have less stringent animal welfare rules than those which operate here. It is, therefore, much easier for Australian and New Zealand farmers to undercut our own hard-working farmers. Does the Minister agree that farmers are angry about the way they are being treated by the Government and undercut by cheaper imports?

I turn to the financial assistance amending SI. This seems to be all about monitoring of farmers’ financial assistance and enforcement. Over the five pages of the Explanatory Memorandum to this short SI, there are no fewer than nine references to monitoring and enforcement. The whole instrument gives the impression that the farming community is systematically and deliberately attempting to defraud the Government out of money.

There is reference to the tree health pilot scheme and annual health and welfare reviews being exempt from the publication requirements which apply to all other payment schemes. Can the Minister say why this is?

Under paragraph 6 of the Explanatory Memorandum, bullet point 5 refers to the Secretary of State being able to investigate suspected offences. Given the general tenor of this SI, what is the current level of offences? Paragraph 7.1 again refers to checking, monitoring and publication of information. In paragraph 7.3, the fourth bullet point refers to

“investigation of breaches and suspected offences in connection with applications for, or the receipt, of financial assistance”.

Can the Minister say whether wholescale fraud existed in the farming community over payments?

Paragraphs 7.5, 7.6, 7.7 and 7.9 refer to suspicion of fraud, breach of conditions, investigative powers and, again, suspected offences. It would appear that farmers are being accused of wholesale fraudulent activity over their payment claims. The whole statutory instrument wields an awful lot of stick and hardly any carrot in its treatment of farmers. Can the Minister please give the Grand Committee some clarity on just what the basis is for the tone of this statutory instrument, which I find offensive?

Paragraph 7.10 states:

“The instrument does not impose duties that are significantly more onerous than before”.


Can the Minister say, however, whether he thinks a family farmer would be likely to agree with this statement?

16:15

Paragraph 11 refers to Defra planning to provide detailed guidance for each financial assistance scheme. Can the Minister say when this guidance will be published? No impact assessment has been produced, on the basis that participation in the Government’s financial assistance schemes is voluntary. This is insufficient reason for not producing an impact assessment. What will happen if farmers decide that they simply cannot make a living out the new schemes and vote with their feet? The country will still need to engage in biodiversity, and it will certainly still need to produce food, especially given the current situation with the decline in food being imported from Ukraine and the rising cost of energy and fuel supplies.

I regret to say that I think it would be more truthful if this SI were renamed the “Agriculture (Financial Assistance) (Prevention of Fraud) (Amendment) Regulations”. British farmers are not all dishonest and on the fiddle. They are committed and hard-working, diligently and desperately trying to make a living during a very difficult time when there is little certainly for them, in an industry which is under threat in the long term. I look to the Minister to give reassurance that the ethos of this SI is misplaced and not borne out by the evidence.

Lastly, we come to the Agriculture (Lump Sum Payment) (England) Regulations 2022. It is important that new, hopefully younger, people are able to enter agriculture. Encouraging farmers to retire is important as this releases land for new entrants. I note that the SI refers to releasing land for existing farmers to expand. Can the Minister give reassurance that farmers wishing to expand will not push out the interests of new entrants? While it is important for small farmers to be able to expand their holdings when land is released, it should be in proportion to those wishing to get a toe-hold on the farming ladder.

The regulations make it clear that farmers have to release the land before they can receive the lump sum payment but may retain five hectares of land. Can the Minister say what the rationale is behind retaining five hectares? This may be standard practice but, as I am not a farmer, nor come from a farming family, it would be useful to know just what is behind this.

Paragraph 7.8 of the EM indicates that applicants who are part of a woodland creation scheme would not have to transfer their land. Can the Minister give reassurance that the woodland creation schemes do not include rapid growing conifers but the type of trees that are slow growing and likely to increase the biodiversity of the land and the return of species which have previously abandoned the area?

The instrument contains a formula for calculating what the lump sum payment will be. I readily admit that algebra is not my strong point, but can understand how this will be calculated. The maximum amount payable is £100,000 and Defra calculates that 87% of farmers will not reach this cap. This does not seem a sufficient reward to encourage farmers to leave the land after a lifetime of desperately early mornings, slogging through all weathers and very late evenings in order to supply milk, meat, vegetables and grain, often for a poor monetary return. Perhaps I am overly simplistic in my view, but I am not sure this is going to make the room for new entrants which the Government were hoping for—the noble Lord, Lord Carrington, referred to this.

This suite of SIs work together to give a package of measures across the farming industry which should bring some certainty to the farming community but which I fear are not likely to do so. Together with the existing trade deals and those currently under negotiation, it is no wonder that the British farming industry does not feel that the Government have its back.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the Minister for his introduction to these SIs, which, as he said, follow on from the detailed debates we had during the passage of the Agriculture Act, and indeed previous SIs which began to roll out the detailed proposals.

First, addressing the SI which introduces year 2 of the basic payment scheme reduction, as has been said, this is not a surprise, as the plan for this reduction in 2022 has been set out in previous documents. Nevertheless, even for the lowest category of claimants, a drop from 5% to 20% is significant. Already the farming press is reporting significant cases of hardship, and the noble Lord, Lord Benyon, recently admitted in the Chamber that it was hard to see how many upland farmers could continue to make a living under the new regime. We know, for example, that pig farmers have been particularly badly hit by what Victoria Prentis, the Minister in the other place, has described as an “exceptionally challenging period.” I therefore share the concern that several noble Lords raised about the Secretary of State’s comments last week, in which he said that the reductions in the basic payment scheme for farmers would be more than recouped by their increased income from the sale of produce. I do not think anyone of us felt that that was a reality, and indeed I very much share the comment of Minette Batters, who said

“one of us is … living in a #ParallelUniverse”.

I think she summed up the views of many when she said that. Perhaps the Minister could comment on what seems to be an unrealistic comment of the Secretary of State and say whether he agrees with it.

Of course, the Welsh Government have de-risked the changes by postponing the basic payment cut for a year to allow the farming community to adjust to the new arrangements. Can the Minister say what the impact of this is, with farmers receiving different subsidies throughout the devolved nations, and what is the impact on the internal market from the phasing out happening at different timescales?

I am conscious that this SI is for one year only, as was the previous year’s SI. In the current climate that probably makes sense given the huge traumas that are going on in the sector. As noble Lords have said, we are seeing the impact of unforeseen world events causing massive increases in the cost of fuel and gas, and shortages of feed and fertiliser. The Explanatory Memorandum in paragraph 14 makes it clear that these arrangements will be kept under review, saying that

“Defra and its agencies will monitor and review the impact of this instrument as part of its standard policy-making procedures.”

Can the Minister shed more light on what these monitoring arrangements are? I would have thought that in the current climate that is exactly what such flexibility was designed to address, and presumably at this moment risk analyses are taking place as to the impact of these huge world events. Can the Minister say what tests would have to be met before the Government agreed to deviate from the rollout of the basic payment cuts? If not now, when would they ever agree to do it?

Can the Minister also give more information about the savings being made from the first year of the basic payment cut? Again, as noble Lords and the Minister said, it has been said that no money will be lost from the overall pot of money if it is not reallocated via other ELM schemes, but we know that many of those other ELM schemes are not fully up and running yet. Can the Minister reassure us that none of the unallocated money in that first year has been reclaimed by the Treasury? We know what the Treasury is like, and it is hard to imagine that it has allowed that money to sit in a pot awaiting its allocation for future years—it is very generous if it is thinking like that. I think we would all like to be reassured that the cuts in one pot are there and can be shared and made available for this and future years. Just so that we can have some further reassurance on that, when will we be able to see the accounts to give us some factual information?

The noble Duke, the Duke of Montrose, raised the split in the distribution of the ELM schemes. Can the Minister say whether it is still the intention to split it evenly between the three pillars so that a third will still be available to go to individual farmers rather than the larger projects that were also envisaged under the ELM portfolio?

The second SI tightens up the rules for checking, monitoring and enforcing the applications for financial assistance. I do not have a great deal to say on this, although I agree with the noble Baroness, Lady Bakewell, that the tone is rather unfortunate. Obviously, it is important that schemes are watertight and not open to fraud, but it is also important that we have the right degree of flexibility in terms of the investigations that take place. However, I point out the irony of Defra deciding to go its own way on leaving the EU, only for it to concede in paragraph 7.7 of the Explanatory Memorandum that the changes that it is now introducing

“will bring Defra’s investigative powers closer to those … previously created under Common Agricultural Policy … rules”.

I turn to the third SI on the arrangements for lump sum payments; again, noble Lords have raised a number of concerns about this. My first reaction on reading this SI was: is this it? Is this all we are going to get? I had expected a much more detailed document setting out the criteria, any exemptions and much more detail about how and to whom the land could be transferred. We understand the need for and potential benefits of having a scheme that allows farmers to retire with some dignity if they do not want to participate in managing their land for environmental benefits, but we also need to be confident that these retirement payments will transform the way that the land is subsequently managed and owned. This was very much our ambition during the passage of the Agriculture Act.

The Minister may have seen the briefings that we have been sent by Sustain, which echo many of our concerns about this proposal. A fundamental concern is that there is no priority for the land that becomes available to be offered to new entrants. In the Commons debate, the Minister, Victoria Prentis, said:

“The lump sum exit scheme sits alongside extra support to help new entrants into the industry.”—[Official Report, Commons, Delegated Legislation Committee, 15/3/22; col. 13.]


But these two schemes are not linked up. There is currently no incentive for a retiring farmer to offer the land to a new entrant. It is far more likely that, as we have always feared, the land will be gobbled up by the large landowner next door, who will have an inside track on details of the sale and will use it as an opportunity to expand their landholdings. This was the point made by the noble Lord, Lord Carrington, who also made a good point about these sums of money simply not being sufficient for people who want to move off the land to be able to buy a house away from the farm.

Another alternative is that the land will be bought up by large corporations that have no farming background but are keen to offset their carbon emissions or to use it for biodiversity net gain to offset developments elsewhere. We know that the Government are encouraging this, and in many ways those schemes have merit, but we need to know where the land will go and who will be making use of it.

If we are not careful, both those depressing scenarios —the landowner and large corporations—are very likely unless the provisions in this SI for disposal of the land on retirement are tightened up. The end result is that we will see small family farms squeezed out of the sector, which was the point made by the noble Duke, the Duke of Wellington.

Will the Minister look at this again and provide some reassurance about new entrants and where that land will go? Will he also look again at the very narrow definition of “connected person” in Regulation 7(1) of the Agriculture (Lump Sum Payment) (England) Regulations 2022, because, as it stands, you can transfer the land to any family member as long as it is not your partner or spouse. I ask again whether this been fully thought through, because it seems likely that the payments will be made within a family—maybe to the father—with other members of his family carrying on farming much as before. Again, we are facing a scenario where new entrants will find it very difficult to make headway in coming on to the land.

16:30

Finally, what are the specific exemptions where payments can be made but land does not need to be transferred? As the noble Baroness, Lady Bakewell, said, the example given in the Explanatory Memorandum is that if a farmer plants trees under a woodland creation scheme, they do not have to transfer the land. Is there not a danger that this will encourage a huge shift to planting trees, where a more holistic environmental use of the land makes more sense? Of course, we all want trees to be planted, but we want this to be, as we always say, “the right tree in the right place”. It seems very worrying that this will lead to a wholesale obsession with planting trees when we need to be more in line with the full holistic needs of that land use for the future. The woodland exemption was given only as an example. What other exemptions are being considered to avoid the land being transferred?

I find these proposals depressing, because I do not think that they will achieve the promise, set out in the Agriculture Act, to broaden land ownership and bring a new generation of environmentally focused farmers into the sector. It feels like the proposals are rushed and flawed. I am sorry to have asked a number of questions here, but I think it is important for the future of the farming community and of our environmental land that we have a substantial reassurance that our concerns are misplaced and the right outcomes will be achieved. If the Minister is not able to do so today, I hope he will feel able to write with more detail about how the retirement scheme in particular can breathe new life into the sector.

[Lord Goldsmith of Richmond Park (Con)]

I thank all noble Lords who have contributed to the debate. I will do my best to answer the many questions that have been put to me without exceeding my time slot.

The noble Baroness, Lady Bakewell, asked a number of questions in relation to the reduction of direct payments. We do not plan to consult further on the reductions, but the Government have published an evidence paper, updated in September 2019, setting out the expected impacts of removing those direct payments, and that included an analysis by sector, location and type of land tenure. It provided an analysis of how farm businesses across all sectors can offset the impact of reductions in direct payments. An update to that analysis was due to be published shortly, and it has been delayed—only slightly, I hope—in light of what is happening in Ukraine and the impact this will have on farm business incomes; that point was made by a number of noble Lords. We are reviewing this to ensure that the analysis remains fit for purpose.

All funding released from reductions in direct payments in England is being reinvested into delivering other schemes for farmers and land managers in this Parliament. I hope that is some reassurance to the noble Baroness, Lady Jones, as well.

The noble Baroness raised other issues about reductions to direct payments. A small number of farmers leave the industry each year; that has been the case for some years now. They do so for a whole variety of reasons. According to the data we have from the Rural Payments Agency, in 2020 around 1,000 basic payment scheme claimants in England can be assumed to have exited the industry. It is too soon to produce equivalent data following the 2021 scheme year, but for the basic payment scheme 2021, the reductions for most farmers were modest. Around 80% of claimants would have received a reduction of around 5%, which is within the scope of the year-to-year variance experienced historically in any case due to currency fluctuations.

On the impact on the internal market from phasing out direct payments, these payments are largely decoupled from production and therefore they should not be trade distorting. Within the UK, there are already significant differences in the implementation of direct payment schemes, and while direct payments currently form an important contribution to farm income, as the noble Duke, the Duke of Wellington, said, in many cases it is critical—the reason they are still in business. They can nevertheless hamper productivity growth in the agriculture sector and drive up land rental prices. Removing them should raise our agriculture sector’s productivity across the board, leaving our farmers in a better position to compete.

The noble Baroness, Lady Jones, also asked what tests would have to be met before the Government agreed to deviate from the rollout of the basic payment cuts. Defra regularly gathers and publishes statistical data on the current state of the industry; for example, the results from the 2021-22 Farm Business Survey, which will cover the first year of progressive reductions, will be published this autumn. Data is also gathered through bodies such as the Animal and Plant Health Agency and the Rural Payments Agency, and that includes information on various aspects of the sector, such as the impact of reductions in direct payments. That allows the Government to monitor the sector and to make better decisions on the future of farming.

The Government are committed to phasing out untargeted direct payments. We do not believe that they are the best way to support farmers, as I tried to explain in my introductory remarks. The noble Baroness also asked about the savings being made from the first year of the basic payment reductions. For 2021, approximately £178 million was freed by reductions to the payments. This is being redirected into delivering other schemes for farmers.

The noble Baroness, Lady Jones, also asked for reassurance, as I think did my noble friend Lady McIntosh, that none of the allocated money from direct payment reductions has been reclaimed by the Treasury. All the funding released from reductions in the direct payments is being reinvested into delivering other schemes for farmers and land managers during this Parliament; it is not being hoarded for long-term future use. That amounts to an average of £2.4 billion a year over the period 2021-22 to 2024-25.

We have been clear all along that we will spend money where it delivers for the environment, alongside food production, and we need to support changes across the entire farm landscape to deliver those broad and connected ambitions. That is why we have increased the countryside stewardship payments by an average of 30% and introduced the sustainable farming incentive. Direct payments are not about food production. The decoupling of payments from food production took place around 15 years ago. Our evidence suggests that the removal of direct payments in England would have only a marginal effect, if any, on overall food production.

With regard to the Agriculture (Financial Assistance) (Amendment) Regulations 2022, a shared enforcement framework was previously established by the Agriculture (Financial Assistance) Regulations 2021, ensuring that powers of entry will be exercised, and inspections carried out consistently across the schemes. This instrument extends that framework to cover additional new financial assistance schemes and broaden the investigative powers of the Secretary of State, in a manner consistent across the different schemes. Training and guidance will also be provided to those authorised with powers of entry or to carry out inspections to ensure that these are exercised in a consistent way.

The noble Baroness, Lady Bakewell, asked about the tree health pilot scheme and the annual health and welfare reviews being exempt from publication requirements; she wanted to know why that was the case. Specific location details and personal information identifying a land manager or landowner in relation to tree pest and disease findings will not be published. This information is considered to be sensitive and potentially damaging to the individuals or businesses concerned. It could also inhibit the reporting of future cases of pest and disease outbreaks. We will, however, publish aggregated data for these payments.

The noble Baroness, Lady Bakewell, also asked about the level of fraud in the farming community and overpayments. These regulations offer a range of enforcement measures to deal with fraud or breaches of scheme rules, including the withholding of financial assistance, recovering financial assistance previously awarded, and prohibiting a person from receiving financial assistance for up to two years. Appropriate sanctions will be available and applied where there are clear cases of misuse of public funds; for example, through neglect, serious cases of non-compliance or fraudulent behaviour. The noble Baroness asked for specific numbers but I am afraid I will have to get back to her on that because I do not have them, but the point she made, echoed by the noble Baroness, Lady Jones, will have been heard loud and clear.

The noble Baroness, Lady Bakewell, asked when the guidance will be published for each financial assistance scheme. I understand the importance of giving farmers as much time as possible to plan. Detailed guidance for stakeholders will be published in good time ahead of each scheme being launched, giving farmers support to implement the standards and understand the new rules. This guidance will be written in plain English, which will set out and explain the detailed scheme rules and requirements. Some schemes, such as countryside stewardship and landscape recovery, are already live and appropriate guidance has been published. For other schemes, guidance will be published in good time ahead of their launch. For example, for the SFI scheme, we will publish final details of the offer for 2022 and scheme information later this spring—some might say we are in spring now, so shortly—ahead of opening for applications later in the year.

Without the Agriculture (Lump Sum Payment) (England) Regulations 2022, we will not be able to meet our public commitment to offer farmers a lump sum exit scheme this year. This would limit the options we can provide farmers as direct payments are phased out; it would also limit structural change in the farming sector. We believe that the calculation of the lump sum payment is fair. Our calculation means that, for most farmers, the lump sum will be approximately equivalent to the amount they might otherwise receive in direct payments for the years 2022 to 2027, as these are phased out over the remaining years of the planned agricultural transition.

The noble Baroness, Lady Bakewell, asked about the rationale behind the stipulation to retain five acres. Well, farmers will be able to keep up to five hectares of agricultural land. This allows, for example, a farmer to keep some land around or near their farmhouse. We feel this flexibility will help with uptake of the scheme, which will create more opportunities for new entrants and expanding farmers. In relation to the question that she asked about trees, all publicly subsidised planting has to comply with the UK forestry standards. They are based on a UN-sanctioned approach to sustainable forest management. The UK forestry standards are, in effect, a live document that is being updated all the time. At the moment, the emphasis is placed heavily on the need to use public money to deliver the maximum possible public good. This means not just having monoculture conifer plantations, but ensuring we have a genuine yield in biodiversity and numerous other public benefits, such as flood management and flood prevention. As it happens, the overwhelming majority of woodland creation supported by the Nature for Climate Fund grant schemes will be native broadleaf. That can be judged by the applications coming in, even though this very new fund is in its first year.

Returning to a question put to me by the noble Baronesses, Lady Bakewell and Lady Jones, which I realise I did not answer, we think that the lump sum exit scheme will free up land for new entrants and expanding farmers. It is about providing opportunities for farmers, rather than aiming for a particular balance between those entering the sector and existing farmers who wish to expand. We recognise the importance of providing additional support for new entrants alongside that lump sum exit scheme. Attracting new talent into food and farming is vital, if we want a sustainable and productive agricultural sector.

As set out in our agricultural transition plan for 2021 to 2024, we will provide funding to create lasting opportunities for new entrants to access land, infrastructure and support to establish successful and innovative businesses. In January this year, the Secretary of State announced the development of incubator pilots for new entrants, with council farms playing a key role. The details of the pilots are currently being designed and we hope to launch the pilot scheme later this year.

The noble Baroness, Lady McIntosh made a number of comments and raised questions, some of which overlapped with points made by the noble Duke, the Duke of Wellington, particularly on small and tenant farmers. At the end of January this year, the Secretary of State announced an independent review, chaired by the noble Baroness, Lady Rock, dedicated to looking at how Defra schemes can better support the tenanted sector, as farming in England is reformed to be more sustainable. The review period is expected to be six to nine months, and it will publish its findings and recommendations later this year. I will not go into all the details on the group of experts—who has been selected and how, or who they represent—but it is a broad range and I am happy to provide that information if the noble Baroness would like me to. I could tell her now, if she asks, but I am worried about the time.

16:45

The tenancy working group, as it is called, will collect evidence and bring forward recommendations on a whole range of issues: how scheme design can facilitate the participation of and benefit to tenant farmers in the new environmental land management schemes; what policy initiatives will secure the long-term sustainability of England’s tenant farming; how best to foster positive and long-term tenant/landlord relationships; ways to minimise any potential loss of land from the tenanted sector to avoid damaging its resilience; why it might be necessary to look for new legislative or regulatory powers in the future—I shall stop there, because the list is rather long.

[Baroness McIntosh of Pickering (Con)]

I have that already. I am just slightly disappointed that the working group will not now report for nine months; it was meant to report within six months.

[Lord Goldsmith of Richmond Park (Con)]

I said six to nine months; I am afraid that is the answer I received. I shall check on the timescale, but I assume six to nine months is correct, since that is what my colleague, my noble friend Lord Benyon, has told me.

The noble Duke, the Duke of Wellington, raised a broader point beyond tenant farmers, about small farmers. He is right: small farmers are the backbone of our countryside, and any policy that results in a reduction in the diversity, breadth and viability of our small farmers is not a good one. They are critical to the future sustainability of our countryside. Farmers will be supported throughout the seven-year transition period to the new system. We are reducing direct payments, as the noble Duke said, but that will be gradually over the seven years, which will give farmers time to adapt and take advantage of the new offer. Money saved by direct payment reductions will be reinvested directly into English farming and agriculture through our new schemes. The Government are committed to providing the same cash total to the sector in each year of this Parliament. Some £10.7 million of funding has already been awarded through the interim phase of the future farming resilience fund. That provides, among other things, free business support to farmers and land managers to help them navigate the changes during the early years of the agricultural transition period.

Upland farmers have a particularly important role to play in addition to that of food production, and that is in land management. In their contribution to alleviating the threat of floods, which blight so many communities in this country, there is almost no one in a more important position than those farmers. They are absolutely in the mix when it comes to the new system that has been designed.

I turn to the questions asked by the noble Lord, Lord Carrington, and my noble friend the Duke of Montrose. My noble friend asked what proportion of the money would be spent on schemes which are not related to farming and are purely conservation. Again, I cannot give him a direct number, but there are schemes beyond the system being described today which are designed to support, for example, natural regeneration or tree planting, most of the funding for which comes from the nature for climate fund. We are talking here about a slightly different system which the nature for climate fund supports, but ultimately this is all about good land management.

The Government published a paper, which was updated in September 2019—I may have mentioned it earlier—setting out the impacts of removing the direct payments. That paper is being updated as we speak. The delay is caused by the conflict in Ukraine.

My noble friend and the noble Lord, Lord Carrington, talked also about the impact on consumer food prices. The analysis that we have made in Defra suggests that any effect of direct payments on consumer food prices is limited. However, we are doing a full impact assessment on food security up to 2024, and the results will be made available and will inform future policy design.

It is important that we continue with the transition as planned. Applying reductions to direct payments frees up money which we can use to pay farmers and land managers to encourage environmental protection and enhancement, public access to the countryside, and the safeguarding of livestock and plants. We must also provide opportunities for farmers who wish to leave farming to do so in a managed way. These instruments will allow the Government to ensure that this can be done. I hope that I have answered the key questions put to me today. I beg to move.

Motion agreed.

Agriculture (Financial Assistance) (Amendment) Regulations 2022

Monday 21st March 2022 Grand Committee

Considered in Grand Committee

16:50

Moved by

[Lord Goldsmith of Richmond Park]

That the Grand Committee do consider the Agriculture (Financial Assistance) (Amendment) Regulations 2022

Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.

Agriculture (Lump Sum Payment) (England) Regulations 2022

Monday 21st March 2022 Grand Committee

Considered in Grand Committee

16:50

Moved by

[Lord Goldsmith of Richmond Park]

That the Grand Committee do consider the Agriculture (Lump Sum Payment) (England) Regulations 2022

Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.

16:50

Sitting suspended.

Electricity Supplier Payments (Amendment) Regulations 2022

Monday 21st March 2022 Grand Committee

Considered in Grand Committee

16:52

Moved by

[Lord Callanan]

That the Grand Committee do consider the Electricity Supplier Payments (Amendment) Regulations 2022.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, this statutory instrument amends regulations concerning the levies used to fund the operational costs budgets for the Low Carbon Contracts Company and Electricity Settlements Company. The LCCC administers the contracts for difference scheme on behalf of the Government under the Energy Act 2013. Under the same Act, it is anticipated that the LCCC will also administer the dispatchable power agreement and support the development of a new scheme for bioenergy with carbon capture and storage within the next three years. The ESC administers the capacity market scheme. Those schemes will incentivise the significant investment required in our electricity infrastructure, keep costs affordable for consumers and help to deliver our net-zero strategy, while keeping our energy supply secure.

The contracts for difference—CfDs—provide long-term price stabilisation to low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. The current CfD auction, which is the fourth to date, opened in December and we are seeking to secure more capacity than all the previous auctions combined. It will allow a broad range of renewable technologies to come forward, while delivering the best deal for bill payers. To date, only projects located in Great Britain have been awarded CfDs. However, BEIS and the Department for the Economy are considering whether to extend the current GB-only CfD scheme to Northern Ireland. Funds have therefore been included in the budgets to enable the LCCC to undertake some preparatory work in case a final decision is made to enable Northern Ireland to join the scheme.

I turn to the Electricity Settlements Company—ESC. The capacity market is tried and tested and is the most cost-effective way of ensuring that we have the electricity capacity that we need now and in the future. The capacity market provides incentives in the form of guaranteed payments to eligible capacity providers to be on the system and to deliver capacity when needed by increasing generation or by turning down their electricity demand in return for guaranteed payments.

The capacity auctions held to date have secured the capacity that we need to meet the forecast peak demand out to 2025-26. The next auctions, scheduled for early 2023, will secure most of the capacity we need out to 2026-27. In the CfD and capacity market schemes, participants bid for support via a competitive auction, which ensures the costs to consumers are minimised.

The LCCC and ESC’s effective administration of the CfD and capacity market schemes to date has demonstrated their ability to deliver such schemes at least cost to consumers. It is in part for this reason that the LCCC has been working with BEIS to develop new schemes for incentivising the deployment of more low-carbon technologies. For example, the LCCC has supported BEIS in the development of dispatchable power agreements, or DPAs, under the Energy Act 2013. These agreements, which are based on CfDs, have been designed to instil confidence among investors for power carbon capture and storage projects and incentivise the availability of low-carbon, non-weather dependent dispatchable generation capacity.

The DPA will drive the private sector investment required to bring forward at least one power carbon capture and storage project by the mid-2020s. The LCCC is expected to be the counterparty for DPAs, and funds have been included within the budgets to support this role. It is anticipated that the LCCC will also work with BEIS to develop incentives for bioenergy with carbon capture and storage. Although this has not yet been confirmed, contracts for such projects could potentially be entered into following a process established under the Energy Act 2013. Were BEIS to move forward with this option, the LCCC would need to undertake activity to prepare for acting as the counterparty during the next three years. Consequently, funds have been included within the budget for this purpose.

It is of course important that the LCCC and the ESC are sufficiently funded to perform their roles effectively, given their critical role in administering the schemes that I have just outlined. However, the Government are clear that both companies must deliver value for money and, with this in mind, we have closely scrutinised their operational cost budgets to ensure they reflect the operational requirements and objectives for the companies.

Both the LCCC and the ESC are themselves very mindful of the need to deliver value for money, as their guiding principle is to maintain investor confidence in the CfD and capacity market schemes while minimising costs to consumers. They have taken a number of actions to date to reduce costs, such as bringing expertise in-house rather than relying on more expensive outside consultants. It is because of actions such as this that CfD operational costs per contract are falling, despite the growing size of the CfD portfolio. There is a similar narrative for the ESC. The company currently manages 200.8 gigawatts of capacity agreements with 1,335 capacity providers under the capacity market. For the delivery year 2022-23, this equates to 52.9 gigawatts of capacity and 350 capacity providers, an increase of 78 capacity providers compared to the 2021-22 delivery year. Despite this increase, operational costs are expected to be lower in 2022-23 than in 2021-22.

The operational cost budgets for both companies were subject to consultation, which gave stakeholders the opportunity to scrutinise and test the key assumptions in the budgets and, more importantly, to ensure that they represent value for money. The response received to the consultation noted the significant increase of budget for the LCCC but was generally supportive of the Government’s rationale for the increase. BEIS is satisfied that the operational costs budgets for the LCCC and the ESC should remain as consulted upon. Subsequently, the budgets remain unchanged as a result of the consultation. The proposed operational costs budget for the LCCC in 2022-23 is £24,210,000, in 2023-24 it is £26,978,000 and in 2024-25 it is £29,051,000. For the ESC, the proposed operational cost budget is £6,954,000 in 2022-23, £7,382,000 in 2023-24 and £7,734,000 in 2024-25.

The amendments revise the levies currently in place to enable the companies to collect enough revenue to fund these budgets. Any levy collected that is not spent will be returned to suppliers at the end of the relevant financial year in accordance with the regulations.

Subject to the will of Parliament, the settlement cost levy for the ESC is due to come into force the day after the day on which these regulations are made and the operational costs levy for the LCCC by 1 April in each of the relevant financial years.

Finally, I assure the Committee that the Government are also mindful of the uncertainties involved in setting a budget for the next three years, such as any world events that we are witnessing now which could of course impact energy demand, and in policy decisions on new schemes that have not yet been taken. Consequently, BEIS will keep the companies’ budgets under careful review throughout the budget period to ensure, as always, that the costs to consumers are minimised.

I commend these draft regulations to the Committee.

17:00

[Lord Oates (LD)]

My Lords, we on the Liberal Democrat Benches support these regulations so I will not take up too much of the Grand Committee’s time, but there are a number of questions which I hope the Minister will be able to address.

I fondly remember discussing these regulations—the previous, equivalent regulations—back on a cold afternoon last February. At that time, I asked the Minister why the review of the operation of the electricity market, which under Section 66 of the Energy Act 2013 is required after five years and so was due in 2018, had still not been completed and reported three years after it was due. The Minister said:

“We expect it to be laid in Parliament shortly.”—[Official Report, 23/2/21; col. 811.]


The Explanatory Memorandum accompanying these regulations says almost exactly the same the thing, stating that

“the findings for the review are expected to be laid in Parliament shortly.”

Can the Minister tell us what the Government’s definition of “shortly” is, and give us some reassurance that we will actually see the outcome of this review? Has it been completed? If it has, why has it not been laid yet? Had it been completed when we discussed it last year, when the Minister said it would be laid shortly? I hope that he can give us some reassurance on this matter. The reasons given were Covid and Brexit. Obviously, we understand that Covid was a big blow—although Brexit was due two years after we had voted to leave—but we really need some reassurance about when we will see the review.

I will make just a few other points. When we discussed forecasts last year, we were discussing only one year’s levy because of Covid uncertainties. The Government now say that they are confident that they can forecast electricity demand with sufficient accuracy to reinstate the multiyear format. I note that the Minister has explained how the Government expect to see demand falling, albeit modestly, over that period. I wonder whether he could say something about how the Government are factoring in all the complexities of the massive price spike, and what that might do to demand, alongside the new demands of electric vehicles and heat pumps, et cetera.

As has been noted, the operational costs are up 40% over the levy period, and that is on top of the 19% increase that we debated last year. I recognise that there has been an expansion in the CfDs that the organisation is responsible for overseeing, and we welcome it, but I hope that the relentless pressure down on costs which the Minister talked about really will be applied continuously. I wonder whether some further economies of scale can be achieved, because both these organisations, as I understand it, operate from the same address. Are there functions that could be merged to save more money?

On the subject of the expansion of CfDs, I wonder whether the Minister can tell us where we are on the CfD for hydrogen. I note that it is the number two request on the CBI’s call for measures from the Government in terms of growth—number one, incidentally, is to close the public investment gap in terms of retrofitting commercial and domestic buildings. Perhaps the Minister could tell us whether that CfD on hydrogen will be forthcoming soon.

In terms of costs on bills, the Explanatory Memorandum estimates that these will be 50p on domestic consumers’ bills and between £30 and £1,200 on business bills, depending on their electricity usage. Obviously, 50p may seem a small amount, but I am slightly confused because I believe that the Explanatory Memorandum for the last levy-setting regulations said that it would be increased by 40p. It seems odd that this is only 50p over the period. Clearly, although these are small amounts, they all add up. People are facing crippling bills at the moment, so it is important that we keep an eye on that and on how we can drive down costs.

Another point I want to ask the Minister about relates to page 5 of the Explanatory Memorandum—which was presumably prepared some time ago—which talks about inflation of 5% having been allowed and discusses omicron and so on. However, this was clearly before some of the price spikes happened, and obviously before the Russian invasion of Ukraine. The CBI and other commentators expect inflation to peak somewhere around 8% to 9%, and there is increasing feeling that that level of inflation may be sustained for a longer period than was initially anticipated. In his reply, can the Minister tell us whether these new inflationary pressures in the system have been taken into account? If they have not, as some of them are fairly new, can he tell us how things might be adjusted over the period of the levy?

Finally, if there is a surplus and the money is paid back to consumers, can the Minister tell us whether there is a way of ensuring that the electricity supply companies deliver that rebate back to consumers if they effectively have to pay the charges in the beginning?

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his explanation of the regulations before the House. They are essentially non-controversial and, on this lonely side of the House, we do not take issue with them. As we have heard, the regulations update the rates for the operational costs levy and settlement costs levy, which fund the operational costs of the LCCC and the Electricity Settlements Company, respectively. As these two private companies share staff and facilities, these levies are set together.

After a single year of unpredictably and reduced electricity demand during the pandemic, first, it is welcome that this process has been able to return to a three-year system, allowing stakeholders greater visibility of the estimated operational costs, as well as reducing the administrative burdens on the two companies and on us here. Given the situation, it was sensible to reduce the periodicity, and I am glad that we have returned to normal.

Both the LCCC’s contracts for difference and the Electricity Settlements Company’s capacity market are measures that encourage low-carbon electricity generation and ensure security of supply, which is a noble intention. As my colleagues in both Houses have argued whenever these issues have arisen, since these arrangements came into place in 2013, a levy system, which will be passed on to customers by the electricity firms, is possibly the most regressive way of making these arrangements. The figures involved are certainly not large, as the noble Lord, Lord Oates, said, especially when looking only at the impact on the yearly changes, as is the case with the explanatory notice, but with energy bills increasing substantially amid a wider cost-of-living crisis, it is certainly the case that every little bit helps. Has the Minister therefore given any consideration to other methods that could facilitate the costs of these arrangements not falling on the customer?

I would also like to ask some questions about the consultation that took place ahead of the laying of this regulation, both on questions coming from it and the consultation itself. The consultation ran for four weeks and received only one response, from Scottish Power. While the perspective of this large stakeholder was welcome, I am sure the Minister would agree that having a single response to any consultation is not ideal. It is no fault of Scottish Power, but there were gaps in the responses leaving questions mostly unanswered, and inherent biases from a single respondent were unavoidable. Perhaps when this is revisited in three years’ time, the Minister could consider a longer consultation for a broader spectrum of responses to be generated.

One aspect of Scottish Power’s response that I would like to pick up upon surrounds budget lines related to providing policy support to BEIS, which Scottish Power recommended be kept under review. In their response, the Government committed to returning funds allocated here to suppliers. As this is the case with any unused funds, will unallocated funds from this aspect be ring-fenced for return, and, more importantly —as the noble Lord, Lord Oates, has said—will steps be taken to ensure that this is passed on to customers, given that any adjustment to their bills will have already been enacted?

It was also pointed out that the year-on-year budget rises are not insignificant, reaching approximately 40% over the four years from this financial year to the last of the three years this regulation covers. The Government rightly say that this is not unprecedented, given that at least in the case of the Electricity Settlement Company, the Explanatory Memorandum suggests that the body has only become more efficient, but I would be grateful if the Minister could elaborate a little on where the cost increases come from.

I look forward to the Minister’s responses to these questions.

[Lord Callanan (Con)]

I thank the noble Lords, Lord Lennie and Lord Oates, for their contributions to this brief debate. The noble Lord, Lord Oates, is of course quite right to raise the issue of the publication of the five-year review, especially since I told him last year that it was going to be ready shortly—I am sure there could be a big debate on what “shortly” means in the context of government. If I may fill in a little more detail for the noble Lord, I understand that updated advice on the matter is currently with my colleague Greg Hands, the Minister for Energy, Clean Growth and Climate Change. I think he intends to publish the review in due course—I hope, shortly.

The noble Lord also, rightly, asked for an explanation of why the review is so delayed. I can certainly say that it has of course been a government priority to deliver on our commitment to open the largest ever CfD allocation round—I am sure that is something he would agree on—and it has been announced that the rounds will be running annually from March 2023. A lot of work has gone into the preparation behind that. Schemes such as CfD are vital in developing domestic sources of renewable energy to reduce our exposure to volatile global fossil fuel markets, which are of course peaking at the moment, and to protect consumers in the longer term. Delivering on those priorities has had an unfortunate knock-on impact on the publication of the review, but we will endeavour to get it out as quickly as possible.

The noble Lord also asked for an update on the hydrogen business model. Of course, it is not part of this statutory instrument, but I would be very happy to write to him separately. I can certainly confirm that we are not intending to fund hydrogen under this particular mechanism or under the Energy Act 2013, so it falls outside the scope of today’s debate.

On the noble Lord’s questions on inflation, we have used a somewhat optimistic assessment of 5% inflation for each year of the proposed budgets. That was after careful consideration of the forecasts produced by the Office for Budget Responsibility. They probably looked very sensible when it put its advice together, but it suggested that, on balance, an assumption of 5% was appropriate.

17:15

On the question from the noble Lord, Lord Oates, on returning CfD generator paybacks to consumers, the contracts for difference scheme is working exactly as it was designed to. In the current power market that means returning some money to suppliers. Generators pay back to the LCCC when the wholesale price is above the strike price originally agreed. This ensures that consumers do not pay higher CfD support costs during periods of high electricity prices, as is currently the case. As electricity prices are so high at the moment, the LCCC has stopped collecting the supplier obligation levy from suppliers, and CfD generators have instead been paying back on CfDs since quarter 4 last year. To date, this has generated net repayments of around £205 million to the LCCC and, of that, the LCCC has paid back about £40 million to suppliers. The balance on account with the LCCC will meet future liabilities towards funding contracts for difference.

The contracts for difference scheme is working well and is vital to developing domestic sources of low-carbon electricity in Great Britain, which will help to reduce exposure to potentially volatile global fossil fuel markets and, we hope, to protect consumers in the longer term. How energy suppliers ensure they meet the different costs of government policies, including the contracts for difference scheme, is a commercial decision for each supplier and will be factored into their tariff prices. Competition between suppliers and the Ofgem price cap helps to ensure that, in their totality, consumers are offered a fair deal.

The noble Lord, Lord Lennie, raised some good points on how we fund the operations of the company. The costs of decarbonisation should be shared fairly among consumers. Levying costs to support the deployment of clean electricity in this way enables electricity consumers to pay towards the costs associated with increasing the proportion of renewable electricity supply from which they will ultimately benefit. The CfD scheme was designed to deliver value for money for consumers and it is doing so, with costs falling at every auction held to date. The CfD has now entered a new phase, in which renewable projects could reduce consumer bills as, at the moment, they are much cheaper than alternative forms of generation. It remains the case that the LCCC must be adequately funded if it is to perform its vital role to deliver the CfD effectively.

I note the point that the noble Lord raised on the number of responses we received to the consultation. Clearly one response is not ideal, but we have never received more than five responses to any of these increases in the past. Given other pressures on suppliers’ time at the moment, and the other competitive pressures that they are under, it is perhaps not surprising that only one responded to this year’s consultation, but I can inform the noble Lord that it was widely disseminated both on the department’s and on the LCCC’s website.

The noble Lord, Lord Lennie, also asked if merging the companies would result in cost savings. The ESC has no staff of its own, as the LCCC staff performs its functions. They are both based in the same premises and the costs are re-charged. I hope that, as a result, the noble Lord accepts that merging the companies is unlikely to result in significant cost savings.

As I set out in my opening speech, the companies and the Government have taken a number of steps to ensure that the proposed operational cost budgets allow the companies to perform the crucial roles that they carry out effectively, while representing value for money for consumers. I hope the Committee will accept that those twin aims will be achieved if these draft regulations are approved.

In response to points made by the noble Lord, Lord Oates, I will not pretend that the increase in the LCCC’s budget is not significant. It clearly is, but I believe that the increase is justifiable, based on the increasing workload that it will have. Let me set that out for the benefit of the Committee.

The increase in its budget reflects a number of factors, in particular the company’s important role in helping to meet our legally binding net-zero targets and the requirements of the Net Zero Strategy, while minimising costs for consumers. The CfD scheme has proven that it can deliver large-scale low-carbon generation while driving down costs. I know that the noble Lord, Lord Oates, will be familiar with this, but the cost of offshore wind, for example, has fallen by two-thirds between the CfD auction held in 2015 and the third auction—the most recent—held in 2019. The proposed budget will allow the LCCC to play its part in delivering further CfD auctions more regularly, which will help to bring forward more low-carbon electricity and push down the technology costs associated with that in doing so. That will of course bring us closer to meeting our net-zero target.

I can tell the noble Lord that funds have also been included within the budgets to enable the LCCC to support dispatchable power agreements, which will incentivise power carbon capture and storage projects, and a potential new scheme for bioenergy with carbon capture and storage projects. We believe that such projects could well help us to meet our net-zero goals and the requirements of the Net Zero Strategy.

It is also fair to point out that the company is facing a number of costs beyond its control over the budget period, chief of which is the increased uncertainty resulting from world events. This has pushed up many of its costs in a number of areas; for example, insurance premiums for the companies are expected to increase and, as the noble Lord pointed out, assumptions for inflation have also increased. It is important to consider that the budgets also include two contingencies, one focused on electricity demand and the other on legal disputes. I hope these may not be needed if a legal dispute does not arise or if demand is within forecast. If that is the case, the funds raised from the levy to cover these costs will be returned to electricity suppliers. I think that also answers the point made by the noble Lord, Lord Lennie.

Noble Lords have also touched on what this budget increase means for electricity consumers. This is a critical point and I agree with both of them that we must scrutinise every penny that goes on to consumer bills. However, I believe that in this case there has been sufficient scrutiny, with a lot of discussion between my department and the companies. Therefore, given the important role that both companies play in our electricity system, a bill impact which equates to less than 0.1% for the average consumer is proportionate and justifiable overall.

I reiterate one final point to the noble Lord, Lord Lennie. Any unspent levy funds will be returned to electricity suppliers at the end of the financial year, in accordance with the regulations. Indeed, this has been the pattern to date: for example, at the end of 2020-21, the LCCC returned £1.5 million to suppliers and the ESC returned £576,000.

With the explanations that I have provided, I hope the Committee will agree with this statutory instrument. I commend these draft regulations to the Committee.

Motion agreed.

Food and Feed Safety (Miscellaneous Amendments and Transitional Provisions) Regulations 2022

Monday 21st March 2022 Grand Committee

Considered in Grand Committee

17:25

Moved by

[Lord Kamall]

That the Grand Committee do consider the Food and Feed Safety (Miscellaneous Amendments and Transitional Provisions) Regulations 2022.

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Kamall) (Con)]

My Lords, the Government’s priority is, as always, to ensure that the high standard of food safety and consumer protection that we enjoy in this country continues to be maintained now that the UK has left the European Union. This instrument follows the 18 EU exit instruments in the field of food and feed safety made during 2019 and 2020. It addresses two deficiencies identified in retained EU law, and provides transitional arrangements for labelling changes introduced as a result of EU exit. Since the instrument is technical in nature, I hope noble Lords will allow me to briefly summarise the changes we are making.

The instrument serves three key functions. First, it will ensure that emergency powers can be applied equally to all food and feed entering Great Britain. Retained EU Regulation 178/2002, on the general principles of food law, provides Ministers with emergency powers to suspend or restrict the placing of food or feed on the market. This can be used where food or feed presents a threat to human health. Legal analysis of Article 53 of that regulation identified that, as worded, it is not possible for a Minister to exercise those emergency powers on third-country food and feed entering Great Britain via Northern Ireland. To correct this operability issue, this proposed regulation includes a technical amendment that will enable all Ministers to apply, equally, the same emergency controls to all food and feed destined for our market. The amendment does not extend the remit or gravity of the controls that may be introduced, but will ensure that emergency controls are exercisable equally across all parts of the UK.

Secondly, the statutory instrument ensures that authorising provisions for feed additives and for GM food and feed authorisations will be made by legislation. Legal analysis of fixed and retained EU law identified that retained law on feed additives and on GM food and feed contained certain omissions. The regulations did not sufficiently make it clear that Ministers’ authorisation decisions will be prescribed in legislation. While this does not prevent Ministers from taking decisions to authorise these products, provision for those decisions to be implemented through legislation makes certain their enforceability in law. It also ensures consistency with other retained EU law in this area.

Thirdly and finally, the amendment provides a period of adjustment for changes to labelling requirements made necessary by EU exit legislation. In preparation for EU exit, changes were made to the legislation on extraction solvents and quick-frozen foods to reflect the fact that the UK would no longer be part of the EU. As a result, relevant food placed on the market is required to be labelled with the name and UK address of the legal person responsible for it, rather than an EU contact and address. This statutory instrument provides a period of adjustment in those sectors, allowing for the continued use of existing labels until 30 September 2022.

I should be clear that this instrument does not introduce any changes that will impact the day-to-day operation of food businesses, nor any new regulatory burden. The essence of the legislation is unchanged. However, it provides benefit for certain businesses by enabling a period of grace in the introduction of labelling changes.

It is also important to note that we have engaged positively with the devolved Administrations throughout the development of the instrument. I take this opportunity to note that their ongoing engagement has been warmly welcomed.

I reassure noble Lords that the overarching aim of this regulation is to provide continuity for businesses and to ensure that high standards of safety and quality for food and feed regulation will continue across the UK. The changes do not affect the essence of existing legislation. Having effective and functional law in this area is key to ensuring the high standards of food safety and consumer protection that we enjoy in this country and to make sure that they are maintained in the immediate and long term. I hope that noble Lords will feel able to support the amendments proposed in this instrument to ensure the continuation of effective food and feed safety and public health controls.

17:30

[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

My Lords, the noble Baroness, Lady Brinton, is taking part remotely. She is speaking as the Liberal Democrat Front-Bencher but, as there are no Back-Benchers to speak, I invite her to speak.

[Baroness Brinton (LD) [V]]

My Lords, I thank the Minister for his introduction to the Food and Feed Safety (Miscellaneous Amendments and Transitional Provisions) Regulations 2022, which propose three very differing amendments to existing food safety measures. He was right to start by saying that ensuring the highest levels of food safety is absolutely vital.

The Joint Committee on Statutory Instruments has pointed out that the second and third regulations come into force on the day after the day on which these amendments are made, so once again they breach the 21-day rule. It is such a shame that SIs and regulations seem always to be dealt with as emergency items, because this reduces the time available for Parliament to effectively scrutinise legislation.

The first amendment is to Article 53 of the retained general food law, to manage a problem that has arisen as a result of the Northern Ireland protocol. I note that the Explanatory Memorandum calls it a “deficiency”. It might perhaps be more honest to call it a problem of the Northern Ireland protocol and the practical effect it has had on border issues for those living in Northern Ireland—how they have to juggle the tensions of a border in the Irish Sea when third-party goods come into Great Britain via Northern Ireland and where a serious risk to human health has been identified with those goods.

It is right that the UK Government must correct regulations that are not fit for purpose, and we note that these amendments to Article 53 do not change the purpose or function of the original provision but there is now full protection for such emergency measures, regardless of where the goods have come from.

The second amendment relates to the authorisation of provisions for feed additives and for GM food and feed, which will now be through legislation, bringing them into line with other retained EU food and feed law. That is particularly welcome. There is a lot of suspicion about GM food and feed, and it is important that there is a vehicle through which it can be scrutinised carefully. Parliament is the right place for that to take place.

The third and final change is a sensible step to ensure that businesses have a slightly longer period to move from EU to UK labelling requirements, until 30 September this year. For some time, food businesses have been asking for a longer period, as well as for labelling requirements to be as close as possible to the EU requirements. The latter is not covered by this SI, but I hope that the Minister will continue to listen to UK food businesses which want to continue to sell into the EU and which must also abide by the EU labelling requirements. I thank the Government for the extension to the period during which the EU ones can be used.

The SI brings us back to the wider issues of the Northern Ireland protocol. That is obviously not on the agenda for today, but I want to say that, from these Benches, we always warned that there would be problems for goods travelling into Great Britain via Northern Ireland and for businesses there, which continue to express real concerns about the UK’s decisions and legislation between 2018 and 2020. Whether one agrees with them or not, it is good that these three corrections and amendments will at least sort out some of those minor problems.

[Baroness Merron (Lab)]

My Lords, I am grateful to the Minister for setting out the rationale behind this eminently sensible statutory instrument, which deals with a number of significant technical issues relating to the Food Standards Agency, some of which have come about because of the Northern Ireland protocol. They need to be resolved, and from these Benches we are of course happy to support this statutory instrument.

I add that the Explanatory Memorandum is very helpful in outlining the approach that the FSA is taking. I will just pick up on a few points. First, paragraph 7.7 refers to

“An analysis of the emergency powers for”


food and feed control, which revealed that these powers could not be deployed as effectively as required. I am interested in exploring the context. It would be helpful if the Minister could advise on whether this analysis was through a hypothetical desk-based exercise, or whether the situations referred to actually occurred. For example, did goods identified as presenting a serious threat to human health enter Great Britain through Northern Ireland or did that not happen in reality?

I welcome the clarification that the GM and feed additive authorisations will be dealt with through an SI. It would be helpful if the Minister could confirm whether this will be through the negative or affirmative approach. Also, are there any implications for the Government’s longer-term strategy for GM products, given the recent statutory instrument that changed some of the rules on research and gene-edited crops?

On the issue of labelling, it would also be helpful if the Minister could comment a bit on whether he feels that the date in place is the right one. I say that because the food production sector finds itself under pressure, of course, and we want to ensure that this is a practical step.

Throughout the consultation, the National Farmers’ Union has sought clarification on the UK’s relationship with the European Food Safety Authority. The NFU has stressed the importance of the UK’s close collaboration with the EFSA on equal terms. Can the Minister comment on the Government’s intentions for their relationship with the EFSA in the context of this statutory instrument, given its importance to our food industry? I would be most grateful.

I have a final point to raise. With regard to the consultations, one observation by the sector was about the expectation that these changes to the regulations could be read through in under an hour, such that businesses, regulatory agencies and councils would be able to work out in that short period how to apply the changes to their organisations. I know that this was regarded as somewhat overoptimistic, but has any further thought been given to an assessment of just how easy it will be to work with these regulations? With those comments, I offer our support for these regulations and thank the Minister in advance for the reply that I know he will give.

[Lord Kamall (Con)]

My Lords, I thank both noble Baronesses for their contributions and for their general positive response. Once again, I can only apologise for the fact that that some provisions are late. That is an issue that I constantly raise internally and I understand the criticisms.

I will try to address as many of the questions asked by the noble Baronesses as I can before I conclude. On the Northern Ireland protocol, one thing we are looking at is the United Kingdom Internal Market Act and its purpose of promoting the functioning of the internal market, given that we have the Northern Ireland protocol. The Act specifically serves to strengthen and maintain Northern Ireland’s position in the UK internal market. In terms of the bigger picture and how the Northern Ireland protocol works in future, we are hoping that will be done via the UK internal market Act, taking account of that protocol.

The SI makes provision for a specific transitional period to allow the industry to use up existing labelling stocks. A period of 12 to 24 months is indicated as being sufficient time to use up labelling stocks; some quick-frozen produce can also have a shelf life of up to two years. However, if there are still concerns from industry, no doubt we will look at them. We are in constant conversation with industry and a whole range of sectors related to health and other issues.

I hope that covers some of the questions that the noble Baroness, Lady Brinton, asked. Once again, if I have not answered all the questions, we will check Hansard and make sure that we sweep up any answers to both noble Baronesses.

The noble Baroness, Lady Merron, asked how the issue was identified. It is hypothetical; nothing has happened, there was no breach of standards. The procedure will be a negative procedure for authorisations. We have had the first group of applications for authorisations, which have progressed through the risk analysis process, and advice has been prepared for Ministers. This amendment is required to empower Ministers to prescribe the authorisation by regulation.

The wider question of the future of GM and gene editing is not considered by this SI, and really it is a matter for the Secretary of State for Environment, Food and Rural Affairs. Of course, if the noble Baronesses want more information, I am very happy to contact that department. For now, the commercial cultivation of gene-edited plants and any food products derived from them will still need to be authorised in accordance with existing GMO rules.

The UK has developed an enhanced risk analysis process, through the FSA, and we will seek close co-ordination with the EFSA. It does not mean we will always align, but it is really important to make sure that we have a strong relationship. Quite often, clearly, the issue of food safety is something that is shared by a number of jurisdictions, not just the UK and the EU, but in fact globally. So we will be looking at that.

In closing, I am grateful for the noble Baronesses’ contributions today. As I have said, if I have not answered questions, I hope, after a quick read of Hansard, I will try to sweep them up. I grateful to the noble Baronesses for their support. We want to make sure that there is a smooth transition for certain businesses in adjusting to the new labelling requirements. I take on board the comments made and I beg to move.

Motion agreed.

Commissioner for Patient Safety (Appointment and Operation) (England) Regulations 2022

Monday 21st March 2022 Grand Committee

Considered in Grand Committee

17:42

Moved by

[Lord Kamall]

That the Grand Committee do consider the Commissioner for Patient Safety (Appointment and Operation) (England) Regulations 2022.

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Kamall) (Con)]

My Lords, patient safety remains a top priority for the Government, and we continue to place enormous emphasis on making our NHS safer and as safe as possible for patients. This builds on earlier measures including, for example, the first ever patient safety strategy launched by NHS England in 2019. This aims to improve the way the NHS learns from avoidable harm and to create a safety and learning culture across the NHS. However, we know that more work needs to be done.

The First Do No Harm report by my noble friend Lady Cumberlege highlighted and effectively exposed a healthcare system that failed to listen to and disregarded the experiences of women. In my noble friend’s absence, I pay tribute to her for the work and to the review team for their diligence and dedication in conducting the review. I should put on record that my noble friend Lady Cumberlege cannot be with us today but did send her apologies.

The Government published their formal response to the Independent Medicines and Medical Devices Safety Review’s recommendations in July last year, setting out an ambitious programme of change. This included accepting the recommendation to appoint a patient safety commissioner with a remit covering medicines and medical devices. We are making progress towards fulfilling this important commitment. We included provisions in the Medicines and Medical Devices Act 2021 to establish the commissioner and set out their core duties. We also held a public consultation between June and August last year on the detail of the commissioner’s appointment and operation. In January, we started the process to recruit the very first patient safety commissioner. The job advert closed on 1 February and we hope to make an appointment this spring.

As well as establishing the patient safety commissioner, the Medicines and Medical Devices Act allows the Government to make legislative provisions about the appointment and operation of the role. Our public consultation set out nine proposals, covering details such as term of office, reappointment arrangements and remuneration. We are grateful to all those who took the time to engage with our proposals and share their views.

I can inform noble Lords that each proposal was supported by more than half of those who responded, ranging from 59% to 91% of respondents being in agreement. Having considered all the responses carefully, we have laid before the House this statutory instrument that will implement the proposals put forward in our consultation. This instrument will enable the patient safety commissioner to function effectively by providing a clear legislative framework within which they can operate. It allows for the commissioner to serve an initial term of three years. This received strong support during our public consultation, and we believe it provides sufficient time for the postholder to become established and develop the role.

17:45

I am aware that some respondents were concerned that this would provide too short a period for the commissioner to establish himself. I should stress, however, that the regulations also allow for the commissioner to be reappointed for an additional three years, in effect giving them up to six years in office. We believe that this provides the right balance between those who were concerned that a longer initial term would make it difficult to remove an ineffective commissioner, and those who were concerned about the premature removal of an effective commissioner.

The regulations also set out a range of other details about the role of the patient safety commissioner, including producing a business plan covering a period of at least 12 months; receiving the commission’s funding from the Government; keeping proper accounts each financial year; remuneration; publishing and laying in Parliament an annual report; and allowing staff to exercise any of the commissioner’s functions so far as they have been authorised to do so by the commissioner. The regulations also require the commissioner to appoint an advisory panel to provide advice and assistance to the commissioner.

The Government believe that we need to have a more patient-focused system of healthcare. The patient safety commissioner will play a vital role in promoting the safety of patients in relation to medicines and medical devices. We believe that these regulations provide appropriate arrangements to enable the commissioner to function and operate effectively once appointed. I beg to move.

[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

My Lords, the noble Baroness, Lady Brinton, is taking part remotely. She speaks as the Front-Bench Liberal Democrat spokesman but as there are no Back-Benchers, I invite her to speak.

[Baroness Brinton (LD) [V]]

My Lords, I thank the Minister for his introduction. He will know that across the House there have been considerable discussions, not just in recent months but recent years, on the role of the commissioner for patient safety in various Questions, debates and Statements since the First Do No Harm report of the noble Baroness, Lady Cumberlege, was published in 2020. I join the Minister in paying tribute to her, not just for her report but for her absolute persistence in holding the Government to account to deliver as many of her recommendations as possible. I too am sorry that she cannot be with us today but I know that she is pleased that this SI has been published.

This SI specifically covers the appointment of the commissioner but, once again, government actions are happening before Parliament has had a chance to scrutinise this SI. This SI sets up the role of commissioner, but the Minister has just told us that not only is the advert out, but it is closed and an imminent announcement is due. I do not think that there is anyone who does not want the commissioner to be put in place, but once again, this seems to be putting the cart before the horse in that the SI is being dealt with after the advertisement has gone out.

However, for the first time there will be an independent commissioner whose role is to stand up for the rights of patients when they have suffered avoidable harm. The three main parts of the report of the noble Baroness, Lady Cumberlege, covered HPTs, sodium valproate and vaginal mesh but there are other issues as well, and unfortunately there will be more in the future. That is why the Minister is right to say that the creation of a learning and safety culture is absolutely vital, as is an environment in which people working inside the NHS and other organisations associated with delivering medicines and medical devices can speak without fear. That is why some of us had concerns over the initial period of appointment. While the possibility of a second term is welcome, the concerns related to that first period of setting up the commission. This is not just somebody who will walk into the job and everything will be ready to go. The difficulty is that, having established themselves in the post, they will then have to gain the confidence of everybody who they might be investigating, which can take a while. It will be quite difficult to judge whether it is appropriate to appoint them for a second term if they have had probably only about 18 months when they have been able to do the job properly.

[Baroness Thornton (Lab)]

My Lords, the first thing I did when preparing for this debate was to ask the noble Baroness, Lady Cumberlege, if she was content—of course I did. Since her shocking and moving report First Do No Harm, mentioned by the Minister and the noble Baroness, Lady Brinton, and during the passage of the Medicines and Medical Devices Act, there has been active cross-party support for the recommendations in that report and a determination in this House to bring about change. This SI is another step along that path.

As one would expect, the noble Baroness, Lady Cumberlege, is involved in the appointment—and will, I suspect, be involved in the work—of the new commissioner. I join the noble Baroness, Lady Brinton, in asking why we are discussing this SI when action has already been taken. The reason this SI and the commissioner’s job are important is that when people, often at their most vulnerable, put their trust in the hands of healthcare professionals they do so in the expectation, quite rightly, that their safety will be of paramount concern. Sadly, that is sometimes not the case. Even worse, sometimes the patient is not heard. Where those incidents have taken place, patients have been made to jump through hoop after hoop in their fight for recognition and voice. The independent patient safety commissioner will take steps to ensure that patient safety is a top priority and will act as a voice for patients.

There is no question that the noble Baroness’s report was a landmark in the fight to improve patient safety, so I praise her but also honourable and noble Members of both Houses for their work, whether on sodium valproate, Primodos or surgical mesh, who have stood up for the thousands who have suffered because patient safety was not taken seriously enough. My honourable friend Sharon Hodgson MP, for example, was at the forefront of championing these women.

Despite this, there remain several outstanding ways in which this Government could further improve patient safety. I welcome that, in this instance, the Government have taken on board the recommendation to provide an independent patient safety commissioner, but I would like to know from the Minister what progress has been made on the remaining recommendations in the review. I think all are agreed that that full package of reforms is essential.

I would also like the Minister to explain why the tenure is only three rather than five years. I realise that it is allowed to roll over for another term but, when you are setting up a new office with a new role and getting an organisation up and running, three years is too short a time. The Children’s Commissioner has five years. I would be grateful if the Minister could outline how and why that decision was taken.

We welcome the obligation on the commissioner to lay an annual report before each House of Parliament. There is an additional obligation for the commissioner to publish a business plan at the start of each year, which is not mentioned in the SI. What is the point of the commissioner providing a business plan if they are not held accountable for its contents?

Finally, I draw the attention of the Committee to the advisory panel that

“must consist of persons who (taken together) represent a broad range of interests which are relevant to the Commissioner’s functions.”

Will that include the patient voice? Will patients have representation on this board?

Of course, this SI has our support and we welcome it, but the Government should see it as a beginning, not an end.

[Lord Kamall (Con)]

I am grateful to the noble Baronesses who spoke today. Once again, I would like to echo their gratitude to my noble friend Lady Cumberlege, but I also agree with the noble Baroness, Lady Thornton, that a number of politicians in both places across parties raised a number of these issues. We have read some horrifying stories about some of the victims of the three issues that were raised. They are really heartbreaking in many ways.

My Lords, we are determined to deliver meaningful change in our response to the Independent Medicines and Medical Devices Safety Review. We see the safety commissioner playing a key role in that change. I know there are concerns about the three-year and three-year-plus extension. When I was asking questions, right at the beginning of my awareness of this when I first became a Minister, I was told that three years is standard for a number of offices. So I was interested to hear the noble Baroness, Lady Thornton, talk about the term of the Children’s Commissioner being five years. The initial advice I was given was that three years is standard. There were also some concerns from other quarters about what happens if we appoint an ineffective commissioner; do we then have to wait five years to get rid of them? We think three years is the right balance, but it continues to be a subject of debate and I completely understand that.

I also take on board the point made by the noble Baroness, Lady Brinton, that it is not only about women who have had mesh complications or valproate or the other issue; there will be other issues we come across, but this was set up as a result of the Independent Medicines and Medical Devices Safety Review. We completely agree that patient safety must remain a top priority and we hope that this will not be the only way to improve safety. There is a statutory duty of candour, regulated by the CQC, which requires a trust to tell patients if their safety has been compromised and to apologise. There are protections for whistleblowers and “freedom to speak up” guardians; provisions in the Bill to establish, as the noble Baroness will be aware, the Health Services Safety Investigations Body; the implementation of the first-ever NHS patient safety strategy in 2019 with substantial programmes under way to create safety and learning; the implementation of medical examiners across the NHS as a critical reform, so that all deaths not involving a coroner are scrutinised by an independent medical practitioner; and of course legislation for the patient safety commissioner.

I am also in conversations directly with my noble friend Lady Cumberlege who, quite rightly, keeps pressing the department on the issues of valproate, vaginal mesh and the other issue, where we need some form of redress. I have mentioned to my noble friend where the concerns are and that, if we continue those conversations, I hope to close that gap as much as I can. I make no promises, but I hope noble Lords recognise that I do try to close the gap whenever I can, and I am in constant conversation with my noble friend Lady Cumberlege on that.

On top of this, we hope the patient safety commissioner will play a key role in that change, championing the view of patients in relation to medicines and medical devices. It is not particularly party political; this is important across the House. When the NHS performs brilliantly, of course it should be praised, but when things go wrong, we should find out. That then clearly makes it a patient-centred NHS, but it also means we can learn to make sure we have a better health service in the future. These things should not be swept under the carpet.

We hope the regulations before us will help us support the success of this new role, providing a sensible and clear legal framework within which to operate. In case I have not answered any of the questions, I will read Hansard and try to sweep them up and write to the noble Baronesses. Before that, I commend these regulations to the Committee.

Motion agreed.

Committee adjourned at 5.58 pm.