Draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019
Draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019
Draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019
Draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019
(Limited Text - Ministerial Extracts only)
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The Minister for Agriculture, Fisheries and Food (Mr Robert Goodwill)
I beg to move,
That the Committee has considered the draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019.
The Chair
With this it will be convenient to discuss the draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019, the draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 and the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019.
Mr Goodwill
We are all keen to get on today, are we not? I welcome a star-studded cast of Members on both sides of the Committee, especially my immediate predecessor, my hon. Friend the Member for Camborne and Redruth. For any particularly difficult questions that I cannot answer, and my officials cannot enlighten me on, I am sure that we can rely on him.
As a farmer myself, and given the family business’s participation in an agri-environment scheme, I mention my entry in the Register of Members’ Financial Interests.
The matters in the four draft statutory instruments are closely related, and I thank the Committee for taking the logical and sensible step of considering all four together. With a number of small exceptions, which I will explain shortly, the regulations will make purely technical amendments. The amendments are necessary to address European laws being brought on to the UK statute books in a partially inoperable form and to enable the common agricultural policy and the Agriculture and Horticulture Development Board legislation to continue to function as it does today.
The instruments are not solely required in a no-deal scenario and, in the event of an agreement, they will ensure that the current legislation remains operable at the end of any implementation period. The statutory instruments will ensure that the UK Government are able to meet their commitments to funding in the agricultural sector. The Government have pledged to continue to commit the same cash total in funds for farm support until the end of this Parliament, which is expected in 2022, and that includes all funding provided for farm support under both pillar one and pillar two of the current CAP. That commitment applies to the whole of the United Kingdom.
The UK Government have guaranteed that the existing level of agricultural funding under CAP pillar one will be upheld until 2020 as part of the transition to new domestic arrangements. The UK Government have also guaranteed that any rural development projects for which funding has been agreed before the end of 2020 will be funded for their full lifetime.
As the Committee is well aware, agriculture and fisheries are devolved policy areas, and are of special importance for all parts of the UK. We have worked closely with the devolved Administrations to produce the draft instruments, and they place great importance on them. They have given their consent to the instruments.
I will outline the three CAP draft statutory instruments in turn. They will enable regulations to continue to operate effectively. They do not introduce new policy, and they preserve the regime for supporting CAP beneficiaries. Amendments in the instruments include omitting redundant references to the “European Commission” and “member states”, and amending references to “Union law” throughout, so that the retained European Union regulations continue to operate effectively as part of national law.
One purpose of the modifications is to ensure continuity and clarity as to who is responsible for the implementation and administration of the CAP schemes. The obligations and discretions currently placed on member states will continue to be exercised after exit by relevant authorities in the United Kingdom. In that context, a “relevant authority” is the Secretary of State, Scottish Ministers, Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.
The draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019 amend five different EU regulations that give the European Commission powers to change existing legislation relating to the financing, managing and monitoring of the CAP, direct payments, the rural development programmes and the fisheries programme funded by the EMFF, the European maritime and fisheries fund. The five regulations work together to provide the necessary powers to ensure the smooth functioning of the CAP and EMFF-funded fisheries schemes in the light of economic, scientific and environmental changes. For example, the Commission is currently empowered to make legislation adding to a list of practices equivalent to crop diversification in the light of developments in the sector. The regulations also provide powers to, for instance, update the model used to estimate the net revenue of an EMFF or rural development project if a more accurate model becomes available.
As its title suggests, the instrument makes amendments to confer existing legislative powers on the appropriate authorities, which as I have mentioned are either the Secretary of State or the relevant Administration of each constituent nation. The amendments largely consist of replacing references to “the Commission” with “the appropriate authority” or “the Secretary of State.” The instrument also contains operability changes relating to the EU financial discipline mechanism. That mechanism ensures that the pillar one budget, which is the budget for direct payments and agricultural market measures, is not exceeded. It works by reducing the value of direct payments if forecast expenditure on pillar one exceeds a predetermined budget.
The SI makes changes to prevent the financial discipline mechanism becoming inoperable. As agriculture is devolved, the Administrations have each assessed what amendment is appropriate to remedy that inoperability. Devolved Administrations have chosen to omit the financial discipline mechanism, whereas England has chosen to use the powers contained in the European Union (Withdrawal) Act 2018 to make financial discipline operable on an England-only basis. For England, operability amendments are made to financial discipline provisions, to ensure that the mechanism is compatible with existing EU domestic funding practices. That does not constitute a new policy, as that mechanism currently applies in the EU.
The draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 amend the retained EU law that sets out the overarching framework for how the CAP schemes function, governing the financing, managing and monitoring arrangements that underpin schemes. They remove the EU audit and accounting regimes, which would clearly no longer be appropriate for Exchequer-funded payments. Those regimes will be replaced by the domestic system that currently operates in parallel to the EU system, to provide equivalent assurances to our Parliament. Under that domestic system, current levels of checks and scrutiny regarding CAP payments will be retained.
The draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 make technical amendments to the supplementary regulations, which set out detail about the financing, management and monitoring arrangements for the CAP schemes. This instrument ensures the operability of five different pieces of EU law, making sure that the management and monitoring aspects of the retained EU legislation maintain current standards after exit. That includes setting out further detail about how checks to beneficiaries should be carried out, and how penalties should be applied to those found to be in breach of the legislation. The instrument also pertains to five other pieces of retained EU law. Four of those are implicitly tied to EU audit and accounting systems, which as I say will be replaced with the existing domestic equivalent. The final revoked piece of EU law relates to the EU policy monitoring system, which again will be replaced by our existing domestic policy evaluation process.
Finally, the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019 make operability amendments to domestic regulations made under the European Communities Act 1972, and implement certain provisions of the EU common agricultural policy. I draw the Committee’s attention to the fact that we re-laid the explanatory memorandum for this instrument on Thursday last.
In the memorandum that was withdrawn, paragraph 4 —which deals with the instrument’s extent and territorial application—stated that the amendments to the Agriculture and Horticulture Development Board Order 2008 apply to the UK. In fact, although parts of that order apply to the UK, the amendments proposed in relation to horticulture in this instrument apply to Great Britain, and those that relate to the red meat levy apply to England only. That reflects the territorial coverage that the levy body, the AHDB, has for specific sectors, which is now presented correctly in the explanatory memorandum. That correction has no impact, other than to align that memorandum with the instrument we are debating. I apologise for any inconvenience it has caused, although I am sure that most Members present had spotted that issue when preparing for today’s Committee.
As well as operability changes to domestic regulations under the European Communities Act 1972, the SI also amends one order concerning the Agriculture and Horticulture Development Board to address two operability issues arising from the United Kingdom leaving the European Union. In one case, that has required us to make a small policy change. Currently, a minor levy exemption applies to livestock imported from another member state and slaughtered in England within two or three months of being imported. For continuity, we retain the exemption. To ensure that we are then in line with World Trade Organisation rules and are not favouring the EU, we are extending the exemption to cover any such livestock imported from the rest of the world. We expect that minor policy change to have little or no impact on the ground, given the very low levels of live imports from beyond the EU. Indeed, officials were hard-pressed to give me an example. One that came to my mind was a stock bull imported for breeding purposes that became infertile or injured and was then slaughtered here in the UK.
An alternative would have been to scrap the exemption altogether, but in the interests of continuity, we have left the situation changed. When we have left the EU, a UK Government could of course reverse the decision, taking advantage of the freedom people opted for in the referendum. DEFRA and the devolved Administrations have liaised with stakeholders regarding plans to make CAP retained EU law and existing domestic legislation operable at the point of EU exit. We have kept them informed of the SI’s progress. With regards to financial discipline, DEFRA is liaising with stakeholders through a targeted engagement exercise to discuss the proposed new guidance, which will set out how pillar one spend should be apportioned towards England. Because the minor policy change to the AHDB order is expected to have little or no impact on the ground, as we believe the relevant circumstances rarely arise, we have consulted the levy board, but not other stakeholders.
The statutory instruments provide important and necessary continuity for stakeholders and beneficiaries. They will help to ensure that farmers, fishermen and land managers continue to receive payments that support their vital work. I urge Members to agree to the amendments proposed in the regulations, which I commend to the Committee.
Mr Goodwill
I thank all hon. Members who contributed to the debate and asked interesting questions. These regulations ensure that we are able to make amendments to the CAP legislation in the same way as the EU does currently, to respond to changing circumstances in the agriculture sector and have the flexibility to manage the pillar one budget through the financial discipline mechanism.
They will ensure the continued operation of the financing, management and monitoring arrangements that underpin the common agricultural policy in the United Kingdom and will provide the AHDB with an operable legal framework. Although these are very complex matters, as the hon. Member for Stroud noted, the changes that we are making are simple and straightforward. In most cases, we are merely substituting EU bodies with UK bodies, which will help us to take back control of our own legislation.
Thangam Debbonaire (Bristol West) (Lab)
I hope that the Minister is getting used to my cheekily taking my position as the Whip but then asking questions about process—although this question is about content. He says that the changes being made are quite straightforward, yet he also talks about the devolved Administrations. I am concerned about what will happen to the democratic oversight of decisions that relate to Northern Ireland, where there is currently no Assembly.
Mr Goodwill
To put it simply, officials went through the regulations, and every time they saw a reference to an EU body, they changed it to a reference to a UK relevant body, whether that was in England, Northern Ireland, Scotland or Wales. I share the disappointment felt by many people that we have not had an agreement in Northern Ireland and a return to devolved administration; at the moment, civil servants are making the decisions, based on decisions taken in the past. As a former member of the Select Committee on Northern Ireland Affairs, I know how tough the job of those civil servants is; the longer it is since there was a devolved Administration in Northern Ireland, the more difficult it is to make decisions based on political policies that were decided at that time. I hope that all the political parties in Northern Ireland will get together to participate fully in the democratic process and give the people of Northern Ireland their voice once again through the devolved settlement, delivering on the Good Friday agreement—the Belfast agreement.
The hon. Member for Stroud asked some general questions about payment windows. There will be no changes to the scheme, but given the performance of the last Labour Government, I have to say that people in glass houses should not throw too many stones. The Labour party must take some responsibility for the complexity of the system introduced in England, which contrasts with the much more workable system in Scotland. We are often critical of European legislation, but if we gold-plate it ourselves, we must take some of the blame.
The hon. Gentleman also talked about new schemes. Obviously, under the new policies that we will introduce once the Agriculture Bill is on the statute book, we will be in a position to facilitate new schemes. We will have an improved system that will allow us to base our agriculture policy and agricultural support on UK priorities, rather than on the often compromised priorities that emerge when we negotiate within the European Union.
The hon. Gentleman talked about consultation. In a debate on a previous statutory instrument, I gave a long list of those whom we have spoken to and who have not expressed concerns. There are no concrete changes; as I have said already, in most cases we are substituting EU bodies with UK bodies.
The hon. Gentleman asked whether we should make modifications at this stage to take account of the directions of change that we discussed in debates on the Agriculture Bill. The answer is no; this is a “business as usual” measure. If he wants to make changes, the first thing he needs to do is vote for the deal, so that we can actually leave the European Union. The Agriculture Bill will create those opportunities, but that will be possible only with a deal. I hope that we can work closely with the devolved Administrations as well.
The hon. Gentleman asked a question about the red meat levy. The exemption that we are concerned with relates only to livestock imported into the UK and slaughtered in England within two to three months of arrival. There are believed to be very few cases, if any, in that category. The overall red meat levy is payable on all livestock slaughtered in England for the human food chain and raises approximately £26 million a year. Extending the exemption to imports from beyond the EU might affect the KPA. No exemptions were sought for such imports last year.
The hon. Gentleman mentioned the Soil Association. I can reassure the association that we are maintaining the status quo. As I say, the Agriculture Bill will give us great opportunities in the delivery of organic production, for example.
I was asked about future funding arrangements: as agriculture is devolved, who will pay for what? I reassure the Committee that the Government have pledged to continue to commit the same cash total in funds to farm support until the end of this Parliament, which is expected to be in 2022.
Mr Goodwill
I know what the hon. Gentleman is going to ask, and I will try to cover it.
That includes all funding provided for farm support under both pillar one and pillar two of the current CAP. Obviously, if there were an early election—of course, under the Fixed-term Parliaments Act 2011, that is not as straightforward as it used to be—since no Government can tie the hands of a future Government, it would be up to the parties standing in that election to put their plans in their manifesto and then deliver on that when elected.
Gavin Newlands
I am not sure whether there are any Scottish Tories here, but I am sure that, given their rural constituencies, they would be keen to learn whether the Conservative party manifesto will commit to giving Scottish farmers back the money that was stolen from the convergence uplift.
Mr Goodwill
I am certainly not going to rush my fences and write the next manifesto on the hoof, particularly as we do not expect to go to the people again until 2022. The last time we consulted the people on what we should do was in the referendum, and we have not delivered on that one yet, so perhaps we should get on with the work in hand.
Mr Goodwill
I will make a point about the Barnett formula before I give way. We have also committed that the Barnett formula will not simply be applied to DEFRA’s agriculture budget in 2022. That means that farmers in Wales, Scotland and Northern Ireland will not just be allocated funding according to the population of each nation. Each is significantly smaller than England, but they have large areas of agricultural interest. In October 2018, the Government announced an intra-UK allocations review, which will look into the factors that should inform the allocation of convergence funding from 2020 to 2022. The review will report ahead of the 2019 spending review, and its recommendations will be available to Treasury Ministers when future funding decisions are made.
Did I answer the hon. Gentleman’s point? I thought I had.
Dr Drew
I was actually going to make another point. Since I think we must assume that the Agriculture Bill will be delayed, these SIs are quite important. The starting point for the reduction of direct payments is 2021—that is in the plan, not in the Bill itself. Will the Minister assure me that if there is a delay, the seven-year transition period will move with it? Or are we going to try to reduce that transition period? Obviously, that would cause those who need direct payments even more difficulty.
Mr Goodwill
I thank the hon. Gentleman for that question. We are keen to make progress on the Agriculture Bill. We will get it on the statute book as soon as possible, and it will certainly be on the statute book as and when it is required.
I was asked about cross-compliance. The European Union (Withdrawal) Act 2018 does not give us the power to make wholesale policy changes, and we do not think it would be appropriate to use the powers in the Act to omit cross-compliance from retained CAP legislation. Instead, we have the flexibility to amend cross-compliance within the confines of the current legislative framework. Further substantive changes to cross-compliance will be able to be made through the Agriculture Bill.
I was also asked why the devolved Administrations have taken a different approach to agriculture. Agriculture is a devolved policy area, and the devolved Administrations are currently able to operate CAP schemes within the legislative framework. It is for each Administration to decide how these EU regulations should be made operable.
The hon. Member for Plymouth, Sutton and Devonport raised issues to do with EMFF funding and the Fisheries Bill. I had been doing so well, but that is one that I will need to write to him about, as it is quite a technical issue and I do not want to get it wrong—similarly with the dispute mechanism, although of course that is one of the things for the future. As I said, at the moment, we are keeping measures in place as they are; there is no change.
The hon. Gentleman mentioned the exchange rate. The exchange rate for payments is fixed in September. That has been the case for some time. He also mentioned fixed-term Parliaments. As I said, no Government can tie the hands of a future Government, and it will be up to the parties what they put in their manifestos.
Luke Pollard
On the technicalities of the two threshold levels, I would be grateful if, when the Minister prepares his note to me, he set out the thinking behind the €2 million mark, whether that is RPI or CPI-related, and what formula created those two levels.
Mr Goodwill
I will ’fess up: I was not aware of that difference. There may be a perfectly logical explanation that is not policy related.
Sir Oliver Heald (North East Hertfordshire) (Con)
I notice that there is an article in the regulations entitled, “Financial Discipline in England”, which sets out how that would work. Am I right that the other nations would not have to have any financial discipline, or would they make their own arrangements?
Mr Goodwill
The other nations have chosen not to opt into the financial discipline mechanism, which we use—I was going to say “to top-slice”, but that is too emotive—to ensure that we have provision for emergency payments and other such measures. That is in no way to suggest that the Scottish Administration are behaving recklessly; it is just how they are choosing to deliver that policy. I hope my right hon. and learned Friend is reassured. Indeed, I met with the DAs this morning, and Mr Ewing was very keen to talk about how we move forward constructively, respecting the powers devolved to the Scottish Parliament and Administration.
These draft statutory instruments are required to ensure our continued ability to pay UK beneficiaries of the CAP and the common fisheries policy as now. They will help to ensure compliance with the rules set out in the retained CAP legislation and to ensure that public money is spent appropriately. On that basis, I commend the regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019.
draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019
Resolved,
That the Committee has considered the draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019.—(Mr Goodwill.)
draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019
Resolved,
That the Committee has considered the draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019.—(Mr Goodwill.)
draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019
Resolved,
The Committee has considered the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019.—(Mr Goodwill.)