Rules for Direct Payments to Farmers (Amendment) Regulations 2020

Baroness Byford Excerpts

Tuesday 3rd March 2020 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)]

My Lords, I declare my farming interests as set out in the register. I hope that it will be helpful to your Lordships if I speak to both the Rules for Direct Payments to Farmers (Amendment) Regulations 2020 and the Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020, given the close connection between the two instruments. These instruments amend retained EU law governing the direct payment schemes for farmers for the 2020 scheme year. This EU law was brought into domestic law on exit day by the Direct Payments to Farmers (Legislative Continuity) Act 2020, which, as noble Lords will remember, we have debated.

These statutory instruments address operability issues in retained EU law so that it can continue to function effectively in the United Kingdom for the 2020 scheme. The instruments make purely technical amendments to fix inoperabilities, and I should emphasise that they do not make policy changes. They use the affirmative procedure and I would like to explain why this was necessary. They could not have been made any sooner as they could be made only after the parent Act received Royal Assent, which was just before exit day. The instruments needed to be in force on exit day, at the same time as the relevant direct payments legislation was brought into UK law. This has ensured a seamless transition from EU law to UK law. It has meant that the Government and the devolved Administrations can continue to operate effectively the 2020 scheme, which began on 1 January, therefore avoiding any disruption to farmers. Significantly, these instruments ensure that the UK Government can meet their commitments to funding in the agriculture sector. The Government have announced nearly £3 billion in funding for direct payments to UK farmers for the 2020 scheme year.

The Rules for Direct Payments to Farmers (Amendment) Regulations 2020 make operability amendments to the retained EU Regulation 1307/2013, which is the main direct payments regulation establishing the high-level framework required to make direct payments to farmers. It also amends two delegated and implementing Acts under this regulation which together set the detailed scheme rules for direct payments. Finally, it makes minor operability amendments to an existing statutory instrument related to direct payments in England. It is worth making it clear that the direct payments legislation being amended by this regulation was brought into UK law only for the 2020 scheme year, not for prior years, so this instrument makes amendments only in relation to 2020 direct payments.

The Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020 make amendments to the retained EU Regulation 1306/2013. This is the main “horizontal” regulation that sets the overarching framework for how the CAP is administered, including direct payments. It also amends four delegated and implementing Acts under the main regulation, which together set the detailed rules necessary to finance, manage and monitor the delivery of the CAP schemes. Finally, it makes minor operability amendments to an existing statutory instrument in relation to direct payments in England.

It is important to recognise that the EU legislation being amended by this regulation was brought into UK law only in so far as it relates to 2020 direct payments and not to other parts of the CAP. Therefore, this statutory instrument amends only the parts of the legislation which relate to the 2020 direct payments. The list of regulations amended by these instruments can be found in paragraphs 2.2 and 2.3 and Annexe 1 to the accompanying Explanatory Memorandum.

The amendments include replacing EU terms with domestic equivalents. For example, references to “Member States” have in most cases been replaced with the term “relevant authority”. The SIs define a relevant authority as meaning the Secretary of State, Scottish Ministers, Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland. The instruments in most cases confer powers to make legislation which once sat with the European Commission on either the Secretary of State or the relevant authority.

The amendments also include removing provisions which are not applicable in the UK, such as references to the payment for cotton and administrative processes which lose their purpose outside the EU context; for example, the requirement to send information to the Commission.

More specifically, the Rules for Direct Payments to Farmers (Amendment) Regulations 2020 remove the power to fix spending ceilings for individual direct payment schemes. In a domestic context, it is unnecessary to set such individual ceilings in legislation, particularly given that the schemes are administered at the devolved level.

The Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020 remove from retained EU law the EU’s processes for managing its budget and remove or amend the EU’s auditing and accounting rules.

Except for the amendments made to the domestic statutory instruments, which apply only in England, these SIs cover all four parts of the United Kingdom. We have worked closely with the devolved Administrations to produce the instruments and they have given their consent to them.

In summary, the instruments allow the retained EU law to function effectively so that the Government and devolved Administrations can continue to operate the 2020 direct payment schemes for farmers. I beg to move.

[Baroness Byford (Con)]

My Lords, I thank the Minister for introducing the regulations. I thank him, too, for the Government’s commitment to give £2.852 billion to ensure that the programme continues. I should declare a family interest in farming in Suffolk, where we are recipients of basic farm payments and stewardship funding.

The instruments speak for themselves. I have no queries with them; the legislation as it stands is fine. However, is the Minister confident that the payments will be made at the right time and in the full amount? I refer not just to the basic payments but to payments on the stewardship side, which has not had a good record in recent times. I understand from farming colleagues around the country that they are still waiting for some of those payments to be made. Perhaps the Minister can tell us how many are outstanding and when they will be paid. My worry is that the Government will find that fewer people enter those schemes because they fear that they will not be paid at the right time. That would be a great shame because we are trying to encourage a greater number of environmental projects within food production.

Given the flexibility within the instruments, might the Government rethink their stance on the three-year crop rule in the light of recent circumstances? I have in mind particularly the flooding that we have had. At the moment, we are supposed to rotate crops within a three-year period, but given the flooding—which remains a key issue in Lincolnshire, Yorkshire and other areas where crops are still standing in the fields, with little chance of farmers getting them out or being able to plant spring crops—is there flexibility within the system to make any allowances for that?

I have a direct question for the Minister on flooding. I know that emergency payments are allowed, and that some may have already been paid of which I am not aware. Within these rules, may some flooding assistance be given to the farmers who are in such dire straits at the moment?

I noticed in particular Regulation 7(10). I think the exchange rates are undecided at this time. Can the Minister tell us whether the exchange rates will be honoured in the same way between the four devolved Administrations? Clearly, it would surely be wrong to have one system in England and another in Wales and in Scotland. Will he comment on that?

On Regulation 7(6), I see that the Government of Wales have paid an amount to small farmers, and in Scotland beef and sheep farmers have been given assistance. Where will that balance take us? Are there plans to assist farmers in England, who are not represented in that way?

Lastly, I turn to payments. The Minister has a farming background and I am sure he realises that we need to ensure that payments given to farmers this year, let alone next year, are equal across the four devolved Administrations; otherwise, we will have unfair trading circumstances, which I know the Minister would not want to encourage.

Having made those few comments, I return to where I started: I welcome these regulations, and it is important that they are passed by the House. I have no difficulty with what is in them, but they raise other questions, which I have been able to ask this afternoon. I thank the Minister for introducing them.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to the Minister for bringing forward these regulations; it would be a very brave man who stood between the farmer and his payments this year. I am also very grateful to my noble friend Lady Byford for setting out her concerns.

Anybody who has travelled from Scotland or the north of England down to London by train or car will have seen the amount of damage caused by the floods. Like my noble friend Lady Byford, I make a special plea for a sense of urgency on the three-crop rule. I hate to say this in mixed company, but I pay tribute to a previous Secretary of State, under a different Administration, Hilary Benn. He visited the Great Yorkshire Show and, on the same day, went back to London and lifted a similar provision that prevented farmers going on the land. The circumstances were similar, although it was a different time of year—July—and I forget which year it was.

My understanding is that the Government are actually discouraging anybody from applying for a specific force majeure provision. There is a very real concern that, eventually, the RPA will be inundated with potentially thousands of applications, given the scale of the problem this year.

I also understand that those who are seeking farming recovery fund financing are experiencing delays. I appreciate how hard my noble friend and his department are working at the moment—he was in the Chamber until very late yesterday, as indeed we all were—but anything that his department can do would be appreciated.

My noble friend will be aware that Flood Re had limited financial capacity, and that no businesses, particularly small businesses, were included. This means that no farm can make an application for financing or insurance cover under Flood Re. Can that be looked at in some shape or form?

I know that this issue might be raised by others, but another statutory instrument is coming down the tracks to implement the Chancellor’s funding statement of 30 December. I do not know whether my noble friend can put a date on that.

--- Later in debate ---

This debate has taken us somewhat beyond the SIs, but it is really important to ensure that farmers have certainty in respect of the 2020 scheme. I will reflect again on the work we have done with the devolved Administrations. All four parts of the United Kingdom know of the importance of the farmer. I am reminded that it is always the farming community who turn out to help their communities in bad weather. They clear the snow with their tractors and help flooded communities. I think I can say that all of us are champions of farmers and food production. I hope that makes my comments extremely clear, given other reports.

[Baroness Byford]

My Lords, I am very grateful for my noble friend’s responses to the various questions raised. I am not surprised, but I am really pleased to hear him champion the need to produce food above all else. He kindly referred to the recovery funds following flooding and such things. My understanding is that, in the past, some of those payments have not been made until after the recovery happened. I do not know whether there has been a change of thought on that, because they need those payments most when flooding happens, not when they have recovered, if the Minister follows my line of thought. If he cannot answer today, I am quite happy for him to write to me, because this is crucial. As he knows so well, there is immense pressure on the health and well-being of many of our farmers. For some of them this is nearly the tipping point. It would be very helpful if he could clarify that.

[Lord Gardiner of Kimble]

My Lords, I obviously cannot make any commitments today, given the changing situation and floods in parts of the country that were not part of the further announcements. However, the unprecedented flooding in many agricultural parts of the country has obviously affected many towns and villages, as well as farmland. I will write to my noble friend, put a copy in the Library and send it to all noble Lords who have spoken in the debate. Providing an up-to-date version of what we plan to do on farm recovery would be the most helpful way to deal with that.