Sheep Farming: No-deal EU Exit

George Eustice Excerpts

Tuesday 3rd September 2019 Commons Chamber

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Darlington (Jenny Chapman) on securing this important debate on a day when we have already had a lot of discussion about our EU exit. She has raised this issue in a series of parliamentary questions, and a little later I will address some of the concerns and issues she raises.

The UK sheep sector is incredibly large and important. Combined, our upland and lowland sheep production had an annual production value of around £1.26 billion in 2018, accounting for around 4.5% of all agriculture output in the UK. As a number of hon. Members have said, the sector is also responsible for some of the most iconic landscapes in the UK.

There are 16 million breeding ewes and some 70,000 sheep farms across the UK, and the sector is particularly important in some of the devolved regions. For instance, around 50% of UK sheep production and the national flock is in Wales and Scotland. The UK is the largest producer of sheepmeat in the EU, producing around 38% of all the sheepmeat and goatmeat produced in the EU last year. The UK is also the world’s third largest exporter of sheepmeat, behind New Zealand and Australia, so we are a truly global player in this sector.

Around a third of our annual production of lamb is exported, and as the hon. Member for Darlington said, over 95% of it goes to the European Union. Total lamb exports in 2018 were valued at around £384 million, with a large amount of that coming from the European Union. The main export destination for lamb in 2018 was France, followed by Germany and Belgium, but for certain parts of the industry, notably those in Wales that tend to produce smaller lambs, some of the Mediterranean countries such as Italy and Portugal are also important purchasers of our goods. Some of our heavier lamb, predominantly from lowland areas, is more sought after in northern Europe. We recognise that, because of all those factors, in the event of a no-deal exit the sheep sector is the most exposed in its trading relationship with the EU, and we have always acknowledged that.

In managing those risks, we have two important factors going for us. First, we have a large domestic market for food in general and for lamb in particular. Measured by import value, the UK is the world’s third largest market for food and drink, coming after only China and Japan, so there are many opportunities for import substitution, as we currently source a significant quantity of lamb from New Zealand.

Secondly, we have an independent exchange rate—an independent currency and a floating exchange rate. That is incredibly important for the agriculture sector. It helps as an automatic stabiliser when we have shocks. We now contemplate the prospect of having to leave the EU without a withdrawal agreement, although that is not our preference, as all hon. Members know. Having a floating exchange rate makes that easier for the farming sector than it would have been had we become trapped in the euro some years ago.

[Helen Goodman]

I am astounded by what the Minister has just said. The pound has fallen by 20% since the referendum, which means that for every export the farmers are getting 20% less money. How can that be good for them?

[George Eustice]

The hon. Lady has it the wrong way round, as it is always the case that for sectors that are producing goods, such as agriculture, a weaker exchange rate against the euro leads to higher prices. It is no secret that since the referendum result in 2016, when there was an adjustment of sterling against the euro, agriculture commodity prices in the UK have been at highs, and that has helped farm incomes. That is a recognised fact; exchange rates are a key driver of agriculture commodity prices.

We recognise that even with those important factors going in our favour, the sector is still exposed. Some modelling has been done by a number of different organisations, including the NFU. It is important to recognise that tariffs are a tax on consumers first and foremost. Some estimates therefore anticipate that were the EU to apply full most favoured nation tariffs on lamb, there would likely be an increase in consumer prices in the EU of up to about 20%. That reflects the fact that the UK is the dominant lamb producer in the EU and there are limited other options for it to source its lamb from.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The Minister mentions choosing to apply MFN tariffs. I profess not to be an expert on the sheep industry, but in the ceramics industry we have been told that there is no choice over MFN and it is the tariff that has to be applied to abide by World Trade Organisation rules. Is the Minister now saying from the Dispatch Box that the Government can apply discretion on that? If so, will he outline what that plan is?

[George Eustice]

Yes, absolutely, there is discretion, and the UK Government have already indicated what our tariff schedule would be in a no-deal scenario. Governments have the opportunity to have a lower applied tariff—lower than the bound tariff set in the WTO. The option is also open to any Government unilaterally to suspend tariffs. Indeed, should it wish, tariff suspension would be open to the EU, which I think is unlikely. Alternatively, and more likely, is the creation of an autonomous tariff rate quota for lamb that would be open to the whole world, including the UK. There are many options that both the EU and the British Government have unilaterally to apply tariffs that are lower than the WTO bound tariff.

However, as I said, it is important to recognise that we are the dominant producer. The EU could source more product from New Zealand, provided it had access to the ceiling currently set under the EU tariff rate quota. In the medium term, countries such as Spain could increase their production, but they are unlikely to be able to do that in the short term. For those reasons, it is likely that there would be an increase in consumer prices in the European Union as a result of its applying the full MFN tariff.

It is important to recognise that that increase in price would dampen demand in the European Union. Modelling suggests that that would increase supply in the domestic market and that as a result prices in the UK could fall by up to 30%. To put that into context, that means prices going back down to roughly where they were in 2015, which was a difficult year for the sheep sector. We are talking about a significant potential reduction, but it is not unprecedented. It would simply be going back to levels prior to the referendum result.

[Tonia Antoniazzi]

The Welsh Affairs Committee recently went to New Zealand and visited the sheep and beef industry, which was very interesting. Our farmers worry that our markets are going to be flooded with cheap New Zealand lamb. What can the Minister say to allay our farmers’ fears?

[George Eustice]

The Government have already made it clear that because of the particular sensitivity, we will apply full MFN tariffs on lamb, so there will not be any additional imports to the UK beyond those we already have. There is a splitting of the existing TRQ for New Zealand lamb between the UK and New Zealand—a combined total of around 250,000 tonnes—but there will be no additional lamb because we will apply full MFN tariffs outside that TRQ.

[Tonia Antoniazzi]

How is the tariff going to work between Europe and the UK? Has it been decided what percentage of the tariff is going to go to the UK or to Europe?

[George Eustice]

Yes, that has been decided. One of the few areas in which the European Union has from the very beginning being willing to work with the UK is on agreeing a splitting of the tariff rate quota schedules, and those have already been lodged with the World Trade Organisation.

As I said, we recognise that in a no-deal scenario we will have to show some solidarity with the sector, which will nevertheless face potentially significant falls in prices to levels not seen since 2015.

[Douglas Ross (Moray) (Con)]

I welcome the Minister back to the Dispatch Box. He is giving a strong account for this important sector. On my summer surgery tour, farmers from Tomintoul to Rothiemay expressed their concerns about the future of the industry. What reassurance can the Minister give, on behalf of the Government, that this issue is being given the utmost priority? What can he say tonight to reassure sheep farmers in Moray, across Scotland and throughout the UK?

[George Eustice]

I can absolutely give my hon. Friend that reassurance. He will be aware that the Government are seeking a free trade agreement with the European Union in the medium to long term and, if we can get it, in the short term. In the short term, the Prime Minister has already made it clear that in the event of a no-deal exit we will show solidarity with the sheep industry and make interventions, where necessary, to support farmers’ incomes.

[Jenny Chapman]

rose—

[George Eustice]

I am going to conclude because we are running out of time.

The hon. Member for Bishop Auckland (Helen Goodman) raised the important issue of whether we have the legal vires to make those interventions, and I can confirm that we do. The Government have a number of legislative vehicles with which to do so, including elements of retained EU law, and the Natural Environment and Rural Communities Act 2006 also includes general grant-making powers that give us the ability to do so. We are considering two possible options. One is a headage payment on breeding ewes, should that be necessary. That would be important in the event that farmers producing lambs are the ones who have the shock to their income. The second option would be something called a slaughterhouse premium, which would in effect involve a supplementary top-up payment for lambs at the point of slaughter. We could use a combination of those options but, broadly speaking, a headage payment and income-support approach would be the right approach to adopt.

[Matt Western]

rose—

[George Eustice]

I want to conclude now as we are running out of time.

The scale of, or need for, any intervention is difficult to judge at this point, because it will depend quite considerably on the approach that the European Union finally takes. As I said earlier, it is open to it to create an autonomous tariff rate quota, but it is also highly dependent on the extent of exchange rates. I can give hon. Members an undertaking tonight to reassure them that the Rural Payments Agency has already been told to design the administrative procedures necessary to make such headage payments. Discussions with the Treasury are at an advanced stage about what support may need to be set aside, while recognising that no final decisions can be taken until we actually leave the European Union.

I know that the hon. Member for Darlington has previously raised the issue of culling sheep, and she raised it again tonight. I can confirm that that is not under consideration. We regard any problems as being potentially short term and the correct approach would be to supplement farmers’ incomes through the headage payment schemes that I have described. We do not want to reduce the capacity of our flock.

We are a global player in this sector and we believe that there is a bright future for our sheep sector. However, in the unlikely event that it is not possible to get a longer-term free trade agreement with the European Union, there are, of course, other approaches that we can take. Our existing tariff-rate policy is set for just 12 months. It is open to us in future to review that and to apply certain tariffs to other EU sectors, to give our farmers opportunities to diversify into different sectors such as beef. Many of our sheep producers are mixed beef and sheep enterprises. It is also open to us to support the opening of new markets through, for instance, the deployment of new attachés to our embassy to help gain that market access. I know that the hon. Lady said that that was against WTO rules, but that is not correct. Certain types of export refunds are against WTO convention, but there is no rule against investment to support market access.

In conclusion, we recognise that the sheep sector more than any other agriculture sector is exposed because of the scale of its exports to the European Union, but the Government have been working for the past two years on modelling the potential impacts and planning the types of interventions that we may need to make to ensure that our sheep farmers are protected from any no-deal exit.

Question put and agreed to.

Aquaculture

George Eustice Excerpts

Wednesday 17th July 2019 Westminster Hall

[George Eustice (Camborne and Redruth) (Con)]

There are huge economic opportunities in aquaculture—indeed, Scottish salmon is one of our biggest food exports—but, as my right hon. Friend says, there are some environmental consequences. One of those is the plight of the wrasse, a species of fish found in Cornish waters. Is he aware that Scottish vessels go to Cornwall, kidnap live wrasse from Cornish waters and take them to the North sea to eat sea lice on their farms, which has a big impact on wrasse? Will he ask his officials to look at the impact on and the plight of the Cornish wrasse?

[Mr Goodwill]

I pay tribute to the work that my hon. Friend did, as my predecessor, in getting to grips with these issues. He is a hard act to follow. I was aware of the wrasse being kidnapped and taken to harvest the lice, and of the impact that has on the ecology in the south-west of England.

No Deal: Agriculture Tariffs

George Eustice Excerpts

Tuesday 16th July 2019 Westminster Hall

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I beg to move,

That this House has considered a proposed tariff schedule for agricultural products in the event that the UK leaves the EU without a deal.

Diolch yn fawr iawn, Mr Hollobone. It is a pleasure to serve under your chairmanship once again.

On 13 March this year, the British Government published their temporary tariff regime for a no-deal Brexit. At the time, the announcement gained little political attention as it was the policy of the period to avoid no deal at all costs. One of the greatest failures of the current Prime Minister is her use of the phrase,

“No deal is better than a bad deal”.

She fell into a bear trap set by the extremists in her own party. When the British Government switched strategy in summer 2018 to warn explicitly about the dangers of no deal as a means of gaining parliamentary support for her deal, it was too late. The infamous phrase had legitimised the totally reckless policy of a no-deal Brexit.

With the Prime Minister’s demise, the leadership election for the Conservative party has been dominated by the question of who can puff out their chest the most on Brexit. The debate has occurred in a parallel universe, far divorced from political realities. However, one conclusion we can safely assume is that it seems inevitable that no deal will become a viable option for the next Prime Minister, so all aspects of British Government policy in relation to a kamikaze Brexit deserve greater scrutiny.

A key aspect of a no-deal situation is that, on 1 November, if the likely next Prime Minister sticks to his Halloween promise, the British Government will have to introduce an independent tariff schedule for goods entering the newly formed UK customs area. A major consequence of leaving the EU with no deal is that the territories of the British state will no longer inhabit the safe harbour of the EU customs union.

I could have concentrated on a whole range of goods that will be impacted, but I want specifically to debate agricultural products for two reasons. First, Carmarthenshire is a proud agricultural county, and therefore leaving the EU customs union will have a disproportionate impact on the communities I serve. Secondly, tariffs on agricultural products are traditionally far higher than on other goods. That is especially true of the European Union, the destination for the vast majority of Welsh produce.

As part of the EU customs union, Welsh farmers are protected by those high tariffs, which has enabled our food producers to develop high-quality goods with unhindered access to the most lucrative and largest market in the world. The agricultural industry faces not only the loss of unfettered free access to its main export market in Europe; the new tariff schedule and its accompanying quotas offer precious little protection for the domestic market from being flooded by lower standard food products from around the world. That double hit would be too much for many farmers in my constituency and beyond. I cannot emphasise the dangers to the industry enough.

Both farming unions in Wales agree. John Mercer, Director of NFU Cymru, said:

“It is absolutely clear that a no deal scenario will be catastrophic for Welsh and indeed British agriculture. A scenario where Welsh farmers have to operate under the ‘no deal’ default of WTO tariffs will have devastating effects and will severely threaten the livelihoods and business of Welsh farmers.”

I am delighted to report that Mr Dafydd Jarrett from NFU Cymru is watching our proceedings.

Glyn Roberts of the Farmers’ Union of Wales said:

“It says it all that the prospect of a hard Brexit means a rich and highly developed state is stockpiling food and hoping to use an exemption to WTO rules on the Irish border which would more normally be applied in cases of war or famine. Yet this situation is not compulsory; this is a crisis which in fact we can easily avoid by acting in the best interests of our four nations; by withdrawing Article 50 and telling people honestly why Brexit must take place over a safe and realistic timetable.”

In July 2018, the British Government lodged proposed schedules with the World Trade Organisation setting out the most favoured nation tariffs that would apply to imports to the UK after Brexit. Subsequently, in March 2019, the British Government set out proposed temporary tariffs to apply in the event of a no-deal scenario, which would see zero tariffs applied to 87% of imports measured by value for up to a year in a temporary regime, while consultation and review on a permanent tariff regime takes place.

I am pleased that the British Government have exercised at least a degree of sensitivity in their treatment of the sheep sector, recognising the need to maintain tariff protection for lamb in the event of no deal by maintaining the full WTO tariff of 48% on lamb imports. However, what they give with one hand, they take away with the other. Tariff rate quotas will allow lower or zero tariffs to be applied up to a certain level of imports on some products. We know, for example, that New Zealand will continue to enjoy significant tariff-free access to the UK market for 110,000 tonnes of lamb annually. One of our principal competitors in the lamb sector will therefore enjoy more generous tariff-free access to our market.

[George Eustice (Camborne and Redruth) (Con)]

I was involved in some of that work and the development of that schedule as a Minister. The existing New Zealand tariff rate quota would be split in half, giving it less access to the UK market than previously. Is the hon. Gentleman aware that, in any event, in recent years New Zealand has used only about 70% to 75% of its current rate quota because it cannot compete with lamb produced in the north-west and south-west of this country even before it reaches that ceiling?

[Jonathan Edwards]

I recognise the former Minister’s expertise in the matter. We will have to wait and see what farmers have to say about that. I invite him to attend the Royal Welsh show next week and make that point. I am sure he would receive a welcome response to his comments.

The new Brexit date of 31 October will coincide with very high numbers of finished lambs coming on to the UK market.

Oral Answers to Questions

George Eustice Excerpts

Thursday 20th June 2019 Commons Chamber

[David Rutley]

We will do all we can to encourage local authorities to get involved. It is good to hear that Yorkshire Water is planting 1 million trees in Yorkshire. We need to do more, particularly in the hon. Lady’s area, with natural flood management techniques upstream. There is lots we can do.

[George Eustice (Camborne and Redruth) (Con)]

9. What plans his Department has to support (a) rare and (b) native breeds in future agriculture policy.

[The Minister for Agriculture, Fisheries and Food (Mr Robert Goodwill)]

Our rare and native breeds are an important genetic resource. There are several purposes under clauses 1 and 2 of the Agriculture Bill for which financial assistance could be provided to support our genetic heritage.

[George Eustice]

I declare my interest in that my family are long-standing breeders of both the British Lop pig and pedigree South Devon cattle, but genetic diversity is critical to maintaining resilience in our livestock sectors, and protecting genetic resources is a primary responsibility DEFRA. Will the Minister therefore agree to convene a meeting at DEFRA of representatives of our native and rare breeds to discuss what support would be appropriate for them under future policy?

[Mr Goodwill]

I was already aware of my hon. Friend’s considerable interest in this policy area. I am pleased to tell him that a workshop with breed societies will be taking place in London on 12 September to look at the issues that he has in mind. Later today I will be visiting the Lincolnshire show, where I hope to see some of the rare breeds that are bound to be there.

Oral Answers to Questions

George Eustice Excerpts

Thursday 9th May 2019 Commons Chamber

[Mr Speaker]

I think that one probably requires a little bit of work and finesse, but it is only a matter of time. That was a first draft.

[George Eustice (Camborne and Redruth) (Con)]

Welsh fishermen will be particularly interested in the application of the Hague preference since the ability to invoke it and, more importantly, counter-invoke it against the Irish Republic is critical to our interests. Will the Secretary of State confirm that the withdrawal agreement will protect our ability to invoke the Hague preference, because he will understand that it is not part of the common fisheries policy but a political convention that needs to be invoked each year?

[Michael Gove]

My hon. Friend makes an important point. We will be able to continue to invoke the Hague preference in certain circumstances, and it is vital that we do so in defence of our interests.

Oral Answers to Questions

George Eustice Excerpts

Thursday 28th March 2019 Commons Chamber

[Michael Gove]

That is a fair point.

[George Eustice (Camborne and Redruth) (Con)]

The UK has some of the highest standards of animal welfare in the world, but American attitudes to farm animal welfare remain very backward. Given that there is now a cross-party consensus in this House that we should enshrine recognition of animal sentience in law, should the Government not require the United States to pass equivalent legislation at federal level as a precondition to any trade deal?

[Michael Gove]

That is a very good point from someone who was an excellent Minister. I so enjoyed serving with my hon. Friend. As ever, he shows that his commitment to animal welfare and to the highest standards in farming remains undimmed. We are very lucky to have him in this House.

draft Common Organisation of the Markets in Agricultural Products Framework (miscellaneous amendments, etc.) (eu exit) Regulations 2019 Draft Common organisation of the markets in agricultural products and common agricultural policy (miscellaneous amendments) (eu exit) regulations 2019 Draft Agriculture (Legislative Fuctions) (EU Exit) (No. 2) Regulations 2019

George Eustice Excerpts

Tuesday 26th March 2019 General Committees

[Dr Drew]

I am delighted to serve under your chairmanship, Mr Evans, and I welcome the Minister to his place. This is my third SI of the day, so if I sound tired, it is because I am tired—rather tired of SIs. Given that the Minister has worked out all the questions I was going to ask, my job could be relatively short. I had better think of some other questions, just to make sure that the civil servants earn their pay for the day. I also welcome the former Minister, the hon. Member for Camborne and Redruth, yet again. We have a double act here. He does this for free now, but he should not tell his colleagues that; they will think it is a good way forward, and we might get a few more of them acting in that way. We will say nothing more about that.

I state my usual caveat: we are doing these things in an incredibly rushed way, and mistakes will be made. In fact, the previous SI we considered was all about the mistakes in an SI from last week, so we are going back over what we went over. That will happen, given that we are going through these SIs at a rate of knots.

I am a simple soul, so I will take the SIs in some sort of order; otherwise I will get confused. There are four instruments, but effectively three statutory instruments. I am still trying to struggle through them, but I will try to make my explanation as simple as I can. The first is the draft Common Organisation of the Markets in Agricultural Products Framework (Miscellaneous Amendments, etc.) (EU Exit) Regulations 2019, which the Minister mentioned. Much of the subject matter is devolved, and I am intrigued about the extent to which there is an attempt to pull back to the centre some of the changes coming from the EU. The Minister touched on this and made the point about the Administration in Cardiff. I would like him to at least allay my fears that the devolved Administration are losing out in some way. I am sure that the Scottish National Party spokesman will have something to say about that.

This whole area of market structure is not easily picked up; I found it complex—perhaps I am not that clever. I know enough about pillar one, and the way it has worked for a long time, having studied it for a long time. There are issues to do with the lack of clarity on how this will be restructured, even though we are talking about just a transfer of powers, according to the Government. We are told these are technical regulations, but at least some stakeholders disagree with that and feel that there is a change in the relationship. Given the attempt to conflate all these SIs, we have to pick through them carefully.

The Minister outlined the different things covered by market organisation—public intervention, aid for private storage, aid schemes, marketing standards, producer organisations, import and export rules and price measures —all of which are covered by the transfer of powers, as far as I understand. As I said in my rant to the Minister’s colleague in the last SI Committee, the Opposition struggle because all the non-governmental organisations are struggling to keep up to date. I am glad that the Minister is meeting the NFU and CLA, but the various non-governmental organisations to whom I have spoken say that they do not have the capacity to undertake any scrutiny of these SIs because of their complexity and the speed with which they are moving through the House.

The NFU has, however, commented on the first SI. It sees producer organisations as being very important, so continuity as the European legislation becomes UK law is important, as is remaining exempt from competition law; if there is no exemption, it will complicate matters. That is particularly true of horticulture. I would welcome hearing from the Minister on that, so that we can be sure that there are genuinely no changes.

EU member states have been encouraged to work on strengthening routes to market; I know from talking to farmers that they see that as being where they should go. How will these SIs, which are all about market structure, encourage farmers to move closer to the marketplace without raising food prices? We have to be well aware of that. The issue is the degree to which these SIs touch on competition law, and whether the UK will have to revisit its competition law.

The second SI, the draft Common Organisation of the Markets in Agricultural Products and Common Agricultural Policy (Miscellaneous Amendments) (EU Exit) Regulations 2019, seems to anticipate future SIs. What are those future SIs and changes? How will they impinge on the way the market operates? Given that this has a lot to do with producer organisations, where is the financial analysis? That is the question that I always ask. Can we be assured that the burden will not fall on the producer organisations, which already suffer from market precariousness? In the short term, there will be churning in the policy vacuum—and there is bound to be a vacuum; things may operate seamlessly, but various questions will remain.

We have to look at where we are, and where we want to be, and make sure that policies are as fair, open and transparent as possible, because any unfair trading practices will undermine the point of trying to encourage producer organisations. That is borne out by what the NFU said to me. It believes that producer organisations are the way in which farm businesses should be moving, so that they can negotiate more successfully with retailers and directly with the customer.

Greener UK asked me a series of questions about the regulations. I will not go through all of them. It is concerned about how the effect of the changes on the environment will be monitored and measured in a fully transparent fashion. It wants to know how the searchlight will be turned on, and how we will make sure that procedures are fully operative as early as possible. That is all linked to the implementation of environmental law and policy. It is also interested in how we will deal with possible breaches, and that will reflect how citizens or civil society organisations will look at this. Greener UK has views on the fairness or unfairness of how things work. Producers and representatives of customers have questions about transparency, accountability, and what to do when things do not work as they should.

The draft Agriculture (Legislative Functions) (EU Exit) (No. 2) Regulations 2019 are much more about the structure itself, but concern such aspects as organic production and labelling, which we have talked about in previous Committees. It is important that we recognise that that sector needs greater protection, because it will undergo considerable changes. Although we have our own organic regulators in this country, so much of it is about commonality with the rest of the EU, and that will have to change.

The main issues are diverse, and extend to the functioning of age schemes, including for school milk and the fruit and vegetable scheme, which is of course about providing good-quality food to children, and subsidising the industry, to put it bluntly. The question is how can the Government realistically think that anyone, especially key stakeholders, can cover that? There is such a wide range of elements in the SI. The Minister said that the Government did not need to consult, but it would be interesting to know what consultation, if any, has taken place.

[George Eustice (Camborne and Redruth) (Con)]

All we are doing with the SIs is substituting “a member state” for “national authority”, or replacing “Commission” with “the appropriate authority”, simply to make the existing regulations operable. The real question is where was our ability to scrutinise the original EU regulations that were imposed on us? Nobody generally bothered to look at them, barring the Ministers who were there at the time.

[Dr Drew]

The answer is that we could always do it better, and now we have no reason not to. It puts the onus on us, which is why the SIs are important. If we do not get it right now, it will come back to haunt us, either because we will have missed an opportunity or because we will have to revisit the SIs, as we did with those laid just a week or so ago. I accept what the former Minister says, but a whole series of market segments are affected by the CMO and the way in which the SI will operate.

The Government say that there are no costs, but somebody, somewhere, has to bear some of the costs, because there will be new regulatory burdens. As yet, the Government are not clear on how those burdens will be set up, and what form they will take. It would be interesting to understand the Government’s thinking on that, because unless we get the market structure right at least some of the different segments within the food industry will suffer, at least in the short run. Some of the legislation really matters, because it is about emergency measures, which we all ought to know about because of what has happened in previous food scares.

The Minister will be pleased to hear that my final point will be my usual entreaty about databases. We are looking at how we will set up a new databank—in this case, of isotopic data—to detect fraud. The current one is based on samples taken by the member states; we will have to replicate that in a UK context. It would be interesting to know where we are with all the wonderful IT innovations that the Government are trying to introduce, also at a speed of knots.

There is no date for this, so I do not know whether we will borrow stuff from the EU. Clearly, they have collected and stored a lot of material on, for example, the authenticity of wine and what level of sugar has been added, and how much water is in the wine. There is something biblical about that. If we are starting from scratch—I do not know whether we are—can we just bring all the information across, or do we have to pay for it? Alternatively, can we use comparable databases?

It is the usual questions. Where are the databases? How advanced are they in terms of their operation? Who will have access to them? If there is evidence of fraud in the way these different market sectors are operating, what do the Government intend to do? I have nothing more to ask. This is one of the more complex SIs of the many we have been through. As the Minister answered many of my questions to start with, I have come up with a few different ones, but I welcome that we are now getting the answers as well as the questions. It makes my job that much easier.

--- Later in debate ---

[George Eustice]

Perhaps officials in the Department could foresee that Parliament would baulk at the idea of leaving without a deal. “One year” might be a reference to the extension.

[Luke Pollard]

I am grateful to the former Minister, who is again backseat driving the Minister’s role. I would like to think that officials are that prescient about the Government’s inability to bring forward a deal that they can get a parliamentary majority for, but I suspect the answer is that this SI has been sitting on a desk in DEFRA for some considerable time, and we are waiting until the last moment for these SIs to be given the scrutiny they deserve. As my hon. Friend the Member for Stroud said, driving through so many SIs means that the level of scrutiny that stakeholders and the Opposition can give them is more limited than if we had been given more time. However, I would be grateful if the Minister set out answers, particularly about the geographical indications and what they mean for the read-across of UK protections.

Draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019 Draft Common Fisheries Policy and Aquaculture (Amendment etc.) (EU Exit) Regulations 2019 Draft Common Fisheries Policy (Amendment etc.) (EU Exit) (No. 2) Regulations 2019

George Eustice Excerpts

Monday 25th March 2019 General Committees

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

It is a pleasure to see you back in the Chair, Mr Davies. It is good to be in Committee for a second time today, albeit not in the same room—this time to debate fisheries.

I begin with the usual health warnings about the speed and the volume of the statutory instruments that are being pushed through. The Opposition believe that there are several glitches and gremlins in them that would have been caught with greater scrutiny and that could have severe consequences when it comes to implementation. We have concerns, which I will set out in turn, about all three instruments that the Committee will consider today.

Combined, the instruments represent about 190 pages of additional regulation. Concerns have been voiced by many of the stakeholders that we on the Opposition side work with about the sheer volume of legislation being pushed through, and about their ability to adequately scrutinise dense legal text and provide good scrutiny from a stakeholder perspective. Some 80% of UK environmental laws come from the EU.

[George Eustice (Camborne and Redruth) (Con)]

The hon. Gentleman will no doubt be aware that when these original regulations came from the EU, drafted by the European Commission, they probably came in the form of delegated Acts or implementing Acts that would have received little or no scrutiny in this House. These regulations, as with others under the European Union (Withdrawal) Act 2018, are just about making those powers operable.

[Luke Pollard]

I am grateful for that intervention. It is good to see the former Fisheries Minister, the hon. Member for Camborne and Redruth, in his place, and good to know that the Government now need not only a Fisheries Minister but a former Fisheries Minister to rebut some of the Opposition’s scrutiny.

The concerns that we are raising sometimes relate to the implementation and drafting of the regulations. As the hon. Member for Camborne and Redruth will know from the statutory instrument Committee we sat on earlier today, the Minister himself acknowledged that there was a gremlin in that particular statutory instrument, which we flagged up. Our concern is about what other gremlins are in the statutory instruments we are considering today, and how they will affect future considerations.

[Luke Pollard]

I am grateful to the Minister for making my point for me. The fact that mistakes have been made in that respect means that other mistakes could be made, which is why enhanced scrutiny is important in making sure that the regulations we are considering today—all 190 pages of them—are dealt with sufficiently robustly. These regulations affect one of our most important sectors, one that is especially important for those Members who represent coastal communities. As Business Green has noted,

“The pace at which draft legislation has been processed has been relentless…Parliamentary scrutiny has been creaking at the seams with MPs and peers often admitting they haven't had enough time to review the legislation thoroughly.”

I will now set out the Opposition’s concerns about these SIs, starting with the draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019. We have a number of concerns about how the powers provided for in section 8 of the European Union (Withdrawal) Act 2018 are being used. The drafting in a number of areas appears to be defective: it often fails to adequately correct the provisions of EU law, and makes a number of policy changes to the current provisions. Environmental organisations have got in touch with us to recommend that these common fisheries policy SIs be annulled and updated, because they fall short in a number of areas. I will take the Committee through the areas in which we believe the SIs, and this one in particular, are falling short.

These SIs risk creating a governance gap, placing responsibilities from EU bodies on to organisations that are yet to be created or sufficiently financed. They leave gaping holes in the area of enforcement, leaving fishers less safe and our waters less protected—a concern that the Opposition have raised about previous SIs. There is a risk that these SIs could degrade environmental standards, a point to which I will return when we consider electric pulse trawling. We have specific concerns about the Government’s ban on electric pulse trawling: it is a good example of a policy change hidden within these SIs, notwithstanding the Minister’s statement that there are normally no policy changes in such SIs.

I understand that the Minister will want us to hold our nose and vote these SIs through, because we are at risk of careering towards a no-deal Brexit. In the area of fisheries, unlike in other areas of Government scrutiny, the regulations are not necessarily in place if we do not pass these SIs, so we need to make sure we are using our time properly. However, given the extension from 29 March to 12 April, I suggest to the Minister that some provisions in these SIs should be looked at again and the instruments re-laid, so that they can be comprehensive and fulfil the role they are supposed to.

I am not trying to be difficult or fly a partisan flag, but the concerns about this SI were also highlighted last month by the Secondary Legislation Scrutiny Committee, on 6 February. Its report states:

“Given the significance of fisheries as a policy issue, the House may wish to explore further the approach the Government have taken with this instrument.”

We also reject these SIs being grouped together. That is one reason why we have asked for them to be taken individually, and why I will focus my remarks on each in turn.

I have mentioned the governance gap, which was raised by a number of stakeholders. That is a common theme that Ministers and Government Members will have heard about from the Opposition when responsibilities, especially oversight responsibilities, are being moved from EU bodies to UK bodies. Several provisions in the first common fisheries policy SI remove functions currently carried out by EU bodies, such as the European Commission, the Scientific, Technical and Economic Committee for Fisheries, the European Fisheries Control Agency and the Advisory Council, which are not replaced in this particular SI. The loss of monitoring, reporting and other governance requirements will seriously undermine the functioning and effectiveness of the law. I would be grateful if the Minister came back on that point when he gets to his feet.

Obligations to provide assessments from reports to the European Commission and the European Parliament have been removed, including the provision of data on stock quantities. Given the fact that we are leaving the European Union, that might not be an unreasonable assumption, but our concern is that no subsequent scrutiny functions are inserted. The oversight role that we are looking for is no longer there.

[George Eustice]

Surely when we become an independent coastal state we will re-join other bodies, such as the North East Atlantic Fisheries Commission. Through those bodies and our membership of the International Council for the Exploration of the Sea we will contribute our own scientific evidence. Does the hon. Gentleman not understand that the UK, year in, year out, regularly corrects data from the European Commission, through our Centre for Environment, Fisheries and Aquaculture Science?

[Luke Pollard]

I am grateful to the former Minister. Our CEFAS scientists are brilliant. He will know our concern that there is insufficient focus on science in creating truly sustainable fisheries with the Fisheries Bill. I take your note, Mr Davies, about not talking about things that are not in these SIs, but these SIs need to fit together with the Fisheries Bill, and that Fisheries Bill has sunk without trace. It is no longer being tabled. I am really concerned that the lack of a Fisheries Bill—indeed, of an Agriculture Bill for the associated one—means that the jigsaw that is being put together with these SIs is incomplete, and the fishers cannot see what type of environment is being created for them after we leave the European Union.

The former Minister is right about one element: after we leave the EU, some of those functions will be carried out by other bodies. However, there is no requirement in these SIs for those other bodies to pick up those requirements, nor is there a home for those scrutiny functions to sit in between leaving those EU bodies and becoming part of any future bodies. That is a concern, because it assumes that we will participate in those bodies in the future. I think some of the examples that the former Minister just raised are fair. However, the situation does not sit easily with me. We need to ensure that there is adequate scrutiny throughout.

[George Eustice]

Is that not just a product of the fact that we are becoming a self-governing nation again? We do not need to be held to account by an external body, but should hold ourselves to account.

[Luke Pollard]

Indeed. I suggest that the former Minister lobbies his colleague, the new Minister, to bring forward the Fisheries Bill, because without a Fisheries Bill we have no legal and legislative framework to hold ourselves together. The former Minister proves my point again, because we lack a Fisheries Bill. That may have been a concern of his when he was at the Department.

I return to this SI in particular. The key role that the Commission plays in the control and enforcement of the rules of the CFP has been removed and not replaced by this SI. Regulation 4(43) of this SI removes articles 96 to 118 relating to the European Commission’s control of the application of the CFP and Council regulations 1224/2009 by member states, including the requirement on member states to report on implementation. That reporting requirement is important, because it is about how we have decent scrutiny of any of the implications of this SI and how hon. Members—assuming they fulfil the role of scrutiny of the European Commission, previously performed by the European Parliament—are able to scrutinise the outcome of this SI.

References to “advisory councils” have been removed and not replaced in this SI. The Minister will know that the Opposition tabled amendments to the Fisheries Bill, to include advisory councils in the future fisheries regulation—a proposal that the former Minister encouraged Members on the Government Benches to vote down. The lack of formal stakeholder engagement means that the involvement of the fisheries industry is removed with the direct implementation of this SI, which is a point of concern not just for the Opposition, but many of those stakeholders.

The Secondary Legislation Scrutiny Committee highlighted in its report that the Department for Environment, Food and Rural Affairs argued:

“The oversight function that the Commission currently holds over Member States could, for England at least, be provided by the Office for Environmental Protection (OEP)”.

But in the event of no deal, that will not necessarily be provided. That is where stakeholders have created a governance gap. Indeed, the Office for Environmental Protection is, as hon. Members will be aware, coming down the track—not something that we can implement today. That creates the risk of a governance gap in this particular SI.

--- Later in debate ---

[Mr Goodwill]

As far as I am aware, this is one of the issues that needs to be dealt with during the implementation period.

[George Eustice]

Does my right hon. Friend agree that, with other countries outside the European Union, such as Norway, we have in place framework agreements that set out our approach to joint fisheries management; that those agreements include provisions on data sharing; that the European Union has created a mandate for there to be a continuity agreement for the remainder of this year, which would cover such issues; and, indeed, that the Department already has advance plans for a future framework agreement to cover such matters?

[Mr Goodwill]

I thank my hon. Friend—having had five years in this job, he is well aware of the intricacies of some of the issues. However, the point that I am making is clear: the Prime Minister negotiated a 20-month implementation period to allow this and other measures to be agreed.

The hon. Member for Motherwell and Wishaw, who speaks for the SNP, said that we want to see continuity. That is precisely what this measure does: it ensures continuity. The measures agreed at the Fisheries Council before Christmas will continue past the date on which we leave the European Union. It has always been clear that that will be the case. I have to say to her, however, that members of the Scottish fishing industry—those to whom I spoke, anyway—are fully behind Brexit. They relish the opportunity we have to be an independent coastal state and to exploit the resource available to us.

--- Later in debate ---

[Mr Goodwill]

I thank the hon. Gentleman for the question; Hartlepool is an important port just up the coast from my constituency. As I said, only three authorisations are in place for UK vessels. We are proposing to review that, with a view to withdrawing them. I am confident that we may well be in a position to be ahead of the EU in getting that ban in place.

[George Eustice]

Does the Minister agree that the UK has led the calls in the EU for that change? Far from responding and reacting to what the EU is doing, we will implement, through the changes he outlines, a ban on the majority of pulse trawling in our waters far sooner than the European Union.

[Mr Goodwill]

My hon. Friend is absolutely right—I can think of several instances where the UK has wanted to move ahead on environmental or animal welfare legislation. I am digressing slightly, but we are looking at dry sow stalls, battery cage legislation and veal crates. The UK moved ahead of, and faster than, the rest of the EU—it was not moving at the same speed as us. Although people say that leaving the EU will result in a degradation of our environmental and animal welfare legislation, that has no regard to our track record as a nation. Both parties have been keen to promote those topics and to move faster than the rest, so leaving the European Union will give us the opportunity to do that, rather than dragging behind.

--- Later in debate ---

[Luke Pollard]

This draft instrument bears the brunt of my concern and the Opposition’s concerns about electric-pulse beam fishing. I am grateful to the Minister for doing my job for me by saying that there will be no changes in behaviour because of the draft instrument, and then in the next sentence saying that changes over time will build a more sustainable fisheries industry. Both cannot be true.

My concern relates mainly to the electro-pulse beam fishing method. There is widespread, cross-party condemnation of this method, as was raised in the Fisheries Bill Committee. I will spend a bit of time talking about those concerns in relation to the draft instrument.

The explanatory notes to the draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019 say:

“The technical changes made by this instrument are necessary to ensure that the rules contained in the CFP continue to operate effectively, so that fishing within UK waters continues to be regulated in a sustainable manner.”

However, our concern is that how sustainability will be provided is open to broad interpretation.

Provisions of the draft Common Fisheries Policy and Aquaculture (Amendment etc.) (EU Exit) Regulations 2019 replace certain duties on authorities to take action with powers. This is not only a legal change, but also potentially undermines the effectiveness of the law. The main concerns around this raised by stakeholders—some environmental and some from the industry—relate to conservation. Regulation 25(7) removes reference to article 7(3) of Council regulation 2018/973, which provides that emergency measures under the CFP should form part of remedial measures to restore stocks above maximum sustainable yield. That sounds very technical, but what it effectively says is that we must ensure there are sufficient fish in the sea for our fishing industry to fish, and the changes to that could be quite considerable. Provisions on conservation measures have also been removed and not replaced; regulation 3(5) of this statutory instrument removes articles 6, 7 and 8 on types of conservation measures and the establishment of fish stock recovery areas. That is a concern to a number of stakeholders who have got in touch.

Certain provisions of this SI, such as regulation 25(11), remove requirements for the UK to co-operate with other countries when taking measures to protect fish stocks. That presents a risk that the important role that other countries and European functions play in ensuring that fish stocks are maintained will be lost and not replaced. Further to the concerns raised about the first SI, the question is how we ensure that we have a functioning fisheries regulatory environment, especially when it comes to sustainability, as soon as we leave the European Union.

[George Eustice]

Is the hon. Gentleman not just alighting on the simple fact that after we leave the European Union, it will no longer be the role of the European Commission to enforce these things? Instead, it will be for us to enforce them ourselves. He is referring to the removal of a function from the European Commission, which is absolutely right and proper in the context of our leaving the European Union.

[Luke Pollard]

I like to think that scrutiny is a bit like energy. We cannot destroy it; it can only be moved from one function to another. If we are taking scrutiny away from the European Commission, it must be placed somewhere else, and that is not what this SI does.

Our main concern with this SI relates to the phony ban on electric pulse beam trawling. Crucially for us, this SI had the potential to create commonality—a common bond between the Opposition and the Government on the need to ban this cruel fishing method. As my hon. Friend the Member for Hartlepool said, this fishing method is cruel. The voltage used by some fishers can be so high that it breaks the vertebrae of the fish they are dealing with. Given how strong a fish is, a considerable amount of force is needed to break those vertebrae, and that involves a level of cruelty that I think the people who sent us to this place would find completely unacceptable.

The Minister will know that the Opposition have significant concerns about this ban. It does not go far enough, it is open to abuse and it fails to make good on the promises that I believe were made by his predecessor in the Fisheries Bill Committee, where the Opposition tabled amendments that, by my rough arithmetic, would have passed if we had not withdrawn them.

[George Eustice]

Will the hon. Gentleman give way?

[Luke Pollard]

I have not even got to my main point, but I am happy to give way.

[George Eustice]

As the Minister at the time who made that offer, I completely refute the hon. Gentleman’s allegation that this does not live up to what was offered. It was made clear in Committee that the derogation that applied particularly to the 87 or so Dutch vessels would not be carried into domestic law, but it was also made clear that the small number of Scottish vessels—I think there are three or four—that practise that method would still be subject to that derogation, but obviously it would be open to the current Minister, or indeed a future Minister, to change that through licensing regulations.

[Luke Pollard]

The hon. Gentleman tempts me to move ahead with my speech; I will run through the first bits, and then, if that does not address the point, I am happy to come back to it.

This controversial form of fishing in UK waters is done mainly by Dutch trawlers operating under a phony scientific derogation. They have effectively built a commercial fishery in electric pulse beam fishing—a fishing method that has caused excessive harm to our marine life. British fishers and conservationists warn that it is wreaking havoc on our sea bed, and there are reports that large parts of our sea bed have been turned into graveyards after this method has been used in the waters above them. It is powerful enough to break the vertebrae of large cod, and it is thought that similar damage and suffering is being inflicted on other sea life.

The previous Minister and I were corresponding on this issue before he resigned from the Government. I thank him for responding to my feedback, but it was unfortunate that he decided not to accept it. The Opposition were trying to create a comprehensive ban that would have ensured that this fishing method was not seen in our waters. In Committee, we withdrew an amendment that would have put a ban in the Bill. Following the Minister’s response to the amendment, I was more than happy to grant him the opportunity to correct the situation.

Although we welcome the idea of introducing a provision in the SI to ban electric pulse beam fishing, we do not believe that this one goes far enough, because, as the explanatory notes state, far from removing the ability for any boats to fish with this method, it includes a derogation. Page 16 of the explanatory notes—hon. Members may wish to read this for themselves—states:

“The derogation will therefore permit the authorisation of up to 5% of all the beam trawlers in the United Kingdom fleet to use the electric pulse trawl, along with certain other conditions that remain the same as before EU Exit.”

To me, a ban on a fishing method means that no one can use it. Allowing 5% of beam trawlers to use that method sounds like authorising a large number of fishing boats to use it.

[George Eustice]

Is that not simply a product of the fact that the EU withdrawal Act says that we should not change policy? We should simply bring across EU policy, and the 5% the hon. Gentleman mentions is EU policy. The best that we could do with this SI is remove the derogation for the Dutch vessels that make up the vast majority of those using this technique.

[Luke Pollard]

The former Minister hits on the problem. The SI does not do what it needs to. The commitment given when the Committee amendment was withdrawn was that an SI would come forward that would comprehensively ban electric pulse beam trawling. That is not what the SI does. It opens the window for up to 5% of all beam trawlers in the UK to use electric pulse trawl, and certain other conditions remain the same as before. That is not the ban that we need.

--- Later in debate ---

[Luke Pollard]

When the Minister got to his feet, I was looking to him to commit to removing that 5% derogation and ban the practice completely. That is what the Opposition are looking for and what hon. Members on the Government Benches, who have fishing communities that have been trimmed from the SI, also want.

If we are to have truly sustainable fisheries, which is the ambition set out in the fisheries White Paper, we must not allow a loophole through which up to 5% of beam trawlers can use this method. Conditions might change; we need to ensure that fishing regulations are future-proofed. Otherwise, all we are doing is simply allowing a loophole that will need to be addressed in future.

We are very concerned about the 5% figure. I would be grateful if the Minister could set out how he intends to remove any loopholes from future regulations. Potentially allowing 200 boats—5% of beam trawlers—to use this fishing method in future opens the opportunity for considerable pain.

I would also like the Minister to edit this part of the SI to include additional protections. The former Minister set out the need for occasional scientific derogations, to investigate whether elements of technological change in pulse beaming could be more sustainable, but clear parameters should be set around that.

The Minister missed a trick with regard to public consultation, and when he said there was no prohibition on this type of fishing activity in marine protected areas, or within 12 nautical miles of the shore. We believe there should be strict punishments and proper enforcement.

I am conscious that hon. Members wish to return to the main Chamber, so I will not keep us on this point much longer. Our concern is that the SI creates a loophole in law and does not set out a clear enough vision or certainty that this method will be banned. I would like to see the SI brought forward again with that loophole removed, in which case the Opposition would be happy to support the Minister.

[George Eustice]

Does not what the hon. Gentleman is asking for violate the essential principle of the European Union (Withdrawal) Act? It is not there to change policy. What he is asking for should be delivered through the Fisheries Bill, which, as he knows, has passed its Committee stage and will, we all hope, return to the House shortly.

[Luke Pollard]

I am grateful to the former Minister for that comment. As he will recall, in a room very similar to this one, he made the commitment that an SI would be brought forward before we left the European Union that would comprehensively ban electric pulse trawling.

[George Eustice]

That is not what I said. I said that we would not bring across the derogation for non-UK vessels, and that is what the SI delivers.

[Luke Pollard]

I am grateful to the former Minister for seeking to clarify his words. The fact is that the SI provides a 5% loophole for this cruel and unsustainable fishing methodology to be used in UK waters. It does not provide a ban as soon as we leave the European Union—the Opposition withdrew the amendment to the Fisheries Bill because we thought it would—nor does it seek to close loopholes that could be used in the future.

--- Later in debate ---

[Luke Pollard]

The Minister will be unsurprised to know that I have similar concerns about the governance gap in these regulations, and about how they fit with the Fisheries Bill. I appreciate that the Minister may want to call it a Fisheries Act, wishing that it had gone through its parliamentary stages, but it is a Fisheries Bill—at the moment, it is a missing Fisheries Bill—and we need to ensure that it fits with this SI so everything works together.

The Minister talked about the removal of TACs, and I will return to that concern in a moment. More broadly, our concerns about this SI relate to conservation and governance gaps. They are similar to the concerns we set out in relation to the previous two SIs. The requirement to report certain catches against gear type has been removed—that is regulation 6(10)(c)(ii), for people following this closely—but it has not been replaced by an obligation to report that anywhere else instead. The Minister may say that that will be in the Fisheries Bill, but the Fisheries Bill does not exist in the way we want. It is not going through its parliamentary process, so that level of oversight and governance has been lost. The Minister says it is business as usual, but it is business as usual with only minor scrutiny. We have concerns about that. The provision stating that total allowable catches should be set in line with the principle of sustainable exploitation and consistent with maximum sustainable yield have been removed in this SI.

Regulation 6(7) omits article 6 of Council regulation 2019/124, which states that total allowable catches should be set in line with the principle of sustainable exploitation and should be consistent with maximum sustainable yield. The Opposition have raised concerns throughout the fisheries SI process, and during the Fisheries Bill, that if we remove the requirements to fish at a sustainable level and do not replace them with robust requirements to ensure our seas are fished sustainably, there is a risk that our fishing may be at unsustainable levels in future. When the hon. Member for Camborne and Redruth was the Minister, I had great confidence that he would not set catches above sustainable levels, although I recognise that they have been set in some cases leading up to this point. I hope that the current Minister would not do such a thing either, but that is not to say that any future Minister, buoyed by political concerns or otherwise, may not be tempted to do that.

[George Eustice]

Is it not the case that in doing so they would be in breach of other international fisheries obligations that we have?

[Luke Pollard]

I am grateful for the former Minister setting that out, but we know that there is fishing above sustainable levels today. Mackerel losing its sustainable status just a few weeks ago shows that all our fisheries in the UK are not being fished at sustainable levels at the moment, but they need to be. Given the risk of fishing populations changing due to climate change, we need to ensure that there is an adequately responsive deal on fisheries.

--- Later in debate ---

[George Eustice]

Is the hon. Gentleman aware that the UK has no right to represent itself in the mackerel negotiations with countries such as Norway and the Faroe Islands? That is done by the European Union. Insofar as there is a problem, it is literally the fault of the European Union.

[Luke Pollard]

The lack of fish in the sea is also about overfishing and the regulatory environment that deals with overfishing. The solution to restoring mackerel stocks to sustainable levels will not be about pinning blame on whichever body, but about making sure that fishing levels are set at a sustainable rate, so we are not overfishing stocks, especially those on the decline due to poor recruitment or overfishing. We have to be clear about that.

I have been through most of my concerns about the governance gaps in the statutory instruments, so I will not keep the Committee any longer. I would be grateful if the Minister could set out where our total allowable catches lie, and his vision for the Fisheries Bill. Perhaps he could say when he expects the Fisheries Bill to return, so we can see how this statutory instrument would fit in with any provisions the Government propose in future.

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

George Eustice Excerpts

Monday 25th March 2019 General Committees

[Dr David Drew (Stroud) (Lab/Co-op)]

I am delighted to serve under your chairmanship, Mr Hanson, and to welcome the Minister and the former Minister to their places. We are going to get doubled-barrelled explanations of everything that is going on.

I thought that last week I was getting to the nadir of my understanding of things, but these SIs are complex. In many respects, they are not controversial, but then, as the Minister rightly touched on, we get to the red meat levy. Those of us who were on the Committee in question spent a lot of time arguing whether it was appropriate, and the devolved Administrations do not necessarily agree with England on the issue. It would be interesting to know whether that has been properly worked through.

I refer back to the European Statutory Instruments Committee, which looked at the issue on 4 December. Its report quoted the instrument, which explains:

“Removing this levy will ensure that, following EU Exit, there will be equal treatment between the EU and the rest of the world for animals imported for slaughter. Defra’s estimate of the maximum financial impact to the AHDB caused by this change is a loss of c. £1,000 per year in levy, although it is believed that the amount actually collected by the AHDB in relation to the rest of the world imports are far lower than this and are probably nil.”

The Minister touched on that. The moneys exchanged seem very limited. I do not know why we have any regulation relating to that, if it is so unimportant. Can he enlighten us a little?

I will start with some general questions, because some points need to be brought out early on. I hope the Minister will get some help from somewhere to answer them. I am always willing to accept written contributions, although I have not received any yet. We have had rather a lot of SI Committees, and so far I am yet to have anyone write to me saying, “You should look at this to understand that,” or, “The Government intend to do this to move to that.” It would be useful to get some contributions so that I at least know that I am along the right lines, or that the Government have done it in the right way.

Under the common agricultural policy, there are payment windows. We have a lot of arguments over them, because they are often breached, and farmers or landowners do not get the money that they should currently get within those windows. Do these regulations in any way change those payment windows? It would be interesting to know what the Government’s contingency is if we were to crash out of the EU. Much of this is predicated on our having an Agriculture Bill in place. Sadly, it does not appear that there will be such a Bill in place, which has caused some consternation among the Opposition—let alone among Government Members—about what will happen if we are no further forward.

[George Eustice (Camborne and Redruth) (Con)]

On that point, the hon. Gentleman is wrong. The Agriculture Bill is all about developing a future policy; these regulations, in common with all such regulations under the EU withdrawal Act, are about ensuring that the current EU scheme and retained EU law—including the common agricultural policy and all its provisions—are operable in the interim period.

[Dr Drew]

I agree with the hon. Gentleman, but there was supposed to be a seamless move from one to the other. It does not seem very seamless anymore; it seems rather senseless that we are unclear about where we are today—let alone where we will be in a week’s time—in relation to where we would possibly be going in terms of the Agriculture Bill, of which we have heard nothing. We suppose that it will crash out of the Government’s programme this year and we will have to revisit it again next year. We are not really going forward at a rate of knots.

Those who criticise the common agricultural policy—no doubt there are many in this room today—will question the fitness of the legislation as it stands and as it will stand tomorrow should these regulations go through. Farmers are calling for improved systems, so was this not the opportunity—notwithstanding what I said about payment windows—to look at how the system would be improved? Throughout the Agriculture Bill, I have called for the scrapping of the Rural Payments Agency and for its replacement with a new, purpose-built body. Unfortunately, we do not seem to have got any further with that.

My next question is about the limited consultation. Yes, it is true that farming organisations were consulted. However, given that we are moving towards environmental payments, it was really quite a narrow consultation. What about the different environmental organisations that have contributed, largely through the Green Alliance? As the Minister knows, they are very critical of this process and how it has been taken forward. Why were they not directly consulted about these statutory instruments? That would at least have been commensurate with the direction of travel.

I will make two more general points, before I comment on specific bits of legislation. Given our learned experience from having been a member of the CAP for 43 years, it would be useful to know why these SIs could not take account of some of the direction of change.

My last general point is about what the Minister said about there being a series of technical amendments. But this involves direct payments, which is one of the more controversial areas—as we know, through the Agriculture Bill—between the four home countries. When I talked to the Ulster Farmers Union and said, “Of course, we will be removing direct payments,” its representatives basically intimated: “Over our dead bodies!” They believe that direct payments have a strong and continuing role to play in keeping people on the land in Northern Ireland. Since we debated the issue during the Agriculture Bill, have we got any further forward on how we intend to deal with a very different approach? [Interruption.] If the Minister wants to intervene—

[George Eustice]

indicated dissent.

[Dr Drew]

Sorry, the former Minister; I am still getting used to all the different roles being played.

I am intrigued about where we are with those four different approaches: Scotland has its own approach and did not want to make its statement through the Agriculture Bill; Wales is largely in common with England, but has made its own contribution to the changes; and, because there is no Administration in Belfast, we are not at all sure what Northern Ireland is doing. But let us go on to the three bits of legislation.

The draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 again come down to money. I am interested to know whether the Government, through the SIs, will commit to exactly the same moneys being available today and tomorrow, regardless of what happens next week. It would be useful to know whether the Government are prepared to make that commitment of the £3.1 billion or £3.2 billion, which would work its way through to the system. As I said, the Ulster Farmers Union in particular is very clear about wishing to continue with direct payments. How does that impact on the way in which the other parts of the UK will respond?

The Soil Association, although not part of the direct consultation, looked at the issue. It is clear about welcoming the Government’s direction of travel but, again, questions whether the draft SI makes any difference to the programme under which, starting in 2021, we gradually run down direct payments. That would be interesting to know in connection with the draft SIs, given that we have no Agriculture Bill coming through. We are only talking about 18 months away now, so it is not way in the future—this is in the foreseeable future, and farmers are already making calculations about their investments.

The National Farmers Union brought up the point, which the Minister did not mention, that there are now criminal offences for breaching financial assistance schemes. Will he say something about that? The NFU is unhappy about it. Will these SIs mean that obstruction of a person acting in pursuance of the regulations could result in the farmer or landowner facing a financial penalty or worse? Again, some of the conflicts that arise out there are difficult to resolve without clarity of thinking and a much clearer explanation of the impact of these SIs.

The draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 largely concern the budget and the income-support system. One presumes that in the short run we will carry on with the existing structure, because we have no Agriculture Bill and because unless we give farmers the moneys that they thought they were getting, they would be at a distinct disadvantage in competing with other parts of the European Union—in particular in Ireland; Northern Ireland would not want to be at any disadvantage.

We laid down some pretty strong targets in the Agriculture Bill, but how does that relate to the draft statutory instruments? The Nature Friendly Farming Network, for example, wants much longer-term commitments on moves towards soil management, protection of water and the rest of it. Again, that is all wrapped up in the environmental management schemes, which are not part of these SIs, but unless we get things right, farmers will be at a disadvantage in the meantime.

The last instrument is the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019. This has been mapped out and spoken about on many occasions by the Secretary of State, but the real issue is how to move from direct payments to environmental payments. Sustain in particular was worried about whether the new shared prosperity fund—the Minister will say that it is not affected by the SI, but that is contingent on the Government’s direction of travel—will be administered by DEFRA or go to the Ministry of Housing, Communities and Local Government, as Sustain fears it might. Where will the moneys for environmental payments be set aside in the interim?

The Ramblers’ Association has made some points about how cross-compliance will essentially alter things, come what may, because of how the Rural Payments Agency has itself been reformed. We know that there is a problem with countryside stewardship for various landowners—the hon. Member for Camborne and Redruth talked about that on the Agriculture Bill Committee, when he was the Minister. It would be interesting to know how that cross-compliance will operate not only through the new Bill, but with respect to the regulations before the Committee. They constitute the interim policy; if we do not get that right, farmers, landowners and environmentalists will be disadvantaged.

[George Eustice]

I welcome my right hon. Friend the Member for Scarborough and Whitby to his post. I offered to take part in these Committees specifically because I am largely to blame for some of their content and have signed some of the statements.

I pay tribute to the DEFRA officials, who have had to work incredibly hard on this and all other similar SIs. Hon. Members who read those SIs will quickly establish that to fillet through every piece of EU legislation, literally exchanging the words “Member States” for “relevant authority”—that is predominantly what these statutory instruments do—is not the most attractive of jobs. It requires somebody to go through a huge amount of legislative text. A huge amount of work has gone into all those instruments and it is important to recognise that their purpose is simply to make retained EU law operable.

The shadow Minister made the point that as we are not changing policies, we should surely have drafted the regulations to make them a bridge to the direction of future policy. The European Union (Withdrawal) Act 2018 was explicitly clear that that should not be done. The purpose of that Act was simply to allow for retained EU law to continue to function as closely as possible to the way that it does currently. It was clear that any future changes in policy should, as a general rule, require future legislation. Of course, we have the Agriculture Bill for that.

It is also worthy of note that section 2(2) of European Communities Act 1972 is probably the most pernicious Henry VIII power in this country in modern history. It is used, particularly by a Department such as DEFRA, to drive a coach and horses through all sorts of pieces of domestic legislation, often without much more than passing a statutory instrument via the negative procedure. The irony with all these SIs is that we expend a great deal of effort to judge whether we are happy to swap the words “Member State” for “relevant authority”, but those powers were simply imposed on us, generally by delegated legislation or by Acts implementing European Union legislation.

When we looked at the AHDB levy—particularly the exemption from the levy for EU animals, which was raised by the shadow Minister—we had two things to consider. The first was whether we should go for a strict interpretation, seeking legislative continuity, in which case we might have said, strictly speaking, that the EU was now a third country and should therefore be treated as such. The second was whether we should adopt an approach to provide continuity for producers in the closest way possible. Had we taken the former approach, we would have required abattoirs up and down the country to suddenly start trying to design and implement systems so that they knew when they were dealing with an animal that might have come from the European Union and could apply a levy to it. As the shadow Minister noted, we apply a levy to animals from outside the EU, but not those within the EU. We concluded that the best way to provide continuity was simply to extend that exemption to everyone in the world, which meant that operators could carry on broadly as they do now.

I do not have a lot of affection for the horizontal regulation in the EU, which one of the SIs relates to. It led to lots of administrative problems for DEFRA to do with how we had to interpret penalties and implement audit processes. It is far from perfect, but the Agriculture Bill has a sweeping power to modify it once we leave the European Union. But for now, in keeping with the ethos of the European Union (Withdrawal) Act, we should retain it, which is what the regulation does. On financial discipline, in England we decided that we wanted to retain the power to make use of some of the pillar one payments for a crisis reserve, so there would be funds to support agriculture at times of great need in the year ahead before we have introduced our own crisis measures through the Agriculture Bill.

Finally, the shadow Minister mentioned a couple of points about criminal proceedings. We debated that during the Agriculture Bill, and I gave an undertaking to look at the issue. My understanding is that we have never used that power; it has been in our enforcement powers for the EU regulations—that is why it is retained for now, although obviously it can be looked at in the context of the future Bill. As he knows full well, because we debated it at length in Committee, the budget will stay the same in cash terms until 2022. I predict that will cover the timescale for these regulations under retained EU law, because long before that I hope we will have our Agriculture Bill in place.

UK’s Withdrawal from the European Union

George Eustice Excerpts

Wednesday 13th March 2019 Commons Chamber

[Michael Gove]

I am delighted to give way to my dear Friend.

[George Eustice (Camborne and Redruth) (Con)]

I thank the Secretary of State for giving way. He is right to say that the European Union does not have border infrastructure in place to carry out the border inspection checks that he mentions. Is that perhaps why the EU has asked us to dynamically align our regulations for a period of nine months so that it would not have to carry out such checks during that period?

[Michael Gove]

My hon. Friend is right, but dynamic alignment during those nine months would mean our being a rule-taker during that period. Dynamic alignment would allow us to be registered as a third country, but there would also be sanitary and phytosanitary—SPS—checks on a variety of products.

--- Later in debate ---

[George Eustice (Camborne and Redruth) (Con)]

I resigned from the Government two weeks ago over the issues that we will be debating in the days ahead. Since Parliament has now taken direct control of events and decisions in this negotiation, I wanted to be free to participate in that debate and to make the case publicly on the Back Benches that I have made privately within the Government over the past year.

I fear that Parliament has set us on a dangerous course. We are in real danger, today, of signalling to the European Union and others that we are too scared to leave without a deal and, tomorrow, of ordering the Prime Minister to go on her hands and knees, and cap in hand, to Brussels—

[Heidi Allen]

Will the hon. Gentleman give way?

[George Eustice]

No, I will not give way.

We may be ordering the Prime Minister to go cap in hand to the European Union to beg for an extension to article 50, and we do not know what counter-offer it may make. It may demand that that extension must be for two years, and it may demand a large financial charge for that extension. It may even say that it will not give an extension, but that it is open to us to revoke article 50. Members in this House may face a very difficult, very uncomfortable decision in just a couple of weeks’ time.

I believe that we must be willing, if necessary, to take our freedom first and talk afterwards. We know that the European Union—I worked closely in a lot of the preparations for no deal—is already seeking what is, in effect, an informal nine-month understanding.

There have been a number of points over the past two years when I think the Government could have reappraised their approach to the negotiations. Personally, it became clear to me a year ago, at the point at which the implementation period was agreed, that our negotiations were getting into a little bit of trouble, and that we were in danger of drifting along a path of least resistance, only to find that we had an agreement that Parliament would not accept. At about that time, something else interesting happened.

[Lady Hermon]

I am extremely and sincerely grateful to the hon. Gentleman for giving way. Can I take it that he has made a point of speaking to the Chief Constable of the Police Service of Northern Ireland, who has warned consistently about the dangers of no deal, of a hard Brexit and of a hard border on the island of Ireland?

--- Later in debate ---

[George Eustice]

I have not spoken to the Chief Constable, but I have been involved in a lot of other negotiations on the DEFRA front.

On 22 March last year, when I was visiting Oslo for some fisheries negotiations, our then ambassador to Norway told me that she had had a busy week, because she had been placed on standby by the Foreign Office to deliver a letter by hand to the Norwegian Government giving 12 months’ notice of our intention to quit the EEA. In the end she was stood down, because of the transition agreement, and this country took a conscious decision not to give notice of an intention to quit the EEA.

That made me curious, because up until that point, and indeed since, the Government have always maintained that when we leave the EU our agreement under the EEA will automatically fall away. If that were true, and if it were the only possible interpretation of the EEA treaty, why was our ambassador armed with that letter to deliver to the Norwegian Government? After much probing, I established that there is indeed more than one interpretation that could be adopted, and the Foreign Office was concerned that, in the absence of giving that notice, we could be subject to challenge under the Vienna convention.

For me, that opened the prospect of a different approach: relying on our existing EEA membership, asserting our rights under that treaty, and simply applying to join the EFTA pillar of the EEA agreement. That arrangement means we would have had no customs union; control of our fisheries and agriculture policy; an independent trade policy; no need for an implementation period; no need for a backstop; and no need to worry about whether we have a codicil or a protocol, since we would be able to quit at any time, with 12 months’ notice in writing.

I have tremendous respect for my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) and was initially very encouraged when he picked up that idea and ran with it. However, as hon. Members who know him will know, he also has a tendency to overcomplicate things, so a simple and clean EEA model that could have given us an easy pathway out of this became Norway-plus, then the customs union 2.0, and then a backstop was added as well. The result is that it has alienated many Members on the Government side of the House who might otherwise have supported it.

In conclusion, my view is that, first, we need to unhitch the customs union and the backstop from any proposal based on our existing EEA membership. That might require us to be ready to leave without an agreement. Secondly, we can dynamically align our regulations over the next nine months. Finally, we can have the dynamic alignment as a bridge to a new arrangement in which we apply to join the EFTA pillar.