Food and Farming: Supply Issues

Lord Ashton of Hyde Excerpts

Thursday 20th January 2022 Lords Chamber

[Lord Benyon (Con)]

The best pressure on supermarkets does not necessarily come from finger-wagging of the Government or measures from Ministers but from the customer. We must encourage people to shop locally; for example, if they are concerned about the effects of their diet on climate change, eating grass-fed, locally produced meat means they are probably doing more to help the environment than when buying products that have been brought from the other side of the world, under circumstances that are much below our standards in this country.

[The Deputy Speaker (Lord Ashton of Hyde) (Con)]

My Lords, the noble Lord, Lord Jones of Cheltenham, wishes to speak virtually. I think this would be a convenient moment to hear from him.

[Lord Jones of Cheltenham (LD) [V]]

My Lords, how do the new trade deals with Australia and New Zealand help with the aims of maintaining Britain’s food production self-sufficiency level at 60% and creating an environment for farm and food businesses to thrive and compete in the coming years?

Pesticides: Thiamethoxam

Lord Ashton of Hyde Excerpts

Thursday 20th January 2022 Lords Chamber

[Lord Benyon (Con)]

I do not take that view, because we have massively increased the condition that we have applied this year. Last year, the derogation was not used because it did not reach of the already high 9%; we have raised that to 19% this year. There is a wider factor. If there is a catastrophic loss of yield, that sugar will have to come from other countries. Spain, France, Belgium and other EU countries have derogations with very few of the conditions that we have applied. We could damage our sugar infrastructure in this country—the factories that we need to produce sugar for our own population—and export the problem to countries that do not have our conditions and our determination to move towards integrated pest management.

[Lord Ashton of Hyde (Con)]

My Lords, the noble Lord, Lord Jones of Cheltenham, wishes to speak virtually. It is a good time to call him now.

[Lord Jones of Cheltenham (LD) [V]]

My Lords, Countryside Online tells us that the sugar beet industry supports 9,500 jobs, produces half of the UK’s sugar and is environmentally friendly because of the low number of miles beet travels from farm to processing plant to consumer. Mr Gove supported a total ban on neonicotinoids when he was Environment Secretary because they harm populations of bees and other pollinators. By allowing their use now, why are the Government breaking their promise to maintain high environmental standards?

Agriculture Bill

Lord Ashton of Hyde Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Thursday 1st October 2020 Lords Chamber

Relevant document: 13th Report from the Delegated Powers Committee

[Lord Ashton of Hyde (Con)]

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Agriculture Bill, has consented to place her interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Clause 17: Continuing EU programmes: power to provide financial assistance

Amendment 1

Moved by

Fisheries Bill [HL]

Lord Ashton of Hyde Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Wednesday 1st July 2020 Lords Chamber

[Lord Ashton of Hyde (Con)]

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Fisheries Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

A privilege amendment was made.

Agriculture: Dairy Prices

Lord Ashton of Hyde Excerpts

Tuesday 28th April 2020 Lords Chamber

[Lord Ashton of Hyde (Con)]

I will come in, as the Chief Whip. I am very sorry, but the answer is that I have no idea why my noble friend Lord Gardiner is unavailable. I apologise to the House. Something technical has obviously gone wrong, and I can only ask your Lordships’ forgiveness on this occasion. There will be a thorough inquiry into this, and I apologise to the House.

[The Lord Speaker]

Thank you, Chief Whip. Can you stay on the line and at least field the questions that will come? The right reverend Prelate needs to ask his supplementary.

[The Lord Bishop of St Albans]

Thank you very much. I cannot thank the Minister for his Answer because he has not given me one, but he will be aware that some dairy producers are unable to change contracts and are finding it extraordinarily difficult to access business support grants. What changes have Her Majesty’s Government made in the past month to cut red tape and save some of our dairy farmers who are going bankrupt?

[Lord Ashton of Hyde]

I should first declare an interest. I am not a farmer, but I own a farm and my tenant is a dairy farmer. Obviously, these are difficult circumstances. Dairy farmers have a particular problem. I know that there is a great difference depending on where dairy farmers sell their milk. For example, if they are selling their milk to supermarkets, that is okay, but those selling to other enterprises that are not functioning in the same way have different problems. I know that some have had to pour milk down the drain. I will take the right reverend Prelate’s specific question away and make sure that I get him a sensible answer because I do not know the details at the moment, I am afraid.

[Lord Campbell-Savours (Lab)]

Perhaps the noble Lord, Lord Gardiner, can give me a written answer to my question. I understand that Meadow Foods pays more to its farmers in Cheshire than those in Cumbria for milk. Furthermore, it cannot give any guarantees that the price in Cumbria will not fall further, thereby threatening the viability of the industry. How can the industry survive under such conditions without the Government temporarily—I repeat, temporarily—setting a national minimum price for milk, as happened under the old Milk Marketing Board? I suggest a price of 25p per litre.

[Lord Ashton of Hyde]

The noble Lord makes a very powerful point. I will ask my noble friend Lord Gardiner to answer that specifically. He raises an important issue about differences between parts of the country. I have just seen a message that my noble friend is having technical difficulties; I think we knew that anyway.

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

Can noble Lords hear me?

Water Bill

Lord Ashton of Hyde Excerpts

Tuesday 11th February 2014 Lords Chamber

[Baroness Parminter (LD)]

My Lords, I put my name to my noble friend Lord Moynihan’s amendment and I shall speak briefly in support of it.

The Government’s impact assessment on managing the future financial risk of flooding states that there is insufficient evidence of a problem for businesses to get insurance and that there are other market mechanisms for them to get cover. However, the impact assessment focuses on the national impact, whereas flooding affects localities, so it is perhaps no surprise that it did not find that much evidence.

Further, the Government’s position is driven by their recent consultation on the issue, which asked for evidence of a need for a mechanism for small businesses and received a few responses from small businesses, which may well have had other priorities. The ABI has given the Government assurances that the broker community is doing,

“a good job working directly with business customers in getting a good deal for them”.

I contend that it is the Government’s job to insist that there be firm evidence of that, which is what the amendment is intended to deliver.

There are few studies of the impact of flooding incidents in general on business, apart from some by AXA, and they focus on the impact on individual businesses rather than the broader economic resilience of communities in the face of flooding. I could not find any research which looks at the significant impact of flooding on small businesses, which often make up the backbone of the rural economy. It is here that flooding has a huge impact not just on individual families and their businesses but on the complex web of supply and demand chains in the local economy. Ensuring adequate flood cover for small businesses, including farm businesses, is as important as supporting households if we are to protect the overall community resilience of rural areas.

As my noble friend Lord Moynihan said, small businesses were covered by the statement of principles and they were able to get flood risk insurance in the same way as households. Given that Flood Re does not guarantee them that insurance, we certainly need reassurance from the Government that they are mindful of the need for cover for businesses, particularly small businesses, and of their important role in rural communities.

[Lord Ashton of Hyde (Con)]

My Lords, I should declare an interest that I declared on Second Reading, which is that, until June, I was the chief executive of two insurance companies, and I still labour under some residual contract limitations.

There is an overriding need to put in place a workable solution that will, first, solve the most pressing need, which is to address the availability and cost of flood insurance and, secondly, do so in a way that is timely, affordable to the insurance industry, secured in co-operation with it and that does not allow government subsidy to create a huge deficit in the scheme over time.

Addressing the issue of small businesses raised by the amendment of the noble Lord, Lord Moynihan, we ought to remind ourselves that the statement of principles only covers the availability, not the affordability, of insurance for those small businesses. It covers only renewal policies, so the policyholder at risk of flooding cannot change insurer, and it does not cover the cost of the policy.

There is also the question of practicality. The introduction of businesses into Flood Re would dramatically complicate the pricing of the scheme, the availability of Flood Re as crucial reinsurance—on which the scheme depends—and, by no means least, the complexity of the internal model, which will have to be approved by the PRA. All the different coverage afforded by business policies, such as business interruption, contingent business interruption and loss of profits, will make the internal model much more complicated compared to what are fairly homogenous homeowners’ policies.

To address the most pressing need as soon as possible in a way that is acceptable to as many people as possible, we should concentrate on the most important issues and leave the Flood Re design as it is.

--- Later in debate ---

[Lord Krebs]

My Lords, I am grateful to the noble Lord, Lord Whitty, for suggesting an additional task for the Adaptation Sub-Committee of the Committee on Climate Change. While recognising that that is a task that we could carry out, I just say that one important corollary would be that the committee would need access to the relevant data from Flood Re, Defra and the insurance industry. Given access to that information, the committee could, as the noble Lord suggests, provide an independent assessment for the Government, which I think would be helpful in seeing how Flood Re is progressing.

[Lord Ashton of Hyde]

My Lords, perhaps I may ask the noble Lord whether the requirements should be imposed before the regulations that bring the Flood Re scheme into effect, or whether he is talking only about subsequent regulations. If that task has to be undertaken at the beginning, it might imperil the start of Flood Re.

[Baroness Northover]

My Lords, I am grateful to the noble Lord, Lord Whitty, for drawing attention to his wish to ensure that that the policies set out in the legislation respond to the demands that climate change may bring in future—in particular, by including a formal role for the Committee on Climate Change. I was not entirely sure whether the noble Lord, Lord Krebs, accepted that formal role.

We fully agree that climate change and adaptation to it are vital. The noble Lord, Lord Whitty, added the additional factor of population growth. He rightly challenges us on the uncertainty of the future and we are very much aware of the need to plan for the future in this regard.

The Committee on Climate Change and, in this respect, its Adaptation Sub-Committee play a very important role in providing independent advice to the Government. The information and analysis provided since the committee’s inception have helped to shape the debate on climate change. Although the evidence of climate change is becoming increasingly compelling, it is clear that we need to do more to understand and plan for its impacts. This is a challenging task, given how interrelated and unpredictable those effects are. We have seen how variable the jet stream has been over the past few years, for example, and how it has brought us drought and flood.

Although, clearly, dealing with the current devastating flooding is the immediate absolute priority, we also need to reflect on our management of flood risk and assess our preparedness for climate change. The Government published the UK’s first national adaptation programme report in July 2013, which sets out the action that we propose to take. There is great expertise in this country, not least in your Lordships’ Chamber, which we can access and are accessing, as well as learning lessons from elsewhere.

Specifically in relation to Flood Re, I assure noble Lords that climate change projections were considered alongside other risk factors during the design of the policy and that the effects of climate change will continue to be considered during future levy-setting discussions. I remind your Lordships that in the memorandum of understanding with the industry that has been used to craft the Bill—I mentioned it in relation to a previous group—we have recognised the importance of the programme of flood defence and have committed to a specified amount of expenditure for 2015-16. However, we believe that advising on the scope and financial parameters for the transitional Flood Re scheme is a role for the insurance industry and would be outside the current remit of the Committee on Climate Change.

To clarify, the number of policies that would be eligible for Flood Re is based solely on the cost of the flood risk component of any policy, which is set by the insurers. This assessment of flood risk will indeed change over time, as the noble Lord, Lord Whitty, acknowledged, and it would not be possible for the Committee on Climate Change to provide any estimates without detailed knowledge of industry pricing models. Similarly, the value of the levy required and the likelihood of the need of any additional contribution by insurers is based on a number of financial parameters that could change year on year. Those include the level of premiums received, the cost of reinsurance and the amount of levy collected.

The Government and the Association of British Insurers have worked hard to determine the value of the levy required and the likelihood of the need for additional contributions, based on industry data and assumptions that were subject to independent review by Professor Stephen Diacon. In addition, extensive modelling, using a model that was quality-assured by the Government Actuary’s Department, has been carried out by the Government using there data, as part of both the pre-consultation and post-consultation impact assessments.

Looking forward, the Environment Agency will continue to collect and analyse data on flood risk, which will feed into the Government’s ongoing assessment of the scheme. In addition, as Flood Re is directly accountable to Parliament, detailed audited information about Flood Re’s ongoing operation will be reported to Parliament regularly.

I turn now to the proposed role of the Committee on Climate Change in advising the Secretary of State on setting the target number in relation to the flood insurance obligation. Clause 58 gives the Secretary of State the power periodically to set a target for the proportion of properties on a register of properties at greater flood risk that relevant insurers are collectively required to issue with insurance policies. The register, to be created by the Environment Agency and its counterparts in the devolved Administrations, will be based on the flood risk maps published by those bodies.

The number of properties indicated as subject to flood risk may change with time, as a consequence of climate change or through better information and mapping. The Secretary of State would set an overall target for the number of registered properties that the industry as a whole needs to cover. In setting this target, the Secretary of State would consider evidence on existing take-up rates of insurance and other relevant data. This could include advice from the Committee on Climate Change, should the Secretary of State wish.

The setting of the target number is a decision regarding the appropriate breadth of support that should be given by this financial support mechanism. Again, we believe that advising on the target number would be outside the committee’s current remit and, for reasons discussed in relation to Flood Re, would not be the most appropriate use of its resources or expertise.

Although, for the reasons that I have set out, we do not feel able to accept these specific amendments, I would like to return for a moment to the wider spirit behind them. We absolutely recognise that climate change is a most important consideration for the management of future flood risk and we value the expertise of the Committee on Climate Change. We are pleased that the independent Adaptation Sub-Committee will be publishing a revised climate change risk assessment report in summer 2016. We will consider that evidence and any implications for flood risk management carefully once the report is received.

Noble Lords know about various measures that we are putting in place to reduce the risks of flooding and coastal erosion, so I will not expand on that right now. I hope that the noble Lord will have been reassured by what I have had to say, setting what we are doing here in the context of our deep understanding of the potential implications of climate change and the unpredictability of measuring it into the future. I hope that he will withdraw the amendment.

Water Bill

Lord Ashton of Hyde Excerpts

Monday 27th January 2014 Lords Chamber

[Lord Ashton of Hyde (Con)]

My Lords, I am pleased to support the Bill because of the increased competition it will bring to the water sector generally. I am glad that Her Majesty’s Opposition in another place welcomed this aspect of the Bill. In talking about competition, I will concentrate on Part 4 of the Bill concerning flood insurance. Here, I must declare an interest, or a residual interest, because I was, until June, the chief executive of a Lloyd’s insurance company and a London market reinsurance company, which was a member of the ABI. Although I am not now an employee, I am still the subject of various restrictive covenants. I am also, like my noble friend the Minister, the owner of a flooded house, but, fortunately for me, it was occupied by my father-in-law.

Making flood insurance available and affordable to all, as is the intention of the Bill, is a common problem in many countries and the temptation to interfere in the open market is fraught with difficulties. In the United States, for example, the National Flood Insurance Program was created in 1968 and allows property owners in participating communities to buy protection from the Government. The problem with government schemes is that the correct risk-adjusted rate is not charged, so the program is now about $30 billion in deficit. When you try to correct it, as the Biggert-Waters Act of 2012 was seeking to do, you get huge rate increases. In this case, there were increases of up to 400% for some home owners.

Having said that, there are huge problems for those households which, through no fault of their own, live in areas that are susceptible to flooding and for which this is a deeply worrying matter. It is surely right that there should be temporary help for those households while, at the same time, acknowledging on the face of the Bill the intention to,

“transition to risk-reflective pricing of flood insurance for household premises”.

The Bill stipulates a 25-year transitional period. Flood Re is a unique solution and, after many months of negotiation, it has the advantage of being supported by the insurance industry, as represented by the Association of British Insurers. It will be an industry-owned mutual classified as a public body. In agreeing to this, recognition should be paid to the insurance industry for agreeing to maintain the statement of principles until Flood Re is up and running. The industry has an incentive to make the new company work and avoid the flood insurance obligation, which is also in the Bill.

Flood Re will be an improvement because it makes affordable insurance available where it is not today. All insurers, new and old, are on a level playing field. Of course, there is nothing to stop an insurer keeping high-risk flood properties and not ceding them to Flood Re if it can get what it judges to be the correct risk-adjusted rate. That happens in many countries. There are, however, a number of potential problems, which will no doubt be addressed in Committee.

The first is the danger that, in the early years, a large-scale flood or series of floods over several months could exhaust Flood Re’s resources. That is a possibility although an extremely remote one. Like all insurance companies in the Solvency II world, Flood Re will be capitalised to a one in 200 level. In other words, it will have enough resources with an appropriate level of reinsurance—and assuming that the internal model is correct—to cover 99.5% of the losses that it could ever expect to face. This takes into account possible model errors and a host of other variables, which have to be documented and validated before the internal model is approved by the PRA. One in 200 is far more remote than any recent losses. Even the floods of 2007, which would have had an estimated £400 million cost to Flood Re, would have had to be six times worse—to be accurate, the reinsured loss amount would have to be about six times higher—to exhaust the likely level of the reinsurance programme.

In the event of a shortfall, the member insurance companies could be asked for a top-up levy to enable Flood Re to pay out its contractual aggregate limit after which, like any reinsurance arrangement, the liability falls back on the insurance companies that wrote the original business. The insurance industry has accepted this risk. While not incurring any contractual liability, the Government have affirmed in the memorandum of understanding with the industry that they bear primary responsibility for dealing with a flooding event with a greater than one in 200 return period.

Secondly, there are exceptions that Flood Re will not cover. These are mainly areas that are not covered anyway today by the statement of principles, such as houses built after 2009, to which the noble Lord, Lord Cameron of Dillington, referred, commercial properties and SMEs, and potentially genuinely uninsurable properties, although this will not happen at the outset of the scheme. If the intention is to move to free-market pricing, albeit over 25 years, it would surely be odd to increase the scope of the market intervention at the outset.

Thirdly, there are many details to be addressed before Flood Re can begin operations, which makes mid-2015 an ambitious target. The reinsurance protections will have to be bought in the open market. Flood Re will have only a finite amount of ceded premium and levy available to pay for that reinsurance, and whether or not the market will provide the required aggregate limit at an acceptable price remains to be seen. The fact, too, that it has to be bought under public procurement rules makes the exercise more time consuming. June 2015 is an ambitious timetable, with more than 170 open work packages to complete. Anyone who has been involved with Solvency II preparation, the validation of an internal model and the approval of the very onerous documentation requirements will know that is not trivial and that timely authorisation from the PRA should not be taken for granted. Nor, by the way, should EU authorisation for state aid, and I would be interested to hear from my noble friend the Minister when he anticipates that this will be forthcoming.

Finally and, to me, worryingly, it seems that Flood Re is going to be the most regulated company in the insurance market. It has been set up deliberately as a private regulated insurance company, but there will also be public arrangements for oversight due to the levy that will raise an estimated £180 million. Because of that, all the panoply of public supervision will be imposed in addition to the normal regulation that Parliament and the European Union have seen fit to impose. Actually, £180 million is really not a great deal of money—to put it in context, insurance premium tax alone raises more than 16 times as much. Nevertheless, as a result, Flood Re will be regulated by the PRA and the FCA. The National Audit Office will assess the economy, efficiency and effectiveness of its operation. There will have to be a responsible officer directly accountable to Parliament. There may well be scrutiny by the Public Accounts Committee. Defra will be held accountable to Parliament because Flood Re will be part of its accounts, with obvious implications for Flood Re’s compliance and governance costs. Commenting on this, Defra’s briefing note states:

“This proposed approach aims to strike a balance between the requirements of accountability to Parliament, and the need for Flood Re to be able to operate as an integral part of the insurance market”.

I hope that the future CEO of Flood Re, who is yet to be appointed, agrees.

Nevertheless, these concerns, which can be met, should not detract from an innovative solution to a genuine social need: to achieve affordable insurance for some 500,000 homes in the country while at the same time preparing the way for genuinely risk-reflective rates.