Sheep Farming: No-deal EU Exit

Debate between Matt Western and George Eustice

Tuesday 3rd September 2019 Commons Chamber

[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.