Agriculture Bill (Ninth sitting)

Baroness Chapman of Darlington Excerpts

Tuesday 13th November 2018 Public Bill Committees

[The Chair]

Good morning, ladies and gentlemen. May I remind you of the housekeeping arrangements? Please switch electronic devices to silent. Although we do not recognise the Public Gallery, it would be helpful if that could be done there as well. Tea and coffee are not allowed—but I cannot see any, so that is all right.

On line-by-line consideration of the Bill, the ground rules apply as usual. I decide whether there is a stand part debate. You can have a stand part debate, if it is convenient to you, during the debate on the clause or at the end, but not both. You have to exercise your judgment.

Clause 11

Support for rural development

[Jenny Chapman (Darlington) (Lab)]

I beg to move amendment 79, in clause 11, page 7, line 35, leave out “simplifying or improving” and insert

“making a change or changes which the Secretary of State believes to be necessary to”.

[The Chair]

With this, it will be convenient to discuss the following:

Amendment 80, in clause 11, page 8, line 19, leave out “negative” and insert “affirmative”.

Amendment 81, in clause 11, page 8, line 19, at end insert—

“(5) Before making regulations modifying legislation under this section, the Secretary of State must consult persons who, in his or her opinion, are representative of the sector to which the regulations will apply, or who may otherwise be affected.”

This amendment would ensure that there are checks and balances on the use of Ministerial powers in relation to rural development that would be granted under Clause 11.

[Jenny Chapman]

It is good to be back after our week’s rest last week. Clause 11 concerns support for rural development and I am afraid, looking back at our previous deliberations, I must rerun some of the arguments we applied to previous clauses. The issue that runs through the Bill is what the Secretary of State may want to do with the powers, and the inadequate definition of that. In the present case, the Minister wants the powers to be subject to the negative resolution procedure, which we went over in some detail the week before last.

Clause 11 states that the Secretary of State “may by regulations modify”

“retained direct EU legislation relating to support for rural development”

and

“subordinate legislation relating to that legislation.”

That is quite a broad power. Subsection (3) sets out some of the measures that the Secretary of State would be able to modify. It begins:

“In this section ‘retained direct EU legislation relating to support for rural development’ includes in particular—”

but it is not clear to me, and I should like the Minister’s view, whether the list of measures that follows is intended to be exhaustive, or whether the Secretary of State would be able to add to it. If he could add to it, and could use the powers in other ways, too, would the use of the negative procedure be appropriate in all circumstances, and not just the instances specified in the list? I should like the Minister to enable the Committee to understand the aim of the clause properly.

Amendment 79 relates to the Secretary of State’s power, under the clause, to simplify or improve the measures. The amendment would make the quite modest but important change of replacing the words “simplifying and improving” with

“making a change or changes which the Secretary of State believes to be necessary to”.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

Would the hon. Lady rather give powers to the Secretary of State to complicate legislation or make it worse? It seems she is opening a door for that to happen.

[Jenny Chapman]

No—clearly, that is not the intention. If the Minister needs to table something to make that clear, we will gladly discuss that.

[Sandy Martin (Ipswich) (Lab)]

Does my hon. Friend agree that although additional, more specific regulations might be more complicated, they would be clearer?

[Jenny Chapman]

I agree, yes. The change we are seeking in the amendment is to include “necessary”, because the Secretary of State has powers under the clause to make changes that he or she thinks would simplify or improve, but that is so subjective. The power that the Government seek would be through the negative procedure, so any change ought to be needed and not just used for things that the Secretary of State desires to do, for motives that we could not discern.

If the Secretary of State wishes to change the scheme in ways that today we can only guess at, we want to know more about how that power can be used. It could be said that it is very generous to allow the Secretary of State to make changes that, in his or her opinion, simplify or improve—he or she could say that just about any change was an improvement if he or she wanted to.

All amendment 79 seeks to do is to place a duty on the Secretary of State to ensure that any future changes are really needed: these measures will potentially have a significant impact on rural communities. The Secretary of State may decide to do nothing in this policy area, despite having the powers. People watching our deliberations will want to know an awful lot more about what will happen as a consequence of the clause.

I move on to amendment 80, which subjects regulations under the clause to the affirmative procedure—not the negative procedure, as the Secretary of State desires. We went over this point at length last time when we discussed the difference between the two processes. I do not see any benefit in going over all that again. It would be helpful if the Minister justified why he thinks the affirmative procedure is not appropriate in this instance.

As we discussed at some length previously, amendment 81 requires the Secretary of State to consult persons who,

“in his or her opinion, are representative of the sector to which the regulations will apply, or who may otherwise be affected.”

The Opposition believe that that is a necessary safeguard. We want the amendment on the face of the Bill because the clause affords such great power and discretion to the Secretary of State.

We know, because he said it last time, that the Minister has good intentions to consult, but the majority of consultations conducted by his Department take place because they are required in legislation. We talked about there being several hundred consultations—could he tell us how many of those come about because they are required in legislation? How many happen because the Department feels that it is the right thing to do?

There is no requirement at all in the clause to consult, but perhaps there ought to be. The Minister is asking us to rely just on his good will and the custom and practice that he says exists in the Department, but I question whether that is the case and whether the consultations that take place in the Department for Environment, Food and Rural Affairs are by and large required by legislation. They are often required for very good reasons and are an important safeguard that ought to apply when we are talking about support for rural development.

As we discussed last time and as is worth repeating, done correctly, consultation improves decision making and avoids costly mistakes and unintended consequences. Why does the Secretary of State believe it is not appropriate to require consultation in this case?

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

I am delighted to be back, Sir Roger. I spent much of last week in Northern Ireland and Ireland, and will no doubt be referring to that in Committee.

A couple of points are important to the clause. We need to understand that the Bill should encompass pillar 2 of the common agricultural policy. I am not sure whether it does, although this is the closest that we get to it. I am aware that in due course we will be debating my amendment 115, so I am not going to talk about timetables.

I want to talk about the substance of rural development: it is very important that we understand that although agriculture is crucial to rural development, it is not the totality of it. I would argue that the Government have not got a rural policy, and they need one. Things are going on in rural England, to which the Bill largely refers, that are not good at the moment. Anyone who has read the material that has come out about the relative decline of market towns should be very clear that we need to invest in those communities and the villages around them.

The worry is that the Government not only do not have a rural policy, but they have no one to speak on a rural policy. They dismissed all rural advocacy. I am not saying that new Labour was wonderful in this area, although we did have a good rural policy between 1999 and 2004—principally around the countryside White Paper of 2000 and what the £1 billion earmarked for rural areas implied. It made a significant difference. Sadly, that has all gone: we have lost the rural tsar and the Commission for Rural Communities. That worries me when it comes to this Bill; I do not know how pillar 2, which largely invested in rural communities through the common agricultural policy, transfers into the Bill.

I will be interested to hear what the Minister says. We are back again to the usual game of powers and duties. The Minister and Secretary of State do not need to do anything. They can make lots of warm noises about rural areas, but the reality is that unless we have vibrant rural areas, we will not have a vibrant farming sector because those are inextricably linked.

It is important that we get clarity from the Government on how pillar 2 is embedded in the Act, to make sure that rural areas are not forgotten. The Agriculture Bill is the nearest we will get to being able to talk about rural areas and their need for investment and support through the nature of farming—obviously, a lot of the people who get the benefit of rural development are farmers or farm businesses along the food chain.

Will the Minister clarify what guarantees there are in respect of pillar 2? It was never perfect, but a lot of the academic and support work that goes into rural areas came through that channel. We all know that that sort of funding is highly questionable at the moment. I hope the Government will make some real statements today about how they intend to fund rural development.

[The Minister for Agriculture, Fisheries and Food (George Eustice)]

I want to begin by addressing the shadow Minister’s over-arching point about rural development and the pillar 2 scheme. I will respond to that specific question, which is not directly relevant to this clause but is picked up in other parts of the Bill.

Pillar 2 and pillar 1 are an EU construct: that distinction will no longer exist, but the policy objectives, currently delivered under pillar 2, will be delivered in the following ways. Clause 1(1) is all about the farmed environment and supporting farmers to farm in a more sustainable way and enhance the environment. The objectives delivered by the current countryside stewardship schemes and the previous entry level stewardship and higher level stewardship schemes, which account for the lion’s share of the funding in pillar 2, will be picked up in clause 1(1).

[Jenny Chapman]

This gets to the nub of the problem. As we have said, the Secretary of State may give financial assistance for those things, but the Bill does not say that the Secretary of State is going to do any of those things.

[George Eustice]

We had a long debate about the drafting protocols that we have always had in this country, and “may” is the wording that has been used in a number of Acts, including the Natural Environment and Rural Communities Act 2006 and a number of other Acts that Opposition Members are passionate about, such as the Agriculture Act 1947. We covered that in detail last week when we debated this issue.

I want to return to the point that clause 1(2) enables us to make grant aid and loans for farm productivity, and that picks up a number of the other components of the pillar 2 schemes—notably what we currently call countryside productivity schemes, which are all about supporting farmers to invest in new equipment.

Finally, as I also made clear in earlier debates, there will also be a shared prosperity fund with a rural dimension, which will pick up some of the other objectives currently delivered in pillar 2, such as the LEADER scheme. We have a clear plan, both in the Bill and the development of a shared prosperity fund, to deliver rural development and support.

This clause, in common with clauses 9 and 10, is all about the power to modify retained EU law. That is very important because our frustration at the moment with the bureaucracy around the current schemes is horrendous. The amendment seeks to change “simplifying” or “improving” the operation of the scheme to saying simply to make

“changes which the Secretary of State believes to be necessary”.

I am not sure that the hon. Lady’s amendment narrows the scope—it might, in fact, give more discretion to the Secretary of State. We are clear we want that power to be used to simplify and improve. A number of people have asked what “simplify” and “improve” mean. I think that is understood: it is to simplify and improve. As my right hon. Friend the Member for Scarborough and Whitby made clear, we would not want to make the situation worse and more complex.

[Jenny Chapman]

It is not sufficient to say that people have asked what “simplify” and “improve” mean and then to say that they mean to simplify and improve. It might help if the Minister gave a couple of examples so that we have a clearer idea of what he intends.

[George Eustice]

Yes, I was coming on to do just that. One frustration at the moment is having LEADER groups up and down the country regularly complaining to me about the process that they have to go through in the application. The current regime has been made more onerous with the number of checks and the amount of paperwork required.

We have had problems in the past when people with relatively small grants have been told that they have to get three or four quotes for the job to be done. There is nothing wrong with that in principle but, if there is a slight modification to their plan and they have to make an adjustment to their investment, they have to go out to the market again and get a whole new set of quotes. They find that kind of bureaucracy deeply frustrating. This provision would enable us to improve that.

Another example comes from the countryside stewardship schemes. People get deeply frustrated about the amount of photographic evidence they have to send in; we have even had complaints that people have had to send in photographs of invisible boundaries because that is a requirement of the scheme rules. Again, that has all been done because of pressure from the IACS regime, as it is called: the integrated administration and control system, enforced by the EU. The provision would give us the ability to take off some of those rough edges.

At the moment, we get about £100 million of disallowance fines a year from the European Union, and a large amount of that is for trivial points around the way something is recorded. One example that I remember particularly well is that we ended up with fines from the European Union because it did not like how we had recorded how we checked whether companies were VAT registered; they were large companies with grants under the fruit and veg regime in that instance. We had checked that they were VAT registered. The check took place and was recorded through an email exchange, but the EU said we should have recorded it on a particular type of form.

That is the monstrous complexity and bureaucracy that bedevils all these schemes, and that is why it is right that we strike down that unnecessary bureaucracy and administration, as we seek to do in clause 9.

--- Later in debate ---

[George Eustice]

My right hon. Friend makes an incredibly important point.

[Jenny Chapman]

Will the Minister give way?

[George Eustice]

I will answer that important point first. The regulations are drafted in a way that assumes guilt—often, it is worse than that. For example, farmers might have made a number of innocent and minor record-keeping errors and we might have chosen to write warning letters instead of imposing fines. Under the penalty matrix, the EU auditors take the view that there almost has to be a quota for guilt: if we were to be more lenient on some farmers because they had made innocent errors, we would have to apply higher penalties to other farmers, deeming them to be guilty. It is an EU process that is completely inconsistent with British notions of justice and the rule of law, but it is a system that we have had to endure for many years.

[Jenny Chapman]

People watching this will be astonished that we are being asked to assume that one group within society is somehow to be treated differently when they are in receipt of public funds, because they have a tradition of honour and not being misleading and should be viewed differently from other people who are getting support. There will have to be rigorous procedures around all this. The Government are in for a huge shock if they think that the scrutiny and pressure from the EU will not be replaced by pressure from constituents and taxpayers.

[George Eustice]

That was not my point at all, and it was not my right hon. Friend’s point. The point was that we should allow farmers and other landowners to be treated the same as everybody else; apply the principles of justice and rule of law that we have in this country; and not have an arbitrary system of penalties coming from the EU.

To come back to my point about the areas in which we can improve, clause 9 will be an important area for some of our evidence requirements and rules on deadlines and dates; we would be able to show more flexibility. The powers in clause 11 will probably be more modest, but they enable us to sort out some of that unnecessary administration—on the LEADER scheme, in particular. They would enable us, for instance, to vary the length of agreements when we thought that was appropriate, particularly if we wanted to extend and roll forward some of the legacy agreements for a few years.

--- Later in debate ---

[George Eustice]

Yes. The devolved nations have that retained EU law through the EU withdrawal Act. We have discussed previously that Scotland requires some kind of clause to be able to continue to make payments after we leave the European Union, but that is relatively easy to remedy. A combination of this Bill and the EU withdrawal Act gives us the power right across the UK to honour all those commitments that have been entered into.

Returning to clause 11, the hon. Member for Darlington asked whether subsection (3) is an exhaustive list or whether we can add to it. It is not exhaustive but it covers the bulk of the regulations. I will explain why we drafted it in that way. The regulations listed under subsection (3) are effectively all the current in-force rural development regulations. However, we have kept open the option to broaden the list slightly because we have some legacy schemes—older agreements under previous countryside stewardship or productivity EU schemes that are no longer technically in force—and we might still want the ability to modify and tweak them. The best way to describe it is to say that the list is not exhaustive, but is close to being exhaustive. It covers all the regulations currently in force, but we need just a slight amount of room to capture the previous legacy schemes that are no longer in force.

[Jenny Chapman]

If there are not many of those additional measures, why did the Minister not include them, just to ensure more clarity in the Bill?

[George Eustice]

The problem with EU regulations is that they are often chopped and changed all the time. We can capture the snapshot of what is there at the moment, but some of these regulations will have repealed and replaced elements of previous ones, but often not all elements. This is a complex area. Often there will be a grant agreement in place where there are binding requirements between the two, but where the initial regulation under which it was made has lapsed and, sometimes, been partially—but not fully—replaced by new ones. There is a constant churn of EU regulations, so we have tried to capture the vast majority of those in force now, but we need that movement to cover areas that might have been missed.

Amendment 80 proposes that regulations under this clause should be made under the affirmative rather than the negative resolution procedure. We discussed this issue in debates on earlier clauses where we are seeking to modify retained EU law. We are talking about technical changes and improvements to legacy schemes that are going to be wound down anyway, and it is not appropriate to have lots of affirmative resolutions for that type of change. We envisage making a single sweep of changes to improve and simplify these schemes in one point, and that would be the end of it.

However, I can give the hon. Lady some reassurance on her amendment 81. As I explained earlier in relation to a similar amendment, DEFRA needs no encouragement to hold consultations. We love consultations. My constant refrain to officials is: “Are we sure we really need a consultation on this?” We often hold consultations where we have just a couple of dozen people who can bear to respond to them. While we do not need to put this requirement in legislation—the only legislative requirement for consultation in the DEFRA sphere, for obviously good reason, is for food safety, which is in the Food Safety Act 1990—I can give her an undertaking that, before making changes to the scheme under the powers of clause 11, we would hold a consultation to ensure that all relevant parties could be engaged.

[Jenny Chapman]

I have such concerns about this, because it could become a free-for-all, where the Government can do what on earth they like. We cannot sit back and allow that to happen. Minette Batters said in evidence that she did not wish this kind of support to become politicised. I do not blame her for that, and I would not wish that in her position either, but the fact is that it is going to be politicised, and the Government have no idea what they want to do. I am not accusing the Government of having some sort of sneaky plan up their sleeve that they wish to inflict on rural communities, but I do not think they know what they want to do. They have therefore decided to come up with this clause, to give themselves as much flexibility as possible. I accept the Minister’s undertaking on consultation. I take him at his word and will be holding him to that, but the Government have not been clear. I do not think they know what they want to do. The list is not exhaustive, as we would have hoped.

I will not push each amendment to a vote—aspects of this issue will undoubtedly be dealt with in the House of Lords—but we have genuine concerns. We are not just trying to make a point; it is a real problem for Parliament and, potentially, rural communities that the Secretary of State is being allowed these kinds of sweeping powers under an inadequate procedure, which cuts out parliamentary scrutiny and Members’ ability to voice their concerns. I will therefore put amendment 80 to a vote.

[The Chair]

The hon. Lady needs to say that she first wishes to withdraw the lead amendment, if that is what she intends.

[Jenny Chapman]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Jenny Chapman]

I shall speak principally to amendment 97 and what it seeks to do. To an extent it is probing, but we are incredibly concerned about this. As my hon. Friend the Member for Stroud just pointed out, clause 17 talks about “exceptional market conditions”. We are trying to understand more precisely what the Government want us to understand by that. As paragraph (b) of amendment 97 states—this may be imminent—we would consider it an exceptional market condition

“if, on the day after exit day, the United Kingdom has not entered, or secured an agreement to enter, into a customs union with the EU.”

We are concerned about that. Exit day is at the end of March next year, about 150 days from now. That would be a significant threat to the livelihoods of farmers and others in the food and drink industry up and down the country.

We want to understand whether the Government agree that that is a significant threat and what, if anything, they intend to do to support producers through it, should it come about. The Minister may be able to say, “Actually the circumstances that would emerge in that case are covered by elements of the clause in the Bill,” but it would be good to hear him say that, so that we can at least be assured to that extent as we continue to follow the Government’s progress through these negotiations—I hesitate to use the word “progress”.

I am particularly concerned, when we are talking about a customs union, that we have no Members from Northern Ireland on this Committee, so that voice is missing. I understand that the Assembly is suspended at the moment, and I wish the Secretary of State for Northern Ireland well in her endeavours to re-establish the Assembly. It is a great pity that there is currently no access to the Assembly, particularly for the citizens of Northern Ireland, and the voices of that part of our country are limited as a consequence. That is a real problem, particularly when we consider farmers in Ulster. There are farmers along the border whose farms cross the border. It is a border of 300-odd miles, intersected by far too many roads to be able to have any meaningful customs checks.

We have all heard many times in the Brexit debates the concerns about border infrastructure and what it would mean for security and identity in Northern Ireland. That insecurity and concern is felt particularly by strong Unionist farmers I have met in Northern Ireland who tell me very clearly—as I am sure that they will have told the Minister, if he has been there, which I expect he has—that they want to be in a customs union. They have a very plain way of telling you this. I was shocked to hear how one Ulster farmer, a strong Unionist all his life, talked about it. He said that he would rather have a united Ireland than a border on the island of Ireland. That stuck with me, and we all need to keep it in mind, because it shows the strength of feeling in Northern Ireland.

I regret that we have no member of the Committee who can speak with first-hand knowledge of Northern Ireland, and that we have to rely on people like me. Although I have visited many times in recent years to talk about Brexit and its implications, it is a real missed opportunity that we do not have someone on the Committee. I am sure that the opportunity will be taken to hear those voices in later stages of the Bill.

There is growing concern that the Government’s understanding of the way that food gets in and out of our country is lacking. The Secretary of State for Exiting the European Union recently remarked that he did not realise how dependent we were on the Dover-Calais crossing, which was shocking to many people, including me. It was extraordinary to hear that at this late stage in the negotiations. If that lack of appreciation finds its way into the agreement, it could have catastrophic consequences for food producers in this country.

[Mr Goodwill]

The hon. Lady is absolutely right to identify some of the concerns, but is that not why, when we get a deal, which I am confident we will, we should all vote for it, rather than have more uncertainty?

[Jenny Chapman]

Nice try, but whatever the deal is, let us see it and judge it according to its merits. One of the tests that we will apply is the effect that it will have on manufacturers, food producers, communities and the devolved Administrations, and whether it respects the nations of our country and keeps our Union together. Those are the things that we will be thinking about, and we think that having a customs union is essential. We could have referred to a single market deal or any number of things, but we have chosen to be specific in the amendment. We want to understand what the Government expect to happen should we leave without a deal and without being part of a customs union with our nearest neighbours at the end of March next year. We are deeply worried about that.

[Martin Whitfield]

Is it not the case that, because of the circumstances surrounding the Bill on the question of no deal or deal, and because the Bill represents scaffolding, a lot of people are seeing what they want to see in it, when there is actually very little to see? The sort of certainty that is proposed in these amendments would go a long way towards giving our farmers and rural communities confidence about what is expected and intended.

[Jenny Chapman]

That is a really important point. If I was a farmer, I would be incredibly worried by the Bill in general, but my anxiety would be heightened by this clause and by what I might anticipate happening, given the reports we are reading in the press. I do not think that any hon. Members present have any certainty about whether a deal will be reached, what a deal will look like if it is reached, whether it will be approved by Parliament, or whether it will be approved by the Cabinet, so to blithely assert that there will be a deal and that everything will be fine is not good enough.

We have one opportunity to get the Bill right. This clause could be the lifeboat for many people in the industry. It is important that we understand what the Government intend and what they would do, under the powers given to them through the clause, should we leave without a deal and without being in a customs union.

The National Audit Office report states that the Government are generally underprepared for a no-deal outcome. To be fair, DEFRA has done more than many Departments, but that is because it has had to, because so much of its activity is affected by Brexit. Because the Government are underprepared, there is now panic. A year ago, we anticipated having a deal in October, then it was last week, this week and probably next week. Where is the deal? The anxiety in Parliament is palpable, and it is starting to be felt in the country too. There is an emerging sense of panic, whether about transferring staff from valuable wildlife protection work in Natural England or about the need to stockpile food. We know that the industry has already rented out virtually all the available food storage in the country, and people are incredibly worried about that. Given the lack of clarity and information, their concern is understandable and valid.

The Government have a duty to ensure that there will be food in the shops in April. I know I will be accused of “Project Fear” mark II, mark III or whatever—I understand that, and I am being careful not to enter into that kind of thing—but we must be honest. I do not know whether hon. Members had a chance to read the Government’s technical notices, which were published this summer, but they make pretty grim reading. The Government now acknowledge and anticipate many of the concerns that were deemed to be part of “Project Fear”.

[Sandy Martin]

Does my hon. Friend agree that one of the points made in amendment 122 is that Brexit is likely to have a serious impact on the cost of production? It is not just about markets for produce; it is also about the cost of production. We already see some of those costs changing as a result of the decision to leave the European Union.

--- Later in debate ---

[Jenny Chapman]

My hon. Friend is right to highlight that this is about not just trade but many other things, including access to labour, certification, standards and future trade deals. People in this industry are worried about many unknowns. It would go some way to reassure them to know that the Government were mindful of these risks and have used the Bill to make some commitments about the measures they would put in place should those exceptional market conditions come about.

The Opposition have what we think is a helpful answer: to remain in a customs union with the European Union. I do not intend to enter into a long debate about that today—we could spend the rest of the day discussing the benefits or otherwise of a customs union, and I am sure we will do so in the Chamber when we talk about the legal advice later this afternoon. The Opposition have been incredibly clear about wanting to be in a customs union for many reasons. It would deal with many of the risks surrounding trade certification, access to markets and our ability to export as we do now—“friction-free” has become the standard phrase to describe it. That really matters to this sector. It would be good to hear the Minister acknowledge that, because many voices in the sector have been increasingly clear about that as understanding has grown and the debate has progressed. I anticipate that, as we approach exit day without clarity or anything concrete from the Government, the calls for remaining in a customs union will be amplified. The sector needs certainty. It needs to know what it is doing.

The NFU reported that its modelling shows that the removal of the beef tariff and the opening of the UK beef market to imports from around the world would result in a 45% fall in farmgate prices and a 30% fall in the price of sheep. That obviously has a huge impact on producers. Would it qualify as one of the exceptional market conditions in the Bill? What if there is some kind of barrier to trade with the EU of animals and animal products, if we fall out without a deal at the end of March?