Fertilisers and Ammonium Nitrate Material (Amendment) (EU Exit) Regulations 2019

Baroness Young of Old Scone Excerpts

Wednesday 20th February 2019 Grand Committee

[Baroness Parminter (LD)]

My Lords, I certainly have no intention of opposing this fairly straightforward statutory instrument, particularly since ringing round a couple of the people who were described as the key stakeholders. When I phoned one of them, they sent me a reply and copied it to the department. Clearly there is a healthy, if not cosy, relationship between the industry and the department.

I want to make two points. Paragraph 7.5 of the Explanatory Memorandum talks about what will happen, and has been happening, in terms of a risk assessment for these fertilisers. It refers to certain ways in which a fertiliser can be treated,

“if there are justifiable grounds for believing that it constitutes a risk to safety or health of humans, animals or plants or a risk to the environment”.

That is a really important point, given the impact of fertilisers. We accept that they have an important role to play in farming but they are not without their risks. I would like a little more clarity from the Minister about our process for identifying those risks. The memorandum goes on to talk about the changes in the rules being carried out in conjunction with the HSE. Of course—that is perfectly right and proper because the HSE has a remit with regard to human health. However, I would like some reassurance about what the process is at the moment. I am not saying that there are any changes—I am pretty sure there are not—but I would like some clarity. What engagement is there between the HSE and the Environment Agency to ensure that environmental concerns about fertilisers potentially coming into the UK are assessed appropriately, particularly given that, sadly, we import the majority of our fertilisers at the moment?

My second point is merely one of process—a matter that other noble Lords have mentioned. Paragraph 6.3 of the Explanatory Memorandum talks about the need for some changes to be made. They are changes which pertain to this SI but which will be covered in a further SI—the Pesticides and Fertilisers (Miscellaneous Amendments) (EU Exit) Regulations, which will come before us at some point in the future. That SI is the third of the triumvirate of pesticides SIs, which we discussed at great length in the Committee last week. A government impact assessment said that both business and the Government would be extensively impacted, and it seems wrong that this third pesticide SI was not discussed at the same point. I accept that there is an argument that it should and will be subject to the negative procedure at some point, but with that to one side, if you have an impact assessment which covers three SIs and says that there are major implications, it would be helpful for the House to discuss them concurrently.

[Baroness Young of Old Scone (Lab)]

My Lords, as I came to the House today, my local farmers were carting megabags of EC fertilisers everywhere I went. I presume they have come to the conclusion that spring is here; it seems that in spring a young farmer’s fancy turns not to love but to fertilisers.

I thank the Minister for her clear exposition of the regulations, and for the briefing meeting that she very kindly convened. I am sure everyone will be delighted, at this point in the evening, to hear that this statutory instrument appears comparatively straightforward. We welcome the changes that have been made as a result of the consultation and the sifting exercise, including the introduction of a two-year transition period for the fertilisers part of the regulation.

I would much prefer that the transition period be overtaken by an outbreak of sanity and us remaining in the EU, rendering the provisions unnecessary. However, it would be good to hear from the Minister what the Government anticipate that the longer term will hold. Currently, fertilisers are partially harmonised in that member states are permitted to have a domestic regime in addition to the EU rules. Do the Government anticipate us trying to keep in harmony with EU fertiliser standards and controls in the longer term, and if not, what impact would that have on both imports and exports?

Of more concern, though admittedly affecting only a small number of UK fertiliser manufacturers, is the position of those manufacturers who export to the EU. They may already have to meet individual member state requirements where a member state has a domestic regime. A technical notice has been issued by the Government on where the parachutes are if we crash out on 29 March. Under that, UK manufacturers who wish to continue trading with the EU will have to send samples to EU labs for testing in order to comply with EU regulations. Any necessary sampling or analysis will be carried out by competent laboratories included in the Commission’s published list. Manufacturers in the UK will be able to label their products “EC fertilisers” only in accordance with the EU framework, and UK companies will only be able to export EC fertilisers to the EU if they comply with the EU regulations, which include a requirement that I did not quite understand, that,

“the manufacturer is established within the EU”.

Therefore, I ask the Minister for clarification on two points. First, in the short term, does the requirement to have the sampling and analysis carried out by an EU lab double up the costs—an EU lab and a UK lab—and is this an additional burden on UK manufacturers? This would be at odds with the Government’s statement in the Explanatory Memorandum that there will be no added cost burdens to manufacturers. Secondly, does the requirement that the manufacturer is established within the EU in reality rule out UK manufacturers being able to market their products under the EC label if we crash out of the EU at the end of March?

All this would be unnecessary if we came to the conclusion that leaving the EU is the arrant folly which it is, but I am sure the Minister is not going to give any key assurances on that tonight.

[Baroness Vere of Norbiton]

I thank all noble Lords who have taken part in what has thankfully been a short debate; I believe that this is a fairly simple piece of secondary legislation which we should be able to dispatch fairly quickly. However, I appreciate the comments made by many noble Lords, and certainly from my noble friend Lady Byford. The consultation period was very important to us, and it was quite interesting that the agreement was that two years was the best time; this is the period that had been used previously. For example, when the label had to be changed from “EEC fertiliser” to “EC fertiliser”—they had to knock out an “e”—that took two years, which seemed the appropriate amount of time for the bags to be relabelled and for more to be produced with the new label. The transition period is an important issue for the labelling and I am pleased that it seems all parties are happy with where we have got to.

I turn to the comments made by my noble friend Lady McIntosh. It is always a pleasure to see her in these debates, but I sometimes fear slightly what she may say—I do not want to say that she may go off-piste, when I am sure many of us are supposed to be skiing. She certainly asked me some questions that I cannot hope to answer within the scope of what the Committee is discussing. For example, I am afraid that ammonia emissions go far beyond what I have and can help noble Lords with, but it is important that many bodies already exist which farmers can go and speak to on the use of fertilisers. When we get to consider the Agriculture Bill in your Lordships’ House, we will be discussing advice to farmers and their relation to the environmental land management schemes which will be put in place. All those things are very important for how we function in harmony with the countryside, so perhaps my noble friend would hold her horses just a little while longer and we will come back to that.

[Baroness Vere of Norbiton]

My noble friend is quite right but I see us as doing something specific today, which is to protect our country in the event of a no deal Brexit, which I am sure none of us would want to see. I recognise that we sometimes have to deal with these provisions in a slightly piecemeal fashion but they are designed to be piecemeal—to be nice little nuggets that we can discuss and then hopefully move on, having protected our legislative framework which is clearly so important.

I also put forward a slight word of warning because apart from my Defra job I have another, which is as the Whip for BEIS. I am sure that many of your Lordships will be aware that that department has issued an SI which amounts to 330-odd pages. I see my noble friend Lady McIntosh saying that is not a problem but I am afraid that many people have regarded it as a problem. To a certain extent, bite-size pieces can be better. I see the noble Lord, Lord Grantchester, rubbing his hands in glee and I hope that I will not be the Minister taking it through—I am sure that my noble friend Lord Henley will be better by then and with us.

To go back to the matters in hand today, my noble friend Lady McIntosh also mentioned the list of laboratories. Yes, that will be republished. At the current time, I believe that three laboratories do fertilisers. It will be republished shortly and I will make sure that that is the case.

I turn to the points raised by my noble friend the Duke of Montrose. What we are dealing with today is more about the imports than the exports, as I am sure he will appreciate. It is so important that our farmers have continuity of supply. Obviously, we cannot tell the European Union what to do if we leave with no deal. We will unfortunately be in a situation where there will be no reciprocity. However, it is the case that we import vast quantities of fertilisers, including ammonium nitrate, which is why we are extending a warm hand to those overseas manufacturers and saying: “Look, it’s okay. We will continue to recognise your labelling for the next two years to ensure continuity”.

With regard to chemicals more broadly and the REACH SI, regulations on which will I know be coming to us soon, that is a far more complicated area and we will have to go into it. It was most important for us to make sure that we have the systems and laboratories in place, and that we accept the results from overseas laboratories for that two-year period.

The question of exports was raised, both by my noble friend and the noble Baroness, Lady Young. Fertiliser manufacturers based in the UK will, of course, be able to sell products into the EU. If we leave with no deal, they will do so as a third country, but they will have to comply with the EU regulation—they already comply with it at the moment, Regulation (EC) No. 2003/ 2003—and any other relevant legislation.

The noble Baroness raised the point about ensuring establishment—this is a very broad term—within the EU after exit. Sometimes, when exporting to third countries, you have to comply with them as they require. In some cases of larger companies, it would be cost effective to have an office there, but for many it is simply a case of using an import agent in that country. Those requirements would come into being; however, this is for no deal only. If we have an implementation period, none of this will come into play. If we get a free trade agreement thereafter, as we hope, much of this will continue, as we all wish it to, so I am afraid we are dealing solely with a no-deal scenario today.

[Baroness Young of Old Scone]

Will the Minister confirm that that small number of 20 or 30 manufacturers of fertilisers in this country will have to get lab tests in the UK and the EU—potentially in member states that have a national testing regime—and pay for an agent? That seems like quite a major burden on the poor souls.

[Baroness Vere of Norbiton]

I cannot really comment on the costs because the testing of fertilisers is not required quite as often as, for example, for other chemicals. I imagine that there will be a small increase in costs for those companies that want to export into the EU, unless of course the EU decides that it wants to mitigate those costs and would like to work with us, either on a bilateral basis or whatever. That is indeed the case: exporters, whether of fertilisers or, quite frankly, of anything else, will find that certain things will be different for them when they export in future if there is no deal. This is why the noble Baroness and I would like a deal.

[Baroness Young of Old Scone]

I just do not want us to leave.

[Baroness McIntosh of Pickering]

On that point, highlighted by the noble Baroness, the technical notice says that Norway, Iceland and Liechtenstein, being party to the European Economic Area, will be covered. Will lab costs have to be applied to export to those areas in the event of no deal as well?