Agriculture Bill (Second sitting)

Chris Davies Excerpts

Tuesday 23rd October 2018 Public Bill Committees

[Kerry McCarthy]

Q 50 Presumably, if there is less land available for farmers, that will then push up rent prices?

Christopher Price: I would suggest that, say, on every farm—this is talking in averages—there is 10% to 15% where the input costs are greater than the value that is got out of the process. There is a lot of land that need not be used for farming and that could be used for nature in particular, provided that there are sufficient incentives in place for people to do so.

George Dunn: I also think it is important to appreciate that, in the current economic circumstances, the return on capital that the landlord is getting from a rental payment, even if it is £200 per acre, will only be 2% of the capital value of the land that they are offering to let. The reasons for people owning land and letting it out are simply different to the economic uses they are getting from it. So, it might be because they are looking for development into the long term, or they might be interested in using the reserve rights for minerals, for sporting purposes or for other activities.

Also, the tax system within which land is owned is quite beneficial, in terms of agricultural property relief and the ability to claim other relief. So there are other reasons why landlords will still choose to let land, and we have seen the area of land let in this country remain pretty static for about the past 30 years, at about a third. So I do not suspect that we will see a massive shift from the let market simply because we see rents adjust downwards a little bit.

[Chris Davies]

Q 51 (Brecon and Radnorshire) (Con): We heard from our previous witness that there is not enough agriculture in the Agriculture Bill. Would you both agree with that and, if so, what would your organisations like to see in this Bill that is not already there?

Christopher Price: The headings are there; the issue is very much how those headings are used in practice. There are provisions to reward farmers for many of the public goods they provide, but there could be more explicit commentary on rural vitality and on the importance of preserving rural communities, because often farmers are at the hub of rural communities, particularly in some of the more remote areas of the country.

There are significant powers in the Bill to invest in improving productivity and that sort of issue. The big frustration is that we have had very little from Government about how they intend to exercise those powers. It is all very well saying that farmers have got to adapt to the new world of delivering public goods, but they have also got to become more efficient at farming, and Government have not given any indication at all really as to how the powers they propose giving themselves in the Bill will be exercised. However, if those powers are exercised in the right way, there is the potential to improve things very much for farmers and the agricultural sector more generally.

George Dunn: It goes back to what I said previously about this Bill being a scaffold, not a building. The issue for us is that we still need to be convinced that we will see the Government use the powers they are making available for themselves in terms of things such as the supply chain issues. The Groceries Code Action Network has put in some evidence to the Bill Committee—we are a member of it—to say how we can beef up some of that section. We are not convinced that the Government are as serious as they say they are if the Rural Payments Agency is going to be the body responsible for overseeing this particular bit of the Bill. The RPA is perhaps not best skilled for this type of work in terms of the supply chain issues.

We also need to be convinced that the productivity measures are going to be used to the full effect. Actually, the measures reserved for Wales in the schedules of the Bill appear to be better than the ones reserved for England, so we would ask for the Welsh ones to be transposed into England.

On the marketing standards issue, it is absolutely correct that we want to protect our production standards, but if we do not protect our trading positions so that we reject stuff from abroad that is not produced to the same standards, we will undermine our production at home, too. There is an awful lot of hope in the Bill, but not yet too much trust.

[Chris Davies]

Q 52 If a Minister may interpret this set of rules in one way, how concerned are you that, in the devolved nations, there will be different processes going on right around the country?

Christopher Price: Perhaps this is one thing that the Bill lacks: the important thing is to have a UK-wide framework that allows four national agricultural policies underneath it, so that everyone is operating to a high-level set of common rules, but each country has the power to go and decide what it thinks best for its own circumstances.

George Dunn: Obviously, in a devolved world there is great scope for the four countries of the United Kingdom to take a different view of different aspects of this policy. But, fundamentally, we must remember that we are an economic union of four nations, and we need to preserve that for the benefit of the populations of all four countries of the United Kingdom. That will be the key issue—to ensure that we do not impact the ability to trade with one another in a free and open manner.

[Mr Goodwill]

Q 53 Included in clause 7 of the Bill is a provision to allow de-linking of the payments. The example I was given was where a tenant farmer who wishes to retire could take three years’ worth of payments, which, together with his live and deadstock sale, would allow him perhaps to clear his overdraft and retire. However, if he hands that tenancy back to the landlord, he is left with land that will not attract any payments for two or three years and the difficulty of attracting another tenant. How would that work in practice?

George Dunn: I am not sure there is a problem in what you suggest. It is not just the tenant’s ability to roll up the direct payment with the live and deadstock; the landlord themselves may be willing to give a payment for the early surrender of the tenancy, in order to get vacant possession or to offer the tenancy to a new entrant on a farm business tenancy basis, as opposed to an old-style agricultural holding tenancy. There may be some benefits for the landlord.

--- Later in debate ---

[Deidre Brock]

Q The CAP payments operate to a seven-year cycle. Could you share your thoughts on the suggestion that future payments might be tied to the Westminster budgetary cycle? If farmers are lucky, that might be three to five years, but the Government might change and the money flow might stall as a result. Can you tell us about your concerns on that issue and set out your thoughts on what sort of mechanism might be used to resolve it?

John Davies: Obviously, we need a long-term, multi-annual framework to deliver support, because farming is not a short-term business. For instance, sheep that are going to the tup now will be sold in a post-Brexit marketplace. That is very short-term. We plan in generations, not years, so the longer it can be and the more robust model we can have to allow that would be useful. We are not entirely clear on any solution, because we recognise that future Governments are not bound by the previous Government, but that is a real issue for farm support going forward, because it is a long-term business.

Dr Fenwick: I agree. We have been dealing with multi-annual EU budgets for a very long time and they tally far better with farming calendars. The risks that having fluctuations on an annual basis would bring would be huge.

[Chris Davies]

Q First, may I declare that Mr Davies is a constituent of mine and that the Builth Wells office of NFU Cymru is based in my constituency?

If I may, Mr Thomas and Dr Fenwick, I will just pick you up by saying that there are not that many cross-border issues. Given that Brecon and Radnorshire share 65 miles of Offa’s Dyke, there is a lot of cross-border and I hear of great difficulties that arise on both sides of the border, with both systems, so I would not necessarily say that it is all one way.

Dr Fenwick: I am afraid to say that, on an annual basis, in terms of the payments, it is routinely the RPA that fails to provide data to the Welsh payment agency and that causes delay. Wales has an exemplary record when it comes to payments. It releases about 95% of payments on 1 December annually. I think we are the best in the UK, maybe apart from Northern Ireland, so I am afraid to say that that is not our experience. Many of those 600 cross-border farmers are members of ours and they are the ones who phone me when they do not receive payment, and they are struggling.

[Chris Davies]

We will agree to differ on that one.

Huw Thomas: There is an issue with cross-border farms but what I was saying was that such issues are not insurmountable with a political will to get over them. Yes, there are farmers—hundreds of farmers—on the border who suffer every year from delayed payments, simply because they have one foot in England and one foot in Wales, but given the political will, I think these problems could be solved. As Nick has said, the Welsh Government have a good record when it comes to paying promptly and on time. Often the problems will lie with transferring the data from the English side.

[Chris Davies]

Q Were the unions pleased or disappointed that the Welsh Government aligned themselves with this Bill?

Huw Thomas: The Welsh consultation came out in early July and then the Bill came out in mid-September, so their publication was not synchronised. However, it is quite obvious that they are different sides of the same coin. Obviously, a consultation is predicated on a piece of legislation that has been put through the UK Parliament, as can be done. The Welsh Government have expressed a desire to provide specifically Welsh legislation in due course for a Welsh agricultural Bill, so they may well revisit some of these provisions.

What we were anxious to see was some certainty and continuity at quite a volatile and unstable time. In that regard, at least we have a starting point for a discussion around what shape future agricultural policy should take in Wales, and we are starting from the fact that we have a lot of concerns about some of the content.

[Chris Davies]

Q A very good political answer, Mr Thomas, but was the union pleased or disappointed that the Welsh Government aligned themselves with Westminster?

Huw Thomas: I do not think we took a view. I do not think we had a member discussion about how people felt about that. There was a lot of anticipation—this consultation was long anticipated. We have done an extensive member engagement exercise over the last few months. We are coming to the end of that process and we will be putting in a comprehensive response to the consultation.

[The Chair]

Mr Davies, feel free to respond to your constituency MP.

John Davies: Thank you, Sir Roger. Perhaps I can have slightly more freedom, being president. I regularly sit round a table with the presidents of Ulster, Scotland and England. In Wales we are very keen to see the best policy being copied or used, whichever country it comes from. We need to ensure that that fits the bill for the needs of Wales, which are unique and rather special. We need a bit of flex within a UK framework.

Dr Fenwick: It is important for me to say that we were extremely disappointed. As has been made clear, we are opposed to what is proposed in England and Wales. It is untried and untested, and there are big questions about its economic viability and impacts, so naturally, it was a grave concern. The Minister is aware of our concerns; we have discussed them on many occasions. We had hoped that Wales would do what it has done in the past, which is to undertake detailed modelling and work out what is best for our rural economies, rather than simply follow England’s lead.

--- Later in debate ---

[Ben Lake]

Q Another quick question. We have spoken a lot about what is in the Bill today. Is there anything you would like to see that is not there? I have in mind the meat levy. There was some discussion in Wales about the possibility of including that in the Bill. Do you have any views on that particular omission and is there anything else you would like to see in the Bill?

Dr Fenwick: Certainly, there has been a lot of discussion about how this could have been an opportunity to take account of the fact that Wales is currently losing money through the red meat levy legislation. We appreciate that some moves have been made to address and correct that, but it is far from ideal. We lost hundreds and hundreds of thousands of pounds when a single slaughterhouse closed a few years ago, and that hamstrung our meat marketing body hugely in terms of how it could market its meat, whether in England or on the continent. So it absolutely needs addressing. Certainly an opportunity has been lost there.

In terms of other elements, I am afraid I am more concerned about what is in it than what could have been in it.

John Davies: We want to see agriculture in the Agriculture Bill. We want to see a real, strong focus on the active farmer and how that comes through in terms of a sufficient degree of self-sufficiency. That would be useful. We see food security as a public good or a public right. That is vital. So there are a number of issues there. We want a safe and traceable domestic food supply. We want equal standards for imports and a level playing field, so that needs to be tightened up. There is an opportunity around public procurement. There is a real, strong opportunity around better labelling. It is vital that consumers are properly informed about their purchasing decisions. So there are a number of places there where we can see room for tightening and more detail. It is broad enough. We just need to focus in on that.

[Chris Davies]

Q You probably heard the talk earlier about how there could be a compounded payment in the transition period. Do you think that would work in Wales and would it be a benefit to many of our senior farmers who were looking to retire? Do you see it as a benefit or not?

John Davies: We would have some concerns around that in terms of the active farmer. We do not accept that it will be the correct and proper time to transit out of direct support or a level of direct support, so obviously we would not agree with that. That option has not at the present time been flagged up strongly in the consultation, so we need to focus more on that, with the membership, but initially we would say no, we would not be supportive of that.

Dr Fenwick: I am afraid I was on a train, or on a tube train maybe, when that was raised, so I did not hear the discussion around it, but I agree with John Davies that it is a concern. We would have preferred to see some proactive moves to encourage young farmers and a transition from the older generation to the younger generation, with greater succession, etc., rather than moves which potentially leave vacuums, but are done for all the wrong reasons rather than being something that actually ensures that there is an incoming generation that probably is more deserving of any moneys.

[Tonia Antoniazzi]

Q Following on from Mr Davies’s question—he is good at taking mine—what impact will the transition period in the Bill have on farmers in Wales, directly? Will there be any?

John Davies: It will have quite a major impact if transition is too quick. We have the opportunity, under the Bill, to transition over a seven-year period. I think the key thing is where we transition to. That is all part of the consultation at the present time. Until that is finalised and until we see the clear path there—I don’t mind transitioning more quickly to something that is desirable, but if not, obviously I want to take as long as possible. We have a seven-year plan at present, with the option to extend, and it is important that if things change we take the opportunity to pause and reflect, to see whether that is workable and whether the money has been well spent or not. There are flexibilities in the Bill.

Dr Fenwick: I am afraid we do not know what we are transitioning to in terms of its economic impact on individual businesses, on the supply chain, on rural jobs, and some urban jobs—indeed, in slaughterhouses and places like that. As John said, if it is transitioning potentially to something negative, we want to take as long as possible. You don’t want to transition away from a car to a bicycle; and we really do not know where we are going at the moment. It is extremely concerning.

What is being proposed in Wales, potentially: it will just be a slower death, maybe, for some communities if our worst concerns are realised. What we would say is that before making any suggestion of such a move, that detailed assessment has to be undertaken. It is no good trying to stop halfway through when you have lost 20% of your rural businesses and unemployment in rural areas is on the up. You simply need that impact assessment.