Rules for Direct Payments to Farmers (Amendment) Regulations 2020 Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020

Daniel Zeichner Excerpts

Monday 24th February 2020 General Committees

[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to serve with you in the Chair, Ms Nokes. It is also a pleasure to welcome the Minister to her place. I am sure we will spend many happy hours together discussing these points in the coming weeks. She is well placed to do so as a farmer and an experienced lawyer, and I am sure that she enjoyed as much as I did spending the recess reading EU regulations 1307/2013, 639/2014 and so on. For those hon. Members who are hoping that our sitting will be quick, I am afraid I did read those regulations, and I would not want all that time to be wasted. It struck me that things do not seem entirely oven-ready or “got done” at this point; it will take a little time. However, I must pay tribute to those who drafted the regulations before us, who, quite frankly, must have the patience of saints.

I was also struck by some rather understated humour that emerged at some points, particularly in the explanatory memorandum that accompanies these regulations. If you do not mind, Ms Nokes, I intend to go through points raised in it before going into the detail of the regulations. Those who have read the explanatory memorandum will notice how it quickly becomes a complicated explanation, particularly of how this legislation interacts with EU retained law. By the time one gets to paragraph 2.5, one reads:

“As a result, existing law would either be unclear or would not function effectively.”

That it could be unclear is potentially an understatement, but we will try to develop clarity, as that is why we are here.

The memorandum goes on to talk about the danger of potentially “inoperable provisions”. In paragraph 2.9 it describes the regulations as the “appropriate legislative ‘fixes’”, which

“will maintain a status quo position”.

Of course, on Second Reading of the Direct Payments to Farmers (Legislative Continuity) Act 2020, the Opposition pointed out exactly that: the first act after exit day was to keep the status quo. We understand why that was necessary—because of the unfortunate delays in bringing forward legislation—but all of these measures would be unnecessary if we already had the Agriculture Bill in place.

We do not have to go much further through the explanatory memorandum to find yet more problems. In paragraph 6.3 the dreaded concept of equivalence pops up, when we are made aware that we need to maintain equivalence to continue to benefit from state aid exemption rules. I suspect we will talk much further about that in the coming weeks.

We learn in paragraph 6.6 that the regulations are laid under powers in the 2020 Act, which basically provided for the Secretary of State to do what is necessary to make this stuff work. One wonders how many more measures will be needed to sort out what is a considerably complicated set of proposals.

If one was beginning to think it could not get any worse, paragraph 6.8 points out the further difficulty—I will return to this in my detailed account—that different rules apply for January. Until exit day, EU law applied, but retained EU law relates to the whole of the claim year, including January. This may not be for today, but at some point it may be helpful for the Minister to explain how anybody is going to be able to work out exactly how this works. A potential infringement on 31 January may well be treated differently on 1 or 2 February. That could well be quite complicated; all I observe is that it would be good times for lawyers. This was supposed to be about giving certainty, but as Labour warned on Second Reading, some of this may be difficult to sort out quickly, and by the middle of this year farmers will be wanting to make decisions for next year. As we have said, we worry that far from giving certainty, this process will carry on for some time yet. In paragraph 7.8 of the explanatory memorandum, there is a glorious phrase:

“The Government remains committed to beginning ambitious agricultural reforms”.

I am sure that will reassure lots of people. “Remaining committed to beginning” is hardly encouraging.

Turning to annex 2 of that memorandum and looking at the detail of the SIs and the pieces of EU law that they amend, further concerns arise—again, some of this will be discussed in detail later. The Minister made this point tangentially in her introduction, but basically, we will withdraw a level of scrutiny from the whole process by taking out the EU level. Many people, of course, will be delighted by that—they will be cheering—but huge sums of public money are involved here, and we need to be sure that appropriate mechanisms are in place to replicate some of that scrutiny, although not necessarily the bits we do not like. The Minister may be confident that those mechanisms are in place, but not everyone has total confidence in the Rural Payments Agency, or feels it has the necessary resources in place to do this extra job. I seek some reassurance regarding that.

It is also striking that we are now outside the EU crisis reserve. To laypeople, that would look remarkably like moving out of an insurance system and into an uninsured position. Of course, we may well think that that is fine because we have the full weight of the Treasury behind us, but the basic point is that if we are part of something bigger, we are pooling the risk. Obviously, we hope that reserve is not needed, and some of the money is on the way to coming back to us, which is fine. However, we should at least be aware of what we are doing.

I will now move on to the detail, beginning by looking at Regulation (EU) No. 1307/2013—I apologise to Members who do not have the full details at their fingertips, because this will possibly be a little tricky, but that regulation is the legislation that SI 91 amends. I have to say, I have had a crash course in learning how the CAP works; in a previous life, I used to do local government finance, and would joke that the only thing that was more complicated was the CAP. I have come to regret that particular line now.

What struck me about Regulation (EU) No. 1307/2013, which was the EU’s attempt to improve the CAP last time around, was just how much of what the EU was trying to do was the same as what we are now trying to do. The preamble talks about the absolute necessity of reducing administrative burdens, and about tackling abuse. Interestingly, it also talks about the ability to transfer funds between what, in EU jargon, are described as

“the first and second pillars”.

Broadly speaking, that means the opportunity to put more money into environmental goods, which is exactly what we want to do. It is striking that in England, when the Government had the opportunity to exercise their full discretion to move to 15%, they chose not to do so. Without reopening past debates, it is worth noting in passing that we have not exercised the full flexibilities that were available to us.

As the Minister has said, many of the changes made by the SIs are simply changes to wording. I am sure it would be wonderful to do a replace all, changing “member state” to “relevant authority” and so on, but alas, it is never that simple. In the more pernickety points that I will get to in a moment, I will point out some areas that do not make sense to me, where those changes have not been made. Those may, of course, be minor drafting errors, or there may be reasons for them. It would be useful to tease out why those decisions have been made.

I suspect that we will come back to the active farmer debate another day, possibly even tomorrow. However, I ask today why we are deleting the reference to granting payments to airports, rail, water services and sports areas in article 9.2 of Regulation (EU) No. 1307/2013, and replacing it with a much more general provision. I believe it has been discussed in the past, but some clarification would be helpful. I do not expect the Minister to know the answer to all my questions instantly. If she is unable to reply today, I would be perfectly happy with a written reply later.

I do not understand why the article 28 provision on windfall profit has been deleted. There are many paragraphs on the regional and national reserves. The term “regional reserves” is not to be understood in the way that many of us would understand it. I ask the Minister for some details on the reserves and how they will be used in the future. It does not seem entirely clear. The point I am making throughout my remarks is that, although the top-level message is that nothing changes, as we dig down into the detail we begin to find that it is not quite as straightforward as it seems.

In article 43, which is an important set of paragraphs, the EU sets out something not dissimilar from the work that we will do going forward. The EU tries to define the agricultural practices that are beneficial for the environment and the climate, with a series of details in annex IX. I return to my point about who will check all of that. It seems that we are potentially now checking our own homework.

Turning to the second instrument, which amends Regulation (EU) No. 639/2014, it is not entirely clear to me why articles 62, 63 and 72 have been left in, and there are one or two articles where the “Member States” amendment does not seem to have been made: articles 16.2 and 33. In article 45, I do not see the logic in detailing the list of pollen and nectar-rich species when land is lying fallow. There may be a reason, but it is not clear to me. Perhaps more significantly, article 45.5 changes—I would say weakens—the rules on governing the sizes of buffer strips. There is no reason to believe that there is any desire to weaken them, but as I read the legislation it potentially will do so.

Moving on to Regulation (EU) No. 1306/2013, article 9 talks about certification bodies. I think that this matter has been controversial in the past. Again, I seek clarification from the Minister on where the Government think that we are going. It looks to me like a potential change. Articles 12 to 15 on farm advisory systems are effectively deleted, which seems significant. I would welcome some reflections on the impact of that. Article 29 is a detailed account of how the exchange rate issues would have been dealt with, which are of course potentially very important for people. We do not know how the currency will go this year, but it will make a significant difference and the provisions have, obviously, been taken out.

In a number of places, I do not understand why articles have been retained: 30 to 39, 65 to 66, and 79 to 91. Within those, there are references to “Member States”. I suspect that they should have been taken out, but I may be misreading them. Article 46 includes a reference to article 42, which seems to have been deleted. Article 97 goes to the heart of the claim year issue and the complexities around January. Again, some detail would be welcome. It is not clear to me why in Regulation (EU) No. 907/2014 articles 3 and 4 have survived, nor why in Regulation (EU) No. 908/2014 articles 16 to 24 and 45 to 57 have survived.

We are told that nothing has changed, and that this is the status quo. I think I have demonstrated that that is not entirely the case because, as we look into the detail, we find tweaks and changes. I am not sure that we understand what the exact impact will be on the way in which the schemes will work, but it is our duty to at least ask. I hope that we get clarification on some of that. Who knows? We may at some point get the long-awaited policy paper on how the new systems will work, which I think was promised for the Second Reading and Committee stages. If it turns up in the middle of the night it will be no help to many of us, but we look forward to it with relish.