Brexit: Trade in Food

David Drew Excerpts

Thursday 14th June 2018 Westminster Hall

[James Gray (in the Chair)]

We start the afternoon in this great Chamber, Westminster Hall, with a debate on the recent report by the Select Committee on Environment, Food and Rural Affairs entitled “Brexit: Trade in Food”. It is normal on these occasions for the Minister to be present at the beginning of the debate, although that is not required under Standing Orders. I suspect he may be approaching the Chamber quite quickly. There being no further intelligence on where the Minister might be, I know the Parliamentary Private Secretary will take a keen interest.

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

The PPS can do it!

[James Gray (in the Chair)]

Order. I know the PPS will take a keen interest in how the Chair of the Environment, Food and Rural Affairs Committee approaches the motion.

--- Later in debate ---

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

I am delighted to serve under your chairmanship, Mr Gray. I am very pleased that, yet again, we are in this place debating food and farming. I am even more pleased that the Minister is here, because otherwise I would not have been able to ask him the questions I want to ask him. I am sure he will try to answer them.

The Chair of the Select Committee, the hon. Member for Tiverton and Honiton (Neil Parish), raised a number of issues that I wish to take up. I pay tribute to my hon. Friend the Member for Bristol East (Kerry McCarthy), who has had to leave, and my hon. Friend the Member for Keighley (John Grogan). They are very strong members of the Select Committee, as is my hon. Friend the Member for Ipswich (Sandy Martin), who has not had a chance to say anything yet, but if he wishes to intervene and put something on the record, I am more than happy to let him do so.

I am a former member of the Select Committee, and I am grateful that it is in good hands. I was lucky to be chaired by David Curry and Michael Jack, and the hon. Member for Tiverton and Honiton has carried on in the same good order. He has shown how the Committee is making a difference. The quality of its work is in the preciseness of its arguments. Why write a long report when a short one can do the job?

The hon. Gentleman’s speech ranged far and wide, so I make no apology that I will refer to the later report, which may also be discussed in this place in due course. It is, however, contingent on the report before us. I will refer to a number of things in the Government’s Command Paper, and how the Select Committee has investigated them.

Let me start with where we are with this whole exercise. Although farming is a relatively small part of the British jigsaw, it is a very important part of European functionality, because half the EU budget is spent on farming. My first question to the Minister—I have asked this previously—is, when will we get into serious negotiations about farming, and particularly food? Although farming is not a huge constituent part of the British economy, food and food exports are. As the hon. Member for Tiverton and Honiton said, that sector is responsible for about £110 billion-worth of business, and employs one in eight people. It is an important part of the UK economy, so we have got to get this right whatever the post-Brexit situation is.

I echo the hon. Gentleman’s request to see the sectorial reports. Like lots of hon. Members, I went to look at the original sectorial reports. I have to say that a good A-level student would probably feel reasonably pleased with them, but I do not think their quality was much better than that. We need definitive evidence, because these sectors are very different and will require different negotiations. It would be good to know when some of those negotiations will take place, and that there will be ministerial—not just civil service—input, because they will be complicated.

I am not sure—I know the Minister is sure and can allay my fears—when we will start talking to the WTO. We are a signatory to the WTO, but through our membership of the EU. At what stage will we start to talk to the WTO about how we will exercise our independence? The one thing that I know from all my time on the Select Committee, and since, is that when we start to get into the different boxes—amber, red, blue and green—and the aggregate measure of support, we get into enormous complexity, which will not be sorted out in a few weeks. That will take a long time.

[Neil Parish]

I thank the hon. Gentleman for giving way, and certainly for his comments about the Select Committee. When it comes to tariffs and the European relationship with agriculture, the problem with the WTO is that if we were under WTO rules rather than in a free trade arrangement with Europe, French and Irish beef would have to have the same tariff as Brazilian beef. Imagine having to compete with Brazilian and Argentinian beef—we produce very high-quality beef in this country, but it would be difficult to produce it at the same prices as Brazil and Argentina.

[Dr Drew]

Again, I am not an expert on the farming industry per se, as the hon. Gentleman is, but having talked to those who know about it, I know that the lamb market—Welsh lamb, in particular—is very vulnerable. I made the point that New Zealand would no doubt be keen to expand its exports to this country, but I was proven wrong in the sense that New Zealand can already export 200,000 tonnes of lamb. The big threat is actually from Australia, which has a more limited quota arrangement and will no doubt wish to have a free trade agreement—any agreement—so that it can export more to us. Again, that is a question I ask. I genuinely do not know where outside the EU—where 60% of our food exports go to—we can form all these free trade agreements.

[Sandy Martin (Ipswich) (Lab)]

Does my hon. Friend agree that the problem is not only where our exports will go or where our imports will come from, but that the laudable environmental and health and safety constraints that we place on agriculture in this country will not necessarily be replicated in countries in other parts of the world that may wish to export to us? We shall see a race to the bottom on environmental and health and safety concerns.

[Dr Drew]

That is, of course, a real threat. I refer to the Government’s response to the Committee’s report. At paragraph 6, on “Regulations and Standards”, the Government cited the Prime Minister in her Mansion House speech, saying that

“the UK will need to make a strong commitment that its regulatory standards will remain as high as the EU’s.”

I should damn well hope so—excuse the proverbial—because if we do not, we will not be able to export to the EU. It is important to maintain the existing standards, and we would want to drive them up—the Minister has said that—but that will be in some jeopardy if we form free trade agreements with countries with lower standards, because those would preclude the higher-standard export markets that we have now.

Looking ahead to the Select Committee’s “The future for food” report—to laud the Committee again—its value is that it has all the right headings. The keynote is uncertainty: we need to allay the element of doubt that is creeping into what is now a tight timescale. Looking at the report, the questions will obviously be about budget—I am pressing the Labour party to ensure sufficient funding. We have already guaranteed the same money until 2022, but to be honest with the Minister, we want to go further, because we do not think that the transitionary period is long enough. That has come through in both reports.

There is not enough money to make the transition work. Whatever form of payment system we come up with, it will be a pretty traumatic change. For some farmers, it will be the most traumatic change they have ever had in their lives. We would therefore like more money to be allocated and for things to be done properly. We are not against public using moneys for public goods, but we have to handle the situation with extreme sensitivity. Otherwise, we will lose a lot of good farmers who cannot make the transition easily.

To go back to today’s report, I have some questions arising from the Government response. How will they deal not only with tariffs, but with non-tariff issues? In my constituency, some of the manufacturing companies say that the problem is never with free trade, or setting up free trade agreements, because they are set up all the time. The problem is when other parts of the world take non-tariff action, which is a real danger in the food sector. It would be good to know how far the Government have got and in what ways they are at least investigating how to deal with the threat of non-tariff barriers.

On the potential for increased paperwork, the Government are setting great store by a new computer system—as did my Government, to our cost, when we introduced the Rural Payments Agency, and I dealt with Accenture at that time. We were told then how everything was going to be wonderful because the computer would do it all for us. It would be good to know how far we have got with the new computer system and what it will do—there is the idea of “e-certs”, but whatever name it has, it is just a computer system. If we do not have the right brief to start with, we will not get the right outcomes. Therefore, how far have the Government got towards introducing that computer system in such a way as to cope with all the different pressures, whether of trade or of the standards and so on?

There is also the human dimension. The spokesperson for the Scottish National party, the hon. Member for North East Fife (Stephen Gethins)—to whom I should have paid due regard earlier, but I do so now—spoke about the need for seasonal workers. Another element, which was picked up on by the Select Committee, is the additional need for veterinary support. At the very least, we do not have enough vets in this country to do the work that is needed, which is why we recruit foreign vets.

That work will only increase, despite restrictions on immigration and on what is called mutual recognition of professional qualifications—a very good thing that ensures we get in people with equivalent qualifications to ours. Dealing with that takes time. We will need additional vets in the short run to deal with some of the new processes. Again, will the Government give us an update on their important discussions with the Royal College of Veterinary Surgeons, the British Veterinary Association and so on?

That leads on to the issue of customs and how those arrangements are being looked at. I must say that some of the Government’s answers are fairly sketchy. The response is a fairly brief piece of work—I laud the Select Committee again because although its work was brief, it was precise, but the Government did not necessarily tell us everything. Perhaps the Minister will fill in some of the detail, such as how much store is set by the IT system, how he will deal with border inspection post capacity and what is happening with some of the trade agreements with non-EU countries. All that will require a very different approach. I hope that we will not have a hard Brexit, but even under a soft Brexit those will be very complicated issues that are difficult to work through in the short term.

Another issue is country-of-origin labelling, which Members across the House would all support. Customers need assurance to know where something has come from and whether it is of the standard that they expect. Again, the Government have made lots of commitments, but it would be good to know how they will deliver on those commitments—what they said in paragraph 13 of their response was very good in aspiration, but not detailed in how they would action it.

In conclusion, there are many points of detail. That matters, because we should be entering a period of discussion where agriculture, hopefully, will be in the footlights. That is rare, because normally agriculture is somewhat in the shadows, but it is crucial at this stage because of what happens to our food chain. We must make sure we get this right to support the industry and the people who work in it. That may not be easy in the short run, but we must be clear where the strategy is taking us.

If there is any regulatory divergence from the EU, those of us who fear that things could get worse in the short run need the Government to be clear on what they are trying to do. What mechanisms will they employ and who will employ them? The Department for Environment, Food and Rural Affairs has taken on a huge number of new people—perhaps it should not have got rid of as many as it did when it was not at the frontline of these changes. It would be good to know how those people could be as effective as they should be, in a short period. Their knowledge alongside the ministerial team will be crucial. I sympathise with Ministers; I know how much pressure they are under, because this issue puts the Opposition under a lot of pressure due to the number of ways in which we have to respond.

I hope the Government have got the message that they need to be very clear on how they are moving forward. Otherwise, we will be back here week after week with debates, trying to ascertain what the detailed considerations really mean and how we will take British agriculture and the British food chain forward into the next decade, whatever our status with the EU. More particularly, they must make sure that British food is of as good a standard as it can and should be, and that it can be traded successfully with the rest of the world.

--- Later in debate ---

[George Eustice]

I am interested in history, but I am not necessarily interested in implementing all historical policies. To extend the history lesson, there was also a view in the 1960s that we should not have subsidies but we should have tariffs. Obviously, we have moved some way since then.

[Dr Drew]

I always love a bit of history, but to bring us up to date, in all those previous reorganisations and structural changes, there was time to make changes partly because the British Government were deciding things for British farmers. Will the Minister assure us that the transition period must respect the importance of these changes, and that there must be support for those who will suffer if we get this wrong in the short run?

[George Eustice]

Yes. I was going to return to that point. The Select Committee report states that we have to take care during the transition. We absolutely recognise that. Indeed, in our recent consultation, we described what we have as an agricultural transition, where any changes we make to the support regime will be done gradually over a number of years to take account of the fact that we do not want to deliver unsustainable shocks to the industry that it would not be able to cope with.

My hon. Friend the Member for Tiverton and Honiton mentioned the importance of Northern Ireland. I absolutely understand that a huge amount of trade takes place across that land border. That is why, unsurprisingly, the way we should approach that issue dominates much of the discussion about our future arrangements with the European Union. He will understand that that is a much broader discussion, which is being handled by people in the Government more senior than me.

Let me pick up on some of the issues raised by the hon. Member for North East Fife (Stephen Gethins), such as customs, which is being looked at. We have a cross-Government working group, which has brought on board lots of Departments, including Her Majesty’s Revenue and Customs and the Treasury, to look at customs, as well as DEFRA and our Animal and Plant Health Agency to look at border inspection posts. DEFRA’s focus is ensuring that we have the right capacity at any border inspection posts, and we will seek to agree our approach to that. Generally speaking, customs is regarded as an easier and more administrative thing to do, rather than necessarily requiring lots of checks and infrastructure at borders. Technology really has moved on in that area.

I simply make the point that one of our biggest successes in food and drink—perhaps the biggest, and certainly the biggest in Scotland—is Scotch whisky. We have zero tariffs on Scotch whisky, but that sector competes globally and has a recognised international brand. It is also very used to dealing with national markets, even within the European Union, because there are different alcohol duty rates so there must be bonded supplies for each country. There are sectors that have got very good at managing borders. Several hon. Members made the point in yesterday’s debate that we have borders even within the single market for things such as customs duties.

Probably the second biggest food export from Scotland is Scottish salmon, which again is renowned around the world. Scotland’s biggest competitor in that sector is Norway, which is outside the European Union and outside the single market for the purposes of fish products, because, as the hon. Gentleman will know, the European economic area does not cover fisheries products. So there are sectors, including fisheries and Scotch whisky, that have developed quite sophisticated ways to address some of these challenges. This is not an insurmountable problem.

The hon. Gentleman also raised seasonal labour. We recognise that that issue is important, which is why the Home Office commissioned the Migration Advisory Committee to look at what our labour needs will be after we leave the European Union. The MAC is already doing that piece of work. It published an initial summary of the responses it received, and it is now looking in earnest at what arrangements we will need after we leave, and in particular after the end of any transition period.

However, in some ways we already have the necessary structures in place under our existing migration system, through things such as tier 3. That is currently set at zero because we have free movement of people, but we could make some allowance for work permits in less skilled sectors if we wanted to and deemed that we needed to. We have been clear that we are looking at the idea of a seasonal agricultural workers scheme. We had one, which ran successfully from 1945 until 2013, and we have been clear that we are looking at that issue. I worked in the soft fruit industry for 10 years, so I am fully aware of some of the challenges. Those are issues that we will have the power to deal with as an independent country—they will not need to be negotiated with others.

[George Eustice]

Look, on your first point—sorry, Mr Gray, it is a contagious problem. On the hon. Gentleman’s first point, there are degrees of independence. As things stand, as an EU member we do not have an independent farming policy, an independent fisheries policy or an independent policy on migration. When we leave and become not an EU member, we will have independence in those areas.

On the hon. Gentleman’s second point, there will be some challenges, but we have been working on this area. One scenario we have been planning for right from the referendum result is a no-deal scenario where we come out without an agreement, even in March next year. There are contingency plans and work has been done to prepare for such scenarios. While there will be challenges, we are aware of them and have been addressing them.

[Dr Drew]

The problem is that those who might have come here in the future will not do so and we are now into the second year in which they would have been making such arrangements. What inducement is there for someone to come here, when effectively they have been told for two successive years they are not wanted, rather than go to other parts of Europe, as they are now?

[George Eustice]

There are anecdotal reports that more have come back this year because of recent changes in the exchange rate. Some daffodil producers in the west country say that it was easier to get labour this winter than last. It is quite common for seasonal agricultural workers to return for a number of years, and indeed levels of returning are one of the yardsticks used to assess the availability of labour.

The hon. Member for Bristol East (Kerry McCarthy) posed a question in an intervention about rules of origin. The Government are looking at that area. Obviously, not every nation state in the world is a member of the European Union. Lots of countries are not, and they have quite established procedures on rules of origin. While we have not reached a final position on those issues, there is, for instance, the pan-Euro-Mediterranean regional convention, which is a rules of origin system covering countries both in and not in the European Union. Other parts of the world have therefore addressed such issues.

I turn to points raised by the shadow Minister, who asked about how we are approaching the WTO. We have been clear that our schedule of tariff rate quotas on agricultural products should be divided between the EU and the UK based on an historical reference period. We regard that as a matter of technical rectification rather than reopening everything for renegotiation, and that is the approach we are taking on existing TRQs.

The hon. Gentleman mentioned New Zealand lamb and pointed out that we have a TRQ of just short of 250,000 tonnes for lamb from New Zealand coming into the UK. It is also important to recognise that, in recent years, New Zealand has only ever used about 70% of its quota. That demonstrates that long before the ceiling of that tariff rate quota is hit, they find themselves unable to compete with UK producers. I am more optimistic than some about British sheep producers’ ability to compete with New Zealand and Australia. Many do so already. As a country, we should not get spooked by some kind of New Zealand haka on lamb production. We need to get on the pitch and play, and I think we will find that we can beat them.

We have been clear that in any future trade agreements we will maintain our standards. We will not reduce our standards in pursuit of a trade deal. That is a common feature. It is quite possible for us, through doing trade deals with third countries, to require that those who wish to supply us under such agreements must meet our standards.

Just this morning, I visited the Agriculture and Horticulture Development Board and talked to officials who were involved in our negotiations with the United States on reopening its market for British beef, which we have worked on for a number of years. There are opportunities for British beef exports to the United States, but there are also one or two technical areas where the United States wants us to change our rules for those supplying them to meet their standards. For instance, they have a slightly different approach to monitoring things such as E. coli and to the methodology that a vet should use when visually inspecting animals as they arrive in the pen.

We could go in and say, “This is no good. You’ve got to change your rules to be like the British rules,” but we do not. Actually, we say, “Fair enough. Those suppliers who want to supply that market should do that. We should respect their rules, and they should respect ours.” Equally, if US producers want to supply the British market, it is absolutely open to us to say that that must be done on British standards. We are a free-trading country, and we will be open to doing trade deals, but we are clear that we have standards and values that we will not abandon.