Agriculture

Jim Shannon Excerpts

Wednesday 2nd December 2020 Commons Chamber

[Daniel Zeichner]

This is possibly not the place to have this debate, but my hon. Friend is right to raise it and the Minister will have the opportunity to respond later. Of course, we are seeing problems with wool, as well, so it is a troubled time for people. Obviously we hope that we end up without tariffs, because that will be a much better outcome.

[Jim Shannon (Strangford) (DUP)]

Clearly the rules, as the Minister set out, are specific to England, but the shadow Minister referred to the movement of cattle and sheep in the United Kingdom mainland. He will know, as we do, that that movement of traffic is to and fro from Northern Ireland to the mainland. When it comes to the movement of any animals, does he think we need continuity with the payment scheme and the flexibility to be able to move cattle and sheep not only north and south from Northern Ireland to the Republic of Ireland, but from Northern Ireland to Scotland and to England and Wales?

[Daniel Zeichner]

The hon. Member tempts me further and further away from the instrument. I can assure him I will be coming to some of those points, because it is obviously key that we resolve these issues of movement within the island of Ireland. They are complicated and pressing for many, many people.

We are told that this instrument does not relate to withdrawal from the European Union, which is a welcome relief, I suspect, given the number of instruments we have been discussing in recent weeks. Indeed, it comes from the newly passed Agriculture Act 2020. It makes provisions for better traceability. It was noted as an instrument of interest by the Secondary Legislation Scrutiny Committee, and the Minister has outlined many of the proposals, so I will not repeat all of that.

The proposals set out by the AHDB for a new livestock information service system are important. It will provide a multi-species traceability system, and DEFRA tells us that it will enable the Department and the Animal and Plant Health Agency to trace all livestock movements through a single, more efficient system, which would be welcome, because livestock are currently identified through three separate livestock traceability systems: one for cattle, one covering sheep and goats and one for pigs. The service was introduced over the past two decades as various pieces of EU legislation came into force. As the Minister said, the existing systems are species-specific, so keepers with more than one species of livestock need to switch between databases. The existing systems are also designed to collect, rather than share data and, extraordinarily, are paper-based.

I am told that the AHDB will also run a unique number identification service on behalf of England and Wales, which will control the issuing of official individual identification numbers to animals. The Scottish Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland have noted that they will pursue their own systems for issuing identification numbers to animals. The service will operate in England but because, as has been said, animals can and do move across borders, the instrument applies across the UK so that AHDB may handle data on animal movements and traceability systems outside England where necessary to allow a complete picture of animal traceability. Further collective work involving all four Administrations is aimed at agreeing a UK view of key data to support traceability.

As I said, AHDB has established a subsidiary company, Livestock Information Ltd, to carry out the services on behalf of AHDB and DEFRA. We are told that the estimated cost is £32 million over three years, and the projected monetised net benefit using a 10-year appraisal method is conservatively placed at £30 million. AHDB says that improved traceability data will enable a range of other benefits, including reducing the impact of endemic diseases, increasing our ability to act quickly and proportionately in the event of an exotic disease outbreak, and improving livestock business productivity.

Some questions follow from that, however. Under the provisions of the instrument, each devolved Administration will have their own database. How will we be able to trace animals as they move across borders? On the implementation of the system, will there be an instant switchover, or a transition period in which both old and new systems operate alongside one another? What is the timeframe for getting the new traceability system up and running?

Farmers currently pay a levy for the use of AHDB services. In bringing the new traceability system under the remit of AHDB, DEFRA says there are no plans for a new levy to fund any of the services the regulations bring in. “No plans” is a term that is regularly used, often euphemistically. Can the Minister give a guarantee that there will not be a levy? It appears that Livestock Information Ltd will cost £32 million of taxpayer money that is immediately handed to a subsidiary in which DEFRA has a minority stake. Will the Minister explain why that is?

Looking at the direct payments instrument, we have been here before. The draft regulations are laid under the new Agriculture Act 2020 and need to come into force on 1 January 2021 to ensure that direct payment support will be available for farmers in England for the 2021 claim year. The Government have confirmed the continuation of direct payments for 2020 in the Direct Payments to Farmers (Legislative Continuity) Act 2020, which we discussed back in January, but as we heard earlier this week, some of the payments will be phased out in England under the new Agriculture Act from next year over the following seven years, beginning with a 5% to 25% cut in farmers’ income next year.

This statutory instrument has been noted as an instrument of interest by the Secondary Legislation Scrutiny Committee. According to DEFRA, the instrument aims to maintain the status quo as far as possible for farmers next year. The instrument sets rules about the financial ceilings used to calculate farmers’ direct payments, giving the Secretary of State time to determine the ceilings for the 2021 claim year before the start of that year, as the current financial ceilings extend only to the 2020 claim year. It also removes from 2021 elements of direct payments that have not previously been implemented in England, some of which have been used in the rest of the UK. The Secondary Legislation Scrutiny Committee notes that separate legislation will be required for the Government’s planned reforms to phase out direct payments from 2021.

Back in January, when we discussed the Direct Payments to Farmers (Legislative Continuity) Act, Labour pressed the Government on the need for a legislative mechanism for direct payments to farmers to be continued beyond 2020. We predicted that we would be back later in the year—and here we are, with the Government using the Agriculture Act as that mechanism to use this SI for 2021.

We welcome the shift from supporting land ownership to helping farmers restore land and improve our natural environment, but farmers are rightly concerned about how they are going to survive during the transition the Government propose. On Monday, it was revealed that direct payments will start to be cut next year, and will be cut by 50% by 2024, yet the new environmental land management schemes will not fully up and running until 2024. What was once envisaged as a bridging sustainable farming incentive payment will not be available for farmers until 2022, and in the view of many, including Labour Members, there is still too little detail of the schemes to help farmers to plan for uncertain times ahead. Based on DEFRA’s own statistics, 75% of farming enterprises are currently unprofitable without direct payments. We fear that many farms will be left financially unviable under the Government’s proposals.

A recent survey of landowners and farmers by the Country Landowners Association found high levels of concern about the implementation of the new ELM schemes, with 76% of respondents fearing that the payments would not be sufficient and 57% thinking that administration would be poor. The Rural Payments Agency will be administering new payment schemes—we all know that it has had a troubled history, although it has improved in recent times—and there remain real doubts about the capacity to deliver new systems alongside administering legacy payments.

The high-risk approach to our farmers’ future security is, I am sorry to say, of a piece with the highly ideological approach that the Government have taken to farming post Brexit. The Government still refuse to back British farmers with a legal guarantee that they will not be undercut by cheaper, lower-standard food allowed in through trade deals that, despite the claims, will still lack proper parliamentary scrutiny.

I will not go over familiar ground again, the Minister will be glad to hear, but let me put some specific questions on this instrument. The draft regulations that she has come forward with today provide farmers with direct payments for just 2021. Will regulations need to be laid every year for the seven years of the agricultural transition period to continue direct payments in their current form prior to phasing out? When are the Government going to come forward with regulations for phasing out direct payments?

These provisions remove a number of elements of direct payments that have not been applied in England but have been elsewhere in the UK. These include the redistributive payment and voluntary coupled support schemes that have been used in Wales and Scotland. They also take out the active farmer provision and basic payment scheme agri-environment transfer. Will the Minister confirm that there is nothing here that will restrict devolved Administrations from making their own choices? While we understand the concerns about the active farmer provision, we still believe that measures are needed to ensure that money goes to farmers, not just landholders.

This is a continuation of direct payments to farmers for next year, which is welcome, but we know that the Government are planning to cut direct payments for next year. What support are they going to give farmers facing a 5% cut in their income next year? Has DEFRA undertaken an impact assessment on what direct payment cuts would look like to farmers in different sectors and farm sizes, and will they release that impact assessment?

We know that different parts of the UK will now be pursuing different payment support schemes for farmers, as agriculture is a devolved area. How will the Government ensure that we do not see market distortions emerging across the UK? Given its past performance failures, can the Minister guarantee that the Rural Payments Agency is competent to administer the many changes and parallel systems emerging over the next few years?

In conclusion, let me turn to perhaps the most complicated of the three SIs before us, on WTO compliance. This instrument has been made under the Agriculture Act but relates to the withdrawal of the United Kingdom from the European Union. It introduces a legal framework to ensure UK-wide compliance with WTO commitments on the use of domestic support for agriculture. I understand that this is a largely technical change following our withdrawal, so this SI was not reported on by the Joint Committee on Statutory Instruments.

While a member of the EU, UK interests at the WTO were represented by the European Commission, which was responsible for ensuring that the UK complied with WTO agreements. That included the WTO agreement on agriculture, which sets out a number of general rules and commitments that signatory nations must follow on agricultural trade practices, including disciplines on domestic support, market access and export subsidies. Following the UK’s withdrawal from the EU, the UK will now represent its own interests at the WTO, and the UK Government will be responsible for ensuring that the UK complies with its obligations and commitments as an independent WTO member. These include obligations relating to the classification and notification of domestic support and the UK’s commitment to reduce its aggregate measurement of support.

As the Minister said, this instrument specifies the amount of amber box payments that may be given in each country of the United Kingdom—amber box payments being those that have trade-distorting effects, which are limited under the WTO agreement on agriculture. This instrument also outlines the procedure for classifying such schemes and permits the Secretary of State to request information where this is needed to enable the United Kingdom to satisfy its obligations. The explanatory memorandum says that it

“allows for each UK administration to design and implement their own agricultural support schemes within an amber box spending envelope.”

These provisions stem from part 6 of the Agriculture Act, and they were criticised at the Committee stage by the devolved Administrations. There were concerns that, despite agriculture being a devolved area, the Act gave the Secretary of State the centralised power to decide how farm support payments everywhere in the UK will be classified in relation to international trade rules, and to set limits on how much can be paid out by each Administration. At the Committee stage of the Agriculture Bill, Labour sought to amend the Bill by requiring Ministers to consult with each devolved authority on a draft of the relevant regulations. This was rejected by the Government, but the Minister committed to consult with the devolved Administrations on the making of regulations under part 6.

The Government have outlined in their explanatory memorandum for this SI:

“These regulations were drafted in consultation with policy officials from the devolved administrations, who were given the opportunity to comment at each drafting stage. It was possible to accommodate the majority of their comments and suggested changes whilst recognising that UK Government’s position is that ensuring compliance with international obligations remains a reserved issue.”

I have to say that, from speaking to some of my Scottish colleagues, I am not entirely convinced they completely agree with that characterisation of the discussion. So can the Minister explain what consultations have been had with the devolved authorities on the content of these regulations, how the majority of their comments and suggested changes were accommodated, and what suggestions, if any, were not accommodated?

In conclusion, these are indeed an eclectic group of instruments, but they are all important to make sure our farmers are paid, to ensure that we use the latest technology to best effect to maintain the health of our livestock and to ensure that agricultural support systems are WTO-compliant. We are not opposing them, but there are questions I have posed, and I look forward to hearing the Minister’s answers.