Common Agricultural Policy (Cross-Compliance Exemptions and Transitional Regulation) (Amendment) (EU Exit) Regulations 2022

Lord Benyon Excerpts

Tuesday 28th June 2022 Grand Committee

Moved by

[Lord Benyon]

That the Grand Committee do consider the Common Agricultural Policy (Cross-Compliance Exemptions and Transitional Regulation) (Amendment) (EU Exit) Regulations 2022.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

My Lords, I declare my farming interests as set out in the register.

These regulations apply to retained EU law relating to the common agricultural policy, specifically: rural development; the common organisation of the markets, known as the CMO; and the underlying cross-compliance rules that farmers and land managers must follow on their holding if they are claiming certain rural payments. The instrument, made using the powers of the withdrawal Act, is extremely limited in scope. It makes no policy changes to retained EU law and no provision for future funding.

This instrument corrects a number of requirements to make notifications to the European Commission, references to “member states”, references to EU funding and EU policies, reports to be prepared by the European Commission and references to prospective EU legislation not yet made. These references came into force in the EU through Regulation 2020/2220, which the European Commission published and brought into force only in December 2020. This was too late for Defra to address prior to the end of the transition period, therefore the references were brought into retained EU law in the UK at the end of that period.

These references are redundant or deficient in a domestic context. They would, if possible, have been amended or removed from the statute book by Defra’s 2020 EU exit SIs had the EU regulation that introduced them been made earlier. The provisions being amended add little to domestic law, place unnecessary requirements on the UK to comply with EU policies that the UK does not share, or actively contradict amendments that Defra and the devolved Administrations have already made to provide for the future of agriculture in the UK.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the Minister for his introduction to this SI and for the helpful briefing beforehand. I accept that the majority of these changes are technical in nature.

First, although it is not ideal, I understand why the changes to EU regulation 2020/2220 could not be made at this time, given that it was passed so close to the end of the transition period. It therefore makes sense to take this opportunity to remove the provisions to minimise ambiguity and potential confusion. I also accept that it is helpful to remove redundant references to the EU and member states where they no longer apply in UK law.

Secondly, with regard to the changes to cross-compliance regulations, I can see why it might be necessary to widen the scope of the existing cross-compliance exemptions as set out in Schedule 3. However, I have some specific questions about this. These new exemptions to the schedule are very specific and refer only to the specific changes we made to Section 98 of the Environment Act 1995 and Section 1 of the Agriculture Act 2020. Can we be sure that these two provisions are the only two occasions where exemptions to the cross-compliance rules should be necessary?

I am struggling with some of the detail here, but I do not think many farmers will be operating exclusively under those agreements. That raises the question of what happens if, for example, their environmental work is, say, 20% but also has a direct impact on other activities, such as food production, at 80%. Would they be penalised, or is there an element of discretion? If so, what would that look like? In other words, what is the interface between the old cross-compliance and the new arrangements? How much discretion is there in all that or is it absolutely fixed in stone?

I still do not feel, having read the SI several times, that the application of the cross-compliance rules is clear, notwithstanding double negatives and so on. I would not relish being a farmer and having to try to understand and apply them. To be absolutely clear about this, are they to be applied only to claims under the old basic payment scheme? Therefore, will the cross- compliance rules be phased out as any claims under the old CAP scheme are phased out?

Given that there is wide acknowledgement that the CAP was too rigid and the financial penalties for non-compliances were too onerous, why are the Government not taking this opportunity to introduce the lighter-touch regime we were promised when we debated the then Agriculture Bill? Can we be assured that the roll-out of ELMS and any future UK agricultural and rural payment schemes will be assessed without cross-compliance penalties? How is that all going to work in future?

I look forward to the Minister’s response. I also look forward to the Minister’s response to the very interesting questions from the noble Baroness, Lady McIntosh, which I would like to know the answers to as well.

[Lord Benyon (Con)]

I am grateful to the noble Baroness and my noble friend for their contributions; I will try to answer their questions.

On the dashboard, these regulations and all retained EU law will be carefully reviewed as we go through the next few months. The Bill text is yet to be finalised. We are working closely with the Cabinet Office on what will be required in Defra-retained legislation. My noble friend Lady McIntosh is right to point out that we are coming to the end of the transition period, which is why we are doing all this stuff now. The tidying-up operation we are bringing in is because the sunset element of the EU withdrawal Act will be later this year and we want to get these matters resolved.

My noble friend asked how this instrument relates to the Brexit freedoms Bill. This instrument was an EU exit instrument made using the powers of the European Union (Withdrawal) Act 2018. As such, it makes no policy changes and does no more than is appropriate to make this common agricultural policy legislation fully operable now that the transition period with the EU has concluded. The Brexit freedoms Bill makes it easier to amend or remove outdated retained EU law from the statute book, ensuring that the UK continues to seize the benefits of Brexit and utilise our regulatory freedoms. Future regulation will be in line with our new regulatory principles. This answers some of the points that the noble Baroness, Lady Jones, made. Our rules will be proportionate and create a collaboration with business to help spur on economic growth.

I would just say, to her final point on ELMS, that we are trying to generate a culture change within agriculture. The cross-compliance rules of the common agricultural policy were tedious—I speak with the scars on my back from having to fill in the IACS forms and all their successors—and you could feel the dead hand of government on your shoulder regulating every aspect of what you do. We are transferring to a system that trusts farmers to draw down from a list of possible actions they might like to take and treats them rather like we do taxpayers. We taxpayers fill in our tax returns and the Government trust us unless they have reason not to. Occasionally, they will do an inspection. Occasionally, they will do a risk-based, intelligence-based assessment of whether somebody is at risk of breaking those rules. If they do break those rules, there are sanctions, but we want to be working with farmers much more, encouraging them into the new schemes and seeing the benefits that will come from that.

The noble Baroness, Lady Jones, made a very important point about cross-compliance regulation and enforcement. We are reforming our regulatory system, as I have said, to meet the country’s need and we will deliver a clear, fair and effective system. Cross-compliance will end at the point that the CAP direct payments are dealing from land. However, protections provided by cross-compliance will mostly continue. Domestic legislation already contains most of the same rules as cross-compliance and enforcement action to deal with any non-compliance.

The end of cross-compliance provides an opportunity, as I say, to move away from an approach that is seen to be disproportionate. We are reforming our farming regulatory system using the Dame Glenys Stacey 2018 review recommendations and by working closely with farmers and others. We want a farming regulatory approach that is focused on outcomes and based on the core principles of partnership, adaptability, proportionality, transparency and efficiency.

Some questions related to the whole area of complexity. Defra is working hard to make the system as easy as possible for everyone. We have simplified the online application system to make it faster and easier for farmers to apply and revised the scheme standards to make them clearer and more self-explanatory. Farmers can be in the SFI and the Countryside Stewardship scheme or the Environmental Stewardship scheme at the same time, so long as they are not being paid for the same actions twice and the actions are compatible.

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[Baroness Jones of Whitchurch (Lab)]

I am sorry, I do not normally interrupt the Minister, but can this be right? I think the Minister said, which I did not expect him to, that when the basic payment scheme is phased out, as it will be, cross-compliance will carry on after that. Is that the correct understanding of what he said?

[Lord Benyon (Con)]

There is some conditionality on the scheme. If you say that you are going to plant a headland, you have to plant a headland with wild flowers, and it is the same if you are doing something that comes under the heading of “public goods” that we are pushing through our new schemes under the SFI. However, as I said, we want to do this with a light touch. We want farmers to be trusted to do it. The cross-compliance elements will remain as the schemes are phased out, but then we want to move to a system that is more trusting of farmers to do the right thing.

Motion agreed.