Rural Development (Amendment) (EU Exit) Regulations 2019

Lord Gardiner of Kimble Excerpts

Wednesday 13th March 2019 Grand Committee

Moved by

[Lord Gardiner of Kimble]

That the Grand Committee do consider the Rural Development (Amendment) (EU Exit) Regulations 2019.

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

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

My Lords, it is appropriate that I declare my farming interests, as set out in the register. The matters in the four instruments are closely interrelated; I hope it will be helpful to your Lordships if I speak to all four together. These instruments amend retained EU law and domestic legislation to ensure that rural development payments and maritime and fisheries payments can still be made after exit day. These amendments will maintain the effectiveness and continuity of EU and domestic legislation that would otherwise be deficient following our exit.

These changes are necessary to enable rural development programmes, partially funded by the European Agricultural Fund for Rural Development, and the maritime and fisheries operational programme, partially funded by the European Maritime and Fisheries Fund, to continue operating effectively in the United Kingdom following exit, until their closure at the end of the 2014-2020 programming period. There will be an opportunity to consider the scheme-specific regulations for the European Maritime and Fisheries Fund at a later date, as these are made operable in the Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019.

There are currently four rural development programmes operating in the UK, one in each Administration, providing funding for rural businesses, farmers, land managers and applicants living in a rural community with the intention of growing the rural economy, increasing productivity and improving the environment. The maritime and fisheries programme is UK-wide and promotes growth in the sector by providing funding for sustainable fisheries, marketing and processing and sustainable aquaculture, among other matters.

There are two European funds relevant to these instruments: the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. The former supports the delivery of rural development in the UK and is worth some £430 million per year over the programming period. The latter promotes a competitive, environmentally sustainable, economically viable and socially responsible fisheries and aquaculture sector, which is worth some £32 million per year. The UK Government have guaranteed that any projects funded from the 2014-2020 allocations from these funds will be funded for their full lifetime.

The changes made by these instruments are necessary to ensure that the Government guarantee can be honoured and payments can continue to be made to agreement holders using domestic funding in place of funding from the EU. They provide certainty to individuals and businesses currently receiving rural development and maritime and fisheries funding or considering applying for funding during the current 2014-2020 programming period.

The Rural Development (Amendment) (EU Exit) Regulations 2019 amend the EU regulation that provides the general rules and structures governing support for rural development, providing payments to be made to agreement holders and laying down rules on programming, networking, management, monitoring and evaluation.

The Rural Development (Rules and Decisions) (Amendment) (EU Exit) Regulations 2019 amend the implementing and delegated provisions made under the main rural development EU regulation and four implementing decisions approving the rural development programmes for each of the devolved authorities.

The European Structural and Investment Funds Common Provisions (Amendment) (EU Exit) Regulations 2019 amend the EU regulation that sets out the shared framework for all the European structural and investment funds, but only as far as applies to rural development and maritime and fisheries.

Finally, the European Structural and Investment Funds Common Provisions Rules etc. (Amendment etc.) (EU Exit) Regulations 2019 amend the supplementary provisions for European structural and investment funds for rural development and maritime and fisheries that are not dealt with elsewhere.

I emphasise that all these instruments remedy the deficiencies in the regulations to ensure that they continue to operate effectively when we leave. They do not introduce new policy, are technical in nature and preserve the current regime for supporting rural businesses, environmental land management and sustainable fisheries, among other matters. The amendments include omitting deficient references to the European Commission and member states and replacing them with references to either the UK or the relevant authority, as appropriate. The instruments also amend references to “Union law” throughout, so that the relevant EU regulations continue to operate effectively as part of national law. Provisions that are deficient because they are time-limited and under which the relevant actions have occurred have also been omitted, such as provisions relating to ex ante evaluations that have already been completed and provisions relating to prefinancing paid out when the programmes were initially set up. In addition, references to European institutions such as the European Investment Bank are also omitted.

One purpose of these modifications is to ensure continuity and clarity as to which public bodies have responsibilities towards the programmes. The obligations and discretions placed on member states will continue to be exercised after exit by relevant authorities in the UK. In this context, “relevant authority” means: the current managing authority of the maritime and fisheries operational programme, the Marine Management Organisation; the Secretary of State in relation to the Rural Development Programme for England; Scottish Ministers in relation to the Scottish Rural Development Programme; Welsh Ministers in relation to the Rural Development Programme for Wales; and the Department of Agriculture, Environment and Rural Affairs in relation to the Northern Ireland Rural Development Programme.

As noble Lords are well aware, agriculture and fisheries are devolved policy areas and are of special importance for all parts of the kingdom. We have worked closely with the devolved Administrations to produce these instruments; they place great importance on them and have given them their full support. I repeat that these statutory instruments are required for the continued operation of the rural development programmes and the maritime and fisheries programme. Without them, there would be no legal powers to make payments to fulfil the promises that these important programmes will continue. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend for bringing forward this little group of statutory instruments. I shall pursue what was raised in Sub-Committee B’s report—the 18th report from the Secondary Legislation Scrutiny Committee. The Sub-Committee has invited this Committee to probe for more financial information. I have a series of questions and I shall try not to repeat myself.

There will be schemes that have finished, and new schemes that will commence but end after a key date—that could be 2021-22. What advice are my noble friend and his department giving to those who may be in a position to enter a new scheme but are reluctant to do so, since they are not sure whether it will complete and what the funding will be for it? My understanding is that there are schemes that fall into that category, and concern has been raised.

Paragraph 7.5 of the Explanatory Memorandum to the rural development regulations says:

“On EU exit, the UK will seek reimbursement from the EU for all CAP payments made to beneficiaries up to 29 March 2019”.


On what basis? We are still members of the European Union, so I would just like to know what the legal basis is for that. It seems very odd, because we are committed to the EU schemes between 2014 and 2019. It says “up to”, so I just ask for clarification, because I do not understand what the legal basis is. It goes on to say:

“Thereafter, such funding will be provided by HM Treasury”.


I know this is of great interest to the farming press and the farming community generally. What is the budget from which those funds will be provided, going forward?

The paragraph goes on:

“The UK Government has guaranteed that any EAFRD projects, where funding has been agreed before the end of 2020, will be funded for their full lifetime”.


Again, it would be helpful to know where these funds are coming from. It continues:

“The guarantee also means that Defra and the devolved administrations can continue to sign new projects this year and during 2020”.


What will be the duration of those schemes? Again, where will the money come from? It goes on:

“In addition, the Government has pledged to continue to commit the same … total in funds for farm support until the end of this Parliament, expected in 2022”.


This has been exercising me for some time. The Government have consistently said that we are committed to paying money until the end of this Parliament, which is expected in 2022. It begs the question: if a general election—heaven forfend—is held before 2022, possibly this year, does that leave the door open for a newly elected Government to cease to pay those funds for those three years, from 2019 to 2022, particularly if there is a change of Government? It is just not clear and it gives us the opportunity to clarify that this afternoon.

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[Lord Gardiner of Kimble]

My Lords, I am most grateful for what has been a valuable debate and consideration beyond what are, as we all know, the technical requirements behind why we need to do this. I fully appreciate that many of us have been waiting and wanting to get on with some primary legislation, but that is not in my gift, alas. If it is my privilege to do so, I look forward to taking part in discussions, in the Chamber and beyond, on how we take forward fishing and marine interests and agriculture, and the produce we create in our waters and on our land, which is so important for domestic production and for export.

These instruments ensure that the rural development programmes and the maritime and fisheries operational programmes continue to operate effectively. As I said, the rural development fund is worth some £430 million per year and the maritime and fisheries fund is worth some £32 million per year. I am sure that, at this point, the noble Lord, Lord Teverson, is thinking that that looks like a big gap. It was very generous of him to raise the fact that the fund has been a good custodian of other people’s money.

I will try to give as much detail on this as possible. The Government have guaranteed that any projects funded from the 2014 to 2020 allocations from these funds will be funded for their full lifetime. Whatever is agreed up to 2020, and if thereafter those projects are to be funded, that will be honoured. My noble friend Lady McIntosh opened by asking where the money is coming from. The Treasury allocates to departments. My advice to applicants is that Her Majesty’s Treasury funding is a guaranteed cover of all rural development projects entered into before the end of 2020 for their full lifetime. I encourage those who are minded to think strongly of that Treasury guarantee.

My noble friend raised another point. I have declared my farming interests, and we all would like as much certainty as possible. That is precisely why there is a promise to, as far as is possible—I use those words deliberately, and will seek to clarify that—guarantee the same level of funds until 2022. Some noble Lords will wish completely the reverse, but I have no idea whether this Parliament will go on until 2022, and, as we all know, no Parliament can bind its successors. But this is a promise to the rural community, while this Government are in office and have that responsibility, to honour the level of funds until the end of this Parliament. None of us here is in a position to know precisely when that Parliament may conclude.

My noble friend Lady McIntosh raised the legal basis for reimbursement and the date. It is because the EU is bound by the regulations while they apply to the UK as a member state. Any commitments that the UK has entered into prior to exit are commitments made from the EAFRD. That is the basis, and it was why that was the date in Article 50 and why precisely the Treasury guarantee kicks in for anything after the date of us leaving.

Several noble Lords raised the issue of the link to the Agriculture Bill, including my noble friend Lady McIntosh and the noble Baroness, Lady Bakewell. These SIs are made under the withdrawal Act; they allow us to correct deficiencies. The purpose of the Agriculture Bill, for which we are waiting, is obviously to provide the opportunity to redesign our approach to agricultural support, so that if we wish to we can amend retained EU law. Therefore, any amendments that we make are, yes, probably for the short term, and they will probably be to see how we might improve the current arrangements and give better experience to agreement holders.

Under Clause 1 of the Agriculture Bill, the Secretary of State may provide financial support for managing land or water in a way that protects or improves the environment. Of course, as we design our agriculture policy, we will look to see—and this is a point that I would like to put to my noble friend Lady Byford—how we can support bringing together groups who work together in the agricultural sector. Clearly, as we look at how we can enhance the environment and how we deal with landscape, it is with clusters and the concept of catchment areas. I think of Slowing the Flow at Pickering, in regard to my noble friend Lady McIntosh. All this is where working together in schemes is going to be very rewarding in terms of enhancing the environment and producing very good food as well in that context.

To my noble friend Lady Byford, I say that I am delighted that the House of Commons said that we should have a debate on this. My understanding is that future funding is important to rural and marine communities. I say to the noble Lord, Lord Teverson, that on 10 December 2018, the Government committed to providing £37.2 million of extra funding for the UK seafood sector for projects approved for 2019 and 2020 to boost the industry as we become an independent coastal state.

On the Agriculture Bill, rural growth, which includes the LEADER scheme, is currently included in the rural development programme and will continue under the government guarantee until the end of the programme period. Beyond that, the expectation is that rural growth initiatives will be supported through the UK’s shared prosperity fund, which is intended to deliver for all parts of the country. Wearing the rural-proofing element, which is a strong one, I say that Defra is working with the Ministry of Housing, Communities and Local Government to develop the ways in which it will support the rural economy.

Perhaps I can immediately say to the noble Baroness, Lady Bakewell, on the rural strategy that I was fortunate enough to give evidence with the Secretary of State, and he has said publicly that he was looking forward to the report of our Select Committee and that it might be an occasion to respond. I think he was generously saying, as noble Lords who were in that committee will have heard, that this was something that was raised. I know that he and I will be very much looking forward to the rural economy report whenever it comes out.

The noble Baroness, Lady Bakewell, asked for reassurances about reporting. I assure your Lordships that the level of rigour currently applied to ensure that the rural development programme achieves value for money and overall public benefit will continue. Inspections will still take place. Annual implementation reports will continue to be produced and approved programmes can continue to be evaluated administratively by relevant authorities. The National Audit Office will continue to be involved to maintain existing levels of scrutiny and good practice. We have put in place arrangements to ensure that the Commission’s functions are now taken up by each devolved authority or the programme monitoring committee, which is composed of representatives of environmental, rural and agricultural stakeholders, including non-government organisations.

The noble Lord, Lord Teverson, raised the question of EMFF and how new replacement work schemes will work. In the Fisheries Bill, we propose a power to replace, modernise and broaden the existing grant-making powers in the Fisheries Act 1981. This will provide greater flexibility and ensure that new grant schemes can deliver value for money. Fisheries are devolved and once we leave the EU and on the closure of the EMFF grant scheme, devolved Administrations have indicated that they would want to run their own grant schemes targeted on their national priorities.

The noble Lord asked about fishing support after 2020. The Government have committed to replace EMFF from 2021 across the UK for the next two years, as I said. It was announced that that extra EMFF will be available to UK-licensed vessels.

The European Investment Bank was raised by the noble Lords, Lord Grantchester and Lord Teverson. It currently has no involvement in UK rural development programmes or the maritime and fisheries programme. Treasury funding will still be accessible to those seeking it. The impact on agreement holds will therefore be negligible. I am bound to say that the loss of access to the EIB is a result of exit, not as a direct result of the instrument.

[Lord Teverson]

My Lords, may I say that my fishers friends in Mevagissey did not have the European Investment Bank highest on their priorities, but I am glad he clarified that.

[Lord Gardiner of Kimble]

I thank the noble Lord. I have dealt with the issue of further financial assistance.

The noble Lord, Lord Grantchester, raised areas where different Governments are engaged in regulating the same area. We are working closely with the Department for Business, Energy and Industrial Strategy in developing the instruments. The European rural development fund and the European social fund have domestic power to continue making payments following exit. This is not the case for the European agricultural fund for rural development or the European maritime and fisheries fund, which rely on the spending powers in the EU regulations. That shows the distinction. A different approach is therefore necessary to allow funds to continue operating under the Treasury guarantee.

The noble Lord also asked why the provisions do not apply to the European rural, development, social and cohesive funds. They are being addressed in a separate SI by the Department for Business, Energy and Industrial Strategy. That SI and others will be developed in your Lordships’ House on 14 March.

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[Lord Grantchester]

I press the Minister to clarify that a little more. Is he therefore saying that it was the devolved Administrations’ responsibility to consult with their stakeholders rather than that of Defra, with its wider powers of consultation?

[Lord Gardiner of Kimble]

Defra has very good relations and dialogue with a number of rural and fisheries organisations across the devolved Administrations. It is right to say that there is sensitivity, if the responsibility is a devolved Administration’s, in that to appear to be overhauling that would not reflect well. It is a matter for the devolved Administrations, but clearly we wish to work collegiately.

[Lord Grantchester]

I ask the question only in terms of how it relates to how it is reported to us in explanatory memorandums, so we know that there has been full consultation in all the regions as well as on a UK-wide basis.

[Lord Gardiner of Kimble]

If I have any specific details, I will let the noble Lord know precisely. It may be helpful if I can glean some information on devolved consultations with stakeholders. I would say that when we have been engaged with key stakeholders, on fisheries, stakeholders we have been engaged with were supportive of the work being undertaken. On rural development, no concerns were raised by stakeholders, who expressed their appreciation of the work being undertaken.

I shall read Hansard, because my noble friend Lady Byford asked a number of points about youth and retirement projects, issues to do with contractors and other matters. All I would say is that the order is designed to continue with the arrangements that we have, but with the payment after we leave by our guarantee that we will fulfil the funding of any schemes that are applicable at the moment. Obviously, as my noble friend knows, this is not about future schemes, on which we will have all sorts of discussions. Whatever is appropriate now under these funds, people can apply for until the programme ends, and so forth. If there is anything further that I think would be helpful, I will inform your Lordships, but I recommend the instruments and I beg to move.

Motion agreed.