Direct Payments to Farmers (Legislative Continuity) Bill

Lord Gardiner of Kimble Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard): House of Lords & 2nd reading (Hansard) & 3rd reading (Hansard) & Committee negatived (Hansard)
Wednesday 29th January 2020 Lords Chamber

Moved by

[Lord Gardiner of Kimble]

That the Bill be now read a second time.

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

My Lords, I should at this juncture declare my farming interests as set out in the register.

The Bill before your Lordships is concerned with government spending and not changes to policy; it has consequently been certified as a money Bill. I will therefore focus my remarks on discussing the principles and contents of the Bill.

The Direct Payments to Farmers (Legislative Continuity) Bill is of critical importance. Principally, this small technical Bill seeks to provide continuity and stability to farmers by enabling direct payments to be made in all four parts of the United Kingdom for the 2020 scheme year. These payments are currently worth nearly £3 billion per annum to UK farmers.

The need for the Bill arises from the fact that Article 137 of the withdrawal agreement will on exit day—at 11 pm on 31 January 2020—stop the EU legislation on 2020 direct payments from applying in the UK. This is part of removing the UK from the next EU multiannual budget, in which the UK will not be participating and it would not be appropriate for this country to continue to contribute towards.

The Government are ensuring that, before we begin to reform our agricultural system to suit our own domestic circumstances, the interests of UK farmers are protected in the meantime. It is time sensitive, as the Bill and all necessary secondary legislation must be in place on exit day, because after that point the EU direct payments legislation will cease to apply in the UK for the 2020 scheme year.

This gets to the heart of what the Bill is—and, crucially, what it is not. The Bill will lift and incorporate the EU direct payments legislation for the 2020 scheme year on to the domestic statue book. It will allow the Government and devolved Administrations to make operability fixes to that legislation so that it works and can be used to continue to make payments to farmers for the 2020 scheme year. The Bill does not allow for wide and sweeping agricultural policy reforms.

The Government are committed to ambitious and wide-ranging agriculture reform in England. The Agriculture Bill will introduce a new domestic agriculture system based on the principle of paying public money for the delivery of public goods, such as clean air and water and healthy soil. This will be achieved over a seven-year agricultural transition, starting in 2021, during which direct payments will be phased out in England. But this is not the Bill to bring about these changes.

The Bill’s purpose and scope are narrow and sufficient to provide the Government, devolved Administrations and farmers with the legal certainty that payments can be made for 2020. It is important to provide certainty to farmers, and I hope that farmers will be assured by the recent Government commitment to provide £2.852 billion in funding for 2020 direct payments in the United Kingdom. This means that the overall levels of funding available for direct payments for 2020 will be the same as for 2019. The Government have also committed to maintain the current overall annual budget to farmers each year until the end of this Parliament.

This Bill will give Defra and the devolved Administrations the legal basis for paying direct payments for 2020. This Bill legislates and works for the whole of the United Kingdom. The Government have worked closely with the devolved Administrations, which have had a unity of purpose in safeguarding the interests of the United Kingdom’s farmers.

I want to address one further important point. In September 2019, the Government accepted the recommendations of the review of the noble Lord, Lord Bew, concerning the allocation of farm support funding in the United Kingdom. I thank the noble Lord for the essential work he did on this review, which paved the way for the Government agreeing to an increase in the funding allocations for Scotland and Wales. The Bill enables the Government to deliver on their promise to uplift the funding for Scotland and Wales, while maintaining the funding for England and Northern Ireland, for 2020.

Turning to the Bill’s main provisions, Clause 1 incorporates the EU legislation governing the 2020 CAP direct payments scheme into domestic law on exit day. This will ensure that the Government and the devolved Administrations can make payments to farmers for this claim year.

Clause 2 applies Sections 6 and 7 of the European Union (Withdrawal) Act 2018 for the purpose of the legislation being domesticated under this Bill. In applying Section 6 of that Act, it provides certainty to the domestic courts about what can and cannot be considered. In applying Sections 7(2) and (3) of that Act and the Schedules, it makes it clear how the legislation we are domesticating can subsequently be amended.

Clause 3 contains five powers. There are two powers, one conferred on the Secretary of State and the other conferred on the devolved Administrations, to make operability amendments to the law we are domesticating to make sure that it works in a domestic setting. For example, it would be used to replace references to the European Commission with the domestic equivalent. I must say, particularly looking at the Opposition Front Benches, that your Lordships will be familiar with this, not least because it is akin to the power in Section 8 of the European Union (Withdrawal) Act 2018, under which the many EU exit SIs were made. There are another two powers, again one conferred on the Secretary of State and the other conferred on the devolved Administrations, to replicate any changes made by the EU to its equivalent legislation during 2020, should it be considered appropriate to do so. Quite simply, this is a discretionary keeping-pace power. Finally, there is a power conferred on DAERA in Northern Ireland to retain policy flexibility for its Ministers to continue to move entitlements in Northern Ireland towards a uniform unit value, like the rest of the United Kingdom.

Clause 4 makes provision for the domestic publication of EU regulations relating to direct payments. It also enables regulations made under the European Union (Withdrawal) Act 2018 on rules of evidence to apply equally to the body of law we are domesticating under this Bill.

As I said, Clause 5 enables the Government to implement, as far as they relate to 2020, the recommendations of the noble Lord, Lord Bew, detailed in the review bearing his name. It achieves this by making amendments to the direct payment regulation. This clause demonstrates the Government’s commitment to all farmers across the constituent parts of the United Kingdom.

This is a small technical Bill but it is none the less significant. It is about providing continuity and stability to farmers. Where the Agriculture Bill provides for the beginning of a transition in England towards a new system of paying public money for the delivery of public goods, this Bill will enable us to pay direct payments for the 2020 scheme year across the United Kingdom while also delivering on the Government’s promise to provide fair funding allocations. I beg to move.

--- Later in debate ---

[Lord Gardiner of Kimble]

My Lords, in many respects this has been a preliminary to our deliberations on the Agriculture Bill; I fully expected that. I will first address in particular the noble Baroness, Lady Young of Old Scone. I am worried that she is going to be worried, because I can identify in the Agriculture Bill so much of what she said. In my view, every single element that she mentioned—including soils, floods and climate change—is engaged in Clause 1(1)(a) to 1(1)(j). Because this comes up again, I also want to discuss the balance of all that we want to do. If your Lordships will forgive me, as we have had a preliminary on the Agriculture Bill, I think it is important that I set out the Government’s bona fides.

The noble Lord, Lord Teverson, hit on something that I as a farmer have often reflected on. As a farming sector, we will now have to look to the British taxpayer and say, “We would like your support.” The way in which to look at this is very much Michael Gove’s legacy: the public are prepared to support farmers in doing all the many things in Clause 1(1)(a) to 1(1)(j) in the Agriculture Bill to enhance the environment. With over 70% of our land farmed, the farming world can play an invaluable role in restoring biodiversity and nature recovery.

I also want to emphasise Clause 1(4) of the Agriculture Bill, which says:

“In framing any financial assistance scheme, the Secretary of State must have regard to the need to encourage the production of food by producers in England and its production by them in an environmentally sustainable way.”


The Agriculture Bill is not a proposal for us not to produce food. I hope that the noble Baroness, Lady Young of Old Scone, and other noble Lords who have raised so much of this, will take some reassurance in what is before us when we come to consider that Bill. I also say to the noble Baroness and other noble Lords that the food strategy that Henry Dimbleby is undertaking is absolutely about bringing forward by the summer a national food strategy that goes from farm to fork.

I want to say in the preliminaries that the noble Earl, Lord Devon, has hit on something that I think is very important for us as a nation and our pastoral farming. By that, I mean the best traditions of pastoral farming. Moving from British meat products to plants produced in other parts of the world where we have seen environmental degradation —be it in the production of almond milk, avocado or soya—we should be careful of being buffeted by fads and fashion. I think of what pastoral farming does to the landscape and rural environment in so many parts of the world. We should be very cautious about moving towards a system of jettisoning and disregarding the importance of livestock agriculture to very high standards in this country.

I am grateful to the noble Lord, Lord Teverson, for raising the issue of public money. Let us take ourselves back to earlier caps: could we really face the nation and talk about lakes and mountains, as we had to before, if we are to receive public money?

The noble Baronesses, Lady Jones of Whitchurch and Lady Bennett, and the noble Earl, Lord Devon, asked: why are we here now? The Bill is dependent on the terms of, and has no effect without, the withdrawal agreement. Therefore, we could not introduce this Bill any sooner than we did. Royal Assent cannot occur before Royal Assent to the European Union (Withdrawal Agreement) Bill.

The noble Baroness, Lady Jones of Whitchurch, asked why we were not doing more on future support in the Bill. The Bill is, as I have described, a small technical Bill to lift the 2020 payments mechanism for us to deal with 2020. There are many provisions in the Agriculture Bill that will enable us to outline and deal with the mechanism for continuing to support farmers in their essential work and the production of food.

I will reiterate what I said in my opening remarks on funding. The Government are committed to matching the current overall budget available to farmers in every year of this Parliament. I am not in a position to say what a future Government might do after a future general election, but my view is that we are right to match that overall budget. That is a government commitment. As I said, on 30 December the Chancellor of the Exchequer announced funding for direct payments that matches the total funding for direct payments available for 2019. I think that that is an indication of a Government who are not being cavalier but who absolutely understand that farmers need to have an understanding of where they are this year, and as we go through with all the transitional arrangements and the continuance on a tapering scale of direct payments, so that they can work with the new system and we can progressively reduce direct payments. There are powers to do that.

The noble Baroness, Lady Young of Old Scone, mentioned scrutiny, which is important. Defra will consult before making SIs under the Agriculture Bill. We had some very successful results from scrutinising the exit SIs, for instance.

In no particular order, my noble friend Lady McIntosh asked about live exports for the second time this week. I repeat what I said before and it will not change: we are extremely concerned about the long journeys that live animals are undertaking. The veterinary profession is very concerned about this and it is something we will work on.

My noble friend Lady McIntosh also asked about tenant farmers. This Bill is about status quo for the scheme in 2020, but new provisions on tenancies in the Agriculture Bill will ensure what we believe will be a vibrant future for agricultural tenancies, providing tenants of agricultural holdings with agreements that have more flexibility and removing barriers to investment and productivity.

On remapping, in future years we will look to simplify the administration of existing schemes for farmers and the RPA. On the RPA’s payment performance, it was generous of the noble Earl, Lord Devon, to say that the RPA was working very hard. This year I think that we are up to 97% already being paid. We will obviously focus on completing the remaining claims and releasing payments as soon as possible.

On the issues that the noble Baroness, Lady Bakewell of Hardington Mandeville, raised, my colleague the Minister of State, George Eustice, has had meetings with the RPA’s chief executive. There have been considerable improvements over the past 18 months, but I and they are very conscious that we need to improve the position in particular on the environmental schemes and the countryside stewardship schemes. It has been improved, but there is more room on that.

My noble friend Lady Byford asked about timings on the Agriculture Bill. The Second Reading will be in the other place on Monday 3 February, so clearly it will reach your Lordships in the due time of its deliberations in the other place. I look forward to that. As I said, I think that we have had a very good preliminary.

My noble friend Lady Byford and the noble Baroness, Lady Bakewell, asked about trials. We are currently running a programme of tests and trials. It is important to say that these are about co-designing with farmers in all sorts of topographies in the country. This will be so that we have a range of trials, because part of the work of an ELM in certain parts of the country will quite clearly be somewhat different. The focus might well be on elements of paragraphs (a) to (j) of Clause 1(1) of the Agriculture Bill, for instance. We are working closely with a range of environmental and agricultural stakeholders to design collaboratively the new ELM scheme, so that it is fit for purpose. We will provide further information over the coming year, but, following these tests, we want to refine the co-design to ensure that it works on the ground for farmers and other land managers, and that it delivers the environmental outcomes that we and the farmers want.

The noble Baroness, Lady Bakewell, asked about the rates of exchange. The level of funding available for direct payments in 2020 for each part of the UK will be the same as for 2019; the funding is based on the same financial ceiling and exchange rate.

Several noble Lords, including the noble Baroness, Lady Young of Old Scone, raised trade. We should be proud of our British produce for domestic and export consumption, and of its reputation as being of the highest quality. As I have said so many times to your Lordships, any future trade agreements must work for consumers, farmers and businesses. We will not water down our standards on food safety, animal welfare or environmental protection as part of a trade deal.

On the review by the noble Lord, Lord Bew, it is a great privilege to have one of your Lordships undertaking a review that clearly was knotty. Your Lordships were right; the noble Lord’s skills will become legendary. This was a knotty problem for all sorts of reasons. Also important is the noble Lord’s confirmation of the collaborative spirit across the devolved Administrations. It is a feature of life that we are always wanting to find the areas of disagreement rather than agreement. I say to my noble friend Lady Byford, and the noble Baroness, Lady Jones of Whitchurch, that this money will be ring-fenced, to be spent on farmers in Scotland and Wales respectively. I assure your Lordships that this money will not be taken by farmers in England or Northern Ireland. It is additional money, resulting in an overall funding increase of £56.6 million for UK farming over the two-year period.

As I mentioned before, the transition period, raised by the noble Baroness, Lady Jones of Whitchurch, and the noble Earl, Lord Devon, is a seven-year transition. We intend to introduce changes steadily. In 2021 we will start applying reductions to direct payments. Reductions will apply progressively. We will offer land management schemes throughout the transition. Countryside stewardship will remain open to new applicants until 2023-24. Additionally, existing high-quality countryside stewardship and environmental stewardship agreements will be extended, protecting their environmental outcomes and farmers’ incomes. The new environmental land management scheme is being developed, with full ELM rollout across England in late 2024.

Food security was raised by the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh. The Agriculture Bill includes a new requirement to report on food security. I say to my noble friend Lady McIntosh that on self-sufficiency, we are at 75% of UK production for indigenous grown food, but there are many things that the consumer likes that we do not produce here, so self-sufficiency is not the point. It is about food security. Candidly, I know about tea in Cornwall, but not about coffee and citrus fruits. We need to be conscious of food production, but conscious of food security too.

The Government believe that upland farmers play a vital role as stewards of the countryside and our iconic landscapes, and that across the land they are well placed to benefit from new ELM schemes, which will reward farmers for what many in those areas are already doing.

My noble friends Lord Cathcart and Lord Caithness asked about transition. I get the Farmers Weekly and the Farmers Guardian every week and there is no doubt that there is an awareness and considerable discussions, individually and across farmers generally, about this period of change and the co-design. I emphasise again that none of this will work if it is not the farmers’ idea and concept, too. It is vital that we get it right by co-designing these schemes with farmers.

In response to a point raised by my noble friend Lady Byford and the noble Lord, Lord Bew, on the devolved Administrations, the Government are committed to engaging with the devolved Administrations to develop a fair approach to future funding allocations. We agreed to consider the needs of farmers in England, Wales, Scotland and Northern Ireland, recognising that agriculture policy is and will remain devolved.

My noble friend Lord Caithness asked what amendments Defra expects the EU to make to the CAP this year. We are not expecting the EU to make significant changes but the Bill includes a power, but not an obligation, for us to undertake any amendments. He also asked about greening under pillar 2. Under our new ELMS scheme we are considering how best to reward farmers and land managers for the good work they do in managing the countryside.

On the countryside stewardship scheme, a new round of countryside stewardship will be open for applications in February, with the agreement starting in 2021. This will be a stand-alone domestic grants scheme and we have made an SI on that matter. My noble friend Lord Caithness also asked about this in relation to Northern Ireland. It is a matter for DAERA. Since the start of the current scheme, payment entitlements in Northern Ireland have been moving towards, but have not yet reached, a uniform unit value.

The Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly have all granted legislative consent Motions for the Bill, and the NFU has welcomed it.

On the issue of the carry-over of the three-crop rule, raised by my noble friend Lady Byford, the Bill does not introduce new policy. The basic payment scheme, including the greening rules, which include the three-crop rule, will apply for 2020. The Agriculture Bill will allow us to simplify the current scheme from 2021. However, the Rural Payments Agency has recently updated its GOV.UK online guidance on flooding and wet weather so that farmers are clear on rules and possible alternative options which will allow them to remain compliant.

On the Northern Ireland protocol, an issue raised by the noble Lord, Lord Teverson, spending that supports the production of trade in agriculture products in Northern Ireland is exempt from state aid rules when meeting Article 10.2 conditions. I do not have time to say more on this matter but if there was anything further on it I would.

The noble Baroness, Lady Jones of Whitchurch, also raised the issue of pillar 2. Under the withdrawal Act 2020, Defra and the devolved Administrations will continue to deliver rural development programmes under the terms of the EU regulations, which are not the subject of this Bill.

My noble friend Lord Inglewood raised a number of pertinent points but I am afraid that taxation is above my pay grade.

Obviously, there are issues—many of which will come up in the Agriculture Bill—but I want to take the opportunity with this short Bill to put on record my thanks to the Bill team and all noble Lords who have engaged in these deliberations. The Bill is necessary. I hope I have explained why we are doing it now and why we could not have brought it forward before although it was an issue we understood we would need to manage. It has also enabled the Government to address the review of the noble Lord, Lord Bew, dealing with 2020.

These measures have been agreed by the other place and are overwhelmingly supported by the devolved Administrations, stakeholders and farmers across this country. As I have said, this Bill is certified and is therefore a money Bill. I will look at Hansard because there are many questions which go beyond this Bill. If any particular points come up in other deliberations, I will come back. In the meantime, I beg to move.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time, and passed.