Agriculture Bill

Lord Grantchester Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Thursday 16th July 2020 Lords Chamber

[Lord Grantchester (Lab)]

In speaking to this very extensive group of amendments, I will speak to Amendments 195A to 195F in my name, and to Amendments 197 to 200 in my name and that of my noble friend Lady Jones of Whitchurch, with implications for Amendment 207 in the name of the noble Baroness, Lady McIntosh of Pickering.

These amendments are primarily focused on Clause 27, which deals with the “fair dealing” of agricultural producers in the agri-food supply chain. They come from my experience—as shown by my interests declared on the register—representing mostly dairy producers and dairy processors, and my directorship of a farmers’ co-operative that processes members’ milk and markets produce in the supply chain, and, crucially, from my understanding and experience of the disruption of the food chain following the difficulties of the Covid-19 pandemic.

I very much welcome the “fair dealing obligations” introduced into the Bill in the provisions of Clause 27 and others. The relative imbalance in market power between primary producers at the foot of the supply chain and those at the top of the chain, selling the finished product or meal to the consumer, has long been understood. What happens in between can be a murky business of relationships, given the many channels to the market and the perishable, short-shelf-life product with its various, highly regulated processes.

This imbalance in bargaining power was recognised again as recently as February 2018, in the Government’s response to the call for evidence in the case of extending the Groceries Code Adjudicator’s remit in the groceries supply chain. The Government recognised examples of unfair terms and unclear contracts that led to a general lack of trust and transparency, discouraging good relationships across the supply chain. That the Government recognise that the problem is ongoing, and are now addressing it in the Bill, is to be welcomed.

Clause 27 gives the Secretary of State powers to make regulations “in relation to contracts”. My first amendment, Amendment 195A, is an amendment to the amendment of the noble Lord, Lord Empey—I thank him for his opening remarks—and the noble Earl, Lord Dundee, which seeks to replace “may” with “must” and to establish a timeframe of 12 months in which regulations must be introduced. Progress must be made swiftly; the problems are well known. The impacts of Covid-19 on the supply chain have also become well known and have been answered in the competitive legal structure in emergency regulations, but their effects have yet to be assimilated.

Amendments 195B, 195C, 195D and 195E are designed to be all-inclusive: first, across all business purchases; secondly, across all farming sectors listed in Schedule 1, and, thirdly, across all dealings between purchasers and sellers. Lastly, the Secretary of State must promote fair dealing outside of a contract, as well as within the terms of a contract.

A contract is often drawn up by the purchaser rather than the seller and may contain only necessary provisions around the supply and payment for an agricultural product. It is important that Clause 27 must not be interpreted only with regards to the dealings in a specific contract but encompass all dealings. It would be important for the regulations to address, as a baseline, good basic business practice of fair dealings, and then to address fair dealings in contracts. The regulations must go to the heart of the matter: an enforceable fair dealing code of practice.

Amendment 195 reflects on the disruption to supply relationships caused by the pandemic. The immediate closure of all food service sector outlets—canteens, restaurants, cafes, coffee shops and snack bars, which make up 50% of all food purchases made out of the home—cut off at a stroke all the supply lines. There was suddenly nowhere for food products in the food service sector to go. There was a relative rebalance to retailers and local outlets following this. The effect was for purchasers of primary products to push enterprise risk down to the producers and sellers of products—the farmer—citing force majeure as a reason to refuse contract fulfilment. I am pleased to say that retailers largely stood by their responsibilities to the supply chain.

This experience has severely affected the faith of sellers in fair dealings. Will provisions on fair dealings in Clause 27 be sufficient to deal with these experiences in the future? How will they deal with a similar possible disruption, whether in the extreme—as in the pandemic— or in many other examples which may be more localised and more specific to the food sector, as in Schedule 1, where purchasers may have difficulties making payments for produce? How will the balance of risk be assessed in these regulations? Will the provisions of the Bill cover the situation?

I think the Minister will agree that this is entirely different from circumstances covered under “Exceptional market conditions” in Clauses 18 to 20, in Chapter 2 of Part 2 of the Bill. These clauses give powers to the Secretary of State similar to those pertaining to the EU Commission: to step into the market to stabilise it where there are disruptions from extreme weather circumstances.

I turn now to Amendments 197 to 200, and my comments are also made in relation to Amendment 207, on the same issue, in the name of the noble Baroness, Lady McIntosh of Pickering. These amendments are made to probe the Minister on how these regulations will operate in the marketplace, how they will be governed and by what authority or office. Subsection 9 of Clause 27 states that powers under subsection 1(b), to make regulations for the enforcement of obligations imposed by fair dealings, can be conferred on “any person”

who will have

“discretion in dealing with any matter.”

I ask the Minister to explain who any such person may be, and how this discretion will be made effective. My noble friend Lady Jones and I have suggested the Groceries Code Adjudicator, to stimulate comment and debate.

The amendment of the noble Baroness, Lady McIntosh of Pickering, also suggests extension to the provisions of the Groceries Code Adjudicator Act 2013. I will not take up all the space on this subject, except merely to say that the exercise in the retail trade of fair dealing functions in relation to the 13 main retailers will be very different from what will be necessary across all sections and all sectors of the agri-food supply chain.

The remit of the Groceries Code Adjudicator came out of two Competition Commission inquiries and considerable debate over the course of at least a decade. I pay great tribute to Christine Tacon, the adjudicator. She has operated with a very small office and has brought, over the seven years since enactment, a large understanding of responsible dealing in the retail supply chain, which, to some extent, has been embedded further down the supply chain by large retailers with exposure to the stock market and a recognition of reputational damage through strong audit and risk committees. It would be a very different experience across the whole agri-food supply chain, with thousands of sellers in business relationships with possibly up to 10,000 purchasers.

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[Lord Grantchester]

I thank all noble Lords who have come forward with amendments and support; this is a daunting group of 44 amendments covering Part 3 of the Bill, Chapters 1 to 3, plus parts of Schedules 2, 5 and 6. It covers provisions on aspects of the agri-food supply chain; that is, the requirement to provide data and purposes for which data is provided, as well as enforcement of data requirements in Chapter 1. I have mentioned facets of fair dealing in Chapter 2, and Chapter 3 covers producer organisations and competition provisions.

Many amendments appear quite technical in effect; I applaud the assiduousness with which noble Lords have scrutinised these clauses. I welcome the provisions to make producer organisations more effective in legislation under the fair dealing provisions following their recognition under Clause 28. Regarding “competition exemptions” in Clause 29, can the Minister tell us whether the experiences of the Covid-19 pandemic caused any rethinking of the clause in the application of the Competition Act 1998? Given the opportunity to bring forward regulations in due course, with the consultations normally undertaken in that process, he may be able to confirm that the flexibilities around the framework are sufficient.

The importance of information and the collection of data in the supply chain has long been recognised. I thank the noble Lords who have pursued this in relation to how it is used with recognition of data protection legislation, to improve supply chain transparency and manage volatility. They have asked the Minister to clarify that the drafting of these powers will achieve this. I shall listen carefully to all the Minister’s responses to these amendments.

[Lord Gardiner of Kimble]

My Lords, this has been an interesting debate taking us through a range of issues. I thank the noble Baroness, Lady Bennett of Manor Castle, for tabling amendments relating to fungi. I listened to what the noble Baronesses, Lady Jones of Moulsecoomb and Lady Boycott, said on the matter. I declare my farming interests as set out in the register.

Clause 1(5)(b) already includes the conservation of fungi as conserving can relate to the restoring or enhancement of a habitat. In instances where it may be desirable to conserve wild fungi, or a rare species of fungi, this is possible through the power to conserve the habitat in which they exist. In Clause 22(6) and under Schedules 5 and 6, the definition of “agriculture” already includes fungi. In relation to Amendment 183, I assure my noble friend Lord Lucas that the current drafting includes wild plants, as well as wider aspects of farm-to-fork activity to be collected.

I turn to Amendments 177, 179, 180, 187, 191 and 192 on data collection. Some of the issues have been quite technical in this part of the Bill. I will endeavour to answer as many questions as possible but some might, perhaps, involve a more detailed response; I shall reply in writing on any outstanding points. The Government have taken deliberate steps to ensure that only information which fulfils a clear purpose can be collected. I agree with my noble friend Lord Caithness that this needs to be focused and proportionate—a point also made by my noble friend Lord Trenchard.

An exhaustive list of purposes is contained under Clause 23; the requirements for information must fulfil one of those defined purposes. Clause 24 sets out that, before an information requirement can be issued, the Secretary of State must publish a draft requirement and invite views over a four-week period from anybody who will be affected by it. Any views, including those about difficulties in meeting the requirements, will be considered by the Government before final publication. Clause 25(9) already ensures that, in circumstances where a proposal is made to disclose information in an anonymised form, consideration must be taken of how such a disclosure would affect commercial interests, including intellectual property rights. As regards information provided under a duty of confidence, a blanket provision would be inappropriate given that a duty of confidence could easily be established via a discretionary agreement between any two parties simply for the purpose of avoiding information requirements.

At Clause 21(5), the Bill includes safeguards to protect information subject to legal privilege. Clause 46(2) sets out that these powers cannot be used in ways that would contravene existing data protection legislation. The Government therefore believe that these safeguards are sufficient.

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Moved by

[Lord Grantchester]

105: After Clause 1, insert the following new Clause—
“Minimum level of financial assistance
Before exercising the powers under section 1 for the first time, the Secretary of State must lay before Parliament a statement confirming—(a) the total amount of financial assistance available in the first year in which the Secretary of State intends to exercise the power under section 1,(b) that this is no less than the total amount provided in the preceding financial year, adjusted for inflation,(c) provisional total amounts for the subsequent three financial years, and(d) the reasons for the amounts specified under paragraph (c).”Member’s explanatory statement
This amendment seeks to ensure that the transition to a new funding system does not result in a reduction in the overall financial assistance provided for agriculture and associated purposes.

[Lord Grantchester]

Amendment 105 is in my name and I thank the noble Lord, Lord Greaves, for adding his name to it. I will also speak to Amendments 107, 112 and 123 in my name, as well as Amendment 129 in the name of my noble friend Lady Jones of Whitchurch and Amendment 139 in the name of the noble Lord, Lord Krebs, to which my noble friend Lady Jones has added her name.

Amendment 105 is very important as it lays out the “Minimum level of financial assistance” that must be provided by the Bill to the new system of support. Under this proposed new clause, the level of support must be maintained from year to year at the level made available in the first year, adjusted for inflation, at least for the subsequent financial years. There has always been anxiety that the Conservative Government, in keeping with their austere inclinations, would not maintain support systems at the level of payments previously made under the CAP as a member state. Under the May Administration, the Government stated that they would maintain the level of support in any future scheme for one Parliament—at that time, at least until 2024. This suggested that reductions would be made thereafter.

This new Administration, resulting from the December election, have not made emphatic statements beyond the provision of the direct payments to farmers Act 2020, which operates for one year only as an interim continuity provision while the Bill, when it becomes the Agriculture Act, is implemented. Indeed, it has been decided to make cutbacks in financial support as soon as the next year—that is, in this first transition phase—even before any new measures could be set up, as trials, to make up that shortfall. The first experience that farmers and land managers will have under this new scheme will be a cut to funding—hardly a measure to build confidence and trust.

This proposed new clause gives the Minister the opportunity to be clear and put the Government’s intention forward, giving a measure of certainty to all agricultural businesses regarding the funding levels envisaged not only for the next three years but into the future, when the ELM schemes and their benefits can be brought forward. As was said at Second Reading, this is a framework Bill where many of the mechanisms and provisions are not transparent, or even finalised, from the discussions published to date by the department. If the Government want ELMS to be a success, as we all do, the maintenance of at least total farm support transposed into ELMS must be looked at to provide rewards well beyond those at present experienced under stewardship schemes.

I will quickly speak to my other amendments in this group. Under Amendment 112, I propose that any funding not taken up in one year is

“carried over to a future year”.

I thank the noble Baroness, Lady Bennett of Manor Castle, for adding her name to this amendment. It is important in the early years that farmers and land managers, as they assess and make plans for their businesses, have time to come forward with applications. It would be unfortunate if any delay in applications resulted in the budget being cut in a future year in response by this Government.

Under Amendments 107 and 123, I propose that the Government are mindful of the purposes of the Bill and that the costs of administration and advice do not become seen as overly bureaucratic and consume an expanding proportion of the overall budget. They would also ensure that the important advice to the industry from consultants, which we would also wish to see taken up, does not consume a large slice of any application, especially in relation to the larger catchment area schemes that will come forward under the higher proposed tiers 2 and 3. We would want to see farmers and land managers given the tools to perform their activities, putting a scheme’s cash for projects on to the ground.

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[Baroness Bloomfield of Hinton Waldrist]

As I think I said in my speech, we have built flexibility in to the planning stage, although it does not need to be five years, and in all cases there will be no gap between one plan and another.

[Lord Grantchester]

I thank all contributors to this debate for speaking to the various amendments. Even the negative comments were interesting.

If the Government commit to having multiannual plans, as stated in the Bill, it would seem conceivable that they would honour a package that financed the plan ahead in its entirety from the start through to the finish. The amendments scrutinise the Government’s plans around financial assistance in delivering outcomes that are sufficiently robust in their application—with the necessary oversight, as stressed by the noble Lord, Lord Blencathra.

I thank especially the noble Baroness, Lady Rock, for her amendment in sympathy with mine and the noble Baroness, Lady Neville-Rolfe, for her emphasis on a robust implementation plan being adopted by Defra. I am also grateful to the noble Lord, Lord Cormack, for adding his support.

As with so much in every group of amendments, the Minister has been exhaustive and considerate in responding to the many points raised. Along with other noble Lords, I will consider her reply carefully, but at this stage I beg leave to withdraw my amendment.

Amendment 105 withdrawn.