Agriculture Bill (Eighth sitting)

Robert Goodwill Excerpts

Thursday 1st November 2018 Public Bill Committees

[The Minister for Agriculture, Fisheries and Food (George Eustice)]

I turn my attention now to Opposition new clause 10. I recognise that there is a very big issue behind the new clause—funding. We completely understand that. We need to ensure that we have the funding in place to support the purposes we outline in clause 1 in particular. We are absolutely clear about the importance of that. That is why we made a manifesto commitment, which we will honour, to keep the cash totals we spend on agriculture policy the same for the duration of this Parliament—we hope until 2022.

There is also provision in the Bill for a long, seven-year transition. Although we have given no concrete undertaking about the exact quantum of funding after 2022, it is implicit in the Bill and in the nature of the transition that there will be ongoing funding thereafter. We also made a manifesto commitment to introduce new schemes to replace the current common agricultural policy, and that is what the Bill is all about. On 16 October, the Government announced that they will review the intra-UK allocation for domestic support, which will go some way to giving consideration to how we allocate funds within the UK and set the ground rules for allocations after 2022.

At the moment, we spend around £3 billion a year on the CAP. In the scheme of things, compared with the spending of many other Departments, that is a relatively modest sum, particularly if we refocus those resources to delivering public goods—improving the quality of our soils and water, enhancing the beauty of our landscapes, and supporting key Government objectives, such as promoting biodiversity and wildlife on farmland and reducing our climate change emissions to mitigate the impact of climate change.

However, new clause 10 is less about the size of the budget—no doubt we will discuss that later—than about annual reporting on the budget. There are two reasons why it is unnecessary. The first is technical. The new clause would create a legal requirement to list the total funding for each of the purposes outlined in clause 1. As I made clear on Tuesday, the difficulty with that is that many of the interventions we seek will cross multiple purposes. We may have schemes that enhance animal welfare but also the environment, or that enhance the environment but also mitigate the impacts of climate change. It would be difficult to separate those things out and report on the basis of individual purposes.

Strangely enough, it would be far easier to report even more granularly—to report how much money we spent on integrated pest management schemes, catchment-sensitive farming schemes or schemes to enhance farmland birds or pollinators, for instance. We would probably be able to extract that information from individual agreements and aggregate it for reporting purposes far more readily than we would be able to pigeonhole expenditure within the purposes outlined in clause 1.

The second reason—the hon. Member for Stroud may have forgotten this, but he was in the House at the time—is that the last Labour Government introduced the Government Resources and Accounts Act 2000, under which the Department for Environment, Food and Rural Affairs already has a statutory duty to present an annual report and accounts to Parliament, detailing all our expenditure. These days that includes quite a comprehensive list, as well as reporting of the Department’s priorities and how it is delivering, for example, on its business plan.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

Is it not also the case that hon. Members who might have an interest in such things may table parliamentary questions and need not wait for the publication of an annual report?

[George Eustice]

That is absolutely the case, as my right hon. Friend points out. We have scrutiny by the National Audit Office, the Environmental Audit Committee and the Environment, Food and Rural Affairs Committee, for example, and I always enjoy the many parliamentary questions I receive on every piece of detail about DEFRA’s spending priorities.

A statutory requirement to do annual reporting on DEFRA is in place already. However, this is an important point, so at a later stage of the Bill—perhaps on Report—I might be willing to explain to the House in a bit more detail what information we would envisage publishing as part of our requirements under the Government Resources and Accounts Act. In a world in which we want transparency about how we spend money in this area and what it is delivering, it may well be possible for us to decide to adopt a convention on the particular format of these annual accounts. I am more than happy to return to the House on Report to say a little more about that. On that basis, I hope the hon. Gentleman will not press new clause 10.

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[Mr Goodwill]

I echo what the hon. Gentleman said from the Opposition Front Bench. Some farmers and others involved in the management of land have been a little worried that there may be new offences for which very large penalties would be incurred through the money not being made available for support. Having said that, I understand that elsewhere in the European Union over the years, we have had some egregious criminal offences, and the system has been milked by those with criminal intent. We need to be sure that we are not talking about that here in the UK.

For example, in Spain and across a number of southern European countries, the EU ruled that any olive trees planted after 1998 were not eligible for support. The subsidy was based on the amount of olives delivered to the mills, but there was no way of testing those olives to know when trees were planted. That resulted in 40 million new olive trees being planted in 2001 alone, and the widespread criminalisation of the system. Between 1985 and 1998, only 6% of the money that had been unfairly claimed was recovered. That example shows how, when a system is out of control, it can be open to widespread fraud.

[Sandy Martin (Ipswich) (Lab)]

Does the right hon. Gentleman agree that where such widespread criminal activity takes place, it would be appropriate for it to be dealt with through existing criminal law or for new criminal law to be created? It would not be appropriate for it to be adjudicated by the Secretary of State in the same way that the Minister said that regulations should be done through existing law.

[Mr Goodwill]

That is precisely the point I was coming to. The European Union instructed OLAF, its own anti-fraud body, to look at that sort of thing. Even this year, in Slovakia, journalist Ján Kuciak was murdered along with his fiancée after he exposed widespread fraud involving the Italian mafia, Slovak business and politicians in Slovakia. That resulted in the fall of that Government, so widespread was that fraud. We have seen similar problems in Bulgaria, where, rather surprisingly, a farmer wanting to get agricultural support must first register to pay health and pension insurance, so the very smallest farmers, who we would want to help in this country, do not get help in that country.

If we have that type of fraud in this country, even though there has been no evidence and no cases of widespread manipulation and fraud in the system, there is already criminal and environmental law under which farmers could be prosecuted. The worry among many farmers—I hope the Minister will reassure us and perhaps even clarify this on Report—is that this could be an opportunity to create lots of new criminal offences and punitive financial penalties for farmers who are trying their best. The Minister mentioned the farmer who accidently ploughed an extra 20 cm on his headland margin. Indeed, when I spoke to the Department for Environment, Food and Rural Affairs, I was told that if my daughter rode her pony on the field margin strip, that would be against the rules and, therefore, that we could have been penalised.

We have no similar cases of widespread fraud in the UK. This type of offence is already covered by existing anti-fraud or environmental legislation. There is some worry that trivial offences or mistakes could be penalised and that farmers could be unnecessarily criminalised. I hope that the Minister will give us some reassurance that that is not the intention of clause 3(2)(h), and that he will give further clarification to ensure that some future Government could not use the clause in a way that was not intended.

[Mr Philip Dunne (Ludlow) (Con)]

I will not detain the Committee for long. I endorse the comments of my right hon. Friend the Member for Scarborough and Whitby. I note that the hon. Member for Stroud does not intend to press the amendment at this stage, but it is important to reflect on the spirit of what my hon. Friend the Minister said in this morning’s debate when he outlined the Government’s intent in devising the new schemes: they are intended to be less onerous on the recipients of financial support than the schemes that they replace under the CAP.

In the same spirit, I hope my hon. Friend the Minister will be able to enlighten the Committee that this power to create offences is designed primarily not to create a mass of further offences that would allow people to be criminalised if they made inadvertent errors in the receipt of their financial assistance, but to—as I understand it—replicate existing Government powers. Anything he can do to reassure us that there will not be an extension of the kind we have described will be very helpful.

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[Jenny Chapman]

Unfortunately not. In the case we are looking at now, it is laid down in the Bill—well, it is at the moment, but I am optimistic that the Minister will reassure me—that it will be the negative procedure. Most often, when a Minister has these powers, it is specified, alongside where that power lies in the Act, how it should be exercised. I do not know whether that is challengeable later, although I am happy to take advice on that; I am not sure that it is, and I cannot think off the top of my head of any occasions when that has happened.

[Mr Goodwill]

The sorts of policies we are talking about have previously been EU policies, and the decision on whether to scrutinise them has been down to the European Scrutiny Committee. However, I cannot think of a single case where the Committee has called one in for debate and it was not all done and dusted and agreed before it even got to this place.

[Jenny Chapman]

That is an argument we often hear. The challenge to me is, “Why are you so worried about this now? This was all done in Brussels before.” To an extent, I take that point, but the point of this exercise is that we now, for the first time in a very long time, have the opportunity to develop our own agricultural policy. If we are going to do that, let us do it right. Let us do it really well. Let us ensure that, just because Ministers cannot quite decide exactly what they want to do at this stage—I think that is what underlies a lot of the vagaries of the Bill—we do not give them too many powers or give them those powers in a way that does not enable the fullest scrutiny by Parliament.

These are important issues that are subject to amendment by Ministers, and it would be much better if today we were debating exactly what they intended to do with the powers, rather than which mechanism should apply and whether they should have the powers at all, because what people are really interested in is what will happen. What support will be available? How will it be administered? What is their right to challenge? It would be better for us to be debating that, but insufficient work of that nature seems to have been done as yet. That is a theme that we keep coming back to.

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[Dr Drew]

I will read this interchange back very carefully to see whether it has been about what I think or whether I have misunderstood. This matters because, at the end of the day, farmers need to plan ahead, and 2021 is not that far in the future. Some farmers will lose a considerable amount of money, which they will have to replenish by moving into the new scheme, which we do not quite have yet.

[Mr Goodwill]

Will the hon. Gentleman give way?

[Dr Drew]

I give way to the right hon. Gentleman, who will help me out.

[Mr Goodwill]

The hon. Gentleman will be aware that many farmers have already entered into multi-annual environmental schemes. They need the security that the support will be there for them to deliver the plans they already have.

[Dr Drew]

That is very helpful. A lot of farmers have obviously entered the countryside stewardship scheme, but a lot of farmers have chosen to come out of it because they are very unhappy with it. We have to put that right very quickly, because if farmers are to have any certainty in the payment system, they have to know that the scheme to which they are applying exists, is capable of doing what they think and rewards them appropriately, otherwise they will feel short-changed.

I see this as largely technical, but again, it is very complicated. We are moving from a scheme that pays farmers for being farmers to not paying them at all. We will pay people—they may not be farmers—to do things with the land. We therefore have to be very clear that they will not be paid anymore for being farmers; the basic payment is going. Yes, there is a taper, as the Minister says, but it rolls through quite quickly. People need to understand that they will no longer be able to do what they were used to doing and be paid for.

We will not vote against this measure, because it is a technical change. However, I ask the Minister to communicate what is involved to as many people as possible. There will be a modulation, and it was never going to be a straightforward process—when I was on the Environment, Food and Rural Affairs Committee, we struggled to understand exactly how it worked in practice. The Minister will need a proper communication strategy, so people know that, when their money goes, on the one hand, they will have other ways in which to earn it, on the other.

Question put and agreed to.

Clause 6, as amended, accordingly ordered to stand part of the Bill.



Clause 7

Power to provide for phasing out direct payments and delinked payments

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[George Eustice]

This debate links to a discussion we had earlier about setting a clear direction during the transition period. I understand that the purpose behind the amendment is to try to tease out a bit more what we have in mind when it comes to the de-linking of payments.

We believe that many farmers—sometimes they are in upland areas, sometimes they are on tenancies; often they are in their 70s, sometimes they are even older—who probably should face the decision to retire should have support in doing so, but it is not always easy for them. Sometimes they will have some residual debt or an overdraft and always be hoping that next year might be the good year that will put them in a better position.

If we want to have a vibrant, profitable farming industry in the future, we think it is right to support new entrants and put in place the right schemes that will help some farmers retire with dignity. We will de-link the payment from the need to farm the land and for it to be connected to the land. There is provision in a separate part of the Bill for us to bundle up several years of payments into one lump sum. Through those measures, that 70-something farmer who probably should retire, or would retire if he felt he was financially able to, may take a lump sum as a voluntary exit package to sort out some of his liabilities, pay off his creditors and take that decision to retire with dignity. In doing that, we will create an opportunity for new entrants who are coming in while, equally, helping to safeguard good retirements for those farmers for whom it is right to step back. That is one of the thoughts behind de-linking.

Also, in the final stages of the transition period it might be the right thing to de-link everyone’s payments from needing to be linked to the land. Through that, people can have complete freedom over what they do with that money, whether they invest it in new equipment, choose to retire or put it into some crisis reserve to give them a buffer. We want to free them up to do that as we prepare for the move to a new system.

[Mr Goodwill]

On the point the Minister raised regarding the farmer who might want to retire and take three years’ payments, one question we tried to explore during the evidence sessions was what would happen to the new entrant coming on to that farm, who perhaps for the first two years on that farm would not receive any support, which might make it difficult for him to establish that business.

[George Eustice]

I understand my right hon. Friend’s point, but of course we must view all this in the context of a seven-year transition period, at the end of which it is our objective and our vision that there will be no basic payment scheme as it is known today. What we would envisage happening in those scenarios is that we would free up land for new entrants to come in, who would get used to working in a different way from the start.

It would be quite possible, for instance, to prioritise the roll-out of a new scheme to those new entrants coming on to land that had been exited and was no longer eligible for the BPS payment. I would also envisage that some of those new entrants coming on to that land would also be likely to qualify for the productivity support. We have to see all this in the context of the fact that we do not want a single farm payment to be carrying on forever. We have set a clear pathway to move to a different approach over a seven-year transition period.

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[Dr Drew]

The amendment is really a probing amendment, to consider where we are in relation to setting rules for the de-linking process. The Minister has already talked about that. I have just asked how this will work in practice. It is unclear, at least in my mind; maybe people are ahead of me on that. However, I think there is a need for further work in that regard.

What would happen if the Minister introduced a de-linked payment, but then made use of the powers to extend the transition period in accordance with clause 5(2)? The status of the farmer who has taken a de-linked payment is uncertain—we have identified that. He may be locked out of the system for longer than envisaged. This is really contingent on our previous debate. So, in taking the money—what? They then can use their opportunity on the land? The status of the person will be defined in law, but again it is a matter of how the process works in practice.

Under the CAP, there are payment windows, and—dare I say it?—this is all laid down for those who receive payments for work they have done. So things are not as clear in this new proposal. All of us who have rural constituencies know that the Rural Payments Agency is not very good at making the payments on time, for the right reasons or in the right amounts. So there are some question marks about the extant process and where we are now going to. If anything, it is going to be quite a complicated change. So it is really about whether farmers will be entitled to payments on guaranteed timescales, because again—dare I say it?—we do not have a good history.

[Mr Goodwill]

It strikes me as well, of course, that the farmer could take the payment but then his wife could establish a new business, in which case perhaps there would not really be a fundamental change; it was just a mechanism. I wonder if the hon. Gentleman shares my concerns and whether the Minister could comment on that situation.

[Dr Drew]

This did come up quite a lot on Second Reading. I think my hon. Friend the Member for Bristol East had something to say on it, or somebody else referred to succession planning. Farmers could take the money and then another member of the family could decide to carry on with the holding.

[Dr Drew]

I stand suitably admonished and we will be hit by the towels later.

[Mr Goodwill]

rose—

[Dr Drew]

The right hon. Gentleman can dig himself out of that hole now.

[Mr Goodwill]

It is particularly difficult, because as I am down here doing this job, my wife is minding the farm, although I am the one who signs the forms when I make claims, so it is often difficult to distinguish the person who is farming from the person who signs the form—[Interruption.]

[Dr Drew]

I am not sure whether that helped or hindered. [Laughter.] We will move on.

Amendments 107 and 108 really try to tease out how this process is going to work in practice. I do want to say some things that are effectively for the stand part debate, but they link in directly with the clause. The issue is the way in which this phasing-out of direct payments and the de-linked payments will work. This is the clause that, if you like, executes that, so we need to look at it quite carefully.

A number of important issues arise, some of which have already been identified through the EFRA Committee, where I gather the Minister had quite a difficult time in answering questions about exactly how this process was going to work. It is important that he puts on the record again how he thinks it is going to work.

We are talking about considerable sums of money. If three years’ worth of payments for a reasonably sized holding are wrapped up into one, we are talking about tens of thousands of pounds, so we have to get the accountability of the process right. The average direct payment in 2016 was £20,000, but 10% of recipients received something in the order of £6.5 billion. The bigger landholders have traditionally received quite large sums of money through the single area payment scheme, so the mechanism through which we make that change is very important. Multiplying that over seven years, which is what the transition period will be, we are talking about large sums of money. It would be useful to know that in accepting this use of public money, the Minister can justify the larger sums involved.

As I referred to, the policy statement explains how the tapering down will operate. It would be good to know that there will be some further explanation of what that means for particular holdings. Let us look at some figures from real holdings, rather than the rather abstract figure that we have at the moment. What can those lump sum payments be used for? One can understand a tenant needing to acquire property, or to have sufficient money to pay the rent. Will recipients be limited to some use or reuse of the land, or will they basically have a free choice about what they do with that money? My notes refer to Lib Dem pensions Ministers and Maseratis; I think Steve Webb will always regret having made that point.

I have quite a lot of interesting evidence from the Landworkers Alliance and from the Tenant Farmers Association. Those are the people who represent smaller farmers and new entrants. The Landworkers Alliance is keen to know what that lump sum can be used for, how much flexibility there will be in the purposes outlined in clause 1(1), and whether—dare I say it?—the payments will be linked to the productivity of the farm or farmland. Could farmers, for example, put that money into a community land trust and collectivise those payments? That is an interesting point, because there are those who do not want to farm a holding in isolation, but want to do so on a more collective basis. Is the scheme flexible enough to allow that to take place?

The Tenant Farmers Association has written to me to support the concept of de-linking, because it thinks that farmers should be able to retire. However, although the money is of significant assistance to farmers who wish to retire, the question of what subsequently happens to that money, and any bar on what they can do if they have taken the money, are of keen interest. Those farmers might want to re-invest that money in another holding, or enable another member of the family to take that money and start a new holding. These things matter, because people have to start planning their businesses now. I know that I have stretched the Chair’s patience by moving away from the amendments, but my comments are part of our stand part contribution. We are asking the Minister to spell out in a little more detail what, in practice, these de-linked payments are and are not available for, because people are going to have to plan for that.

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[Sandy Martin]

I totally agree. Whether or not we can see what will go around the scaffolding might be annoying to us, or it might feed our fears that an awful lot of work will be done without any democratic control or oversight, but it is far more important for those involved in farming to know what will be put on that scaffolding, because they might well be making decisions without knowing.

Subsection (7) is like an offer that those farmers cannot refuse—not because they know that the consequences of refusal will be dire, but because they do not know and will therefore just go for the easy option. We do not want large numbers of smaller farmers to face going out of business or choosing to take payments under subsection (7), leaving the field clear for those with more money and resources and a better understanding of the complicated regime that the Government are thinking of introducing.

[Mr Goodwill]

I want to raise one point with the Minister, which I hope he will be able to cover. We have heard already that about a third of the farm land in this country is farmed through tenancies. Indeed, a tenancy is probably the only way that many new applicants can get into the industry, other than marrying into money or winning the lottery. However, there may be situations where taking these payments is attractive to the tenant, but where the landlord is unwilling for that to happen, particularly as the basic payments underwrote the rent in many cases, as we heard in evidence. Indeed, we heard that in many cases the rent was basically dictated by the basic payments.

My question for the Minister is, will the consent of the landlord be required before a tenant can take one of these multi-annual exit schemes? If not, might we then have the landlord looking at the small print of the tenancy agreement and going into the whole dilapidations situation? Many people leaving a tenancy can find clauses requiring the guttering to be painted or the gateposts to be straightened. Often, tenants find that they cannot leave because of the dilapidations. Where the landlord wants a tenant to leave, he will waive the dilapidations, so a lot of these payments might get mopped up by angry landlords demanding dilapidations at the end of tenancies.

[Chris Davies]

I have a query, which I am sure the Minister will be able to answer easily, relating to the decoupling of cross-border farms. There are many on the Welsh-English border, as there are on the English-Scottish border, that will own land in both England and Wales, or both England and Scotland. I can give many examples of farmers in my constituency who own land in Herefordshire or Shropshire—well, not much of Shropshire, because my hon. Friend the Member for Ludlow owns most of Shropshire.

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[George Eustice]

I would almost say the opposite. If the market is such that a number of people choose to retire and there is no longer the inflationary pressure of a BPS payment driving up rents, rents might decline in some areas. That is not necessarily a bad thing. If rents go down, it is not great for landlords, but it creates opportunities for new entrants to come in with lower overheads and produce food for the country. There is a problem with the BPS scheme, which has inflated rents and made it difficult for entrepreneurs to get on to the land and make a sensible living.

Amendment 108, which was also tabled by the shadow Minister, puts explicit timescales on payments. I understand the frustration of many hon. Members who have had farmers coming to them in recent years and complaining that they have been unable to get the payment. We address the issue in a number of ways. First, under retained EU law, the existing timescales already set out in EU law would come across. I know that farmers will generally take the view that unless they are paid in December their BPS payment is late. In fact, the payment window opens at the beginning of December and closes in June, so there is quite a wide payment window under EU law. That will come across through retained EU law, but we have made some improvements in recent years in terms of getting money to farmers as quickly as possible. Last year more than 90% got to farmers by the end of December.

[Mr Goodwill]

Of course, in the past when payments have been delayed, fines have been payable to the European Commission. Under the new scheme, presumably there would be nobody to pay a fine to.

[George Eustice]

That is absolutely correct, but the scrutiny of Parliament will demand action. I was going to say that one of the strong features of the Bill is the fact that it gives the Government the power to act to sort out the dysfunctional EU auditing processes that create late payments.

Clause 9 gives us powers to sort out what is called the horizontal regulation. That is the regulation that sets out all the conditions on payment and the plethora of audit requirements, which often duplicate one another and are unnecessary. The primary cause of the problem we had last year in the BPS system was that under EU law we were forced to remap 2 million fields in one go, to try to get their area accurate to four decimal places. If we had not done, that we would have had a fine from the European Commission of more than £100 million, so we had to attempt the exercise. However, it inevitably caused problems on some farms. Many hon. Members will have had farmers reporting to them that fields had disappeared, or, in some cases, their neighbour’s fields had ended up on their holding. That is what happens when we try to remap 2 million fields. We would not have had to do that, had we had the powers to strike down those requirements.

Secondly, the issues we have at the moment with the countryside stewardship scheme are largely due to the fact that the EU, under horizontal regulation, introduced a new requirement that every single agreement must commence on the same date; so whereas we used to spread the burden of administration across the year, with people able to start in any month, everyone had to start in January. That meant a huge pile of application forms coming in at the same time. Our agencies had to employ lots of temps to try to process the work; and we all know what happens if there is a surge of temporary agency workers to process work. There were inevitably errors and problems. Again, we could remove those rather ludicrous requirements that the European Union imposes on us—in that case under clause 11.

I hope that I have been able to provide some further information about how we would intend to use the clause 7 powers, both to de-link and to make lump sum payments available. I hope I have also reassured hon. Members that the answer to the problem of late payments lies in clauses 9 and 11, not in an amendment to clause 7.

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[Dr Drew]

I am now assured, I think.

[Mr Goodwill]

As a member of the Northern Ireland Affairs Committee, I can say that this is not just a problem in agriculture. There is no devolved Government there and it is very difficult for civil servants to second-guess what might be done, because it has been a long time since decisions were made on which they could base their activities. For those in Scotland, the policy seems to be to stick their fingers in their ears, sing “la la la la” and pretend that it is not going to happen.

[Dr Drew]

I will not go down that line. The Chairman will be relieved to hear that I am not going to get involved in devolved politics. I think this has been a very useful debate that has been far and wide in scope. It has not really been about the amendments, but the stand part has allowed us to look at some of the possibilities of what will happen—2021 is not very far in the future. People will be doing their planning now, particularly if they have it in mind to leave their holding, and they will need security, certainty and some very good advice on whether that is the right thing to do. I beg leave to withdraw the amendment, but I am grateful for the discretion of the Chair, which has allowed us to get through this issue.

Amendment, by leave, withdrawn.

Clause 7, as amended, ordered to stand part of the Bill.

Clause 8 ordered to stand part of the Bill.

Clause 9

General provision connected with payments to farmers and other beneficiaries