Thursday 1 February 2018
[Mr Nigel Evans in the Chair]
Leaving the EU: Chemicals Regulation
[Relevant document: Written evidence to the Environmental Audit Committee, on The Future of Chemicals Regulation after the EU Referendum, reported to the House on 24 October 2017, HC 389.]
I beg to move,
That this House has considered the Eleventh Report of the Environmental Audit Committee of Session 2016-17, The Future of Chemicals Regulation after the EU Referendum, HC 912, and the Government response, HC 313:
I am delighted to be here with you, Mr Evans, and with so many colleagues to debate this vital matter. I am grateful to the Liaison Committee for granting the debate and to colleagues for attending. I look forward to good speeches and good debate.
Nine months after the Environmental Audit Committee’s report, the chemicals industry in the UK remains deeply concerned about the Government’s decision to leave the European single market and customs union and the impact that doing so will have on their business. Today, I will set out why our chemicals industry is the foundation stone of UK manufacturing; how the chemical regulation REACH—the registration, evaluation, authorisation and restriction of chemicals—regulates the UK chemicals industry; and what the Government’s decision to leave the single market and customs union means in terms of jobs, trade, potential increases in animal testing, duplication of regulation and costs, the risk of tariffs and increased red tape.
Let us begin by looking at the chemicals industry. From the leaked Brexit economic analysis this week, we heard that chemicals is one of the five sectors that will be worst hit by leaving the European single market and customs union. Our Committee looked at that last year. The industry has a £32 billion annual turnover and provides half a million direct and indirect jobs across the country. Chemical clusters tend to be on coastal sites near to petrochemical sites because they are often connected by pipelines. Clusters are found in Hull, Teesside, Grangemouth and Runcorn—areas that have already been hit by industrial decline and capital flight, and where good, well-paid engineering jobs are not easy to come by.
The paints, adhesives, mixtures, polymers, plastics and dyes made by the industry are used in every aspect of our lives, including the car industry, aerospace industry, tech sector, energy sector and pharmaceutical sector—I could go on. They are the backbone of the nation’s manufacturing industry, and we rely on an integrated European Union supply chain. The UK no longer produces a number of important chemical feedstocks and is reliant on them coming in from the European Union.
The UK exports almost £15 billion-worth of chemicals to the EU each year. Chemicals is our second largest manufacturing industry and our second largest export to the EU after cars, but it is not getting the attention it deserves. It is not as glamorous; it is a Cinderella sector.
What is REACH? It is the EU’s regulation, agreed by this country about 10 years ago, which regulates chemicals and hazardous substances. It covers more than 30,000 substances bought and sold in the EU single market. It also covers products and articles such as the coating on a non-stick frying pan, flame retardants in sofas, carpets and curtains, and medicines.
Our chemicals inquiry came out of our inquiry into the future of environmental regulation after we leave the EU. People kept saying, “You need to look at the chemicals sector”, so we decided to do so. The inquiry found that, first and foremost, UK companies want to stay in REACH. They have made more than 5,000 registrations with REACH. Another deadline is looming—31 March—by which smaller tonnages of chemicals will have to be registered. By the end of March, UK companies will have spent an estimated £250 million on registering their products on the database. One concern raised in the inquiry was that smaller manufacturers, looking ahead at the potential of a hard Brexit, would baulk at spending £20,000, £30,000 or £40,000 on registering a chemical when that registration could fall exactly one year later, on exit day.
I congratulate the Select Committee and my hon. Friend on the report. I represent a constituency in which 7,000 manufacturing jobs are dependent on the chemicals sector and there are 1,250 jobs in chemicals companies. That exact point about the cost of registration has been raised by companies in my constituency. Some of them have spent hundreds of thousands of pounds on registering chemicals over the years, and they suggest that in the Brexit negotiations we should seek third-country status, so that our companies can continue to register within REACH. Does she agree that that would be one route forward?
I certainly do, and that was the route recommended in the report. The report was slightly curtailed—we had to rush it out in a form that was not as fine and detailed as we would have liked because of the early calling of the general election—but we were clear that that was the most pragmatic and cheapest route.
The looming deadline raises the threat of market freeze. If a small company decides not to register and just to run down its chemical feedstocks, when a big multinational manufacturer comes to apply that coating to whichever tiny aircraft engine part or car part requires it, the supplier—in some cases they are unique suppliers—might say, “We’ve run out of that stuff now.” We could see market freeze in the automotive and aerospace supply chains long before we leave the EU, because of that deadline and the lack of certainty about what will happen.
Leaving REACH puts at risk our trade in chemicals. The European Chemicals Agency has said that without an agreement to the contrary, all UK registrations will be invalid after exit day. Therefore, the jobs of my hon. Friend’s constituents and investment in their companies will all be put at risk. I will come on to talk about the threat from double regulation.
Secondly, the inquiry found that the chemicals regulation framework established by the EU through REACH would be difficult and—critically—expensive to transpose into UK law. It is not just a list of rules or restricted substances but a governance mechanism; it is an entire working body of parts. It involves data sharing and co-operation. For the UK to establish a duplicate system of chemicals regulation, as the Minister proposed when she gave evidence to us, will be expensive for us—the taxpayer—or the industry, or both.
Thirdly, after Brexit, REACH could become zombie legislation, which is no longer monitored, updated or enforced. When we debated the European Union (Withdrawal) Bill, I tabled new clause 61 to try to remedy that by ensuring that we remained part of REACH. However, it is part of the difficult third of EU environmental legislation that cannot be neatly cut and pasted into UK law through that Bill. The Minister in response said that the REACH regulation is directly applicable, but that is essentially meaningless without the chemicals agency to govern and regulate it. We will end up having zombie legislation, duplicating regulation and potentially diverging from the EU, which could also be a bad thing for British business.
My hon. Friend did an excellent job on this report and is doing an excellent job of leading the debate. Does she share my concern that when the Department for Environment, Food and Rural Affairs gave evidence to the Committee, it seemed to have only just started conversations with the chemicals industry about all these issues and how complicated they would be? It was almost on a learning exercise—doing its homework—long after article 50 had been triggered.
I did notice that. I went over the road to read the impact assessments that were not impact assessments, and it was good to read a secret document on the chemicals sector that quoted our Committee’s report heavily. There was some good analysis in there, but I was grateful to see that however thin our report was, the civil servants involved had looked at the evidence we had taken. It was certainly a very useful exercise.
The Government’s response to our report was pretty thin gruel—a couple of pages, and quite dismissive. That reflects what my hon. Friend says about the Government making it up as they go along. They are knitting their own policy as they go. There is nothing wrong with knitting, but we do not want something that ends up full of holes.
We put out the response because we wanted to see what the industry would do. It is fair to say that last year, when we were doing the report, the industry was perhaps more concerned about the impact of tariff barriers than it was about regulatory barriers. It was happy to give Government the benefit of the doubt, to believe what it was hearing and to accept reassurances, but as the exit day deadline heaves into view, that belief has been replaced by thorough scepticism and in some cases downright fear, particularly about the impact of a hard Brexit.
We put the Government’s response up on our Committee’s website and invited comments. The Chemical Business Association said,
“the Government Response to the EAC’s Report fails to…recognise the unique nature of the regulatory issues facing the chemical industry”.
Breast Cancer UK said,
“the Government’s response to EAC’s report is woefully inadequate. It fails to provide even an outline of how the Government will manage chemicals regulation post-Brexit.”
EEF, the manufacturers’ organisation, said:
“The degree of uncertainty in this area is causing concern not just in the chemicals industry but also very much among downstream manufacturing industries which are reliant on a wide range of substances and chemical formulations.”
That is why 20% of the 126 companies represented by the Chemical Business Association were looking at moving to the EU. We had that evidence almost a year ago, and it would be interesting to know how many of them have established presences in Dublin, Paris or Frankfurt.
On a recent visit in my Wakefield constituency I went to a bed manufacturer, Global Components. It is in Ossett, in what used to be called the heavy woollen district—the Dewsbury part of my constituency. I was not expecting to hear about Brexit, but the company told me that 90% of its products are imports, so it has been hit by the fall in the value of the pound. It is finding it harder to recruit new staff and has delayed a major investment as a result of uncertainties over Brexit. Crucially, the foam it uses in its mattresses comes from a German supplier, and the price of that foam has risen by 30% since the referendum. Global Components is having great difficulty passing those costs on to its consumers.
The European Chemicals Agency has been very clear that without an agreement to the contrary, all UK company registrations will be invalid after exit day. No REACH means no licences. No licences means no market access. No market access means no trade. It is that simple. As one senior executive said to me, on condition that I did not say his name or his company,
“Brexit is a business-killing issue.”
If we leave the single market and the customs union, businesses will no longer have access to the database they helped to fund and build. UK science, testing, ingenuity, innovation and creativity helped to build the database. UK scientists are present in Helsinki. We helped to build the database, but now we are ripping ourselves out of it and we will no longer have the detailed safety information on all the chemicals that are handled and produced. Obviously, that is of great concern to my own trade union, the GMB, which represents workers in what can often be hazardous industries.
What choice is left to our constituents and companies? UK companies that want to continue to trade must set up what is called an only representative in the EU to re-register with REACH the registrations they used to have. That is absolutely absurd, and it is duplication. If those companies want to stay registered, they must set up somebody in a European Union member state and pay twice for something they have already bought. That is the height of absurdity. It is a huge duplication of costs, and it risks making UK chemicals and manufacturing uncompetitive. Companies could ask the importer to register themselves, but why would they do that? Why would they take on the cost and documentation? They will just switch to an alternative supplier, and that will be bad for British jobs, British growth and British businesses.
Does my hon. Friend share the concerns of businesses in my constituency? Even if the Government are able to say that existing registrations would continue to be recognised in both European and UK law under some form of deal—the Minister suggested in a letter to me that that was the Government’s preferred position—that would not offer any certainty about future registrations and might lead to businesses relocating out of the UK altogether.
I do share my hon. Friend’s concerns. UK industry is not waiting for the Government to sort this out; it is already voting with its feet on this issue, delaying investment and winding down operations. None of that is being announced. I asked one senior executive why not, and he said, “In all my years in this industry, I’ve never done a press release announcing job losses and closures. This is not something we want to talk about.” That is understandable, but we have also seen courage—in the case of the chief executive of Airbus, for example, who has talked about how manufacturing and competitiveness will be hit. Our debate goes into the detail underpinning that: what do we mean when we say that, and what will it cost in jobs?
I turn now to what was a touchstone issue during the passage of the European Union (Withdrawal) Bill: the issue of animals and animal testing. We might be able to stay in the registration, but will we be able to stay in the knowledge-sharing scheme? If we do not participate in European Chemicals Agency scientific committees or the forum for exchange on enforcement, we may need more animal tests to be done in this country—something that none of us would welcome. At the moment, UK companies registering chemicals within REACH must share data from animal testing. Other registrants access that data, which minimises the need to carry out and duplicate animal testing, but only participants in REACH have access to that data, so we could see an unwelcome increase in animal testing.
The REACH framework is built on co-operation between signatories. It contains obligations, oversight and control mechanisms. It requires freedom of movement of products between all signing countries. If we do not co-operate in that way, how will we ensure that human health and our environment are protected from chemical hazards, and how will we stop our country from becoming a chemical dumping ground?
As an aside, the Committee travelled to the US to see how it regulates chemicals. We were pleased to hear that the US, after 50 or 60 years of fighting the chemicals industry on the issue, has set up its Toxic Substances Control Act, although there was a question mark over its implementation with the arrival of the new regime under President Trump. We also heard that the EU’s chemical standard was seen as the global gold standard and was being used by the states of California and New York; that things such as babies’ bottles were advertised and marketed as meeting EU chemicals standards as a badge of honour and safety; and that the US chemicals industry had asked for that regulation to keep up and compete with European chemical products and articles.
We also heard that the de-regulatory lobbying and the Americans’ approach in this area had led to the absurdity of asbestos—a known carcinogen hazardous to human health—never having been banned in the United States. I am sure that the citizens of this country, whatever their thoughts when casting their vote for leave or remain, were not asking for an increase in animal testing, a decrease in jobs and the supposed freedom to follow a weaker regulatory regime.
The Government have said that they want to set up their own chemicals agency, but they really have to clarify what system of registering, monitoring and authorising chemicals will be used in the UK post exit. The clock is ticking. What is the plan? How will decisions be made after exit day? Will we be like Switzerland, which does not have access to the REACH database, or Norway, which does, through its membership of the European economic area? How does the Minister propose to protect our £14 billion export trade with the EU?
The Government’s 25-year environment plan promises a new chemicals strategy that will set out the Government’s approach as the UK leaves the EU. I hope we will not wait two and a half years for that new chemicals strategy in the way we did for the environment plan. The Government say that the new strategy will “build on existing approaches”. When will we see it? When will it be published?
Words and phrases such as “build on existing approaches”, “looking” and “monitoring” are a prime example of the “muddling through” that former Department for Exiting the European Union Minister Lord Bridges talked about in the other place on Tuesday. Although we are not clear about what will happen during the two years of the Brexit transition phase—if it is for two years; it will perhaps be longer—Lord Bridges has warned that it
“will be a gang plank into thin air.”—[Official Report, House of Lords, 30 January 2018; Vol. 788, c. 1423.]
We must not force our chemicals industry to walk down it. Will the Minister clarify whether there will be a two-year transition period during which we will remain a member of REACH? Businesses need that clarity.
Let us look at the IT aspect of setting up our own agency. The European Chemicals Agency has a budget of more than £100 million a year and 500 staff to manage its database and monitor compliance. Will we still have our own agency? The Minister’s civil servant told our Committee that a new agency would cost tens of millions of pounds. Who will pay for that extravagant bauble? Will it be industry, which already has the double burden of re-registering the stuff they have already registered with REACH, and would then have to register again in a UK system—a triple whammy—or the taxpayer?
Several witnesses expressed concerns to the Committee about the Government’s poor track record in setting up IT projects. Setting up our own database will be expensive, and we have seen the beginnings of the taxpayer footing the bill for it. The DEFRA permanent secretary wrote to the Secretary of State for Environment, Food and Rural Affairs on 18 January requesting a ministerial direction to approve a spend of £5.8 million between February and July this year on the delivery of a new IT system for registering and regulating chemical substances placed on the UK market, as part of the preparations for a no-deal Brexit.
Will the Minister tell the House what that £5.8 million will pay for, the total estimated cost of the new agency, the total estimated cost of the new database and how much it will cost every year to run the system? How many staff will be needed and what happens to them if the Government negotiate to stay in REACH, as the Under-Secretary of State for Exiting the European Union, the hon. Member for Wycombe (Mr Baker), told Parliament could happen only this morning? How will we recruit the best people to a job that may not be there in a year’s time?
The UK’s chemicals sector will see its costs treble: it will re-register with REACH, thereby losing the money it spent first registering with REACH, and will also have to register with a new UK regime. However, the pain will not stop there. Leaving the customs union will compound that pain. As well as the regulatory barriers, the risks of tariffs and customs red tape on chemicals could cost companies dearly. A Chemicals Industry Association Brexit survey suggests that tariffs on imports could be in excess of £350 million, while re-exporting could cost £250 million.
Ministers often fail to understand that intra-company trade is a significant percentage of those imports and exports. We import things from the EU to make the wings of an Airbus aeroplane in Alyn and Deeside and then export them to Toulouse, where they are fixed on to an aircraft. Those are intra-company imports and exports, and customs and tariffs and paying more money to import and export such things will make British industry non-competitive.
When I first asked the Secretary of State for Environment, Food and Rural Affairs how he planned to regulate chemicals after the UK leaves the EU back in July, he said, “Better”, and sat down. However, 20 months after the referendum, things are much worse. I hope I have explained why “better” is simply not possible. Remaining close to REACH is not only unavoidable—it is desirable, pragmatic and sensible. Staying in REACH is the right thing for jobs, British growth and British investment, and the majority of our inquiry’s witnesses supported continued membership of REACH. The Green Alliance said:
“The REACH regime is the most advanced in the world, protecting citizens and the environment from tens of thousands of chemicals.”
Our Committee recommends that the UK remains in REACH. It is the passport to a global marketplace. UK companies do not care whether that passport is blue or brown, so long as it does not kill jobs and investment. Leaving REACH could mean lower environmental or safety standards than in the EU, exposing UK workers, consumers and the environment to greater risks. Leaving REACH places huge additional financial burdens on the chemicals industry and the UK taxpayer to comply with two different sets of regulations. Leaving the customs union creates the added danger of tariffs.
I look forward to the Minister’s response to colleagues’ speeches and to hearing how she will provide the certainty that our businesses and our constituents rightly crave.
It is a privilege to serve under your chairmanship, Mr Evans. I am afraid that I may have to leave early to travel back to the frozen north. I appreciate your indulgence in that.
I congratulate my colleagues on the Environmental Audit Committee on producing the report. I have become a devoted environmentalist since serving with my colleagues on the Committee. I am a farmer, and partly an organic farmer, and as I said to the hon. Member for Bristol East (Kerry McCarthy) the other day, I once owned a vegan food manufacturer, of all the bizarre things. However, I am also a beef farmer. I seem to be crossing the divide.
The report was written largely before I joined the venerable Committee, which is so ably chaired by the hon. Member for Wakefield (Mary Creagh) with her typically collegiate approach, which I very much enjoy. Not being the author of the report, I will be brief. The report recommends that the Government take a pragmatic approach to the UK’s relationship with the EU’s single market for chemicals, and in particular that it should seek to remain a participant in the registration process for those chemicals.
I represent Gordon, the constituency with the biggest oil and gas footprint, so hon. Members will see how difficult it is for me to be on the Environmental Audit Committee. However, I see oil and gas as part of the solution, not part of the problem. The oil and gas industry is clearly a massive feedstock supplier to the chemicals industry, which employs 157,000 people. To put that into perspective, the oil and gas industry employs 320,000 people, down from 460,000.
The UK could decide to follow the regulatory decisions made through REACH—the regulation on the registration, evaluation, authorisation and restriction of chemicals—or to take a different approach while still allowing UK companies to sell their products in both the UK and the EU, thanks to continued data sharing. Oil and gas is an international, dollar-denominated industry; 60% of oil and gas exports are outside the EU. Oil and gas should be an example to other sectors of how there may be good things outwith the EU. UK oil and gas, a bit like the UK chemicals industry, sets EU standards and has done for the 40 years during which it has been producing. The Government indicating that they have no intention of aligning the future UK system of chemicals regulation with that of the US is welcome news. However, the experience of the US in providing consistent regulation across the country, rather than allowing variations from one state to another, could be a model for the Government should the UK decide to establish its own system. I say that because we have UK-wide frameworks and we will be maintaining the single market within the UK.
As I am not the author of the report, that is how brief I am going to be.
I am delighted that the hon. Gentleman has spoken on the report, and it has been fascinating to hear about the oil and gas industry, but does he agree that the experience in respect of, in particular, worker protection in that industry has been potentially much weaker outside the UK? I am thinking of the experience of Deepwater Horizon and some of the environmental degradation in the Niger delta in particular. Those are not models that we would wish to follow in our own oilfields, where we want workers and, of course, the environment to be protected.
That is a very interesting point. The UK and Norway are obviously the two biggest oil and gas producers, by a long way. UK regulation has set EU regulation for the last 40 years; and interestingly, the EU is currently trying to put through regulation that Norway will not accept, because it feels that its regulation is already higher. I am therefore very optimistic that the oil and gas industry in the UK and in Norway will continue to set standards. It will be interesting to see how the UK chemicals industry will set international standards and have an effect on the EU going forward.
I look forward to greater participation in the Environmental Audit Committee, and I hope that the next time I stand here I am a signatory to its report.
As always, it is a pleasure to serve under your chairmanship, Mr Evans. I am grateful for the opportunity to speak in this debate. I congratulate the EAC on its report and my hon. Friend the Member for Wakefield (Mary Creagh) on her very clear and detailed explanation and defence of its recommendations, which I entirely endorse.
It is a pleasure to follow the hon. Member for Gordon (Colin Clark). He had no need to justify his position as both an MP for a constituency with oil and gas interests and as someone with an interest in the environment. If we dichotomise those two very important issues, we do a disservice to the country. The oil and gas industry remains important; it will not disappear overnight. We need to work hard to reconcile those two key interests as much as we can.
This topic is critically important. I am chair of the all-party group on the chemical industry, and this report is of great interest to me and to the all-party group. I reinforce the point that the chemicals sector directly contributes £6.4 billion to the UK economy each year and employs approximately 88,000 people—in all the areas that my hon. Friend outlined but also in areas such as the south bank of the Humber, where it is a critically important employer.
As has been pointed out, 60% of our chemical exports go to the European Union, and 75% of our imports in this sector come from the bloc. We must recognise that the chemicals sector has an important impact on all manufacturing sectors—in my constituency, for instance, we have the steel sector, which is an important downstream recipient of chemical products—and therefore the knock-on effects of regulation in this sphere will be profound and felt far and wide.
I congratulate my hon. Friend on the brilliant work that she has done in chairing the APPG and ensuring that the voice of the chemicals industry is heard loud and clear in this place. Does she agree that the issue is not just upstream but downstream chemicals, affecting things as diverse as kidney dialysis chemicals and machines, artificial limbs and so on? It spreads right out into the medical industry as well. We do not want there to be unintended or unforeseen consequences, because chemicals really do network out into every nook and cranny of our lives.
I agree. That is why chemicals are considered one of our key foundation industries that is of profound importance to the UK economy in every respect. On that basis, it is imperative that we get this right; on that, at least, I hope that we all agree.
The Environmental Audit Committee made several very sensible recommendations as part of its inquiry. However, in their response, the Government have given very little away about policy proposals. Nine months later, and with the Brexit date looming on the horizon, I, alongside the sector, the members of the Committee and Parliament more generally, remain deeply concerned by the lack of clarity.
What do we know and what do we not know? Against the Committee’s explicit advice, the Government are attempting to use the European Union (Withdrawal) Bill to give Ministers the power potentially to create a new UK-based regulatory body to replace REACH. The industry has made it abundantly clear that replacing REACH would be costly and over-bureaucratic. It would also potentially limit important access to data, as my hon. Friend pointed out, and to scientific collaboration, a point made powerfully by the Royal Society of Chemistry.
REACH represents the gold standard in international chemical regulations, and there is no appetite at all in the industry for degrading regulatory standards, I am pleased to say. What is more, if companies are to continue trading with the EU, compliance is, in the words of the Chemical Business Association, “non-negotiable”. Failure to comply means no market access and therefore no trade, as my hon. Friend pointed out.
As I said, creating a body like the one that we are discussing risks costing the public purse and taking a huge amount of time, simply to add another layer of bureaucracy for no practical purpose whatever. After all, substances requiring evaluation or authorisation will already have achieved that status by complying with REACH by this year’s deadline of 1 May. I ask the Minister these questions directly. Will she urge the Government to reconsider their approach to chemicals regulation post Brexit? Can she assure the industry today that we will remain in full regulatory alignment, both in the transition and in the long term?
Another area causing immense concern relates to the registration process. The Committee recommended that “as a minimum” the Government should ensure that the UK retain the registration element of REACH. The Government even acknowledge that any company wanting to trade with the EU will have to engage with that element of REACH. So why leave it? In the short term, companies need assurance that REACH registrations made before May 2018 will remain valid post Brexit, because otherwise, why bother, why do it? Millions of pounds have already been spent on registrations. The Chemical Industries Association says that if companies have to re-register everything because of Brexit, the cost will be in the region of £350 million. That is not pocket money; it is a significant sum that could have a serious impact on the industry.
The uncertainty is enormously problematic for companies, which need REACH registrations to operate but are reluctant to make the payments in case they become invalid. That dilemma risks an exodus of companies from the UK to the European Union—to other member states—and has already led a number of companies to spend vast sums of money opening up offices on the continent.
My hon. Friend is making a brilliant point. As she sets it out, I am struck more and more by the fact that the Government like to talk about sound finance, but actually our own chemicals regime starts to look more like an ideological indulgence, an extravagance, with, of course, other people’s money—taxpayers’ money and the chemicals industry’s money.
Does she agree that many of the only representatives of American firms based here are now having to—or will have to—shut up shop and set up in other countries? Not only are our own companies moving out into the European Union, but companies from third countries, which use the UK as a springboard into that integrated European market, are also going shopping and setting up elsewhere.
I agree with that latter point. On the first point that my hon. Friend made about ideological indulgence, I find it enormously frustrating that we are set not only to spend large sums of public money to achieve satisfaction and indulge ourselves ideologically, but to ignore the voice of business. I find it startlingly difficult to comprehend why what has always seen itself as the party of business is ignoring those very important voices—I just find it absolutely unbelievable.
Two years after the referendum, I still find it hard to reconcile my understanding of the party of Government. I have always respected it as a party that has always listened to the voices of those who make the wealth that keeps this country going, but it is no longer doing that—all in the name of a project that will damage the country’s economy in the long term. I find it absolutely astonishing, I have to say.
I ask the Minister what she is doing to give clarity to business in this area. Should businesses continue to make REACH registrations and will these registrations remain valid post-Brexit, or at the very least during the implementation period? Have her Government colleagues broached these subjects with their European counterparts during negotiations? I think we need to know—Parliament has a right to know this.
Does the Minister acknowledge that the easiest way to resolve these issues would be to stay in the single market and, as a consequence, to remain within REACH? That is the easiest way forward. It is the way forward that the chemicals industry prefers, and it would solve so many problems. I look forward to the Minister’s response and hope that she can provide some clarity.
It is a pleasure to see you in the Chair, Mr Evans. I congratulate my hon. Friend the Member for Wakefield (Mary Creagh) on her brilliant job chairing this inquiry. When we first started taking evidence, I thought, “How on earth are we ever going to get our heads around such a complex subject?” I have to confess that I might have got 50% of the way there, but I am pretty sure that she got 100% of the way there and it is a credit to her. I think we saw that in her speech.
It is unusual that both environmental NGOs and the chemicals industry think that the structure of REACH is about right. It is one of the most sophisticated chemicals regulations systems in the world, and if the Government are planning to leave its protective framework—I do not think they should—they need to clarify as a matter of urgency what will replace it. Not doing so is not fair on the industry. If the Government do not get on with the job, we are going to be left in limbo.
As my hon. Friend said, when we talk about chemicals, we are talking not just about things that are obviously chemicals—the sorts of things you keep under the sink, such as bleach or cleaning sprays—but the chemicals that are present in every product and activity. Chemicals are in car engines, in the paint on cars and in our carpets; I had never thought that carpet dye was a chemical. We are exposed to countless chemicals in every facet of our lives, and they are all controlled by REACH. They are all part of the system. It should therefore be of the highest priority to ensure that chemicals continue to be properly managed after we leave the EU, not least because of the potential harm that improperly regulated chemicals can cause to the environment, and human and animal health. There is another debate to be had about chemical use in the developing world, for example, where things happen that we would not tolerate here, but that is a question for another day.
Everyone has heard of the American case made famous by the film “Erin Brockovich”, in which 370 million gallons of chromium-tainted water leaked into the local water supply and dramatically increased the levels of cancer in residents. More recently, in 2008, tributyltin—a paint used to cover the hulls of boats—was outlawed in Europe after it was found to be extremely toxic to both humans and the marine environment, with the World Health Organisation reporting a 20% to 40% increase in the risk of certain types of cancer after regular contact with the substance. That shows us the importance of regulation and vigilance.
I thank my hon. Friend for her speech, and for the brilliant contribution she makes to the Committee. I am sure she was far more than 50% of the way there in this inquiry. If she did not feel that way, she certainly did not let on. I know that the inquiry was difficult. Does she agree that information sharing and knowledge sharing are a really important part of the REACH regime? This stuff is all around us and the evidence only builds up gradually, in bits and pieces, because we do not conduct controlled experiments on ourselves to see what gives us cancer—that would be unethical. The information emerges over time, and we are often ignorant of the damage that a chemical is doing to our body. When that gets out, there is always a vested interest that does not want it to be banned, changed or removed. That is why REACH is the global gold standard.
That is absolutely right. I do not think I need to add anything to that. My hon. Friend has told us, in a nutshell, why it is so important to be vigilant and on top of things—almost ahead of the game—in terms of what is being brought on to the market. If we are not, there could be quite devastating consequences that we might not discover for years. New chemicals are being manufactured continually, so we cannot rest on our laurels.
It is impossible to know what chemical regulation will look like in the future, so to transpose current standards without supplying the surrounding infrastructure would be an approach that was totally unfit for purpose. It is not a case of bringing in a law and then putting it into operation in the UK, as has been said—such a law would be out of date almost immediately. As we have heard, the infrastructure that is required to regulate chemicals is extensive. REACH manages tens of thousands of chemicals, with an estimated 140,000 chemicals present in the EU market, and 33 new chemicals are awaiting evaluation.
When we were in the United States, we discussed the time-lag—how long approval can take. I think the US system has been improved now, but, at one point, if a chemical had not been assessed and approved within, I think, six months, it automatically got approval by default. That seems a dreadful way of going about things, and I think that the US has introduced new legislation on the matter fairly recently. We want an efficient and speedy but absolutely thorough system that can get these new chemicals on the market or reject them as required.
The UK has the second largest number of REACH registrations in the EU. It is important to remember that REACH is a relatively new creation; it did not come into existence overnight. It came into force in 2007, after many years of preparation, and there are 600 people working on it at the European Chemicals Agency. There is a suggestion that we could create a British REACH. There was some laughter in the Environmental Audit Committee when the Minister coined the acronym BREACH, because it is probably not the best name for our own chemicals regulator. If we were to create BREACH, it would be impossible and absolutely foolish to try to replicate the work of REACH, when there are 600 people already working on it and we could seek to be part of it. Trying to duplicate that work would require the investment of a huge amount of time, resources and expertise.
We know that DEFRA has suffered from budget and staffing cuts over recent spending reviews. It has so many competing priorities—it seems to be about to release a new plan or strategy every other week—so I do not see how it could take on this task as well. We cannot match the pooled resources of all the EU member states. If we try to operate with a reduced capacity and a pared-down scheme for regulating and managing chemicals, the negative impact on the environment could be huge.
Hundreds of chemicals are classified as toxic to marine life under EU harmonised classification. That includes 1,045 chemicals that are classified as very toxic to aquatic life, 933 chemicals that are classified as very toxic to aquatic life with long-lasting effects and 405 chemicals that are classified as harmful with long-lasting effects. I use the marine environment as an example because, as people will know, it is a passion of mine. The organisation Blueprint for Water estimates that, even with the stringent regulation that is in place at the moment, at least 27% of total ecosystem losses are due to chemical pollution. Reduced capacity could further expose humans and animals to numerous cancers, disrupted reproduction, immune dysfunction, DNA damage and deformities, to name just a few concerns.
There is also the problem of persistent pollutants, called bioaccumulators, which build up inside cells or environments over time, meaning that humans, animals and the natural world are still exposed to them today. The negative impacts are felt only when a certain threshold of accumulation is passed, and that could be many years after their use begins. Bioaccumulation often occurs through food chains, with those at the top suffering from the worst exposure—in most cases, humans are at the top of the food chain. Polychlorinated biphenyls, which were once widely used in electrical products, paper and flame-resistant coatings, are a prime example. It took many decades, pre-REACH, for a ban to be finally implemented, and during that time people were regularly exposed to dangerous carcinogens. Surely, it is better to take a pragmatic approach and attempt to stay in REACH. Although it is not perfect, it has, as I said at the start of my speech, the support of both sides of the equation: the vested interests in the chemical industry, and those who seek to protect the environment, humans and animal welfare.
REACH is being constantly updated, and it has had 38 amendments since its creation. UK companies would have to continue to comply with REACH if they wanted to continue to trade with the continent. As we have heard, even if only a small component of a product—with a car, for example, it could be the paint, the seats or any of 101 different elements—is manufactured in the UK, that small part may well have to comply with REACH. The UK Chemicals Stakeholder Forum recorded that there was a
“clear consensus that businesses did not want to see a weakening of environmental standards”,
and that the industry wants to maintain access to REACH after we leave the EU.
REACH is also closely connected with the EU’s classification, labelling and packaging legislation, as well as the more general EU health, safety and environmental legislation. Just as “chemicals” includes a wide variety of substances, so too does the body of regulation that is required to adequately govern them. If we leave REACH, it is not just a case of replacing it; the UK would need to offer up a substitute for EU regulations, including the sustainable use of pesticides directive, the biocidal products regulation, the industrial emissions directive, the bathing water directive, the drinking water directive and the urban waste water treatment directive, to name just a few. They are all interconnected.
The UK has signed up to a number of sustainable development goals that bind us to regulate chemicals properly and not to support a drop in standards. They include ensuring that by 2020 we use and produce chemicals in ways that do not lead to significant adverse effects on human health and the environment; and, by 2030, reducing the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination, as well as improving water quality by minimising the release of hazardous chemicals.
That strays on to the turf of another Environmental Audit Committee report on the sustainable development goals and how we can implement them in domestic policy. Again, we were not particularly happy with the Government’s response, and I am sure we will continue to pursue the matter. Despite the obvious risks and uncertainties that face both the chemical industry and the health of the public and the natural environment, the Government’s response to the EAC report was disappointing and rather lacking. I urge the Government to commit to and implement the Committee’s recommendations, because the cost of failing to act, and of not being adequately prepared for when we leave the EU, is too great. In the Government’s election manifesto, they promised to be
“the first generation to leave the environment in a better state”
than they found it, but achieving that is incompatible with their current approach to chemicals regulation, and with any regulatory system that does not adequately protect humans, the environment and animals to the extent that REACH does.
It is a pleasure to serve under your chairmanship, Mr Evans.
I take this opportunity to thank the hon. Member for Wakefield (Mary Creagh) for securing this crucial and topical debate. Some interesting and intriguing points and concerns have been raised. The hon. Lady has already said that she feels as though the Government are treating the chemicals industry as a Cinderella industry. Her point about zombie legislation was not lost on Members, and her detailed knowledge of this subject is admirable.
Other Members made clear their concerns about the loss of jobs and the possibility of animal testing, which raises another unnecessary problem that we would have to deal with. Many other important questions are as yet unanswered. It was good to hear that the hon. Member for Gordon (Colin Clark) might cross the divide—that intrigues me—but it was reassuring that he has already become a devotee of the EAC. The hon. Member for Penistone and Stocksbridge (Angela Smith)—
Am I? If I can say “Auchtermuchty”, and so on, it is fairly easy.
The hon. Lady raised the importance of getting the transition right and reiterated that we need policy certainty on this issue. The modesty of the hon. Member for Bristol East (Kerry McCarthy) and her understanding of the complexity of this inquiry is to be admired. She is without doubt a very able and knowledgeable MP, as I have learned.
It has been a privilege to be a member of the Committee, as it is to follow the hon. Lady. As well as benefiting from my deeply committed and knowledgeable colleagues, I have relished fighting on issues that I am passionate about. Highlighting the need to protect our precious environment against pollution on a local, national and international level has been my mission. From the scourge of plastic microbeads and nurdles on our beaches, to plastic fibres from clothing that poison our waterways, the Committee has shone a light on environmental issues that the public want and need to know about. The Committee has successfully alerted corporate giants to their responsibility to communities and to the wider world that we share. We have never shirked asking difficult questions. I wish to acknowledge our Chair, the hon. Member for Wakefield, and I am sure that my colleagues want to do the same. In my opinion, she provides the best model for the operation of a successful Committee.
I, too, was on the trip that the hon. Lady mentioned to America prior to last year’s election. The Committee visited Washington DC to meet various agencies, senior academics and scientists. We were told by one of the scientists there that they had already had 100,000 companies registered in Ireland. That immediately raises concerns, and it reinforces what has been said today. We were all warned that Brexit threatened our membership of REACH and would result in disastrous consequences for our industries and economies. I was also warned that the Scottish Government’s competencies in environmental matters were facing an existential threat.
The chemicals industry is an economic linchpin, and we heard grave concerns from senior people who fear that Brexit may result in deteriorating standards if REACH is compromised. REACH has been widely described as the most complex piece of legislation ever undertaken in the EU’s history, and around 30,000 chemicals are registered under it at present. I think that in the UK something like 6,500 are registered under it at the moment. Meanwhile, as has been said, its membership is a passport to the global chemicals marketplace.
REACH standards are recognised by regulatory regimes worldwide. That enables exports worth £14 billion every year across the EU. By May this year—the looming deadline for registering chemicals under REACH—UK companies will have spent an estimated £250 million on the process over the past 10 years. If the unthinkable occurs and no agreement is hammered out between the UK and EU, are we then a UK out of EU reach? Chemical registration-related data sharing would cease to exist. That would be utterly disastrous for businesses and their investments, and they would have to reapply all over again. It would be an absolute nightmare for us to go through.
Let me turn to my homeland, Scotland. The Scots chemical industry is a truly international and invaluable part of the Scottish economy, second only to our thriving food and drink industry. It is a major exporter that delivers outstanding GVA and has shown remarkable resilience in these turbulent economic times. I believe that the most recent Office for National Statistics figures show that the Scottish sector maintained double-digit export growth between 2014 and 2015, before the recent weakening of the pound. Surely that success cannot be allowed to face uncertainty. As we know, the sector is acutely sensitive to any tariffs or barriers that would make exports less competitive. We must also think of the vast numbers of people employed in the sector, as has been said—more than 10,000 directly in Scotland and six times that figure indirectly—in an array of jobs ranging from manufacturing, sales and marketing to logistics. Chemical sciences account for 33% of all Scottish manufacturing.
The regulation system achieved through REACH allows us to protect our environment and therefore human health. Industry and the public—our constituents —cannot afford to wait for the UK Government to act on these issues. Industries will still need to meet EU regulations after we leave the EU if businesses are to continue trading, so why is the Government’s position so vague? We are painfully aware that prolonged uncertainty could cost the taxpayers of this country millions of pounds and leave our exports in disarray.
I believe wholeheartedly that membership of REACH is vital to allow unhindered movement of medicines and drugs post-Brexit. Yet when they were asked by the Environmental Audit Committee to take a pragmatic approach to the UK’s future relationship to the EU single market for chemicals, the Government gave a meaningless response that held no answer. That is simply not good enough. As for Scotland, its continuing transition to a low-carbon energy country must be allowed to continue. It is important for everyone that that approach is seen as a way forward for the environment. Everybody here has asked questions; we now demand some answers.
I am delighted to serve under your chairing, Mr Evans. It is good to see the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Suffolk Coastal (Dr Coffey), back in her place; I fear that we may spend some time in statutory instrument Committees, including on this topic. I congratulate my hon. Friend the Member for Wakefield (Mary Creagh), Chair of the Committee, on a thoughtful presentation. I do not intend to repeat much of it, because I think that the Minister has got her train of thought and will be answering some of her points.
I commend my hon. Friends the Members for Penistone and Stocksbridge (Angela Smith) and for Bristol East (Kerry McCarthy) for their speeches, and my hon. Friend the Member for Stretford and Urmston (Kate Green), who made an intervention. The hon. Member for Gordon (Colin Clark), although he is no longer in his place, made a good contribution, and the hon. Member for Falkirk (John Mc Nally), who spoke for the Scottish National party, also raised numerous pertinent points.
The report is good and, I must say, pithy. I enjoy Select Committee findings when they can be read within a relatively short time; I always think that the shorter they are, the better the quality. That would be fine, except that the Government’s response was even shorter and, I am afraid, not as pithy, in the sense that it did not get to the point of things, except one bit, which I will ask the Minister about. The Government say:
“The government will use the Repeal Bill (The European Union (Withdrawal) Bill) to convert EU law into UK law and use the powers to amend REACH, as well as other related chemicals regulation to make them work properly in the UK.”
Can I assume from that that REACH is still the preferred methodology for dealing with chemicals? That is important. As far as I understand it, this is an interesting issue, because the Department for Environment, Food and Rural Affairs is only one part of it, and the Department for Business, Energy and Industrial Strategy also has a strong interest. I gather that the Secretary of State for Business, Energy and Industrial Strategy has more or less intimated that he also wants some continuation of the relationship to REACH. Is that our starting point? That is my question for the Minister, because all other factors follow from that. The issue is important. Interestingly, this excellent paper from the House of Commons Library on Brexit and the environment uses REACH as an example of the implications, because it will have a pretty big impact on our industry, but also on how we feel safe with chemicals.
The report preceded the general election, even though the Government’s response came after it, so we must consider something a bit more recent—the 25-year environment plan, in which three pages are allocated to chemicals. It makes some clear commitments. On page 100, the Government commit to four actions. The first is:
“Publishing an overarching Chemicals Strategy to set out our approach as we leave the EU.”
When? The second is:
“Exploring options to consolidate monitoring and horizon-scanning work to develop an early warning system for identifying emerging chemical issues.”
How will that be done? The third is:
“Considering how we will address tracking of chemicals in products to reduce barriers to recycling and reuse whilst preventing a risk from harmful chemicals.”
Who will do that? If not Government, will it be done in partnership? The fourth is:
“Working internationally to strengthen the standardisation of methods that assess chemical safety in support of the mutual acceptance of data to identify and share information on emerging concerns and new approaches to risk assessments.”
If not REACH, what could it possibly be?
We have already talked about double registration, the impact on jobs and investment and the possibility of relocation. All four of those actions impinge closely on how the industry will evolve, so it is important for the Minister to give us at least some way forward on how the Government are tackling them. Like my hon. Friend the hon. Member for Wakefield, I read the previous Brexit impact assessment—are we allowed to call it an impact assessment now? Like everyone else, I do not know whether the Minister has seen the one on chemicals; presumably it would have been referred to in the latest documentation, which we have been debating this week. It is important to know that the industry will feature, because it is important.
In terms of where we are, it is not just a question of the chemical industry. As my hon. Friends have made clear, it is about how that locks into all sorts of other industries, such as the food chain, health and medicines and animal welfare. That is important, because every time I sit next to someone from those industries, all they say to me is, “Is there any certainty? Is there any way we can make decisions? We don’t know what we’re going to do, because we get nothing but confusion. We need some clarity.”
It is not just about the industry. My hon. Friend the Member for Bristol East discussed some of the implications when things have gone wrong. I mention organophosphates, to pick up an issue after not having been here for some time. I am dealing with a constituent who suffers from organophosphate poisoning. It has nothing to do with the Minister—it predates both her Government and mine, although it involved mine—but we all know that when regulation goes wrong, people suffer. For someone facing the repercussions of OP poisoning, it is awful. That is why we must get this right. It is a matter of human safety and, eventually, someone’s life experience, so it would be good to know that this issue is at the top of DEFRA’s agenda, and that the Department is talking to BEIS to ensure that we get it right.
I have a series of questions. I will go through them quickly, but they are important. First, the European Chemicals Agency, the current chemicals regulator, has extensive databases. Are we talking to the ECHA about how we could still access those databases after exit day? Secondly, I have already referred to the overarching chemical strategy. Is there a timetable? I know that it has been said that it will not happen until after exit day, but there must be some clear steer on what the timetable is. Thirdly, will the Department be transparent and publish what it is doing and thinking about how those procedures will be taken forward?
Chemistry World published a story—whether it was a leak or an inspired story—that said that Government had set aside £5.8 million for an IT system to look at the registration and regulation of chemicals. Can the Minister confirm that? Is that in addition to REACH or a replacement?
I have mentioned the Business Secretary’s view that REACH is something we need to build on rather than replace. It would be useful to know whether the Department is talking to BEIS about how that will happen.
The Department’s research is hopefully now focused on this issue. Does it have sufficient civil servants and sufficient expertise? Is it drawing in other outside expertise? It is very important to draw together to ensure that whatever the outcome, we get this right.
Finally, can the Minister assure me that there is no intention to lower standards? The bottom line is that it cannot be any worse, for the reasons that we have discussed: people suffered when we got it wrong, and the industry needs stability and security. The Minister has plenty of time to respond, and I look forward to hearing her answers.
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate the hon. Member for Wakefield (Mary Creagh) on securing this debate and I thank her Committee for its report.
The Government recognise that the UK chemicals sector is vital to the economy and to many other industries, often leading the way in research and innovation. Not only is it our second largest export industry, but it is a key component in almost all our other huge sectors. As the hon. Lady explained, chemicals are in many of the products and processes that we use. I am fully aware of the extent to which they can be in everyday products, and indeed in medicines and elsewhere.
The Committee’s inquiry took place nearly a year ago and we replied to it in July. I note that the Committee invited comments on our response. I have continued to meet the industry, and across Government, engagement with the industry and stakeholders will continue. I recognise that the principal concern of the industry—to ensure that existing REACH registrations remain valid—has not changed.
I also recognise that trade associations and other organisations have continued to call for the UK to stay in REACH. As I have explained elsewhere, given the principles set out by the Prime Minister in her Lancaster House speech, we will not stay in REACH per se but, through the provisions set out in the European Union (Withdrawal) Bill, we will bring into law the regulations that put REACH into effect. That is important because the continuity will provide an effective regulatory system for the management and control of chemicals to safeguard human health and the environment. It will also minimise any market access barriers for UK companies trading with the EU.
It has been suggested that we are not listening to the voice of business, but I humbly point out that the Government are listening to the voice of the people by respecting the referendum result. It was reiterated throughout the 2016 campaign that a vote to leave was also a vote to leave the single market.
I differ on the point that people voted to leave the single market. Nevertheless, I am sure the Minister just said that the Government will do their best to minimise any lack of access to the European market. Is that not an acknowledgement that there will be some damage to the industry if we leave REACH and have to set up our own regulatory regime?
The hon. Lady will recognise that our future relationship is still a matter for negotiation. Phase 1 has happened and we are moving into phase 2. Having exactly the same regulation the day before and the day after we leave the European Union will minimise market access barriers for UK companies trading in the EU.
We agree that ensuring the continued validity of REACH registrations is a critical issue and fully recognise the investment that UK companies have made in the REACH registration process. We are clear that we want existing registrations, authorisations and approvals to remain valid in the EU and UK markets, which is clearly in the interest of businesses operating in the UK and the EU. That recognises the complex compliance activity that takes place through supply chains. As the hon. Member for Wakefield pointed out, it is not just about sales between companies but about the movement of goods through the supply chain within a company.
We want to avoid the unnecessary duplication of compliance activities undertaken by businesses prior to exit. That was set out in the Government’s position paper, “Continuity in the availability of goods for the EU and the UK”, published in August 2017, which also set out our principles for maintaining the availability of goods after exit.
It is likely that some products will be undergoing testing, registration or authorisation processes at the point of exit. For such cases, given the ambition for a close future relationship, the body carrying out the assessment should be permitted to complete it and the results should be recognised in UK and EU markets. That would be in the best interests of businesses across Europe, and I encourage them to work together to support that pragmatic outcome.
Although it would not be appropriate to pre-judge the outcome of the negotiations, we will discuss with EU member states how best to continue co-operation in chemicals regulation in the best interests of the UK and the European Union. That extends to aspects of knowledge sharing—it would be ideal to continue that work through the negotiations. For example, the EU is highly reliant on the expertise of the Health and Safety Executive in the assessment of chemicals, particularly biocides and pesticides.
I am aware that the guidance that the European Chemicals Agency published on its website about the UK’s withdrawal from the EU has caused concern. That guidance reflects the EU’s view of what would need to happen if there were no future relationship between the EU and the UK. It does not, of course, take into account potential negotiated outcomes and I am pleased to note that that has now been acknowledged on the ECHA website. As hon. Members may be aware, the guidance has recently been updated to reflect issues about the transfer of registrations and authorisations.
We have increased resources within my Department, in the HSE—a body sponsored by the Department for Work and Pensions—and in the Environment Agency to work on chemicals policy and prepare to deliver an effective regulatory regime after we leave the EU. We have established a joint programme of work with HSE to deliver what we need to have in place for day one. I work with ministerial colleagues across Government from the Department for Business, Energy and Industrial Strategy, the DWP, the Department for Exiting the European Union, the Department for International Trade and the Treasury.
We are also planning for a non-negotiated day one outcome to have a functioning chemicals regulatory and enforcement system. We are now scoping and designing what such a system would look like, including an IT system to replicate REACH. As the hon. Member for Wakefield pointed out, that includes the budget that has been released so far to scope that system.
On leaving the EU, our regulatory system and laws will be identical to those of the EU. There could be opportunities to consider improving the regulatory system to maintain standards in protecting the environment and human health. That is why we have considered the regulatory approaches of other countries, including those that are largely modelled on REACH.
Although we will not be part of REACH, there is an opportunity to work internationally to strengthen the standardisation of methods that assess chemical safety in support of the mutual acceptance of data to identify and share information on emerging concerns and on new approaches to risk assessments. In a global world where we share chemicals and have several existing chemicals conventions, it makes sense for our regulatory authorities increasingly to share that information to ensure that we have greater compliance and convergence in understanding and recognising the benefits and hazards that chemicals can pose. I do not see any reason why we cannot have that ambition once we leave the EU.
The system is at the stage where we are waiting for an aspect of the business case to be signed off. I have met the new Minister responsible for the Health and Safety Executive—the Minister for Disabled People, Health and Work, my hon. Friend the Member for Truro and Falmouth (Sarah Newton)—and work is ongoing between our Departments and the HSE.
The most relevant environmental principle to chemicals regulation is the precautionary principle, which is embedded in international conventions relevant to the regulation of chemicals, such as the Stockholm convention on persistent organic pollutants, to which the UK will continue to be a signatory in its own right. The Secretary of State has announced that we will consult on how we will incorporate various environmental principles and governance mechanisms, and we are carefully considering our proposals at the moment.
As the hon. Member for Stroud (Dr Drew) noted, we recently published our 25-year environment plan, in which we acknowledged that chemicals provide substantial benefits to society, but their widespread use in industry, agriculture, food systems and homes has led in some cases to pollution of land, water, air and food. We will publish a new chemicals strategy to tackle chemicals of national concern. The new strategy, which will build on existing regulatory approaches, will set our priorities for action and will detail how we will achieve our goals. It is intended to support collaborative work on human biomonitoring, address the combination effects of different chemicals and improve how we track chemicals across supply chains. I am not able to set out a timeline, but I certainly do not anticipate that the strategy will be published this year, because our main focus is implementing a smooth transition and continuing existing regulations.
We also need to consider the domestic market within the United Kingdom. REACH currently gives us a consistent framework across the UK, and we would like that consistency to continue. We have already started discussions with the devolved Administrations on a future chemicals framework across the UK.
Let me tackle some other questions raised by hon. Members. Is REACH the preferred methodology for chemicals regulation? In our international discussions, as I told the Environmental Audit Committee, we are not minded to take the United States’ approach. We think that REACH has shown its worth. As has been pointed out, a lot of chemical companies were not necessarily its greatest fans when it was introduced but are now embracing it. When I discuss the matter with Ministers from Brazil and other countries, it is clear that they are trying to get the best of all worlds, which is what we need to ensure for ourselves as we go forward. I have spoken to Switzerland, and I think officials have had discussions with South Korea. A lot of countries are taking a REACH-style approach but may not be replicating it in every detail.
On early warning and horizon scanning, I hope we can set out our approach in more detail when we publish our chemicals strategy. In answer to the question about sufficient expertise, I must point out that the HSE is the responsible authority and there is no reason to doubt its expertise; I commend it for its work in support of the chemicals industry.
I fully understand hon. Members’ concerns about bureaucracy, which is why we are in negotiations. I am afraid that I cannot give hon. Members an update on where we are, because phase 2 of the negotiations is yet to start; I fully understand the uncertainty that that brings. I have engaged with stakeholders. We have seen only representatives becoming part of networks or opening branch offices in different countries or a presence in the European Union. As I told the Committee, from my experience of working in multinational companies, I fully expect them to be contingency planning, but that does not mean that they will be abandoning this country all of a sudden. Far from it: the size of the market in this country, not only for chemicals but—as has already been explained—for many other manufacturing sectors, absolutely means that they will keep a permanent presence in the United Kingdom.
I do not anticipate any new approaches to risk assessment. The precautionary principle is well embedded in what we do. As I have articulated, we will be bringing different regulations into law, as will the devolved Administrations. We sit on committees now and we hope to retain those links in the future, but that is a matter for the negotiations.
The hon. Member for Stretford and Urmston (Kate Green) raised third-party country status. We still need to consider and negotiate elements of that. The approach set out by the Prime Minister on behalf of the Government, in which not being governed by the European Court of Justice is a guiding principle in what we do, still applies, so some assessment is still needed. Bioaccumulation is among the matters that we intend to cover in our chemicals strategy.
Let me assure hon. Members that ensuring we have a regulatory regime that continues to be effective is a very important part of my portfolio, but my top priority has been a smooth transition. As I am sure hon. Members recognise, I cannot answer questions today about exactly what our future customs arrangements with the rest of the European Union will be. However, I am highly conscious that we want to help business to continue to be successful, and I would like it to get certainty as quickly as possible. I am sure that I have disappointed hon. Members today by not being able to do that, but I will move on to the next phase of negotiations shortly.
I reiterate that we will do all we can to ensure a smooth transition and a successful industry for years to come. I saw the hon. Member for Stroud and members of the Environmental Audit Committee yesterday. I am sure that broad consideration of the environment in different ways and across different industries will continue, quite rightly, to be a key topic for debate in Parliament.
I thank Environmental Audit Committee members present—the hon. Members for Gordon (Colin Clark) and for Falkirk (John Mc Nally), and my hon. Friend the Member for Bristol East (Kerry McCarthy)—for their support, along with the Minister’s Parliamentary Private Secretary, the hon. Member for Taunton Deane (Rebecca Pow). I certainly feel that the Committee is waking up, having been a sleeping giant on the Committee Corridor; it is finally finding its voice.
I agree with the Minister that her response was very disappointing. Based on what she is offering the sector, I think the verdict is “Must try harder”. She has told us that the chemicals strategy will not be published this year, which is deeply worrying. She is not offering continuity, as she said, but rupture and multiplication of uncertainty. She is in danger of sounding complacent when she talks about only representatives setting up in other countries. These are the people through whom business flows, so if they leave, the business leaves with them.
This looks like a release of initial moneys to scope out and make the business case for the rest. I wonder about DEFRA’s capacity to deal with this. DEFRA has lost 5,000 civil servants in the past seven years.
The ECHA website states:
“Only a mutual agreement between the EU and UK authorities can change this date”,
meaning 30 March. It also states:
“It is the European Commission that conducts the withdrawal negotiations with the UK Government under a negotiating mandate…ECHA is not party to these negotiations.”
We face the uncertainty of whether there will be a transitional period, how long it will be and what will happen, and then the further uncertainty of what will happen afterwards. Lord Bridges said that the transition period was set to be one of “muddling through” and
“a gangplank into thin air.”—[Official Report, House of Lords, 30 January 2018; Vol. 788, c. 1423.]
The Minister says that when people voted in the referendum, they were voting to leave the single market. Daniel Hannan, her Tory MEP colleague, said that only a madman would leave the single market. Well, I am afraid the Minister’s party seems to have been taken over by the madmen. We need a sensible, rooted debate based on the reality of people’s lives and the reality for businesses in this country, not constant reassuring words that give solidity to mere wind.
Question put and agreed to.
That this House has considered the Eleventh Report of the Environmental Audit Committee of Session 2016-17, The Future of Chemicals Regulation after the EU Referendum, HC 912, and the Government response, HC 313.
Leaving the EU: Agriculture
[Mr Peter Bone in the Chair]
I beg to move,
That this House has considered the policy framework for agriculture after the UK leaves the EU.
As ever, Mr Bone, it is a pleasure to serve under your chairmanship.
Before I start, I should say that I am very grateful to the Backbench Business Committee for having allowed the House the opportunity to debate this subject today. I see a reasonable number of Members in Westminster Hall, so I shall try to keep my remarks fairly short, to ensure that everybody gets a chance to have their say.
First of all, however, it is worth noting the context for this debate. For the 40-plus years that the United Kingdom has been a member of the Common Market, the European Economic Community and ultimately the European Union, the common agricultural policy has been the dominant force in shaping agricultural policy in the United Kingdom. As is often the case when there is such a dominant force, we can get dragged down into the weeds. We can lose sight of the higher purpose—I suspect that, if pressed, any of us could come up with lots of things that we dislike about the CAP.
The moment of our leaving the European Union will be, of course, an opportunity to change much of that and to do things differently, if that is what we choose. However, it is worth reminding ourselves about the context of what has been achieved and the nature of the agricultural industries—I use the plural advisedly—that we have had for the last 40 years as a consequence of our membership of the EU.
Some would say that this is a moment for moving away from financial support for agriculture completely—the New Zealand “cold turkey” approach. That is a respectable view; it is not one that I happen to share, for reasons that I will explain. However, it is a statable case, and if we are sensible it is one that we should address. When the Secretary of State recently made a speech at the Oxford Farming Conference, he spoke about the CAP being a mechanism for subsidising inefficiencies. One man’s inefficiency may be another man’s lifestyle, so I listen to terms such as that being bandied about with some caution, shall we say.
What would be the consequence, though, of ending the support there has been for agriculture? The most obvious consequence, in my view, would be food price inflation. There is a cost attached to maintaining an agricultural business, and if farmers are not to get the money they need through the mix of what they get at the farm gate and financial support from Government, then of course a higher price will have to be paid by the consumer in the supermarket.
In fact, earlier today it was put to me that the most obvious victims of the end of the era of cheap food—the era in which we have lived and continue to live—would be those on the lowest and fixed incomes. That is a good point: people on low incomes spend a higher proportion of their disposable income on food than on anything else. Ending support would also have very profound implications for our countryside. Many of the things that we value most about our countryside come about because people live there—because they can work there and make a living there. The countryside is not just a glorified retirement home.
I have seen a lot of farms’ books in my time as a Member of Parliament, for a whole variety of reasons. When it comes to farmers in my constituency and throughout the highlands and islands—and doubtless those in other parts of the country—there simply would not be a living to be made without the farm subsidy payment coming into their businesses every year. We would lose the farms, then the shops and the post offices. The country schools would close, which would lead to the loss of professional support, such as the lawyers, accountants and the vets. With that loss, we would start to lose the mix that a rural community needs to sustain itself. Thereafter, it is pretty easy to see where we would go.
The alternative to food price inflation, of course, would be to import cheap food from other parts of the world. However, I caution hon. Members about that. One of the reasons why our costs of production are high in this country, relative to other parts of the world, is that we maintain very good standards of animal welfare, traceability and biosecurity. Those all come at a price. We are told that such things are valued by the consumer, and there is a price attached to that. If our farmers are to compete on a level footing, we should expect the same standards in those countries from which we would envisage importing food. At that point, one would wonder whether the price difference between food produced here and imported food would be as marked as it is now.
In that context, the CAP and support for agricultural industries have given us considerable stability in recent decades. There is then the question of what will follow the CAP. If we take away the framework that we have had since the mid-1970s—the CAP—we will inevitably have to replace it with some other sort of framework: a UK-wide one, if that is to be the extent of our regulation. I am pleased to note an emerging consensus between the UK Government and the devolved Administrations: that the creation of a UK-wide framework is a desirable and necessary event, which will have to be taken seriously.
To my mind, there are something in the region of four different objectives that such a new framework would need to have built into it. First, and most importantly, it would need to preserve the functioning and integrity of the UK internal market. That is important for consumers and producers across the length and breadth of the country. Secondly, it would need integrity, to ensure that the UK was in a position to enter into trade agreements with other countries. Thirdly, it would have to ensure that the United Kingdom could continue to meet its existing international obligations, never mind those that we may seek to take on. Fourthly, it should provide for effective management of common resources. As I say, the first of those four objectives—preserving the integrity of a UK internal market—is the most important.
As the National Farmers Union Scotland has put it in one of the many briefings that have been provided for today’s debate,
“animal welfare and traceability, public health, pesticides regulation, and food labelling”
should all be part of a “commonly agreed ‘framework’”. That is in the interests of all parts of the United Kingdom.
Of course, once an overarching framework has been agreed, everything else that remains should be devolved to the constituent parts of the United Kingdom. For the purposes of England, that would obviously be the Department for Environment, Food and Rural Affairs; the Scottish, Northern Irish and Welsh Assembly Governments would have control and responsibility for their own respective jurisdictions. The thinking that needs to be done now about how we design that framework is important. We need something that will allow each Administration to implement it as is appropriate for their area.
As one who was always a keen supporter of the idea before it happened, I think that devolution since 1999 in Scotland has been very good for Scottish farmers. They say that the administration of agricultural policy from a dedicated Department in Edinburgh has been better for them: it is closer to their needs and better able to design a system that is suitable for the farmers in our constituency.
I am sure that that is true across the whole United Kingdom, so the framework must provide a structure without tying the hands of the devolved Governments. They should be able to continue to do as they currently do: look after the less favoured areas such as the highlands and islands, and perhaps then the beef farms and dairy farms; I am thinking not only of Orkney and such places, but the north-east of England—I see the hon. Member for Dumfries and Galloway (Mr Jack) from the south-west of Scotland—or the south-west of England.
There are upland farms in Yorkshire and Cumbria. All the different industries have needs that are best met by devolved Administrations delivering policy in their own jurisdictions. For that reason, when the framework is constructed, it has to deal with those matters in a way that that can be commonly agreed. If the Minister has not already had representations from the NFUS, although I suspect he probably has, he should consider its proposal for the creation of a strengthened joint ministerial Committee. The mechanisms of devolution already make provision for that sort of thing, but as we move to the next phase of our constitutional change, it is pretty clear that something of that sort will be necessary.
The idea posited to get a commonly agreed mechanism is that something such as qualified majority voting, as is often used in the Council of Ministers, could be engaged. The advantage would be to create something that was genuinely a common agreement, rather than a top-down approach where control would still be vested in DEFRA and in London.
Inevitably, one comes on to the question of finances. Currently the United Kingdom remits money to Brussels, which then pays the respective Administrations money that goes in a dedicated way to farm support. Obviously, after our departure from the European Union, that supply line will be significantly shortened and we shall look to the Treasury. I do not see any other mechanism than that the money should come from the Treasury, but perhaps the Minister has other ideas about how that would work. More importantly even than that, we need to know the mechanism by which that funding will be distributed across the different parts of the United Kingdom. For most public spending purposes, we currently have the Barnett formula, but that takes into consideration a whole range of different matters that would not really be relevant, so some sort of thinking at this point will clearly have to be done.
On the brass tacks of this, when the Minister comes to reply to the debate today—I realise we are in the early stages of the thinking and we can look only for broad principles—will he confirm that the pie that we will slice up by whatever mechanism we devise will remain the same size as the one we currently have? The one thing that consistently comes through to me, from talking to farmers and crofters in my constituency and to the farming unions, is that at this stage our objective should be continuity and stability. Farmers really need to know what the future holds for them. If we do not have early confirmation of what the future holds, we cannot expect them to have the confidence to keep investing.
A whole range of imponderables will come from our decision to leave the European Union. Access to export markets, the terms on which imports will be allowed from other countries, and the availability of labour for both the production and processing of food are just a few of them. All those matters are outwith our control, but the creation of a UK-wide framework is one element entirely within our own control; more than anything else, it will give our farmers the opportunity to continue their planning for future investment.
In his speech at the Oxford Farming Conference, the Secretary of State guaranteed support payments to 2024. That was a welcome announcement and I do not want to diminish the importance of it in any way, but in doing that he prayed in aid the need for long-term certainty.
I speak as a farmer’s son. I know two things about farming. First, I knew I was never going to be one; that is partly why I am here today. Secondly, I know that six years for a farmer is nothing like the long term. The long term is what agriculture is built on and what our farmers and crofters need to hear about. I hope the Minister will at least give an indication that we have started the process of giving it to them.
It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this debate. I listened intently to his speech and he will be pleased to hear that I agreed with absolutely everything he said. However, that will not stop me saying some of it again.
Brexit is a great opportunity for us to reform the policy framework for agriculture in a way that promotes both the agriculture sector and the environment, but it is crucial that we get it right. In Scotland, a healthy agricultural sector makes for a healthy economy. Across agricultural production and the food and drink industry, Scottish farming and crofting supports more than 400,000 jobs. Scottish agriculture has functioned for decades under the EU’s regulatory framework, including the flawed and inefficient common agricultural policy. It is no surprise, therefore, that a majority of British and Scottish farmers voted for Brexit.
My source is the farming press. According to The Scottish Farmer, a survey revealed that 66% of Scottish farmers said they had voted for Brexit.
Many farmers will be glad to see the back of the CAP and will be looking forward to what will replace it. I am encouraged by the UK Government’s commitment to deliver the same level of farm support money until at least 2024, which the right hon. Member for Orkney and Shetland mentioned. I am also encouraged by the plan to put in place a green Brexit that rewards good environmental stewardship. However, even more can be done.
The CAP has failed to keep up with the pace of change in agriculture, trade and the wider economy. We would be hard-pressed to find many farmers who would describe the CAP as modern, efficient, or even fit for purpose, and that assumes that they get their CAP payments on time, which I know, as a Scottish farmer, can sometimes be a bit of a luxury. We should build an agricultural policy framework fit for the 2020s and beyond that supports a healthy, profitable, diverse, innovative and sustainable sector in a global economy and that seeks to embrace the future and make the most of it, rather than shy away from the challenges it presents. But the issue goes far beyond farm support. As the right hon. Member for Orkney and Shetland said, it is vital that, for example, we maintain our high regulatory standards.
The EU is not a perfect regulator, and Brexit allows us to make changes to regulate better and smarter, and respond more proactively to changing circumstances. There is no case for compromising our standards, and we must make sure that standards in all parts of the United Kingdom are as high as or higher than they are at present. Animal welfare in particular is an area where we should seek to hold ourselves to even higher standards after Brexit. We must also maintain the commitment to high agricultural standards in our trade negotiations with third parties, and develop a framework that ensures that we can make such trade deals while preserving the devolution settlement. I expect that the powers over agricultural policy due to return from Brussels will in turn be devolved to Holyrood at implementation level.
The preservation of the UK internal market should underpin any future framework. If that were not to happen, it would be harder and more expensive for Scottish farmers to trade in the rest of the UK, and vice versa. We cannot allow that. That is a particular concern for farmers in my constituency. Dumfries and Galloway is near England and Northern Ireland, and trades extensively with both. We must not give our agricultural sector trouble at home when it should be seeking new opportunities around the world. We therefore need frameworks that ensure a degree of harmony between all parts of the United Kingdom, and that make sure our common resources are managed as effectively as possible.
Brexit is a challenge for Scotland’s agricultural sector, but it is also a great opportunity that can get the sector flourishing for decades to come. However, that will require the UK and Scottish Governments to work together to create an effective policy framework that can give a real boost to Scottish, and indeed British, agriculture.
It is a pleasure to see you here, Mr Bone.
The debate is very welcome. It has obviously been a long time since agriculture policy was in such a period of transition, and where there was so much up for debate and needing to be decided; as we come out of the common agricultural policy we look towards the negotiation of new trade deals, and there is an agriculture Bill on the horizon, I hope. The Environment Secretary has made some welcome statements at the Oxford Farming Conference and the Oxford Real Farming Conference—I attended the latter—which were restated in the 25-year environment plan, about trying to shift to the use of public money for public goods. That must be the backbone of the approach. I welcome his clarity about the ending of subsidy per acre, and using it to pay for public goods. It is encouraging that the direction of travel on that is so clear. Farmers want to do much more to conserve their land for future generations; the structure should be there to support that.
We need to do a much better job of internalising the external costs of the damage we do to the environment, including soil degradation, deforestation, biodiversity loss and the impact on public health of the routine use of antibiotics. Those have been disregarded for too long. I am sure that we all agree on the desirability of the new regime supporting the public goods that the Environment Secretary identified, such as planting woodland and restoring habitats for endangered species, and restoring and enhancing soil. I would add other things, but the direction of travel is good.
As chair of the all-party group on agroecology for sustainable food and farming, I would also like specifically to promote the benefits of agroecological approaches. They are sometimes seen as backward-looking, because they can involve reviving some old-age systems, but I am not personally anti-innovation. I think that agroecological measures can be adopted without a reduction in productivity. As the former UN special rapporteur on the right to food, Olivier De Schutter, said, the approach has been shown
“to improve food production and farmers’ incomes, while at the same time protecting the soil, water, and climate”.
That is the balance we need.
I want to focus my comments on two areas about which little has been said so far. The first is post-Brexit agricultural policy, which urgently needs to address how we increase our food sustainability and, given global pressures, ensure long-term food security. The second is the growth of diet-related ill-health and widening health inequalities. As to food security, leaving the EU potentially puts UK food security at greater risk. At the moment we produce less than 60% of the food we consume and rely on the EU for almost 30% of our imports. Post-Brexit, shortages of farm labour and a more volatile market could make that situation even worse. I am vice-chair of the all-party group on fruit and vegetable farmers. Witnesses from the sector, and the wider horticulture sector, gave evidence to the Select Committee on Environment, Food and Rural Affairs a while ago; the sector is already starting to suffer from the Brexit effect. Last year, there were reports of produce rotting in the fields in Cornwall from a lack of EU workers to pick it, put off by poor exchange rates and uncertain future employment. I know that the Minister has attended the all-party group and the Select Committee to hear our concerns. I am sure that the Committee Chair, the hon. Member for Tiverton and Honiton (Neil Parish), will mention that later.
Nothing was said about the workforce in the 25-year plan. Although the Environment Secretary has said that he recognises the need for seasonal agricultural labour, we do not have a clear indication of what he intends to do about that. We need to ensure that agricultural policy addresses the prevalence of low pay, insecure employment and the exploitation of workers in the food and farming sector. I do not think that that is too much to ask.
The issue of labour availability is important, but it is not confined to low-paid workers. The hon. Lady should be aware that the veterinary profession relies heavily on vets who come to work in this country from other parts of the European Union, especially for meat inspection.
I think that I am right in saying that about 85% of the vets from overseas who work in this country have not been in the UK more than five years; so they would not be captured by the arrangements being put in place to enable people to apply for status to stay in the country. That is an important issue.
On the question of horticulture and healthy eating, we need to ensure that our agricultural policy not only maintains but widens access to healthy, nutritious food for everyone. Analysis by the Food Foundation, which was of course set up by a former Conservative MP, who is doing excellent work, shows that a British family of four could be spending up to £158 per year more on fruit and veg after Brexit, as a result of tariffs, inflation and increased labour costs. That is a huge amount of money for those already struggling to put nutritious food on the table. Ninety-two per cent. of teenagers in the UK already struggle to get their five-a-day, and diets low in vegetables are linked to 20,000 premature deaths every year. We had a debate in Westminster Hall the other day about the links between junk food and childhood obesity. Cancer Research provided inspiration for that debate, and the other side of the healthy eating coin is obviously the consequences of unhealthy eating.
It is partly due to consumer choice; but it is also a question of what is presented to people in supermarkets, and the encouragement to people to get cheap ready meals. As we saw during the horsemeat scandal, it is much easier for people with a very limited income, who are running out of money before their next pay cheque, to buy a ready meal such as a lasagne that costs 99p or a pack of 12 Tesco burgers in the Value range, than it is to buy all the separate ingredients that would enable them to cook a similar meal at home. They just do not have the resources to do that.
That is something that the Food Foundation stresses. It says that if we increase the level of UK self-sufficiency in fruit and veg, production could become more competitive in comparison to pricier imports, and that there are 16 types of fruit and veg that we could grow more of in the UK, which would increase supply and help to protect demand in the uncertain times of Brexit. Last summer there was a sudden shortage of iceberg lettuce in shops because of the situation in Spain. I am sure that the Minister has looked at the Food Foundation report “Farming for 5-A-Day”, but if he has not I urge him to do so.
I want to raise the real threats to UK food and farming from a no-deal scenario and from free trade agreements with the US and countries with lower animal and food safety standards. The most carefully structured subsidy regime could be fatally undermined by the trade arrangements we enter into post-Brexit. The all-party parliamentary group on agroecology highlighted that in our recent inquiry. We found that trade deals post-Brexit could pose the biggest peacetime threat to the UK’s food security, if current environmental and public health standards are not prioritised in the terms of the negotiations. It is vital that agriculture does not become a bargaining chip or something that can easily be traded away during negotiations. We know there is a difference of opinion between the Environment Secretary, who has sworn that he wants to uphold standards, and the Trade Secretary, who has a less acceptable stance on these issues. He does not appreciate how much the public care about protecting these things.
There is a very real danger that when faced with the threat of rising food prices post-Brexit, many will argue for cheaper food through low or no tariffs, but that will come at a cost. The US Commerce Secretary, Wilbur Ross, has made it clear that any post-Brexit trade deal will hinge on the UK ditching its higher EU-derived food safety laws. The debate on chlorinated chicken and hormone-pumped beef is very much in the public domain. That situation could drive out higher-welfare and smaller-scale UK farmers who would be unable to compete on price. It could make it more difficult for British farmers to export to EU countries, with worries that they could provide a back door to the EU for these US imports. There are food safety issues, too, with US eggs and poultry much more likely to have salmonella contamination than UK products. At a recent meeting of the EU environment committee, Which? gave evidence. It said that something like one in six Americans get food poisoning over the course of a year, compared with one in 66 in the UK. That cannot just be down to poorer hygiene standards in people’s homes.
We cannot trigger a race to the bottom on standards. Nor should we seek to compete by copying American mega-farms, cutting costs by becoming ever more industrialised and intensive. One of the recent farming Ministers was very fond of the phrase “sustainable intensification”, but I never quite got him to explain what he meant by that.
The hon. Lady is making an interesting speech. It is important that our policy on food standards is evidence-based. Salmonella rates are 1.5 times higher in Europe than they are in the US. We must not proceed in any trade deals on the basis of any anti-American bigotry. I am not suggesting that the hon. Lady is guilty of that, but some who contribute to these debates are. We must proceed only on the basis of evidence.
I agree with that, but the Soil Association has come up with a list of 10 products that are currently banned that could enter UK markets if we enter into a trade deal with the US. Chlorinated chicken and hormone-pumped beef were banned for very good reasons.
We have different views on EU protections, but the EU ban on chlorinated chicken was introduced in 1997. Hormone-pumped beef was banned before that. If the hon. Gentleman asked his constituents whether they wanted these products in the UK market, I think they would support his Environment Secretary’s position, whether they see these things as animal welfare concerns or food safety concerns. When he was giving evidence to the Select Committee, the Environment Secretary said that he saw that issue as a red line in negotiations and that we should not allow such things in. Perhaps the hon. Gentleman can ask the Environment Secretary what evidence he has considered. On that note, I will conclude my remarks.
It is a pleasure to serve under your chairmanship, Mr Bone; I think it might be my first time. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this important debate. I have four points that I would like to make, and I will try to keep my remarks brief because we have got just under half an hour before the first Front Bencher is called. The four points are about subsidies, promoting agricultural jobs, migrant workers and environmental protections.
On subsidies, it is my firm belief that the common agricultural policy is fundamentally flawed and wasteful. The UK could implement a subsidy of its own that could save money and create better standards. The safeguarding of our current level of subsidies in establishing the new system was a welcome announcement from the Government, but we need to look further ahead, and we need some strategic investment in our agricultural sector. We need to offer capital grants, loans and tax incentives for investing in infrastructure. It is my firm belief that farm-led research and things to do with equipment and buildings should be implemented in collaboration with farmers.
The need to support new entrants and succession in farms is an issue that I have picked up when I have been out speaking to my farmers. There seems to be a break in people wanting to take part in agricultural work. We need to ensure that we invest in that. We also need to make things much more resilient for farmers who need protection against and compensation for unforeseen circumstances, such as crop blights. We have a step to go in that direction, but by promoting agriculture, we will see huge investment in the south-west.
Secondly, there are big opportunities for tech-based agriculture jobs. I recently met with Duchy College in my constituency. People there talked to me about how they are linking food and agriculture, and teaching young people about how the new innovation and tech of the future will benefit them. The Government also need to explore the opportunities for apprenticeships in agriculture. We have not done enough in that regard, and we owe it to our agricultural workers to do much more.
My third point is on migrant workers. We heard from the hon. Member for Bristol East (Kerry McCarthy) about the challenges around crops in Cornwall. In the south-west, 57% of our workers in the meat sector and 40% of people in the egg sector are migrant workers. Leaving the EU will enable us to control the number of people entering and leaving the UK, but we must maintain the balance by ensuring that we have the right people in place to do farm work. We need that to continue.
The NFU has been keen to promote an agricultural permit scheme for a 12-month visa. We had a seasonal agricultural workers scheme that stopped in 2012 or 2013, and we should look again at that. We have a challenge that we need to address to ensure that everything in the field is brought in on time. In the short and medium term, I want our farmers to have access to labour markets and visas. In the long term, we should be looking to retrain and re-employ British people to do those jobs and to bring in EU or other workers if and when required.
My main point is about environmental protections. I see big opportunities post Brexit for us to have a British agricultural policy that shapes production and improves environmental standards. I recently went out with the Westcountry Rivers Trust on a farm visit in my constituency, and the trust talked me through its work on upstream thinking. It implements a policy with a water company to provide a 50% grant to take slurry pits away from water courses. As we move towards a British agricultural policy, our water protections, our improvements to soil quality, our ability to maintain the uplands to store water and our ability to deliver high standards of animal welfare are all vital.
In conclusion, I am firmly of the belief that we can improve our production and increase our environmental protections at the same time. We will need to shape a British agricultural policy. I am looking forward to the agriculture Bill coming to the House. I ask the Minister to consider the points I have made.
It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this important debate and getting Back-Bench time. It is also good to follow my hon. Friend the Member for North Cornwall (Scott Mann), who I know is very supportive of farming, agriculture and the countryside. It was good to hear what he had to say. I agreed with the right hon. Member for Orkney and Shetland when he said that the countryside and farming are intricately linked, and that farmers are very much a part of the community. He may be a farmer’s son who is no longer a farmer, but I am a farmer’s son who is still a farmer. We have much in common, even if he is not farming now. We were both born on a farm and have farming in the blood.
As we move forward, we have to look at exactly what we want agriculture and our land to provide. We want it to provide good, wholesome food, and a good quantity of food. Let us not just play at farming; let us have proper production. The common agricultural policy has many sins, but the money that comes in through the basic payment scheme is used by the farming community—especially family farms—to keep farming going and to keep it profitable. Contrary to popular opinion, most of it, especially in the livestock sector, does not drive food prices up. I suggest it probably keeps them down, because it keeps a level of production going, which is key as we leave the EU.
The Environment, Food and Rural Affairs Committee is conducting an inquiry into all the commodities. Some 70% of our exports go to Europe, so we need a combination of support payments, continuing into the future, and access to that market. We cannot have a New Zealand or Australian-style policy, because when the New Zealanders and the Australians got rid of subsidies they had virtually no regulation on their farmers whatsoever. The result would be a perfect storm were we to say, “Okay, we’ll allow all the food in. Let’s not worry about tariffs. Let’s have the cheapest food we can get from South America—Argentinian and Brazilian beef. Let’s get our sheep meat from New Zealand. Let’s not worry about the cost and the price of produce in this country.” We cannot do that, for the simple reason that we want an improved environment, and our farmers will have many controls, quite rightly, on the way we control water and nitrates, and the way we help to stop flooding. All those things are great benefits, but they come at a cost.
There needs to be a real policy, and I know the Minister is very keen to see that. I welcome the support payments, but whatever period we have them for, I do not want them to stay roughly the same and then fall off the edge. Whatever we do, we change the system of payment and move farmers in another direction. Certainly, we can make farming more competitive, and we can give grants and support, as my hon. Friend the Member for North Cornwall said, to help that happen. However, when it comes to livestock and the sheep and beef sectors, it is very difficult to see, given the present pricing structure, how those industries will thrive without some support.
The hon. Member for Bristol East (Kerry McCarthy) rightly talked about the availability and affordability of food. That is why we need enough production. We can have a great farm shop and a great tourist attraction, and we can sell food to our tourists—that is all great stuff—but it is perhaps 1% or 2% of the total production in this country. It is no more than 5% of food. We need to make sure, as we go into our large retailers as consumers, that we get British food. Back in the ’80s, around 80% of food was produced and consumed in this country, but that has gone down to 60%. Perhaps some tastes have changed. Even though we have a bit of global warming, I do not think that we can quite grow bananas, oranges and rice yet. Seriously, though, we still have a great opportunity to produce more food.
We also have a great opportunity to keep the environment sound. Where we draw water for our reservoirs, let us look at the amount of nitrates going into that water. Such things are important; however, every time we restrict a farmer in his or her operation, there is a cost. I do not think that our consumers and the population of this country really see the opportunity that that offers to support farming. I do not believe that we should control farming so much that we stop that production and the income from it. We have to do a combination of things. I know the Minister is very keen on looking at insurance policy and how we might remove some of the fluctuations in price. All of that is right, but the policy has to be a practical one that farmers can afford to buy into.
As we go forward, we must also look not only at ways to get new entrants in, but at our tenancy laws and how we rent our land. Perhaps slightly contrary to what I have been saying, as much as we like the support that comes to farming through the basic payment scheme, there is an argument that it drives rents up and can therefore make land, particularly for young entrants and other coming in, more expensive. As we target the payments, they must end up in the pockets of those who do the farming, manage the land and look after food production and the environment. I am very keen to see that that happens.
I do not believe that coming out of the EU will be a disaster, or that it will lead us to a great sunny upland where everything will be rosy—perhaps the Minister and I may slightly disagree on that. I think we have to be realistic as we leave. Food production is necessary. I am very fond of our Secretary of State, and I know that he loves to talk about the environment, but I want to hear more about food, farming, production and how we are going to feed the nation. It is important that we keep those exports going and that we have a market that works.
The environment is great, but we need a market along with the environment. We need profitable agriculture above all things. The Minister will know as well as I do that if someone goes to the bank manager and they are not making a profit, they will not stay in business for long. I have huge confidence in the Minister, and I am sure that he will have huge influence on the Secretary of State, so that when he gets to the National Farmers Union conference in a couple of weeks, we will hear about food production and how we will keep farming and food going in this country.
It is a pleasure to follow my hon. Friend the Member for Tiverton and Honiton (Neil Parish), and to serve under your chairmanship, Mr Bone. I refer hon. Members to the register of interests: I am an active farmer and a recipient of single farm payment.
Many people have referred to the speech at the Oxford conference, which was described in Farmers Weekly as
“one of the most important speeches for UK farming in living memory”.
I think that is testament to the vision that the Secretary of State has had. On the face of it, funds are guaranteed, but it is up to the devolved Governments to set their own policies.
I have been involved in the agri-food industry for my entire career. I believe passionately that productive agriculture and protecting the environment are mutually inclusive—having well-to-do, or economically viable, countryside is the best way to protect the environment. The vast majority of our countryside environment has been shaped by man. We should not kid ourselves that this is North America; this is not a big wildlife park. It is very important that the general public realise that the main purpose of agriculture or farmland is to produce food. Many hon. Members have spoken about the affordability and availability of food, which is what is ultimately important. It is estimated that every household contributed £400 to the CAP every year, but we have affordability, availability, and wholesomeness in food that we have never seen before. The policy framework must recognise the importance of affordability of food because, as the hon. Member for Bristol East (Kerry McCarthy) said, many people find it difficult to make budgets balance, and we cannot have wild fluctuations in the price of food. It is not good for farming.
I have been involved in produce for ever, or at least since I was in my 20s [Interruption.] Not quite for ever—I thank my hon. Friends for their asides. If the production goes up, the price goes down. We have to have a leveller.
I would also clarify that a support payment, not a subsidy, supports agriculture and the food industry—the biggest manufacturing industry in the country. The vast majority of payments are effectively reinvested in the business. Anybody who looks at agricultural statistics will see that farmers are not making a fortune in the islands; they are not making a fortune in Gordon and they are not making a fortune in Dumfries. It is important to recognise that.
We must bring to the debate the scale of British farming and the proportion produced in the different areas. It is important to realise that the scale of farming in the UK is, on average, bigger than in the rest of the EU. It is very productive and relatively efficient, despite the CAP. A system of payments that achieves environmental and productivity targets would allow a mix of farming. There are 19,700 claimants in Scotland alone. Some 8,000 of them claim less than £5,000, and it is obvious that there is a socio-environmental opportunity there, not just a purely agricultural one.
The National Farmers Union Scotland has its own negotiation to do with the Scottish Government, and I will not speak about Scottish policy here because that will be formed in Scotland, but I would clarify one point. There have been concerns about a DEFRA-centric approach to the devolved countries, despite Ministers being crystal clear that that is not the case. For absolute clarity, I would ask the Minister to state clearly that there will not be a DEFRA-centric policy dropped down on to Scotland.
It is clear from comments made by many Members that we want to see a common framework across the whole of the United Kingdom. That is just good practice. Farmers in Aberdeenshire have as much to do with farmers in Lincolnshire as they do in Essex; similarly up and down the west coast. It is very important that we have standards across the entire UK, and how they are policed is also important. England, Scotland, Wales and Northern Ireland should be policed effectively, perhaps by some sort of super-environmental agency, as DEFRA has suggested.
There is an 80/20 rule in agriculture: 80% of all production is by 20% of farmers. It is probably nearer to 10% to 90%. It is important to recognise that the affordability of food depends on scale and productivity. Having come from the retail sector, I have seen rapacious rationalisation by the supermarket. In the long run, that does not bring us any benefit; it brings far too much dependency on one or two very big players, which makes us very vulnerable to food scares or problems.
Affordable food is every bit as much a public good as the environment. They must go hand in hand and I hope the policy framework will respect that.
It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this important debate. Many of my points have been raised by other Members, so I will keep this short and sweet, and make three key points. First, I will touch lightly on the UK framework and funding; secondly, I will talk about the opportunity to do things differently; and thirdly, I will stress the importance of the environment and infrastructure in the development of UK frameworks.
In my constituency of Ochil and South Perthshire, agricultural industries are a cornerstone. They are involved in land and environmental management. They create jobs. They help integrate the economies of the villages and towns that make up the constituency. Although farmers are different, whether they are arable, livestock or dairy, and face different challenges in different parts of the country, there are some common challenges throughout the UK, including price pressures from retailers, international competition and the pressure on innovation and value. It is important when we develop UK frameworks that we recognise the differences throughout the United Kingdom, but also that we, as elected Members, make sure we are reaching through each part of the United Kingdom to recognise the common challenges faced in each of our constituencies, and that we make policy that works for the entire United Kingdom.
As my hon. Friends have outlined, funding and decisions on how the spend is distributed should be devolved, as currently. However, it is very important that, whatever the UK body turns out to be, the funding should be ring-fenced. When Westminster is putting money out to the devolved Administrations around the United Kingdom, that should be ring-fenced and protected, so that devolved Administrations, which may be under some political pressure, do not shift funding from agriculture into health or transport or whatever might be the subject of political pressure at the time—maybe even things such as IT systems.
When we devolve different areas of funding, as already takes place, we still maximise the benefit of being one United Kingdom together. Central Departments such as DEFRA have central resources such as IT systems. Perhaps the devolved Administrations should have freer access to those things, which could save money and help farmers with the receipt of payments and other administrative tasks.
My second point is about the opportunity to do things differently. The Secretary of State outlined in his Oxford speech that we have a chance to develop our own policies, shaped by our collective interests. I could not agree more. This is an opportunity to tackle the criticisms of the common agricultural policy. Anyone who studied politics or economics at Higher or A-level has been taught for many years about butter mountains and the inefficiencies of the system. This is our chance to address that. We can create a bespoke policy for our industries, not for one political party.
On the environment and infrastructure, we have stressed the importance of the protection of the environment and its preservation, but it is important to remember that my constituency and others across Scotland and the United Kingdom are not biscuit-tin communities. They are active, working, agricultural landscapes. We have to make sure that we are educating people across the UK to understand the value of the agricultural industries, which help preserve, protect and progress the environment as a working, living landscape.
This is a prime opportunity for us to start redirecting payments towards more infrastructure. In reports on broadband over the last week, rural parts of our country fall vastly behind urban parts. We have targets of 95%, reaching 100% under the devolved Administration, for superfast broadband. My constituency is at 83.3%. I hope that when forming policy we look not only at direct payments but at how we can help regenerate our towns and villages and make sure that our rural economies are as connected as our cosmopolitan ones.
It is important that in our UK framework we make sure that we devolve implementation so that we recognise the nuances, but pull together common resources where that will serve our constituents best; that we take note of the opportunity and grasp it with both hands in order to do something differently, and finally, that we recognise the importance of the environment but also the opportunity to invest in more infrastructure.
Thank you, Mr Bone. It is a pleasure to serve under your chairmanship today. I am not a farmer—I am perhaps unique in that. I do farm votes, however, and I am pleased to say that my productivity rates in every election have improved, so that means I am doing a good job for the farmers I represent. Indisputably, I represent the finest farmland in the United Kingdom, in east Yorkshire and northern Lincolnshire, which is some of the most productive. [Interruption.] I am pleased to hear the cheers of agreement from my hon. Friends.
I have a number of points to make, many of which have already been made, but as Members new to the House will have realised by now, that does not prevent somebody else from making them. I would emphasise the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael). I thought his speech was excellent and there was not much I could disagree with. Particularly important were his two points about a UK-wide framework and maintaining the integrity of the market within the UK. I entirely agree. It is an innovative idea to leave the European Union and then copy the European Union’s decision-making model, but it is one worthy of consideration.
In considering agricultural policy, we have to think in the broader context of the whole of food and drink in the UK and how we support that entire sector. What we do in the agricultural sector is so important in the supply chain through to the food and drink sector, which is such an important part of our exports. I am very involved in food and drink export promotion in my role as the Prime Minister’s trade envoy to Canada, and we need to ensure that policy is connected across Government with that in mind.
Comments have been made about labour flexibility. I am a Brexiteer, and I think we have made the right decision. Last night, I was a remainer, for staying in this place. I look forward to the second vote—obviously, we voted to leave by a very narrow margin.
I and most of my constituents fully understand that we have to maintain labour flexibility. I think most of the public will buy into an immigration system that we can trust, which matches skills to the areas of the country with shortages. Brexit gives us the opportunity to have a sensible, informed debate about immigration, as has happened in many countries, such as Canada and Australia.
I have another point here, but I cannot read my own writing—I used to be a schoolteacher—so I will ignore that. I agree with the comments that were made about animal welfare. My real reason for coming here this afternoon is that I want to talk about what we do in terms of our trade deals with the rest of the world. As I said when I intervened on the hon. Member for Bristol East (Kerry McCarthy), we must build trade deals on the basis of evidence. In the previous couple of Parliaments, I was very involved in the all-party group on transatlantic trade. It originally focused on the transatlantic trade and investment partnership negotiations, which of course are going nowhere, but eventually focused on the comprehensive economic and trade agreement.
I want to chide the Secretary of State slightly, because some of his comments about American food production and chlorinated chicken have not been helpful to our future relationship. Having access to the US market is incredibly important to British farmers post-Brexit, just as it is important for American farmers to gain access to our market. Any agreement must therefore be based on evidence. Let us look to the CETA model. In those negations, the language that Ministers, Secretaries of State and European Commissioners used was always modest—I will not say that it was not extreme, because that would be a terrible thing to say. The EU and Canada had big differences on standards. In particular, we had a 20-odd year dispute with Canada at the World Trade Organisation about hormones and antibiotics in beef, but it was resolved through CETA and has now ended. Of course, that beef is not coming into the European Union.
Where we have differences, it is still possible to negotiate a deal. Some of the comments that have been made about things such as chlorinated chicken have fed anti-American bigotry, which would not be accepted in any other relationship. There is a lot of evidence out there about chlorinated chicken. I do not propose to go into it, other than to point out that a person would have to eat a full chlorinated chicken to get the same amount of chlorine as they would get from one glass of water. I do not see many people advocating drinking or importing raw water. We must do this on the basis of evidence.
Some of the differences between the EU and the US are based on trade defence, rather than science, so let us have a scientific, evidence-based trade policy. The Secretary of State should be conscious of the fact that talking down the prospect of trade deals with a market as big and important as America is not particularly helpful. That said, it would be incredibly difficult to come to such a deal—I do not underestimate this—particularly if it includes agriculture. The all-party group on transatlantic trade went out and met various American food producers, including an American beef producer—he had a Stetson on—pork people and chicken people. I am not going to pretend that it will be easy to negotiate a deal. Given the agricultural propositions in CETA, it may well be very limited, but let us not buy into this bigotry. Let us ensure that our policy on agriculture and trading relations more generally is evidence-based. I hope the Minister will take that message back to his Secretary of State, who otherwise is doing an excellent job in his new position.
It is a pleasure to serve under your chairmanship, Mr Bone, and to start the summing up speeches.
We have had an interesting debate, but the most interesting aspect of it was what nobody said. Despite the fact that the overwhelming majority of those who spoke were Conservative MPs, nobody suggested that free-market capitalism should be the basis for the production of our most basic, fundamental commodity. The right hon. Member for Orkney and Shetland (Mr Carmichael)—I congratulate him on securing the debate—raised that possibility for as long as it took to shoot it down.
One thing is clear: whether we are in or out of the European Union, we need some kind of sustained Government intervention in our agriculture and food production industries. That is partly because where we have tried to run them through a free, unrestricted market, it has not worked. Does anybody seriously think we have struck the right balance between Tesco and the farmer with 50 or 60 cows, who is trying to get a decent price for their milk and to make sure that the person they sell it to this week will come back and buy it next week?
We have to be cautious, because although everybody can point to the faults, failings and weaknesses of the common agricultural policy, at the moment nobody knows what we are going to replace it with in 16 or 18 months’ time—perhaps in 30 months’ time if we get a transition and implementation period. We have to be very careful that we do not wait so long for a decision that there is a sudden shock to the system. Farmers are the same as workers in any other industry or business; sudden changes without adequate warning do not help them. I ask the Minister to guarantee that we will know about any decisions that are taken in plenty of time so people can adjust to them.
We have to remember that our agricultural industries are not just about the production of food. They also have a massive impact on the appearance and the very fabric of all the nations in these islands. The way that the land is farmed or worked makes a huge difference to its appearance, which makes a difference to its attractiveness as a place to live and has a huge knock-on effect, for good or for ill, on our tourism industry, for example.
Glenrothes and Central Fife does not look like the most rural, farming-intensive constituency in the United Kingdom, but I reckon about 1,000 households in my constituency live either in isolated homes or in homes in groups of two or three, scattered around the countryside. They do not all work full-time in agriculture, of course, but a lot of them do. My constituency is also home to Cameron Brig, the biggest grain distillery in Europe, and therefore perhaps the biggest customer for grain producers in Scotland—perhaps in the United Kingdom.
The hon. Member for Bristol East (Kerry McCarthy) made a very well-informed speech, which touched on a lot of areas that other hon. Members did not mention. She reminded us that Brexit is not just about what happens to the common agricultural policy; it is also about where workers come from and what conditions they work under.
On the affordability of fresh food, I think staff at my food bank in Glenrothes would beg to differ with the hon. Member for Gordon (Colin Clark), who said that food has never been more affordable. The hon. Member for Brigg and Goole (Andrew Percy) used a lot of his time to sing the praises of chlorinated chicken. We respect each other’s views in this place, so the hon. Gentleman is welcome to his opinion. He is also welcome to his chlorinated chicken, but I do not think many of my constituents will be too chuffed if taking back control means that someone else decides whether chicken can be chlorinated.
My point was that people should proceed on the basis of evidence. I am not an expert, but my simple point was that we should listen to what bodies such as the European Food Safety Authority say about such things, rather than rely on bigotry. I trust the experts, not those who buy into anti-capitalist, anti-American bigotry.
It would be nice if the Government’s approach to Brexit was based on evidence, facts and proper analysis, rather than ideology. The hon. Gentleman also welcomed the opportunity to have what he described as an informed debate about immigration. I think it would have been nice if we had had an informed debate about immigration, rather than the desperately ill-informed debate we had up to, through and since the referendum. We have not heard enough about the enormous benefit that immigration brings to these islands and will continue to bring if we allow it to do so.
The hon. Member for Gordon reminded us at Brexit questions this morning that, as far as agriculture is concerned, one size does not fit all. In fact, the danger is that one size very often does not fit anything, so nobody gets the result they need.
Anyone can work out that the needs of a hill farmer or crofter in the highlands of Scotland or in Wales are very different from the needs of a dairy farmer in the south of England, or indeed of a fruit grower in lowland Scotland or lowland Perthshire. That means that whatever framework is put together has got to be capable of being adapted and applied flexibly to ensure that the decisions taken are those that are most suited to where they are being applied.
I do not have an issue, and neither does the Scottish National party, with recognising that in some areas of public policy there are huge benefits to having one framework and one set of rules to apply everywhere. For example, animal welfare standards are common throughout the United Kingdom—good idea. Let us face it, they are going to be common throughout the United Kingdom and the European Union, because we will still want to be able to sell our stuff across the Irish border, so Northern Ireland will have to fit in with European Union standards in the longer term.
It is essential that a decision that something will be taken on a UK framework basis is a decision by consensus. I am waiting, as are a lot of people back home in Scotland, to hear the Government confirm that no UK framework policy will be decided without the consent of the devolved Administrations, and that once it has been agreed that something needs a UK framework, the content and detail of that framework will be agreed by consensus among the four equal partners in the Union, not simply imposed on us by a Government in Whitehall—nor indeed imposed on the farmers of England by a Government in Edinburgh.
I am not convinced that defining a specific voting system now would be particularly helpful. I would not have a problem with the system being more devolved in England, if only there were a government structure to allow that to happen, because farmers in Devon do not necessarily need the same response as the farmers of east Anglia—but that is for the people and representatives of England to sort out. If decisions are to be taken that will affect farmers in Scotland, it is essential those decisions are the right ones for Scotland. The best place for decisions affecting Scotland to be taken is in Scotland—if we want to, we can replace Scotland with Northern Ireland, Wales or even Cornwall.
Yorkshire, absolutely—we could possibly even split Yorkshire into north and south, if the hon. Gentleman wants to go that far.
Decisions used to be taken by Ministers or civil servants in the ivory towers of Whitehall and imposed on communities the length and breadth of these islands, but those days have simply got to be over. Scottish farmers produce a significant amount of our food and export earnings. They often provide employment, as the right hon. Member for Orkney and Shetland pointed out, in areas where there is not a lot of alternative employment. It is important that decisions that affect our farmers are taken by the people they elect.
To pick up on a final point, the hon. Member for Ochil and South Perthshire (Luke Graham) asked for complete ring-fencing of the funding. Perhaps, but only as long as the decisions about how much funding is to be allocated and what is ring-fenced are taken by consensus—
It is a pleasure to serve under your chairmanship, Mr Bone.
I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for securing the debate and recognising the challenges that we face in Cumbria. There have been many good contributions from Members across the Chamber. I thank my hon. Friend the Member for Bristol East (Kerry McCarthy) for expressing her concerns about food security and labour, which are an important part of the debate.
We have heard that British farming is critical to our economy, providing thousands of jobs and the cornerstone of our food production. It is therefore important for the Government to step up to the plate to get the best deal and maintain the high standards that we have heard about, to enable our businesses and farms to flourish and remain successful. When we negotiate our trade agreements, it is important to make sure that they work for British farming, while protecting the high standards of food safety and animal welfare that our consumers expect. As we have heard from a number of Members, it is important that any deals do not undercut British farming.
Food and farming need to be a clear strategic priority and a cornerstone of the broad industrial strategy that the Government are promoting. I agree that there is a clear need, as hon. Members have said, for a plan to enable food and farming to grow more, so that people have a greater appreciation of British food and are encouraged to buy British at every opportunity. We also need to look at the brand of Britishness to help us to export more and get others to appreciate our high standards.
It is important that we appreciate exactly what is at stake for the farming industry with Brexit. If we get it wrong, that is the nation’s food security, nutrition, environment and public health, as we have heard. Farming is an integral part of the Labour party’s vision of a fairer society—one that tackles the increasing social ills of food poverty, poor diet, environmental degradation and inequality. We believe that we must be ambitious in the creation of our new British agricultural policy, which should aim to establish a new deal and a consensus on what a modern farming industry can do for the economy, rural communities, consumers and the environment. Change cannot be left to market forces alone, as long as farming is critical to our food security and to stewardship of the natural environment.
We have to look at better food labelling, which is vital. If our farmers are to be able to compete fairly under any new trade deals, product labelling must be clear and unambiguous so that people know exactly what they are buying. Such labelling should include the country of origin and method of production.
As we have heard, the issue of farm labour is critical and immediate. Farmers and food manufacturers need to have access to a wider labour market. Without access to that labour, the agricultural sector and food manufacturers will face severe difficulties. A lack of labour will lead to consequences for UK agriculture. We could end up with product being left to waste, the movement of investment and operations out of the UK and, on top of that, price inflation for consumers.
At the moment, the profitability of many farms is too dependent on direct payments from the CAP. Because of the huge diversity in farming and the volatility in many areas, we need to consider how we can support farms to become more resilient, while mitigating the volatility. When it comes to replacing the CAP, we believe that a future payment system must broadly seek to do the following things. We need to look at how we target support to farmers who provide the most public good but may struggle to compete in the market, through no fault of their own—for example, the hill farmers in my Lakeland constituency. Any future system must be transparent as well as relevant. It must be easily accessible—we have heard about broadband—and cost-effective. It should reward environmentally sustainable practice and environmental stewardship, such as the management of habitat and natural resources. I believe strongly that we should recognise the cultural and historical landscape for the benefit of us all.
We should also support flood mitigation through land management, so we need to look at how any future programme can include that. We also need to include technological innovation, and consider how investment in it could meet the aims of improving resource efficiency and animal health and welfare, managing disease and adding value. It could also be used to encourage investment in machinery and software. It is important to support rural communities and family farms as part of any system. They, too, are central to the economy.
In short, any new system must enable profitable and sustainable farming businesses that support a vital and dynamic rural economy. Farmers tell me that their big problem at the moment is uncertainty about the future, so I am looking forward to hearing what the Minister has to say. I hope that anything being developed will provide that certainty and direction for our farmers, so that they can engage in long-term planning for sustainable future prosperity.
I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this debate. Like him, I am a farmer’s son. Unlike my hon. Friend the Member for Tiverton and Honiton (Neil Parish), I am not farming now, but I did try farming for 10 years. It is a real honour to be farming Minister at an exciting time: we have an opportunity, for the first time in half a century, to design fresh thinking and coherent policy in agriculture.
As the Minister for Agriculture, I have wrestled with the common agricultural policy, and the rules and bureaucracy, for four years. It is stifling. Although there have been changes to the CAP over the years, in its current incarnation it is a bureaucratic quagmire. It attempts to regulate every single field and every feature in them. Our administrators spend their time fretting about the width of a hedge: whether it is too narrow or too wide, whether the gateway is too big and whether there are too many trees on a parcel of land. It goes on forever.
Every Administration in the UK feels deep frustration at some of the bureaucracy in the CAP. We have an opportunity as we leave the EU to do things differently and to design coherent policy. We set out our intention in the Queen’s Speech last year to bring forward an agriculture Bill later this year. Before that, we will publish further plans about our initial thinking—some time later in the spring or in early summer.
The right hon. Member for Orkney and Shetland and others talked about the importance of UK frameworks. We absolutely recognise that and I think that all other parts of the UK do, too. As he pointed out, when we consider the UK framework, we will be looking predominantly at two areas: first, what is required to protect the integrity of the UK single market. Clearly, we could not have one Administration subsidising sheep farmers in a way that would be to the huge detriment of farmers in other parts of the UK. There would have to be some boundaries. Secondly, everyone accepts the need for UK frameworks when we talk about what is necessary to secure international agreements, be they on trade or other matters: things like phytosanitary, food safety and traceability issues to protect our export market. We will have to have some kind of framework and common outcomes and objectives to deliver those things.
I reassure the hon. Gentleman and others that we are engaging regularly with Ministers in all the devolved Administrations. We have regular meetings with them and in some of those meetings, different devolved Administrations lead on particular aspects. They have been updating us on some of the work that they have been doing. At official level there has been a very in-depth analysis, both to deliver what is necessary for the current European Union (Withdrawal) Bill and for the detailed work on the principles and features that a future UK framework will need.
Picking up on the point that my hon. Friend the Member for Gordon (Colin Clark) made, our critique of the CAP is that it is a one-size-fits-all policy, and it does not work for that reason. I want to ensure that leaving the EU and the CAP is liberating for everyone in this country—for all the devolved Administrations and for farmers right across the UK. As he put it, it is not our intention at all to have a DEFRA-centric, top-down policy. Far from it: we want to protect maximum flexibility and ability for each individual devolved Administration to design policies that work for them.
I will give an example of the sort of thing that we have to put up with. About 18 months ago, the Welsh Government got into a legal dispute with the European Commission because the Commission did not like the size and shape of the ear tag that they used as the second tag on cattle. I would have no intention of trying to dictate to other devolved Administrations what the size, shape or colour of their ear tags should be. All I would want to know is that they had proper traceability in place.
The right hon. Gentleman pre-empted me—I was about to get to that point. We were very clear in our manifesto that the budget in cash terms for agriculture policy will stay the same until 2022. My hon. Friend the Member for Ochil and South Perthshire (Luke Graham) asked the question: I reassure him and other Members that that applies to all parts of the UK. There would be no question between now and 2022 of any devolved Administration departing from that and using those funds for some other purpose—that would be a breach of the manifesto commitment.
As a Government, we have been very clear that we will keep the cash total the same until 2022, but we have given a very clear undertaking that we will seek to phase out over time the single farm payment and to replace it with the new environmental land management scheme, which will be funded. It is not the case that funding will end in 2022; at this stage we have not set out exactly what the figure will be post-2022, but we are absolutely clear that there will be a gradual transition and a funded policy to support our environmental land management scheme after 2022.
I am going to touch very briefly on a few of the areas that we are looking at in England as future policy. For a new environmental land management scheme we want to move away from the current direct payments, which are on an area basis. I do not think there is much sense for that. We want to directly reward farmers for what they do by way of delivering public goods—whether enhanced animal welfare or environmental goods. We want to move to a system where we are rewarding farmers for the goods that they provide. We are also looking at innovation and competitiveness, including the possibility of grants to support investment on farms, to help farmers prepare for a new world in agriculture.
To pick up on the point that my hon. Friend the Member for North Cornwall (Scott Mann) raised, we are looking at whether we can help support and foster the development of futures markets and insurance products to help farmers manage risks. We are looking at issues such as fairness in the supply chain, too.
The right hon. Member for Orkney and Shetland and my hon. Friend the Member for Tiverton and Honiton raised the issue of New Zealand. New Zealand is different: people often forget to take account of the fact that when it removed subsidies, it also devalued its currency by 45% and priced itself back into world markets. In doing that, New Zealand had certain problems with the environment—even today, New Zealand dairy has environmental impacts that we would not want to tolerate in this country. There are differences and there are things that we would not want to follow in the case of New Zealand. There are also things that we can learn—for instance, its support for investments on farms through grants.
I assure the right hon. Member for Orkney and Shetland that I regularly meet with NFU Scotland—I can see its members today in the Public Gallery, carefully watching the debate—and we are very keen to get its engagement; we are not allowing that to be something that just the Scottish Government do. As the UK Minister, I want a UK perspective. My hon. Friend the Member for Dumfries and Galloway (Mr Jack) mentioned animal welfare. I agree with him; we have prioritised it and we are looking at ways that we can incentivise and support high animal welfare systems of husbandry. As I said, it is a public good and we recognise it as such.
The hon. Member for Bristol East (Kerry McCarthy) gave some positive comments on what she has heard so far. I very much look forward to her supporting us in the Division Lobbies as we try to take the Bill forward on that basis. She mentioned the issue of labour; I was formerly a strawberry farmer and I understand the challenges that fruit farmers face. We have been working with the Home Office to discuss what work permit arrangements we might put in place for when we leave. The Migration Advisory Committee has just started a big piece of work to look at the labour market in the round. I agree with what the hon. Lady said about some of the work of the Food Foundation. Horticulture often has been overlooked, and we have an opportunity to address that. I attended the launch of the project that she highlighted.
My hon. Friend the Member for Tiverton and Honiton talked about some of the pressure on the uplands. We recognise that, but I had a very interesting conversation with the Uplands Alliance just last week; it pointed out that although they are financially more vulnerable, it believes that there are more things that they can deliver by way of public goods—whether peatland restoration, flood mitigation work or public access. There are many opportunities for it to do that.
Farmers are the recipients of subsidies, but they are not always the main beneficiaries. Subsidies distort all sorts of markets. We have an opportunity to do things very differently. It would be remiss of me not to mention trade with the US. It is difficult to assign the description of “anti-American bigotry” to the Secretary of State, who is quite an Atlanticist, but we recognise and value our high animal welfare standards and we are determined to protect them.
I thank all hon. Members who have taken part in the debate. I feel that we will return to this subject many times. In particular, I thank the Minister, who has been assiduous in addressing the points; he took copious notes throughout, but despite that, he still managed to send me an email at 3.30 inviting me to a reception to mark Cornish Pasty Week. I accept his invitation with some pleasure and look forward to discussing with him there the importance of protected geographical indications, of which Cornish pasties, Orkney beef and Shetland lamb are but a few.
Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14).