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House of Commons Hansard
Draft Food and Drink, Veterinary Medicines AND RESIDUES (amendment ETC.) (EU Exit) Regulations 2019
20 March 2019

The Committee consisted of the following Members:

Chair: Ian Austin

† Blackman, Bob (Harrow East) (Con)

† Brock, Deidre (Edinburgh North and Leith) (SNP)

Cryer, John (Leyton and Wanstead) (Lab)

† Debbonaire, Thangam (Bristol West) (Lab)

† Drew, Dr David (Stroud) (Lab/Co-op)

† Fysh, Mr Marcus (Yeovil) (Con)

† Killen, Ged (Rutherglen and Hamilton West) (Lab/Co-op)

Law, Chris (Dundee West) (SNP)

McGovern, Alison (Wirral South) (Lab)

† Martin, Sandy (Ipswich) (Lab)

† Rutley, David (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

† Seely, Mr Bob (Isle of Wight) (Con)

† Smith, Royston (Southampton, Itchen) (Con)

† Stevenson, John (Carlisle) (Con)

† Stewart, Iain (Milton Keynes South) (Con)

† Trevelyan, Anne-Marie (Berwick-upon-Tweed) (Con)

† Vickers, Martin (Cleethorpes) (Con)

Sean Kinsey, Committee Clerk

† attended the Committee

Ninth Delegated Legislation Committee

Wednesday 20 March 2019

[Ian Austin in the Chair]

Draft Food and Drink, Veterinary Medicines and Residues (Amendment etc.) (EU Exit) Regulations 2019

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I beg to move,

That the Committee has considered the draft Food and Drink, Veterinary Medicines and Residues (Amendment etc.) (EU Exit) Regulations 2019.

It is an honour to serve with you in the Chair, Mr Austin. Most of this statutory instrument, which was laid before the House on 13 February, corrects retained EU law on geographical indication schemes, or GI schemes, using the powers in the European Union (Withdrawal) Act 2018. The remainder makes a small number of amendments relating to wine and spirits provisions, and to veterinary medicines.

I turn first to the provisions on GIs. GI schemes provide legal protection from imitation for local and traditional food and drink specialities. They make up 25% of UK food and drink exports by value and together were worth more than £5.5 billion in 2018. Because of the number of relevant pieces of EU legislation, there are a number of EU exit statutory instruments that deal with GIs.

The instrument we are focusing on today has a pivotal role, as it sets the frameworks for the new GI schemes for agrifoods and aromatised wine; we will have lots of conversations about some of the other GIs, but those are for another day. Further SIs will complete those frameworks. This instrument enables the Government to administer and enforce those GI schemes in the UK after the UK’s withdrawal from the EU, and ensures that our GIs remain protected against imitation in the UK. Parliament approved the framework for spirit drinks last week and, in the next exciting instalment of the GI story, we will be putting the framework for wine before the House very soon.

Together with other legislation on GIs, this statutory instrument will ensure that the UK continues to comply with World Trade Organisation obligations after exit—specifically the agreement on trade-related aspects of intellectual property rights. I know hon. Members will be interested in the detail of exactly how the instrument will do that. It will provide a UK framework to administer and enforce GI schemes for agricultural products and foodstuffs, and aromatised wines, throughout the United Kingdom. It will enable applicants from the UK and third countries to apply for UK GI protection. It will also enable the number of UK GIs to continue to grow after we leave the EU.

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Whether or not we protect GIs here in the UK, will that have any further effect in the rest of Europe? If we introduce new GIs in the UK, will the rest of Europe recognise them?

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I will answer the hon. Gentleman’s question about new GIs later in my speech, but on the UK GIs that are currently in operation, our understanding is that the EU will continue to recognise those, because we are listed in its legislation.

In addition, the instrument will amend retained EU law on the method of analysis used to ensure that spirit drinks comply with the relevant rules. It also amends retained EU law concerning the documentation that must accompany the movement of wine and imported wine, the certification of wine and the registers that must be kept by wine operators relating to the wines handled by them.

The Government launched a public consultation in October 2018 to seek the views of stakeholders and the public about our proposed new UK GI rules. The majority of respondents supported the Government’s proposals. GIs are intellectual property and, as such, reserved. The relevant powers currently exercised by the European Commission will therefore be transferred to the Secretary of State. We have worked in partnership with the devolved Administrations on the whole of this instrument, and where it concerns devolved matters, they have given their consent.

I turn to the provisions on veterinary medicines. This is the second EU exit statutory instrument to cover veterinary medicines. The other, with which Opposition Members may be familiar, is the Veterinary Medicines and Animals and Animal Products (Examination of Residues and Maximum Residue Limits) (Amendment etc.) (EU Exit) Regulations 2019. That instrument has already been debated in, and accepted by, both Houses.

The instrument we are debating covers three areas of veterinary medicines. It transfers powers and functions to set maximum residue limits for veterinary medicines. It provides for veterinary medicines that have been approved by the European Medicines Agency to remain on the UK market. It also makes necessary consequential changes to the fees charged by the Veterinary Medicines Directorate, as set out in the Veterinary Medicines Regulations 2013.

Maximum residue limits are the maximum safe limit of a particular substance in produce from animals. These limits are used to establish withdrawal periods—the period that must elapse after the last administration of a medicine before produce from that animal may enter the food chain. The UK MRL-setting framework is necessary to ensure the safety of produce from food-producing animals.

Veterinary medicines are devolved to Northern Ireland, so the power to set MRLs is shared between the UK Government and the Department of Agriculture, Environment and Rural Affairs. The Department for Environment, Food and Rural Affairs will be able to act on a UK-wide basis with the consent of DAERA, and the Veterinary Medicines Directorate will continue to act as the UK-wide regulator to ensure consistency. In addition, this instrument brings across from the European Medicines Agency the existing MRL application fees of £62,300 for a new MRL and £18,850 to amend an existing MRL. As stated in the explanatory memorandum, these fees will be reviewed as soon as possible.

As a cost recovery agency, the VMD recovers its assessment costs from the pharmaceutical industry. Until the data is available in a few months’ time to underpin a more accurate cost base, the VMD will administratively and significantly reduce the fee, to better reflect the actual cost of the assessment. Once a robust cost base has been established, the fee in the legislation will be amended, and that will be subject to consultation.

Medicines approved by the EMA—there are only 389 of them—account for a small percentage of all veterinary medicines in the UK, at 13%. However, they are often novel treatments and substances, so it is highly important for these medicines to remain on the UK market after we leave the EU. This instrument provides for their conversion to UK national approvals, with no charge for the conversion. Pharmaceutical companies will not need to take any immediate action to enable them to continue to market their products in the UK.

Lastly, this instrument makes minor consequential changes to the fee schedule charged by the VMD for the function it carries out. Apart from bringing over the existing MRL fees, which I have set out, these are minor corrections, and no new VMD fees are being introduced.

The amendments proposed to schedule 7 of the Veterinary Medicines Regulations 2013 are merely to correct deficiencies arising from us leaving the EU. Without these amendments, the UK would be unable to regulate the marketing and use of veterinary medicines effectively. That would have negative impacts on business, as well as on our ability to protect human and animal health and the environment. This instrument will maintain the existing high standards for the safety, quality and efficacy of veterinary medicines.

In line with the Government’s better regulation principles, and given the small costs involved, a formal impact assessment has not been carried out. The impact on business has been assessed as being well below the threshold requiring an impact assessment. Although a formal public consultation has not been carried out, the Government have proactively engaged with the animal health industry to discuss how we ensure that the regulatory regime continues to function effectively after exit day.

Lord Gardiner of Kimble has met the Veterinary Pharmaceutical Association and the National Office of Animal Health on a number of occasions, as part of our extensive engagement. Officials from the Veterinary Medicines Directorate continue to hold regular meetings with key industry representatives. The industry has welcomed our proactive and continued engagement with it. NOAH has expressed some concern that introducing a separate MRL-setting regime for the EU could increase burden and cost on industry. The Government recognise that MRLs are key to facilitating trade in animal produce, and will therefore look to align with international standards when setting MRLs.

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In addition to the additional cost of this process, is there not a real danger that it will be difficult to carry out if there is a shortage of trained and professional staff?

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The good news is that we have those trained and experienced members of staff available, and we are ensuring that, whatever the eventuality, we will have the resources available for the change. As the hon. Gentleman has intervened, it is important for me to answer his previous question about whether the rest of Europe would recognise new GIs from the UK. That would not happen automatically; new UK GIs will still need to apply for EU GI status, although the Government will support them in that. However, existing ones would be protected.

The steps I have outlined will ensure high-level protection for human health. MRLs must be based on sound science and data; the UK has a proud and growing reputation in the area of food, and GIs play an important part in that. The Government are committed to protecting and celebrating the success of those products and driving further market access to make sure that they and other great British food are enjoyed around the world. For the reasons I have set out, I commend this statutory instrument to the Committee.

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I am delighted to serve under your chairmanship, Mr Austin, and to see the Minister in his place. We see an awful lot of each other at the moment, and will no doubt see each other again.

I start with our usual caveat: this is an incredibly complicated bit of legislation and, to be honest with the Committee, I have not completely got my head around it yet. It is very complex, bringing together a number of different issues that, in a normal state of affairs, we would look at separately and scrutinise in some detail. To make sure that we are all on the same page, GI refers not to an American serviceperson, but to geographical indication. That is quite important, because we will not have Cheddar cheese or various ciders if we do not get this right. We have to do our bit as an Opposition, despite the problems posed by the number and complexity of these SIs.

For this SI, I will start with something slightly different, and ask some quite complicated questions that I hope the civil service will be able to answer for the Minister or in tandem with him. If not, I hope that the civil servants will be able to write to me in due course through the Minister. Some quite separate issues have been conflated in this SI, so I am doing the best I can. I will start with some fairly complex, but nevertheless important, issues.

Paragraph 6.4 of the explanatory memorandum states that the maximum residue limits

“are set to protect consumers from residues of medicines in produce. These limits are used to establish withdrawal periods (the period that must elapse after the last administration of the medicine before produce from that animal may enter the food chain).”

My question is quite simple: how long are the withdrawal periods, and will those periods be the same length regardless of what happens next week?

Paragraph 6.5 states:

“This instrument provides for the conversion of veterinary medicines issued by the European Medicines Agency (EMA) to UK approvals in order for these products to remain on the UK Market.”

My question is whether UK approvals will be recognised in the EU market, or whether we will have to go through a different process.

My hon. Friend the Member for Ipswich has already picked up on the issue of costs. As NOAH has intimated, there is certainly some concern about the fee structures, because we are changing the mechanism by which these medicines are being regulated. If there are additional costs, are the Government aiming to defray those in any way? Again, we received no regulatory impact assessment, which is always very sad, because those assessments are supposed to provide that kind of information. We therefore have to rely on the Government to give us some indication of what those additional costs may be; there is certainly no such indication in the explanatory memorandum.

Paragraph 7.7 of the explanatory memorandum states:

“All GI applications will go through a single UK scrutiny and opposition process, rather than the two-stage process for applications”

that currently exists under the EU scheme. Will the Minister say something about whether that is sufficient? Could it limit scrutiny for geographical indications? Again, it is a matter of not just what is allowed, but what is not allowed. We all know the arguments about who claims Cheddar cheese and so on. These things can get terribly complicated if we are not careful. Producers get very hurt when their particular product is undermined by something that claims to be something that it clearly is not, yet people are able to sell it.

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Does my hon. Friend agree that where such controversies arise around geographical indications, we currently have recourse to debate, consultation and reconciliation processes in the EU, but we will no longer have recourse to them once we have left?

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Of course. At the moment, I am not quite sure what is in place and what is not. That brings me to my next point, about the appeals provisions for those who have made an application. The provisions say that those who have a legitimate interest can appeal to a first-tier tribunal. Is that tribunal set up, and who will be part of it?

Then we come to the logos. Logos matter here because they are the only way the general public can tell exactly what they are buying. Currently, the Government intend to introduce a new UK process, whereby geographical indications for a product will be clearly labelled in this country, but what ability does this country have to then negotiate with the EU over the acceptability of those logos in what will be a different marketplace?

I could go on at great length, but I am trying to get to the kernel of what the Government are trying to do with this legislation, albeit that it is largely a cut and paste from existing EU regulations. Paragraph 10.3 of the explanatory memorandum states:

“Respondents were happy with the proposed three year adoption period until logo use becomes mandatory on food and agricultural products.”

Why was a period of three years chosen, and will that period begin on 29 March or some date thereafter?

Finally in terms of my detailed questions, paragraph 12.2 states that changes to packaging requirements are the only ones

“introduced by this instrument that present significant cost implications”.

That brings us back to the issue of cost. Clearly, if we are changing logos and the way in which those logos are regulated, an additional cost is implied, at least in terms of the logo and the packaging. Why is there no mention of that in the legislation?

As the Minister rightly said, my friends at the National Office of Animal Health will be the ones mainly concerned with this legislation, because they are the representative body for veterinary medicines. I have to say that they are largely happy with it and with the way it is being carried through. The Minister was right that they had some questions about how it is going to work in practice. I certainly looked at the time periods, which is where NOAH is most quizzical regarding the changes in our relationship with not only the EU but third countries. Clearly, products will come to this country that will then be sold on to the EU. It would be interesting to know what discussions the Government have had, within and without this country, to ensure that this process is as seamless as possible.

This is one of those complicated SIs. Trying to struggle through it is very difficult. In terms of what it does, it is very important to so much of our agricultural produce, because that produce will be branded—it will have its own logo and its own statement of what it really stands for. We have to hope that the disruption is as limited as possible, but it is something we will have to watch.

It would be interesting to know what scrutiny the Government intend to carry out when and if there are complaints, and how they will handle those complaints. How can we be sure that food products, and particularly veterinary medicines—which are the bit that is most about safety—are being properly regulated? If there is a new system, such as a tribunal to which appeals will go, we will need to know that it is transparent and up and running. Those involved in making food products and veterinary medicines need to be sure that they will be able to sell them as far afield as they have in the past. That is something that has to carry on, rather than being threatened by huge disruption.

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Like you, I am sure, Mr Austin, I have sat on what feels like hundreds of these Committees where the purpose of the secondary legislation has, by and large, been writing back into UK legislation provisions that are being lost as a result of Brexit. This SI is an unfortunate exception, as it fails to maintain the provisions that protect our food and drink sector in trade deals around the world.

The EU’s protected geographical indicators have helped to protect the branding of our food and drink products. They have helped producers here to market their goods across the EU and wherever the EU has done trade deals, and they protect our overseas and domestic markets against cheap and inferior imitations. Cornish pasties cannot be made in Paris, Arbroath smokies cannot come from Budapest, Caerphilly cheese is always Welsh, and Comber new potatoes have to come across the sea from Northern Ireland. The same goes for Scottish salmon —both wild and farmed—Stornoway black pudding, Scotch beef, Scotch lamb, Orkney beef, North Ronaldsay sheep, Shetland lamb, native Shetland wool, Orkney cheddar, and of course whisky.

Scotland has one in six of the UK’s protected products, so Scotland, I am afraid, is once again being unfairly penalised by a Brexit we never voted for. Those protected products are also some of our most lucrative: our top food export is salmon, and our top drink export is whisky. Without the economic muscle and political might of the EU protecting those products around the world and across the EU, there is a real danger that their market share will slip and income from them will decline, with jobs and businesses at risk. All of that will be on top of losing the easy access to the EU market that we currently enjoy. The UK simply does not have the clout to protect those products in the way that the EU does.

There are also, I am afraid, examples of UK Government Ministers—it is difficult to tell whether they are still Ministers, but they are certainly Ministers who have served under the current Prime Minister—saying that some of those protections would be used as bargaining chips in trade negotiations. When giving evidence to a Holyrood committee in September, the then Minister for Trade Policy—he might still be Minister for Trade Policy; I am not sure—said:

“The GI issue is not…straightforward”

and that some countries see these protections as “barriers to trade”. That is why it is so worrying that this dubious piece of legislation gives up the protection of the EU system in favour of a system dreamed up by someone who has delusions of UK adequacy, but no grounding in what our food and drink sector will need to survive and thrive. I have absolutely no idea why anyone thinks it is a good idea to give up using the EU system, which we could have continued to participate in after Brexit, in order to try to build one of our own, which will at best be a pale and powerless shadow of the former.

We are lucky that the EU sees those trade protections as important, and will continue to respect UK indications after Brexit. The downside is, of course, that it will not enforce UK indications in third countries with which we have trade deals, and it will insist on the UK recognising EU protections. I quote a written answer given by President Juncker to a question lodged in the European Parliament:

“The European Union schemes for the protection of geographical indications…within the European Union territory apply, without discrimination, to European Union and non-European Union GIs.

After leaving the European Union, the United Kingdom…is expected to protect the GIs of EU-27 according to its domestic legal order and in compliance with its international obligations, including those of the World Trade Organisation (WTO). The same will apply in the European Union in respect of UK GIs.

It remains to be determined in the framework of negotiations whether any specific measures or agreement for the protection of GIs between the EU-27 and the UK would be appropriate following the United Kingdom's withdrawal.”

Admittedly, that was in September 2017, but attitudes in Brussels may no longer be as forgiving as they were, after the recent shambles.

We are walking away from a perfectly decent and fully functional set of protections to set up a whole new system for protections that cannot be as effective, will never be as powerful and will not have the reach or influence to do the job—it will not be as good but we will have our own system to do it. How ironic that those who complained the loudest about EU red tape are now setting up whole new bureaucracies in the name of taking back control. It is like a “Carry On” film. The SNP cannot support the regulations and I cannot allow them to pass unchallenged with anything like a clear conscience. I will be pressing them to the vote and voting against them.

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I thank Committee members for their contributions. I will seek to answer as many questions as I can, so they should bear with me. I seem to be spending more time with the hon. Member for Stroud than my wife at the moment, along with the other three musketeers on the Opposition Front Bench. I am sure that I am spending more time with SNP Members as well. These are important times, however, and we need to get through these SIs because of the momentous changes happening around us—or the potential for them to happen.

The hon. Member for Stroud asked an important question about withdrawal time periods, which are individual to products and the active substances within them. Existing withdrawal periods will not be affected by EU exit. To give some examples, the withdrawal period is seven days for eggs, 28 days for meat and seven days for milk. Hopefully that gives him some assurance.

The hon. Gentleman also talked about MRL fees. The important point to recognise is that the VMD works on a cost recovery basis, so it is looking to do all it can to ensure that it reduces the costs associated with MRL fees in future. I highlighted the cost of those fees, as does the SI, and I assure him that they will be significantly lower once the cost base has been established. That will be done administratively to start with, and put into legislation in due course. They will be much lower, which will of course be welcomed by the pharmaceutical businesses and producers involved.

Another important point I made earlier was that the instrument will ensure that the conversion of the medicines approved by the EMA—there are only 389 of them—to the UK approvals process will take place and that there will be no charge for the conversion. We are taking every possible step to ensure that the transfer of powers takes place and that the costs are lowered, to be more in line with the costs associated with them. In relation to conversions, the hon. Gentleman asked whether the products would be recognised in the EU market. EMA products are already approved in the EU; all other products are authorised on a national basis in the individual member state. As now, companies will need to apply to market products in the EU.

The hon. Gentleman raised a number of questions about geographic indications and whether single-step scrutiny was sufficient. I assure him and other hon. Members that the reduction to a single step will not reduce the rigour of the process. The EU process has two phases because it needs to allow for a national and an EU-level step—that is the way it has been set up. In future, we can do the same job in a single phase, but no less diligently. In fact, having a single-step process will reduce the burden on applicants, which can be considerable. I hope that addresses some of his points.

The first-tier tribunal is administered by Her Majesty’s Courts and Tribunals Service and was set up to handle appeals against administrative decisions made by Government regulatory bodies, among other things. Appeals on GIs are therefore part of its core business and experts can be appointed by the court. I hope that answers the hon. Gentleman’s question.

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I accept what the Minister has said, but this is very different work for the courts and tribunals system—very specialised. Will it be looking to appoint people who have particular knowledge of food and the food chain? Otherwise, it is going to be very difficult to arbitrate on some of these issues.

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I will get back formally to the hon. Gentleman on that point, but my understanding is that the court can appoint experts to help with particular issues. It is important to recognise that this SI also introduces additional appeals provisions as a result of the UK assuming the responsibility and functions previously belonging to the EU. In short, a person who thinks that the Secretary of State has got a decision or application wrong can go to this first tier tribunal to appeal against that decision. The appeal processes will cover all four regimes: agri-foods, wines, spirits and aromatised wines. The appeal provisions ensure that we comply with our obligations under the European convention on human rights. I will get back to the hon. Gentleman on his specific point.

A number of points were made about geographical indications. The hon. Gentleman asked when the three-year period would start. It will start from the day of exit. The whole point of having a three-year period is to enable time for the producers to adjust themselves and their packaging to the new situations. Protection of UK GIs in the EU will continue automatically after exit. They have been through the EU scrutiny process and they have earned the right to their place on the EU’s registers. To remove UK GIs from its registers, the EU would have to change its rules. If the UK GIs are removed from the EU registers, the Government will support UK GI holders in reapplying for EU GI recognition.

The key point here, certainly from the Government’s perspective, is that we should not lose sight of how important securing a deal is, for some of the very reasons we are talking about here, but we have processes in place should we find ourselves in a no-deal scenario.

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Can the Minister give us a little more information about how long reapplying to the EU to be on that register would take, and what kind of support he will give businesses to do that? Businesses have told to me they are worried about the length of time and the cost involved before they can be back on that register.

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With the hon. Lady’s permission, I will return to that point in a minute. I am sure I will get some inspiration to answer those points specifically, and if not, I will write to her.

I have answered several questions on the situation that we find ourselves in. I think that the hon. Member for Edinburgh North and Leith made an important point about Scotch whisky. When I was appointed to this role, one of the first things I did was to meet with the Scotch Whisky Association in Edinburgh, to understand its views on the matter. As she rightly said, it is vital for our export business, for the Scottish economy and, of course, for the UK economy as a whole. I respect the important work that it does.

As I said, the protection of UK GIs will continue in the EU, unless and until the EU decides to change its rules to remove UK GIs.

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I made a point about third countries in future trade deals and how protections might be dealt with in those circumstances. I am thinking particularly of evidence that we received in the Scottish Affairs Committee from Dr Maria Garcia of the University of Bath. She used Scottish whisky as an example. She said:

“Recognition of Scottish whisky and protection of that GI in trade negotiations will be much more difficult for the UK acting alone. It will have much less success, probably, in getting its demands met, than it would as part of the EU.”

What assurances can the Minister offer Scottish whisky producers and all the other people who are part of the PGI system in the UK that they will be protected in those sorts of trade deals in the manner needed?

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I understand the hon. Lady’s point. The Government are working with their global trading partners to transition EU free trade agreements and other sectoral agreements. That includes commitments on the recognition and protection of UK GIs. We are working to have bilateral agreements in place, ready for when we need them. If there is no deal, the Government will seek to bring into force bilateral agreements from exit day, or as soon as possible thereafter.

We have already signed a trade continuity agreement with Switzerland to continue trade worth £32.1 billion in 2017. We also signed a mutual recognition agreement for certain wines and spirits with the USA that will guarantee ongoing protection for Scotch whisky there. The UK has also signed trade continuity agreements with Chile, the Faroe Islands, Palestine, Israel and eastern and southern Africa states.

I can now answer the request for more information on the time and support available. An application could be made very quickly or old applications could be largely recycled. It is not possible to say how long the EU would take to consider an application but the UK would not charge any fees and nor does the EU. We would want to support businesses and work with them. I can talk to the hon. Member for Edinburgh North and Leith afterwards about some of the details because she has raised some important points.

To conclude, the Government are committed to ensuring effective arrangements are in place to protect GIs in the UK after we leave the European Union, enabling new registration to take place. The instrument is essential to achieve that. There are no substantive policy changes and only minimal modifications from the current EU regime. It includes the UK assuming powers that had been undertaken by the European Commission.

The instrument ensures continued levels of protection for this collection of GIs and assures consumers that they will still be able to procure products that meet the high standards to which they are accustomed. For those reasons, I commend the legislation to the Committee.

Question put.

Division 1

20 March 2019

The Committee divided:

Ayes: 9
Noes: 1

Question accordingly agreed to.

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That the Committee has considered the draft Food and Drink, Veterinary Medicines and Residues (Amendment etc.) (EU Exit) Regulations 2019.

Committee rose.