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General Committees

Debated on Monday 25 March 2019

Delegated Legislation Committee

Draft Trade etc. in Dual-Use items and Firearms etc. (amendment) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Sir Roger Gale

Ali, Rushanara (Bethnal Green and Bow) (Lab)

† Bardell, Hannah (Livingston) (SNP)

† Churchill, Jo (Bury St Edmunds) (Con)

† Cummins, Judith (Bradford South) (Lab)

† Davies, Chris (Brecon and Radnorshire) (Con)

† Eagle, Ms Angela (Wallasey) (Lab)

Efford, Clive (Eltham) (Lab)

† Green, Chris (Bolton West) (Con)

Hendrick, Sir Mark (Preston) (Lab/Co-op)

† Johnson, Dr Caroline (Sleaford and North Hykeham) (Con)

† Prisk, Mr Mark (Hertford and Stortford) (Con)

† Pursglove, Tom (Corby) (Con)

† Smith, Owen (Pontypridd) (Lab)

† Stuart, Graham (Parliamentary Under-Secretary of State for International Trade)

† Tami, Mark (Alyn and Deeside) (Lab)

† Watling, Giles (Clacton) (Con)

† Whately, Helen (Faversham and Mid Kent) (Con)

Hannah Bryce, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 25 March 2019

[Sir Roger Gale in the Chair]

Draft Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019.

I am pleased to open this debate on the draft regulations; they may not have a very catchy title, but I assure the Committee that they do a very serious job. Without these amending regulations, existing European Union law would not be effective in UK domestic law on the day we exit the European Union. Addressing that issue has been a vital part of our long-term planning since the European Union (Withdrawal) Act 2018 received Royal Assent.

The draft regulations include amendments that will allow the UK to maintain the EU laws that control exports of dual-use items—items that have both civil and military uses. They will also control the export of civilian firearms of the type used by hunters and sports shooters. If we do not retain and amend the relevant legislation, we will no longer control the export of such potentially dangerous items. That would put the United Kingdom in breach of international agreements that require us to impose such controls, which prevent military equipment from falling into the hands of those who intend this country harm.

Exit-related legislation provides the necessary legislative building blocks to ensure our readiness as a nation on exit day. The 2018 Act provides the Government with the tools to deal with deficiencies in domestic law that would arise as a result of our exit from the European Union, so it is right and proper that we use it for matters such as export controls. By making the draft regulations and the associated Export Control (Amendment) (EU Exit) Regulations 2019, my Department will have completed much of the legislative part of controlling the export of strategic goods in preparation for a no-deal scenario. If the draft regulations are no longer required on exit day, we expect to revoke or amend them; alternatively, commencement could be deferred to the end of an implementation period.

Broadly, all the provisions that today apply to exports from the EU customs territory will instead apply to exports from the UK. However, our leaving the European Union will mean that the rules will have to change, and we cannot guarantee that all the export licensing requirements with which UK exporters are familiar will remain the same. The Government have therefore made every effort to provide certainty for businesses and the public, wherever possible. We have published a new general export licence that provides for the export of dual-use items to all European Union member states and the Channel Islands. In August, we published a technical notice on export controls, which explained our plans for post-EU exit export control licensing. We have also included EU exit advice in the export control training programme and at the annual export control symposium, as well as giving extensive advice to key sector trade associations.

Hon. Members should be aware that the Joint Committee on Statutory Instruments has reported the draft regulations

“on the grounds that they require elucidation in one respect and are defectively drafted in three respects.”

On the first point, we have provided the Joint Committee with an explanation of why the transfer of technology by electronic means to the Isle of Man is considered to be an export, whereas the physical movement of goods is not: it is a consequence of our customs arrangements with the Isle of Man and is consistent with our controls on military goods and technology. The other three points we acknowledge as drafting errors, which we will correct in the near future, but none of which will affect the proper functioning of the regulations.

I hope that the House will work in the interests of our nation to ensure the passage of this legislation, which is essential to ensuring that we are prepared for EU exit. I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Sir Roger. The sifting Committee has drawn the draft regulations to the special attention of both Houses on the basis that their drafting is defective and that particular points require further elucidation. The Department has acknowledged the legislation’s flaws, but we are still considering the defective draft, as the Government have not withdrawn it or laid before the House a draft with the defective wording amended, so the wording of the draft before the Committee may not be the wording of the final statutory instrument. Can the Minister confirm whether the Government intend to amend the regulations in the light of the sifting Committee’s comments?

That Committee referred specifically to regulation 3(5)(f), which amends the final paragraph of article 4 of the dual-use regulation so that it reads: “This Regulation is without prejudice to the right of Member States to take national measures under Article 10 of Regulation (EU) 2015/479”. In its minutes, the sifting Committee noted that it was

“puzzled as to how domestic UK legislation could, after exit day, prejudice the right of member States to take national measures under EU law”,

and that

“the Department acknowledges that this is an error and undertakes to correct it.”

Regulation 3(22) amends annex I of the dual-use regulation, which lists dual-use items for which export authorisation is required. Category 9 lists items related to aerospace and propulsion, including assemblies and components that incorporate technologies for turbine engines

“whose design or production origins are either non-EU Member States or Wassenaar Arrangement Participating States; or unknown to the manufacturer.”

Regulation 3(22)(h)(ii) amends that provision by removing

“either non-EU Member states or”.

The sifting Committee noted that that amendment would require authorisation only when the design or publication of those items originated from such places as Norway, Canada, Japan, Australia or EU member states, or when their origin was unknown. The Department acknowledged that that was an error, and gave the Committee assurances that it would seek to amend the drafting.

The sifting Committee also asked the Department to explain why the words

“This Regulation shall be binding in its entirety and directly applicable in all Member States”

had not been omitted by regulations 3 or 4. Can the Minister clarify what steps have been taken to amend the defective drafting of this legislation to correct those errors?

The regulations are intended to ensure that the existing approach to export controls applied to dual-use items and firearms is continued once we have withdrawn from the European Union. For the most part, the draft regulations proposed by the Government seek to ensure that references to “the European Union” or “the Community” are replaced, where appropriate, by references to the United Kingdom, our customs territory or the Secretary of State. To that end, we recognise that the United Kingdom must seek to ensure that we maintain an export control regime that is effective immediately after we leave the EU. That must happen with minimal disruption to ensure that the regime is operable and that controlled goods are not inadvertently exported inappropriately.

We recognise the considerable contribution that a responsible, world-leading defence and security industry makes to the UK economy. We believe that strong export controls have a vital role to play in sustaining a legitimate trade in arms while protecting UK jobs and research and development. We want to ensure that a robust and rigorous control system is in place for dual-use items, firearms and other sensitive material. We have called for a tighter approach to our export controls regime and for the cessation of exports to countries where there is a concern that they will be used to violate international humanitarian law. Will the Minister set out how the Government intend to ensure that export restrictions can be imposed when the ultimate user may be applying that item to or in a jurisdiction where there are concerns about public security or human rights?

Regulation 3(8) provides for the deletion of article 8 of Council regulation (EC) No. 428/2009. That article covers member states of the European Union where they impose restrictions on exports not otherwise included on the EU’s military list. Although it may be necessary to omit that article given that we will no longer be members of the EU, we would welcome clarity on whether the Government believe that such measures are covered in the revised regulations.

The Minister will perhaps also clarify what the basis will be for determining what constitutes a human rights violation for these purposes, given that regulation 3(27)(d)(iv) amends Annex IIe of the European regulation to omit the reference to the charter of fundamental rights of the European Union. How, then, do the Government intend to define such a violation?

Will existing licences that have been granted under the current EU regime continue to apply once the UK has left the EU, or will exporters be required to seek new licences under the UK’s stand-alone regime?

The draft regulations will impose obligations on British exporters to obtain licences and demonstrate import permission in respect of goods or services to be exported to the EU27 once we leave the EU. Can the Minister tell us whether the Government have conducted any analysis of the impact on British businesses? It is quite possible that there will be a substantial increase in the administrative burden on the British companies that service customers in those markets and the European suppliers that feed into the supply chain of those businesses—let alone the re-papering exercise that may be required for compliance with the UK’s regime.

I would also be grateful if the Minister clarified the intent of regulation 3(3)(d), which will amend the definition of “broker” to include

“any United Kingdom person who carries out brokering services from a country within the European Union into the territory of another third country”,

and will place an obligation on

“any European Union national who carries out brokering services from the United Kingdom”.

How will that provision interact with obligations that might be imposed on those people by the EU? How do the Government intend to work with European counterparts in administering such licences?

Regulation 3(7) will omit the article of the European regulation that relates to the transit through the EU customs territory of a non-Community good that would otherwise constitute a controlled good. Omitting that article leaves a question about the UK’s handling of controlled goods that are transported through the UK and intended for a destination outside the UK. I would be grateful if the Minister confirmed how the draft regulations will capture such goods.

Finally, the underlying EU regulation makes numerous provisions for procedural harmonisation, dialogue and co-operation between EU member states, including a dual-use co-ordination group chaired by a representative of the European Commission. The draft regulations would omit those obligations, which are set out under articles 11, 14, 16, 19, 22 and 23, among others. I would be grateful if the Minister advised us whether the Government intend to continue a formal dialogue with our European counterparts to ensure a common approach to restricted exports.

It is a pleasure to serve under your chairmanship, Mr Gale. The Minister’s answers to the admirably and forensically prepared questions of my hon. Friend the Member for Bradford South will clearly be important, but I want to ask something slightly more overarching.

The draft regulations relate to complex but important EU regulations on export controls for all kinds of goods, including firearms and technology, that we would not want in the hands of non-democratic state actors. They will disentangle us from an EU regime of long standing. My hon. Friend asked important questions about how we intend to continue working with our EU partners, despite being disentangled, to ensure that we do not become a conduit for dubious activities as a result of loopholes in our systems.

With reference to the regulation that addresses the UN protocol on ammunition, I assume that the Minister can tell us a little about how his Department deals with the issues in non-EU contexts. I hope he will reassure us that if we are disentangled from the EU’s structures, his Department will have enough people and resources in place to ensure, first, that we have a regime robust enough to guarantee that we do not create loopholes that might attract prospective smugglers, and secondly that the Department can deal with what will undoubtedly be an increased workload in an appropriate way that does not put us at risk.

I thank Opposition Members for their contributions. We have discussed the importance of maintaining robust strategic export controls, and a number of questions have come up. I thank the hon. Member for Bradford South for her forensic questioning, as the hon. Member for Wallasey rightly described it, on the important issue of maintaining effective controls after we have left the European Union, and will pick up on a few of the points that she raised.

Existing licences will still be valid; however, exporters from the UK who have a licence from the EU will need to seek new licences from the EU. The hon. Member for Bradford South rightly raised the impact on business. The export control joint unit has minimised additional administrative burdens for business by making available an open general export licence—OGEL—for exports to the EU. Exporters can register for one easily through our SPIRE online platform. Our assessment is that that will not have a significant impact on exporters.

Both hon. Members who spoke raised the question of future co-operation with the EU. The form of dialogue with the EU will be a matter for negotiations on our future economic partnership with the EU. We will continue to maintain robust controls on brokering. Transit is controlled under the Export Control (Amendment) Order 2018.

I have been clear that the Government remain committed to using the draft regulations to maintain the high-quality controls that we have discussed. We have a responsibility to ensure the safety and security of our people, and the legislation supports that objective. On that basis, I call on my fellow hon. Members to support the motion.

Question put and agreed to.

Committee rose.

Draft Customs Safety and Security Procedures (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Sir Henry Bellingham

† Braverman, Suella (Fareham) (Con)

Burden, Richard (Birmingham, Northfield) (Lab)

† Cowan, Ronnie (Inverclyde) (SNP)

† Goldsmith, Zac (Richmond Park) (Con)

Hoey, Kate (Vauxhall) (Lab)

† Kawczynski, Daniel (Shrewsbury and Atcham) (Con)

† Knight, Julian (Solihull) (Con)

Kyle, Peter (Hove) (Lab)

† Lewer, Andrew (Northampton South) (Con)

† Mann, Scott (North Cornwall) (Con)

† Mills, Nigel (Amber Valley) (Con)

† Peacock, Stephanie (Barnsley East) (Lab)

† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)

† Smith, Jeff (Manchester, Withington) (Lab)

† Stride, Mel (Financial Secretary to the Treasury)

† Walker, Thelma (Colne Valley) (Lab)

† Whittaker, Craig (Lord Commissioner of Her Majesty’s Treasury)

Yohanna Sallberg, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Monday 25 March 2019

[Sir Henry Bellingham in the Chair]

Draft Customs Safety and Security Procedures (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Customs Safety and Security Procedures (EU Exit) Regulations 2019.

May I say at the outset what a pleasure it is to serve under your chairmanship, Sir Henry? The Government’s priority is to leave the EU with a deal that works for citizens and businesses, as set out in the withdrawal agreement and the political declaration. That would, of course, avoid a no-deal outcome. However, as a responsible Government, we have a duty to plan for all scenarios, to minimise the disruption to businesses and individuals.

We are here to consider a statutory instrument that is part of the Government’s package to prepare for the possibly of the UK leaving the EU without a deal. The instrument relates to the safety and security of goods entering and leaving the European Union. By way of background, the Union customs code provides the current legal framework for implementing safety and security policy across the EU. The legislation sets out that the movement of goods into and out of the EU requires entry summary and exit summary declarations, also known as safety and security declarations. For example, shipments from the US or China require a safety and security declaration before entering the European Union.

In the event of the UK leaving the EU without a deal, UK importers and exporters will be required to complete safety and security declarations for goods to and from the EU, as well as the rest of the world. The information in the declarations will be used as part of the overall risk assessment conducted by our border agencies to detect threats to our security. The Union customs code as it exists immediately before exit day will form part of domestic law from the day that we leave, and it will continue to apply to the UK as retained EU law by virtue of the provisions of the European Union (Withdrawal) Act 2018.

However, the code was drafted to apply to EU member states and will not work as effective legislation for the UK without amendment. Amendments are required to replace references and terminology that will no longer be valid in the event of leaving without a deal. It is vital that we make those amendments, so that the UK has safety and security legislation in place after we leave the EU. That will ensure that we are able to protect our borders by requiring safety and security declarations on goods coming from the rest of the world just as now.

We have engaged with industry on the introduction of the new requirement for imports from the EU. Industry was clear that it would be challenging, if not impossible, to be ready for that new obligation on day one. We also considered the risk from goods from the EU if we leave at the end of this month without a deal. Given that the EU’s rules and standards are not changing, our view is that the risk to the UK after we exit the EU will not increase on day one. As such, the instrument also introduces a provision to phase in the requirement for entry summary declarations on EU goods after 29 March, or on such date as we may leave the European Union. Therefore, until at least 1 October 2019, we will not require entry summary declarations on goods imported into the UK from the EU, and other territories where we do not currently require them—for example, Switzerland and Norway. That will give traders a transitional period of six months from the day the UK leaves the EU. Carriers will be legally required to submit safety and security declarations after that transitional period.

When the UK leaves the EU, a separate customs union will be created between the UK and the Crown dependencies—the Channel Islands and the Isle of Man. The instrument includes a provision to ensure that the movements of goods between the UK and the Crown dependencies do not require safety and security declarations.

I should also be clear about the effect of the SI on the border between Northern Ireland and Ireland. The UK Government have committed to avoiding a hard border, and we will do everything in our power to ensure that no physical infrastructure or related checks and controls are introduced at the border in the event of no deal. Safety and security declarations will not be required for goods moving between Northern Ireland and Ireland. However, they will be required for goods being imported to and exported from Northern Ireland from other territories, unless the movement is covered by the transitional period introduced by the safety and security instrument, which applies to all of the United Kingdom.

To conclude, the instrument ensures that the UK will continue to have a robust and operable safety and security regime in place after its departure. It also allows businesses more time to cope with their additional responsibilities in meeting safety and security requirements, and ensures that the UK-Crown dependency trade flow is facilitated without compromising safety and security. I commend the regulations to the Committee.

It is always a pleasure to serve under your chairmanship, Sir Henry. Once again, we are here to discuss a statutory instrument that makes provision for a regulatory framework after Brexit in the event that we crash out without a deal. On each occasion, I and my Front-Bench colleagues have spelled out our objections to the Government’s approach to using secondary legislation to enable the process.

An issue raised repeatedly by Opposition Members is the impact of a no-deal exit on our ports system. I thank the Minister for his introductory explanation of the SI. My understanding is that, in the event of a no-deal Brexit, goods coming into the UK from the EU, Norway and Switzerland would be able to enter without having to submit safety and security information for a period of six months. I assume that the measure is designed to prevent gridlock at the ports, but the Opposition are troubled by the potential chaos that could occur if we do not get some resolution by the end of this week.

Paragraph 3.4 of the explanatory memorandum to the SI effectively admits that ports, hauliers and ferry operators are not ready. There has been unbelievably poor planning by the Government and it is something we have warned about since the passage of the customs Bill a year ago. The explanatory memorandum explicitly states:

“There is a strong possibility that businesses, such as hauliers and ferry operators, will suffer immediate hardship if the UK leaves the EU without a negotiated deal. They do not have the systems in place in readiness for exit day.”

How have the Minister and the Government allowed that to happen? How is it that restitution of a temporary way forward is being proposed only four days away from our proposed exit date?

The Opposition are concerned about how the exemption could increase the level of smuggled goods and undermine security, particularly at a time when threats to national security are rising. What safeguards do the Government propose to protect against both those risks? Furthermore, what are the implications for the collection of taxation if we are to forgo collecting taxes at the border simply because we do not have the capacity to do so? That is the Government’s stated approach, and the Financial Secretary to the Treasury himself gave evidence to the Treasury Committee last summer, admitting that keeping the ports open would take priority over collecting tax. But how long is such chaos expected to be justified? What assessment has the Treasury made of the potential loss to taxation?

Her Majesty’s Revenue and Customs is already struggling against the weight of the cuts already sustained and the new burdens placed upon it as we leave the EU. We seem to be contemplating potential chaos at our borders. As the Opposition have previously warned, it will be worsened by the serious issues concerning the roll-out of the customs declaration service. The Office for Budget Responsibility stated in its economic and fiscal outlook, published at the spring statement, that the Government’s new customs declaration service has processed just 500 declarations from four traders in seven months, since its launch last August. Yet it was built to handle 300 million import and export declarations. That is extremely worrying. One way to prevent the short-term chaos that we seem to be talking about is to consider staying in a customs union with the EU, as Labour has consistently argued.

I also want to ask the Minister what checks and balances will be placed on the powers. What is to stop us reaching the end of the six-month period and simply extending the process once again by statutory instrument? We would therefore effectively be in a de facto customs union, but without the wider scrutiny of Parliament and the wider benefits that such an active decision would bring. A sunset clause on the extension of the powers would have been an important component in preventing that.

To conclude, this seems an extraordinary statutory instrument to be discussing this week. I have huge concerns about whether this is the right way forward, and I very much want to hear the Minister’s further justification of these measures.

I have sat on numerous Delegated Legislation Committees—I am sure that most of us have—but most of them tend to be a nod through and we understand why. However, I have real concerns about this SI. The chaos of the plans will reflect across the economies of these islands. It demonstrates why a no-deal Brexit should be ruled out. I consoled myself that we are trying to cover all potential outcomes, which is a responsible thing to do, requiring a belt-and-braces, “ball of string in your pocket” attitude. However, after further scrutiny, I see that the legislation applies to England, Wales and Scotland, and it will sort out Ireland in a few weeks.

The Government have already admitted that border operations will be less than optimal on day one in any no-deal scenario. Even in six months’ time, when the border issue has been magically solved, it will take years to hire, train and equip the necessary personnel to enforce the customs and excise regulations, collect taxes and tariffs, enforce immigration legislation and provide veterinary checks. HMRC will need systems to track goods, and Border Force will need space and facilities to examine people and goods physically, but we cannot start building that infrastructure because ports and airports need certainty about the future arrangements before they can invest in the bricks and mortar.

This legislation delineates Northern Ireland’s regulatory regime from the rest of the United Kingdom—exactly the opposite of what the Prime Minister has promised her allies in the Democratic Unionist party. The explanatory memorandum notes that:

“Further details on the arrangements for trade between Northern Ireland and Ireland will be published as soon as possible.”

We cannot go on this way. It will not be all right on the night. There is no solution to the Irish border issue that will allow the UK to leave the single market and the customs union with Northern Ireland retaining regulatory alignment with the rest of the UK. The legislation is premised on a false promise that there will be a solution to the border issue in a few weeks’ time. I was born and raised in the west of Scotland, which has a very strong link with Ireland and its politics. It is clear to me that Westminster does not. I shall be opposing this SI.

I thank the hon. Members for Stalybridge and Hyde and for Inverclyde for their contributions, which I will address in turn. The hon. Member for Stalybridge and Hyde talked about his dissatisfaction that this matter is being dealt with via a statutory instrument. Of course, the primary legislation under which these powers are being made was debated at considerable length in both Houses of Parliament, and the matters he raised were debated at length at that time. He said that he is concerned about the six-month delay in introducing these measures. As I explained, that is in order to address and ameliorate the concerns that businesses, hauliers and the ports themselves raised in our discussions with them. I should point out that the status quo does not require the safety and security regime between us and the EU27.

The hon. Gentleman rightly spoke about the challenges to businesses in a day one no-deal scenario, and he raised the issue of potential friction and problems at the border. He used an expression that I have used myself on many occasions: he said that this would all be suboptimal if we leave on a day one no-deal basis. That is, of course, the very reason why we are taking the responsible and measured approach of allowing a six-month delay to bring in this requirement for the traders and businesses whose trading arrangements with the EU27 he quite rightly seeks to protect.

Am I right that the EU requires declarations on the import of goods into the EU and the export of goods out of the EU? Does the Minister have any indication of whether the EU will reciprocate in not requiring declarations for six months? Will we merely just not have the UK side of a declaration? Either way, the thing will have to be made anyway, so we will not achieve quite the work saving that we are hoping for.

My hon. Friend is right in the sense that, as is the case for our exports to and imports from the rest of the world—in other words, outside the EU’s customs union—there are safety and security requirements. What the European Union will do in the event of a day one no-deal situation is for it to determine; clearly, exactly what happens is not within our control. In exactly the same way, the arrangements that it may or may not put in place at its ports across the short channel straits, in relation to customs declarations, duties and tariffs, will be for it to decide. We can focus on what we can do to make sure that the day one no-deal scenario is as comfortable as possible for businesses impacted and that, wherever possible, trade flow is prioritised across our borders.

The hon. Member for Stalybridge and Hyde drifted to some degree into the issue of taxation raised, by which I think he meant the customs duties on trade with the EU27 that may be applicable at our border in a day one no-deal scenario. We have always made it clear that trade flow will be our priority. There will still be arrangements in place to collect customs duties, but those customs duties are new duties—they are not levied at the moment. In terms of revenues forgone, this is the forgoing of revenues that we are not entitled to under existing arrangements.

The hon. Gentleman also asked whether the customs declaration service would be ready for the increased trading volumes that would be involved in a day one no-deal scenario. He is right to raise the issue of increased activity; we estimate that there are 145,000 VAT-registered businesses who trade solely intra-EU at the moment, and probably another 100,000 who are below the VAT threshold, making almost a quarter of a million in total. That will mean an increase in the requirement for CDS, but we have made it clear that in parallel with CDS we have upgraded and maintained the ability of the CHIEF—customs handling of import and export freight—system to keep up with those increased volumes.

The hon. Gentleman then asked what will happen at the end of the six-month phasing in of those measures, and what is to stop Parliament deciding to go for a further period of delay in bringing in the measures. As I am sure he knows full well, there is nothing to stop Parliament doing virtually anything it wants when it comes to legislation, but it will have to do that via due process, coming back to a Committee of the House in order to do so. On that basis, I commend the draft regulations to the Committee.

I am grateful to the Minister for, as ever, batting solidly for the Government about the proposed measures. I was struck by two things he said. First, a no-deal situation is the purest form of Brexit, in the sense that it is the minimum level of co-ordination with our European colleagues and the strongest articulation of sovereignty over prosperity available of the options. Even under that scenario, what the Government are offering is essentially our being a supplicant to the European Union. For the reasons of keeping the country open, we would be forced to forgo the checks and balances that we could wish to impose, while not having any assurances from the European side that that would be reciprocated.

Secondly, it is a year since we had the customs Bill. The one thing we knew about Brexit was that it would increase friction at the ports; it would make the need for more capacity in the UK more evident. To be in this position in the final week of March is extraordinary. It is extraordinary to have an explanatory memorandum for a key statutory instrument that tells us we are not ready for the one thing that we knew was a distinct possibility. On that basis, I recommend that we divide the Committee.

I sympathise with the hon. Gentleman’s point about no deal, because it would be a suboptimal arrangement to end up with, but an option will perhaps come before Parliament shortly to ensure that we can avoid that. I suggest that Opposition Members think carefully about that particular point when they file through the Lobby.

Committee rose.

Draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019 Draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 Draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 Draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: David Hanson

† Bruce, Fiona (Congleton) (Con)

† Burns, Conor (Bournemouth West) (Con)

† Debbonaire, Thangam (Bristol West) (Lab)

† Drew, Dr David (Stroud) (Lab/Co-op)

† Eustice, George (Camborne and Redruth) (Con)

† Goodwill, Mr Robert (Minister for Agriculture, Fisheries and Food)

† Heald, Sir Oliver (North East Hertfordshire) (Con)

† McLoughlin, Sir Patrick (Derbyshire Dales) (Con)

† Newlands, Gavin (Paisley and Renfrewshire North) (SNP)

† Newton, Sarah (Truro and Falmouth) (Con)

† Pollard, Luke (Plymouth, Sutton and Devonport) (Lab/Co-op)

† Rashid, Faisal (Warrington South) (Lab)

† Reeves, Ellie (Lewisham West and Penge) (Lab)

† Seely, Mr Bob (Isle of Wight) (Con)

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

† Streeting, Wes (Ilford North) (Lab)

† Western, Matt (Warwick and Leamington) (Lab)

Ben Street, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Monday 25 March 2019

[Mr David Hanson in the Chair]

Draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019

With this it will be convenient to discuss the draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019, the draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 and the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019.

We are all keen to get on today, are we not? I welcome a star-studded cast of Members on both sides of the Committee, especially my immediate predecessor, my hon. Friend the Member for Camborne and Redruth. For any particularly difficult questions that I cannot answer, and my officials cannot enlighten me on, I am sure that we can rely on him.

As a farmer myself, and given the family business’s participation in an agri-environment scheme, I mention my entry in the Register of Members’ Financial Interests.

The matters in the four draft statutory instruments are closely related, and I thank the Committee for taking the logical and sensible step of considering all four together. With a number of small exceptions, which I will explain shortly, the regulations will make purely technical amendments. The amendments are necessary to address European laws being brought on to the UK statute books in a partially inoperable form and to enable the common agricultural policy and the Agriculture and Horticulture Development Board legislation to continue to function as it does today.

The instruments are not solely required in a no-deal scenario and, in the event of an agreement, they will ensure that the current legislation remains operable at the end of any implementation period. The statutory instruments will ensure that the UK Government are able to meet their commitments to funding in the agricultural sector. The Government have pledged to continue to commit the same cash total in funds for farm support until the end of this Parliament, which is expected in 2022, and that includes all funding provided for farm support under both pillar one and pillar two of the current CAP. That commitment applies to the whole of the United Kingdom.

The UK Government have guaranteed that the existing level of agricultural funding under CAP pillar one will be upheld until 2020 as part of the transition to new domestic arrangements. The UK Government have also guaranteed that any rural development projects for which funding has been agreed before the end of 2020 will be funded for their full lifetime.

As the Committee is well aware, agriculture and fisheries are devolved policy areas, and are of special importance for all parts of the UK. We have worked closely with the devolved Administrations to produce the draft instruments, and they place great importance on them. They have given their consent to the instruments.

I will outline the three CAP draft statutory instruments in turn. They will enable regulations to continue to operate effectively. They do not introduce new policy, and they preserve the regime for supporting CAP beneficiaries. Amendments in the instruments include omitting redundant references to the “European Commission” and “member states”, and amending references to “Union law” throughout, so that the retained European Union regulations continue to operate effectively as part of national law.

One purpose of the modifications is to ensure continuity and clarity as to who is responsible for the implementation and administration of the CAP schemes. The obligations and discretions currently placed on member states will continue to be exercised after exit by relevant authorities in the United Kingdom. In that context, a “relevant authority” is the Secretary of State, Scottish Ministers, Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.

The draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019 amend five different EU regulations that give the European Commission powers to change existing legislation relating to the financing, managing and monitoring of the CAP, direct payments, the rural development programmes and the fisheries programme funded by the EMFF, the European maritime and fisheries fund. The five regulations work together to provide the necessary powers to ensure the smooth functioning of the CAP and EMFF-funded fisheries schemes in the light of economic, scientific and environmental changes. For example, the Commission is currently empowered to make legislation adding to a list of practices equivalent to crop diversification in the light of developments in the sector. The regulations also provide powers to, for instance, update the model used to estimate the net revenue of an EMFF or rural development project if a more accurate model becomes available.

As its title suggests, the instrument makes amendments to confer existing legislative powers on the appropriate authorities, which as I have mentioned are either the Secretary of State or the relevant Administration of each constituent nation. The amendments largely consist of replacing references to “the Commission” with “the appropriate authority” or “the Secretary of State.” The instrument also contains operability changes relating to the EU financial discipline mechanism. That mechanism ensures that the pillar one budget, which is the budget for direct payments and agricultural market measures, is not exceeded. It works by reducing the value of direct payments if forecast expenditure on pillar one exceeds a predetermined budget.

The SI makes changes to prevent the financial discipline mechanism becoming inoperable. As agriculture is devolved, the Administrations have each assessed what amendment is appropriate to remedy that inoperability. Devolved Administrations have chosen to omit the financial discipline mechanism, whereas England has chosen to use the powers contained in the European Union (Withdrawal) Act 2018 to make financial discipline operable on an England-only basis. For England, operability amendments are made to financial discipline provisions, to ensure that the mechanism is compatible with existing EU domestic funding practices. That does not constitute a new policy, as that mechanism currently applies in the EU.

The draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 amend the retained EU law that sets out the overarching framework for how the CAP schemes function, governing the financing, managing and monitoring arrangements that underpin schemes. They remove the EU audit and accounting regimes, which would clearly no longer be appropriate for Exchequer-funded payments. Those regimes will be replaced by the domestic system that currently operates in parallel to the EU system, to provide equivalent assurances to our Parliament. Under that domestic system, current levels of checks and scrutiny regarding CAP payments will be retained.

The draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 make technical amendments to the supplementary regulations, which set out detail about the financing, management and monitoring arrangements for the CAP schemes. This instrument ensures the operability of five different pieces of EU law, making sure that the management and monitoring aspects of the retained EU legislation maintain current standards after exit. That includes setting out further detail about how checks to beneficiaries should be carried out, and how penalties should be applied to those found to be in breach of the legislation. The instrument also pertains to five other pieces of retained EU law. Four of those are implicitly tied to EU audit and accounting systems, which as I say will be replaced with the existing domestic equivalent. The final revoked piece of EU law relates to the EU policy monitoring system, which again will be replaced by our existing domestic policy evaluation process.

Finally, the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019 make operability amendments to domestic regulations made under the European Communities Act 1972, and implement certain provisions of the EU common agricultural policy. I draw the Committee’s attention to the fact that we re-laid the explanatory memorandum for this instrument on Thursday last.

In the memorandum that was withdrawn, paragraph 4 —which deals with the instrument’s extent and territorial application—stated that the amendments to the Agriculture and Horticulture Development Board Order 2008 apply to the UK. In fact, although parts of that order apply to the UK, the amendments proposed in relation to horticulture in this instrument apply to Great Britain, and those that relate to the red meat levy apply to England only. That reflects the territorial coverage that the levy body, the AHDB, has for specific sectors, which is now presented correctly in the explanatory memorandum. That correction has no impact, other than to align that memorandum with the instrument we are debating. I apologise for any inconvenience it has caused, although I am sure that most Members present had spotted that issue when preparing for today’s Committee.

As well as operability changes to domestic regulations under the European Communities Act 1972, the SI also amends one order concerning the Agriculture and Horticulture Development Board to address two operability issues arising from the United Kingdom leaving the European Union. In one case, that has required us to make a small policy change. Currently, a minor levy exemption applies to livestock imported from another member state and slaughtered in England within two or three months of being imported. For continuity, we retain the exemption. To ensure that we are then in line with World Trade Organisation rules and are not favouring the EU, we are extending the exemption to cover any such livestock imported from the rest of the world. We expect that minor policy change to have little or no impact on the ground, given the very low levels of live imports from beyond the EU. Indeed, officials were hard-pressed to give me an example. One that came to my mind was a stock bull imported for breeding purposes that became infertile or injured and was then slaughtered here in the UK.

An alternative would have been to scrap the exemption altogether, but in the interests of continuity, we have left the situation changed. When we have left the EU, a UK Government could of course reverse the decision, taking advantage of the freedom people opted for in the referendum. DEFRA and the devolved Administrations have liaised with stakeholders regarding plans to make CAP retained EU law and existing domestic legislation operable at the point of EU exit. We have kept them informed of the SI’s progress. With regards to financial discipline, DEFRA is liaising with stakeholders through a targeted engagement exercise to discuss the proposed new guidance, which will set out how pillar one spend should be apportioned towards England. Because the minor policy change to the AHDB order is expected to have little or no impact on the ground, as we believe the relevant circumstances rarely arise, we have consulted the levy board, but not other stakeholders.

The statutory instruments provide important and necessary continuity for stakeholders and beneficiaries. They will help to ensure that farmers, fishermen and land managers continue to receive payments that support their vital work. I urge Members to agree to the amendments proposed in the regulations, which I commend to the Committee.

I am delighted to serve under your chairmanship, Mr Hanson, and to welcome the Minister and the former Minister to their places. We are going to get doubled-barrelled explanations of everything that is going on.

I thought that last week I was getting to the nadir of my understanding of things, but these SIs are complex. In many respects, they are not controversial, but then, as the Minister rightly touched on, we get to the red meat levy. Those of us who were on the Committee in question spent a lot of time arguing whether it was appropriate, and the devolved Administrations do not necessarily agree with England on the issue. It would be interesting to know whether that has been properly worked through.

I refer back to the European Statutory Instruments Committee, which looked at the issue on 4 December. Its report quoted the instrument, which explains:

“Removing this levy will ensure that, following EU Exit, there will be equal treatment between the EU and the rest of the world for animals imported for slaughter. Defra’s estimate of the maximum financial impact to the AHDB caused by this change is a loss of c. £1,000 per year in levy, although it is believed that the amount actually collected by the AHDB in relation to the rest of the world imports are far lower than this and are probably nil.”

The Minister touched on that. The moneys exchanged seem very limited. I do not know why we have any regulation relating to that, if it is so unimportant. Can he enlighten us a little?

I will start with some general questions, because some points need to be brought out early on. I hope the Minister will get some help from somewhere to answer them. I am always willing to accept written contributions, although I have not received any yet. We have had rather a lot of SI Committees, and so far I am yet to have anyone write to me saying, “You should look at this to understand that,” or, “The Government intend to do this to move to that.” It would be useful to get some contributions so that I at least know that I am along the right lines, or that the Government have done it in the right way.

Under the common agricultural policy, there are payment windows. We have a lot of arguments over them, because they are often breached, and farmers or landowners do not get the money that they should currently get within those windows. Do these regulations in any way change those payment windows? It would be interesting to know what the Government’s contingency is if we were to crash out of the EU. Much of this is predicated on our having an Agriculture Bill in place. Sadly, it does not appear that there will be such a Bill in place, which has caused some consternation among the Opposition—let alone among Government Members—about what will happen if we are no further forward.

On that point, the hon. Gentleman is wrong. The Agriculture Bill is all about developing a future policy; these regulations, in common with all such regulations under the EU withdrawal Act, are about ensuring that the current EU scheme and retained EU law—including the common agricultural policy and all its provisions—are operable in the interim period.

I agree with the hon. Gentleman, but there was supposed to be a seamless move from one to the other. It does not seem very seamless anymore; it seems rather senseless that we are unclear about where we are today—let alone where we will be in a week’s time—in relation to where we would possibly be going in terms of the Agriculture Bill, of which we have heard nothing. We suppose that it will crash out of the Government’s programme this year and we will have to revisit it again next year. We are not really going forward at a rate of knots.

Those who criticise the common agricultural policy—no doubt there are many in this room today—will question the fitness of the legislation as it stands and as it will stand tomorrow should these regulations go through. Farmers are calling for improved systems, so was this not the opportunity—notwithstanding what I said about payment windows—to look at how the system would be improved? Throughout the Agriculture Bill, I have called for the scrapping of the Rural Payments Agency and for its replacement with a new, purpose-built body. Unfortunately, we do not seem to have got any further with that.

My next question is about the limited consultation. Yes, it is true that farming organisations were consulted. However, given that we are moving towards environmental payments, it was really quite a narrow consultation. What about the different environmental organisations that have contributed, largely through the Green Alliance? As the Minister knows, they are very critical of this process and how it has been taken forward. Why were they not directly consulted about these statutory instruments? That would at least have been commensurate with the direction of travel.

I will make two more general points, before I comment on specific bits of legislation. Given our learned experience from having been a member of the CAP for 43 years, it would be useful to know why these SIs could not take account of some of the direction of change.

My last general point is about what the Minister said about there being a series of technical amendments. But this involves direct payments, which is one of the more controversial areas—as we know, through the Agriculture Bill—between the four home countries. When I talked to the Ulster Farmers Union and said, “Of course, we will be removing direct payments,” its representatives basically intimated: “Over our dead bodies!” They believe that direct payments have a strong and continuing role to play in keeping people on the land in Northern Ireland. Since we debated the issue during the Agriculture Bill, have we got any further forward on how we intend to deal with a very different approach? [Interruption.] If the Minister wants to intervene—

Sorry, the former Minister; I am still getting used to all the different roles being played.

I am intrigued about where we are with those four different approaches: Scotland has its own approach and did not want to make its statement through the Agriculture Bill; Wales is largely in common with England, but has made its own contribution to the changes; and, because there is no Administration in Belfast, we are not at all sure what Northern Ireland is doing. But let us go on to the three bits of legislation.

The draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019 again come down to money. I am interested to know whether the Government, through the SIs, will commit to exactly the same moneys being available today and tomorrow, regardless of what happens next week. It would be useful to know whether the Government are prepared to make that commitment of the £3.1 billion or £3.2 billion, which would work its way through to the system. As I said, the Ulster Farmers Union in particular is very clear about wishing to continue with direct payments. How does that impact on the way in which the other parts of the UK will respond?

The Soil Association, although not part of the direct consultation, looked at the issue. It is clear about welcoming the Government’s direction of travel but, again, questions whether the draft SI makes any difference to the programme under which, starting in 2021, we gradually run down direct payments. That would be interesting to know in connection with the draft SIs, given that we have no Agriculture Bill coming through. We are only talking about 18 months away now, so it is not way in the future—this is in the foreseeable future, and farmers are already making calculations about their investments.

The National Farmers Union brought up the point, which the Minister did not mention, that there are now criminal offences for breaching financial assistance schemes. Will he say something about that? The NFU is unhappy about it. Will these SIs mean that obstruction of a person acting in pursuance of the regulations could result in the farmer or landowner facing a financial penalty or worse? Again, some of the conflicts that arise out there are difficult to resolve without clarity of thinking and a much clearer explanation of the impact of these SIs.

The draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019 largely concern the budget and the income-support system. One presumes that in the short run we will carry on with the existing structure, because we have no Agriculture Bill and because unless we give farmers the moneys that they thought they were getting, they would be at a distinct disadvantage in competing with other parts of the European Union—in particular in Ireland; Northern Ireland would not want to be at any disadvantage.

We laid down some pretty strong targets in the Agriculture Bill, but how does that relate to the draft statutory instruments? The Nature Friendly Farming Network, for example, wants much longer-term commitments on moves towards soil management, protection of water and the rest of it. Again, that is all wrapped up in the environmental management schemes, which are not part of these SIs, but unless we get things right, farmers will be at a disadvantage in the meantime.

The last instrument is the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019. This has been mapped out and spoken about on many occasions by the Secretary of State, but the real issue is how to move from direct payments to environmental payments. Sustain in particular was worried about whether the new shared prosperity fund—the Minister will say that it is not affected by the SI, but that is contingent on the Government’s direction of travel—will be administered by DEFRA or go to the Ministry of Housing, Communities and Local Government, as Sustain fears it might. Where will the moneys for environmental payments be set aside in the interim?

The Ramblers’ Association has made some points about how cross-compliance will essentially alter things, come what may, because of how the Rural Payments Agency has itself been reformed. We know that there is a problem with countryside stewardship for various landowners—the hon. Member for Camborne and Redruth talked about that on the Agriculture Bill Committee, when he was the Minister. It would be interesting to know how that cross-compliance will operate not only through the new Bill, but with respect to the regulations before the Committee. They constitute the interim policy; if we do not get that right, farmers, landowners and environmentalists will be disadvantaged.

I welcome my right hon. Friend the Member for Scarborough and Whitby to his post. I offered to take part in these Committees specifically because I am largely to blame for some of their content and have signed some of the statements.

I pay tribute to the DEFRA officials, who have had to work incredibly hard on this and all other similar SIs. Hon. Members who read those SIs will quickly establish that to fillet through every piece of EU legislation, literally exchanging the words “Member States” for “relevant authority”—that is predominantly what these statutory instruments do—is not the most attractive of jobs. It requires somebody to go through a huge amount of legislative text. A huge amount of work has gone into all those instruments and it is important to recognise that their purpose is simply to make retained EU law operable.

The shadow Minister made the point that as we are not changing policies, we should surely have drafted the regulations to make them a bridge to the direction of future policy. The European Union (Withdrawal) Act 2018 was explicitly clear that that should not be done. The purpose of that Act was simply to allow for retained EU law to continue to function as closely as possible to the way that it does currently. It was clear that any future changes in policy should, as a general rule, require future legislation. Of course, we have the Agriculture Bill for that.

It is also worthy of note that section 2(2) of European Communities Act 1972 is probably the most pernicious Henry VIII power in this country in modern history. It is used, particularly by a Department such as DEFRA, to drive a coach and horses through all sorts of pieces of domestic legislation, often without much more than passing a statutory instrument via the negative procedure. The irony with all these SIs is that we expend a great deal of effort to judge whether we are happy to swap the words “Member State” for “relevant authority”, but those powers were simply imposed on us, generally by delegated legislation or by Acts implementing European Union legislation.

When we looked at the AHDB levy—particularly the exemption from the levy for EU animals, which was raised by the shadow Minister—we had two things to consider. The first was whether we should go for a strict interpretation, seeking legislative continuity, in which case we might have said, strictly speaking, that the EU was now a third country and should therefore be treated as such. The second was whether we should adopt an approach to provide continuity for producers in the closest way possible. Had we taken the former approach, we would have required abattoirs up and down the country to suddenly start trying to design and implement systems so that they knew when they were dealing with an animal that might have come from the European Union and could apply a levy to it. As the shadow Minister noted, we apply a levy to animals from outside the EU, but not those within the EU. We concluded that the best way to provide continuity was simply to extend that exemption to everyone in the world, which meant that operators could carry on broadly as they do now.

I do not have a lot of affection for the horizontal regulation in the EU, which one of the SIs relates to. It led to lots of administrative problems for DEFRA to do with how we had to interpret penalties and implement audit processes. It is far from perfect, but the Agriculture Bill has a sweeping power to modify it once we leave the European Union. But for now, in keeping with the ethos of the European Union (Withdrawal) Act, we should retain it, which is what the regulation does. On financial discipline, in England we decided that we wanted to retain the power to make use of some of the pillar one payments for a crisis reserve, so there would be funds to support agriculture at times of great need in the year ahead before we have introduced our own crisis measures through the Agriculture Bill.

Finally, the shadow Minister mentioned a couple of points about criminal proceedings. We debated that during the Agriculture Bill, and I gave an undertaking to look at the issue. My understanding is that we have never used that power; it has been in our enforcement powers for the EU regulations—that is why it is retained for now, although obviously it can be looked at in the context of the future Bill. As he knows full well, because we debated it at length in Committee, the budget will stay the same in cash terms until 2022. I predict that will cover the timescale for these regulations under retained EU law, because long before that I hope we will have our Agriculture Bill in place.

It is a pleasure to have you in the Chair, Mr Hanson. I welcome the Minister back to Government, although how long that Government will last is up for debate given events outside this room. As I find myself saying fairly often, it is regrettable that this legislation has been rushed through without proper scrutiny. That is rather unhealthy for parliamentary democracy, but we are where we are.

As the Minister outlined, the Scottish Government have consented to the statutory instruments—for pragmatic reasons, rather than because they fully support them. There was concern about the Government’s approach to many of the matters. The Agriculture Bill completely failed to deliver on promises made to Scotland during the EU referendum campaign. As the hon. Member for Stroud indicated, we plan to do things rather differently.

The Scottish Government have set out a five-year plan that will give farmers and crofters the stability, certainty and funding they need for the next five years. They will act to address Brexit risks, such as announcing a loan scheme in which payments start earlier than in any other part of the UK, directly helping vulnerable farmers and crofters. We have serious concerns that the UK Government might impose unwanted policies and rules on Scottish farmers in areas that should be devolved competencies.

The Scottish Government published clear proposals for the next five years in their “Stability and Simplicity” consultation paper, aimed at providing farmers with financial certainty in the face of Brexit. In January, MSPs debated future rural support, and the Scottish Government announced that, due to the inadequacies of the UK’s Agriculture Bill, they would bring forward a Scottish rural financial support Bill to implement the proposals set out in the consultation.

We welcome the review of agriculture funding allocations, but are disappointed that our concerns on the remit of the review have not been addressed, particularly for the convergence uplift money. The Conservative party does not generally support redistribution—unless the money should be going to Scottish farmers, in which case it redistributes it elsewhere. I ask the Minister, who is relatively new in the Department, to change tack, ensure that there is an adequate review and look at the remit and at future and previous payments.

The Minister will be pleased to know that I have just a small number of technical questions. Before I turn to agriculture, I briefly want to mention fisheries. The explanatory memorandum for the Agriculture (Legislative Functions) (EU Exit) Regulations 2019 talks at the bottom of page 3 about the EMFF funding. It was asked during the passage of the Fisheries Bill what happens in the event that the powers jointly exercised by the Secretary of State and the devolved Administrations cannot be exercised with complete unanimity because one of the devolved Administrations object to the Secretary of State’s policy. That is referred to on page 3 of the explanatory memorandum. Page 16 states:

“Any changes as a result of the use of powers after EU Exit will only be carried out with the consent of the devolved administrations.”

The Opposition proposed an amendment that would have created a dispute mechanism to ensure that, if that happens, there will be a plan in place to resolve it. The Government disagreed with that dispute mechanism, but I note that there is no method of dealing with the issue in this instrument. I will be grateful if the Minister sets out how he intends to deal with it.

On the Agriculture (Legislative Functions) (EU Exit) Regulations 2019, I would be grateful if the Minister set out, in relation to financial discipline in England, the different thresholds specified in the regulations. I have two questions about the regulations. First, the SI suggests that the threshold for the financial year ending 31 March 2020 is £2.093 billion, and the financial threshold for the year ending 31 March 2021 is £2.095 billion. That is an increase of only £2 million. What calculation and rationale was there for that £2 million? Why is there no reference to any retail prices index or consumer prices index calculations?

Secondly, I want to press the Minister on the exchange rate used. Throughout the document, euros, rather than pounds, are used for financial payments. I could not see anything about the exchange rate. Any big fluctuations, such as the fall in the value of the pound after the 2016 referendum, could have a substantial effect on the exchange rate. Is there a mechanism to adjust that to ensure that our farmers do not lose out?

I am grateful that the Minister set out the gremlins that he discovered in the explanatory note. In a previous SI Committee, I asked him to assure us that there were no gremlins in the explanatory notes or the SIs, but one was pointed out in the very next SI Committee. I am glad that he spotted that one, but I wonder how many other gremlins in these SIs have not been spotted. I do not anticipate that the Minister has a list of how many have not been spotted; the point is that there could be others.

Finally, I want to ask the Minister about the agriculture support. The Government have committed to continue funding until the end of the Parliament, rather than a certain date. What happens to the funding if the Parliament ends before 2022, especially if there is a shortfall? My understanding from Ministers’ statements is that the post-CAP funding settlement is expected to lead to an above 40% reduction in the total value of agricultural support. If the Parliament ends before 2022, what measures are in place to provide the same timeframe for farmers and others in the agricultural sector, so they can adjust to what could be quite a substantial difference in agricultural subsidies?

I thank all hon. Members who contributed to the debate and asked interesting questions. These regulations ensure that we are able to make amendments to the CAP legislation in the same way as the EU does currently, to respond to changing circumstances in the agriculture sector and have the flexibility to manage the pillar one budget through the financial discipline mechanism.

They will ensure the continued operation of the financing, management and monitoring arrangements that underpin the common agricultural policy in the United Kingdom and will provide the AHDB with an operable legal framework. Although these are very complex matters, as the hon. Member for Stroud noted, the changes that we are making are simple and straightforward. In most cases, we are merely substituting EU bodies with UK bodies, which will help us to take back control of our own legislation.

I hope that the Minister is getting used to my cheekily taking my position as the Whip but then asking questions about process—although this question is about content. He says that the changes being made are quite straightforward, yet he also talks about the devolved Administrations. I am concerned about what will happen to the democratic oversight of decisions that relate to Northern Ireland, where there is currently no Assembly.

To put it simply, officials went through the regulations, and every time they saw a reference to an EU body, they changed it to a reference to a UK relevant body, whether that was in England, Northern Ireland, Scotland or Wales. I share the disappointment felt by many people that we have not had an agreement in Northern Ireland and a return to devolved administration; at the moment, civil servants are making the decisions, based on decisions taken in the past. As a former member of the Select Committee on Northern Ireland Affairs, I know how tough the job of those civil servants is; the longer it is since there was a devolved Administration in Northern Ireland, the more difficult it is to make decisions based on political policies that were decided at that time. I hope that all the political parties in Northern Ireland will get together to participate fully in the democratic process and give the people of Northern Ireland their voice once again through the devolved settlement, delivering on the Good Friday agreement—the Belfast agreement.

The hon. Member for Stroud asked some general questions about payment windows. There will be no changes to the scheme, but given the performance of the last Labour Government, I have to say that people in glass houses should not throw too many stones. The Labour party must take some responsibility for the complexity of the system introduced in England, which contrasts with the much more workable system in Scotland. We are often critical of European legislation, but if we gold-plate it ourselves, we must take some of the blame.

The hon. Gentleman also talked about new schemes. Obviously, under the new policies that we will introduce once the Agriculture Bill is on the statute book, we will be in a position to facilitate new schemes. We will have an improved system that will allow us to base our agriculture policy and agricultural support on UK priorities, rather than on the often compromised priorities that emerge when we negotiate within the European Union.

The hon. Gentleman talked about consultation. In a debate on a previous statutory instrument, I gave a long list of those whom we have spoken to and who have not expressed concerns. There are no concrete changes; as I have said already, in most cases we are substituting EU bodies with UK bodies.

The hon. Gentleman asked whether we should make modifications at this stage to take account of the directions of change that we discussed in debates on the Agriculture Bill. The answer is no; this is a “business as usual” measure. If he wants to make changes, the first thing he needs to do is vote for the deal, so that we can actually leave the European Union. The Agriculture Bill will create those opportunities, but that will be possible only with a deal. I hope that we can work closely with the devolved Administrations as well.

The hon. Gentleman asked a question about the red meat levy. The exemption that we are concerned with relates only to livestock imported into the UK and slaughtered in England within two to three months of arrival. There are believed to be very few cases, if any, in that category. The overall red meat levy is payable on all livestock slaughtered in England for the human food chain and raises approximately £26 million a year. Extending the exemption to imports from beyond the EU might affect the KPA. No exemptions were sought for such imports last year.

The hon. Gentleman mentioned the Soil Association. I can reassure the association that we are maintaining the status quo. As I say, the Agriculture Bill will give us great opportunities in the delivery of organic production, for example.

I was asked about future funding arrangements: as agriculture is devolved, who will pay for what? I reassure the Committee that the Government have pledged to continue to commit the same cash total in funds to farm support until the end of this Parliament, which is expected to be in 2022.

I know what the hon. Gentleman is going to ask, and I will try to cover it.

That includes all funding provided for farm support under both pillar one and pillar two of the current CAP. Obviously, if there were an early election—of course, under the Fixed-term Parliaments Act 2011, that is not as straightforward as it used to be—since no Government can tie the hands of a future Government, it would be up to the parties standing in that election to put their plans in their manifesto and then deliver on that when elected.

I am not sure whether there are any Scottish Tories here, but I am sure that, given their rural constituencies, they would be keen to learn whether the Conservative party manifesto will commit to giving Scottish farmers back the money that was stolen from the convergence uplift.

I am certainly not going to rush my fences and write the next manifesto on the hoof, particularly as we do not expect to go to the people again until 2022. The last time we consulted the people on what we should do was in the referendum, and we have not delivered on that one yet, so perhaps we should get on with the work in hand.

I will make a point about the Barnett formula before I give way. We have also committed that the Barnett formula will not simply be applied to DEFRA’s agriculture budget in 2022. That means that farmers in Wales, Scotland and Northern Ireland will not just be allocated funding according to the population of each nation. Each is significantly smaller than England, but they have large areas of agricultural interest. In October 2018, the Government announced an intra-UK allocations review, which will look into the factors that should inform the allocation of convergence funding from 2020 to 2022. The review will report ahead of the 2019 spending review, and its recommendations will be available to Treasury Ministers when future funding decisions are made.

Did I answer the hon. Gentleman’s point? I thought I had.

I was actually going to make another point. Since I think we must assume that the Agriculture Bill will be delayed, these SIs are quite important. The starting point for the reduction of direct payments is 2021—that is in the plan, not in the Bill itself. Will the Minister assure me that if there is a delay, the seven-year transition period will move with it? Or are we going to try to reduce that transition period? Obviously, that would cause those who need direct payments even more difficulty.

I thank the hon. Gentleman for that question. We are keen to make progress on the Agriculture Bill. We will get it on the statute book as soon as possible, and it will certainly be on the statute book as and when it is required.

I was asked about cross-compliance. The European Union (Withdrawal) Act 2018 does not give us the power to make wholesale policy changes, and we do not think it would be appropriate to use the powers in the Act to omit cross-compliance from retained CAP legislation. Instead, we have the flexibility to amend cross-compliance within the confines of the current legislative framework. Further substantive changes to cross-compliance will be able to be made through the Agriculture Bill.

I was also asked why the devolved Administrations have taken a different approach to agriculture. Agriculture is a devolved policy area, and the devolved Administrations are currently able to operate CAP schemes within the legislative framework. It is for each Administration to decide how these EU regulations should be made operable.

The hon. Member for Plymouth, Sutton and Devonport raised issues to do with EMFF funding and the Fisheries Bill. I had been doing so well, but that is one that I will need to write to him about, as it is quite a technical issue and I do not want to get it wrong—similarly with the dispute mechanism, although of course that is one of the things for the future. As I said, at the moment, we are keeping measures in place as they are; there is no change.

The hon. Gentleman mentioned the exchange rate. The exchange rate for payments is fixed in September. That has been the case for some time. He also mentioned fixed-term Parliaments. As I said, no Government can tie the hands of a future Government, and it will be up to the parties what they put in their manifestos.

On the technicalities of the two threshold levels, I would be grateful if, when the Minister prepares his note to me, he set out the thinking behind the €2 million mark, whether that is RPI or CPI-related, and what formula created those two levels.

I will ’fess up: I was not aware of that difference. There may be a perfectly logical explanation that is not policy related.

I notice that there is an article in the regulations entitled, “Financial Discipline in England”, which sets out how that would work. Am I right that the other nations would not have to have any financial discipline, or would they make their own arrangements?

The other nations have chosen not to opt into the financial discipline mechanism, which we use—I was going to say “to top-slice”, but that is too emotive—to ensure that we have provision for emergency payments and other such measures. That is in no way to suggest that the Scottish Administration are behaving recklessly; it is just how they are choosing to deliver that policy. I hope my right hon. and learned Friend is reassured. Indeed, I met with the DAs this morning, and Mr Ewing was very keen to talk about how we move forward constructively, respecting the powers devolved to the Scottish Parliament and Administration.

These draft statutory instruments are required to ensure our continued ability to pay UK beneficiaries of the CAP and the common fisheries policy as now. They will help to ensure compliance with the rules set out in the retained CAP legislation and to ensure that public money is spent appropriately. On that basis, I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Agriculture (Legislative Functions) (EU Exit) Regulations 2019.

draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the draft Common Agricultural Policy (Financing, Management and Monitoring) (Miscellaneous Amendments) (EU Exit) Regulations 2019.—(Mr Goodwill.)

draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the draft Common Agricultural Policy (Financing, Management and Monitoring Supplementary Provisions) (Miscellaneous Amendments) (EU Exit) Regulations 2019.—(Mr Goodwill.)

draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019

Resolved,

The Committee has considered the draft Common Agricultural Policy and Agriculture and Horticulture Development Board (Amendment etc.) (EU Exit) Regulations 2019.—(Mr Goodwill.)

Committee rose.

Draft Common Rules for Access to the International Market for Coach and Bus Services (amendment etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: † Sir Christopher Chope

† Donelan, Michelle (Chippenham) (Con)

† Double, Steve (St Austell and Newquay) (Con)

† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)

† Eagle, Maria (Garston and Halewood) (Lab)

† Ellman, Dame Louise (Liverpool, Riverside) (Lab/Co-op)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† George, Ruth (High Peak) (Lab)

† Ghani, Ms Nusrat (Parliamentary Under-Secretary of State for Transport)

† Harrison, Trudy (Copeland) (Con)

† Henderson, Gordon (Sittingbourne and Sheppey) (Con)

† Kinnock, Stephen (Aberavon) (Lab)

† Maskell, Rachael (York Central) (Lab/Co-op)

† Pawsey, Mark (Rugby) (Con)

† Shapps, Grant (Welwyn Hatfield) (Con)

† Stephens, Chris (Glasgow South West) (SNP)

† Sturdy, Julian (York Outer) (Con)

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

Sarah Rees, Committee Clerk

† attended the Committee

Fifth Delegated Legislation Committee

Monday 25 March 2019

[Sir Christopher Chope in the Chair]

Draft Common Rules for Access to the International Market for Coach and Bus Services (Amendment etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Common Rules for Access to the International Market for Coach and Bus Services (Amendment etc.) (EU Exit) Regulations 2019.

It is an honour to serve under your chairmanship, Sir Christopher. The draft regulations that we are considering will be made under powers in the European Union (Withdrawal) Act 2018 and will be needed in the event of no deal. The instrument amends the retained European Union legislation governing access to the international passenger transport market and associated domestic implementing legislation, to deal with deficiencies that would otherwise exist when the UK leaves the EU.

EU regulation 1073/2009 establishes the conditions for the international carriage of passengers by coach and bus within the EU and cabotage within member states by non-resident EU operators. It covers regular timetabled services, and occasional services such as those for holidays and tours. It establishes for this purpose a system of Community licences, which act as the international bus and coach licences used within the EU, to be issued by the competent authorities of member states. Section 3 of the withdrawal Act will preserve EU regulation 1073/2009 in domestic law, and—[Interruption.]

Order. I understand that the hon. Member for Glasgow South West is finding it difficult to hear the Minister because of the conversation that is taking place. I hope hon. Members will enable those who wish to listen to so do.

I will perhaps speak a little bit louder, Mr Chairman. Section 2 will preserve implementing domestic legislation, including the Public Passenger Vehicles Act 1981 and the Road Transport (International Passenger Services) Regulations 2018. The statutory instrument adjusts the language and references in those pieces of retained legislation and five others to recognise that the UK is no longer a member state.

The SI amends the retained UK version of regulation 1073/2009, and allows EU-based operators to continue to access the UK market in a no-deal scenario on a unilateral basis by recognising Community licences and control documents issued by EU authorities under EU legislation. Existing authorisations for international regular services to the UK will continue to be recognised to avoid any additional administrative burden for operators.

In respect of the retained EU legislation, this SI covers Northern Ireland, too, but that devolved Administration will need to make consequential changes to their legislation; that is the subject of a separate instrument. The retained regulation 1073/2009 will apply only to EU-based operators. In the event of no deal, UK operators will be able to continue to access the EU market through the UK’s accession to the Interbus agreement, an EU multilateral agreement that allows bus and coach operators to run occasional services between participating countries. The UK is currently party to the agreement through its EU membership. As part of contingency planning for no deal, the Government have deposited the UK’s instrument of accession to the Interbus agreement, meaning that the UK will become a member of the agreement in its own right. Due to the wording of the agreement, it may only enter into force on the first of the month.

The Government have made a commitment to reducing the adverse impact of EU exit on businesses and citizens, and that applies to people’s ability to make international journeys by bus or coach. Coach travel provides a safe and environmentally friendly choice of travel, and its low cost is particularly valued by individuals on low incomes. Coaches from continental Europe bring in some 1.6 million visitors each year, and in Northern Ireland travel across the border is a commonplace daily activity, with 900,000 journeys across the border per annum. These draft regulations are essential to support our tourism industry, and to ensure that international services that are, in effect, cross-border local bus services on the island of Ireland can continue to run.

It is a pleasure to serve under your chairmanship, Sir Christopher. These regulations seek to establish common rules for access to the international market for coach and bus operators from the EU, so that they can operate in the UK and continue to function in a similar way after the proposed, and changing, exit day, and to minimise any potential disruption to services for passengers in a no-deal scenario. Of the 1.6 million annual coach journeys to the UK, 83% are from the EU, so there are widespread implications.

For reciprocal arrangements, it is expected that the Interbus agreement will be brought into force, and I wonder whether the Minister could update the Committee on the position, including the expected date of implementation. I heard her mention the beginning of the month, but she did not say which month. Given an exit day of no earlier than 12 April, it would be helpful to know whether that meant the beginning of April or a later date.

In the light of the importance of the regulations, it is astounding that the Government have left them until fewer than four days before the date when the UK was due to leave the European Union. That could have had a serious impact on the coach and bus sector and the tourist sector, and it shows just how ill prepared the Government are for leaving the European Union. The regulations establish the conditions—whether for regular, scheduled coach services or occasional, non-scheduled services such as holiday and tour services between the UK and EU—for the international carriage of passengers by coach and bus within the EU, and for cabotage arrangements. They also cover the licensing arrangements within the EU, if we move out of the Community licence arrangements.

The regulations would move powers from the European Union to the Secretary of State for Transport and the Northern Ireland Department of the Environment, to enable coach and bus operators from the EU who were in the Community licence scheme to operate in the UK as they do now. I note that EU operators who wish to obtain a new authorisation for a regular scheduled coach service to the UK will in future need to apply for new authorisation from the appropriate authority in the UK, instead of in their home member state. If a new operator were to apply from 30 March—the relevant date might now be 13 April—assuming that the UK had left the EU, would the UK be ready to issue a new licence? How much is already in place for the transition? What would happen to cabotage arrangements?

Will the Minister explain how licensing will differ for current European economic area operators? Those issues are particularly acute for Ireland, north and south, where there is a gap between leaving the EU and the coming into force of the Interbus agreement. That is my understanding, although I have asked for clarity. Why is that the case when there are 900,000 journeys across the border? What risk has the Minister uncovered, through having such a gap, and how will she address that?

With the transfer of powers from the EU to the International Road Freight Office, should the UK leave the EU, how much additional work will be created? How many operators are expected to require licensing, in the light of a no-deal scenario, by 12 April, and what will the cost be? I note that in proceedings on previous regulations, various Ministers have stated that costs would be minimal, but an accumulation of many minimal costs soon adds up. What is the total cost?

For those who hold a personal service vehicle operator’s licence and those who are part of the EU Community licence regime, no friction must be built into the transition of powers. Can the Minister assure operators of that?

In the light of the crisis that we face as a nation, the regulations are critical in reducing risk to coach and bus companies. Labour will therefore not oppose them this evening.

I shall be brief. A key thing was missing from what the Minister said, and it comes down to the issue of passenger rights. Even though the UK is leaving the EU, consumers and passengers across the UK must be given clear and unequivocal assurances and guarantees that their rights and safety will not be compromised. Under EU directives, UK passengers are entitled to a huge number of benefits if a journey is cancelled or delayed. That gives some protection and assurances to consumers, and provides passengers with peace of mind. Will the Minister say something about passenger rights and whether the Government intend them to be protected, as they are under the directives in question?

I thank hon. Members for their consideration of the regulations. Let me turn to some of the points made. Apologies for having been a little remiss; the proposal comes into play on 1 April. The UK will have completed formal accession to the Interbus agreement by the end of March, and it comes in on the first Monday after that, which is 1 April. My apologies for not mentioning that earlier. Engagement is ongoing with the Interbus depository to ensure alignment between the end of the formal accession period for Interbus and the short extension to article 50.

The other question was about cabotage and Northern Ireland. Under the agreement, cabotage can continue between the Republic of Ireland and Northern Ireland. Should we leave with no deal, we will continue to work with the European Commission and the Republic of Ireland to ensure that any long-term transport arrangements between the UK and the EU take into account the unique transport demands on the island of Ireland.

There was also some conversation about the impact that the agreement has on the sector, and potentially on the cost. I place on record the fact that my officials have been working with the Confederation of Passenger Transport, which is the main industry representative body, and the Federation of Passenger Transport Northern Ireland, to ensure that stakeholder consultation has taken place, and to understand the impact of this statutory instrument. All stakeholders support the UK’s decision to join the Interbus agreement independently. Any costs are noted as minimal, and any certification or passporting to allow this business to continue tends to be over a five-year period; the authorisations last for five years. Work has taken place to see how much work that would involve going forward.

Could the Minister give some clarity on the impact on EEA countries? What will happen to their operations?

The Interbus agreement works with countries beyond the EU. There are another six countries that it is working with. My officials are working closely with them to put in place bilateral agreements to allow processes and practices that are in place to continue.

I thank the hon. Member for Glasgow South West for his question about passenger rights. We have worked to ensure that passenger rights will be as they are today; we are taking on board any part of EU legislation that we can adopt into UK legislation. As maritime Minister as well, I must say that we have gone above and beyond what is expected; we are working to international guidelines, not just EU guidelines, in this area.

I believe that the Committee is in agreement that these are serious regulations that we need to take forward to ensure that tourism, which is incredibly important business between the UK and the EU, can continue. I hope that hon. Members will support this instrument, so that we can ensure international coach travel access, and particularly regular services, to the UK for EU bus and coach operators, in much the same manner as before, in the interest of passengers. That is the reason why they will be supporting these regulations, which I commend to the Committee.

Question put and agreed to.

Committee rose.

Draft Cash Controls (Amendment) (EU Exit) Regulations 2019 Draft Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Steve McCabe

Bryant, Chris (Rhondda) (Lab)

† Daby, Janet (Lewisham East) (Lab)

† Dodds, Anneliese (Oxford East) (Lab/Co-op)

† Freer, Mike (Lord Commissioner of Her Majesty’s Treasury)

Gethins, Stephen (North East Fife) (SNP)

† Grant, Mrs Helen (Maidstone and The Weald) (Con)

† Hands, Greg (Chelsea and Fulham) (Con)

† Hughes, Eddie (Walsall North) (Con)

† Merriman, Huw (Bexhill and Battle) (Con)

† Moore, Damien (Southport) (Con)

† Morris, Grahame (Easington) (Lab)

Perkins, Toby (Chesterfield) (Lab)

† Smith, Jeff (Manchester, Withington) (Lab)

† Stride, Mel (Financial Secretary to the Treasury)

† Vickers, Martin (Cleethorpes) (Con)

† Walker, Thelma (Colne Valley) (Lab)

† Wragg, Mr William (Hazel Grove) (Con)

Adam Mellows-Facer, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Monday 25 March 2019

[Steve McCabe in the Chair]

Draft Cash Controls (Amendment) (EU Exit) Regulations 2019

With this it will be convenient to consider the draft Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr McCabe, and I reassure the Committee that we are now in safe hands—it is business as usual. I welcome our Clerk. When the Clerks are here, they are of course so seamlessly efficient that we do not notice them, but when they are not here, apparently we do notice that they are not. There was a slight delay, but I have none the less moved the first of the draft statutory instruments and I will speak to both the SIs before us.

The Government’s priority is to leave the European Union with a deal that works for citizens and businesses, as is set out in the withdrawal agreement and political declaration. That would avoid a no-deal outcome. As a responsible Government, however, we have a duty to plan for all scenarios to minimise disruption for businesses and individuals. We are in Committee to consider two statutory instruments that are part of the Government’s package to prepare for the possibility of the UK leaving the EU without a deal.

The first set of draft regulations relates to cash controls. The European Union monitors the international movement of cash by requiring individuals who enter or leave the EU carrying more than €10,000 in cash to make a declaration. That cash control declaration must be made to the customs authority of the member state into which they are arriving or from which they are departing. The UK is committed to continuing that practice. The declaration is one measure that assists the fight against money laundering, organised crime and the funding of terrorism.

If the UK leaves the EU without a deal, the draft instrument will require cash control declarations at the UK border, including the borders between the UK and the EU. That does not apply to the border between Northern Ireland and Ireland. The current practice, which requires those declarations between the UK and non-EU countries, will continue. The draft regulations extend those requirements to movements between the UK and the EU. The instrument makes a small change in so far as we will require declarations on amounts of £10,000 or more, rather than €10,000.

The second draft statutory instrument under consideration relates to economic operator registration and identification, or EORI. An EORI is a unique registration number given to businesses that are involved in matters covered by customs legislation, so that Her Majesty’s Revenue and Customs can identify them effectively. Registering for an EORI is a requirement under EU law. As those registration numbers allow HMRC to identify traders effectively, it is necessary for traders to use them when applying for customs simplifications or facilitations, making declarations or exchanging information with the customs authority.

The Union customs code, as it exists immediately before exit day, will form part of domestic law on exit day and continue to apply to the UK as retained EU law, by virtue of the provisions of the European Union (Withdrawal) Act 2018. The code was drafted to apply to EU member states and will therefore not work as effective legislation for the UK without amendment. The second set of draft regulations amends those retained provisions to ensure that they are suitable for an independent UK customs regime. The instrument mirrors current EU provisions to ensure that traders and systems are faced with as little change as possible.

All existing EORIs issued by the UK, known as UK EORIs, will continue to remain valid for use in UK customs processes in the event of a no-deal EU exit. Following the UK’s departure from the EU, UK individuals and businesses that want to trade with the EU and do not already have a UK EORI will need to obtain one. In addition, persons who are not established in the UK but are entitled to lodge a UK declaration will first require a UK EORI.

I will now comment on the effect of the two draft SIs at the border between Northern Ireland and Ireland. The UK Government have committed to avoiding a hard border and will do everything in their power to ensure that no new physical infrastructure or related checks and controls are introduced at the border in the event of no deal. As such, the two SIs will not apply to movements between Northern Ireland and Ireland, but they will apply for movements between Northern Ireland and other territories. Cash control declarations will not be required for movements of cash between Northern Ireland and Ireland, but will be required for movements of cash between Northern Ireland and other territories.

Likewise, traders whose only international trade is between Northern Ireland and Ireland will not be required to register for a UK EORI, but a UK EORI will be required by Northern Ireland traders trading with other territories. Finally, an EORI is not needed by UK traders with only domestic trade. The instruments are important in helping to ensure that our trade and cash controls continue to function in a day one no-deal scenario. I commend the first set of regulations to the House.

It is a pleasure to serve with you in the Chair, Mr McCabe, and to hear the explanatory remarks from the Minister. A huge volume of such legislation has obviously been passing through Parliament. When my shadow Treasury colleagues and I have been considering it, we have been determined to spell out our objections to the Government’s approach to EU exit secondary legislation, the volume of which has been deeply concerning in respect of accountability and proper scrutiny.

The Government have assured the Opposition that no policy decisions are being taken, but establishing a regulatory framework inevitably involves matters of judgment and raises questions about resourcing and capacity. Intrinsic decisions are being made about supervisory arrangements, and we are worried that mission creep is happening, which goes beyond what was outlined in the European Union (Withdrawal) Act 2018.

Secondary legislation should be used only for technical, non-partisan and non-controversial changes, because of the limited accountability it allows. Instead, the Government continue to push through far-reaching legislation via these vehicles. As legislators, we have to get them right. They could represent real and substantive changes to the statute book, so they need proper in-depth scrutiny.

We are only four days away from our original EU exit date. The legislation still stands, at least in the UK’s case, but it is unclear whether much of it will be used. Obviously, we are considering two instruments that amend our customs regulations to account for our exit from the EU, but there is a lack of clarity about whether they are no-deal SIs.

The impact assessment that relates to both instruments is entitled “HMRC impact assessment for the movement of goods if the UK leaves the EU without a deal”, but some of the associated explanatory notes suggest that they are not no-deal instruments, but pertain to all kinds of exit. In my opinion, the second set of regulations would be needed only if we shifted away from the EU’s customs code, as the Minister mentioned, which is not a condition of leaving the EU per se. It is therefore peculiar that we have information not about the impact that the instruments would have in all possible scenarios, but only about a no-deal scenario.

On the cash controls regulations, I want to probe why the Treasury has decided to make the threshold £10,000. That is higher than the previous €10,000 threshold, which converts to about £8,500. I hope that the Minister can explain why it is set at £10,000, apart from the fact that that is a nice round number—that may well be the reason, but surely we need more information if that is the case. I find it peculiar given that, as I understand it, the cash controls system currently applies to €10,000-worth of other currencies brought in or out of the country, rather than a different value being set—it does not refer to 10,000 rupees or $10,000 or whatever. Perhaps the Minister can enlighten us about that and whether I have the wrong end of the stick.

On the issues relating to the Irish border in the cash controls regulations, I hope the Minister can give us more information than is provided in the papers we have been given. The Irish border is mentioned only fleetingly in the instrument. The citation, commencement and effect section states:

“The amendments made by these Regulations do not have effect in relation to any person entering Northern Ireland from the Republic of Ireland or exiting Northern Ireland to the Republic of Ireland.”

The instrument omits articles 6 and 7 of regulation (EC) No. 1889/2005, which relate to information sharing. Some might say that that is understandable, given that the obligations will not stand after exit day, but surely we as parliamentarians need to know a lot more about what controls will be maintained than we are provided with. What discussions, for example, have the UK Government had with the Irish Government to ensure that there will be proper scrutiny of individuals who might try to exploit this situation to launder or otherwise hide cash?

I appreciate that the Government might respond by saying that we have the Proceeds of Crime Act 2002, which means that police or border officials are able to seize cash if they have reasonable grounds for suspecting that it is either itself stolen or laundered, or is intended to be used in illegal ways in unlawful conduct, and that that applies from £1,000 upwards. However, I find it a bit strange that the Government suggest that we have to have a separate approach to cash controls as a condition of leaving the EU, yet that seems to be no issue at all when it applies between Northern Ireland and Ireland. Maybe they are just saying that security considerations trump that, which they may well do, but surely we need more meat on the bones here.

That is particularly true given that the impact assessment states:

“Compliance with the SI…gives HMRC information on the movement of cash, which feeds into the risk profiles of individuals and their associates where they are acting on behalf of others.”

That suggests that it is pretty important information, so we need more detail on why the Government are saying that we will not seek it here. It may well be justified in the overall cost-benefit analysis, but we really do not have that information.

Moving on to the economic operators registration and identification SI, again we are informed:

“The amendments to the retained EU law contained in this instrument will not have effect in relation to economic operators whose only customs activities consist of the trade of goods between Northern Ireland and Ireland.”

That seems a reasonable measure to prevent a hard border while maintaining existing regulations, but it would be interesting to hear from the Minister whether the Treasury has calculated how many operators of this type only trade in goods across the Irish border. That would be useful to know.

Generally, the context of this SI is a worrying lack of certainty for Northern Irish companies provided by the current situation. We did not have any indication until 13 March that the Government would take a temporary approach to avoid new checks and controls on goods at the Northern Ireland land border if the UK leaves the EU without a deal, and we do not yet have those arrangements set out in detail—we have the aspiration, but we do not have the detail. The Government’s own “EU Exit” paper from last year said that,

“WTO terms would not meet the Government’s commitments to ensure no hard border between Northern Ireland and Ireland.”

This surely needs much more work.

Finally, the EORI SI sets up the requirements, as the Minister mentioned, for a UK-run economic operator and registration identification system. I am grateful to the Minister for being willing to confer with me about the extent of use of that system before this Committee sitting. I wrote to him about this matter in February, because as at the end of that month, HMRC itself admitted that less than one fifth of the businesses that were estimated to need an EORI number had one, meaning that four fifths did not. HMRC said at that stage that it takes up to three days for an EORI number to be sent out, and longer than three days if there are “high volumes” of applications.

HMRC maintained that it had the capacity to process 11,000 EORI applications a day. Perhaps it is a strange coincidence that when we multiply that by the number of working days that were left when HMRC’s press release was issued, it sums perfectly to 29 March—it is quite amazing that its systems mapped on so precisely. However—and I am sure the Minister will talk about this—it appears that in practice perhaps only about a quarter of the companies that will need an EORI number have one. If companies do not have one, what are they going to do? Will they literally not be able to trade if they are not provided with one of these numbers? That is surely quite concerning for them.

I asked at the time for the Treasury to provide more information on what it was doing to promote the need for people to get an EORI number. I also highlighted the fact that there are con merchants—perhaps I need to be careful legally what I say here, and I would not describe them as doing anything illegal, but there are certain companies that advertise themselves as enabling other companies to get such numbers and apply a charge for doing so, when it is actually free to get one. They seem to be trying to profit from this situation. As I said, there is potentially nothing illegal about that, but surely it is unfortunate, at the very least, if companies believe as a result that they have to pay to get an EORI number. It would be helpful to have an update on that.

Finally, what proportion of eligible businesses have signed up for the new transitional simplified procedures? HMRC acknowledges that there has been an underspend on training funds for that scheme. It would be helpful to have an update on that too, because it is meant to speed up some of the processes related to the EORI SI.

I thank the hon. Lady for her questions, which, as usual, were very thorough and detailed. I will do my best to answer them all. The first related to the whole issue of why we are using secondary legislation. In general terms, I hope the hon. Lady recognises that, given the kind of detail involved in some of this secondary legislation, the sheer practicalities of setting all that out in advance in primary legislation would have been prohibitive, not least because the relevant Bill went through some time ago and we are now considering these matters nearer to the event of our potential departure from the EU without a deal—although that is certainly not our desired departure. She will also have noticed that both instruments were considered by the European Statutory Instruments Committee and, on its recommendation, turned from negative instruments into affirmative instruments.

The hon. Lady asked very specifically whether these instruments relate to a no-deal scenario. Indeed they do. Of course, if we have a deal—the current deal, which has been negotiated with the European Union—we will go into an implementation period until the end of 2020. Under those terms, we would continue to trade with the EU27 on broadly the same basis as we do today.

The hon. Lady asked specifically why £10,000 was used, rather than the sterling equivalent of €10,000, that being—I will take her figure at face value—about £8,500. She suggested that it might be because it is a nice round number, and I guess perhaps it is. It certainly maintains the figure 10,000, albeit there is a relatively marginal change in value at today’s exchange rate; as we know, that may change over time.

The hon. Lady made some very important points about the Northern Ireland border and, with regard to the cash controls instrument, the level of security that may or may not be in place as a result of no deal. In the case of the border between Northern Ireland and Ireland, the instrument really would maintain the status quo. Of course, as a member of the European Union at the moment, we do not have cash controls between ourselves and other member states, including between Northern Ireland and the Republic of Ireland. We have a variety of intelligence-based arrangements in place to track down those who may be moving cash for the wrong reasons across any of our borders with any member state, and we have always had very close co-operation with the Irish Government and the Garda in respect of such matters.

I turn to EORI. The hon. Lady asked how many operators trade only across the Northern Ireland-Republic of Ireland border and, because they do not already trade with a country outside the EU27, have not already been registered for an EORI number. I do not have a precise figure, but we estimate that about 245,000 businesses in the UK as a whole—145,000 that we can identify as being above the £85,000 VAT registration threshold, and an estimated 100,000 further that are below that threshold—trade solely intra-EU, so it will be a fraction of that number.

The hon. Lady touched on whether the arrangements relating to Northern Ireland in both statutory instruments would be compliant under WTO arrangements. Our belief is that they would be, albeit that they would be exceptional arrangements. In the case of both instruments, we would hope to be in constructive discussions with the Irish Government about how to move forward if we end up in a no-deal situation.

The hon. Lady asked some specific questions about EORI registration and referred to her letter. I am grateful to her for having raised that with me before this Committee. The answer to her question is that approximately 60,000 EORI registrations have now been made in the group we are targeting. That is 24.8% of those that we believe are in the scope of requiring an EORI. She asked what happens if a business turns up in the UK without the relevant EORI registration, and I point her to the transitional simplified procedures that we have set out.

The hon. Lady’s final point was about businesses that might provide a service to facilitate EORI registration. Quite rightly, she pointed out that is a free-of-charge service that can be completed very quickly, and it is not that complicated to do it online. If she has any specific examples that she would like to bring to my attention, where she believes that anybody is in any way misrepresenting the complexity of this process simply in order to profit from the interaction with the business concerned, I will look at them very closely.

I am grateful to the Minister for those clarifications, which are enormously helpful. I mentioned in my letter the name of one outfit that operates in that direction, but I will have another look and send it on. On his penultimate point about how companies would cope with not having an EORI, it was my understanding that, in order to participate in the new transitional simplified procedures scheme, businesses had to have signed up for that, and we do not know how many have. They could be in a double bind if they are not in either scheme. I know that the Government say they will completely suspend many of the normal reporting requirements, which opens up many concerning questions, but unless I am misunderstanding the transitional simplified procedures scheme, it is not clear that those who do not have an EORI would drop into that other scheme. Perhaps he can explain that further.

The hon. Lady poses a fair question. Although what happens going the other way will be in the control of the EU27, in the event that a business came into the United Kingdom, arrived without an EORI number, was not in the TSP arrangements and was not in transit with the various suspensions that go with that, we would take a proportioned, flexible approach at the border under those circumstances. We would make sure, as we have always said, that we prioritise flow over other aspects, while in no way compromising on security.

Question put and agreed to.

Draft Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the draft Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019.—(Mel Stride.)

Committee rose.

Draft Social Security Coordination (Reciprocal Healthcare) (Amendment etc) (EU Exit) Regulations 2019 Draft National Health Service (Cross-Border Healthcare and Miscellaneous Amendments etc.) (EU Exit) Regulations 2019 Draft Health Services (Cross-Border Health Care and Miscellaneous Amendments) (Northern Ireland) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Sir David Amess

† Badenoch, Mrs Kemi (Saffron Walden) (Con)

† Cooper, Rosie (West Lancashire) (Lab)

† Courts, Robert (Witney) (Con)

† Coyle, Neil (Bermondsey and Old Southwark) (Lab)

† Creasy, Stella (Walthamstow) (Lab/Co-op)

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

† Elmore, Chris (Ogmore) (Lab)

† Graham, Richard (Gloucester) (Con)

† Hammond, Stephen (Minister for Health)

† Jones, Mr Marcus (Nuneaton) (Con)

† Morton, Wendy (Aldridge-Brownhills) (Con)

† Norris, Alex (Nottingham North) (Lab/Co-op)

† O'Brien, Neil (Harborough) (Con)

† Sheerman, Mr Barry (Huddersfield) (Lab/Co-op)

† Sherriff, Paula (Dewsbury) (Lab)

† Throup, Maggie (Erewash) (Con)

† Tomlinson, Michael (Mid Dorset and North Poole) (Con)

Ian Bradshaw, Committee Clerk

† attended the Committee

Seventh Delegated Legislation Committee

Monday 25 March 2019

[Sir David Amess in the Chair]

Draft Social Security Coordination (Reciprocal Healthcare) (Amendment etc) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Social Security Coordination (Reciprocal Healthcare) (Amendment etc) (EU Exit) Regulations 2019.

With this it will be convenient to consider the draft National Health Service (Cross-Border Healthcare and Miscellaneous Amendments etc.) (EU Exit) Regulations 2019 and the draft Health Services (Cross-Border Health Care and Miscellaneous Amendments) (Northern Ireland) (EU Exit) Regulations 2019.

It is a great pleasure to serve under your chairmanship, Sir David. I am grateful to the Committee for agreeing to discuss these regulations together, which seems logical to me. I welcome the hon. Member for Dewsbury, who is debating with me. I want to put on record at the start that the hon. Member for Ellesmere Port and Neston (Justin Madders), who is no longer on the Labour Front Bench, conducted himself in a helpful and constructive way in this particular part of our discussions about EU exit, which is about reciprocal healthcare and the good of all our constituents.

I would also like to put on record my thanks to the Scottish Government and the Welsh Assembly, and the Labour Government there, for their help with the Healthcare (International Arrangements) Bill, on which we have had legislative consent motions. That is a record, because it is the only piece of EU exit legislation to which we have a legislative consent motion. It will mean, hopefully, that some of the things that we are discussing tonight will be easier to implement when that Bill comes through, either tomorrow or some other time.

Before the Minister gets into full flow, I would like to say that I have been to lots of these Committees—I do not know if someone up there loves me or the Whips have a grudge—but I have never come across one that is such a rag-bag of things. As a Member of Parliament, I am supposed to give parliamentary scrutiny to this whole rag-bag of very important pieces of delegated legislation. Is that just because the Minister is in a hurry? This disaster of Brexit is coming and we are throwing everything at it. Up until now, we have had one statutory instrument, debated it in some detail and, by and large, felt that we have led some accountability. This looks like a total mess. How can we do our job properly with this large number of documents in front of us?

The hon. Gentleman has been in the House much longer than I have. He will know that it is not unusual to have statutory instruments grouped together. In fact, last week a number of SIs from the Department for Environment, Food and Rural Affairs were grouped together and discussed on the Floor of the House, and then voted on individually.

The rationale for this evening’s grouping is simple: they are all to do with reciprocal healthcare, ensuring that our citizens—in either a deal or, particularly, a no-deal situation—have the potential to have the rights that they currently enjoy, which is the Government’s aim. That is why I have asked for them to be grouped together. I am grateful to the Committee for allowing that. Had the hon. Gentleman chosen to do so, we could have discussed them individually. If he allows me the time to progress with my speech, I hope he will see the logic of why we have grouped them this evening.

I have a slightly different question for the Minister. He just spoke about his gratitude to the Scottish Parliament and the Welsh Assembly Government for their work on the legislative consent motions that these statutory instruments require. I note that in the explanatory memorandum it says that consent has also been sought from Northern Ireland. For the record, I would like the process by which consent has been sought from Northern Ireland on the measures to be set out.

If the hon. Lady will allow me, I will tackle that in my speech. I will set out the arrangements that are in place with the Northern Ireland Executive, and if she is then not happy I will try to answer any questions at the end.

I have to explain this accountability and scrutiny work I am doing to my constituents, so before the Minister sets sail—I wish him a really nice journey, with no problems—will he be putting the SIs into layman’s language, carefully going through them and saying what they really mean in the sort of language his constituents, along with mine and yours, Sir David, could understand?

The hon. Gentleman can only test that and prove whether he has done his work on accountability after he has heard what I have to say, so I hope he will allow me to say it. I read this speech last week and it went back for re-writing, so I hope that it is now in the sort of language that both he and I and, importantly, our constituents will be able to understand.

Here we go.

The Government are introducing these three statutory instruments under section 8 of the European Union (Withdrawal) Act 2018, to correct deficiencies in retained EU law relating to reciprocal and cross-border healthcare, and to ensure that the law is operable on exit day. When the UK leaves the EU, that Act will automatically retain the relevant EU legislation and the domestic implementing legislation in UK law. In a no-deal scenario, however, if we did not legislate further, the regulations would be incoherent and unworkable without reciprocity from member states. There would be a lack of clarity about patients’ rights to UK-funded healthcare in EU and European Free Trade Association countries.

Current EU reciprocal healthcare arrangements enable people to access healthcare when they live, study, work or travel in EU and EFTA countries, and in the UK. They give people retiring abroad more security, they support tourism and business, and they facilitate healthcare co-operation. The Government intend to continue those reciprocal and cross-border healthcare arrangements, as they are now, in any exit scenario until at least December 2020.

In a deal scenario, the in principle agreement we have reached with the EU under the withdrawal agreement is that during the implementation period—until 31 December 2020—all reciprocal and cross-border healthcare entitlements will continue. There will be no changes to healthcare for UK pensioners, workers, students, tourists and other visitors, and the European health insurance card scheme and planned treatment will continue. That would all be legislated for in the European Union (Withdrawal Agreement) Bill. The Government want to secure a wider reciprocal healthcare agreement with EU and EFTA states following the end of the implementation period, which will support a broad range of people. We will negotiate that with our European partners during phase 2 of the talks on our future relationship.

In a no-deal scenario, our proposal to all EU and EFTA countries is to maintain the current reciprocal healthcare arrangements for at least a transitional period lasting until December 2020, to ensure that UK nationals can continue to access affordable healthcare when in the EU.

When we get our EHIC card and go across to anywhere in Europe, we are sure that if we need medical attention it is covered by those reciprocal agreements. Is the Minister saying that for a short transitional period the continuity of that process will be maintained but that it will all end when we leave the European Union?

No, that is not at all what I am saying. I am sure that the hon. Gentleman was listening carefully. I was saying that in a deal scenario all current arrangements will continue and in a no-deal scenario we are seeking to put in place interim arrangements. In both scenarios we seek to have an arrangement that will continue reciprocal healthcare after the implementation period. Were he to vote for the withdrawal agreement, the EHIC card he was talking about would continue to be used, certainly until December 2020 and possibly much later depending upon what we negotiate. These regulations seek to ensure that UK law is consistent, so that the arrangements that are in place in a potential no-deal scenario can allow reciprocal healthcare arrangements to continue.

When I discussed the subject with a junior Transport Minister, who is a good colleague of the Minister’s, he said that the green card—which ensures that UK drivers who are hit by an uninsured driver when driving in Europe, whether they are in their own car which they have taken to the EU or one they have hired there, are insured—will disappear as we leave the European Union and it will no longer work. He was very final about that. The hon. Gentleman is now saying that he is not sure if that is final. It is the end of a reciprocal relationship and after 2020 everyone will be uninsured when they travel abroad.

The hon. Gentleman is putting words into my mouth that I did not say. What I said was that in a deal scenario all reciprocal arrangements will continue as per now until 31 December 2020. As I have pointed out, during that period clearly the Government will seek to negotiate an EU and EFTA states-wide continuing reciprocal arrangement. Everything we have now will immediately go into that transitional period when we negotiate. If there were a no-deal scenario, we would have to put in place interim arrangements to ensure that the current arrangements pertain. Again, during the transitional period it is the Government’s intention to seek to negotiate an EU and EFTA states-wide continuing reciprocal healthcare arrangement. However, we might also have to do that on a bilateral basis with individual states. There is no intention or expectation from the Government—or from the EU or EFTA states—that 31 December 2020 is a break point. I hope that I have satisfied the hon. Gentleman on that point.

I am not going to respond to the chuntering from the floor, other than to note very clearly what—

The Government want to secure a wider reciprocal healthcare agreement with EU and EFTA states following the end of the implementation period, which supports a broad range of people. That is what I have just explained. In a no-deal scenario, our proposal to all EU and EFTA countries is to maintain the current reciprocal healthcare arrangements for at least a transitional period to ensure that UK nationals can continue to access affordable healthcare when they are in the EU.

The statutory instruments we consider today will support us to do that with the countries we are able to negotiate those agreements with. However, our proposal depends on reciprocity from other European countries and we are in advanced discussions with member states to ensure continuity. In the event that an agreement cannot be reached, healthcare cover for those nationals may change.

We have approached and are in discussion with other member states and are prioritising those that are the major pensioner, worker and tourist destinations. The UK and Irish Governments are committed to continuing access to healthcare arrangements within the common travel area and both Governments are taking legislative steps to ensure we can implement the arrangements in time for exit day.

The Government welcome the action by EU member states who have prepared their own legislation for a no-deal scenario, including, but not limited to, Spain, France, Portugal, and Belgium. Depending on the decisions by other member states, it is important to acknowledge that access to healthcare could change.

Did I hear the Minister right? Forgive me for another intervention, Sir David. Did the Minister say that he thanks those other European states, because they are negotiating this? It is not final, is it? As I said earlier, this is a “coming home on a wing and a prayer” policy. Our constituents should know the position, surely. We are Members of Parliament; we are paid to come here and represent our constituents. The Minister is telling me that this legislation will mean that after 2020 they will not be insured for their healthcare when they travel abroad. That is what he is saying, because there is no certainty in what he says.

The hon. Gentleman is completely wrong: that is not what I am saying. I will say this once again for him. If the withdrawal agreement is signed—I urge him to vote for it, because that would provide certainty for his constituents—the current arrangements will continue, and it is the Government’s intention, during the transitional period, the implementation period, to negotiate an EU and EFTA states continuing arrangement. In a no-deal scenario, we will have to put in place interim arrangements, and that is what we are discussing now. It would still be the intention—it is a very clear expectation of the Government and is very clear from the stated ambitions and comments of the EU—that reciprocal healthcare would be the subject of a negotiation, either on an EU-wide basis or by individual member states.

I accept that there is some element of uncertainty, but I hope that I can now reassure the hon. Gentleman. Each of the 27 EU member states is a country with universal healthcare, and in general people have good options for obtaining healthcare, provided that they take the appropriate steps. Depending on the country, it will be possible to access healthcare through legal residency, current or previous employment, or by joining a social insurance scheme. Less frequently, people may need to purchase private insurance. It is always the advice when people travel overseas, including to Europe, that they should purchase appropriate travel insurance. People have always been encouraged to do that. However, I appreciate that it can be difficult for some people with long-term conditions, and it is important that people make the best decisions for their circumstances when choosing to travel.

As is the case now, UK nationals who return to live permanently in the UK will be able to access NHS care. UK nationals who currently have their healthcare funded by the UK and are resident in the EU on exit day can use NHS services in England without charge when they temporarily visit England. We recognise that that might mean change, and in some circumstances additional expense, for UK nationals living abroad. It is to avoid that that we are bringing forward these statutory instruments.

I would like to reassure the Committee that the Government have issued advice, via Government and NHS websites, to UK nationals living in and travelling to EU and EFTA states and to EU citizens living in the UK. The advice to UK nationals explains how the UK is working to maintain reciprocal healthcare arrangements, but that their continuation depends on decisions by member states. It also sets out what options people might have to access healthcare under local laws in the country that they live in if we do not have bilateral arrangements in place, and what people can do to prepare.

The Minister has lifted the lid on this. It is horrific news for our constituents—for people who live in Huddersfield and Dewsbury and all the constituents we represent. It is, in stark terms, the end of the assurance that people can travel around Europe. We all had our little card and we knew that we did not have to go out and get private health insurance; we would be covered. We had that peace of mind. What the Minister is saying today, in plain language, is that that peace of mind will end. He has just read that out. It will end unless by luck, some wing and a prayer policy that arrives from this incompetent Government actually delivers something that they cannot promise and cannot deliver.

The hon. Gentleman is a noble exponent of the art of opposition, but he is sensationalising and misunderstanding what I say. I have not said that the arrangements are not going to continue; what I have said is that in a no-deal scenario there may be some circumstances where people have to consider different arrangements from what they have already. It is the Government’s intention, in both a deal and a no-deal scenario, that these arrangements should continue, and that is what we will put in place this afternoon, if we ever get there.

The hon. Member for Huddersfield seems to be trying to imply that if someone goes on holiday in the EU area at the moment, they do not need to have travel insurance. Now, from my experience of travelling to the EU area, it has always been advisable to have travel insurance, because in my experience, when I have had to access services, the first thing that the hospital in an EU country has asked is, “Where is your health insurance? Where is your credit card?” So it is not necessarily just a given that the card that people can obtain covers them in all eventualities.

Where my hon. Friend is absolutely right is that, of course, it has always been the advice that people should purchase travel insurance when they travel, wherever they travel, including within the EU. The EHIC card is clearly in place. If the withdrawal agreement is signed, that arrangement will continue, but it has always been the Government’s advice that people should take out the appropriate travel insurance when travelling abroad, and he is absolutely right to make that point.

I thank the Minister for giving way; he is being very generous in doing so. There are particular British expatriates living in other countries. As he said, some people have long-term conditions, including skin conditions that are temperature-sensitive and lung issues, for example. Just to be absolutely clear, he has said that there may be circumstances in which some of those people with long-term conditions may have to make other arrangements. So there is a direct disadvantage for disabled British people who are supported under the current framework who may not be supported, even under the Government’s plan. Is that correct?

It is correct only in the unlikely circumstance of a no-deal scenario, and only in that there may not be interim arrangements put in place immediately after exit in a no-deal scenario. That is why I am setting out what the possibility might be, but I stressed that this is not what the Government hope for. Neither is it something that the Government expect or that is the Government’s ambition. What I have said is that, in the unlikely circumstance of a no-deal scenario, there may be some changes that some people need to make.

On a point of order, Sir David. I know this Minister to be a very honest man, but I think he is in danger of misleading the Committee, only in this sense—that he keeps saying “only if we crash out without a deal”. I am sorry, but as I read the documents and listen to him when he reads from them, that does not appear to be the case. It seems to me that, whatever happens when we leave the EU, the security of being insured as people travel around Europe will disappear, whether we crash out or whether we achieve a deal.

As a Member of 40 years’ standing, the hon. Gentleman knows perfectly well that no one can be accused of misleading anyone, so I am sure that he did not mean to say that. And as far as the point of order is concerned, it was not a point of order; it was a point of exasperation.

Exasperation is something that many of us feel, Sir David. However, in some circumstances these instruments enable the Government to protect individuals irrespective of reciprocity with other countries. The issue was raised during the Lords’ consideration of the Healthcare (International Arrangements) Bill and has been misreported in the press.

I want to be absolutely clear, or at least I will try to be absolutely clear, and hopefully the hon. Member for Huddersfield will accept what I say. Through these instruments, we can finish funding healthcare for people in a transitional situation. That would cover those who are in the middle of a treatment on exit day, those who have already had treatment and are receiving post-treatment care, and those who have applied for or been given authorisation for the treatment before exit day. That will apply for a year, or for the period of authorisation, whichever is later. That, of course, assumes that the member state is willing to provide the treatment and accept reimbursement from the United Kingdom. The offer that the Government are making through these instruments is to continue to fund healthcare through the current reciprocal and cross-border healthcare arrangements until 31 December 2020 in those member states that agree to reciprocate. It is not feasible to directly fund healthcare for hundreds of thousands of people living in, or visiting, the EU without the cooperation of the member states.

Many hon. Members will know that the Government have also brought forward a Bill focused on reciprocal healthcare arrangements, the Healthcare (International Arrangements) Bill. That Bill will ensure that the UK can respond to all exit scenarios, and complements the approach we are taking in these instruments. It provides powers to give effect to comprehensive healthcare arrangements that are bespoke, or are different in any way from the current arrangements provided by the EU regulations. That Bill will also provide the legislative framework to implement long-term, complex reciprocal healthcare arrangements with the EU or bilateral agreements with individual member states.

We are also exploring whether there is a need to further fund healthcare for limited numbers of people in exceptional circumstances in which there would otherwise be a very serious risk to their health. The Healthcare (International Arrangements) Bill will give us the powers to do that, and to respond to an unpredictable situation. Clearly, we need to prioritise support for those individuals who most need it, and those in countries where there are actual challenges in obtaining healthcare. It is our hope that that will not be necessary at all. I recognise the difficulty of the current situation, and assure the Committee that we are doing all we can to minimise changes in the way that care is accessed. Of course, if the withdrawal agreement is passed, there will be certainty.

I will try to pre-empt a number of questions about why these instruments are subject to the affirmative procedure and regulations under the Healthcare (International Arrangements) Bill are subject to the negative procedure, although I am sure there will be other questions. As has been explained during the course of debates on that Bill, regulations that are made under it will give effect to healthcare agreements and are most likely to focus on procedural, administrative and technical details, such as the types of documents or forms used to administer the reciprocal healthcare arrangements. The Government therefore believe that the negative procedure offers parliamentary scrutiny and proper checks on the use of delegated powers, and balances those against the appropriate use of parliamentary time. The withdrawal Act statutory instruments that we are debating prevent, remedy or mitigate deficiencies in the retained EU law relating to reciprocal healthcare, and in doing so amend powers to legislate, which is one of the triggers for the affirmative procedure under that Act.

I clarify that the instruments we are considering do not make any changes to welfare benefits policy; the Department for Work and Pensions is bringing forward separate legislation on welfare benefits. I also reassure hon. Members that, as I said at the outset, we have been working closely with our colleagues in the devolved Administrations, who have provided consent for these instruments. I am pleased to acknowledge those Administrations’ co-operation on securing the legislative consent motions, and thank them for it. I also thank colleagues in the Northern Ireland Department of Health and in the Northern Ireland Office for the productive engagement we have had with them. We have amended the Bill to reflect the outcome of those discussions: the Secretary of State must now consult the relevant devolved Authority before making regulations under clause 2(1) containing provisions that are within the legislative competence of a devolved legislature.

For the avoidance of doubt, could the Minister set out what he believes to be the relevant devolved Authority for giving consent? He has said that in addition to the legislative consent motion, the Northern Ireland Department of Health and the Northern Ireland Office had been consulted, and had given consent. I do not want to get this wrong, so could the Minister clarify which bits which Departments have given consent to, and which relevant devolved Authority he believes will give consent to this motion at this point in time?

What I actually said was that we have had productive and positive engagement with colleagues in the Northern Ireland Department of Health and the Northern Ireland Office, and Northern Ireland officials have agreed that they are content for the Department of Health and Social Care to lay the draft Health Services (Cross-Border Health Care and Miscellaneous Amendments) (Northern Ireland) (EU Exit) Regulations 2019. That follows a decision by UK Ministers that, in the interest of securing legal certainty in Northern Ireland, the UK Government will progress the necessary secondary legislation for Northern Ireland at Westminster, in close consultation with Northern Ireland officials and the relevant Northern Ireland Departments. I hope that satisfies the hon. Lady.

I beg the Minister’s indulgence. For the avoidance of doubt, is he saying that consent to the orders will be given in Westminster for the specific Northern Ireland elements of the statutory instrument? Can he confirm that that is what he is telling us about the legislation?

What I am telling the hon. Lady about the specific statutory instrument, the Health Services (Cross-Border Health Care and Miscellaneous Amendments) (Northern Ireland) (EU Exit) Regulations 2019, is that consent was sought from the Northern Ireland civil service, and was provided by the permanent secretary for the Department of Health for Northern Ireland. The Northern Ireland civil service may make decisions in the public interest under the Northern Ireland (Executive Formation and Exercise of Functions) Act 2018. Again, following decisions by UK Government Ministers, in the interest of securing legal certainty in Northern Ireland, the UK Government will progress the necessary secondary legislation in close consultation. As I have said, consent was sought from the Northern Ireland civil service, and was granted.

Order. We can have only one person on their feet at a time. Is it the case that the Minister is not giving way?

I have given way on a number of occasions. I am bound to say to the hon. Member for Huddersfield that I have been clear about the legal position and the legal certainty. I have given clarity that the Northern Ireland civil service and the Northern Ireland Department of Health are clear and are consenting to what we are doing.

Then the hon. Gentleman does not need to ask me, because I have just answered his question.

In addition, I am pleased to report that we have the legislative consent motions for our Healthcare (International Arrangements) Bill. To underpin and facilitate the consultation, we have developed and agreed a memorandum of understanding with the devolved Administrations, which sets out a practical and mutually beneficial working relationship. That will ensure that the devolved Administrations will continue to play a vital role in delivering reciprocal healthcare for the benefit of all United Kingdom nationals.

The Minister is a little grudging, but it is an important issue. He has gone through all the people whom he has consulted in Northern Ireland, and they all sounded like bureaucrats and civil servants to me. I did not hear him once say that he had confronted the facts of what is happening, through the statutory instruments, to our parliamentary colleagues or that he had put it to them. For all these years, their constituents have felt that they could go all over Europe and carry with them an extension or a bubble of the national health service that delivered the NHS promise, even though they were travelling. Did they get the picture? Were they told in blunt terms that that will no longer exist for their constituents? For people who are travelling, it is the old Tory dream of privatising the health service.

I was going to say that I can see why the Speaker regards the hon. Gentleman as a national treasure, but after his final remarks, it is difficult to agree.

In closing, I make it clear that the instruments make miscellaneous amendments to EU references in retained EU law—for example, by removing references to EU concepts. Moreover, together with the Healthcare (International Arrangements) Bill, the instruments are necessary to ensure that the UK Government are ready to deal with reciprocal and cross-border healthcare in any EU exit scenario. They provide us with an efficient and effective mechanism to ensure that there will be no interruption to people’s healthcare in a no-deal scenario.

I thank members of the Committee for their valuable contributions.

It is a pleasure, Sir David, to be here discussing the draft regulations. The Opposition have started our speeches on Brexit SIs with a caveat, and I shall do so again this evening, so I apologise for any repetition.

We are now just four days away from Brexit day, as I am sure everyone is well aware. It is deeply concerning that we are still planning for a no-deal scenario when we are so close to the deadline. Once again, we are in Committee to discuss a statutory instrument that would make provision for the regulatory framework after Brexit in the event that we crash out without a deal. On each similar occasion, I and my Labour Front-Bench colleagues have spelled out our objections to the Government’s approach to secondary legislation.

The volume and flow of EU exit secondary legislation is deeply concerning for accountability and proper scrutiny. The Government have assured the Opposition that no policy decisions are being taken. However, establishing a regulatory framework, for example, inevitably involves matters of judgment and raises questions about resourcing and capacity. Secondary legislation should be used for technical, non-partisan, non-controversial changes, because of the limited accountability that it allows. Instead, the Government continue to push through contentious legislation with high policy content via such vehicles. As legislators, we have to get things right. The regulations could represent real and substantive changes to the statute book and they need proper in-depth scrutiny. In the light of that, the Opposition would once again like to put on record our deepest concerns that the process for these regulations is not as accessible and transparent as it should be.

With that out of the way, as always I have some concerns and questions about the statutory instruments. I understand that the three SIs set out provisions for an “orderly wind-down” of UK reciprocal healthcare arrangements with the EU and European economic area in the case of no deal, and that they allow for treatment that is in progress or that was authorised before exit day to be completed on either side of the channel, and—so far as possible acting unilaterally—for reimbursement for those treatments. I also understand that the Department of Health and Social Care regards the regulations as a temporary provision, which, until the Healthcare (International Arrangements) Bill comes into effect, will allow the current system, including the European healthcare insurance card and S1 form, to be continued until 31 December 2020 with individual countries. The Minister has alluded to that.

The transitional elements allow for all ongoing treatment to continue for a maximum period of one year following exit, and for pre-authorised treatments. Similarly, dedicated regulations deal with the special situation in Northern Ireland, where such arrangements are more frequent owing to the land border with the Republic of Ireland. I know that the Department of Health and Social Care regards the regulations as a temporary provision, but an article in The Guardian this week showed that British nationals in Europe feel that the healthcare plans for pensioners are “sick” and “uncaring”. They feel that they are being thrown under a bus and abandoned. They do not think that the one-year undertaking is at all adequate. The Minister will need to deal with the fact that the measure does not reassure many of our fellow citizens living abroad who access healthcare abroad.

As to the Northern Ireland regulations, people need clear guidance to avert harm in the event of no deal. Health services in Northern Ireland and the Republic of Ireland, working separately, often do not have sufficient demand to provide cost-effective, highly specialised medical services. More than €40 million has been invested in cross-border health and social care initiatives via Co-operation and Working Together, a partnership between the health and social care services in Northern Ireland and the Republic of Ireland. Cross-border service arrangements have been established and are currently providing high-quality, safe care for patients, in a range of areas including primary care, cancer services, and paediatric cardiac surgery. Those vital health services must not be destabilised during, or after, the Brexit process, regardless of the outcome.

It is also vital that patient access to key health services is not jeopardised during the Brexit process. Can the Minister provide assurances on that? Will he also agree to an equality impact assessment to ascertain the number of Brits who may lose access to treatment for long-term conditions if his desire for a deal is not realised? It would also be good to understand what the cost would be of any of those Brits having to return home for treatment, as clearly there might be financial implications.

Lastly, on the Social Security Coordination (Reciprocal Healthcare) (Amendment etc.) (EU Exit) Regulations 2019, we are talking about the European health insurance card. Some 27 million of our fellow citizens hold the EHIC and some 190,000 UK pensioners living elsewhere in the EU are registered with the S1 scheme. One week away from Brexit, the NHS England website is still encouraging people to apply for the EHIC, even though it might not be valid in one week’s time, and it is very difficult to see what other advice is available. There is no advice about taking out additional insurance, and no advice whatsoever for those with long-term conditions. That is completely inadequate and it will not do when we are so close to what might be an exit without a deal.

Can the Minister tell me how people will know what to do? How will they go about finding out? When will the NHS website be updated? What will happen to those people, who already feel abandoned, if in just over a week’s time we leave the European Union without a deal and they find that they cannot access clear advice on how to keep themselves and their families safe?

It is a pleasure to serve under your chairmanship, Sir David. I will be brief; I agree with much of what has already been said. Brexit clearly threatens the healthcare of millions of people in Scotland, and their healthcare rights when abroad are something that the Scottish people did not vote to have taken away from them.

It will come as no surprise that the House of Commons has overwhelmingly voted to rule out a no-deal Brexit, as have both the Scottish and Welsh Parliaments, yet here we are still discussing no-deal Brexit contingencies. However, I am pleased that there has been agreement with the Scottish Government on a legislative consent motion. We have never been opposed to common frameworks, but we have always believed that they must be agreed with discussion and with the consent of the devolved Administrations, which in this case they have been. I welcome that progress and that respect for the devolution settlement.

It is clear that mechanisms need to be in place to protect those currently making use of reciprocal healthcare arrangements, as they are being put under considerable psychological and, potentially, physical stress as a result of this Government’s decisions. As these measures, should we ever be in the position of having to use them, go some way toward alleviating their situation, I will not be opposing them today.

It is always a pleasure to serve under your august chairmanship, Sir David. I rise simply to put on record a concern that many of us have, having heard what the Minister has said about this matter. We recognise that we are hampered by the fact that many SIs are being bundled together. With many of these SIs, as the hon. Member for Linlithgow and East Falkirk pointed out, we do not want to be in this situation at all, because many of us have such concerns about Brexit. However, we understand that the necessary legislation needs to be there should the worst happen, and therefore we cannot unbundle these SIs to express our concerns in particular about the SI relating to Northern Ireland.

I want to put on record that the Minister has essentially admitted that, by the process he has set out, we are facing direct rule in Northern Ireland. He talked about the Northern Ireland (Executive Formation and Exercise of Functions) Act 2018 and laying an SI, and he said clearly that consent has been given for this legislation not by elected representatives of the people of Northern Ireland, as the legislation sought to do under traditional legislative consent motions, but in fact by bureaucrats and by people here in Westminster.

The Minister will know that healthcare is a devolved issue; that is why I asked him all those questions about how the Government are using the 2018 Act. It is clear from this SI that their concept of the national interest is being stretched to cover bureaucrats and people in this place making decisions on behalf of the people of Northern Ireland. He may say to me, “Well, there isn’t a functioning Assembly in Northern Ireland”—many of us know that all too well—but he owes the people of Northern Ireland the honesty and decency to admit that, since the Government are using that piece of legislation on measures such as this and claiming a very broad interpretation of the national interest, we now have direct rule in this place for the people of Northern Ireland.

If the motions were unbundled, it might be a different matter, because those of us who believe in democracy believe that the people of Northern Ireland have a right to that truth. Because they are not unbundled, we cannot do that, so I am putting on record the Labour party’s concerns about the way in which the people of Northern Ireland have been treated in this statutory instrument.

I do not want to speak for more than half an hour, but I must make the point about this bundling. I have been on many Delegated Legislation Committees and have become quite an expert on statutory instruments.

If the hon. Gentleman and the hon. Member for Walthamstow did not want the statutory instruments to be bundled, they could have said so at the beginning of the Committee. The Government did nothing other than seek the permission of the Committee to bundle them. Should the Committee have wished, I would have been perfectly happy to unbundle them.

Order. We cannot have interventions on interventions. The Minister is intervening on Mr Sheerman.

I recognise the concerns of the hon. Gentleman and the hon. Lady and I will address their points, but the Government asked the Committee to agree, and the Committee agreed to the bundling of the statutory instruments.

I take that point. There has been honest confusion, because when the Minister introduced the statutory instruments, I did not realise that, because they had all been bundled, I could not have a responsible view and single out the statutory instrument relating to Northern Ireland. I would not want to vote against that, but I want to vote against the others. I did not realise that was what would happen; I thought we would vote on each one.

Order. I should clarify that there will be the opportunity to vote against each statutory instrument separately.

That is reassuring. Those of us who have become experienced with statutory instruments in these Committee rooms, with brilliant Chairs who keep the peace, try to do our job as parliamentarians and scrutinise them, but there is a large number of them. We trundle up here; very often the Minister gabbles through his or her speech and gets quite sulky if someone intervenes. This Minister has not —he has given way in good humour and I thank him for it—but many Ministers gabble through and get irritated if Members intervene. This hothouse of Committees churning through this stuff is something of a national scandal. We all know that we do not have the time to scrutinise the legislation.

Order. The hon. Gentleman’s remarks are very wide; they are general remarks about the way these matters are dealt with.

Quite right; I just wanted to set the context. I am very unhappy that these statutory instruments are scrambled together, but I thought that we would not be able to vote on each one, so I am reassured.

These statutory instruments look quite innocent, but we have unpicked them and asked the Minister questions, and there will be a dramatic impact on our constituents when they travel. They will no longer have the protection that we have all got used to over many years of going round Europe and knowing that we do not have to take up time with insurance because our insurance from the national health service follows us, with this lovely card that we all carry. Most of my constituents and those of Members here will be shocked when they go on holiday and are told, “You have to get private insurance; you won’t be covered. The green card doesn’t cover you because if an uninsured driver hits you, you’ll be in real trouble.” This is a serious issue. We are taking away from the citizens of this country the health protection that they have got used to after many years. The Minister says, “At some point it will all turn out all right because the negotiations will deliver something.” I cannot, hand on heart, say to my constituents that there will not be an abrupt change to all their holiday and business travel plans.

I only wanted to make that point, but I wanted to make it forcefully. I hope the Minister has not taken umbrage—I hope no other Committee members have, either—but it is our job to scrutinise and unpick some of the things that come before us. The Minister has been generous in taking interventions and, although I am not satisfied and will vote against some of the SIs, I am pleased that we have had some debate rather than sitting here supine, accepting stuff that comes down from the Executive.

Of course I do not take umbrage at the hon. Gentleman’s criticism or scrutiny. After all, that is what he is here to do. I would just say to him, though, that his characterisation of what the Government are putting in place is wrong. He can say to his constituents that if the withdrawal agreement is passed, there will be no interruption to their healthcare. In a no-deal situation, these instruments will allow—

I made it very clear that it is the intention—the expectation—of both the UK Government and the EU and EFTA states that there will be an agreement about reciprocal healthcare.

The hon. Member for Walthamstow raised a number issues about Northern Ireland. As she rightly pointed out, healthcare is fully devolved to Northern Ireland. These statutory instruments would normally be dealt with by the Northern Ireland Assembly. In the absence of the Northern Ireland Assembly, and in the absence of a Northern Ireland Executive, statutory instruments under the European Union (Withdrawal) Act 2018 have to be laid in Westminster to allow for debate and scrutiny. She has heard that that Act was consented to by the Secretary of State for Northern Ireland. The Northern Ireland consent for social security regulations was provided by the permanent secretary for the Northern Ireland Department of Health, which is the appropriate place in the absence of the Northern Ireland Assembly. Her characterisation of direct rule is incorrect.

The Northern Ireland (Executive Formation and Exercise of Functions) Act 2018 explicitly sets out that Ministers must also have regard to representations made by Members of the Northern Ireland Assembly. What efforts has the Minister made to seek the views of Members of the Northern Ireland Assembly on these particular statutory instruments? Even if the Assembly is not sitting, it is written into that Act that its Members should be able to make representations. Can he clarify what he has done in that respect, please?

I can clarify that the permanent secretary for the Northern Ireland Department of Health was consulted, as I said.

The hon. Member for Dewsbury asked about arrangements for cancer and paediatric heart surgery. The north-south arrangements provide that services such as paediatric heart surgery on the island of Ireland are not impacted by the UK’s withdrawal from the EU or these statutory instruments. Those arrangements operate under memorandums of understanding and service level agreements between the Irish and Northern Irish health authorities, which will continue to operate after exit day. The UK and Irish Governments are committed to continuing access to healthcare services within the common travel area, and both Governments are taking steps to enable us to implement these arrangements in time for exit day.

The hon. Member for Southwark and Old Bermondsey asked me about—sorry, Old Bermondsey and Southwark—

I’ll get there in the end. The hon. Gentleman asked about a number of chronic conditions. The statutory instruments allow the Government to fund the treatment of UK nationals who are in the middle of treatment on exit day or who have pre-authorised treatment in another member state. That could include the chronic conditions he mentioned.

Finally, I am not sure which part of the website the hon. Member for Dewsbury was looking at, but I am happy to ensure that we guide her to the right place. There is advice on www.gov.uk and www.nhs.uk to UK nationals living in the EU, to UK residents travelling to the EU and to EU nationals living in the UK. That advice explains how the UK is working to maintain reciprocal healthcare arrangements and sets out the options people might have to access healthcare under local laws in member states that they live in. I am happy to ensure that the hon. Member for Dewsbury can see that guidance.

The Minister has done an outstanding job in explaining a complex matter fairly concisely and taking innumerable interventions, mostly the same ones. Could we now move to a vote?

I understand my hon. Friend’s entreaty.

These three instruments, together with the Healthcare (International Arrangements) Bill, give us the best possible opportunity to ensure that there is no loss of reciprocal healthcare arrangements for UK nationals in the EU and EFTA states. I commend the regulations to the Committee.

Question put.

Resolved,

That the Committee has considered the draft Social Security Coordination (Reciprocal Healthcare) (Amendment etc.) (EU Exit) Regulations 2019.

Draft National Health Service (Cross-Border Healthcare and Miscellaneous Amendments etc.) (EU Exit) Regulations 2019

Motion made, and Question put,

That the Committee has considered the draft National Health Service (Cross-Border Healthcare and Miscellaneous Amendments etc.) (EU Exit) Regulations 2019.—(Stephen Hammond.)

Draft Health Services (Cross-Border Health Care and Miscellaneous Amendments) (Northern Ireland) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the draft Health Services (Cross-Border Health Care and Miscellaneous Amendments) (Northern Ireland) (EU Exit) Regulations 2019.—(Stephen Hammond.)

Committee rose.

Draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019 Draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019 Draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Graham Stringer

† Crouch, Tracey (Chatham and Aylesford) (Con)

† Debbonaire, Thangam (Bristol West) (Lab)

† Flint, Caroline (Don Valley) (Lab)

† Goodwill, Mr Robert (Minister for Agriculture, Fisheries and Food)

† Graham, Luke (Ochil and South Perthshire) (Con)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Jayawardena, Mr Ranil (North East Hampshire) (Con)

† Jenkin, Sir Bernard (Harwich and North Essex) (Con)

Lammy, Mr David (Tottenham) (Lab)

Mc Nally, John (Falkirk) (SNP)

† Martin, Sandy (Ipswich) (Lab)

† Reynolds, Emma (Wolverhampton North East) (Lab)

Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

† Seely, Mr Bob (Isle of Wight) (Con)

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

† Thomson, Ross (Aberdeen South) (Con)

† Warburton, David (Somerton and Frome) (Con)

Dominic Stockbridge, Committee Clerk

† attended the Committee

The following also attended (Standing Order No. 118(2)):

O'Hara, Brendan (Argyll and Bute) (SNP)

Eighth Delegated Legislation Committee

Monday 25 March 2019

[Graham Stringer in the Chair]

Draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019.

With this it will be convenient to consider the draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019 and the draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019.

As a farmer, I mention my entry in the Register of Members’ Financial Interests. The matters in these statutory instruments are closely related, and I thank the Committee for expediting matters by considering them together.

The instruments amend retained EU law and domestic legislation, setting down the detailed rules for the common organisation of the markets in agricultural products, to ensure their smooth transition into a domestic regime. They are distinct from the instruments being debated in the House tomorrow that amend the overarching framework legislation for those detailed rules. The amendments in the instruments will maintain the effectiveness and continuity of retained EU law and domestic legislation that would otherwise be deficient following our exit from the European Union. They will ensure that the transition from a regime governed primarily by EU law to one governed by domestic law causes minimal disruption for businesses and stakeholders.

The Minister talks about making sure that domestic law and the provisions of the statutory instruments do not make problems for businesses, but the Quality Standards for Green Bananas (England and Wales) Regulations 2012 are one of the measures that the statutory instruments tackle. Can he assure us that he will not allow the example of bendy bananas being ruled out from sale to continue when we have our freedoms, and that the statutory instruments do not lock us into the wrong regulations?

I am tempted to speculate, as some newspapers in this country did, about EU regulations on bendy bananas, but much of that was wide of the mark. Bananas are exported in their green state and turn yellow as they approach the market. If one keeps them for too long, they turn brown. As part of our policy on minimising food waste, if anyone would like Mrs Goodwill’s recipe for banana bread, I would be more than happy to provide it. There are regulations in place to ensure that consumers are not sold produce that is below the standard. The shape of a banana has little relevance to the eating quality, except where some diseases of bananas cause abnormal curvature. I did my banana homework before we started.

This legislation is technical in nature and limited in scope. We are upholding standards and maintaining processes. This instruments make appropriate corrections to ensure that the standards and processes continue to operate in a UK context. Where changes are required, we have endeavoured to ensure that they will have limited impact on businesses and other stakeholders. We have consulted extensively with the devolved Administrations on the instruments to ensure that the legislation on the common organisation of agricultural markets continues to work, while respecting the devolution agreements.

Two of the instruments under debate—the draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019 and the draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019—apply across the UK and operate in areas of devolved competence, with powers being transferred to the devolved Ministers. In many cases, the Secretary of State is able to act on behalf of the devolved Administrations, should they give their consent.

However, in some circumstances, that does not apply to Wales. Due to certain provisions specific to the Welsh devolution settlement, allowing the Secretary of State to act on behalf of Wales in certain instances would have implications for Wales’ devolved competences. The Welsh Government have carefully considered whether the Secretary of State should be able to act on their behalf in respect of each of the functions concerned, and the drafting of the instruments reflects the outcome of that consideration.

The draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019 amend a suite of domestic statutory instruments and have the same territorial application as the regulations they amend.

The draft instruments concern the common organisation of agricultural markets, more commonly referred to as the CMO. The CMO sits in pillar 1 of the common agricultural policy alongside direct payments, and was set up as a means of meeting the objectives of the CAP—in particular, to stabilise markets, ensure a fair standard of living for agricultural producers and increase agricultural productivity. Over time, it has broadened out to provide a toolkit that enables the EU to manage market volatility, to incentivise collaboration between, and the competitiveness of, agricultural producers and to facilitate trade.

The three draft instruments relate to the UK’s marketing standards regime, some payment schemes operated under CMO rules and miscellaneous amendments that provide for the enforcement of marketing standards and scheme rules. The draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019 amend a suite of EU regulations that lay down marketing standards and related rules for bananas; beef and veal; carcase classification; fruit and vegetables; hops; milk, milk products and spreadable fats; and pigmeat. Marketing standards, as enforced under the CMO, are designed to ensure a stable market for agricultural goods by enforcing even standards for certain agricultural goods, preventing the market from being flooded with cheaper, substandard goods. I hasten to add that that does not prevent the marketing of wonky vegetables, the sale of which I applaud as a way of reducing food waste.

However, I draw one point to the attention of the Committee. It has come to my attention that a small number of provisions in the marketing standards regulations will require minor amendments, as a result of changes made by the EU to regulation (EU) No. 543/2011, which relates to marketing standards for fresh fruit and vegetables. The changes were published in the Official Journal last week and are due to come into force before exit day. We will make a new statutory instrument to amend the draft instrument to reflect the changes and both instruments will be made together. This will ensure that our regulations link correctly to retained EU law as it is on exit day. I stress that that is not due to a mistake on our part; the EU has made changes that we need to catch up with.

The marketing standards regulations aim to minimise disruption to the flow of goods while preserving standards, and to make marketing standards legislation appropriate to the domestic context of the United Kingdom after EU exit. The amendments in the draft instrument are designed to be as minimal as is practicable in order to prevent wastage and reduce the burden on producers, but as robust as required to ensure that UK consumers can be confident that product information is transparent and accurate.

The draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019 amend a suite of domestic statutory instruments that provide for the enforcement of EU marketing standards in beef and veal labelling in England; carcase classification and price reporting in England; the quality of green bananas in England and Wales, as we have touched on; olive oil marketing standards in the UK; marketing of fresh horticultural produce in England, with some general provisions for the whole of the UK; certification of hops in the UK; milk price reporting in England and Northern Ireland; and the school milk scheme in England and Northern Ireland.

As far as is possible, existing requirements have been maintained. Where necessary, changes have been made to correct deficiencies arising as a result of the transfer of EU legislation into domestic law. For example, requirements to report to the EU or to allow a representative of the European Commission to attend inspections have been removed or replaced, as appropriate, with domestic equivalents. Criminal offences relating to the import and export of fresh horticulture and hops have been amended to reflect that the EU will become a third country on our exit.

The draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019 amend EU regulations that lay down detailed rules for rice processing; information provision and promotion measures; and public intervention and aid for private storage.

The draft statutory instruments make appropriate amendments to existing EU legislation to ensure that the legislation governing the CMO and agri-promotions can operate effectively after EU exit. That includes making technical changes to remove or replace references to EU institutions, as well as omitting certain provisions that will be inoperable once the UK has left the EU.

My right hon. Friend is talking about several measures that will affect different parts of the United Kingdom. Will he confirm now or later in writing how the measures will overlap with the overall UK framework? Even though certain certifications and marketing standards may be devolved, we want to ensure consistency for consumers, so that they can be confident of getting the same quality of product, whether in Scotland, Wales, England or Northern Ireland.

I reassure my hon. Friend that these measures—I am reluctant to describe them as changes, because nothing is really changing, other than the UK becoming the competent authority, rather than the EU—will have no impact on the devolution settlement; any measures that are devolved at the moment will continue to be devolved. There is no threat to that situation. In fact, we wish to build on our excellent devolution process. Only today, I met the devolved Administrations, with Fergus Ewing representing the Scottish Government.

I thank my right hon. Friend for giving way again. I am sure he will correct me if I am wrong. As well as giving us his wife’s banana bread recipe, which I am sure is excellent, will he inform us when the Department might review the application of the draft instruments? As he said, no changes are proposed today, but it might be right to make changes in the future.

My hon. Friend gets to the absolute crux of why people voted to leave the European Union. With the freedoms given to us, we will be able to review these measures in the future. Indeed, the Agriculture Bill, when it becomes an Act, will give us further powers to modify and innovate across a variety of areas to ensure that we have policies tailor-made for UK situations, rather than the often one-size-fits-all policies on the EU statute book.

The first good step will be to get the withdrawal agreement across the line. Indeed, I encourage all Committee members not to miss their third opportunity—they have had two already—to ensure that we deliver on the result of the referendum.

An example of an omission from the current regulations is the requirement to notify the EU; there seems little utility in mandating the Secretary of State to tell himself what he already knows. To pre-empt a question that I am sure right hon. and hon. Members will wish to ask: yes, the draft instruments will be needed if we agree a deal with the EU, as well as in a no-deal situation. They make operability amendments that will be necessary for retained EU law to function effectively and to maintain the integrity of our statute book, either at the end of an implementation period or sooner, if we leave the EU without a deal. If Opposition Members are worried about the damaging effect of no deal outlined by organisations such as the National Farmers Union, the remedy is to vote for the deal. I know that some Opposition Members have already shown exemplary wisdom in that regard.

The draft instruments make necessary changes to ensure that there will be an operable legal framework for marketing standards; that those marketing standards can be enforced; and that certain CMO payment schemes operate once we have left the European Union. The changes uphold our standards and maintain continuity for businesses and stakeholders.

It is a pleasure to serve under your chairmanship, Mr Stringer. I sympathise if Committee members feel that they are here for groundhog day, with yet another repetition of the complicated and technical details of statutory instruments designed to replicate in UK law the regulations that we currently enjoy with the EU.

I say enjoy advisedly, because if one good thing comes out of this process, it might be that we begin to realise just how many regulations it takes to create optimum trading relationships. The Minister and his hon. Friends have made much of the wish to reduce regulations—“red tape” they rather pejoratively call them—but when we joined the Common Market it was precisely regulations such as those that helped to bring about the single market which has been so beneficial to the British economy and which we are now so gratuitously throwing away.

The reason that we need market measures at all is that the market does not and cannot regulate itself to the satisfaction of society as a whole. The attempt to replicate those regulations and thereby to maintain what really only works properly as part of our membership of the EU is probably doomed to failure. Without the unanimity of purpose of a large organised bloc, and the role of equal sponsor of the market conditions in Europe that our membership has afforded us, I predict that many of the regulations will be either unworkable or superfluous.

In particular, the likelihood is that we will not be able or willing to adhere to the marketing standards element of the common organisation of markets, and our ability to trade freely with EU countries will therefore be hampered. Whether we have a soft Brexit or a hard Brexit, our agriculture will be seriously damaged. We will have no influence over changes in EU regulations on marketing agricultural produce, but we will have to adhere to them none the less if we are to continue to trade effectively into EU markets. The fundamental problem therefore is not with the wording of the draft SIs, but with the very idea that we can continue with our marketing and relationships with the EU simply by changing “EU” to “UK” and “Commission” to “Secretary of State”.

Is there anything in the draft SIs that I can pick out for particular criticism? No. Can I be sure that nothing in the SIs ought to be changed? No, I cannot be sure. It would not be at all obvious if mistakes had been made in these technical amendments to technical regulations. Normally, we rely on multiple stakeholders going over amendments to regulations such as these and alerting us to any possible dangers, but the absurd timeframe that we now face, having left all these SIs to the last possible moment, makes that impossible.

The Green Alliance, a grouping of most of the major environmental pressure groups for the purpose of engaging with Parliament and the political agenda, has stated:

“For the majority of environmental legislation that has been transferred in this way, there was no prior consultation or engagement with stakeholders.”

The SIs before the Committee are primarily about marketing agriculture and food, rather than environmental protection, but there are environmental consequences to our choices of which foods to eat and the promotion of more sustainable production methods. Did the Minister consult with any environmental stakeholders on the SIs? Did he receive a consultation response from the National Farmers Union on the SIs?

Like Members of Parliament, the independent stakeholders simply do not have the time or energy to scrutinise all the SIs, and that increases the danger of mistakes and omissions. Will the Minister commit to correcting any errors that do turn out to have been made inadvertently? Will there be some sort of “lessons learned” wash-up after this whole sorry episode is behind us, in order to maximise the participation of stakeholders in the setting of regulations in future?

We need regulations to make our society run smoothly and to maintain our agriculture and other production. The EU not only has transformed the fortunes of its member states through the standardisation of regulation, but is on the way to using its economic leverage to make its standards and regulations the standard for the whole world. It is no coincidence that the people who think that we can do without regulations are the people who tend to think that we can do without the EU. I believe that they are about to be proven spectacularly wrong, but there is nothing that we could do with the draft SIs to make any difference to that, so we will not be opposing them.

It is a delight to serve under your chairmanship, Mr Stringer.

I want to check a couple of things with the Minister before he sums up. My understanding of what we are undertaking in Committee and in all the other Committees on which I have sat considering EU-shared parts of regulation being transferred into UK law is that we are ensuring that we do not fall off a cliff edge without any regulations to cover important areas. Whoever was in government, including Labour had it won the 2017 general election, would have had to do exactly the same. In its manifesto, the Labour party made it very clear—it was on all our leaflets—that the British people’s decision to leave the European Union has been settled, or words to that effect. To transpose the legislation into UK law is not a matter of changing any of the regulations, but simply of making sure that they conform to British law, in many respects—and this might seem daft to the public—by inserting “UK” instead of “EU”.

Would the Minister confirm, however, that when we leave the European Union, Parliament will have the opportunity to look at all the regulations covering all areas that this and other Delegated Legislation Committees have discussed, to improve them if we want to, and to set them on a course beyond the EU’s minimum standard for agreement among the 27 member states?

I just wanted to make sure that that is clear for the record. I have found it quite difficult to understand why we have not opposed the statutory instruments in Committee, but we are asked to vote against them on a three-line Whip in deferred Divisions.

Just before I call Brendan O’Hara, I will clarify the situation. Apparently, there has been an administrative mix-up. Brendan O’Hara is not a member of the Committee, but he is completely in order to speak and will be recorded as present.

Thank you, Mr Stringer. I thank you and the Clerks of the House for your forbearance as I am a very late replacement for my hon. Friend the Member for Falkirk, who could not be here.

I agree with much of what the hon. Member for Ipswich said in his analysis. I absolutely agree—at the risk of repeating myself—that the speed and volume of the SIs passing through Parliament is frightening. I believe that mistakes will inevitably be made—perhaps not with this instrument, but somewhere along the line—and it will be left to those who come after us to clear up the mess. I do not believe that any organisation or Government could sit and sift through every single technical line of every single SI and work out the web of consequences to which they would inevitably lead, without making mistakes. I am extremely concerned about the speed and volume of SIs.

The no-deal tariff regime that was released by the Government in recent weeks, which would almost inevitably be replicated by the EU, would have a devastating impact on our food exports. Quality produce, such as lamb and beef—Scottish exports that rely on provenance—could face potential export tariffs of some 50%. That simply cannot be allowed to happen.

A few weeks ago, Andrew McCornick, the president of the National Farmers Union Scotland, said that

“a no deal Brexit must be permanently taken off the table and a workable solution identified by MPs and government as a matter of urgency to deliver some kind of order out of what is currently chaos.”

He is absolutely right. At this stage, it is inconceivable that we are still debating the idea of a no-deal Brexit. Let us be clear, whether we have a no-deal Brexit or the Prime Minister’s deal, which I am sure the Minister will point me to, neither option will avoid potential catastrophe for Scottish farming.

Again, the Government should listen to the president of the NFUS, who said that the future of Scottish farming depends on friction-free trade and access to skilled labour, and it requires a support package that is designed specifically for the needs of Scottish farmers and access to the single market and the customs union. We have very grave concerns that those things would not be contained either in a no-deal scenario or in the Prime Minister’s deal. We are almost being asked to put a diving board over a cliff—that diving board is the Prime Minister’s deal. Either way, whether we have a no-deal Brexit or accept the Prime Minister’s deal, it will be hugely detrimental to Scottish farmers, particularly those in my constituency of Argyll and Bute, on the west coast of Scotland.As the Minister will know, being a farmer himself, it is a less favoured area, and one that is extremely difficult to farm. Whether we are being offered no deal or the Prime Minister’s deal, it spells a very bleak and difficult future for farmers in our area.

The Scottish Government have done what they can. Despite constant scaremongering that payments will not be made to Scottish farmers if a legislative consent motion is not given, the Cabinet Secretary has confirmed that payments can and will be made, a statement that has been backed up by Michael Clancy of the Law Society of Scotland very recently.

We fear that the deal on offer and the Agriculture Bill completely fail to deliver on the promises made to Scotland, and the promise of the sunlit uplands has been replaced by a very different reality, in which support payments to farmers can be guaranteed only to 2022, and there is no certainly thereafter.

The hon. Gentleman is talking about providing opportunity to farmers. Perhaps he could provide those opportunities by ensuring that Scotland is included in the UK Agriculture Bill. It is the only part of the United Kingdom to be excluded, and it is excluded at the behest of his party.

I refer the hon. Gentleman to the National Farmers Union of Scotland, which will tell him about the difficulties and unique challenges in hill farming in the western highlands of Scotland. These are the people who keep the lights on in the glens. They are the people who tend the land day in and day out. If he wishes to argue that the devolution of agriculture is somehow not the way forward, I am happy to give way to him, but—

Order. Mr O’Hara, I remind you that we are discussing three very specific instruments. I am trying to be lenient, because I realise that they relate to the general debate, but if you could focus on the three instruments, that would be orderly.

Thank you, Mr Stringer.

We accept that the changes are relevant and will continue the operability of the existing legislation through the replacement of “the EU” with member state references. We understand that that approach to amending retained EU law has to be kept. Therefore, like the hon. Member for Ipswich, we will not oppose the draft regulations. However, we do so with grave concerns about the future of Scottish agriculture.

I thank hon. Members for their contributions. What will hopefully be clear is how producers and consumers are well served by passing the instruments, which will make operable retained EU law and domestic legislation on the organisation of agriculture markets to protect standards and our vital farming sector.

The draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019 make operability changes to a suite of EU regulations laying down marketing standards and related rules for the seven areas: bananas, beef and veal, carcase classification, fruit and vegetables, hops, milk, milk products and spreadable fats, and pigmeat.

The draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019 make the appropriate amendments to ensure operability for a number of domestic statutory instruments that provide for enforcement of EU rules for marketing standards for fresh horticultural produce, beef and veal labelling, carcase classification, green bananas, olive oil, and hops, as well as for enforcement of the rules of the school milk scheme and for reporting prices of milk and milk products.

The draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019 make appropriate amendments to EU regulations laying down detailed rules for the three areas of public intervention and aid for private storage, measures to promote agricultural products, and conversion rates for rice. The amendments will ensure that the legislation can operate in a domestic context.

A number of points were raised during the debate, which I will refer to briefly where they are relevant to the measures. The hon. Member for Ipswich seems to still be fighting the last referendum campaign. Although leaving with no deal would deliver for the 52% who voted to leave, I believe that the deal that the Prime Minister has produced is a deal that delivers for everybody and that we should all get behind. He mentioned that it was technical in nature, but the changes are simple; they merely take account of the fact that we will be leaving the European Union. Indeed, when we have left the European Union, we will be able to change things if we want, as the right hon. Member for Don Valley said, because we will be an independent nation. It sounds as if the hon. Member for Ipswich would like to stay in the European Union and not be given the freedoms that the British people voted for.

If we choose to align with EU standards, for example on carcase classification, that will be our choice. Indeed, companies in the UK are well used to exporting to markets around the world and can meet the specifications required in a whole range of countries, so there is no reason why we cannot make changes ourselves, should we wish. I repeat, however, that the amendments do not make changes to the regulation.

The hon. Member for Ipswich mentioned consultation. We had some consultation. We carried out targeted stakeholder engagement on the instruments relating to the CMO in November 2018, engaging stakeholders with a particular interest in the areas covered by the instruments. The stakeholders did not raise any significant concerns, and responses were mostly seeking to clarify issues of policy. We acknowledge the responses from stakeholders and thank them for their comments. Some stakeholders asked DEFRA to consider longer transitional periods for proposed labelling changes. We took their comments on board and provided for longer transitional periods.

The right hon. Member for Don Valley said that the measures before us ensure that we do not fall off a cliff edge. The measures will be relevant whether we have a deal or a no-deal situation and will ensure that business can carry on as usual. The hon. Member for Ipswich was talking about how everything that comes out of Europe seems to be fantastic and how we sign up to everything, but I respectfully remind him that the United Kingdom was held back in a number of areas when we moved on animal welfare. We banned dry sow stalls and veal crates and we took a number of measures on battery hens. We legislated ourselves, but we found that our markets were eroded by others not moving in the same direction. We have been held back in some ways by the EU.

To those who say that the Government will not maintain standards, I say that agricultural food standards in England are already very high, as they are consumer and retailer-led. They often go over and above the current standards set by EU legislation. For example, in the hops sector, brewers have the ability to set the standards they require from their suppliers, and those are often above the minimum EU standards. There is no desire for standards to be lowered for domestic or imported products.

The Minister makes an important point about standards. I absolutely agree that in many respects, we have been ahead of the European Union. We could go further, particularly in the transport of livestock, which is another area that could be improved. I take this opportunity to say that my hon. Friends on the Front Bench have confirmed that we have not objected to as many SIs as I perceived. We have agreed to hundreds and hundreds of SIs and changes. For the most part, Labour has agreed with the transposition of the regulations, and I wanted to correct the record on that.

I thank the right hon. Lady for those comments. In many ways, the Labour party has not stood in the way of such measures as the ones we are considering. However, the Labour party has stood in the way of the big one: the Brexit deal. Many Labour Members have voted against the deal, meaning that we cannot make progress in moving to the situation where we can make those changes, for which the regulations are the preamble.

The hon. Member for Argyll and Bute raised the sensible and reasonable point of what happens if we make mistakes. Well, we will fix them. As the changes are small and technical, it is unlikely there will be any major mistakes. As I have said, we have already picked up something where the EU had moved and the numbering of particular articles in the schedule had changed because a few were added at the top. He is absolutely right that under a no-deal situation, the tariff regime would be very difficult for the sheep markets. Tariffs in the region of 40% would be difficult for sheep farmers not only in Scotland, but elsewhere in the United Kingdom, given that we export 30% of our lamb. In particular, the carcases that tend to go on to the EU market are the small hill carcases, such as those produced in his constituency. Once again, the message is clear: vote for the deal so that we will not have a no-deal Brexit and so that we can negotiate a long-term farming agreement.

The hon. Gentleman mentioned the plight of hill farmers. I am not a hill farmer—we grow grain on some wonderful lowland areas—but I know from my constituency how tough it is being a hill farmer. The measures in the Agriculture Bill seek to switch aid from direct payments for production or for just being a farmer to public goods. I would argue that the public goods that hill farmers are delivering in terms of the wildlife and the environment—the walls, the hedges, and all those other features—are just the sort of things that Scottish farmers would want to grasp with both hands. It is disappointing that the Scottish Administration are perhaps not taking the same line as we are. When British taxpayers’ money goes into agriculture in the future, we will no longer be able to rely on French farmers burning tyres in the road and marching up the Champs-Élysées to protect farmers’ support. Under the Agriculture Bill regime, if Governments were to suggest cutting agricultural support, people would be writing to their MPs asking about the hedgehogs, the badgers, the bumble bees, the hedges and all those other features—those public goods—that the money will support. I hope that Scotland will be late arrivals at the Agriculture Bill ball, and join in on what I believe will be revolutionary changes to how we support agriculture, in a way that the general public as well as farmers will welcome.

The technical and operability amendments made in the regulations will maintain the effectiveness and continuity of the CMO legislation, which would otherwise be inoperable following our exit from the European Union. They will ensure that we can continue to operate schemes under the regulations for our vital farming sector, and maintain the standards they set, which support confidence in our farmed goods on domestic and international markets. I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Market Measures (Marketing Standards) (Amendment) (EU Exit) Regulations 2019.

Draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the draft Market Measures Payment Schemes (Amendment) (EU Exit) Regulations 2019.— (Mr Goodwill.)

Draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the draft Market Measures (Miscellaneous Provisions) (Amendment) (EU Exit) Regulations 2019.(Mr Goodwill.)

Committee rose.

Draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019 Draft Common Fisheries Policy and Aquaculture (Amendment etc.) (EU Exit) Regulations 2019 Draft Common Fisheries Policy (Amendment etc.) (EU Exit) (No. 2) Regulations 2019

The Committee consisted of the following Members:

Chair: Philip Davies

† Bradshaw, Mr Ben (Exeter) (Lab)

† Bridgen, Andrew (North West Leicestershire) (Con)

† Clarke, Mr Simon (Middlesbrough South and East Cleveland) (Con)

† Debbonaire, Thangam (Bristol West) (Lab)

† Eustice, George (Camborne and Redruth) (Con)

† Fellows, Marion (Motherwell and Wishaw) (SNP)

† Gaffney, Hugh (Coatbridge, Chryston and Bellshill) (Lab)

† Goodwill, Mr Robert (Minister for Agriculture, Fisheries and Food)

† Hill, Mike (Hartlepool) (Lab)

† Johnson, Gareth (Dartford) (Con)

† Kerr, Stephen (Stirling) (Con)

† Newton, Sarah (Truro and Falmouth) (Con)

† Pollard, Luke (Plymouth, Sutton and Devonport) (Lab/Co-op)

† Seely, Mr Bob (Isle of Wight) (Con)

† Sobel, Alex (Leeds North West) (Lab/Co-op)

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

† Yasin, Mohammad (Bedford) (Lab)

Laura-Jane Tiley, Committee Clerk

† attended the Committee

Ninth Delegated Legislation Committee

Monday 25 March 2019

[Philip Davies in the Chair]

Draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019

Debate on each instrument can continue for up to an hour and a half. I remind the Committee that the debate should be confined to the instrument being considered.

I beg to move,

That the Committee has considered the draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019.

The technical amendments made by the draft regulations, which were laid under the European Union (Withdrawal) Act 2018, will ensure that retained EU law provides effective and enforceable UK law, as well as continuity to businesses, while protecting the environment. No policy changes are being made to the effect of the retained EU law, and the regulations are not expected to change the way in which the fishing industry conducts its activities.

The draft regulations are complemented by the other fisheries statutory regulations that the Committee will consider today and by the Fisheries Bill, which will deliver our promise to take back control of our waters and decide who may fish in them and on what terms. They will create the powers to allow us to build a sustainable and profitable fishing industry over time.

The draft regulations will extend to, and apply to, the whole United Kingdom. Fisheries management in the UK is largely devolved in Scotland, Wales and Northern Ireland, so the regulations have been developed and drafted in close co-operation with the devolved Administrations, who have given their consent. This will ensure a common approach that respects the existing devolution settlements and maintains the existing system of fisheries management, providing certainty to the fishing sector and businesses.

The draft regulations will amend the majority of the retained EU legislation, including the basic regulation, which provides overarching principles for fisheries management; the control regulations, which contain rules on compliance, including inspection and enforcement; the sustainable management of external fishing fleets regulation, which will provide a framework for authorising UK vessels to operate outside UK waters and non-UK vessels to operate in UK waters; and the regulations on illegal, unregulated and unreported fishing, which will allow us to prevent, deter and eliminate illegal fishing activities—by prohibiting the import of fish from vessels or countries that fish illegally, for example.

The draft regulations were considered by the Secondary Legislation Scrutiny Committee, which reported them to the other place because of the public and political interest in fisheries. The Joint Committee on Statutory Instruments did not report them.

Because the draft regulations make only necessary technical amendments to retained EU law that already applies prior to exit day in the form of directly applicable EU law, a full impact assessment was not required. A 10-week consultation was conducted through the fisheries White Paper, which described future fisheries policy and the legislative approach taken by these statutory instruments. Meetings also took place with key stakeholders from the fisheries sector, the food industry and environmental non-government bodies, which broadly supported our approach. We also received several questions and comments from stakeholders, which we have addressed in explanatory memorandums available to parliamentarians and the public.

I commend the draft regulations to the Committee.

It is a pleasure to see you back in the Chair, Mr Davies. It is good to be in Committee for a second time today, albeit not in the same room—this time to debate fisheries.

I begin with the usual health warnings about the speed and the volume of the statutory instruments that are being pushed through. The Opposition believe that there are several glitches and gremlins in them that would have been caught with greater scrutiny and that could have severe consequences when it comes to implementation. We have concerns, which I will set out in turn, about all three instruments that the Committee will consider today.

Combined, the instruments represent about 190 pages of additional regulation. Concerns have been voiced by many of the stakeholders that we on the Opposition side work with about the sheer volume of legislation being pushed through, and about their ability to adequately scrutinise dense legal text and provide good scrutiny from a stakeholder perspective. Some 80% of UK environmental laws come from the EU.

The hon. Gentleman will no doubt be aware that when these original regulations came from the EU, drafted by the European Commission, they probably came in the form of delegated Acts or implementing Acts that would have received little or no scrutiny in this House. These regulations, as with others under the European Union (Withdrawal) Act 2018, are just about making those powers operable.

I am grateful for that intervention. It is good to see the former Fisheries Minister, the hon. Member for Camborne and Redruth, in his place, and good to know that the Government now need not only a Fisheries Minister but a former Fisheries Minister to rebut some of the Opposition’s scrutiny.

The concerns that we are raising sometimes relate to the implementation and drafting of the regulations. As the hon. Member for Camborne and Redruth will know from the statutory instrument Committee we sat on earlier today, the Minister himself acknowledged that there was a gremlin in that particular statutory instrument, which we flagged up. Our concern is about what other gremlins are in the statutory instruments we are considering today, and how they will affect future considerations.

I appreciate that it is possible for oversights or mistakes to be made, but the gremlin that the hon. Gentleman describes was something that the EU had changed and that we had not quite caught up with. It was not something that was going to have a massive effect; it was just that there had been a change, which we will now reflect in future.

I am grateful to the Minister for making my point for me. The fact that mistakes have been made in that respect means that other mistakes could be made, which is why enhanced scrutiny is important in making sure that the regulations we are considering today—all 190 pages of them—are dealt with sufficiently robustly. These regulations affect one of our most important sectors, one that is especially important for those Members who represent coastal communities. As Business Green has noted,

“The pace at which draft legislation has been processed has been relentless…Parliamentary scrutiny has been creaking at the seams with MPs and peers often admitting they haven't had enough time to review the legislation thoroughly.”

I will now set out the Opposition’s concerns about these SIs, starting with the draft Common Fisheries Policy (Amendment etc.) (EU Exit) Regulations 2019. We have a number of concerns about how the powers provided for in section 8 of the European Union (Withdrawal) Act 2018 are being used. The drafting in a number of areas appears to be defective: it often fails to adequately correct the provisions of EU law, and makes a number of policy changes to the current provisions. Environmental organisations have got in touch with us to recommend that these common fisheries policy SIs be annulled and updated, because they fall short in a number of areas. I will take the Committee through the areas in which we believe the SIs, and this one in particular, are falling short.

These SIs risk creating a governance gap, placing responsibilities from EU bodies on to organisations that are yet to be created or sufficiently financed. They leave gaping holes in the area of enforcement, leaving fishers less safe and our waters less protected—a concern that the Opposition have raised about previous SIs. There is a risk that these SIs could degrade environmental standards, a point to which I will return when we consider electric pulse trawling. We have specific concerns about the Government’s ban on electric pulse trawling: it is a good example of a policy change hidden within these SIs, notwithstanding the Minister’s statement that there are normally no policy changes in such SIs.

I understand that the Minister will want us to hold our nose and vote these SIs through, because we are at risk of careering towards a no-deal Brexit. In the area of fisheries, unlike in other areas of Government scrutiny, the regulations are not necessarily in place if we do not pass these SIs, so we need to make sure we are using our time properly. However, given the extension from 29 March to 12 April, I suggest to the Minister that some provisions in these SIs should be looked at again and the instruments re-laid, so that they can be comprehensive and fulfil the role they are supposed to.

I am not trying to be difficult or fly a partisan flag, but the concerns about this SI were also highlighted last month by the Secondary Legislation Scrutiny Committee, on 6 February. Its report states:

“Given the significance of fisheries as a policy issue, the House may wish to explore further the approach the Government have taken with this instrument.”

We also reject these SIs being grouped together. That is one reason why we have asked for them to be taken individually, and why I will focus my remarks on each in turn.

I have mentioned the governance gap, which was raised by a number of stakeholders. That is a common theme that Ministers and Government Members will have heard about from the Opposition when responsibilities, especially oversight responsibilities, are being moved from EU bodies to UK bodies. Several provisions in the first common fisheries policy SI remove functions currently carried out by EU bodies, such as the European Commission, the Scientific, Technical and Economic Committee for Fisheries, the European Fisheries Control Agency and the Advisory Council, which are not replaced in this particular SI. The loss of monitoring, reporting and other governance requirements will seriously undermine the functioning and effectiveness of the law. I would be grateful if the Minister came back on that point when he gets to his feet.

Obligations to provide assessments from reports to the European Commission and the European Parliament have been removed, including the provision of data on stock quantities. Given the fact that we are leaving the European Union, that might not be an unreasonable assumption, but our concern is that no subsequent scrutiny functions are inserted. The oversight role that we are looking for is no longer there.

Surely when we become an independent coastal state we will re-join other bodies, such as the North East Atlantic Fisheries Commission. Through those bodies and our membership of the International Council for the Exploration of the Sea we will contribute our own scientific evidence. Does the hon. Gentleman not understand that the UK, year in, year out, regularly corrects data from the European Commission, through our Centre for Environment, Fisheries and Aquaculture Science?

I am grateful to the former Minister. Our CEFAS scientists are brilliant. He will know our concern that there is insufficient focus on science in creating truly sustainable fisheries with the Fisheries Bill. I take your note, Mr Davies, about not talking about things that are not in these SIs, but these SIs need to fit together with the Fisheries Bill, and that Fisheries Bill has sunk without trace. It is no longer being tabled. I am really concerned that the lack of a Fisheries Bill—indeed, of an Agriculture Bill for the associated one—means that the jigsaw that is being put together with these SIs is incomplete, and the fishers cannot see what type of environment is being created for them after we leave the European Union.

The former Minister is right about one element: after we leave the EU, some of those functions will be carried out by other bodies. However, there is no requirement in these SIs for those other bodies to pick up those requirements, nor is there a home for those scrutiny functions to sit in between leaving those EU bodies and becoming part of any future bodies. That is a concern, because it assumes that we will participate in those bodies in the future. I think some of the examples that the former Minister just raised are fair. However, the situation does not sit easily with me. We need to ensure that there is adequate scrutiny throughout.

Is that not just a product of the fact that we are becoming a self-governing nation again? We do not need to be held to account by an external body, but should hold ourselves to account.

Indeed. I suggest that the former Minister lobbies his colleague, the new Minister, to bring forward the Fisheries Bill, because without a Fisheries Bill we have no legal and legislative framework to hold ourselves together. The former Minister proves my point again, because we lack a Fisheries Bill. That may have been a concern of his when he was at the Department.

I return to this SI in particular. The key role that the Commission plays in the control and enforcement of the rules of the CFP has been removed and not replaced by this SI. Regulation 4(43) of this SI removes articles 96 to 118 relating to the European Commission’s control of the application of the CFP and Council regulations 1224/2009 by member states, including the requirement on member states to report on implementation. That reporting requirement is important, because it is about how we have decent scrutiny of any of the implications of this SI and how hon. Members—assuming they fulfil the role of scrutiny of the European Commission, previously performed by the European Parliament—are able to scrutinise the outcome of this SI.

References to “advisory councils” have been removed and not replaced in this SI. The Minister will know that the Opposition tabled amendments to the Fisheries Bill, to include advisory councils in the future fisheries regulation—a proposal that the former Minister encouraged Members on the Government Benches to vote down. The lack of formal stakeholder engagement means that the involvement of the fisheries industry is removed with the direct implementation of this SI, which is a point of concern not just for the Opposition, but many of those stakeholders.

The Secondary Legislation Scrutiny Committee highlighted in its report that the Department for Environment, Food and Rural Affairs argued:

“The oversight function that the Commission currently holds over Member States could, for England at least, be provided by the Office for Environmental Protection (OEP)”.

But in the event of no deal, that will not necessarily be provided. That is where stakeholders have created a governance gap. Indeed, the Office for Environmental Protection is, as hon. Members will be aware, coming down the track—not something that we can implement today. That creates the risk of a governance gap in this particular SI.