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Common Agricultural Policy and Market Measures (Miscellaneous Amendments) (EU Exit) Regulations 2019

Volume 797: debated on Wednesday 8 May 2019

Motion to Approve

Moved by

My Lords, I declare my farming interests as set out in the register.

The purpose of this statutory instrument is to ensure that the regulatory baseline currently applicable in the UK under European Union legislation will be maintained on the UK statute book and can continue to operate effectively after exit. This instrument does not make any policy changes. It consists of a series of technical amendments that are essential to ensure that two new amending EU common agricultural policy regulations are retained in UK law at the point of the UK’s withdrawal from the EU.

This instrument is among a small number of affirmative statutory instruments that have been made under the urgent procedure. The urgent procedure was used because during March 2019 the European Commission introduced two new amending EU CAP regulations and it was essential that the UK should retain these amendments in an operable form in advance of a possible no deal exit on 12 April 2019.

The two new amending EU common agricultural policy (CAP) regulations are EU regulation 2019/288, which applied to all member states from 1 March 2019 and relates to direct payments to farmers under the CAP; and EU Commission delegated regulation 2019/428, which took effect from 26 March 2019 and relates to marketing standards in the fruit and vegetables sectors under the common organisation of agricultural markets (CMO). The instrument also takes the opportunity to make a few minor typographical corrections and, in the case of Regulation 3(3), removes a duplication in a small number of previous Defra EU exit SIs. Again, these amendments represent no change to policy. Agriculture is a devolved policy area and Defra has worked closely with devolved Administrations, who have all given their consent to this instrument.

As I explained on 20 March 2019, when we debated a number of instruments concerning the common agricultural policy, the UK Government have pledged to continue to meet their funding commitments in the agriculture sector. This SI, by taking account of the EU’s regulatory updates, fine-tunes Defra’s direct payments EU exit instrument, ensuring that the flexibilities to manage the budget between Pillar 1 and Pillar 2 are reflected and up to date.

The EU direct payments provisions amended by this instrument will enable UK relevant authorities to continue to have the flexibility to decide whether to transfer funds from the direct payments budget to the rural development budget via an inter-pillar transfer. This inter-pillar transfer provision was available across the United Kingdom in previous years of the CAP and has been used by England, Scotland and Wales in those years, but was limited up to and including the 2019 direct payments scheme year. Defra had already intended to address that regulatory gap for the 2020 scheme year via domestic legislation. However, the EU has now decided to make an inter-pillar transfer provision available to member states for the 2020 scheme year. That decision came into effect via new EU regulation 2019/288 on 1 March 2019, and Defra has taken the earliest available opportunity to account for these changes through this instrument. This instrument will retain the valuable flexibility currently afforded to UK relevant authorities. This will enable direct payment and rural development funding levels for 2020 to be maintained in line with previous years.

For the common market organisation (CMO), this instrument amends provisions of an existing exit SI as regards marketing standards for mixes of fruit and/or vegetables and citrus fruit. The EU has recently undertaken some refinements of its regulations on marketing standards for fruit and vegetables to align the EU marketing standards with the latest United Nations Economic Commission for Europe marketing standards. It has also clarified that marking and labelling requirements for small packages of mixed fruit and/or vegetables apply equally to mixes of fruit, mixes of vegetables and mixes of fruit and vegetables. That update came into effect on 26 March 2019, and the version of the EU marketing standards regulation that will be retained in UK law on exit will include this update. We want to ensure that this regulation is operable in the UK at the point of leaving, taking this amendment into account. The updates made by this instrument are therefore only technical in nature, such as ensuring that labelling changes are applied consistently and updating references to other provisions. This will provide clarity to stake- holders.

Finally, we have used the opportunity provided by this instrument to make minor technical amendments to four EU exit statutory instruments relating to the CAP that were made by Defra between February and March 2019. By way of example, Regulation 3(3) of the instrument omits a duplicated provision. Regulation 6(2) amends a phrase in a non-operative section of a domestic SI describing a provision of retained EU legislation to ensure the terminology is consistent with the exit statutory instrument that amends the provision described as “appropriate authority” rather than “relevant authority”. Neither amendment has a practical implication; they merely tidy up the statute book. The other corrections are essentially of a typographical nature, such as use of the word “of” instead of “or”; taking account of different phrasing in the EU regulation; and correcting an instance where the text quoted in the statutory instrument does not match the text in the retained EU regulation.

I take full responsibility for the errors, and obviously I regret any error. As I have said before, my task is to ensure that everything is right. I assure your Lordships that we felt it better to attend to these, so that the statute book was perfection. I am being absolutely open when I say that we need to attend to them. I hope your Lordships will understand that I am always disappointed to have to offer my regrets about inaccuracies, but is it not far better to be straightforward? I beg to move.

My Lords, I take this opportunity to thank my noble friend for bringing forward these regulations today. I also take the opportunity to thank his department, which had to deal with more statutory instruments in a record time to enable us to be prepared for what could still be the eventuality of Britain leaving the European Union with no deal. I know that this has been at some considerable human cost to his department.

My question relates to information from the new Minister for Agriculture in the other place, our honourable friend Robert Goodwill. As my noble friend alluded to in his introduction, the Minister set out the ability for inter-pillar transfers between Pillar 1 and Pillar 2. When this was considered in the other place, our honourable friend stated that,

“inter-pillar transfers of up to 15% can be made from year to year”.

He went on to elaborate:

“England has availed itself of 12%, Scotland 9.5%, and Wales 15%—the full amount”.—[Official Report, Commons, Second Delegated Legislation Committee, 7/5/19; col. 8.]

As of that date, Northern Ireland had yet to avail itself of the transfer because of its particular circumstances.

What my noble friend has brought forward today will ensure that we will be prepared to leave. I congratulate him on his honesty in identifying the errors that were made, inevitably, in bringing forward so many statutory instruments in such a short time. What will be the position relating to Scotland, Wales and Northern Ireland in the run-up to and post 2020? I also welcome the commitment that funding will still be in place, as I understand it, until that time. What is the status of the framework agreement that will, presumably, come into place to deal not just with agriculture but with fisheries and a number of other areas relating to my noble friend’s work in the department? I understand that it will be the UK Government who will decide what the position is for agricultural policy at that time. At the moment, Scotland and Wales have been able to have a differential in the transfer between Pillar 1 and Pillar 2. Will they lose that flexibility going forward, either before or after 2020?

I intend, however, to give a fair wind to the statutory instrument before the House today.

My Lords, we on these Benches support the comments of the noble Baroness, Lady McIntosh of Pickering, who has reflected on the errors to the three statutory instruments on CAP which have already come. It would be churlish to make more political capital out of that, given the huge number of statutory instruments that the department has had to deal with. As she rightly says, there has been a huge human cost, so we do not wish to make any political capital out of those drafting errors.

Equally, the Minister in his opening remarks reflected on the need for this statutory instrument to ensure that the discretion remains to enable flexibility between Pillar 1 and Pillar 2. Again, we support the discretion to move money from Pillar 1 to Pillar 2 to encourage further expansion of rural development schemes.

The one issue I will raise is the need to transpose into UK law the European Union’s new marketing regulations on the standards for fruit and vegetables. The EU has been extremely strong on ensuring food standards protections for consumers—for example, in respect of chlorinated chicken coming on to the market. The EU made this change to the marketing regulations to prevent the market being flooded with sub-standard goods.

Although we welcome the transposing of these regulations through this SI, the question is, what confidence can we have that, in future, the Government will be able to ensure the food standards that the European Union has been so good at protecting? That is particularly relevant in a week when we hear that in the discussions between the Labour Party and the Government on stitching up a potential Brexit deal, it is environmental protections that the Government have not guaranteed.

So, yes, we welcome the transposing of the standards, which will offer further protections to consumers on food standards and more protections for our farmers and the environment—but what guarantees can the Minister give that, if we leave the European Union, those food protection standards will be maintained?

My Lords, I thank the Minister for his helpful and honest introduction. I note that this statutory instrument is headed, “Exiting the European Union. Agriculture. Food”. It also refers to marketing and agricultural products.

My concern today is sheep farming, the sheepmeat industry and the upland communities of Wales and, indeed, across Britain. It is a truism to say that Brexit is a huge moment in our national history. My hope is that the sheepmeat industry, the farmers of our uplands and the scattered communities in which the farmers and their families live will not lose out as we leave the European Union.

I know that the Minister knows his agriculture—he farms—and the Secretary of State for agriculture is a lively participant in the agriculture and environment scene. I would like the department to assure us that government will make every effort to protect and advance the sheepmeat industry. Nobody in the upland communities of Wales, for example, is enriched by running their flocks across the scenic hills of Wales. It is a challenging and demanding life, and as well as being able to make a living, these able and experienced farmers make a major contribution to the landscape. Consequently, it is free of scrub, birch, gorse and bracken. If the industry falters, the far-flung, supportive villages of these handsome hills will also falter.

Here is a way of life. It is a culture and the heritage of many centuries. It is very supportive of the needs of the people of Britain. These communities are owed a great deal from any Government of the day. I hope that the Minister will boldly declare that across all the British Isles, but certainly in Wales, the Government will fight to make sure that this beleaguered industry, which faces major problems, can survive and be enhanced.

The Minister will know that when the magnificent, red-shirted XV take the field in the national stadium, they want to win, and they recently won against those in white shirts from England. In this instance, I am asking a Minister from England to be of service to Wales. I remind the House that many millions of sheep graze on the slopes of the hills in the lovely land of Wales. Sheepmeat is an industry, and we wish it to be kept. We hope Ministers will give us that assurance.

I thank the Minister for his introduction to the regulations. I declare my interests as set out in the register, being in receipt of EU funds. The House may well have thought it had dealt with the multitude of EU exit orders prior to the UK’s non-exit on 29 March, but they continue and will continue. With such a torrent, it is not entirely unexpected that there may well have been minor drafting errors to correct and technicalities to update and I appreciate the conciliatory way the Minister has addressed those issues today. Those issues will not detract from the praise due to him and his team for how he has handled the process and undertaken discussions around the House across a wide range of subjects in such a short period. I think his department probably comes second only to the Treasury in the number of statutory instruments it has to process.

These regulations amend five previously agreed EU exit orders to correct minor drafting errors and incorporate recent amendments made by the European Commission to CAP legislation relating to direct payments and marketing standards in the fruit and vegetable sectors, even those made as recently as 28 March. The main alteration is that member states are now able to make further inter-pillar transfers from Pillar 1 direct payments to Pillar 2 rural development for a further year until 31 December 2019. In the UK, decisions on inter-pillar transfers are devolved. The other pertinent amendments make it clear that marketing standards for mixes of fruit and vegetables apply to mixed packages and make a number of small changes to the general and specific marketing standards in order to align the UK marketing standards with the latest United Nations Economic Commission for Europe marketing standards.

Of note is that continuing updates are likely as negotiations continue around the UK’s EU exit as regards continuing changes made at EU level. While this is clear up to the date of exit, will the Minister confirm what this means in relation to any transition period? I note that the noble Baroness, Lady McIntosh, has concerns on these issues. When any divergence between the EU and UK could begin and the Government’s policy in any transition period are of great importance. Will the Minister confirm my understanding that during any transition period after EU exit day the Government will continue to incorporate into UK law EU measures to ensure the operability of the statute book? Again, I acknowledge that certainty will be maintained with regard to the existing regime through the Treasury’s guarantee to continue the status quo. The importance of that was highlighted by my noble friend Lord Jones in relation to sheep farming in Wales.

These regulations update EU regulation 1307/2013 to give effect to the new discretion for member states to continue to determine inter-pillar transfers of up to 15% up to 31 December 2019. It is worth reflecting that there is already divergence in the rate between the constituent parts of the UK, with Scotland, as noted by previous speakers, at 9.5%, England at 12% and Wales already at 15%. Can the Minister confirm what the position could be in relation to Northern Ireland and say who, in the present predicament, would make any decisions there? Can he also confirm that the devolved Administrations will still be able to decide their own flexibility for inter-pillar transfers? Does it concern him that the range between 9.5% and 15% is considerable and could affect food production and competition within the UK?

Paragraph 7.7 of the Explanatory Memorandum says:

“The impact of the amendments … is deemed to be negligible”.

I agree that this added year for any decision regarding transfers is in itself negligible but the decision to increase the transfer rate is certainly not negligible, and the monetary change can affect farmers, the food chain and the environment. Will the Minister acknowledge that a change in the rate of transfers between Pillars 1 and 2 is significant?

Perhaps I might also follow up with a concern. As the Minister knows, the Rural Payments Agency has had, and continues to have, problems with performance. What action are the Government taking to improve performance with the BPS while the UK remains part of the CAP and to ensure that the RPA’s structure is able to adjust to any new regime consequential to a new agriculture Bill?

It is important to the food chain that marketing standards in the fruit and vegetable sector continue to function effectively to protect the interests of consumers as well as businesses in the sector. Does the Minister agree, and the Government commit, to the continuation of common standards with the EU after Brexit? The continuation of close co-operation with the EU is imperative for agriculture, industry and consumers. Otherwise, I am very happy to approve the regulations before the House today.

My Lords, I acknowledge the generous thanks that have been expressed to the department. It has been a great privilege to work with lawyers and officials in Defra, and we will be attending to some other statutory instruments on Monday. I think that all your Lordships will agree that, whatever our views on the matter, we should acknowledge that officials in the department have worked literally through the night on many occasions, and we should be extremely grateful to them. It is also appropriate to point out that there are times when we all work together very well, and I want to place on the record the co-operation and understanding that there has been in this project to try to get the statute book in order. Whatever our views on the matter, we have all sought to get it right. Although we will be returning to the fray with other statutory instruments on Monday, I wanted to acknowledge that.

My noble friend Lady McIntosh of Pickering made the point that much of the guts of the inter-pillar arrangements is, like agriculture, as we all know, devolved. That means that each part of the United Kingdom has always made its own decision on these matters and indeed on whether to carry out an inter-pillar transfer. In the case of Northern Ireland, that has been its decision, but Northern Ireland was keen to be part of this statutory instrument on the basis that it gives the flexibility to consider that option if it so wishes. It is up to each UK Administration to decide what level of budgetary transfer they wish to make for the 2020 direct payment scheme. As I have said, that is the way I think it should be.

So far as the future is concerned, we all await the Agriculture Bill in your Lordships’ House; I do not say that in any but the most serious of tones, because we are all waiting. Obviously, the Agriculture Bill begins what would be a seven-year transition period from 2021—again, 2020 continues the structure of the old system—to 2027 for direct payments to help farmers in England, for instance, to plan for the future. In the meantime, payments for 2019 and 2020 will be made on the same basis. As I said, this is devolved, and these are matters for devolved Administrations. Although I do not have direct responsibility in this area, I know from the regular meetings held with Ministers in Defra and the devolved Administrations that everyone is seized of the importance of agriculture in all parts of the kingdom.

The noble Lord, Lord Jones, rightly champions Welsh lamb, and I am mindful of the Woolsack on which the noble Baroness is sitting. Sheep rearing, whether for meat or material, is all about a long-term cultural heritage and a way of life that we owe to farmers all across the kingdom who farm in the uplands. I would like to place on record again, and say to the noble Lord, that we owe the farmers of Wales a great deal for many things: they are the custodians of great landscapes, where much of the water and many of the watercourses of Wales come from—that is the case for the uplands. We are very conscious of what the upland farmer produces for the country, and this is reflected in our environmental land management schemes. I am absolutely confident that, in the payment of public money for public goods, our policy will have upland and sheep farmers who care for the landscape—producing food of course, but also acting as custodians of important places—very much in mind.

The noble Baroness, Lady Parminter, rightly raised the issue of marketing standards, which comes up, and should come up, regularly. Marketing standards are well established within the UK agricultural sector, and any proposed changes would require engagement with stakeholders and consultations. The whole basis of marketing standards is that the British product is recognised as the best in the world; this is clear in the marketing standards that we have through the EU and will be so in those we have when we are making our own decisions. They will factor in, first, that existing EU marketing standards will remain operable after exit to continue to protect consumers and traders. Whenever we consider changes, it will be very much with the premise that marketing standards and our ability to give confidence to the consumer will be retained. I am sure that the noble Lord, Lord Jones, wants Welsh lamb to be exported, as we do, as well as kept for domestic consumption. That is so important. I say to the noble Baroness, Lady Parminter, that this is an area where we have brought all the marketing standards back on to the statute book. Clearly, any decisions made in the future, when we have that responsibility, will recognise our responsibility not to compromise what are very strong standards.

The noble Lord, Lord Grantchester, asked a number of questions about the RPA. On 8 April, the RPA confirmed that 99% of BPS 2018 claims have now been paid. I would say, having looked at this over the years, that whether with probate or other issues there will always be a small number of claims outstanding, but this is a significant improvement. It is why I have confidence that, in the movement of the ELS and the countryside stewardship payments to the RPA, we are looking again for enhanced performance.

The noble Lord asked about potential divergences between the devolved Administrations and Defra and so forth. Again, we cannot have it all ways. Devolution means that we have to, and should, respect the decisions of the Administrations in those countries. What I think is important, and what I can acknowledge, is that despite the hurly-burly there are productive and collaborative discussions on these matters between devolved Administration Ministers and Ministers within Defra, because clearly we all want a vibrant UK agricultural system.

With regard to what the noble Lord, Lord Grantchester, and the noble Baroness, Lady Parminter, said, yes, we must and will continue to protect consumers. We want standards of the highest order to continue not only for our domestic consumers but for issues of provenance—the ability for UK agriculture and UK farmers to be known around the world for high standards of production and animal welfare. Our standards and the mark of UK production, in all parts of the UK, mean that people can have confidence in the food that they are eating. Those are all issues that my department feels extremely strongly about.

On operability, the key point that I want to make is that the whole purpose of this instrument is to ensure that there is operability. In a withdrawal agreement scenario with the carrying on of an inter-pillar transfer for 2020, given that EU exit SIs would not come into force until the end of the implementation period, the current withdrawal agreement would disapply the direct payments regulation for the 2020 scheme year. The Government would bring forward equivalent legislation for that scheme year in due course that would include provisions for inter-pillar transfers in line with the Commission’s recent amendment. The whole point about what we did with the urgent affirmative procedure —what we are doing today and what we may have to do in future—is that, whatever our views on the matter, we have sought to ensure that the statute book is ready for any scenario. I repeat that what the Government have sought to do, in the discussions that have taken place across the House and in the other place, is to seek to factor in that we ourselves need to be ready for whatever scenario takes place. Obviously, others are working on securing a deal. We want a deal. We have had to factor in scenarios that may be possible, such as the one that my noble friend Lady McIntosh of Pickering referred to, but we as a Government seek a deal. We want an implementation deal and then one that continues. We want a very harmonious and strong relationship with our friends on the continent and in the Republic of Ireland. Obviously, this is what we all want.

I will look at Hansard because I think the noble Lord, Lord Grantchester, asked about one or two matters of detail on which I might not have the distinct, correct form of words that I would like. If that is the case, I will write and copy in all noble Lords who have spoken in this debate. In those circumstances, I hope I have answered as best I can. I beg to move.

Motion agreed.