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Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020

Volume 807: debated on Wednesday 18 November 2020

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020.

Relevant document: 31st Report from the Secondary Legislation Scrutiny Committee

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

These instruments are closely related as they apply to regulations relating to the common agricultural policy, or CAP. I emphasise that these instruments are minor and technical in nature. They do not make new policy or change existing policy. Instead, they will make existing policy and legislation operable at the end of the transition period.

The Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020 update exit SIs made in 2019, minimising ambiguity about legacy CAP schemes by removing the direct payments provisions from previous exit SIs and clarifying that those SIs relate only to the common organisation of agricultural markets—CMO—and rural development. Amendments to direct payments provisions had already been made on exit day under the Direct Payments to Farmers (Legislative Continuity) Act 2020. There are also Northern Ireland protocol-related technical amendments, such as changing “United Kingdom” to “Great Britain”.

The regulations allow the UK to comply with Article 138 of the withdrawal agreement, which provides that EU law will continue to apply after 31 December to ongoing rural development programmes and CMO operational programmes implemented by producer organisations until those programmes end.

The regulations amend provisions concerning public intervention and private storage aid schemes, which offer financial support when market prices for agricultural products fall below thresholds laid down in legislation. Currently, the schemes allow the European Commission to buy commodities then publish its decisions using implementing Acts. This instrument allows Defra and the devolved Administrations to make these decisions, which will then be published on GOV.UK.

The instrument makes amendments to retained EU law relating to devolved aspects of producer organisations in the Fruit and Vegetables Aid Scheme to ensure that the scheme continues to operate in the UK post the transition period. This scheme provides funding to producers to encourage collaboration, increase competitiveness and improve the quality and quantity of produce grown.

The instrument makes other amendments to retained EU law to ensure that Defra and the devolved Administrations can continue to obtain certain production and price data from those in the supply chain, as they do currently. This information is used for market monitoring purposes.

Finally, this instrument also tidies up aspects of other retained EU law; for example, it changes “Exit Day” to “IP completion day” or reflects updates to EU law.

I turn to the Common Organisation of the Markets in Agricultural Products (Producer Organisations and Wine) (Amendment etc.) (EU Exit) Regulations 2020. This instrument amends provisions of retained EU CMO legislation in the reserved areas of regulating anti-competitive practices and agreements; international relations; import/export controls; and the regulation of intellectual property. It ensures that, post transition period, these functions can be carried out by the Secretary of State. It also amends retained EU law concerning reserved provisions of producer organisations in the fruit and vegetables sector and ensures that functions relating to the recognition of producer organisations in this sector can continue to be exercised by the Secretary of State. It will also omit references to transnational POs within retained EU law, as they are no longer relevant in a domestic context, and updates a reference in relation to contractual negotiations in the milk sector.

On wine, the instrument ensures that protection of designations of origin, geographical indications and traditional terms in the wine sector operate effectively and that Great Britain is able to process domestic and third-country applications for such matters. It will also ensure that the UK is compliant with the rules of the WTO. It will give the Secretary of State the power to approve or revoke protected wine names and terms on the domestic GI register and approve or deny applications already made to the EU. It will also enable the Secretary of State to make administrative decisions involved in processing applications for protected wine names or terms, amending those protections and the use of those terms on the label of the product. It also revokes EU-implementing Acts that duplicate information in the protected designations of origin and protected geographical indications register.

I turn to the Common Organisation of the Markets in Agricultural Products (Miscellaneous Amendments) (EU Exit) Regulations 2020 and the Common Organisation of the Markets in Agricultural Products (Miscellaneous Amendments) (EU Exit) (No. 2) Regulations 2020. The majority of the amendments made by these instruments relate to the implementation of the Northern Ireland protocol and references to Northern Ireland as it will remain aligned to the EU under the protocol. Amendments are also being made to a small number of the transitional provisions, either to align with the Government’s border operating model, which introduces new border controls for the movement of goods between Great Britain and the EU in three stages until July 2021, or because they were introduced on the basis that the UK would leave without a deal and are no longer required.

The Secondary Legislation Scrutiny Committee drew the attention of the House to the department’s explanation for why poultry meat imports from the EU would not require an optional indications certificate for a period of 12 months. Optional indications refer to the use of labelling terms concerning farming or chilling methods. I would like to apologise as the department’s explanation did not provide sufficient context on checks relating to poultry meat marketing standards and this may have caused concern, but it has since been clarified with the committee and the department has asked for a correction to be issued.

I reassure your Lordships that, although the specific matters are not covered by these regulations, the Government remain committed to high environmental protection, animal welfare and food safety standards.

These statutory instruments, which are predominantly technical in nature, provide clarity in the context of continuity. For those reasons, I beg to move.

My Lords, the noble Lord, Lord Loomba and Lord Dodds of Duncairn, and the noble Baroness, Lady McIntosh of Pickering, have withdrawn from the debate. I call the next speaker, the noble Baroness, Lady Bakewell of Hardington Mandeville.

My Lords, I thank the Minister for his introduction to this group of statutory instruments and for his time in the briefing. The first instrument, as he said, relates to agricultural payments and is very much a tidying-up process. As the Explanatory Memorandum states, it was first debated in the Commons and should have been debated within 28 days in the Lords but, due to Prorogation and the general election, this was not possible, hence we are debating it today so that payments and other matters can move forwards smoothly after implementation day.

The regulations relating to the Northern Ireland protocol provide protection at the end of the transition period, and there is also continuity of certain rural development and CMO schemes after the transition period. How long are those rural development schemes likely to run into the future and how soon will they be assimilated into the environmental land management schemes, if at all?

The second SI deals with agricultural products and wine. Protected designation of origin, or PDO, and protected geographical indication, or PGI, are extremely important for producer and consumer confidence. It will be essential for the Secretary of State to use his powers to alter these with extreme caution. In particular, the geographical indications, or GIs, in relation to wine will need to comply with WTO obligations, as the Minister has already said.

While it might be tempting to rebrand fortified wine as amontillado or sparkling wine as champagne, I think the consumer would soon notice the difference. This would be a retrograde step, as our excellent English wines are able to compete under their own labels. Can the Minister confirm that marketing of our own-produced wines will be the main thrust of the Government in this regard?

The SI makes specific reference to imports of wine and quality policy. What are the arrangements likely to be for geographic indicators on exports? Are these covered in this SI, or will there be an additional SI for that purpose? GIs are of great importance to our wine and spirit producers as well as to those making products using milk.

The third and fourth SIs are again needed to ensure that the Northern Ireland protocol can be implemented. Would it be premature to ask the Minister just how many SIs that relate to ensuring the Northern Ireland protocol is safeguarded we will debate before the end of December? It would be useful to know.

In relation to the fruit and vegetable producer organisation aid scheme, the Explanatory Memorandum states that groups of growers will still be able to come together with the aim of planning production, concentrating supply and making them stronger in the marketplace. The Minister may have answered this, but I shall ask him again anyway: is the transnational producer organisation likely to interfere with this process?

Provisions for the import of hops and hop products are to be amended to align with the border delivery model. What proportion of hops used in the brewing industry in the UK is imported from third countries and what proportion is grown in the UK? Originally, EU forms and certificates from third countries were to be accepted for two years. However, this period has now been shortened to 1 July 2021. How will that affect the UK brewing industry?

On chicks and hatching eggs, can the Minister say which third countries are importing these products into the UK? I also have concerns about the use of optional indication certificates for poultry meat imports, as Defra has stated that we do not currently enforce poultry meat marketing standards. I understand that this relates to labelling as to the method of rearing, such as “free range”. However, many third countries do not have the same stringent animal welfare standards as the UK. I feel certain that consumers will want to be aware of these imports.

Lastly, I refer to paragraphs 2.6 and 2.12 of the Explanatory Memorandum to the miscellaneous amendments regulations, which refer to imports of beef and veal from third countries. It may be that the third countries referred to are the same as those which import chicks and hatching eggs but, again, I ask the Minister which they are.

As the Minister said, the Secondary Legislation Scrutiny Committee has drawn these matters to the attention of the House as it believes they are of considerable interest to the public at this time, especially as the poultry meat marketing standards are currently not being enforced and as a 12-month transitional period is needed to enable the future import regime and associated checks to become operational. I agree with the committee’s view.

I am happy to support the four statutory instruments but look forward to answers to the questions that I have posed to the Minister.

My Lords, I thank the Minister for his introduction and the helpful briefing that he organised beforehand. When we agreed to take all these SIs in one go, I do not think I realised just what a complicated task we were setting ourselves, because there is an enormous amount of detail in them and they all seem to be connected and to overlap. I therefore have a number of questions, but I fear that I may be referred to other SIs to find the answer.

As my colleague Daniel Zeichner pointed out in the Commons, the Explanatory Memorandum says that Defra does not intend to consolidate the relevant legislation at this time. All I would say is: “Good luck” to the person who eventually takes that task on because of the complications that we can all see before us.

We also face once more our old enemy the correction of previous drafting errors. This is an ongoing saga. Can I suggest to the Minister in all good faith that we need some kind of standing procedure to deal with all the errors that are coming to light and may well come to light in the coming months, rather than having to revisit SIs one by one as we are at the moment?

Turning to the individual SIs, I have a few questions. The first SI makes provision for public intervention, private storage and aid to continue at times of market failure. The proposal is that this should be done administratively, rather than by political decisions. The Minister has clarified that this administrative decision will be published on the Government website. However, given our recent experience of market failure in the collapse of dairy prices, which was a hugely political event, can the Minister explain whether that would be the sort of thing that would be decided as an administrative decision and whether there would be any parliamentary oversight of decisions such as that? Would Parliament have any say on that at all?

This SI also changes the provisions for fruit and vegetable producer organisations. The Minister clarified in the other place that there were 34 in total and four are believed to be transnational. Am I right in understanding that those transnational producer organisations will not be able to apply for support, even if the majority of their production takes place in the UK? Have those affected producer organisations been informed of this change, and are they content with it?

The second SI proposes changes to EU retained law to enable the Secretary of State to approve or cancel protected designations of origin and protected geographical indications for wine. This SI only deals with wine, so I presume that other protected designations are dealt with in other SIs. The SI says that there is not expected to be any significant impact on business. Given the UK’s growing wine industry, which I think we would all accept has been curtailed by EU regulations in the past, will it give our wine producers more flexibility in the descriptions of the wines that they are able to market? Is it envisaged that we would have the UK equivalent of appellation contrôlée as a UK quality standard in future?

What UK body will replace the Commission in registering PDOs and PGIs? Will it be British only or include Northern Ireland? Will UK products such as wine remain registered in the EU or will they have to be re-registered to access the market at the end of transition?

The third and fourth SIs address issues arising from the transition from EU import certificates of conformity to those aligned with the border delivery model. It seems strange that the dates for ending the transition period for these certificates for beef and veal labelling is different from that of hops, hatching eggs and chicks. I refer to the excellent note from the Secondary Legislation Scrutiny Committee on this issue. When it asked Defra about this, it was told that some provisions were made to align with the border delivery model, while other timescales meant that there would be a delay for a two-year transition,

“in order to allow policy teams to deliver the necessary IT system changes and recruit additional HMI inspectors”.

Three obvious questions arise from that. First, are some of the border issues so complicated that they need a two-year IT project to complete? Is there any danger of further delays, as we have known in the past, with the IT system not being up and running by that date? Secondly, are the HMI inspectors referred to specialist border inspectors, or is it envisaged that there will suddenly be a huge extra volume of work when the transnational arrangements end—which is why it is being staged, to enable those extra recruitments to take place? Thirdly, has sufficient thought been given to the extra burden on businesses importing across the border which might import mixed cargos with different deadlines for the forms and certificates?

The Secondary Legislation Scrutiny Committee also drew our attention to the fact that the UK does not currently enforce poultrymeat marketing standards. I am very grateful that the Minister has clarified, after our pre-meeting with officials, that that is not so much the case and that a clarification has been issued. I thank him for that. However, if poultrymeat is imported from a third country, does that mean it could still say that it was free-range or organic, and that would not be checked? Could it claim not to be chlorine-washed when it has been? I understand from our pre-meeting that little or no poultrymeat is currently imported using these optional descriptions. Can the Minister clarify whether that might be expected to change in the future? These seem to be quite common terms so it is surprising that there are no imports using these labels now. Could unregulated poultrymeat be mixed with other products and given a misleading description? Can the Minister explain what is meant by that explanation? The SI also refers to the organic certificators’ group having been consulted. Is it now content with the proposals?

On a slightly different issue, perhaps I may ask a follow-up question on the application of the Northern Ireland protocol. In a recent SI debate, the noble Lord, Lord Goldsmith of Richmond Park, revealed that 72 border posts were proposed between Northern Ireland and Britain. Is there a list now of where those posts will be based? Are they fully staffed—with trained staff—and ready to be operational at the end of the transition period? Do those trained staff include the specialist inspectors who would have to deal with the checks on the imported fresh food produce that the SIs specifically relate to? I look forward to the Minister’s response.

My Lords, I thank the noble Baronesses for their contributions and important questions on some of these matters. I agree with the noble Baroness, Lady Jones of Whitchurch, that although the regulations are detailed they are intended, as I have explained, not to change policy but to ensure that there is operability in this area as we move forward.

On the point about consolidation, I am very grateful that I am not a specialist in parliamentary drafting, because this would be a mammoth task. I very much take on board the noble Baroness’s point about errors. We all regret when there is an error. Having worked with officials, I think they would apologise to the noble Baroness and to us all, but the pressure is sometimes very intense and these things happen. I regret any error that is made, but the most important thing is to be open about it and correct it as soon as we can. The opportunity that arises now, given that we must attend to these SIs, is to be very straightforward and say that there were a number of errors which we are attending to with these SIs. We should not say that the SIs have been brought forward only to deal with errors because they have not.

The noble Baroness, Lady Bakewell, referred to the length of time of rural development programmes. Some long-term agri-environment and forestry agreements will still be live after the closure of the current Rural Development Programme for England because of the time taken to deliver the environmental benefits from the programme. She also referred more generally to the protected designations of origins and the protected geographical indications after the transition period. These regulations, along with other instruments, will allow Great Britain to administer and enforce the GI schemes and to ensure that the United Kingdom meets its WTO obligations.

On some other points raised about the relationship to our exports, it is important to say that there are GIs for our exports also. Once awarded GI status, a product name is added to the relevant public GI register, thereby providing a basis for protection against any misuse of the name. I reassure the noble Baronesses that this level of protection will apply to all UK GIs. The register will also contain GIs protected through the withdrawal agreement and trade agreements. This domestic protection will enable us to secure reciprocal levels of protection for our wine products on export markets.

Domestic wine production is a growth sector in England and Wales. The noble Baroness, Lady Jones of Whitchurch, referred to domestic wines. These regulations maintain the operability of retained EU law, which is the status quo. Our aim is to ensure that imports of third-country wines continue unaffected while continuing to increase domestic wine production. Existing EU GIs, such as Champagne, will continue to be protected in GB through the withdrawal agreement. We cannot use that name for UK sparkling wines. However, our producers are carving out a strong niche for high-quality sparkling wines and I observe, for example, that two Champagne houses are investing in English vineyards.

The noble Baroness, Lady Jones, asked about the ramifications for transnational groups in the UK. There are four such groups, three in England and one in Northern Ireland. We have kept DAERA fully informed and are working with affected producer organisations to ensure that they are aware of the impact on their business and to help them plan for the future. Transnational POs can still come together, but EU-based members will no longer be able to claim under the aid scheme after the end of the current programme.

The noble Baroness, Lady Jones, raised an important point, which we have discussed, about the definition of administrative decisions and ensuring that what might be described as political decisions are not made under the auspices of administrative decisions. Those decisions have limited scope and do not choose the recipients of the intervention or which sectors to intervene in. They are decisions that, following a tendering process, set rates for buying in commodities under public intervention and for private storage aid, and then allow publication of the rates to be offered. Those decisions are made according to clearly prescribed criteria in the CMO regulations. For example, the tendering procedure is clearly laid down in regulations and the quantities, periods and prices involved are subject to overall limits. The amendments in this instrument would allow the tendering procedure to open and the decision on the maximum price to be published, without requiring legislation to open the procedure and publish the price. It is important to emphasise the narrowness of the scope because I agree with the instincts that the noble Baroness outlined. Changes to these rules and amounts would require legislation and parliamentary oversight. The amendments in the instrument do not introduce new processes or powers, or enable the relevant authorities to do anything new. Instead, they ensure that the relevant authorities will be able to continue operating those clearly prescribed mechanisms, as they do currently, and in a timely fashion, after the transition period.

I turn to some of the remarks relating to the Common Organisation of the Markets in Agricultural Products (Miscellaneous Amendments) (EU Exit) Regulations and the No.2 regulations of the same name. The noble Baroness, Lady Bakewell of Hardington Mandeville, asked about beef and veal. My understanding is that in 2019, 6.8% of the beef and veal imported into the UK came from the following non-EU countries: Uruguay, Australia, Namibia, Brazil, Argentina, Japan, New Zealand, Chile, United States of America, UAE, Botswana and Paraguay. The remainder of our imports came from the EU. While the regulations cover only technical requirements for age on slaughter labelling, and when the terms “beef” or “veal” should be used, I reassure both noble Baronesses that separate legislation concerning high production and animal health standards will continue to apply to beef and veal imported into Great Britain after the transition period.

As I have said before, in all our trade negotiations we will maintain our high environmental protection, animal welfare and food safety standards. These will not change.

The noble Baroness, Lady Bakewell, also asked about importing hatching eggs and chicks and the welfare standards of the country of origin. For hatching eggs and day-old chicks, 85% of our imports come from the EU and we remain committed to high standards of animal welfare and food safety in the future, as we do now.

The noble Baroness, Lady Bakewell, asked about a percentage in relation to hops. I am afraid the detail I have is that we were a net importer of hops and hop products to the worth of £60 million in 2018, while producing £14.1 million-worth ourselves. When I looked into this, one issue was the fact that hops have distinct flavours. We are therefore keen to ensure that there is a continuing ability for production of beer in this country which uses that variety of hop products, although when I studied those figures I thought that there might be some scope for further domestic production. Having looked into that, it is important to ensure that we have that range of hops for our beer production.

The noble Baroness, Lady Jones of Whitchurch, asked about transitional provisions. Funnily enough, in discussing these matters I am obviously seized of the fact that there is this range of dates. I queried this strongly and what we have done—I think this is right—is to have reviewed this on a sector-by-sector basis, to see where it would be practical and possible to align with the border operating model. In doing so, this has resulted in a varying number of end dates. The noble Baroness made a point about having confusion for businesses being the last thing we would want to do. I reassure her that we have actively engaged with businesses ahead of laying these instruments and have updated the relevant guidance on GOV.UK. In fact, representatives from all the sectors have welcomed the provisions, as they allow for appropriate adjustment.

For instance, with regard to the two-year transitional provision concerning EU certificates for fruit and vegetables, I understand we will be using this time to implement upgraded computer systems, as was alluded to, while bolstering our Horticultural Marketing Inspectorate numbers and working with the EU to implement an improved inspection service procedure for member states. After 31 December, the free movement of goods from the EU will end; inevitably, additional checks on imports and additional inspectors will be required. We are working with the APHA to ensure that we have the right calibre of inspectors. That will clearly be important.

The noble Baroness, Lady Jones of Whitchurch, asked about organics. I understand that the UK organics certifying groups are content with the provisions we have brought forward.

In relation to poultry meat marketing standards, I have drawn attention to the correction we made. I reiterate my apologies for it not being sufficiently in context in an earlier version. Although food safety regulations are not covered under these instruments, I reiterate that the Government remain committed to promoting robust food standards and existing food safety provisions, which will of course be retained in the retained EU law. No products other than potable water have been approved to decontaminate poultry carcasses, and this will remain so.

I am mindful of the time so I will be quick in addressing a number of other points. On the Northern Ireland protocol, I am sure that there will be other statutory instruments where, in part, the protocol and the changes following it will need to be applied to other statutory instruments that I bring forward.

I should say, as an aside, that I inquired whether we should have a Northern Ireland protocol SI so that all these matters could be wrapped in it. There was a suggestion that it was rather better to deal with them according to subject matter rather than in that way. If that might have been a suggestion of the noble Baroness, it was one with which I had sympathy, but it was then suggested that it would be more consistent to deal with the whole area of points of concern.

There are one or two further detailed points to cover. On impact, we have worked strongly with businesses because we are conscious that, because of the changes, we need to work with them. We are doing so—that is very important—so that they are aware of the changes and understand why we have a different range of dates to ensure that there are adjustments that work constructively.

If there are any other points, I might receive some information and will write to the noble Baronesses. At this juncture, and mindful that I have already taken a little too long, I commend the regulations.

Motion agreed.