Monday 7 December 2020
The Grand Committee met in a hybrid proceeding.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
The microphone system for physical participants has changed. Your microphones will no longer be turned on at all times, in order to reduce the noise for remote participants. When it is your turn to speak, please press the button on the microphone stand. Once you have done that, wait for the green flashing light to turn red before you begin speaking. The process for unmuting and muting for remote participants remains the same.
The time limit for the following debate is one hour.
Plant Health (Amendment etc.) (EU Exit) Regulations 2020
Considered in Grand Committee
My Lords, I hope it will be helpful to your Lordships if I speak to both instruments, given that they are closely interrelated. Protecting biosecurity is of paramount importance, and the operability amendments in these instruments provide a strong basis for our future regime, including bringing the EU within the scope of our controls on third-country imports. While the overall policy does not change, there will inevitably be some adjustment for those businesses involved in importing plants from the EU. The devolved Administrations have given their consent to introduce these regulations on a GB basis.
The first instrument implements a new UK plant passport in place of the current EU plant passport. The UK plant passport will be used for movements of regulated plant material within GB and provides assurance that relevant phytosanitary regulations have been met. From the end of the transition period, GB will no longer use the EU protected zone arrangements, and will instead move to using pest-free areas and internationally recognised classification. GB will designate two pest-free areas: one for oak processionary moth, a pest which is concentrated around London while being absent from the rest of the country, and one for bark beetles, which are absent from an area in the west of Scotland. Other protected zones will not need to be carried forward to pest-free areas as the whole of GB is free of these pests, meaning that existing protections will be retained but specific geographic designations are unnecessary.
The transition provisions in this instrument require high-risk items from the EU—those assessed as presenting a significant risk of introducing harmful pests and diseases—to be subject to import checks and to be accompanied by phytosanitary certificates from 1 January 2021. This represents only a limited range of the plant material imported from the EU, but they are our immediate priority because they are linked to known threats or, in some cases, previous interceptions. These systematic checks will provide additional assurance about the status of these goods compared to what is currently achievable through targeted checks of goods arriving in GB from the EU. Import requirements for lower-risk plant material will be phased in from April, with physical checks of these goods from July. Import checks will be conducted on a risk basis, with the highest risk goods, such as hosts of Xylella, receiving the most intensive scrutiny. Products such as houseplants and bulbs for retail sale, for example, represent a lower threat, so the frequency of import checks will be less.
This instrument also makes operability amendments to correct references to EU legislation, remove redundant EU obligations and revoke previously laid EU exit legislation that is now redundant. It also makes consequential amendments to fees legislation, including amendments to allow charging for services related to exports to the EU.
The second instrument sets out four categories of regulated plant pests for Great Britain based on international standards. Each list provides for different situations. “Quarantine pests” are those where we have a comprehensive risk assessment to support permanent import requirements to maintain the whole country as free of those pests. Secondly, “provisional GB quarantine pests” provides such protection on a precautionary basis while the necessary evidence is developed and assessed. Thirdly, “pest-free areas” protects against the introduction of harmful pests into new areas. Lastly, while regulated, “non-quarantine pests” allows ongoing protection to prevent the further spread of pests via planting material.
The instrument also sets out measures in relation to the introduction of plants, plant products and other objects into GB, and the movement of plants, plant products and other objects within GB to reduce the risks in connection with those pests to an acceptable level. I would like to cover a few examples which I hope will be helpful to your Lordships. The GB quarantine pest list has been amended to focus on pests which pose a risk to Great Britain. This has included the deregulation of pests which pose a risk only to citrus, rice and other tropical fruits which are not grown in GB. The regulation of all non-European fruit flies has been removed, and requirements will now focus only on fruit flies which pose a risk to crops important to GB—for example, tomatoes, pepper and cucumbers. These deregulations will increase efficiency for the trade and movement of goods through the border by removing checks on produce which does not pose a risk to GB, also freeing up time of our official inspectors to focus on the more significant risks.
Amendments have also resulted in some strengthening of biosecurity protection against certain pests. There have been additions to the GB quarantine pest list, including Phomopsis canker, which causes dieback of blueberries, and apple proliferation phytoplasma, which can affect fruit quality and yield as well as tree vigour. These are present in the EU and are treated as regulated non-quarantine pests, which limits the level of control possible. The new category of provisional GB quarantine pests includes the two-lined chestnut borer, a pest of oak and chestnut in North America which has recently spread to Turkey, and the oak longhorn beetle, which is causing damage to oaks in China.
I think we would all agree that protecting biosecurity is not only of supreme interest to this Government but of supreme importance to our environment, the country and particularly—if I may say so—the horticultural sector and the businesses which we want to prosper, and which frankly give so much pleasure to so many people. I remind your Lordships that there are reputedly 3 million more gardeners this year because of the current health crisis; we want that to continue.
What we have brought forward here in these instruments is that we wish to facilitate import and movement of plant material, but I hope that your Lordships will agree that we need to do it on a risk-basis manner and in a biosecure manner. For these reasons, I recommend these instruments and I beg to move.
My Lords, I am delighted to follow my noble friend the Minister. Some eight years ago I was in his place. I thought I was busy, but none of us could have foreseen the workload that Defra has recently had to carry in this period of dramatic change. He knows of my interests, which are that of bulb growers and packers in my family business. We are very much affected in the import and export aspects of these new procedures. My son Adam—who now runs our bulb business—is a former president of the Horticultural Trades Association, and with it recognises the need to adapt our working methods to maintain, and indeed enhance, biosecurity following our departure from the European Union.
The Horticultural Trades Association realises that these regulations have to be in place by 1 January 2021—deal or no deal. I expect that my noble friend Lady Fookes will provide the Grand Committee an update from the HTA and its chairman, James Barnes. She and I were able to share in a briefing for the HTA by my noble friend the Minister and his senior team at Defra. It made clear the need for a continuing partnership. Good communication is needed if the industry is to deliver on these regulations. The Government must show a willingness to listen and act to avoid unnecessary burdens on business.
The Minister is right to take a risk-based approach. The development of a single-access customs and reporting computer program will be key. There are particular problems with the nurseries and packers which trade with Northern Ireland and the Irish Republic. At present, the Dutch can deliver by crossing GB without any extra paperwork or inspections. Let us hope this can be resolved. With a sizeable business on the island of Ireland, I am keen to see progress so as to avoid repeat inspections, documentation and delay.
As president of the Anglo-Netherlands Society, I am keen to see Defra, in conjunction with the FCDO, have a dialogue with key suppliers such as the Dutch. I know from what the newly installed ambassador, Karel van Oosterom, has said that the Dutch embassy has greatly added to its staff in London. We need to establish and maintain contact and dialogue, here and in Holland, so that we can make use of this important link, now that we are no longer a member of European institutions.
I support these regulations and hope we can make a success of them.
My Lords, it is a great privilege to be able to participate remotely and to follow my noble friend Lord Taylor of Holbeach. He is much more concerned with plant health. I declare an interest as somebody who owns a bit of forestry and a rural property.
It has proved extremely difficult to get hold of this statutory instrument. I had to be coached through a process involving 10 moves in order to find the full text. It is an enormous piece of work. No doubt the department has gone through everything with a fine-toothed comb. I was interested that the regulations draw up a contingency plan for pests and diseases before January 2023. My noble friend the Minister has just told us that they are accepting the details in the EU directive but leaving out the diseases that are not common to this country. Is what is left really adequate? Do the Government propose adding any new diseases to the list? When will they address these matters?
My Lords, it is somewhat intimidating to follow three noble Lords who have infinitely more knowledge and experience in this area. I will attempt to probe the Minister on this entirely necessary but—as the noble Duke, the Duke of Montrose, pointed out—highly complex and lengthy legislation.
In his response, will the Minister say more about the phasing of these regulations? He mentioned April for the less high-risk species and then a second date of July next year. Are the Government committed to a four-month phasing-in period? Will the system be fully operational by July, with all the new checks in place, or is July a less firm date, given its complexity?
In relation to the overall regulations, can the Minister say more about the help that his department is giving to the beleaguered industry? It is seeking to understand how it is supposed to fulfil its obligations on a number of wider import and export issues after Brexit. There is a great amount of detail involved. How are the Government going to help small businesses trying to make their way in this industry through this challenging period? They have no spare capacity beyond making and getting their products to market.
Can the Minister say more about the approach to Xylella fastidiosa? I hope he will forgive me if this is spelled out within the regulations in a way that I do not immediately comprehend. Many people will be interested in whether 1 January marks the divergence between the UK and the EU on this threat which the Minister was blocked from implementing earlier this year.
The Minister showed great forbearance last week when I attempted to ask a number of questions relating to this issue in the debate on the invasive species regulations. Now we are in the right regulatory setting, can he clarify the checks system which is being phased in from January and April through to July? Are the Government implementing routine checks on plants and plant material which were previously prohibited in the single market, or do these routine checks not fit with the risk-based approach which they are following?
Will the Minister allow a final question about the huge impact of the new system from 1 January which goes wider than these specific regulations? Will there be a fast-track, green lane for fruit and veg producers to prevent potentially hundreds of thousands of tonnes rotting in the queues, which we anticipate could happen from next month?
My Lords, first, I declare my interest as co-chair of the All-Party Parliamentary Gardening and Horticulture Group. Of course, I welcome warmly in principle any system which will better protect our country from imported plant diseases. We have all seen enough of Dutch elm disease, ash dieback and sundry other horrible pests and diseases to know that we want to prevent the import of more, notably Xylella, which affects so many garden plants. Nevertheless, the horticultural industry is worried about the adjustments that it will have to make from 1 January. My noble friend the Minister referred to “some” adjustments; I think that the trade would say that they are tremendously important and worrying adjustments.
The regulations are long, complex and, to me, barely comprehensible. It is important that those who will have to run with these regulations have full explanations in everyday language. I am told that these are not yet forthcoming. Perhaps my noble friend the Minister can say whether this is correct, because it is important that all traders, nurseries and so forth have access to them.
My noble friend Lord Taylor mentioned discussions with the Horticultural Trades Association, in which we were both engaged. Perhaps I may put to the Minister some of the worries that it has expressed, but I must make it clear that it, as much as anybody else, wants to prevent pests and diseases coming into this country and is anxious to work with the Government after 1 January as well as before it. It is concerned that border controls to check plant health will not yet be in place, meaning that checks will be made at plant destinations. According to the trades association, that means anything from 1,000 to possibly 2,000, which will be a considerable worry, especially for small nurseries or centres that sell plants. They will need to know whether and when an inspector is going to come and, in the meantime, they will not be free to sell the plants. The association is also worried as to whether there will be differences in the categorisation of plants—high-risk plants and others. I think that my noble friend the Minister has made it clear that the regime will not apply equally; inspectors will look to check high-risk plants, which is of some consolation.
Traders are also worried about the need to switch to, from their point of view, a brand new computer system in July. I believe that it is a system that already works for other organisations, but it would be brand new to the horticultural industry. If it is anything like my experience with computer systems, it is not a happy thing to which to look forward. I hope that my noble friend can explain a little more clearly how this will work, to make it easier for the industry as a whole.
My noble friend Lord Taylor has already explained the concerns in relation to Northern Ireland, so I shall not repeat them, but it is important to reassure the horticultural trades in their various forms that the department is understanding of their problems. Above all, I ask the Minister that he and his officials be prepared to work closely with the Horticultural Trades Association as the main representative of the industry to make certain that, as this thing rolls out and problems appear—some of which we may have discussed already and others that may come forward later—they are fully in touch and will adjust as the need arises. The concerns expressed hitherto reflect intense worry on the part of the various nurseries and garden centres. As I have said, they want a new system, but they do not want to be ruined by its implementation.
My Lords, I thank my noble friend the Minister for his clear explanation of the regulations and commend the Government on aiming to ensure effective phytosanitary controls to protect biosecurity. I welcome the strengthening of some controls, such as on apple proliferation phytoplasma and oak longhorn beetles. However, I share some of the concerns expressed by my noble friends Lord Taylor and Lady Fookes regarding the communication of these vast changes for the industry—I declare my interest as a keen gardener—which will require significant adjustment. On the changes particularly for Northern Ireland, but for the whole United Kingdom, clarification is required. As my noble friend Lady Fookes said, the industry fully supports the aims of the regulations and the Government’s policy to control pests and so on, but it wants to know clearly what it needs to do in a new regime.
Many of the issues have been relayed to me by Friends of the Earth, which has a number of concerns on which I ask my noble friend the Minister to comment. For example, Regulation 28(24)(c) changes the requirement in article 25(4) of regulation 2016/2031 such that the UK will establish priority pest plans for all limited pests with a deadline of 1 January 2023. That is in line with the previous deadline, but there are concerns that the omissions may cause some delay. Can my noble friend outline progress thus far on developing priority pest plans for the listed pests? Will he confirm that any future changes to the current list of priority pests will be subject to the same risk assessment processes as currently used by the EU?
On Regulation 30(7), why is it considered necessary to amend article 44(2) of regulation 2016/2031 to delete the reference to the European Commission’s ability to investigate third countries to see whether equivalence is properly achieved? Can my noble friend allay the fears of reduced democratic oversight expressed by Friends of the Earth and explain why the EU examination procedure for scrutiny and amendment of regulations is not fully replicated? I recognise and respect that we want and need our own regulations and our own system, but if my noble friend is able to address some of the concerns of Friends of the Earth, it will help ensure smoother passage and reassure the industry where currently there are significant concerns.
On scrutiny of secondary legislation with respect to environmental security or protection of plant, animal or human health and safety, there are concerns that these will be weakened by the changes. I am sure that my noble friend would not wish that, but it might be helpful to have it on record that it is the case. I am sure that colleagues in the Committee would also support those aims.
My Lords, I declare my interest as chair of the Cornwall and Isles of Scilly Local Nature Partnership, which is obviously very concerned about biosecurity. I commend the Minister for his work on biosecurity. I know he champions it in government, which is very much to be recognised. I was also going to congratulate the officials who put all this together, as did the noble Baroness, Lady Fookes. If I suffer from insomnia later this week I shall reach for it next to my bed, I assure you.
This is a really serious subject because we know that lapses in biosecurity can cost us a huge amount of money. On the animal side, we still think back to foot and mouth, which cost some £8 billion or £9 billion. In the case of plants, lapses can have a major impact on biodiversity. This is a really important area.
I will bring up a few points with the Minister. First, “passport” sounds impressive, but is nothing at all like the passport we have at the moment while we are part of the single market, which allows us to transfer products within 28 nation states with security. This will allow plant materials to go between the devolved nations, but that is about it.
I will follow up on the important point that the noble Baroness, Lady Fookes, raised about IT systems. I would like to understand whether those systems are ready, whether they have been trialled and whether we are certain that they will work. I am not sure whether this is supposed to happen on 1 January or in July, but perhaps the Minister could reassure us on that.
Within the European Union we have the TRACES system, which I expect the Prime Minister might describe as world beating. It is a very serious system. I wonder whether there are plans to have some connection with TRACES in future—as long as negotiations are successful in the coming weeks, as we all hope they will be. There is real information and data in that system that would be of use to us, and I am sure that our data would still be of use to the EU for the point of increasing both sides’ biosecurity.
One of the most important areas is preventing these diseases getting to the border in the first place. Under the present system, the Commission has a number of officials worldwide who check out producers and growers before products are shipped or processed. We will no longer have access to those individuals and their recommendations, checking and audit. I would be interested to understand from the Minister where we are on replacing that capability. In some ways, preventing these risks at source is even more fundamental than stopping them at the border.
I understand the concept of risk-based enforcement and I welcome it in all sorts of ways. It is a most efficient way to do it, but I warn the Minister that I have too often seen “risk-based” being a euphemism for “budget cut”. I would like reassurance on where we are on personnel at the border, let alone out there in the rest of the world, to make sure that this system works.
Lastly, I ask the Minister to reassure us that we will not have an open gate for six months, where one gets the impression that anything goes. Although I understand entirely that most products come through the European Union, so it will be no riskier on 1 January then it will be on 31 December, I am aware that there tends to be a regulatory arbitrage among people who want to move on substandard product. I wonder whether less scrupulous people in this trade outside our national frontiers might try to use this open door policy to find a way to sell substandard product. That would be a risk.
My Lords, I thank the Minister for his helpful introduction and for arranging a very useful briefing in advance of this debate. We know that he takes plant biosecurity extremely seriously and I pay tribute to his work on that issue. It is vital that we have effective biosecurity and phytosanitary controls in place when we end the transition on 31 December, so we do not object to the principles set out in these two SIs but, like other noble Lords, I have a few questions of clarification that it would be helpful for him to address.
First, paragraph 2.2 of the Explanatory Memorandum on the first SI talks about creating “operability amendments” through
“a ‘single market’ covering GB and the Crown Dependencies”,
but it then goes on to say that:
“Internal controls will also continue to apply to movement of goods”
within that GB single market. I am interested to know what these internal controls will consist of. Do they include, for example, checks on goods moving between England and Scotland? Paragraph 2.4 says that:
“Separate but parallel domestic legislation applies in Wales, Northern Ireland, and Scotland.”
Can I double check that those separate bits of legislation are exactly the same as the SI before us? There would otherwise be a challenge to businesses operating in that system.
Will the new plant passport reference codes referred to in paragraph 12.5 be the same throughout GB, whether the commodity originates in England, Wales or Scotland? Will all those plant passport numbers be compatible? Clearly there will be business implications for businesses moving plants passported within GB, so why has there not been an impact assessment of the regulations, given the inevitable business impact?
Also, in response to the Secondary Legislation Scrutiny Committee, Defra says:
“Between January 2021 and July 2021, physical inspections … will take place at the point of destination for imports from the EU.”
I wanted more information on this, although the noble Baroness, Lady Fookes, has I think already given me part of the answer. I wanted to know what “point of destination” really meant. My question was whether it referred to ports and airports or whether it had a wider meaning. I understand from her that it does indeed have that wider meaning and that it refers to the nurseries and so on where the plants are ultimately destined. If that is the case, it seems that there is a biosecurity issue about those plants travelling to that point of destination before they are checked. How will the inspection process account for that?
Following on in terms of inspections, the whole emphasis of this new package is that it will be done on a risk basis, but will there also be some scope for routine or random inspections? As I think that the noble Lords, Lord Walney and Lord Teverson, said, the system we set up will be known globally to all and sundry. If we are not careful we will be rather open to unscrupulous people if we operate a checking system for only high-risk products. We need to ensure that the system we introduce is robust and has some element of random checking within it. Perhaps the Minister could clarify that.
Paragraph 7.4 refers to separate legislative arrangements needed for Northern Ireland to align with the EU regulations for GB goods entering Northern Ireland. What are those separate legislative arrangements? Is it intended that we will debate them before the new year?
I will follow up on the example from the noble Lord, Lord Taylor, who said that Dutch bulbs could pass through GB without the need for paperwork, presumably because it is, in effect, EU to EU. Again, I did not know this, so I have learned something. Would this apply even if the plants travelling were in a higher category of risk, rather than being just Dutch bulbs?
The noble Baroness, Lady Altmann, referred to the Friends of the Earth submission—the issue about investigations taking place in third countries to determine whether or not equivalence with UK standards is being properly achieved. I echo that; it was also mentioned by the noble Lord, Lord Teverson. Regulation 30(7) removes that reference. Will investigations still take place in third countries? Where is that wording now that that reference, which seems to make perfect sense, has been taken out?
The second SI lists the animal and plant pests subject to quarantine. The Minister has made it clear to us that the list before us is a newly compiled list specific to GB. How does that compare with the EU list, given that EU countries are our nearest neighbours and therefore most likely to transfer existing or new pest threats? If the EU updates its list when it becomes aware of new risks, what will be the system for letting us know so that we can utilise its intelligence and update our risk-based plant controls to correspond? If there is an EU update, how does that impact on our list? How will our list be updated and how will we notify people if the list becomes a moveable feast and is constantly updated, as in many ways it makes sense to do?
Finally, Friends of the Earth says that a specific reference to an “examination procedure” for adopting amendments to regulations has been changed to applying a risk assessment. This seems a watering-down of the current arrangements and I would be grateful if the Minister could address that in his response.
My Lords, I am most grateful to all noble Lords for this really very absorbing debate. I say categorically to all noble Lords, particularly my noble friend Lady Altmann, that there is absolutely no weakening of our resolve on biosecurity—quite the reverse. In fact, in other quarters I may be accused of raising the bar and that is exactly what we are seeking to do in terms of immediate—from 1 January—requirements for high-risk plants coming in from the EU, precisely because we are concerned that there is a biosecurity risk. I emphasise that.
I say also to all noble Lords, but particularly my noble friends Lady Fookes and Lord Taylor of Holbeach and the noble Lord, Lord Walney, that it is absolutely imperative that we work in partnership with businesses engaged in this matter. I know that that is what all the officials I have been working with want to do, and everything that we are doing is on a risk basis, based on sound science, as to what is affecting this country. I should also say that given the time allocated and the number of questions, there may be some questions that I would like to respond to in rather more detail, but we have listened to the concerns of industry to ensure that the new requirements are as practical, proportionate and risk-based as they possibly can be.
Import controls on EU-regulated goods will be phased in over six months from 1 January. Regulated goods will not be held at the border for import checks during this initial period but will instead be inspected on a risk-targeted basis at places of destination. I say to the noble Lord, Lord Teverson, who made the legitimate point about whether there is a gap, that, in fact, we are ensuring that there is no gap with regard to high-risk goods that are coming here at the moment. We are using the opportunity from day one of ensuring that high-risk goods, where we have already had interceptions, will be inspected and checked. As I said, it is designed on the basis of risk. Our focus is on those goods from the EU which have been deemed to represent a significant plant health threat.
I say to my noble friends Lady Fookes and Lady Altmann that Defra has been engaged in numerous trade events and has distributed extensive guidance directly to around 2,200 businesses by email. All known trade associations have been involved in Defra events and have been provided with detailed guidance to circulate to their members. The APHA Defra helplines are actively responding to queries to support business readiness. The devolved Administrations have been involved in similar processes and activities to ensure business preparedness. This is a continuing matter, pre 1 January and post 1 January.
The noble Lord, Lord Walney, asked about what we are doing in the phasing. The purpose is to work with businesses so that we engage on the high-risk plants and plant products first, and from April 2021 all regulated goods will be pre-notified and accompanied by a phytosanitary certificate. We will be extending physical import checks to other regulated goods from July 2021. We will be continuing our risk-based programme of inland surveillance as a further check that requirements are being met.
I say also to the noble Lord that we are working closely with other departments and agencies to ensure that there is a good join-up. We have also listened to the concerns of industry to ensure that new requirements are practical and appropriate, and are working to ensure that there are not blockages of fresh produce.
In response to my noble friend Lady Fookes, I say that have been in regular engagement with industry. More particularly, day in, day out, there has been work between officials and the Horticultural Trades Association and others. Most recently, we have undertaken a series of feasibility sessions with more than 300 participants, and equivalent export sessions. Alongside these feasibility sessions, Defra is hosting a series of webinars, open to all, on the new plant health requirements.
Northern Ireland, mentioned by the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Taylor of Holbeach, will maintain alignment with EU regulations. These instruments focus on Great Britain’s biosecurity and the pests that threaten it. Northern Ireland will retain its own separate legislative arrangements in relation to the continued application of the EU’s sanitary and phytosanitary rules. A further instrument is under development to set out the arrangements for qualifying Northern Ireland goods which are regulated plants or plant products and can move from Northern Ireland to and within Great Britain under the Government’s unfettered access arrangements. We expect to lay this instrument before the end of the year.
My noble friend the Duke of Montrose and the noble Lord, Lord Walney, referred to the length of these SIs. I have considerable sympathy: combined they are 343 pages. They are simply amending the retained EU legislation to reflect risks to Great Britain so that measures against the introduction or spread of harmful organisms continue to remain effective and operable following the end of the transition period.
My noble friends the Duke of Montrose and Lady Altmann asked about pests. Of the 20 pests on the EU priority pest list, 11 already have UK contingency plans and five relate to tropical fruit flies and citrus pests; for the remaining four, contingency plans have been prioritised for development. I say to my noble friend Lady Altmann that our risk assessment is of the risk to Great Britain now and our responsibilities for biosecurity.
I say to the noble Lord, Lord Walney, that protecting against Xylella remains a priority. We have intensified our surveillance, inspection and testing regime for Xylella host plants because they present a considerable danger.
On IT, raised by the noble Lord, Lord Teverson, all essential deliverables are ready for 1 January, including essential IT system amendments, solutions for inland checks for transit material and UK passports, and all external content and guidance. Recruitment is under way in the APHA. On the resources point, the Government are investing £705 million to ensure that our border systems are fully operable by 1 January. The APHA is well on track to have in place more than 200 new inspectors and administrative staff by the end of the year, and we expect this number to increase to 250 full-time equivalents by July 2021. The Government in Scotland are also boosting resources.
On audits and the audit functions carried out by SANTE F, these have already been incorporated into the UK-wide plant health risk group arrangements. That includes a process on audits to scrutinise third countries exporting to the UK and manage the scrutiny from third countries to which we want to export.
On the other point from my noble friend Lady Altmann, the UK plant health risk group identifies, assesses and manages plant health risks. This working group will provide an equivalent level of technical scrutiny. On the question of general powers in the event of a significant plant health risk, general plant health powers are available.
On TRACES, although linking to TRACES remains an option, with third countries able to manually input data to the EU system, during 2021 we are aiming to use the International Plant Protection Convention hub as a single platform to exchange electronic phytosanitary certificates instead of unnecessarily doubling our own efforts by creating multiple interfaces for the rest of the world trade and the EU.
The noble Baroness, Lady Jones, asked about devolution. We are working closely with officials. Separate but parallel domestic legislation is being made in Scotland and Wales, which will ensure that plant health regulations are completely aligned in Great Britain, while respecting devolved arrangements. The plant passport numbers will be compatible. Our experts continue to enable horizon scanning, undertaken by the European and Mediterranean Plant Protection Organization and other organisations.
On the question of the basis of the review and further reviews of legislation, the UK intends to ensure that its SPS regime remains appropriate to address the risks that it faces. Defra has a dedicated team of specialist plant health risk analysts and managers working with the devolved Administrations, monitoring emerging and revised threats.
I am fully aware that, in a period of change, there will be businesses that are worried. I want to reassure all businesses that this is a very important task for Defra and the APHA. We are working on these matters daily and will continue to do so. This is a great opportunity for UK businesses. I understand the difficulties and we are working with them. But on the basis of these instruments being about UK and GB biosecurity, I beg to move.
Plant Health (Phytosanitary Conditions) (Amendment) (EU Exit) Regulations 2020
Considered in Grand Committee
The Grand Committee stands adjourned until 3.45 pm. I remind noble Lords to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
The microphone system for physical participants has changed. To reduce the noise for remote participants, your microphones will no longer be turned on at all times. When it is your turn to speak, please press the button on the microphone stand. Once you have done that, wait for the green flashing light to turn red before you begin speaking. The process for unmuting and muting for remote participants remains the same. The time limit for debate on the Agriculture and Horticulture Development Board (Amendment) Order 2020 and the two other Motions is one hour.
Agriculture and Horticulture Development Board (Amendment) Order 2020
Considered in Grand Committee
My Lords, I declare my farming interests as set out in the register. The matters in these instruments are closely related, as they are the first produced using the powers of the Agriculture Act 2020. They lay the groundwork for our new agricultural policy.
First, the Agriculture and Horticulture Development Board (Amendment) Order 2020 assigns additional functions to the Agriculture and Horticulture Development Board, or AHDB, enabling it to run the new livestock information service—LIS—effectively. The LIS will operate in England, while the AHDB will be able to collect, manage and make available information regarding the identification, movement and health of animals, and to allocate unique identification codes for the means of identifying animals.
Livestock are currently identified through three separate livestock traceability services: one for cattle, one covering sheep and goats, and one for pigs. As existing systems are species-specific, keepers with more than one species of livestock must switch between databases. The LIS replaces these separate systems with a single multi-species system. The existing sheep service in England is expected to transition to the new arrangements in spring 2021. Cattle and pig services are due to transition in 2022. The service will be more cost-effective and user-friendly; it will allow faster, more accurate livestock traceability, enabling us to manage disease and protect human health better, giving confidence to trading partners. The LIS will use cloud-based IT infrastructure, ensuring that the system has capacity to scale up response when user demand is high.
Although the LIS operates in England, an important part of the service is working with the devolved Administrations to ensure that we can share data, allowing seamless livestock movement and traceability throughout the UK. Defra and the devolved Administrations will enter into an agreement to control and share data. Each territory’s traceability systems will be able to communicate with each other, supporting day-to-day business operations such as cross-border moves. This is called the UK view. The ability for veterinary officials across the UK to be able to access the UK view is essential to ensuring a rapid, targeted response in disease-control situations.
The AHDB will also run a unique number identification service on behalf of England and Wales, controlling the issuing of official individual identification numbers to animals. The new system will also allow for value-added services where submitted data can be used to generate information in wider areas, such as livestock productivity and disease management.
The Direct Payments to Farmers (England) (Amendment) Regulations 2020 amend and update direct payments legislation as it applies in England. The legislation governing direct payment schemes contains financial ceilings to calculate direct payments to farmers. However, it only includes financial ceilings up to and including the 2020 claim year. This instrument specifies how the Secretary of State will set financial ceilings for England beyond 2020. Once these provisions on financial ceilings have come into force, 2021 ceilings for England can be set. This will be done by the end of this year. Ceilings for future years will be equivalent to England’s share of the 2020 UK national ceiling. This is because the ceilings are the starting point for payment calculations, before any reductions are applied to payments to phase them out.
The regulations also make minor changes to ensure that schemes continue to work effectively in England beyond 2020. This includes replacing dates specific to the 2020 scheme year with equivalent dates that are not year specific. The regulations also remove rules that are not applied in England, such as those relating to voluntary coupled support, which is operated in Scotland.
No substantive policy changes are made by these regulations. They ensure that direct payment schemes in England can continue beyond the end of the 2020 scheme and are largely technical. The Government remain committed to beginning to phase out direct payments from 2021 as part of their ambitious agricultural reforms in England. We will bring forward a separate instrument to apply reductions to the payments so that we can phase them out over a seven-year transition period. Devolved Administrations plan to make their own legislation in relation to their direct payment schemes.
The World Trade Organisation Agreement on Agriculture (Domestic Support) Regulations 2020 are UK-wide. The instrument ensures that after the end of the transition period, the UK continues to comply with its international obligations under the WTO Agreement on Agriculture in relation to classification and notification of domestic support and its commitment to reduce its aggregate measurement of support. Compliance with the agreement was previously managed by the EU on the UK’s behalf. This instrument is limited in scope to ensuring continued compliance with the agreement. This is a reserved issue because individual nations of the UK do not have legislative competence to act in these matters for other parts of the UK.
The Agreement on Agriculture divides domestic support into “green box”, “blue box” or “amber box”, depending on the potential to distort trade. Under the agreement, each country must limit the amount of trade-distorting amber box domestic support given to agricultural producers. The UK’s overall amber box spending limit remains unchanged after EU exit. These regulations specify the amounts of amber box payments that may be given in each UK nation. Limits have been set, following consultation with devolved Administrations, at a level not constraining policy choices, meaning that there will be no impact on farmers.
The regulations also outline the procedure for classifying such schemes and permit the Secretary of State to request information from devolved Administrations where needed to enable the UK to satisfy Agreement on Agriculture obligations. The regulations outline the transparent and objective process by which UK constituent nations will share information on proposed support schemes in order to establish their classification and ensure timely and accurate notification of domestic support to the WTO.
These instruments implement provisions provided for by the Agriculture Act 2020 and I beg to move.
My Lords, I declare an interest as the owner of 40 acres of woodland registered with the Forestry Commission, the owner of a small vineyard of 100 vines and a member of the winegrowers’ association.
I want to focus on the Agriculture and Horticulture Development Board regulations. It is not immediately obvious from paragraph 7.1 of the Explanatory Memorandum what horticulture is doing here. Is there an equivalent measure for horticulture to the statements made about animal movement? Where does the arboreal dimension fit into this? Does the instrument cover poultry? Poultry is not mentioned. Does it cover bees? Both are important parts of livestock more broadly for people in the UK.
I do not yet read anywhere that we are picking up the opportunity that this country has with horticulture. One way or the other, things will change in a few weeks. We know the history of horticulture in the UK. We have lost out to Holland, principally because of the cost of energy. You only have to drive round Bedfordshire and associated counties that were big in horticulture to notice a substantial reduction. There is a huge, once-in-a-lifetime opportunity for import substitution, so that we can see better performance from horticulture and pick up on the development work that was being done and may still be done on fruit trees and fruit bushes, as well as vegetables in general—all geared up to import substitution. While I am not clear where the horticulture sector is outlined in the document, it seems relevant, as horticulture is mentioned in the title.
The document talks about the Scottish Government and the Department of Agriculture, Environment and Rural Affairs. Having been deeply involved in the internal market Bill and the challenges for liaison between the centre and the devolved Governments, I would like to know what happens if the Scottish Government or the Northern Irish department of agriculture decide to disagree with the centre on their own unique identification codes. Is there a mechanism whereby difficulties in this area can be put to rest?
Broadly in this area, the department has put out a helpful leaflet. I refer in particular to the annexe summary of new schemes on page 22, which I studied over the weekend. On the Forestry Commission incentives, applications are apparently open all year. Are these the existing ones, which have been going for a long time? The leaflet says that they start in 2020. As a registered owner, I am not aware of having received any communication from the Forestry Commission about new incentives.
The tree health pilot, which the Minister has mentioned before, is important because of the problems with ash and elm. It starts in October next year. When will this be communicated fully? Are we sticking to April 2021, as the document says? On the tree health scheme, which is also important, I see that further information is not expected until 2024. It is difficult to understand why the delay should be so long.
The World Trade Organization regulations are important. There is not a lot to ask other than to pick up on one point. We are a founding member of the WTO, which I hope is to our benefit. On paragraph 6.1, what has been the reaction from the devolved assemblies to the amber box support? If there is a difference of opinion, who will make the decision? It is not entirely clear from the document. Finally, I would be grateful for an explanation in more depth of paragraph 6.4, which also refers to disagreements. That is all I want to say. I do not want to make any reference to the direct payments.
I call the next speaker, the noble Lord, Lord Bhatia. Oh, Lord Bhatia, we cannot hear you. We will go to the next speaker and try to come back to you if we possibly can. I call the noble Baroness, Lady Bakewell of Hardington Mandeville.
My Lords, I thank the Minister for his introduction to these three statutory instruments and apologise for missing the briefing which he so kindly provided. The Agriculture and Horticulture Development Board (Amendment) Order 2020 is very short and concise. It moves the functions of identification, movement and health of animals and allocating identification codes from the AHDB to a new livestock information service, the LIS.
It is essential that animals should be able to move around and be accurately tracked. The LIS will make it much easier to track animals as they will all be on one database, instead of three separate databases under the current AHDB. However, if there are 165,000 keepers of farmed livestock and nearly 60,000 keep more than one species, that is a lot of livestock being combined from three databases into one. Has this database been fully tested? In other words: does it work? While it is extremely advantageous for farmers to visit only one database to look at their cattle, pigs and sheep instead of one for each species, it will be necessary that the computer systems work. Is Livestock Information Ltd a private company, or does it operate under the auspices of Defra? Track and trace for animals is vital to prevent disease outbreaks and controlling disease once outbreaks have occurred. Like so many things in life, if the computer system fails then chaos results. I would be grateful for the Minister’s reassurance on this point.
The Direct Payments to Farmers (England) (Amendment) Regulations 2020 ensure that farmers will receive their direct payments from January 2021 and set out financial ceilings used to calculate farmers’ direct payments. However, I could find no information on what these ceilings were in the actual instrument. As with a lot of statutory instruments, unless you have the original legislation in front of you it is very difficult to interpret what is proposed. The devolved Administrations have their own legislation which deals with these issues, so this SI relates solely to England. Can the Minister say whether after January 2021 all four Administrations, including England, will pay their farmers at the same rate for the same activities? If not, I foresee difficulties with cross-border trade.
The direct payment covers basic payments, greening payments and young farmer payments. It is my understanding that the direct payments are on a sliding scale and reduce over the period of the transition from CAP to ELMS, but there is no mention of this in the instrument, which states that the seven-year transition information is not covered in this SI. Where will this sliding scale of support under the withdrawal from direct payments be covered?
The Government have committed to maintain the same financial support for farmers as they previously enjoyed, at £1.8 billion annually. I am pleased to note that in future payments will not be made in euros, so farmers will not be subject to the vagaries of exchange rates. However, in paragraph 7.7 of the Explanatory Memorandum, the text states that the SI
“removes the need for recipients of Direct Payments to meet ‘active farmer’ requirements”.
What is meant by “active farmer”? Does this mean that an inactive farmer—one who no longer manages land or livestock—will receive a direct payment?
The World Trade Organisation Agreement on Agriculture (Domestic Support) Regulations 2020 ensure that the UK continues to comply with its obligations under the WTO Agreement on Agriculture, the AoA. This ensures reductions in its aggregate measurement of support, a key measure used by the WTO to assess domestic support for agricultural commodities. This SI also deals with UK obligations on “amber box” payments with trade-distorting effects, to which the Minister has referred. Defra says that this instrument specifies the amounts of amber box payments that may be given in each country of the UK; they are limited under the AoA, and the aim is to reduce them over time. The Secondary Legislation and Scrutiny Committee has published a paragraph on this instrument, which allows for each UK Administration to design and implement their own agricultural support schemes within an amber box spending envelope set by this instrument.
I would like to ask the Minister about the limits of support at Paragraph 4 of the instrument, which refers to how the total sum is calculated but does not give any indication of what the total will be. However, it states that England will get 49.2%, Northern Ireland 7.49%, Scotland 12.6%, and Wales 6.83%. This does not include the reserve. Are these percentages permanent or will they change each year? I assume these percentages are for the year 2021, but can the Minister please confirm?
The instrument also indicated that spending from the reserve may be used on amber box domestic support in a Crown dependency. Does this include all Crown dependencies or only some? I look forward to the Minister’s response to my questions and those of other noble Lords taking part in this debate.
My Lords, after the noble Baroness, Lady Jones of Whitchurch, I shall call the noble Lord, Lord Bhatia, to speak.
My Lords, I thank the Minister for his introduction to these SIs and the helpful briefing beforehand. I shall deal with the SI on the Agriculture and Horticulture Development Board first.
It obviously makes sense to have a streamlined and digitalised system for recording the movement of animals around the UK. This is crucial to manage and control any outbreak of disease or the spread of invasive pests. We know from painful experiences of the past the devastation that diseases such as foot and mouth can cause. That can be exacerbated by the movement of animals around the country. On the face of it, setting up a separate body in England to provide a multi-species traceability system will be a welcome and progressive move, and I note that it is broadly supported by the stakeholder organisations and devolved Administrations that were consulted. However, I just have a few questions about the status and operation of the livestock information service being established as a subsidiary of the AHDB.
The estimated cost of delivering the new service is £32 million over three years, and the net benefit over 10 years is estimated to be £30 million. However, as it is a limited company, does this mean that it will also be a for-profit company? Will it have directors, and to whom will they report? Farmers currently pay a levy to use the ADHB service. Will they have to pay for the new LIS service, and how do the anticipated charges for farmers compare to the current costs?
If the new service is intended to begin in spring next year, can I echo the question asked by the noble Baroness, Lady Bakewell, about the state of the new IT system? Is it already functioning and has it been properly stress-tested? Has it been tested to deal with the quantity of data to which she referred? Will the existing and the new systems run in parallel for a period of time, or is it proposed to have a D-day switch from one to the other? If there subsequently prove to be errors in the data collection, who will be responsible? There could be catastrophic results, if that was the case.
I also ask about the devolved implications. This is an England-only scheme. As the EM points out, Scotland and Northern Ireland intend to operate their own schemes, issuing identification numbers for animals that would allow them to be traced. Are they all proposing their own digital services and, if so, will they be compatible with the English version? Will the data generated be shared across the four devolved nations? Obviously, animals can and do move across the borders quite frequently. Is it proposed that the English data system will be able to identify and track the unique identification codes issued by the devolved nations?
Turning to the second SI on direct payments to farmers, the Minister will know that when we were dealing with the direct payments to farmers Bill earlier this year, I and others pressed him on why that Bill had a sunset clause which allowed for the extension of the basic farm payment scheme for one year only. The Minister’s response at the time was that the provisions of the Agriculture Bill would then kick in. But I said then that we would need some persuading that the transitional arrangements envisaged in the Agriculture Bill would be ready to be implemented on 1 January next year—and so it has come to pass.
Since the SI was published, we have seen the Government’s plan for sustainable farming announced this week. It confirms a cut of 5% in the direct payments next year, with further cuts thereafter, so when will we see a separate set of regulations confirming the cuts in these payments? Will it be necessary before the end of the year? Has Defra undertaken an impact assessment on the impact on different sectors and farm sizes? What financial support will be made available for farmers whose livelihoods are threatened by these proposals? These proposals are for England only, so has Defra done an assessment of the impact of different levels of farm subsidies being paid across the four devolved nations and the consequences for prices and the internal market of any divergence from a standard set of prices?
Finally, I will just say a few words on the WTO SI. Again, these have significant implications for relations with the devolved nations, as we discussed during consideration of the Agriculture Bill. At that time, there were concerns that the Bill gave the Secretary of State too much power to decide how farm support payments anywhere in the UK should be classified in relation to WTO rules and to set limits on those payments.
The EM says that these regulations were drafted in consultation with the devolved Administrations and that the majority of their comments were accommodated. Can the Minister say a little more about the nature of these discussions and what areas of dispute remain with the devolved Administrations? Paragraph 6 of the EM says that any devolved nation which wants to make changes to a scheme must notify the others. But what happens if another devolved nation is unhappy with these actions, and what would be the consequences if it followed that through?
I look forward to the Minister’s response to these questions.
This SI has been prepared by the Department for Environment, Food and Rural Affairs. It amends the Agriculture and Horticulture Development Board Order 2008 to assign additional functions to that board. These functions relate to collecting, managing and making available information regarding the identification, movement and health of animals and allocating unique identification codes to the means of identifying animals. This would provide a multi-species traceability system in England and facilitate the tracing of livestock movements across the UK.
The department has established a subsidiary company named Livestock Information Ltd. This company will be accountable to Defra. The company will provide services to six agricultural and horticultural sectors, including the beef, sheep and pig industries in England and the milk industry in Great Britain. Of the 165,000 people who farm livestock today, only 60,000 keep more than one species. The nature of this industry is such that the livestock move across the UK, and this service will provide a unique number for each animal, which will ensure disease management.
Food standards are extremely important, and this regulation will ensure that food quality is monitored on an ongoing basis. There has been a press report recently which said that science has now produced a man-made product that does not require animals, thereby having an impact on this industry. Can the Minister give some information on whether the department is making an impact assessment of this new product, as it is likely to affect the whole industry, thereby making thousands of people redundant?
My Lords, I thank all noble Lords for contributing to this debate. I think we all regret that my noble friend Lord Naseby was not in the earlier consideration debate on plant health and plant products. I agree with him that there is considerable opportunity for growing in Britain. What I would say is that this particular instrument relates to adding further functions for the AHDB, but of course the AHDB currently serves six agricultural and horticultural sectors. From that point of view, today’s work is about the livestock information service specifically. Bees and poultry are not engaged in this order, and in fact the existing AHDB order does not include bees or poultry.
I turn to some of the questions, particularly on the governance structure. The noble Baronesses, Lady Jones of Whitchurch and Lady Bakewell of Hardington Mandeville, raised this. The LIS will be run by Livestock Information Ltd—LI Ltd—a subsidiary body of the AHDB. LI Ltd is wholly separate from AHDB levy schemes, and it is not funded by them. LI Ltd is a not-for-profit company, limited by guarantee by the AHDB and Defra. It will not charge fees to keepers for providing livestock traceability services. Movement reporting is a statutory requirement, and the service will be fully paid for by Defra, as existing services are now. LI Ltd may in the future charge for offering value-added services above and beyond statutory requirements. Any such services would be agreed with industry. It could thus include services which could help reduce or eradicate endemic disease.
I absolutely understand the point the noble Baronesses made about a new system and its readiness. The underpinning information technology has been in development over a longer time period ahead of the new company launching in October 2019. Defra receives regular updates, and LI Ltd is currently on track to lead with live services in spring 2021. Defra actively monitors delivery and would not decommission existing traceability services until the new one was ready. Indeed, I say to both noble Baronesses that the transition to the new service will be incremental, so there will be periods with old and new systems running. All changes will be carefully managed so that keepers will have to enter their data only once; in other words, a pragmatic solution.
My noble friend Lord Naseby and the noble Baroness, Lady Jones of Whitchurch, asked about the separation of traceability services for each Administration, and I absolutely agree: they need to be compatible, and I confirm that this is the case. Any livestock movement between UK nations should allow the full continuity of traceability. Defra is working closely with devolved Administrations and data-sharing agreements will govern information moving with the animals.
I turn to the direct payment instrument. The noble Baroness, Lady Jones of Whitchurch, asked about the direct payment legislation, the 2020 scheme and the earlier legislation. Indeed, the Direct Payments to Farmers (Legislative Continuity) Act 2020 provided continuity of payments for the 2020 scheme year. The Act was focused on providing direct payments for farmers as the UK left the EU, not on extending the scope of the regulations beyond 2020. This instrument uses powers in the Agriculture Act 2020, always designed as the vehicle for our agricultural reforms, including making substantive amendments to retained EU law. That allowed post-2020 changes, including the power to extend direct payments beyond 2020, to be debated together. To those who asked whether we will need new statutory instruments for direct payments each year, I say that the changes made via this instrument are not specific to 2021. It will not be necessary to lay further instruments to continue existing direct payment schemes for future years.
The noble Baroness, Lady Bakewell, and other noble Lords asked about the reductions in 2021 and thereafter. We intend to legislate for the reductions to 2021 direct payments in an affirmative statutory instrument early next year. Simplifications to the scheme will be made through a separate statutory instrument that was laid on 1 December.
The EU rules on active farmers have not been applied in England since 2017. They were thought to have added burdens and caused confusion for farmers. This statutory instrument does not change the requirement that you must be a farmer in order to claim direct payments.
Forgive me for being so punctilious about the impact assessment, but this statutory instrument allows existing direct payment schemes in England to continue beyond 2020. An impact assessment of this instrument is not necessary as the instrument does not introduce changes for farmers, make policy changes or set reductions for phasing out the payments for agricultural transition. I will take questions on this in a separate statutory instrument debate, but it is important to say it here.
The noble Baroness, Lady Jones, also asked about the UK internal market. We all know that agriculture is devolved. The approach to direct payments in each UK nation is a matter for each Administration. Direct payments are largely decoupled from production and should not, therefore, distort trade. There are already significant differences in the implementation of direct payment schemes within the United Kingdom.
On the WTO instrument, the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Naseby asked about disputes between any of the UK nations. These regulations set out a transparent and objective decision-making process for classifying schemes according to WTO definitions. The devolved Administrations will be able to design their own policies and schemes, propose WTO classifications for these schemes and provide evidence in support of the proposed classifications. All four UK Administrations will then discuss their proposed support schemes and how to reach agreement on their classification according to WTO criteria before they are introduced. The provisions allow for a dispute resolution process, but this would be used only in the unlikely event that agreement could not be reached on classification of a new and amended domestic support scheme. If agreement cannot be reached there is provision for the Secretary of State to make the final decision. I should emphasise that it is expected that the vast majority of issues will be agreed. The objective is that any disputes should be resolved through discussion and collaboration between the four Administrations.
The noble Baroness, Lady Bakewell, asked how limits are calculated. The “amber box” limits are equivalent to the average annual level of all domestic support—green, blue and amber—given to agricultural producers in England, Wales, Scotland and Northern Ireland between 2014 and 2017. The amber box limits therefore accommodate current levels of green, blue and amber box support, meaning that policy choices in England, Wales, Scotland and Northern Ireland are not constrained. The limits are expressed as a percentage of the current UK aggregate measurement of support, as set out in the UK goods schedule at the WTO.
The noble Baroness, Lady Bakewell, also asked about direct payments. The English share of the UK direct payments financial ceiling is €2.07 billion, which equates to £1.8 billion and will be used as the basis for setting the direct payment financial ceiling in future years. Since agriculture is devolved, it will be up to each devolved Administration to determine their own approach to the direct payment schemes.
I will look at Hansard in case there are other points which I have missed. The noble Lord, Lord Bhatia, made one or two other remarks to which I shall attend. In the meantime, these instruments are worthy of your Lordships’ support. I beg to move.
Direct Payments to Farmers (England) (Amendment) Regulations 2020
Considered in Grand Committee
World Trade Organisation Agreement on Agriculture (Domestic Support) Regulations 2020
Considered in Grand Committee
The Grand Committee stands adjourned until 5 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, while others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
The microphone system for physical participants has changed. Your microphones will no longer be turned on at all times in order to reduce the noise for remote participants. When it is your turn to speak, please press the button on the microphone stand. Once you have done that, wait for the green flashing light to turn red before you begin speaking. The process for unmuting and muting for remote participants remains the same. The time limit for debate on the following statutory instrument is one hour.
Unmanned Aircraft (Amendment) (EU Exit) Regulations 2020
Considered in Grand Committee
My Lords, these draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020. The regulations amend EU Delegated Regulation 2019/945, which sets out new product standards for unmanned aircraft, and EU Implementing Regulation 2019/947, which sets out new requirements for the operation of unmanned aircraft. The regulations also make minor changes to the Air Navigation Order 2016 by removing references to the European Aviation Safety Agency—EASA—to ensure that flight restriction zones around protected aerodromes continue to function, and to Regulation 10 of the Operation of Air Services (Amendment etc.) (EU Exit) Regulations 2018 to ensure that the savings provision applies from 31 December 2020.
Sitting suspended for a Division in the House.
My Lords, I will continue. I was just about to talk about the background to the EU regulation, and I will focus on the unmanned aircraft element of these regulations.
EU Regulation 2019/945 requires unmanned aircraft and associated accessories to be designed and manufactured in accordance with certain standards. It creates classes of unmanned aircraft and defines the characteristics of those classes. It imposes certain obligations on manufacturers, importers and distributors, such as ensuring that an unmanned aircraft is accompanied by the manufacturer’s instructions. It also defines those unmanned aircraft whose design, production and maintenance shall be subject to certification. This regulation entered into force and became applicable on 1 July 2019. However, transitional provisions mean that while most existing unmanned aircraft can continue to be sold for now, products placed on the market after 1 January 2023 must comply with the requirements of the delegated regulation.
EU Regulation 2019/947 requires unmanned aircraft to be operated in accordance with certain rules and procedures. It creates operational categories that unmanned aircraft can be flown in, proportionate to the level of risk posed by an operation. The open category, for the lowest-risk operations, requires operators and remote pilots to abide by certain requirements. If those requirements cannot be met, an authorisation must be obtained to fly in the specific category. The highest-risk operations, including the use of unmanned aircraft designed for carrying dangerous goods or transporting people, must occur in the certified category. This requires the certification of the unmanned aircraft and the operator, and, where applicable, the licensing of the remote pilot. This regulation also imposes requirements on operators and remote pilots to ensure that operations are carried out safely and securely. For example, remote pilots must meet any applicable competency requirements for the flights they undertake. The regulation entered into force on 1 July 2019, but it is not applicable until 31 December this year. Therefore, it will still be retained in UK law.
As civil aviation is a reserved policy area, both regulations apply to the whole of the United Kingdom. The withdrawal Act will retain both the delegated and implementing regulations in UK law after the end of the transition period. This draft instrument makes the changes necessary so that the regulations continue to function correctly. This is essential to ensuring the continuation of an effective regulatory regime for unmanned aircraft.
This instrument is subject to the affirmative procedure because it creates or amends a power to legislate. For example, it provides the Secretary of State with the power to make regulations designating geographical zones for safety, security, privacy or environmental reasons.
The most significant amendment being made to the delegated regulation is providing a new power for the Secretary of State to designate standards after the end of the transition period. Until that power is exercised, unmanned aircraft and associated accessories that conform to EU harmonised standards will continue to be considered compliant with EU requirements, and those requirements will be recognised in the UK. It is not possible for these harmonised standards to be recognised in UK law as yet as they are still under development.
Another significant amendment is replacing the term “notified body” with “approved body”, thereby enabling the Secretary of State to approve bodies to carry out conformity assessments without notifying the European Commission. Other changes being made to the regulation are mostly minor and technical in nature; for example, replacing the phrase
“a language which can be easily understood”
The amendments being made to the implementing regulation are minor but equally important. As well as providing the Secretary of State with the regulation-making power to designate geographical zones, this instrument amends various references to EU institutions and appoints the Civil Aviation Authority, the CAA, as the competent authority for the purposes of the implementing regulation.
This instrument demonstrates that the Government are committed to ensuring a fully functioning regulatory framework for unmanned aircraft after the transition period. While we are focused on securing the best arrangements for our future relationship with the EU, including in the aviation sector, this instrument will ensure that legitimate, safe unmanned aircraft operations can continue while ensuring effective oversight if we get to the end of the transition period without a deal. I commend the regulations to the Committee.
My Lords, I thank the Minister for her helpful introduction to our debate on unmanned aircraft—sometimes, of course, described as drones. They are very different from the drones of the Drones Club of PG Wodehouse, Bertie Wooster and Jeeves, which we know so well, although the way we keep hearing some Ministers—with the notable exception of course of the noble Baroness—going on about “taking back control”, I see some connection with drones. If taking back control means the House of Lords and the Commons dealing with hundreds and hundreds of these statutory instruments, there is surely some connection. With the outcome of the discussions on our exit from the European Union still poised between no deal and a very poor deal, it does not bode well either way for the future.
How does all this affect unmanned aircraft? First, as the Minister rightly said, the EU regulations deal with the product standard for unmanned aircraft—that is the present. Do Her Majesty’s Government have any plans to change these and, if they do, why? How would any change affect the export or the import of drones?
Secondly, we are going to take control of rules for the operation of third-country unmanned aircraft operators. Could the Minister tell us how far beyond our shores this will apply, particularly in relation to the channel? We have a lot of disputation about fish in different parts of the waters around us. We do not want that to apply also to unmanned aircraft.
Could the Minister also tell us whether there are any plans to alter the requirements on maximum take-off mass, speed, height, serial number, or the characteristic dimensions of three metres or more, and on whether the drones are designed for transporting people or dangerous goods? Also, do the Government plan to make any changes on the age limit for operating unmanned aircraft if we take back control on it? If so, in what direction and why? Equally, does she envisage any changes on licensing operators when we take back control? Are any changes planned on arrangements for insurance, or for the examination requirements for obtaining a licence? The Explanatory Memorandum tells us that there are “no immediate plans” for the Secretary of State to designate new standards, but it would be helpful to know whether there are plans beyond the immediate future, or we must wonder why it is so vital to take back control in this area.
As the Minister said, the territorial extent of the regulations is the United Kingdom, I am glad to say, but paragraph 6.2 of the Explanatory Memorandum says that the Act also contains powers for the devolved Administrations to make secondary legislation. As she will know, there has been a lot of controversy over the allocation of the powers being returned from the European Union, as I know only too well as a member of the Common Frameworks Scrutiny Committee, so it would be helpful if she could clarify the respective responsibilities. She said in her introduction that civil aviation is a reserved function, as we know, so why are the devolved authorities mentioned? I advised her of this query in advance, when she very kindly asked us the points that we might raise. I hope that she will be able to deal with it in her reply.
I also take this opportunity to ask the Minister—I warned her about this as well—what lessons have been learned from the incident in December 2018, when drones closed the whole of Gatwick Airport. Could she tell us what action the Government have taken, or propose to take, as a result of their investigations?
These unmanned aircraft can be useful in many ways, such as for delivering medicines urgently, for traffic surveillance or in other areas, but they can also be deployed by those wishing to cause harm. Can the Minister assure us that there is close co-operation with the police and intelligence services to prevent any such use, particularly by terrorists?
Finally, I sympathise with the Minister for having to deal with this and many other statutory instruments. Nevertheless, notwithstanding all this, I look forward to many more when we return to membership of the European Union, as we undoubtedly will one day, because it is the most successful multinational co-operative body in the world today. With that, I am sure other noble Lords will be glad to know that I am well within my time.
My Lords, it is a great pleasure to follow the noble Lord, Lord Foulkes of Cumnock, who, as always, displayed great insight and perception in his analysis of the current position. I found myself in agreement with many of his points.
I thank my noble friend the Minister for setting out clearly the effect of these important regulations. I appreciate that the intention is, broadly speaking, to carry on the existing law from the European Union and European Union Aviation Safety Agency, an approach with which I certainly agree. Too often we seem to be taking back control just for the sake of it, so it is good to see, in these regulations at least, inherent in our approach a degree of honesty, and that we are having consistency from 1 January 2021. I am also pleased to see a transition period provided for in the regulations—another transition period—until 1 January 2023, permitting unmarked, unmanned aircraft, legacy drones, to continue to be placed on the market in the United Kingdom. I am sure that that is a common-sense measure.
I have several questions for the Minister, some of which will echo what the noble Lord, Lord Foulkes, has already touched on. Are there any plans for divergence from the existing EU position? There are none in the immediate future, as we know, but is there any plan in the medium to long term and, if so, from what date and what form will that divergence take? I think we need to know that. Further, I ask for reassurance on whether there is a close working relationship with the EU so we are kept au fait with any future plans that we may wish to incorporate into United Kingdom standards from the EU—or, at least, be aware of what EU developments are in this area.
I appreciate that these regulations deal with reserved matters, as has been stated. However, clearly, as so often, whether matters are reserved or devolved, there is an interface with the devolved Administrations in Wales, Scotland and Northern Ireland. I welcome the fact that that has been reflected in what the Minister said and, indeed, in the regulations themselves. I seek reassurance from the Minister that we are ensuring close liaison with the devolved authorities where appropriate.
One such area would be that there is a desirable nexus in the area of employment. In that regard, I ask my noble friend—and I have given her advance notice of this—about job prospects at the West Wales Airport in Aberporth, Ceredigion; and in Caernarfon, Gwynedd. I have no doubt that my good friend the noble Lord, Lord Wigley, will touch on that as well. In both areas, drones may well be used; I hope they are. There is clearly a key role for drones in maritime search and rescue, which would be reflected in both those areas. But also, as the noble Lord, Lord Foulkes, touched on, they can be used in counterpollution work, defence use and traffic surveillance, as well as having commercial possibilities, for videos of events such as weddings and other gatherings. It would be good to see the United Kingdom in the forefront of this—and, of course, I am particularly keen that Wales should be in general terms, and in both those sites. I hope that the Minister can comment on the feasibility of job prospects and enterprise in the United Kingdom generally, and certainly in relation to Thales and Bristow in the two sites to which I have referred. It would be good to see the UK lead the way in the unmanned sector of aerospace.
I certainly support these regulations, but overall I would like the Minister to give us an undertaking that, at the heart of government policy, there is a drive to ensure that the United Kingdom leads on the unmanned sector of aerospace, providing public facilities on search and rescue, as I have said, as well as in surveying for pollution and traffic surveillance, in defence interests and commercially, and that we seek to protect and enhance high-value jobs in Wales and throughout the United Kingdom in a safe and secure way.
My Lords, I too welcome the opportunity to ask a few questions. Paragraph 4 of the Explanatory Memorandum is on the extent and territorial application, which is obviously the UK. However, having sat through many sittings on the internal market Bill recently, I know that there is a sensitivity between the devolved nations and the centre. In what way will we ensure that there is clear linkage and working together on this important and developing issue? My noble friend Lord Bourne made the same point.
I understand why we are taking the approach of designated standards. My only question is: will the UK be informed of cases where there were difficulties in registering a new drone or drone variant? If we are not aware of where there are difficulties, somebody might try to register here at some point.
Paragraph 7.4 of the Explanatory Memorandum discusses the design and manufacture of unmanned aircraft. Are these requirements, and in particular the oversight mechanisms, now ready or are we still working on those for the near future?
On the implementing regulations, paragraph 7.11 refers to the current categories of “open”, “specific” and “certified”. Do we intend to change those at all, or do we think that they will remain for the foreseeable future? I hope that there is no suggestion in paragraph 7.12 that we will drop the minimum age of 16 for the control of remote pilots and that there would therefore be no exemptions at all. I hope that the Minister can confirm that that is the position.
Paragraph 7.13 says that:
“Rules for conducting an operational authorisation are also set out in Article 11”.
I admit that I have not read Article 11, and I apologise for that, but perhaps the Minister could mention whether there will be any significant changes there. On paragraph 7.15, as a matter of interest, are the clubs that allow any form of drone activity all registered with the department or some other body?
On paragraph 7.16, I put on my hat as a former Deputy Speaker in the other place. This is such a young and dangerous market, in terms of potential danger to life, that the negative procedure is not appropriate. Her Majesty’s Government need to think long and hard about using the negative procedure, as referred to paragraph 7.16(a) and (b), because those instruments will go through on the nod. Unless people have a particular knowledge of the market they will be unlikely to raise anything on them. I would have thought that it would be much better to use the affirmative procedure for a period of time in that situation, particularly as we are taking this over from Europe. It would be a great deal safer for everybody.
I initially thought when I looked at paragraph 7.8 that we should carry out a review after three or five years, but then we have the September 2021 situation. What is the Minister’s current thinking? Is it to carry out a review in September 2021, or will we do a complete review in 2023?
Lastly, I have four general questions. In the world we live in, we know that people do copycat actions. We know that what happened at one of our airports one Christmas was awful. Can we be reassured that actions have been taken to anticipate a possible copycat somewhere in the UK along the lines of what happened at Gatwick? That is a highly forecastable risk.
I apologise for not forewarning my noble friend on this, but I read it myself only in my catch-up reading. I draw her attention to an article in the Financial Times on 5 December, which says:
“Russia’s most notorious cyber security company, Kaspersky, is trying to diversify into anti-drone technology”.
I do not expect an answer from her this afternoon, but the principle behind these new systems is to help airports and private landowners to jam drone signals. Does that come under her area of responsibility? If it does, is this not an area that we should be cognisant of?
The noble Lord, Lord Foulkes, raised the question of exports and imports. That was a fair question, and one I was concerned about as well.
Finally, it is pretty clear to me that Amazon and maybe others are looking to produce delivery drones. That market will not stay static for two or three years. I just hope that Her Majesty’s Government are keeping a close watch on that and that they will, if necessary, produce our own requirements and not wait on the EU to produce its own.
My Lords, the main thrust of these regulations is to make changes to existing EU legislation on unmanned aircraft. They result from leaving the EU and, where references to bodies, organisations and powers have an EU context, they are to be replaced by a UK context.
In April, EU Regulation 2020/1058 made amendments to regulations 2019/947 and 2019/945, and it was passed by Parliament. Regulation 1058 has very detailed information within it on all sorts of measures, including conformity, badging and everything else. I am not certain whether those amendments have been carried forward into the regulations that we are debating. I would be grateful if the Minister could tell me whether the SI before us, which refers to the two earlier EU regulations, has included Regulation 2020/1058. In a mass of great detail, that regulation has put in place lots of information which goes behind those earlier regulations. Can the Minister confirm that?
Some aspects of the 2020 regulations do not now come into force until July 2021. We know that some do not come into play here fully until 2023. We have a start date of the last day of this year when the existing EU regulations come into force. We are being taken through those today, so I would like some clarity from the Minister on the precise timetable that is emerging from here as to when events happen as a result of these regulations and existing regulations. That information will very much be required by those who are manufacturers, sellers, importers or operators of drones from 1 January. That is just three weeks away and they need to know when to prepare and what to prepare for.
For those who need to register, the registration date is 31 December. Is that a start date by which registration becomes mandatory or is there a grace period? Over what period do we expect all registrations to take place? That goes back to the earlier question on a timetable. Are we fully prepared for that registration? Do we have staff trained in the considerable detail underpinning these regulations, including Regulation 2020/1058? For example, do they know which airspace is permissible for what categories of unmanned aircraft, what levels of registration are required, what categories drones fall into, and the distinction between uninvolved people and crowds? There is a lot there which we would expect staff to have been trained for.
Regulation 6 refers to designated standards. It provides direction and some description of what these standards are meant to achieve, and how, but at no point does it set a date when these designated standards are to be introduced. It is clearly welcome that there will be some time, otherwise people involved in manufacturing this equipment may not be given adequate notice and will not be prepared. Until that time, we are following the standards set out in EU regulations, but these technical standards are important, as they prescribe a large part of the protection that the people of this country need from failures in the products themselves, particularly as described in paragraph 2(a) and 2(b) of the new article in Regulation 6. This will have an impact on manufacturers and distributors of unmanned aircraft systems not only in construction and design terms, but in some of the safety aspects which arise.
Other noble Lords asked about insurance. I should be grateful to know whether this is required for those who operate and run these pieces of equipment.
I am also concerned about the definition of a toy. Clearly, if you can classify something as a toy, it rules out registration and the same level of regulation as for any of the other aspects. A toy is currently defined in European legislation as a device which could be attractive to a child. If we continue with that definition, it provides a great deal of freedom of use. The European Union suggests marking devices as being unsuitable and not for the use of children under 14 and thereby not a toy. Do the Government think this is sufficient? We have already seen what has happened to scooters—now a daily scene on our streets. They are definitely not toys, though many toy scooters exist.
On weddings, do we need to seek the written agreement of participants? This is part of the distinction between uninvolved people and crowds.
Finally, I turn to drone operator registration. Have the Government taken any steps to recognise the interoperability of registration between the UK and any other countries? This is a complex area in which technology has made rapid advances. In such an environment, the Government need to be fleet of foot and future-proof their legislation. For obvious reasons, these regulations do not touch on the speed of technological progress. I hope that the Government can keep ahead of the curve and make arrangements to introduce appropriate legislation at the right time.
My Lords, I will not be able to match other noble Lords who have spoken in the number of questions or points I want to raise. The answers that the Government give to the questions and points raised so far will highlight whether these regulations provide for significant changes in the months ahead or whether they keep largely to the status quo. We will all listen with interest to the Government’s response.
These regulations keep the effect of the policy framework established by the EU implementing and delegated regulations. They ensure that certain provisions relating to unmanned aircraft will be retained in UK law and will continue to apply after the end of the transition period in less than four weeks’ time. The EU implementing regulation applies from the end of this year and sets out the rules and procedures for the operation of unmanned aircraft. The delegated regulation sets out the requirements for unmanned aircraft and for third-country operators of these aircraft.
As we have already heard, the regulations enable the Secretary of State to designate standards after the end of the transition period. In the meantime, unmanned aircraft that conform to current EU harmonised standards, will be considered compliant with the EU requirements recognised by the UK. The main consequence of these regulations is that, since we will no longer be a part of the EU and of the European Union Aviation Safety Agency, the European Union standard CE marking will be replaced by an official marking recognised within the UK. The same product standards as currently apply will be maintained. As a result, unmanned aircraft that lawfully bear the CE marking can continue to be put on the UK market.
As I understand it, the implementing regulation provides for a transitional period until 1 January 2023 during which unmarked—that is, CE or UK—unmanned aircraft will continue to be placed on the market. The Government intend to use the powers under the regulations to designate standards by the end of the transitional period. Like other noble Lords, I ask whether the Government have any view on whether the designated standards from the end of the transitional period will vary to any significant degree and, if so, in what way from the current standards under the implementing regulation. Have these regulations been drawn up on the assumption that a deal will need to be agreed with the EU before the end of the transitional period at the end of 2022? If so, will any changes be necessary if one is not agreed?
Finally, the new UK mark will come into force from the beginning of next year—in a few weeks’ time—but there will be an overlap period with the CE mark, which I understand will be accepted until the beginning of 2023. What is the reasoning behind both the overlap and its length?
My Lords, I thank all noble Lords for their consideration of these draft amendments. I shall endeavour to get through as many questions as possible. I am grateful to all noble Lords who gave me advance warning of what they were going to raise. In some circumstances, I have been able to get an answer; in others, I am afraid the system failed me and I did not. I am also conscious that there are questions that I will not be able to answer. I shall study Hansard and write if necessary.
As a number of noble Lords have recognised, the opportunities for unmanned aircraft are enormous. The purpose of the Government’s framework for the operation, manufacture and approval of unmanned aircraft is to provide certainty such that commercial, military and all sorts of operations can take place.
The noble Lord, Lord Foulkes, said that unmanned aircraft are drones. I remind noble Lords that, of course, they are also model aircraft—we have been round that loop before—and it is only fair and right that model aircraft as well as drones are included in the regulations.
My noble friend Lord Naseby asked whether clubs were signed up with the DfT. It is the individual who registers, but the DfT works closely with all sorts of clubs in the unmanned aircraft space to ensure that our framework is working effectively.
The noble Lord, Lord German, asked whether registration arrangements were in place. One has had to register a drone for more than a year now. That system is completely in place and is run by the CAA. It includes a competency test for remote pilots. The operators of a drone must register it with the CAA. I am not aware of any interoperability outside the UK at this time.
I reassure the noble Lord, Lord Foulkes, that we speak to the devolved Administrations relatively frequently—I have my next call with them on Thursday. We talk about all sorts of things, as do my officials. The devolved Administrations are aware of this legislation and have not raised any concerns. On paragraph 6.2 of the Explanatory Memorandum, referring to DAs’ powers to correct deficiencies in matters that are not reserved, we do not anticipate there being any such matters; this is just a standard line in EU withdrawal Act SIs.
The noble Lord, Lord Foulkes, had a number of questions, nearly all of which I picked up, but I am afraid that some have slipped me by. I will address one of them, because it was also mentioned by my noble friend Lord Naseby. I think that a difference of opinion on age limits will be coming down the track. I will talk about age limits, registration, licensing and insurance, which I know is of interest to many noble Lords. This instrument amends the delegated and implementing regulations to remove the deficiencies; that is absolutely clear. The powers, of course, do not allow us to amend the policy of the regulations through this instrument. Therefore we are dealing simply with the impact of EU withdrawal.
On age limits, Article 9 of the implementing regulation brings in a minimum age of 16 for remote pilots, with the option for member states to reduce that by up to four years for the “open” category, which is the lowest risk, and by up to two years for the “specific” category. This instrument provides the Secretary of State with the power to make regulations relating to Article 9 of the implementing regulation on age limits. It is the Government’s intention to lower the remote pilot minimum age by the maximum number of years and then to remove it as soon as we are able to in 2021. However, I reassure noble Lords that the minimum age of an operator of an unmanned aircraft will remain as 18 years old—we have had this discussion previously with the Air Traffic Management and Unmanned Aircraft Bill. To remind noble Lords, there is a difference between the operator of an unmanned aircraft and a remote pilot.
The implementing regulation contains provisions relating to registration and competency. As the CAA’s drone and model aircraft registration and education service—which is a rather long-winded way of describing the system you sign yourself up to—was originally created with these EU regulations in mind, they came as no surprise to anybody, so there are only some very small differences between the system we already operate and the new system. I hope that goes some way to reassuring the noble Lord, Lord German.
The implementing regulation requires operators in the “open” category to register if their unmanned aircraft is 250 grams or more, or if it has data capture capability. Remote pilots must also pass a competency test. There are a number of other requirements, but it is not worth going into great detail on the requirements of, for example, the “specified” and “certified” categories. As we noted before, the risk associated with those flights increases with each category.
On insurance, the implementing regulation does not require an operator of an unmanned aircraft to hold insurance unless required by other relevant legislation. It is the responsibility for every operator to ensure that they have appropriate insurance cover.
My noble friend Lord Naseby and the noble Lord, Lord Foulkes, talked about Gatwick, which really was a watershed in our understanding of the world of unmanned aircraft and the catastrophic events that can happen. In this case, the catastrophic event was actually an economic event, when Gatwick was essentially shut down. Since then we have made huge strides in understanding how we can respond to illegal unmanned aircraft activity. We accelerated our testing activity and we launched the counter-unmanned aircraft strategy, including unmanned aircraft remote pilot competency testing and operator registration, before we even had to under the regulations. We extended aerodrome flight restriction zones and we developed legislative proposals, which noble Lords will recall. The counter-unmanned aircraft strategy is an incredibly important Home Office strategy. It safeguards the benefits of unmanned aircraft, which is our goal, but also ensures that people are safe and that anybody using unmanned aircraft maliciously or negligently can be appropriately dealt with.
There are a number of things within that strategy. We recognise that there is no one silver bullet. My noble friend Lord Naseby talked about counter-drone technology. We are, of course, in touch with many of the operators and developers of that technology; the reality is that it remains a work in progress and probably always will do. However, great strides have happened in the world of counter-drone technology, and the Government are really at the heart of that.
The noble Lord, Lord Rosser, talked about divergence and the impact of 1 January 2023. The product standards set out in the delegated regulation do not have a substantial practical effect until 1 January 2023, and non-compliant unmanned aircraft can continue to be put on the market until that date. However, this instrument provides the Secretary of State with these new powers to designate standards for unmanned aircraft after the end of the EU exit transition period. Until that power is exercised, unmanned aircraft and associated accessories that conform to the EU harmonised standards will continue to be considered compliant with EU requirements, and those requirements will be recognised by the UK. However, those EU requirements and harmonised developments are still under development, so it is not possible for me to comment on the content of future designated standards.
Very briefly, on the UKCA mark that the noble Lord, Lord Rosser, mentioned, the mark can be used from 1 January 2021 but, prior to that, it is not required to be used. From 1 January 2023 will be when the mark is required.
Very briefly also on Wales, it is playing a cracking role in developing the drone sector, including at West Wales Airport and Snowdonia aerodrome in Caernarfon. The Government are providing support to develop the drone sector through the drone pathfinder programme and the future flight challenge. The first successful projects in the future flight challenge were announced in November and include the gold dragon project at Snowdonia aerodrome, which will develop sensor technology for drones working with public services such as police and mountain rescue.
That was a brief run-through of as many questions as I possibly could. I shall follow up with a letter. I commend these regulations to the Committee.
My Lords, the Grand Committee stands adjourned until 6.15 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, while others are participating remotely, but all Members will be treated equally. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit for debate on the following statutory instrument is one hour.
Renewable Transport Fuel Obligations (Amendment) Order 2020
Considered in Grand Committee
My Lords, this statutory instrument proposes an important change to the Renewable Transport Fuel Obligations Order 2007, or RTFO. Renewable transport fuels are more expensive than fossil fuels and rely on the RTFO support mechanism to create demand and incentivise their supply. This SI changes the price used to calculate any buy-out payment due under the renewable transport fuel obligation certificate trading scheme. It would increase that buy-out price from 30p per litre to 50p per litre. This change is necessary to ensure the continued supply of biofuels and other renewable fuels by increasing the potential level of support. It would also ensure continued delivery of carbon savings.
The 2007 order establishes targets driving the supply of renewable fuels in the UK. It does this by placing obligations on larger suppliers of fuel to ensure the supply of renewable fuels. The amount of renewable fuel that must be supplied is calculated as a percentage of the volume of fossil fuel supplied in a calendar year. This obligation level, or target, has increased over time and is currently 9.75%. These increases have supported the market for renewable fuels and were accompanied by improvements to their sustainability. The RTFO target gradually increases until 2032 at which point, without further legislative agreement, the yearly target would be 12.4% in each subsequent year.
The 2007 order also provides for a certificate trading scheme, which supports a market for suppliers of renewable fuels. Under the scheme, obligated fuel suppliers must acquire sufficient renewable transport fuel certificates, or RTFCs, to meet their obligations by either supplying renewable fuels or purchasing RTFCs. Alternatively, they can make a buy-out payment. This buy-out option, and increasing its price, is the focus of the statutory instrument.
Enabling suppliers to pay a buy-out rather than having to acquire RTFCs caps the cost of the RTFO scheme. It protects consumers of fuel from exceptional spikes in the price of renewable fuels. However, in normal market conditions, the continued success of the RTFO scheme relies on the supply of renewable fuels. Biofuels are the main type of renewable fuel supplied under the RTFO. Recent increases in the cost of biofuels relative to petrol and diesel mean there is a potential commercial incentive for suppliers to make a buy-out payment. Any reduction in biofuel supply will affect greenhouse gas emissions savings in transport, creating a gap in UK carbon budgets. It also could damage our biofuels industry and future investments needed to keep us on the path to net zero.
The RTFO applies UK wide and has been highly successful in reducing carbon emissions. Through it, we have seen the average greenhouse gas savings of renewable fuels increase from 46% in 2008-09 to 83% in 2019. The renewable fuels supplied under the RTFO saved almost 5.5 million tonnes of carbon dioxide emissions in 2019, equivalent to the emissions of 2.5 million combustion engine-powered cars. Indeed, renewable fuels currently contribute around a third of the savings required for the UK’s transport carbon budget. Clearly, we need to ensure that the RTFO continues to provide effective market support.
The amendment in this statutory instrument does just that and follows a consultation carried out over the summer. The consultation proposed two options: an increase in the buyout price from 30p per litre to either 40p per litre or 50p per litre. The vast majority of respondents, 56 out of 61, agreed with the Government’s assessment of the urgent need to increase the buyout price. Of these 56, 45 agreed with our preferred option: to increase the buyout price to 50p per litre.
In proposing this statutory instrument, the department has carefully considered a balance of interests, recognising that potential additional costs in meeting the RTFO would ultimately fall to the consumer and the need to maintain a competitive biofuels market which continues to deliver reductions in carbon emissions. I believe that the increase in the buyout proposed strikes the right balance. I commend this instrument to the Committee.
My Lords, I am very grateful to the Minister and particularly grateful to her for allowing us to forewarn her of questions that we might want to raise, not least because I think we are all exploring our way in terms of this order. There have been times, over the five years that I have been in your Lordships’ House, when I have come into the Chamber or Committee not to pontificate or provide pearls of wisdom but actually to learn something. That is why I signed up for this Grand Committee discussion this evening.
I confess that I was unaware of the technicalities and substantial impact that this programme has had since 2007 on carbon emissions and the way in which trade and the buy-out system works. So I have given notice to the Minister of my simple—or even simplistic—question: are we talking here about providing incentives to expand and develop this critical market for the future, or are we providing a balancing disincentive for market failure? Although I have read the Explanatory Note to which the Minister referred, I am still completely confused by it, and sometimes I do not mind admitting it.
I support this Motion, but I believe that we have such a long way to go in meeting the strategic objective of zero emissions targets by 2050. I wanted to ask the Minister a question. I have been studying the Green Book review published last week, which enjoins government departments and those seeking to spend money to fix their minds on the strategic objective ahead. In this case, I select net zero by 2050 as the strategic objective. I wonder how you build a case of contributory objectives which help you to get to the strategic objective. I built an imaginary case, aimed at reducing the amount of diesel burned in this country by very large amounts, by various actions. It mostly concerns electrification of the railway and the substitution of HGVs by electric trains. My calculation shows that you would save a lot of diesel fuel—and I mean a lot.
I am not absolutely convinced yet of my figures, but I wanted to ask whether, in seeking a strategic objective, one is hamstrung by the different departmental objectives rather than looking at a problem in an overall fashion, which includes where the investments take place—for example, are less favoured parts of the country helped by this, or by the greater reduction in emissions in various places, or the reduction in traffic congestion? Does the work in the Green Book take us to a new place in terms of looking at investments on a broader rather than a narrow focus?
Having listened to my noble friend Lord Blunkett, I feel a lot happier to know that I am not the only one who is not an expert on this SI. The purpose of the order, as the Minister said, is to increase the renewable transport fuel obligation buyout price for fuel suppliers to 50p per litre from 30p per litre for obligation periods beginning on or after 1 January 2021. Annual obligations for the supply of renewable fuels are set for fuel suppliers under a similarly named 2007 order that commenced in April 2008. The obligations can be met by supplying renewable fuel, by purchasing renewable transport fuel certificates from other suppliers, or by paying a sum—a buyout price—to the Secretary of State. As the Minister said, it is that sum that this order has the effect of increasing.
The Government have said that increasing the buyout price to 50p per litre will mitigate the risk of suppliers buying out of their obligations and the UK losing greenhouse gas savings. Renewable fuels supported under the RTFO order have reduced greenhouse gas emissions from transport over the last 12 years and, as we heard from the Minister, they are contributing a third of the greenhouse gas emissions required for the UK’s current transport carbon budget.
Further, the Government have said that the buyout price increase will help protect the renewable transport fuel obligation scheme against rising prices for biofuels and ensure that investment in UK biofuel facilities continues to have a market. As I understand it, in August 2019 the cost differential between renewable fuels and the fossil fuels for which they are a substitute was approaching a level at which it would cost less to buy out an obligation under the RTFO rather than continue to supply renewable fuels.
Fuel suppliers are likely to pay the buyout only if the cost of renewable transport fuel certificates regularly exceeds 30p per litre. In January this year, offers for renewable transport fuel certificates for the 2020 compliance year were 30.25p per litre and since the beginning of July offers have regularly been higher. Offers for 2021 RTFCs have been reported as high as 33p per litre in September this year. RTFCs are issued for every litre of sustainable and renewable fuels blended. Lifting the buyout to 50p per litre will result in a maximum additional cost of 2p per litre to the motorist.
The renewable transport fuel obligation is designed to reduce greenhouse gas emissions from transport fuel by setting annual biofuel blending obligations for fuel suppliers. As we heard from the Minister, the obligation is 9.75% this year and will increase incrementally to 12.4% by 2032. Could the Government say in their response on what basis that incremental increase is determined; what was the percentage figure fixed in 2008; and, in 2032, what proportion of greenhouse gas emissions required for the UK’s current transport carbon budget will be contributed by renewable fuels supported by the RTFO order?
I have just a few questions on the Explanatory Memorandum. Paragraph 7.6 refers to civil penalty provisions and states:
“It is planned to consider this matter as part of other changes to the RTFO Order that will be consulted on in due course.”
What are the
“other changes to the RTFO Order”,
and by when will they have been consulted on? Paragraph 10.4 of the Explanatory Memorandum refers to “obligated suppliers”. How many obligated suppliers are there in total who are covered by the terms of this order?
Paragraph 12.1 of the Explanatory Memorandum refers to a maximum cost for 2021 to 2030 that would be incurred if all suppliers opted to buy out of the main obligation in each obligation period. How much has been paid out under the buy-out provision option under the RTFO Order 2007 to date in total, and of that how much has been in the last two years for which figures are available? To what purpose has any such money been put?
Paragraph 13.2 of the Explanatory Memorandum refers to transport fuel suppliers who are exempt from the renewable fuel obligation and fuel suppliers for whom the obligation is reduced. What is the reduction for those in that category, and how many suppliers are in that category? Finally, is it felt that the case still exists for having that reduced rate, bearing in mind the Government’s desire to enable renewable fuels to contribute to the UK’s future carbon budgets?
My Lords, I thank all noble Lords for their consideration of this statutory instrument. I join other noble Lords in declaring my previous lack of a full understanding of this very important area. It has been a very useful discussion and I am grateful for the questions raised, particularly those raised by noble Lords who were able to share them with me in advance. I will, of course, write where I do not cover everything.
To start with the question raised by the noble Lord, Lord Blunkett, when he asked if it is an incentive to maintain supply or a punishment to maintain the market, I am going to be very unhelpful and say that it is neither. The increase in buy-out price is simply necessary for the market to function. We need to make sure that there is a continued supply of biofuels and other renewable fuels under the RTFO and ensure the continued delivery of carbon savings. Obviously, a buy-out price set at the wrong amount would not allow that market to function, because suppliers would then pay a buy-out, rather than having to acquire the RTFCs which, as a whole, obviously cap the cost of the RTFO scheme and protect the consumer from the exceptional spikes. So, the buy out is one element of a very well-designed and successful scheme, and it serves as a release valve to make sure that the consumer is never forced to pay a very large amount for their fuel.
The noble Lord, Lord Bradshaw, raised a number of issues not wholly related to the SI before us today. I would like to reassure him that the Department for Transport is studying very carefully the changes to the Green Book, and we will consider all the issues he raised, in terms of looking at where we are going to do our investment in transport infrastructure in the future. The noble Lord will also know that we have a transport decarbonisation strategy, which my department is working incredibly hard on at the moment, and which will serve as a path to net zero in the future.
On the questions raised by the noble Lord, Lord Rosser, in 2019 there were 19 obligated suppliers covered by the terms of this order, and these are obviously the ones that supply significant amounts of fuel, which I will come on to. Of course, there are exempted suppliers, which the noble Lord, Lord Rosser, also mentioned. These fuel suppliers supply less than 450,000 litres of transport fuel, and they are exempted from the obligations of RTFO. In these circumstances, 450,000 litres is not a very large amount. Furthermore, there is a second group of suppliers that supply less than 10 million litres of transport fuel, and they do not have an obligation on the first 450,000 litres of their supply—again, a few percentage points of their supply. This is basically to ensure that there is no cliff edge when you get to 450,000 litres.
In 2018 and 2019, there were not many fuel suppliers benefiting from this reduction in obligation—four and two respectively. To put that into context, those exemptions represented a very small fraction of the 52 billion litres of total fuel supply covered by the RTFO in 2019 and of the potential greenhouse gas emissions savings. We have no plans to review this.
The noble Lord, Lord Rosser, also asked about the amount of buyout incurred. To date, there has been no significant buyout under the main obligation in the 2007 RTFO order. Buyout amounts relate to a very small number of companies and are therefore considered commercially sensitive. In the last two years—2018 and 2019—all obligated suppliers have met their obligation. In 2019, two obligated suppliers used buyout to make up around 10% of their main obligations. That meant that less than 0.1% of the total main obligation was met through buyout—the sort of level we hoped for.
All money received from suppliers buying out is paid to the Treasury. It is Consolidated Fund and not ring-fenced for any particular purpose. I can reassure noble Lords that the Government take investment in biofuels and sustainable fuels very seriously. We have developed a target to incentivise specific advanced renewable fuels because they are of strategic importance for use in sectors which are difficult to electrify—for example, heavy goods vehicles and aviation. We have an advanced biofuels demonstration competition called the Future Fuels for Flight and Freight Competition, which provides up to £20 million of capital funding and offers real opportunities. As part of the Government’s 10-point plan, a new package of support for sustainable aviation fuels has been announced. This includes a further £15 million in competitive funding to support the production of sustainable aviation fuels in the UK. Although the money goes to the Treasury, sometimes it comes out again.
The noble Lord, Lord Rosser, mentioned how the RTF obligation level has changed over time. The level was set at 2.5% for 2008-09 and has been increased on several occasions since. Increases to the obligation level to 2032 were made in 2018, following an extensive consultation in 2017. These increases to targets were set on the basis of providing longer-term policy stability for industry, increasing the supply of waste-derived fuels and encouraging the production of advanced low-carbon fuels. The RFTO is expected to deliver greenhouse gas emissions savings of nearly 7 million tonnes of carbon dioxide equivalent per year by 2032. As laid out in the Government’s energy and emissions projections 2019, this will make up around one-sixth of transport sector savings in 2032 as a result of policies implemented so far. The Government recognise that we have to do more to reduce emissions during the period to 2032. As I mentioned previously, the DfT will publish the transport decarbonisation plan very soon.
The noble Lord, Lord Rosser, mentioned a future consultation on the RTFO order. The final content of the consultation on further changes to the RTFO planned for next year is still being worked up. We are reviewing whether there is an opportunity to increase greenhouse gas savings from the scheme, in addition to technical and consequential changes, such as those to civil penalties. We anticipate that the consultation will also include measures in response to suggestions from industry as to how the RTFO might support, for example, recycled carbon fuels, and the rules relating to renewable hydrogen. We expect the consultation to be concluded next year.
This is a small and thankfully non-controversial amendment which has been subject to consultation. All noble Lords now understand a little more about RTFO than previously, which is all to the good because it is an important scheme which supports the renewable fuels industry. I hope that the Committee will join me in supporting this statutory instrument.
That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room.
Committee adjourned at 6.40 pm.