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Draft Rural Development (Amendment) (EU Exit) Regulations 2019

Draft Rural Development (Rules and Decisions) (Amendment) (EU Exit) Regulations 2019
21 March 2019

The Committee consisted of the following Members:

Chair: Mike Gapes

† Braverman, Suella (Fareham) (Con)

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

† Debbonaire, Thangam (Bristol West) (Lab)

† Drew, Dr David (Stroud) (Lab/Co-op)

† Dunne, Mr Philip (Ludlow) (Con)

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

Hayes, Helen (Dulwich and West Norwood) (Lab)

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

† Law, Chris (Dundee West) (SNP)

† McCarthy, Kerry (Bristol East) (Lab)

Phillips, Jess (Birmingham, Yardley) (Lab)

Phillipson, Bridget (Houghton and Sunderland South) (Lab)

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

† Seely, Mr Bob (Isle of Wight) (Con)

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

† Swayne, Sir Desmond (New Forest West) (Con)

† Wood, Mike (Dudley South) (Con)

Ian Bradshaw, Committee Clerk

† attended the Committee

Twelfth Delegated Legislation Committee

Thursday 21 March 2019

[Mike Gapes in the Chair]

Draft Rural Development (Amendment) (EU Exit) Regulations 2019

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I beg to move,

That the Committee has considered the draft Rural Development (Amendment) (EU Exit) Regulations 2019.

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With this it will be convenient to consider the draft Rural Development (Rules and Decisions) (Amendment) (EU Exit) Regulations 2019.

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It is a great pleasure to serve under your chairmanship, Mr Gapes. As a farmer myself, and given that my family business participates in an agri-environmental scheme, I should mention my entry in the Register of Members’ Financial Interests.

The two statutory instruments are closely interrelated and I thank the Committee for taking them together. They amend retained EU law to ensure that rural development payments can still be made after exit day. The amendments will maintain the effectiveness and continuity of EU legislation that would otherwise be deficient after our exit. The changes are necessary to enable rural development programmes, particularly those partially funded by the European agricultural fund for rural development—the EAFRD—to continue to operate effectively in the United Kingdom following exit, until their closure after the end of the 2014 to 2020 programme period.

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With his background, the Minister will know the importance of the rural development programme for England. Can he confirm that the effect of the draft instruments will be that that programme will continue unimpeded and unchanged and that there will be proper funding for it if we have a no-deal Brexit?

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I thank my right hon. and learned Friend for his question. I can absolutely confirm that—it is vital if we have a no-deal Brexit. If, as I hope, we do not have a no-deal Brexit—I hope Opposition Members will think about that before next week’s vote—the regulations will come into force when we leave, following the implementation period.

Four rural development programmes operate in the UK—one for each Administration—providing funding for rural businesses, farmers, land managers and applicants who live in a rural community, with the intention of growing the rural economy, increasing productivity and improving the environment. The European fund relevant to the instruments is the EAFRD, which supports the delivery of rural development in the UK and is worth £430 million a year over the programming period.

The UK Government have guaranteed that any projects funded from the 2014 to 2020 allocation will be funded for their full lifetimes, to repeat the point that I made to my right hon. and learned Friend. The changes that the draft instruments make ensure that payments can continue to be made to agreement holders, using domestic funding in place of EU funding. That will provide certainty to individuals and businesses who receive development funding or who are considering applying for funding during the current 2014 to 2020 programming period.

The draft Rural Development (Amendment) (EU Exit) Regulations 2019 amend the EU regulation that provides the general rules and structures that govern support for rural development, provide payments to be made to agreement holders and lay down rules on programming, networking, management, monitoring and evaluation. That includes the countryside stewardship and environmental stewardship schemes, which improve the environment; the countryside productivity fund, which supports productivity improvements in farm and forestry businesses; and the growth programme, which supports rural business development, food processing, tourism and broadband. Let me give examples of the sort of projects that the latter two funds might support. The countryside productivity fund might fund a fruit-growing business to increase the storage capacity of a reservoir to include water security during the summer months. The growth programme might support a company that grows salad leaves and specialist vegetables to invest in new equipment to keep up with demand and grow the business.

The draft Rural Development (Rules and Decisions) (Amendment) (EU Exit) Regulations 2019 amend the implementing and delegated provisions made under the main rural development EU regulation. They also amend four implementing decisions that approve the rural development programmes for each of the devolved Administrations. We are omitting powers to submit and implement an information and publicity strategy, and actions relating to it. That includes the requirement for agreement holders to publicise EU participation. We have all seen the big billboards around the country where EU funding has been used. As we are no longer using EU funding, putting up those big billboards, with those blue flags with yellow stars on, will no longer be a requirement. I am sure that that will be a great relief to many of those travelling around the country, and will emphasise that we have left the European Union.

I emphasise that the instruments remedy deficiencies in the regulations that are a direct result of the UK leaving the EU, to ensure that they continue to operate effectively when we leave. They do not introduce any new policy, and simply preserve the current regime for supporting rural businesses and environmental land management, among other things. The amendments include omitting redundant references to the European Commission and member states, and replacing them with either the UK or the relevant authority as appropriate. The instruments also make references to “Union law” throughout, so that the relevant EU regulations continue to operate effectively as part of national law. Provisions that are deficient because they are time limited, under which the relevant actions have occurred, have also been omitted—such as the provisions relating to ex-ante evaluations that have already been completed.

One purpose of the modifications is to ensure continuity and clarity regarding which public bodies have responsibility towards the programmes. The obligations and discretions placed on member states will continue to be exercised after exit by relevant authorities in the UK. In this context, “relevant authority” means the Secretary of State in relation to the rural development programme for England, Scottish Ministers in relation to the rural development programme for Scotland, Welsh Ministers in relation to the rural development programme for Wales, and the Department of Agriculture, Environment and Rural Affairs in relation to the rural development programme for Northern Ireland, where we do not currently have an Administration operable.

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

I repeat that the statutory instruments are required for the continued operation of the rural development programmes. Without them, there will be no legal powers to make payments to fulfil the promises that those important programmes will continue.

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I am delighted to serve under your chairmanship, Mr Gapes.

I am glad that I am with the Minister; he and I spend a lot of time, in one place or another, on SIs. I have to say that, of the many that I have been involved with, this one concerns me the most. As the European Statutory Instruments Committee said in chapter 5.4 of its report in December 2018:

“The Committee believes that the issue has significant financial implications and is of particular importance to rural communities. Although the amendments are required in a no deal scenario to implement the commitments made by the Government on funding, we consider the significance of the instruments and interest in the subject is such that the additional safeguard of affirmative resolution is appropriate.”

That is why we are here to discuss the instruments.

I am glad that the Minister mentioned that this is about £430 million for existing programmes. My concern is what will happen at the end of 2020. There is no clarity at all from the Government on their rural policy, because it does not really have one, despite needing a rural strategy. What will the Government do then? That matters because, as the right hon. and learned Member for North East Hertfordshire made clear, a panoply of different schemes are encapsulated within the catch-all of the EAFRD.

The Minister may correct me, but I believe it remains the sad state of affairs that we have never drawn down and match-funded the full amounts of rural development moneys that are available for the UK Government to spend—certainly that is the case for the rural development programme for England. That matters, because there is no other rural programme out there. I have severe concerns that what we are beginning to see here is a programme that is already underfunded, and rural areas need funding—they do not need huge amounts, and they certainly do not need great dollops of money in particular places, but they need some funding.

This particular scheme has been one of the strengths of the EU, partly because, through things such as the Erasmus programme, different higher education institutions—such as the one in my area, the Countryside and Community Research Institute at the University of Gloucestershire—have done clever work across different parts of the EU to allow rural development to work in parallel in so many different countries. Of course, all that finishes. We have nothing left. Now, it is possible that we could do some bilateral work, and a number of institutions are looking to relocate at least some of their offices in order to remain within the EU. I do not quite know how that will happen, but they have gone to those extreme lengths to keep some of those programmes going.

I worry about what is left. When this goes, what is left in rural England? The hon. Member for Dundee West will no doubt have a lot to say about Scotland too. These funds are the building blocks of what happens in rural communities. They cover a huge range of things, from countryside stewardship to support for particular initiatives in villages and other small market towns. I am left with the view that we may well start again, but what are we starting with? We are starting with something that does not exist at the moment.

I am taken, again, by those who have commented; there has been quite a lot of say-so from organisations that feel they have not been consulted, particularly in areas such as this, where there is such a diverse range of organisations that it would be difficult to know who to consult. Because, again, there is no regulatory impact assessment, it is difficult to know who the Government went to in terms of rural consultation. That is important, because it is all about the money. It is about the things we do with the money, but unless we have money, we cannot do the things we want.

Among those who have written to me about this, the Landworkers Alliance has been clear that it is worried that some of the land-based initiatives it is involved in will suffer and that the money for existing services such as schools, pubs and shops, which have hidden subsidies—perhaps not directly, but through good organisations such as the Plunkett Foundation that are able to find ways of helping to keep those services alive in those communities—is now highly questionable. The Landworkers Alliance is very unhappy about some of the things that are currently run on a shoestring, but on a shoestring of which much of the money comes from the European Union.

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I thank the hon. Gentleman for noting the situation in Scotland. Much of this is devolved and I hope it will continue to be devolved, but I want to highlight one particular issue about money, particularly the rural economy and the rural support that is needed. Research by the Conference of Peripheral Maritime Regions shows that the highlands and islands region, which has benefited hugely from EU resources over recent years—as a result of which, the population of Inverness city has actually grown—will miss out on more than £160 million in EU regional development funding for the period from 2021 to 2027. The UK Government have still not brought forward a plan for the proposed replacement fund, and have failed to give any assurances that the funding will be replaced at the same levels. I look forward to hearing the reply, but I wanted to raise that because it is just one example with this Government of where we do not know what the long-term plans are.

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I thank the hon. Gentleman for that intervention, because in a nutshell that is where we are; we just do not know. One of the sad things about the loss of these moneys is that it has been targeted at particular groups—young farmers, for example, who desperately need investment into the way they come into the farming industry. I do not like to use the term “funny money”, but there have been ways we have been able to fund it through the various different grants that the EU has made available. Where will those grants come from in the future? People of ordinary means cannot, sadly, enter the land, because of the costs—not just of securing the land, but of investing in the way they intend to farm, particularly if they are going to be a livestock farmer. Those are very expensive and punitive impositions on them when they are in the infancy of trying to get on the land.

Before we decide how we vote, it would be useful to hear from the Minister about what the Government’s strategy is. I am aware that we have done very little in this House, which is to our shame. The Lords does a lot more work on rural economies: there is the Cameron report, which came out about nine months ago, and a report that is just about to be released by Lord Foster, which has looked at some of the impacts of rural development.

I am aware of the Rural Services Network’s call for a rural strategy, which I totally support. This is against the background of next year being the 20th anniversary of the then Labour Government’s 2000 White Paper, which was a very good piece of work because it was accompanied by a billion-pound budget. Sadly, it was all frittered away. Such things happen in Government, but many of the good initiatives that were set in place have been lost for good, which is wrong. As the then rural tsar Stuart Burgess talked about, there is £347 billion of untapped capacity in rural England. I know that is a magical, mystical figure, but it shows the capacity there is in rural England—I cannot comment on Scotland, because when I was on the Select Committee I was able to look only at rural England—to do some interesting work.

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I do not know if the hon. Gentleman remembers the 1995 rural White Paper, which I was quite involved in. It was a very solid piece of work.

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I agree entirely. The problem was that it did not have a budget, which meant, sadly, that it was rather stillborn, but it was a very good piece of work by Lord Deben. It is important that we parliamentarians recognise that the rural economy and society does not get enough publicity, and that we do not do enough to help it.

I have some questions for the Minister. It would be interesting to know the financial framework the Government envisage once the EAFRD offer goes, because I cannot see anything in place. I met a member of the rural team—I know there is one—but I do not know what budget they have to do anything. It would be interesting to know about the financial framework that the Government envisage after 2020 or, dare I say, 2021—whenever we finally leave the EU schemes.

I am taken by some of the things the Green Alliance has been saying recently about the lack of consultation, particularly in the area of stewardship. Countryside stewardship is not in a good place. We are talking about the environmental land management schemes as if they will just roll in on the back of countryside stewardship. The reality is that many farmers—the Minister will know this—are pulling out of stewardship because it is seen be too complicated and is not fit for purpose. Given that at least some of this money came through this budget heading, it would be interesting to know what the Government intend to do.

What is the Minister planning to do in order to consult more widely on how we might get towards a rural strategy? If the Government do not do it at this stage, at what stage do we move towards a rural strategy? Everyone who is involved in this area is calling for a rural strategy. If we are losing money that we have already been able to allocate, and we have not got anything else in place, at what stage do the Government get serious about launching a consultation to find out what we could do to make a difference?

My final question is about the legacy of many of the schemes that we have put in place over a generation. Is anyone going to capture them, to see in what ways we have worked with our EU neighbours and if any of them can be opened up in different formats?

I assume that there are ways and means of looking at different funding streams so that institutions such as CCRI, which I mentioned earlier, can continue to do some research on a pan-European basis. It would be a great tragedy to lose the knowledge that we have without putting anything else in its place. Whatever one’s views on the EU, I cannot find anyone who does not see that as one of the EU’s strengths; there are many weaknesses, but we do not want to throw away all the collaboration that has happened over a long period—between higher education, rural communities and practitioners within those rural communities who do a lot of the groundwork. It is important to know from the Government what they intend to put in place instead of something that will be a loss.

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I am very pleased to respond to the hon. Gentleman’s points, which I have to say are precisely the sort of questions that I have been asking as a new Minister in the Department. It is constructive that we seem to be on the same page about the exciting opportunities available to us as we leave the European Union. I will expand on that in due course.

The two draft instruments will ensure that the rural development programmes funded by the EAFRD continue to operate effectively in the United Kingdom following EU exit. As I said, the development fund is worth some £430 million a year, and the UK—I repeat—has guaranteed that any projects funded from the 2014 to 2020 allocations from the fund will be funded for their full lifetime. The instruments provide the legal basis for continuing to make payments to agreement holders, providing certainty to farms and land managers, and for preserving the existing regime for supporting rural businesses and environmental land management, among other things.

The hon. Gentleman started his remarks by saying that this SI is the one that concerns him most. I have to say, there is nothing to see here. These are not changes; this is maintaining the existing situation so that we can continue the current regime. It is business as usual. The debate gives me another opportunity to reassure right hon. and hon. Members that that is indeed the case.

The hon. Gentleman has not fully grasped the opportunities that life outside the European Union may present. Having sat in the back row in the Agriculture Bill Committee, I know of the tremendous opportunities and the innovative new schemes that will come forward. No doubt those schemes will build on our experience of existing agri-environmental schemes. On my own farm, for example, we are planting nectar plants—the first time that we have ever encouraged weeds, rather than killed them. We need to build on such schemes.

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My recollection of the Agriculture Bill Committee is that the right hon. Gentleman disagreed with rather a lot of the Bill. Now he has been promoted to the Front Bench, has he had something of an epiphany so that he agrees with the Government line?

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If the hon. Lady analyses everything I said in that Committee, as I have done, it was absolutely in line with the objectives and ambitions of the Bill, and the reassurances that I received from my predecessor established the fact that we are on the right page and that we need to move forward. She must revisit the points that I made—I asked some searching questions during the debate, and I was pleased with the answers that I received. Indeed, I was happy to vote for that piece of legislation.

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I assure the Minister that I have gone through what he said in the Agriculture Bill Committee with a fine-toothed comb. I have a very long list of where there might now be some inconsistencies, but we can return to them at a future date.

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I look forward to that robust exchange of views. Indeed, it might be that, given my particular take on some aspects of that Bill, we look at some amendments. Who knows!

The hon. Member for Stroud made a valid point that not all the funds have been drawn down. That is a great disappointment, because the funds are important to develop not only our rural economy but the public goods and the environment that people wish to see. We need to analyse why that was not done. In the case of some of the capital grant funding for improvements to businesses, the EU structure was often very much based on giving money to co-operatives. Many European Union countries have a much wider co-operative structure among their farmers, particularly in areas where there are small farmers, who can work together only if they co-operate. In the UK, we do not have that same history of co-operatives, which in some cases has prevented farmers from applying, say, for better storage facilities.

Secondly, as the hon. Gentleman mentioned, many EU schemes are complicated and over-bureaucratic. We need to look at how to simplify them. Given the egregious exploitation of schemes in some parts of southern Europe, I can understand why the European Union came to the view, in some cases, that every farmer was out to exploit the system in a way that was not intended. My view is that farmers in this country are much more likely to comply and engage with our common objectives.

I met several landowners and farmers at an event last week. The point has been made that we have not made payments as effectively as we should—there have been delays, particularly in the agri-environmental schemes. Many such schemes involve up-front investment, such as buying seeds or hedging plants, so we need to improve our performance to encourage more people to feel that they can invest in them.

The hon. Gentleman talked about funding. There is the small matter of our contribution to the European Union budget, which we will be able to deploy for our own interests. As net contributors, we will be in a better position to make sure that the money is adequately spent. We will certainly be engaging in the spending review and with the devolved Administrations to make sure that we have a fair share of the available money and that it can be deployed as intended and not top-sliced in some other way.

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Obviously we will not replicate pillar 1 and pillar 2, but is the Minister saying that the pillar 2 moneys will be secured? So far, he has mentioned agriculture and land, but not rural communities. A key thing about the pillar 2 moneys was that they were ring-fenced for particular rural developments, which may have involved farmers and landowners, but did not have to. What will the Government do to make sure that the pillar 2 moneys are secured, as they were under the EAFRD?

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As the hon. Gentleman well knows, the direction of travel in policy is to switch funding from pillar 1 to pillar 2, so direct funding will be reduced at the same time as the schemes that the Agriculture Bill facilitates are delivered. I am ambitious and optimistic that we can continue to build on such schemes and that the money will be there, because we will be directing it for the public goods that farmers will be keen to deliver. The general public will also feel more content, perhaps, that taxpayers’ money is being spent in those directions rather than how it was spent in the past.

The hon. Gentleman talked about the consultation. There was no statutory requirement to consult, because we are not making operational changes. We met the Rural Payments Agency industrial partnership group in September 2018 to update farming and land management stakeholders about the Government’s plan for EU exit. A number of stakeholders were present, including the Tenant Farmers Association, the Country Land and Business Association, the Farming Community Network, the Institute of Agricultural Secretaries and Administrators, the British Institute of Agricultural Consultants and the National Farmers Union. A subsequent meeting was held on 26 November 2018.

The hon. Member for Dundee West is concerned about Scottish participation. I spoke to Fergus Ewing last week to reinforce my wish to work with the Scottish Government. Their consultation, “Stability and Simplicity”, which was published in June 2018, invited comments on their proposals for dealing with the implications associated with leaving the common agricultural policy. It explained that the first stage would be for EU law to be retained in domestic legislation. The consultation closed in August 2018 and there were 137 responses. At least so far as that aspect is concerned, the Scottish Government are engaging.

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Will the Minister confirm that, when the Agriculture and Fisheries Bills are introduced, the powers that belong to Scotland will be devolved back to it? On funding for the highlands and islands, it looks like we will be £160 million short from 2021-27. He might not be able to give me the numbers just now, but will he look into that and write to me about what he will do about that shortage?

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The hon. Gentleman is absolutely right to make the case on behalf of not only his constituents but his nation. We certainly look forward to robust exchanges about the way funding is brought forward, but I repeat that, as we leave the European Union, the money that we previously paid into the coffers in Brussels will be available for us to deploy here. England is embracing the opportunities of leaving the European Union, and the Agriculture Bill is one clear example of that. The Scottish Government need to engage more widely in those opportunities and must not be in Brexit denial. Many of the hon. Gentleman’s right hon. and hon. Friends seem to think that it is not going to happen. It is important that they realise that the result of the referendum in the United Kingdom was to leave the European Union. The Government of the United Kingdom are determine to deliver our promise.

As further changes to the way we deploy and deliver the agri-environmental and other schemes in this SI emerge, we will of course consult. We will evaluate the way that schemes have worked in the past. We will need to see how we can balance and incentivise new schemes, particularly in connection with the environment, to ensure we get the balance right between rewarding those who were in the vanguard of delivering these environmental schemes and incentivising new entrants. Getting that balance right will be one of the important challenges for us.

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Given how small the rural team is in DEFRA—people now just call it “DEF”, because the “RA” has dropped off—who will do this? These schemes, such as the ones through Erasmus, have not necessarily directly involved DEFRA. It may have had some sign-off, but it has not been directly involved with some of the rural initiatives. Who will do that? We are talking about dropping out next week, so this is pretty urgent stuff. What mechanism is in place to undertake this evaluation?

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I thank the hon. Gentleman for his question. We will only drop out next week if the Labour party votes against the agreement that will allow us to leave in an orderly way, and allow the implementation period to be delivered. We are preparing for a no-deal Brexit, but it is not a particularly palatable prospect, in terms of turbulence in the land market. The documentation required for, say, fish exports will need to be delivered in a very short time. The Labour party needs to think long and hard about the game it is playing in this regard.

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Order. Can we get back to the instruments before us, please?

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I apologise, Mr Gapes.

As we move forward, we are looking to ensure that these schemes are adequately funded. We will need to consult if changes are to be made in future. The Agriculture Bill is the perfect foundation on which to build new, innovative and exciting schemes that will not just deliver for agriculture and food production, which is the primary role of agriculture, but provide important public goods.

On highlands and islands funding, and Scotland’s missing out on EAFRD funding, we have committed that the Barnett formula will not simply be applied to DEFRA’s agriculture budget in 2022. That means that farmers in Wales, Scotland and Northern Ireland will not just be allocated funding according to the population size in each nation, which in each case is significantly smaller than England. I hope that provides some reassurance that we will look at the needs of agriculture, rather than per capita funding.

I hope I have answered all the questions that were asked. These statutory instruments are required for the continued operation of the rural development programme, and will ensure that farmers and land managers are able to be paid after we have left the EU.

Question put.

Division 1

21 March 2019

The Committee divided:

Ayes: 9
Noes: 3

Question accordingly agreed to.

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Resolved,

That the Committee has considered the draft Rural Development (Amendment) (EU Exit) Regulations 2019.

Draft Rural Development (Rules and Decisions) (Amendment) (EU Exit) Regulations 2019

Motion made, and Question put,

That the Committee has considered the draft Rural Development (Rules and Decisions) (Amendment) (EU Exit) Regulations 2019.—(Mr Robert Goodwill.)

Division 2

21 March 2019

The Committee divided:

Ayes: 9
Noes: 3

Question accordingly agreed to.

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Committee rose.