Considered in Committee
[Dame Eleanor Laing in the Chair]
Incorporation of EU legislation governing the CAP direct payment schemes
Question proposed, That the clause stand part of the Bill.
With this it will be convenient to discuss the following:
Clauses 2 to 9 stand part.
That schedule 1 be the First schedule to the Bill.
Amendment 8, in schedule 2, page 12, line 11, leave out “3(1)(a) or”.
This amendment together with Amendment 9 would make regulations under Clause 3(1)(a) subject to affirmative resolution procedure rather than the made affirmative resolution procedure.
Amendment 9, page 12, line 13, leave out “3(1)(b), 3(b) or (4)” and insert
“3(1)(a), (1)(b), (3)(b), (4) or 6(1)”.
This amendment is linked to Amendments 8 and 10.
Amendment 10, page 12, line 16, leave out paragraph 3.
This amendment together with Amendment 9 would make regulations under Clause 6(1) subject to affirmative resolution procedure rather than negative resolution procedure.
That schedule 2 be the Second schedule to the Bill.
Clause 1 provides the legal basis for the Government and devolved Administrations to make payments to farmers under the direct payment scheme for 2020. The clause is needed because article 37 of the withdrawal agreement means that the EU legislation governing the 2020 common agricultural policy schemes will no longer apply in the UK on exit day. This was fully intended; it is part of extracting the United Kingdom from the European Union’s next multi-annual budget cycle, which starts in 2021, and it allows us to take back control of agriculture policy and domestic agricultural funding.
The Bill is needed because of a quirk in the way that the EU common agricultural policy is funded. Pillar one payments—the so-called basic payment scheme payments —are funded from the following year’s budget, unlike pillar two payments for things such as countryside stewardship, which are funded from the budget year in which they apply.
It includes the basic payment scheme. Only direct payments are in the Bill’s scope, and that includes the annual area payments that most farmers would receive.
As we are not contributing to the next multi-annual financial framework, we have decided that we should fund this year ourselves to provide farmers with continuity. The withdrawal agreement therefore disapplied the direct payment scheme to the UK. The European Union (Withdrawal Agreement) Act 2020 applies that agreement, and disapplies the direct payment scheme, so to pay farmers for this year, we have to provide this regulation.
Chelmsford is largely an urban constituency, but when I visited one of my local farms just before Christmas, it was devastating to see that, because of the wet weather, people there had not been able to plant any of their winter wheat. They are doing some fantastic work with new crops such as millet, so that we do not need to import that. Will the Bill help to give farmers across Essex and the east of England the certainty they need at this challenging time?
Will the Minister confirm that as we move on to the new policy, there will be an emphasis on growing more food at home for import substitution, so that these general moneys can lead on to moneys that help us to build a bigger domestic food industry?
My right hon. Friend will be aware that we have presented a separate Agriculture Bill, which has had its First Reading. It sets out all the powers we would need to reform agriculture policy. The direct payment regulations before us bring the CAP into UK law and on to the UK statute book, and in the Agriculture Bill, there are powers to modify these regulations, so that we can remove the rough edges and simplify them. There are also powers in the Agriculture Bill to strike a very different course for our agriculture—a course based on payment for public goods, but also on providing farmers with grants to invest in new technology, so that they can improve their profitability or add value to their produce. That Bill also recognises that our food security is vital, and commits the Government to reviewing it every five years. That, however, is obviously a matter that we will debate in the coming weeks and months; I want to return to this direct payments Bill.
My hon. Friend the Member for Chelmsford (Vicky Ford) mentioned the need for certainty in her arable sector. We have a strong arable sector in North Dorset. Does the Minister agree that the certainty that this Bill provides to our farmers is of particular importance to those involved in the dairy and beef sectors, both of which are incredibly strong in North Dorset?
I very much agree with my hon. Friend. The Bill will give certainty and clarity about this year to all farmers who currently make a BPS claim and have done for some years. That will include, of course, dairy farmers and beef farmers. Beef farmers in particular have been through a rather difficult year, in which beef prices have been suppressed, and the knowledge and clarity that there will absolutely be continuity this year, and that payments will be made, will be very welcome to them.
The Minister’s own Department’s figures recognise that 85% of livestock farm income comes through basic payments. Of course, this 12-month stay of execution will be welcomed by many of my farmers, but from next January, he is planning to phase out BPS, and the danger is that there will be no certainty about its replacement before 2028. Does he not worry that we will lose many livestock farmers during that seven-year transition, and does he agree that he should therefore delay the phasing out of BPS?
It is important to recognise that a significant proportion of sheep farmers in particular do not receive the basic payment scheme area payment, because they are on contract farm agreements and the landlord receives that money. Nevertheless, the hon. Gentleman makes an important point. I think the principle of investing in public goods has support across the House, but we need to strike this new course sensitively and ensure that agriculture remains profitable. We want a vibrant and profitable agriculture industry, which is why the Agriculture Bill also makes provision for payments to improve productivity, and sets a quite long transition period of seven years, so that we can gradually phase out the old legacy scheme. He will be reassured to hear that the Bill before us makes no changes at all for the coming year. Farmers in his constituency can rest assured that once this Bill is passed, the direct payment scheme will operate this year in exactly the same way as it has in previous years.
Does the Minister agree that there is a balance to be struck between incentivising productivity and rewarding farmers for their role in looking after our countryside—the hedges, copses and spinneys that make England, and indeed Scotland, Northern Ireland and Wales, so unique in their character, and so different from some intensive agricultural operations in European and beyond? If we are to remain competitive and our land is to remain productive and profitable, we need to find a system that balances those priorities, protecting what we love about our countryside, while recognising the wonderful contribution our farmers make to our agricultural economy.
My hon. Friend makes a very important point. It is all about striking the right balance. The premise behind the direction of agriculture policy is this: rather than trying to put on a sticking-plaster, and masking poor profitability in agriculture, we ought to have a coherent policy that rewards farmers properly for their work to improve the environment, create new habitats and so on, and that makes them able to become more profitable by investing in new equipment, adding value to their product and improving transparency in the supply chain. That is our approach—tackling the causes of poor profitability, not masking them with an arbitrary area-based subsidy.
My hon. Friend is being characteristically generous in giving way. I hope he will agree with me, and probably most people in this House, that as important as this Bill is—so, too, is the Agriculture Bill, to which he referred—it will be for nothing if we do not have some form of equivalence clause on food imports to ensure standards of animal welfare and public health. All of the Minister’s good intentions, both for this Bill and the Agriculture Bill, will come to nothing if we suddenly find ourselves swamped by cheaper imports that make all the countryside issues to which my hon. Friend the Member for Milton Keynes North (Ben Everitt) referred absolutely irrelevant.
My hon. Friend makes an important point. Obviously, that is not a matter for this Bill, but our party’s manifesto makes a clear commitment to our maintaining standards as we approach new trade deals, and to our ensuring that we do not water down our standards or undermine our producers.
The Minister says that there will be complete continuity of the basic farm payment over the coming year. Does that include continuity of the three crop rule and all the regulation that goes with the present system? Farmers will need to know that. They have got used to the system, and so has the Rural Payments Agency, so we need to know whether the system will be exactly the same, or whether there will be some changes.
My hon. Friend makes an important point, and I will come on to that when I describe some of the regulations that will be brought across by the Bill. The system will be exactly the same, including the so-called three crop, or crop diversification, rule, the requirement for environmental focus areas, all the scheme deadlines for getting forms in, and the penalty matrix. I am not a huge fan of many of those things, and have been critical of them in the past, but we have taken a decision that charting a different course is a matter for the Agriculture Bill. This is a short Bill that is about providing farmers with immediate continuity and legal certainty that they will get their payment in exactly the way they used to—for this year only; then we will set out a different approach and a different course.
As my right hon. Friend will be aware, under the financial settlement in the withdrawal agreement, we did not make a contribution to the next multi-annual financial framework, so the UK will not contribute to the EU budget from 2021 onwards, and will therefore not contribute to the budget that would fund this current year of BPS. We will fund it domestically, and that is why the direct payments regulation must be brought on to a UK regulatory footing.
There is an argument that for many years the UK has actually contributed much more to the common agricultural policy than we have received from it. Can the Minister assure me that as we will not make those payments, we should save some money for the Exchequer?
My hon. Friend will remember the debate that took place in 2016. The UK has typically received back roughly half of what it put into the EU budget, and our contribution to the common agricultural policy on average has been double what we have received from it, historically.
Further to the intervention from my right hon. Friend the Member for Wokingham (John Redwood), and so that I understand this point, am I right that in this transition year we effectively pay as if we were members, but we are also funding domestically this farming payment under the Bill? Is it netted off, or are we in effect paying more for this year overall? Does that make sense?
It is complicated—as ever—with the common agricultural policy, but I tried to explain this point in my opening remarks. It is a quirk of the way that the EU budget works that the EU borrows the money for the pillar one payment—the BPS and area payments—from next year. Because the payments are made typically from December onwards, the money comes out of the 2021 budget. The pillar two payments come out of the 2020 budget—the year in which the money is spent. Put simply, we have not contributed to the 2020 capped budget because it is borrowed from 2021. I know that is complicated, but in essence we are not paying twice.
Yes, my hon. Friend is right. Under the common agricultural policy, there is provision for something called modulation, under which member states are able to transfer a chunk of money from pillar one to pillar two. Wales transfers 15%, or modulates by 15%, from pillar one to the pillar two budget. England modulates at the rate of 12.5%, and Scotland and Northern Ireland modulate considerably less, but still a little bit. There is a provision for that, and the Bill brings that regulation into UK statute.
Without clause 1, neither the Government nor the devolved Administrations would be able to continue to operate the 2020 direct payment schemes, and that would severely affect the agricultural industry, threatening the financial viability of agricultural producers who have planned on the basis of continuity of payments for this year. The direct payments basic legislation, and the implementing and delegated legislation, will become domestic law on exit day, as opposed to at the end of the implementation.
Climate change is a threat that we must all take action to tackle, and my constituents and farmers care deeply about it. Does my hon. Friend agree that the Agriculture Bill and these changes will provide us with a great opportunity to encourage greener practices in the world of agriculture?
Yes—my hon. Friend makes a very important point. As we chart a new course on agriculture policy, one key objective set out in the Agriculture Bill, which was recently published, was on climate change. It is absolutely the case that we should support farmers to farm more sustainably and reduce their greenhouse gas emissions, and that will be a matter for future policy. This Bill does not envisage radical change compared with what has gone before. Some provisions—the so-called “greening provisions” that are brought across by the Bill—will potentially have a modest impact on our carbon emissions and climate change, but addressing that issue properly will be a matter for future policy.
Clause 1(3) sets out the regulations that are covered. That includes the direct payments regulation, apart from article 13. Article 13 of the direct payments regulation is still there in retained EU law, because the withdrawal agreement Bill brought that element of the regulation across, so we do not need to do that a second time. We need that state aid provision because the withdrawal agreement committed us to an equivalent approach to the EU for this year. There is also the Commission delegated regulation (EU) No. 639/2014, which supplements the direct payments regulation, and Commission implementing regulation (EU) No. 641/2014, which lays down rules for the application of the direct payments regulations.
In Beaconsfield, we are still very keen to receive these payments, and the Minister is right to bring forward the Bill. Many of my farmers would like to produce more, but that is currently restricted under the CAP. Does the Bill deal with that? For example, I have a chicken farmer who would like to increase the number of chickens and eggs that they produce, but there are restrictions because of the common agricultural policy payments. Is there anything in the Bill that will allow them to increase productivity as we move out of the EU?
If my hon. Friend writes to me on the specific issues for the chicken producer that she mentions, I am happy to look at that. As a general rule, poultry producers tend not to qualify for the basic payments scheme, because it is area-based. Of course, it could be a mixed enterprise, where the producer has a poultry unit and some land on which they claim BPS. There are also some domestic environmental regulations and a licensing scheme that the Environment Agency runs that would affect certain establishments in the poultry sector.
The Bill brings across existing legislation exactly as it is and does not envisage any change. The only change might come from the absence of EU auditors, as this is no longer an EU budget. Therefore the absence of the risk aversion that is a feature of Whitehall—where we have perpetual legal jeopardy and the constant threat of infraction, of disallowance risks and of arbitrary fines slapped on by EU auditors—means that we may be able to have a margin of appreciation in how we interpret some of these regulations, so that we can, for instance, send farmers a warning letter, rather than stinging them with a fine as we are required to under EU law.
It is very welcome to us in Cheltenham that in future the Government plan to use state support to promote biodiversity on farms to a far greater extent than is permissible under the CAP. However, will the Minister indicate how we can expect our landscape to change as a result of these very welcome policy changes?
The Agriculture Bill, which is a matter for future discussion, envisages in clause 1 that we would support, for instance, measures to reduce climate change and carbon emissions and measures on carbon sequestration. We have a commitment to establish additional new woodland areas. In some areas, I suspect that there would be some land-use change. We also want to use our future policy to support a more sustainable approach to farming, for instance getting more farmers involved in catchment-sensitive farming schemes, integrated pest management, better soil husbandry and better stewardship of our hedgerows. All these issues will have an impact on our environment and its biodiversity.
The Minister talked about having a lighter touch, in terms of moving to a warning letter rather than having fines, and many farmers will breathe a huge sigh of relief at that. What scope does he see in the Bill to build on the trend of performance improvement, which we have started to see from the RPA but where there is still headroom for further improvements, therefore hopefully further de-stressing the art of agriculture in this country?
My hon. Friend makes an important point, which links to something I said earlier about the removal of the perpetual legal jeopardy that Whitehall has been subjected to while we have been an EU member. The issue, particularly in the CAP, is that there is a system of fines relating to what is called disallowance risk. The UK typically pays around £100 million a year in disallowance risk fines, often for very trivial errors such as a supposed lack of accuracy on maps, with a requirement that we map fields to four decimal points of accuracy, and issues about how things are recorded—even though they may be recorded, it may not be in the form that the EU auditors require. Some EU audits retro- spectively make things up, so we never know how an auditor will interpret the regulations in front of us. That means that officials who work very hard in DEFRA to make sense of these complex regulations will often take a view, have legal advice and interpret a regulation in a particular way. Subsequently, auditors will come along with a different view and that creates a disallowance risk. It is a very difficult situation to have a constant sense of legal jeopardy, which leads to risk aversion and people being very cautious and sometimes quite draconian in how they deal with farmers. That has been a constant problem with the existing scheme.
As a former Parliamentary Private Secretary to my hon. Friend, I am pretty forensic on these matters, as he will know—I am grateful to him for his indulgence. What plans do he and our right hon. Friend the Secretary of State have for communicating, monitoring and embedding the change of culture in the RPA? I do not say this to be rude to the RPA, but it will have been trained in a certain way of doing things and, rather like people who have been held prisoners for 40 years, will have no idea how to deal with its freedom once it is released. How will he ensure that the lighter touch that is now available as a result of the domestic legislation is communicated to all levels of the RPA so that as soon as possible, from day one, farmers will feel the benefit? A legislative change, if not implemented by the practitioners, is no change at all.
My hon. Friend makes an important point. All of us—officials in Whitehall, Members of this House, and indeed, generally as a country—have to get used to our freedom and to enjoying it, and develop the confidence to exercise judgment in all fields as we leave the European Union and become a genuinely self-governing country again, which is what we will do.
I have already had a meeting with the chief executive of the RPA. It has made considerable progress over the past 18 months in improving its performance, but I have tasked him with looking at any changes in process—anything that could be adapted, removed or changed—that would make the application of the scheme easier once we have removed the constant threat and legal jeopardy caused by EU auditors, so we are doing a piece of work on this.
Many upland sheep farmers, particularly in my constituency, will welcome not only the extra year of payments and the confidence it will give them, but the less draconian approach that the Government seem intent on taking. With the Agriculture Bill coming, can the Minister further reassure farmers in my constituency that there will be a phased approach so that they have time to get used to the new measures?
Yes, my hon. Friend makes a very important point. Today’s Bill today simply brings across the existing schemes, including, as I have pointed out, all the so-called greening rules, all the cross-compliance rules, and so on. There is a small margin of appreciation that we can apply to interpret these sensibly and proportionately, which we have not been free to do to date. That said, we recognise the importance of a gradual transition to our new agriculture policy, which is why that policy envisages a seven-year transition, with a gradual phasing out of the BPS and with support to ensure that farmers have a prosperous and profitable future.
Now we are getting rid of the cosh of legal threat hanging over our hard-working farming community, including in Rother Valley, can we use this as an opportunity to help, educate and upskill our farming community on the importance of biodiversity and so increase the flora and fauna in our beautiful areas? The farming community in Rother Valley already knows this, but what other support can the Government provide to encourage these things?
There are several important schemes, such as the Government-funded Farm Advisory Service and the various wildlife campaigns that also support farmers to farm in a more environmentally sensitive way. The future agriculture policy envisages that we will provide advice and support to farmers—direct on-farm advice—about what might work on their particular holding, with their particular soil, landscape and topography. It is an exciting future, and having the right technical advice will be an important part of it, so my hon. Friend makes a good point.
The Minister will have seen the Scottish Affairs Committee report on agriculture in Scotland. It recommends that in considering the funding envelope across the UK he support less-favoured areas and that the funding follow the quality of the land. He was not particularly enthusiastic about that suggestion. I wonder if he has changed his mind. If not, on what central tenet does he see the distribution of funding across the UK being based?
Obviously we will work with the devolved Administrations on future funding. The Bill—in later clauses, so I will not dwell on it now—deals with recommendations for the allocation of funding this year, pertinent to the conclusions of the Bew review, which I will come on to. More generally, future policy envisages payment for public goods, but it also envisages a long transition towards that. We have given a commitment to keep the agriculture budget the same at least for this Parliament. [Interruption.] Within the UK, yes, there will be some discussions on allocation, but every component of the UK is likely to adopt a transition period during which they would want to keep, at least for a time, something akin to the current system as they move to a new one. That said, the funding settlement is for a future day and discussion, not for the Bill today, which covers this year only.
The Minister talked about public goods. As a veterinary surgeon, I am proud to say that in Penrith and The Border, in Cumbria and across the UK we have the highest standards of animal welfare and farming. Does he agree we need to articulate the fact that those standards will not be watered down and that these Bills are an opportunity for the UK to become a beacon for the rest of the world and that we will be able to raise animal welfare standards in our future trading partners?
Yes, my hon. Friend makes a very important point. As I have said, we have a manifesto commitment to protect animal welfare and food standards in future trade deals. Moreover, future policy envisages our being able to make payments to farmers—for instance, those who enter into a high welfare or high animal health scheme. We have an exciting opportunity to support high health and welfare schemes that could, for instance, reduce our reliance on antibiotics, which has been identified as a clear public good for future policy.
I will return to clause 1, as I realise there have been many interventions, which I have taken because clause 1 contains the meat of the Bill in that it brings across all the regulations.
Order. For the sake of clarity and because new Members are present who might be concerned about sticking to the rules, I should explain that in addressing clause 1 the Minister is perfectly in order and absolutely right to address all the other aspects of the Bill because we have grouped all the clauses and amendments together, and any Member may at this point refer to any aspect of the Bill they wish to raise.
Thank you, Dame Eleanor.
The Bill also covers the horizontal regulation, which governs the way paying agencies should operate; Commission delegated regulation 907/2014, which supplements the horizontal regulation with regard to paying agencies and other bodies, financial management, clearance of accounts, securities and use of the euro; Commission implementing regulation (EU) 908/2014, which lays down the rules for the application of the horizontal regulation with regard to paying agencies and other bodies, financial management, clearance of accounts, rules on checks, and securities and transparency; Commission implementing regulation 809/2014, which lays down rules for the application of the horizontal regulation with regard to the integrated administration and control system—the so-called IAC system—rural development measures and cross-compliance; and Commission delegated regulation 640/2014, which also supplements the horizontal regulation with regard to the IAC system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross-compliance.
Does my hon. Friend agree that these proposals show how the Government are leading the fight on climate change while also protecting our precious farming community? Not only will this Bill safeguard our payments for the next year, but the whole thrust of the Agriculture Bill is to allow our farmers to farm in a sustainable, environmentally friendly way that rewards them for protecting and helping our environment, which has to be applauded.
Yes, my hon. Friend makes a very important point, and that is why we have set a very different course with our future agriculture policy, though it is based on payment for public goods. It is important that we support our farmers and properly reward them for the work they do for the environment.
Farming in South Suffolk is fairly horizontal—fairly flat—so I welcome these regulations. On a key technical question, under all those regulations the top level of payment awarded at EU level is in euros, whereas, of course, the allocation for the payment in UK law is in pounds sterling. Is there therefore any currency risk through the year to the payments that will ultimately be received by our farmers?
There is no currency risk for British farmers in this year, because the total size of the budget has already been set by the Treasury, and it has been set at the same level as last year. Under the regulations, we have to go through the formal process of setting the exact payment rate, but, because the budget has been guaranteed and it has been guaranteed that the payment system will be the same, farmers have a high degree of confidence that—barring any minuscule changes—their payment will be the same as it was last year.
My hon. Friend has put his finger on an important problem with the common agricultural policy. It introduced an entirely unnecessary exchange rate risk for our farmers, in that money was sent to the European Union in pounds and was then denominated in sterling at a fixed point in time, typically in September each year. That meant that if the pound had had a good year and had rallied against the euro, farmers found that their payment would be lower, whereas sometimes when the pound fell, as it did after the 2016 referendum, they had an early Brexit dividend and received a higher payment than they might otherwise have expected. That unnecessary exchange rate risk has now gone, and the budget is set for this year.
I do not want to bore people too much with these regulations. I have listed them all in detail, and there is a reason for that. In the European Union, particularly in the context of the CAP, there are three types of regulations. There are the basic regulations, which the Council of Ministers has quite a bit of involvement in shaping, and on which, through working groups, the member states have a vote. There are delegated Acts or regulations, in which there is far less involvement for the member states. They collectively have a kind of veto power, but have less of an amending role. Then there are the implementing Acts or regulations, which the Commission pretty much just makes up without any particular involvement of the member states.
That said, I am conscious that Members will never have debated any of these regulations. Ministers will have been aware of debates and discussions taking place in working groups as the basic regulation was formed, and they will have received submissions letting them know that something alarming had been handed down in an implementing Act and we could not do anything about it. Obviously, as we make regulations in future, the scrutiny of the House will be brought to bear, and Members will be able to engage in and scrutinise every bit of the detail of future agricultural policy.
The regulations that I read out earlier may have seemed like a list of rather meaningless numbers, but I can tell Members who are interested in what they mean collectively, in terms of what the farmer is required to do, that basic payment scheme rules are published annually by the Rural Payments Agency. Let me give Members a flavour of those.
The publication “Basic Payment Scheme: rules for 2019” sets out the key dates during that scheme year to which farmers must have regard. It includes, for instance—and all this is born out of the regulations that are being brought across today—the setting of 1 January as the official start of the year. The period between 1 January to 30 June is regarded as the
“EFA period for EFA fallow land” .
That is the period during which land must be fallow if farmers want to claim it. On 13 March, the “window opens”, and farmers can start sending in their applications. Between 1 May and 30 June, the so-called three crop rule kicks in, along with the
“EFA period for nitrogen-fixing crops”.
During that period, farmers must demonstrate that in that window and that window only, they have three crops on their farms. Another rule states that one of those crops can be fallow land, but the qualifying period for that type of fallow land is different from the one for the type that is covered by the EFA period.
There is a deadline of 15 May for farmers to submit their BPS application forms. They are then given a couple of weeks’ grace during which they can make changes, and they have until 31 May to do that. There is then a “late application” deadline, which means that farmers are effectively given 21 days to submit late applications, but will lose, typically, 1% of their payment for each late application day.
My hon. Friend has made an important point. Let me say two things. First, clause 3, which I was going to come on to—I understood that you wanted me to address all the clauses simultaneously, Madam Deputy Speaker—deals with that issue in respect of the claim year 2020, in that it gives us powers akin to those that were in the European Union (Withdrawal) Act 2018 to make particular modifications and changes, simply to make this body of law operable. For instance, it enables us to replace the words “European Commission” with the words “UK Minister”, or, indeed, “devolved Administration Minister”, and it gives us the power to introduce subsequent statutory instruments to make the legislation operable.
Secondly and more broadly, for the purpose of future policy, the Agriculture Bill includes a power to modify policy. This Bill does not modify policy, but it gives us the power to make operable changes akin to those in the European Union (Withdrawal) Act.
I think it important to learn the lessons of our involvement in the common agricultural policy over the years, and to consider some of the things that have gone wrong with it. In the context of implementing future changes in regulation, we should recognise that, for example, the set-aside rule—which those of us who were in farming in those days know and love—would sometimes represent the difference between profit and loss for a farm. To put it bluntly, the difference between the farm being viable and not viable was what the EU paid farmers not to grow anything. How can we incorporate that balance between productivity in our land and a viable economic agricultural and rural sector in our future legislation? I am heartened to hear that we are keeping that option in this Bill.
I agree that we must learn the lessons of the common agricultural policy. Having dealt with it for some seven years in total, I know that it is something of a bureaucratic quagmire. It is very difficult to navigate, and we tend to find that the more rules we invent, the more rules we need in order to make sense of the ones that we already have. That is why we end up with all sorts of complexity, as set out in the 127-page document containing guidance and rules for farmers.
The real lesson to be learnt is that whatever we do in future should be less rules-based and more based on delivering outcomes, and should also be tailored to the needs of an individual farm. When farms have poor profitability, we should try to tackle the causes of that poor profitability by helping farmers to invest and improve fairness in the supply chain, rather than by means of an arbitrary area-based payment. That is the direction of travel that we have set out.
Does my hon. Friend agree that those like me who have smallholdings are often overwhelmed by the body of rules, and end up not claiming money that they should rightly claim? Has that been a problem historically, and are there any records that show how many people are covered by this?
Every month I have to deal with appeals lodged by farmers following decisions made against them involving, for instance, penalties or disqualifications for their particular claim year, perhaps because they were late in submitting their claim. There is often a tragedy behind those stories, and the scope for a Minister to address that within the boundaries of EU law is often quite limited, but we will have the chance to address it in the future.
I do not think that anyone will disagree with the Minister about the need to get rid of overt bureaucracy, but on Friday I attended a farmers’ breakfast with representatives of the Farmers Union of Wales, and I know that my local farmers fear that they will lose access to their biggest export markets. Over 90% of Welsh lamb and beef goes into the European single market. What assurances can the Minister give that access to that market will remain unfettered following the completion of the negotiations?
The hon. Gentleman makes an important point—a number of others have raised it—about the importance of trade. That can be about protecting our standards in respect of the trade deals that we do, but it can also be about access to the European market, which is particularly important for some sectors, notably the sheep sector. That is why the political declaration that was agreed as part of the withdrawal agreement—effectively a heads of terms—sets out the ambition to move to zero-zero tariffs on all goods. That is the approach that we will be taking, as outlined in the political declaration, but it is not dealt with by this particular Bill.
I know I am pushing the boundaries slightly, but was the Minister at all concerned by the comment by the Chancellor of the Exchequer about a week ago that there would be no alignment with European standards? If that is the case, there will be no access to EU markets, will there?
The political declaration was very clear, and it is implicit in the withdrawal agreement that we have now put in place that there will be no alignment with EU law. We are seeking agreement on the recognition of equivalence and understandings based on equivalence. It is understood that, yes, there could be some border checks and some additional paperwork, because we will not be aligning with EU law and those rights. I was not alarmed by what the Chancellor said, and I was not surprised by it, as it has been in our manifesto and it is also in the political declaration. I fully support that approach.
A moment ago, my hon. Friend was setting out the timetable for applying for the new basic payment. Could he, for the benefit of the Committee, set out in a little more detail when farmers can expect to receive those payments, on the presumption that an application has been legitimate and cleared all the necessary hurdles in order to secure that payment? Are we just going to mirror what exists at the moment, or are we going to create something different?
For this year, the 2020 year, the payment window will be exactly the same as in previous years. The payment window opens on 1 December. Last year, the 2019 year, we paid around 95% of farmers by Christmas or the end of December, and the latest intelligence I have is that up to 97% of farmers have now been paid. So the vast majority of farmers—well over 90% and probably more like 95%—can expect to be paid in December 2020.
On that point, I have a farmer in my constituency who is still waiting for his basic payment from last year. Rural Payments Wales is in a mess over a degree of payment. Will there be any opportunity, either in this Bill or in the forthcoming Agriculture Bill, to include a measure to allow compensation when farmers’ payments are delayed by Rural Payments Wales or the Rural Payments Agency?
That is a matter for the Welsh Government. I know that the RPA has had its issues in the past. All paying agencies in all parts of the UK are dealing with an incredibly complex body of law with a complex audit structure around it. As I say, with that being removed, I anticipate that all parts of the UK will find it easier to get payments out in a timely fashion by the end of this year.
I want briefly to touch on some of the other types of rules that are covered by this body of regulation. It sets out all the eligibility criteria—for instance, for common land and how to apply for it. It sets out specific requirements for areas such as the New Forest, which has a separate type of approach. It also sets out all the rules on transferring entitlements. There is a feature of EU law that states that someone can only claim on an area of land on which they have also lodged a so-called entitlement attached to that land, and there is a market in the transferable entitlement. The body of regulation also sets out all the so-called greening rules that were added in the last CAP reform. That includes the crop diversification rules for arable land, which stipulate that such land must have at least three crops. It includes the environmental focus area, which is the calculation someone can apply for their hedges to count towards that area. It lists the types of crops that qualify as leguminous crops for the purpose of the EFA rules. It sets out all the rules on buffer strips, including how wide a buffer strip must be when it is alongside a watercourse, and whether someone is allowed to have arable land or pasture alongside and adjacent to that buffer strip. The list goes on. It lists the types of crops that can count towards the three crop rule. For instance, it stipulates that a cabbage can be deemed to be the same as a cauliflower for the purposes of the three crop rule because they come from the same family. In other cases, it stipulates that certain crops are to be treated as separate.
Hon. Members may well be asking why on earth we will be bringing across regulations of this clunky nature. The answer, as I said at the beginning, is to provide clarity and certainty to farmers for this year only. The common agricultural policy, as currently designed, is a bureaucratic quagmire and we have no intention of retaining it for the long term. However, we recognise that evolving from the system that we have to the one that we want will take some years, and in this particular year we are proposing no change at all.
I am grateful to the Minister for this information and for the insight, albeit at a slightly higher level, about how we are to proceed from the Bill into a future relationship between Government and the agricultural sector. How will he detail the relationship between Government, the devolved Administrations and the industry? Can they look forward to a two-way communication whereby they can have confidence that the Government fully understand the ambitions and pressures in the sector as we develop further legislation?
I can say that, for the Bill before us today, we have received legislative consent motions for every part of the UK, including Scotland. It is universally in the interests of every paying agency to have this Bill agreed and on the statute book so that they can pay for this year. Future policy will be a matter for the devolved Administrations, and I know that the Scottish Government will be charting their own course and setting out their own legislation. I know that the Welsh Government, while seeking some provisions in a schedule to the Agriculture Bill, will also now be predominantly striking their own course and making legislation in their own Parliament. It will be very much an issue for the Scottish Government to work with Scottish farmers, but of course we have procedures to co-ordinate around the UK and to set up frameworks where necessary. We also have Joint Ministerial Committees, which I regularly take part in it with my opposite numbers in the devolved Administrations.
Regarding tribunals and disputed claims, are we going to set up a temporary agricultural tribunal or legal system to handle the processing of such claims or disputes? For example, there could be disputes over a buffer strip or over payments or claims, or perhaps when a family member of a deceased farmer has to make a new claim. Will a process be put in place as a temporary measure to handle the necessary legal framework?
My hon. Friend makes an important point. The short answer is that we have an appeals system in place. We have the independent agricultural appeals panel, which is drawn from agricultural experts, lawyers, land agents and farmers. It is a lay panel, but it hears complaints and legal objections to penalties coming from farmers. Once the appeals panel has made a recommendation, it comes to the relevant Minister, which is me. I have spent seven years dealing with these appeals, and I can reassure my hon. Friend that I leave no stone unturned in ensuring that farmers who lodge an appeal are given a fair hearing and that the issues they raise are taken into account.
In terms of our discussions with the devolved Administrations, these are issues that we resolve through the Joint Ministerial Committee. We have frame- works to do that.
I will take no further interventions, because I want to address the other clauses before we move on to other speeches. I am sure that other hon. Members have a great deal to say. Clause 2 applies the provisions in the European Union (Withdrawal) Act 2018 to the direct payments legislation. This is simply about interpretation, to ensure that our courts interpret this legislation in a way that is consistent with that Act.
Moving on, clause 3 contains regulation-making powers for the Secretary of State and the devolved Administrations in relation to the retained direct payments legislation. The parliamentary procedures that apply are covered in schedule 2, which is about the power to make operability changes to correct deficiencies, such as changing the words “European Commission” to “the relevant authority in England” and so on. It is simply about making the particular provisions that are brought across operable. I will address the amendments to schedule 2 when winding up, because the shadow Minister will want to make his points before I deal with them.
Clause 4 is concerned with the publication of EU law before it is brought across under this Bill. It ensures that the approach taken under the European Union (Withdrawal) Act 2018 to rules of evidence will apply equally to the legislation we are bringing across. It basically means that the law as it exists in the Official Journal of the European Union just before exit day is the form of law that is brought across.
Finally, clause 5 is a significant addition that I dealt with on Second Reading. It effectively gives us the power to change the financial ceilings to enable us to implement the recommendations of the Bew review for 2020, which will be of particular interest to those in the devolved Administrations. The Bew review recommended that the Scottish Government should receive an uplift in their allocation consistent with what would have been provided under the so-called convergence uplift when that calculation was run. There will be a similar but smaller payment for Wales. The Bew review also recommended that English farmers and farmers in Northern Ireland should not lose out as a result of the top-up payment made to Scotland and Wales. Clause five is important for those who represent the devolved Administrations, and it gives them the financial uplift that some have been requesting for some time. The Bew review also addressed the dispute over allocations that has been discussed many times .
The other clauses in the Bill mainly relate to the interpretation, extent, consequential transitional provisions and the like. The key issues, as I said, are in clause 1, which is why I spent so long on that particular clause.
I am sure the whole House is grateful to the Minister for his extended and detailed account of clause 1. It was a gentle rural ramble that suddenly finished with a sprint, so a cynic might imagine that the Government have finished drafting their statement on Huawei, but that would be a very cynical view.
The Opposition have of course enjoyed the great interest shown by Government Members this afternoon. After listening to some of the comments, I hope that there have been no misunderstandings, because I think I heard at one point a suggestion that the CAP was going to be used to pay farmers for not producing anything, when of course that is the whole thrust of this Government’s policies. I hope that Government Members will look closely at what the Government are suggesting.
The Opposition, of course, support this Bill and the direction of travel, because there is a clear funding gap between the ending of direct payments to farmers under the CAP and the Government’s considerably delayed Agriculture Bill, which will set out the new system of payments from 2021. We fully appreciate the need for financial security for farmers in the interim, but we have several continuing concerns about this Bill, because it has been rushed to make up for the fact that the Government have lost the last 14 months to delays and wrangling and have reintroduced the Agriculture Bill just days before we leave the European Union. Unsurprisingly, farmers are anxious, and of course the urgent environmental action that we need at a time of climate crisis is also being delayed.
In this last-minute rush to fill the legislative gap, there have been several missed opportunities and a number of proposals that cut corners on the parliamentary scrutiny of which they are worthy. Our surviving amendments challenge the need for Ministers to take the direct powers included in the Bill by too often using the negative or made affirmative procedure. It was a delight to hear the Minister at one point extolling the virtues of full scrutiny, and I very much hope that he will be able to transfer that thought into support for our amendments.
In clause 3(1)(a), the Government stipulate that the regulations to remedy any deficiencies in EU law being retained in the Bill will be subject to the made affirmative procedure, and so will be decided and implemented without parliamentary debate, which we think is wrong. Clause 6(1) contains a broad Henry VIII power that would effectively allow the Secretary of State to make any regulations they deemed appropriate as a consequence of the Bill—a wide approach that has been made subject to the negative resolution procedure, which allows for no parliamentary scrutiny of the decisions being made. That comes despite the Lords Delegated Powers and Regulatory Reform Committee having said that any Henry VII power included when changing primary legislation should be subject to the affirmative resolution procedure to allow proper debate.
We appreciate that swift action might be needed in both cases, and we continue to be supportive, but we are simply making the argument, which the Minister made himself, that there should be the opportunity to scrutinise such further regulations properly, which of course is a legitimate role of this House.
With reference to schedule 2, amendment 8 deals with clause 3(1)(a) and amendment 10 relates to clause 6(1), to subject both clauses to the affirmative resolution procedure to allow for proper debate. Amendment 9 is linked to amendments 8 and 10. I stress again that we offer those amendments in a constructive spirit. We want the new Agriculture Bill to work to incentivise a whole range of public goods in return for public money, but the urgency of the need for this change in our farm payments system cannot come at the expense of unnecessary ministerial power grabs.
Clause 3(8) is a sunset clause, and we think there was a missed opportunity here to allow greater certainty for farmers. The key question that we ask people to consider is the Bill’s relationship with the Agriculture Bill and whether we are giving farmers sufficient certainty while we await the passage of the latter. Without prefiguring the discussions around the Agriculture Bill, we know that it will be highly controversial, because we do not see any guarantees from the Government that, in post-Brexit trade deals, they will guard against imports of food produced to lower standards than our own. That is a very big debate—many organisations stressed the point strongly in a letter to the Government at the weekend, and whether there will be a great future for British agriculture depends on the defending of standards. The matter is not likely to be resolved quickly and will likely be a protracted issue in any negotiations with the USA. One would have to be a great optimist to assume that the situation will necessarily be resolved in detail by the end of the year.
The hon. Gentleman gets to the nub of the argument about equivalence, animal welfare and general agricultural standards. Notwithstanding the fact that the negotiation will be detailed and probably tricky at times, does he take any comfort at all from the words of the Prime Minister, the Secretary of State for Environment, Food and Rural Affairs, the Minister of State and, indeed, other Government spokesmen about the starting point from which they begin, namely that there will be equivalence and that our markets will not be swamped? I represent a very rural constituency, and this matter is a worry for me—he will remember that from previous agriculture Bill proceedings—but I am certainly taking great comfort from what those on the Treasury Bench are saying.
I am sure that we will return to this issue over the coming weeks and months. We hear what the Government say, but the simple way of resolving the matter would be to put something into the Bill, which is what many people would like to see. The point in this context is that we would all agree that this is not easy. It may well take time, and it will be difficult.
Alongside the potential delays, the National Audit Office has pointed to teething problems with the Government’s planned environmental land management schemes, which are terribly important to how our rural areas will be supported in future. Added to the 14-month delay to the Agriculture Bill, the Opposition are simply not convinced that everything will be in place for the new farming payment system by the end of the year.
We want to see an urgent shift to a payment system that rewards public goods, environmental protection and welfare standards, but there is a danger of continuing uncertainty for farmers who will have to make decisions in just a few months’ time about their plans for the following year. If the introduction of the new payment system is delayed, it is imperative that a continuation mechanism is in place in this Bill.
The new Agriculture Bill proposes powers to extend direct payments in future, so we will doubtless discuss those powers at that point, but the fact remains that, as we stand here today, that Bill has not even had its Second Reading. We are starting with this Bill, and we believe it would have been wiser for the Government to have re-examined the sunset clause to allow the possibility of extending the provision of direct payments to farmers beyond 2020 in the event of any delay. That would have given confidence and, frankly, would have reflected what many of us think is likely to happen anyway.
The hon. Gentleman is making some important points. As things stand, we are certain that the BPS will begin to be phased out in 12 months’ time, and there is a possibility that we will have the environmental land management scheme by 2028. In principle, he and I probably agree that scheme is a good thing but, in practice, it does not yet exist. Does he agree there is a danger that, in the seven-year transition, we will lose many of the farmers we need to deliver those public goods?
I suspect that discussion will continue, but the hon. Gentleman makes an important point. As I said on Second Reading, we have replaced the certainty in the system. The only certainty we have now is of future uncertainty, which makes it extremely difficult for people who are planning ahead.
The Government have expressed total confidence that a further period of direct payments will not be needed. I wonder whether we will be having this discussion again in a year’s time. They are absolutely confident that there will be no further delays and, frankly, we hope they are right, but if they are not, I suspect we and others will be quick to remind them of the problems they caused by failing to prioritise safeguards in such an extension.
Another missed opportunity is the exclusion of measures to provide potential compensation to those farmers who have faced, and likely will face, delays to their payments. I cannot help noticing that the hon. Member for Brecon and Radnorshire (Fay Jones) made this point, and I am sure she will happily support us when we return to this topic in future.
Although the Government have rightly lauded the efforts of the Rural Payments Agency to pay farmers on time this year, I am afraid we are all well aware of the previous difficulties, poor performance and delayed payments in its management of direct payments to farmers.
Of course, it is not only about the Rural Payments Agency’s past performance. Look at what it is facing now: there is a real risk that it will be diverted by planning ahead for changes next year while we enter this period of uncertainty about our post-Brexit trade negotiations and the complex provisions of the Agriculture Bill. The danger is that we will find late payments building up again at precisely the time when farmers will most need financial certainty. A sensible response to that threat would have been to make provisions to enable farmers to be compensated if they suffered hardship or financial loss because of a delay in payments under this Bill. I hope the Government will duly consider a compensation mechanism for any such delays.
It is a great pleasure to call the newly re-elected Chairman of the Select Committee on Environment, Food and Rural Affairs, Mr Neil Parish.
I thank Members for reappointing me as Chair of the Environment, Food and Rural Affairs Committee. As I said in my spiel on seeking re-election, my door will always be open to Members on both sides of the House. That was not just a ploy to be re-elected; it is very much my philosophy. I encourage Members to stand for membership of the Committee.
I direct Members to my entry in the Register of Members’ Financial Interests.
I welcome this Bill, as it is essential that farmers have certainty for the coming year. Fifty-eight per cent. of farm profitability comes from the basic payment scheme, and we need to make sure that we not only retain those payments. As we look to our trade deals and our future agricultural production, it would be great to see more of our farming income coming from what farmers are paid for their produce, rather than just from support payments, much as we welcome them.
I thank the Minister for his frank, open and detailed breakdown of the Bill, and I will take this opportunity to consider all the clauses together. I also thank him because, over the years, he has fought hard on various cases of hardship due to farm payments. Of course, he has often been stymied by the rules of the common agricultural policy. I think I correctly interpret what he said, which was that, even in this coming year, he will have a little more flexibility on dealing with this, which is essential.
The Minister’s speech was interesting, because I made a claim back in the 1990s under the integrated administration and control system—I queued up at Exeter to get the Ordnance Survey maps—and I saw the complete disaster of that system, which was quickly corrected the following year. We built on that system to get it almost right, and then the next Labour Government came in and changes were made to the common agricultural policy. It went from direct payments for sheep, cattle and crops to area payments and, again, there was another huge problem with the system: delays, delays and more delays. Lessons probably need to be learned from that. We have had our own problems with the system when we were in government, so I am not saying it is all down to the Labour Government. We all have to plead a certain amount of guilt in this process.
I welcome this Bill, but we need to make sure we get the new system right before we implement it. Previously we implemented systems and then tried to get them right. As I have said before, the trouble with the present system is that farmers are always guilty until they can prove their innocence. In a court of law in this country, we are professed to be innocent until proven guilty.
The Minister talked about speaking to the head of the Rural Payments Agency, and a real cultural change is needed. For all the rights and wrongs of the CAP—Europe’s system of fines and draconian rules—we now have a chance to make it more flexible. The Rural Payments Agency will need to give farmers more advice, because it is the policeman—perhaps it should now be “policeperson”—and it has previously found it difficult to advise farmers when making those payments. I would like to see that culture change completely, because it is necessary.
Does my hon. Friend agree that, on this question of rural payments, many of the changes needed are not just cultural but ministerial? They do not require extra changes in legislation, so there is an opportunity for the Minister, the Department and, indeed, Members of this House to get things right over the coming months. I have many constituents, as I am sure he does, who complain about the system very much.
My hon. Friend raises a good point. If I interpret the Minister correctly, there will be much more flexibility to look at individual cases and have some discretion. I would like to see that written in blood before I am certain it will happen, as we have had so many problems over the years. My hon. Friend will know that we have had these problems not only in his constituency but across the country, and not for the want of the Minister trying to get this sorted. I believe he will, but we need to be aware of it.
I also welcome the Minister’s setting out that the entitlements for claims and all those things will be covered not only under this Bill, but in the new system. Entitlements for making claims have always been a major problem over the years, and as the systems have changed many people have fallen out of the various systems for being able to make a claim and then have had to appeal. Some of those appeals have been allowed, but some have not, and there has been some real hardship in some cases. This issue is important as we move forward.
One Conservative Member made a point about smallholdings, and it will be interesting to see what we do on that in the future, because at the moment we exclude those under 5 hectares from payments. If it is an area payment, I can see some logic to it, because of the number of claims, but if we are to move to a more environmental system, should not some of those smallholders also be entitled to a payment? I accept that that is very much for the next Agriculture Bill, but today’s Bill does allow for a continuation of payment and, we hope, some flexibility.
The Bew report recommended changes to the way in which the UK CAP funds are distributed among the UK nations. Following the review, the Government increased the amount of direct payment for Scotland and Wales. I very much welcome the money going to Scotland and Wales, but as an English farmer and someone representing an English seat, I naturally want to make sure that that goes as extra money and not at the expense of those payments coming to English and Northern Irish farmers. I think I have had the assurance from the Minister that that is the case.
Does my hon. Friend agree that farmers in my constituency are at somewhat of a disadvantage, in that the Welsh Government want to phase direct payments out much faster than the UK Government? My local farmers who sit on the border between Wales and England will be looking over the hedge at neighbours who enjoy an awful lot more support from their Government.
I very much welcome my new hon. Friend—it is great to have her here representing Brecon and Radnorshire. She makes an interesting point. I believe we are almost going too fast in transferring from one payment to another, given the history of not always getting these things correct in the first place, and so I would take a bit more time. The Welsh Government are going faster and that is the wrong way to go, because we have to make sure that the environmental schemes are up and running, and that they are not only delivering for the environment, but delivering cash into the pockets of farmers. I made this point last week when I said on Second Reading that some farmers believe they can replace all the money that comes from the basic farm payment with the new environmental schemes. They may or may not be able to do that. Perhaps some on permanent pasture, upland and grassland might do so, but others might not, and in Wales, that will be piling on the agony if they are not at all careful.
Obviously, I congratulate my hon. Friend on his re-election success. I very much agree with him that we need a lengthy transition and a stable period as we move to the new system; surely the important thing is investment from farmers, as ultimately we need higher productivity, but in order to get to that they need to have stability in the interim to plan that investment, with security about the outcome, until the new system is in place.
I welcome my hon. Friend’s comment, because he is absolutely right. I see a problem in the future, not only with this Bill, but with the future Bill; we rightly talk much about enhancing the environment, but we also talk about the productivity and profitability of agriculture, and we must make sure the two knit together. I am absolutely not convinced that they do at the moment—I am sure the Minister and Government will persuade us otherwise. I accept what my hon. Friend the Member for South Suffolk (James Cartlidge) says, because farmers will not want to earn all their income from environmental payments, and that is not the way forward, so they therefore need to earn an income from what they produce. That is the important bit: how we have a productive agricultural system and a more environmentally based one, and how we incorporate the two. I am sure that we can, and I know the Minister has many ideas, so I look forward to that.
This Bill also deals with the Rural Development Programme for England—the development money that sometimes goes to rural areas; it goes into village halls and all sorts of wider aspects. I take it that the Bill will also cover those sorts of payments for the forthcoming year, because I know that in my area in the Blackdown hills and in others it is very important.
I intervened on the Minister to ask about the issue of our payments to the EU, but I do not think I got a complete answer. He assured us that we will not be making a double payment—the payment we pay to our farmers will not then also be paid to the EU. At the moment, we pay more into the CAP than we receive from it, so, to some degree, we subsidise agriculture across the whole of the EU. As we leave this year, we will not be making that payment to them and so we should be saving money. My question was about that and he may be able to deal with it in his summing up. I do not know whether we have the detail of that yet, but it is essential that we make that saving.
Going back to Wales and Scotland, I very much welcome the extra money there. I am very much looking forward to the Second Reading of the Agriculture Bill next week. One thing that we hope we will be able to do when we get the Select Committees back up and running is look at detail about how these new schemes are going to work on the ground, and how they are not only going to deliver a better environment and better biodiversity, but allow good quality, high animal welfare production. We very much enjoy that in this country, across the whole of our four nations, and it is essential.
One or two Conservative colleagues might throw up their hands in horror at this last statement. We have to make sure that as we roll out the new system, we take some of the parts of the basic farm payment scheme and the CAP that have worked reasonably well and we do not throw all the babies out with the bathwater. We need to make sure we take those aspects of what is good about the current system and enshrine them in the new one, while making it more adaptable and much lighter on its feet, and changing the culture of the RPA and DEFRA. We have good Ministers and a Secretary of State who will be able to interpret and help farmers into this new world, so that in the end we can deliver a better environment and better food production, and produce more food in this country, not less, and look forward to a bright future. I very much welcome this Bill.
At the risk of repeating myself, I am going to repeat myself. The Bill is needed only as a result of the Tory party’s descent into a Brexit fetish. Having to craft emergency legislation to do what was until now normal and routine seems almost a metaphor for the chaos to come. Here we are compensating for a Government who failed to plan and seem surprised that the logical consequences of Brexit are coming to pass. Like those Brexit supporters who have been surprised to discover that the loss of freedom of movement will in fact apply to them, too, the Government seem ill prepared for a future outside the EU.
The Bill needs to go through to paper over some of the cracks and allow the business of farming and crofting to go on. No one will oppose it, so I will not take up much time speaking about it. Nor will I do what other Members did in the earlier stages and haver on about matters unconnected to the Bill. I will not, for example, talk about how crofters and farmers will face massive uncertainty at the autumn markets if there are tariff barriers and trade hurdles with the EU. Nor will I lay out the succession of broken promises from one UK Government after another. I will not point out the problems that agricultural businesses will face in importing fertiliser, animal feed, herbicides, pesticides, machinery and so on. Let all those other things wait their turn in the debates on the maelstrom of Brexit consequences. I may, though, mention the purloined convergence cash from time to time, and demand that its return does not simply become a bit of public relations. It should be returned with humility, rather than a fanfare. We can hope, I suppose.
I wonder whether Ministers have had the chance to consider the questions they were asked and failed to answer last week. [Interruption.] Perhaps the Minister could have a wee listen, because I am keen to hear his answers. Those questions came from Members representing a range of parties and a wide geographical spread. The Minister suggested last week that the issue of possible currency fluctuations had been considered, but he did not offer an answer to the question posed by the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone). Will any drop in the value of sterling see a corresponding uplift in farm payments, to take account of the increased costs of the imported products that farmers need?
In answer to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who asked whether there would be a multi-annual framework, the Secretary of State said that the details had not been worked out yet. Surely the basic framework of the scheme is more than a detail. When are we likely to hear the details? The Secretary of State also said that she had yet to decide on basic payments, which have been raised by other Members today. That is the kind of information farmers are likely to be desperate to get so that they can plan their businesses. When will we see the details, or even the outline of them? More importantly, when will farmers be getting news about how much they are likely to get—or some way to work it out?
The Secretary of State said that the division of moneys was yet to be decided; when will we hear details about the settlement for the devolved Administrations? While I am on that subject, let me get back to the convergence funding, because it is important. The convergence funding was payable to Scotland to even out farm payments, taking into account the extent of Scotland’s less-favoured areas. Last week, however, the Minister said that
“there will be an uplift in funding for Scotland and Wales to reflect their severely disadvantaged area status”,
“the uplift for Scotland and Wales will be paid for with new funds. There will therefore be no loss to the BPS payments for English or Northern Ireland farmers.”—[Official Report, 21 January 2020; Vol. 670, c. 217.]
That means that there is no levelling of payment, Scottish farmers are being short-changed again, and that severe comparative disadvantage to which the Minister referred remains. Will the Minister give assurances that additional funding will come to Scotland—and, of course, go to Wales—to address that imbalance? That is, after all, what the convergence funding was supposed to do.
On the unsettled issue of long-term guarantees, will Scotland’s farmers be able to rely on the cash going to Scotland from the Treasury? Will the funding keep pace with the inflationary costs that farmers and crofters will face? It really concerned me earlier to hear the Minister’s language on future support. As the English system moves away from providing support for food producers, will the funding available for Scotland’s food producers be maintained in real terms? It seems clear to me that the proposed scheme for England will store up some serious long-term problems in food production, without actually delivering on the public goods that the environmental campaigners hope for. That will become clearer as modifications to those public goods are made under the provisions of clause 50 of the new Agriculture Bill, but the ability to provide subsidies for grouse moors and monoculture forests is already written into the first clause of that Bill.
All those will, in the main, be matters for English politicians and campaigners to debate. As the shadow Secretary of State, the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) said last week, farmers will be asking how it affects them. My concern is for the effect that the Bill might have on Scotland and Scottish food production, so what guarantees can Ministers offer us today about the security of future funding for Scottish farms crofts and food production? The Bill will not be opposed, but equally those questions will not go away.
I welcome the Bill for several reasons. First, it provides us all with an opportunity, in this increasingly urbanised media and world, to remind ourselves of the important role that farming plays, not only crucially in respect of food security but, as other Members have alluded to, in respect of landscape management, which clearly assists our tourism sector, and water quality, which clearly affects tourism in coastal areas.
The role that agriculture plays is pivotal. Part of the problem is that a lot of people glean their knowledge or experience of farming and the agricultural sector only from “Countryfile” and “The Archers”, which provide a slightly narrow picture of what it is like. They are both great programmes; they are staple listening and viewing in the Hoare house—and, indeed, where I live, as well. Sorry, I just could not resist. Nevertheless, too many people think that farmers are loaded and that the Bill is just a bung to already wealthy people. Those of us who know farmers, represent farmers and talk to them in our constituencies know that that is very far from the truth.
It is important that in times of uncertainty, as we transition from a 40-year membership of the EU to striking out on our own, we provide certainty where we can. As I said to the Minister in an intervention, arable of course needs certainty, but so too do those sectors where there are greater fluctuations, either in consumer trends, price fluctuation, weather or disease. The lamb sector, beef sector and dairy sector are the mainstays of the Blackmore Vale’s agricultural focus, while the Cranborne Chase in the east of my constituency is more chalk land—
Yes, chalk land, just like the constituency of my hon. Friend the Member for Cheltenham (Alex Chalk). I thank my hon. Friend for that sedentary heckle. It is more chalk land and therefore is predominantly, although not exclusively, arable.
Certainty is important because we are dealing with long-term planning. Do farmers have the confidence to ask lenders for money to buy a new piece of farm equivalent? Do they have the confidence or certainty to plant a certain crop? Some of my local farmers in North Dorset now grow milling grains for the German beer sector. Some of them are growing white poppies, the stalks of which are exported to Hungary for medical purposes—so that medical opium can be extracted to provide painkillers. If someone is going to put their herd or flock into a growth spurt, and if they want to see them calve and lamb, they want certainty that there is some basic underpinning to their sector. That is what the Bill does, which is why it is to be supported.
The huge scope for agritech is important, and I am certain that we will hear that echoed in the debates on the Agriculture Bill—this Bill and the Agriculture Bill are in effect two sides of the same coin. Again, the agritech sector needs certainty. There are productivity benefits and environmental benefits to it, so we must make sure that the sector, which is growing and really taking root in the UK, has the confidence to continue.
My final point is with regard to audit. Various Members have probed the Minister about the performance of the Rural Payments Agency and how, effectively, it will look. Some within the agency will be suffering from Stockholm syndrome, and they need to be freed from that and to be able to take a lighter touch. However, in reference to the point about the audit trail made by the Chairman of the Select Committee—I congratulate him on his recent election—we must not throw the baby out with the bathwater. The British taxpayer must be certain that the payments made to farmers are fair, needed and transparent. Therefore, let us make sure that there is a clear audit trail on this homegrown UK system, so that not only British farmers have confidence and certainty, but the British taxpayer has certainty that their money is being put to good purpose to support and to encourage agriculture, that vital mainstay of the British economy.
It is a pleasure to follow the hon. Member for North Dorset (Simon Hoare). I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on his re-election as Chair of the Select Committee. He brings a wealth of experience to that position, and we wish him well in it.
I am very pleased to speak in this Bill Committee, both on direct payments and on the commitment that the Minister has given. As always, I am pleased to see him in his place. He understands agriculture, just as he understands fishing, for which he also has responsibility. We look forward to his co-operation with the Northern Ireland Assembly, and particularly with the Minister for Agriculture, Environment and Rural Affairs, Edwin Poots, who is my party colleague.
The agrifood sector is vital to the economy of Northern Ireland, and of my constituency in particular, whether we are talking about milk, beef, sheep, lamb, poultry or arable crops. Sustainability, to which the Minister referred, is critical to enable the agricultural sector to maintain its high food standards, and to gain through its partnership with the manufacturing companies.
I thank my hon. Friend for his intervention. I agree wholeheartedly, and will go into that shortly.
I want to talk about the farmers who do well, the companies that work through them, and the partnerships that are established. Lakeland Dairies, which employs some 260 people, produces milk and powder and exports them across the world. There is also Rich Sauces, Willowbrook Foods and Mash Direct. Those are just four of the companies in Northern Ireland that work in partnership with farmers. Farmers with direct payments enable those companies to produce good products, which they sell across the world.
Farmers in my constituency and in Mid Down are ranked second for milk production across the whole of Northern Ireland. I declare an interest, Madam Deputy Speaker: I am not only a member of the Ulster Farmers Union, but a farmer, so I understand the importance to my neighbours of milk and the whole sector. I received correspondence from the Ulster Farmers Union, the sister organisation of the National Farmers Union. I welcomed the announcement from Her Majesty’s Treasury on farm funding for 2020, as it delivers on the commitment made by the Conservative party, and by the Minister. It is essential that Northern Ireland’s share of UK farm funding is maintained. It is my understanding that Her Majesty’s Treasury has confirmed to the Department of Agriculture, Environment and Rural Affairs in the Northern Ireland Assembly that the money will be rolled over from 2019 to 2020.
We hope that DAERA will be able to pay 100% of payments by mid-October. Has the Minister had an opportunity to discuss the nitty-gritty directly with the new Minister in Northern Ireland, and is there an understanding of how we will achieve the things that we wish to?
Getting a new Northern Ireland agriculture policy up and running by 2021 will be very ambitious, but I hope that the Government are up to the challenge. Last week, the Ulster Farmers Union’s beef and lamb policy committee met to discuss the priorities for the new Northern Ireland Agriculture Minister. The UFU’s hill farming policy committee will meet this week to look at its key priorities. I tell the Minister that because it is important that we work together, and that what is happening in Northern Ireland is mirrored by what is happening here.
I assume that a key priority is to re-establish the areas of natural constraints scheme, especially now that the flattening of payments is frozen at five sevenths of the commitment. Beef and lamb are key priorities for support. Again, I put that on the record because it is important to the farmers back home. As the hon. Member for Tiverton and Honiton said, we have small farmers in Northern Ireland who depend on the direct payment scheme to enable their farms to deliver profitability. Beef and lamb are key priorities for support. Immediate-use targeted suckler cow payments are needed to stabilise the numbers. We also need immediate examination of the impact of the €100 million beef exceptional aid measure scheme received by Irish beef farmers. DAERA must consider emergency support for Northern Ireland beef producers.
Let me turn to the safety net—the volatility mitigation support. The Ulster Farmers Union requests that a deficiency scheme, or slaughter premium scheme, be established for the Northern Ireland beef sector. A draft proposal has already been submitted to DAERA. I am keen to know whether the Minister has had the chance to look at those things yet, as they will provide a safety net for farm businesses and the rural economy. We need the Minister to be involved with the Northern Ireland Assembly Minister on that.
We also need an immediate new targeted breeding ewe payment—similarly, a roll-over of the scheme in the Republic of Ireland. Such targeted support will contribute positively to sheep welfare. We want immediate re-instatement of DAERA funding for GrassCheck 2020, Beef from Grass and Land from Grass.
The Northern Ireland Agriculture Minister has committed to doing all in his power for the sector, but we also need the Minister’s commitment on this. I am pleased to see that in clause 3(2), the Secretary of State must obtain the consent of
“DAERA, if the regulations relate to that body of law as it applies in or as regards Northern Ireland.”
It is clear that the Minister and this Government have given their full commitment to working along with the Northern Ireland Assembly to ensure that these things happen.
The Ulster Farmers Union has concerns that the farming sector in Northern Ireland will fall under EU controls; we would like assurance from the Minister that that will not be the case. We want to be treated the same in every way as the rest of the United Kingdom. Close co-operation between the Ministers in Westminster and the Northern Assembly is vital.
I conclude with a point on the environmental schemes. They are critical if the Government are to meet their target of net zero carbon by 2045. The tree planting, for instance, will result in trees that will become the lungs of the world. The Glenwherry grouse project is sponsored through direct payments, but it also enables the environment to grow and sustain itself, so that it is there for the future.
I very much welcome what the Minister has said. I look forward to working co-operatively with him, and beseech him to ensure that he works alongside the Northern Ireland Assembly. If that happens, we all gain.
I have very much enjoyed the observations from around these islands in this debate. I would like to reflect on the answer that the Minister gave me, and offer him an opportunity to expand on it a little in his summing up. I asked how Ministers in the UK Government would interact with the agricultural sector, its representative bodies—the NFU and the National Farmers Union of Scotland—and Ministers in the various devolved Administrations on how we take forward the next cycle of developing a post common agricultural policy, post-EU agricultural framework for the United Kingdom.
Although the devolved Administrations have substantive authority and control over many of these issues, they are necessarily subsidiary to the UK. I definitely wish that that was not the case, but in so far as it remains the case, it is incumbent on Ministers to take a co-operative and collegiate approach to setting objectives for developing, and delivering the very best for, our agricultural sector. I would like to hear how the Government intend to do that.
In the Minister’s response to a question from the hon. Member for North West Durham (Mr Holden), we heard about the phasing of the changes as we evolve after the common agricultural policy, and about how that phasing would be undertaken. That is a key element of understanding exactly what farmers and representative bodies wish to see. As the Chair of the Select Committee pointed out, there are elements of the CAP that are worth keeping, and the Minister would do well to ensure that he liaises with people on the frontline of agriculture about what those elements are. There must be recognition that although the Bill bridges a gap, it does not give an opportunity for the meaningful transition of long-term planning. Many colleagues across the House have spoken about the need for investment in capital equipment and machinery because of the changes in the produce of farms. It is important that there is some indication or signposting about transferring and evolving the post-CAP scenario into something that will really deliver meaningful material change for agriculture.
I wish to address some of the points raised by hon. Members, including the shadow Minister, who tabled some amendments.
On the claim that the Bill has been rushed, the reason that we need to get it through Parliament now is that we cannot allow an air gap to open up in the application of these regulations. We leave the EU at the end of January. Members will be aware, from what I said earlier, that the scheme year is already open. Farmers are already making decisions about cropping and how much land they must leave fallow. Many of the deadlines are already upon us. The scheme window opens in March, so we must have the legislation in place to ensure that the schemes can be implemented. That brings me to my main point, regarding Opposition amendments 8 and 9 to schedule 2, which would remove the made affirmative procedure. The regulations must be made by exit day so that there is not an air gap. If we waited for the affirmative procedure, these necessary regulations would not be in place in time; there would not be operable law in place. That is why the made affirmative procedure is appropriate for clause 3(1) and (3).
The shadow Minister suggested that we needed a provision to extend the Bill. We do not need such a provision because the Agriculture Bill will replace these arrangements. As far as compensation and late payment penalties are concerned, the simple fact is that we need to simplify the scheme to ensure that people are paid on time, not to have lots of complex remapping. That is what we intend to achieve through this legislation.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 to 9 ordered to stand part of the Bill.
Schedules 1 and 2 agreed to.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
I beg to move, That the Bill be now read the Third time.
I thank the House for the debate on this Bill, which is so vital for the agricultural sector across the UK. I recognise the frustrations that some Members might have had because of the need for the Bill in the first place, given that the Agriculture Bill is on its way. Let me reaffirm that this Bill makes no policy changes; it is about continuity. It is a small, technical Bill to ensure that the Government and devolved Administrations are able to pay direct payments to farmers for the 2020 scheme year. Our future intentions for agriculture in England have been laid out by the Government in our Agriculture Bill, which was introduced on 16 January. We know that farmers need stability, certainty and a smooth transition to our new system of public money for public goods, so we will not switch off direct payments overnight. That would be irresponsible. There will be a seven-year agricultural transition period, allowing a system of public money for public goods to be introduced gradually.
I acknowledge that the Bill is being passed according to a tight timescale. However, it is imperative that it and the necessary secondary legislation are in place and in force by exit day, which will be upon us at the end of this week. The withdrawal agreement will stop the CAP direct payments legislation applying in the UK for the 2020 scheme year. This was intended so that the UK would not have to pay into the EU’s next budget cycle, which funds the 2020 direct payment year.
I am going to try once more to get an answer from the Minister. We will not be paying into the common agricultural policy money that comes back to us, but will we be paying the amount that we paid before, which contributed to the CAP across the rest of the European Union?
I am sorry that I was not able to address my hon. Friend’s point previously. We will not be contributing to the next multi-annual financial framework or the 2021 budget. Therefore, not only will we not be contributing and getting back money for our farmers—we will pay that ourselves—but we will not be paying into this scheme year for EU farmers, because we will not be contributing to that part of the budget.
I am pleased that the Bill is becoming law so that we can ensure that farmers in each and every part of the UK have the certainty they need as we leave the CAP, and embark on our new and ambitious programme. The Bill has received legislative consent motions from every part of the UK, including Northern Ireland, even though the new Administration formed only recently, and I concur with the point made earlier by the hon. Member for Strangford (Jim Shannon).
I thank the Minister for repeating what he said in Committee of the whole House. There is cross-party support for the Bill but, as my hon. Friend the Member for Cambridge (Daniel Zeichner) said, that does not mean that there are not some issues worth highlighting. As I said on Second Reading, I declare an interest in that I am a proud brother of a sheep farmer in Cornwall who farms rare breed sheep and is married to a beef farmer; in fact, they are both based just up the road from the Minister’s constituency.
We will not be opposing the Bill, but I need to add the climate crisis to the context that the Minister set out, because listening to the remarks of Government Members there seems to be a slight disconnect between what is in this Bill and the forthcoming Agriculture Bill, and what is in the notes that they are being given to read out. It is really important that we get this right. The Government are proposing moving from a system of supporting farmers via the land they own to a system of supporting farmers based on environmental land management and other environmental public goods. This will be a good scheme if delivered correctly. It is not a subsidy for productivity or food production. After listening to some of the speeches on Second Reading and today, I am concerned that not all Government Members have quite understood this, so I encourage colleagues to consult the recently re-elected Chair of the Select Committee on Environment, Food and Rural Affairs, to whom I pass on my congratulations; it is always good to see Members from Devon in places of authority.
It is important that we get this right because if we are fighting on the wrong pitch, we cannot do a decent job of scrutinising the biggest fundamental changes to our agricultural system since the Labour Government’s introduction of the Agriculture Act of 1947. That is why we need to make sure that this is done properly.
The Minister could address elements raised by his hon. Friends and, indeed, by my hon. Friend the Member for Cambridge, about the future of the Rural Payments Agency. The hon. Member for North Dorset (Simon Hoare) raised some valid concerns about the culture of the RPA. I commend the work of the officials there who have been working under immense pressure not only because of the potential changes how the CAP has worked but because their budget has gone down from £237.6 million when the Conservatives came to power in 2010 to just £95 million in 2017-18. If we are to change our agricultural system, the culture of the organisations that work in agriculture will also need to change, and that will need to be properly scrutinised and given time to bed in. It would be worth the Minister reconsidering our amendments that would have given Ministers slightly more leeway to look at that.
This Bill needs to be seen in concert with the Agriculture Bill. I appreciate that the Minister said that time is of the essence, and indeed it is, but time has not been of the essence over the past 14 months as Ministers sat on the Agriculture Bill, the Fisheries Bill and the Environment Bill. They have been taking it very easy, with a laid-back and pedestrian attitude. It is therefore somewhat cheeky but appropriate for the Minister to say in this context that parliamentary scrutiny cannot be delivered now because we have taken so long to get to this point. That excuse needs a bit more work, because we need to guarantee that Henry VIII powers are not being used disproportionately. I fear that in this setting they should have been used in a slightly different manner. We do need to get this right.
There are also elements of how we can support rare breeds, and other items that were discussed on Second Reading but were not mentioned in Committee and are still issues of concern for our rural communities—not only for hill farming, which I mentioned before, but for crofters, as raised by colleagues in the Scottish National party. We need to make sure that those specific types of farming are supported in any extension or new form of agricultural support. The Minister has a timeline whereby he wishes to reform agricultural support in the next few years or so, but by loading all the changes towards the end of that process, and not the start, we are giving our farmers notice that there will be considerable changes but not enough time to get it right.
The hon. Member for Westmorland and Lonsdale (Tim Farron) spoke about the importance of the ELM schemes and getting those right. This is a technical detail that I am not sure that everyone has been following. If we are to get this right, it is really important that the ELM schemes are properly scrutinised and given time so that we can not only see what the consequences are but improve them before there is a large-scale roll-out. The farming sector is willing to work with Ministers on this to get it right. We know that the “public money for public goods” approach is a philosophy that is supported by many in the farming communities, but we cannot have a new philosophy, a new approach and a new funding system implemented too fast without the proper time to bed it in and improve it to make sure that it all works. The Minister is speeding through this Bill when we could have the option of looking at whether the system needs to be extended for a further year in due course.
On the point about the importance of this transfer, does the hon. Gentleman feel that it is very important in terms our sheep markets, as the hon. Member for Westmorland and Lonsdale (Tim Farron) said? The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred to the 95% of lamb produce that goes out of Wales. In Northern Ireland the figure is 97%. With the changes coming in, it is very important that we hold on to the markets where we can sell that stuff in the meantime.
I thank the hon. Gentleman for that comment. This goes to the heart of some of the debates that might transition into our discussions on the Agriculture Bill.
I want us to have a farming system that reflects the climate crisis, taking due cognisance of food miles and the carbon intensity of importing food from one side of the planet to another when our home-grown local produce is of exceptional quality and something that we can be very proud of. Speaking as a west country MP—indeed, the Minister is another—I think we need to recognise that the south-west creates some of the most fantastic foodstuffs in the country. Representatives from right around the country have their own produce that they can be very proud of. British produce is something that we should be very proud of. I encourage all Members to support buying goods with the red tractor logo to make sure that we take steps to encourage consumer behaviour in buying local.
That is really important, because in any future trade arrangements discussed in other legislative vehicles, we need to ensure that our UK farmers are not undercut. It is important that we set out what that means, because chlorinated chicken and hormone-treated beef are of concern to many people. This does not mean that UK farmers will be treating their chickens with chlorine or using antibiotics on an industrial scale as US agriculture does; it means that we will be allowing access to our market for food produced in that way. It is not the chlorine or the antibiotics that are the main concern—it is the fact that they are used in the first place because the animal welfare standards for those animals are so low. We will need to rehearse and repeat this argument as we get closer to Second Reading of the Agriculture Bill.
It is also important to set out that we need a fairer form of farm support that makes sure that our farmers get their payments on time. Improvements have been made but there is still more progress to be made. We need to support our farmers in decarbonising agriculture, partly by allowing our natural habitats to thrive. We must ensure that farm run-off does not pollute our watercourses, as we heard earlier. We must create a system where we are moving effectively and efficiently towards public money for public goods, not a form of farm subsidy.
This Bill completes a technical amendment that the Minister could, should and probably would have made a year ago, if he had been allowed to by the Whips. I am glad it has been done now. However, as we lead up to the Agriculture Bill, we must make sure that we have a system of farm support, and a debate, that is worthy of the importance of the high-quality, nutritious, locally produced, decarbonising food production that all our farmers and, indeed, our voters want to see.
I thank the Minister for his contributions, but I was saddened that he chose not to answer any of my questions, so I will just put them on the record once again.
I was certainly waiting for an answer to my question about convergence moneys. Convergence money was supposed to level up—that being the phrase du jour—our support for farmers and crofters across the UK, paid as it was for the extent of less-favoured areas in which they are largely located. Ensuring that Northern Irish and English farmers retain their uplift means that the whole purpose of convergence moneys being awarded has been effectively ignored. I would love to hear what the Government will be doing to address that.
May I ask again what compensation for currency fluctuations farmers and crofters can expect? When can we see the details of multi-annual financial frameworks, the future basic payments, and, very importantly for Scottish farmers and crofters, the settlement that the devolved Administrations will receive?
I listened carefully to what the hon. Lady said and have taken a moment to digest it. She mentioned compensating farmers and crofters for currency movements. Does the SNP propose to compensate all international traders for currency movements? Could she tell us a bit more about what she proposes?
We are talking specifically about the payments that are being made at the moment, so I am not really sure why the hon. Gentleman wants to drag in a completely separate subject.
Given the currency fluctuations that are occurring and have of course occurred since the EU referendum and the plummeting of the pound, most farmers would expect that some sort of compensation should be at least contemplated by the Government going forward. That is the extent of my contributions for now, but I hope that at some stage, perhaps during the passage of the Agriculture Bill, some of the questions that I have raised can be addressed by the Minister.
Adding to comments that others have made, this is undoubtedly necessary legislation and we certainly will not seek to oppose it. It is a small amount of certainty in a sea of uncertainty for our farmers—certainly for mine in Cumbria.
When I speak to farmers throughout the lakes and dales and the rest of south Cumbria, they tell me that their concerns regarding our departure from the European Union are manifold. One undoubtedly is the future of direct payments and the environmental payments that we now refer to as coming under pillar two, but the concern about trade deals is massively significant. Over 90% of Cumbrian farm exports are to the single market, so a deal is critical. The problem is, of course, that if we are desperate for a quick deal, the chances of us getting a good one are, almost by definition, reduced.
It seems to me that there are three options; I cannot think of a fourth one. Option one is that we align wholly with single market rules, either officially or unofficially, in which case we have lost control, not taken it back one little bit. Option two is that we de-align and increase our standards, as many people say we would, but that will likely mean increasing input costs, making British farming less competitive at home and abroad. Option three, which is most likely, is that we de-align and reduce the standards of our production, meaning that we may be competitive, but we undermine everything that we said we hold dear and everything that our farming community holds dear. I see no alternative to those three options. We need there to be a deal, but the chances are—in fact, the certainty is—that it will not be as good as the one we currently have.
I am glad that the Government are committing to this legislation, which gives some stability and predictability for the next 11 months. While there is a commitment to £3 billion or so a year for the life of this Parliament, we have no clarification about where that money will go. For all its faults, the CAP money that came to this country was restricted for use on agriculture and the environment. If we are making up our own rules, to which there are many advantages, who is to say that the £3 billion that the Government have allotted will not end up being siphoned off to other rural pots? That might be all well and good, but it would reduce the amount of money going into agriculture. In fact, when I questioned the former Secretary of State for Environment, Food and Rural Affairs on that point, he specifically said that he could not promise that all the £3 billion would be spent on agriculture and the environment. I would like the Minister to comment on that. Will all this money be ring-fenced for agriculture spending? There is nothing to force the Government to do that at the moment. It is a likely cut in the money that will go into our agricultural sector.
Over the last 45 years or so that we have been in the European Union and the Common Market before it, we have not had to debate whether it is right to subsidise food, but we do, and if we stop, we will notice. The average spend on food in 1970 was roughly 20% to 25% of household income. Today, it is around 9%. Whether it is right or wrong to subsidise food, we have done so, and choosing not to will have enormous consequences for the lives of every one of our constituents and colossal political consequences. Thinking this through is vital.
We must consider the unintended consequences. As several Members have said, there is an understanding throughout the agricultural community—indeed, across the country—that we should be spending public money on public goods, and I completely support that, but there is great vagueness about that as things stand. For instance, farmers in my community have always opened their doors to local primary schools, so that children can look around, enjoy being on a farm and get a sense of where their food comes from. In the future, will he or she have to formally bid for funding to provide that public good? Are we in danger of getting to a stage where we account for everything and take the heart out of the public role that farmers currently provide willingly and freely?
So many of those public goods are hard to pin down. How do we make a payment to a farmer in Troutbeck, Kentmere, Longsleddale or the Langdale valley to compensate and reward them for the aesthetics of their land—for ensuring that the Lake district continues to be our premier rural tourist destination and the second biggest tourist destination in the country? How do we put a price on that or fund it? These things are massively important and will not be easily done overnight.
We must think about the value that farmers bring to the United Kingdom. In terms of the production of food, we already import nearly 50% of that which we eat. It is so important that we maintain at least what we currently produce and preferably expand our production. Farmers also maintain rare and natural habitats, promote biodiversity and look after our rich heritage landscapes, which underpin our tourism industry, worth £3 billion a year to the Cumbrian economy and providing 60,000 jobs. What about the water management work in the uplands, protecting the towns and villages from flooding? All those things are massively important, and we will have nobody to deliver the environmental goods that we so desperately need if there is nobody working in the farming industry—especially in the uplands—at the end of the seven-year transition period. If we care about the environment, we care about protecting the livelihoods of those people who are there as our partners to protect our environment.
That is why I am so concerned about the Government’s plan to start phasing out basic payments from next January, which make up 85% of livestock farm incomes in this country. That is a certainty; it is what they face. It is, if you like, a seven-year notice to quit. For all the benefits that I believe and hope environmental land management schemes will bring, they will not be available to everyone until 2028. That is seven years during which British farming has to hang in the balance. Many farmers will either choose to leave the industry before it gets bad or will go under because it has got bad. If we care about our environment and protecting the public goods that farmers bring to this country, we must do the right thing—I challenge the Minister to do this—and agree not to phase out the BPS until 2028 for anyone until ELMS are available for everyone.
It is a pleasure to follow the hon. Member for Westmorland and Lonsdale (Tim Farron), who speaks passionately for his constituents. He talked about the importance of farming to his constituency and the high-quality products that his farmers produce. My farmers in Strangford produce equally high-quality food that goes all over the world. One example is a milk product that goes to Lakeland Dairies and then travels as far as China. The former International Trade Secretary helped to secure a contract with the Chinese authorities worth £250 million over five years for that product. That high-quality produce made in my constituency is so important.
Does my hon. Friend accept that, while it is important that any payment system to farmers be directed towards protecting the rural environment, it is equally important that there should be no disincentive to produce high-quality food?
I thank my right hon. Friend for his intervention and agree wholeheartedly with him.
Direct payments have made some really important environmental projects happen across Northern Ireland—projects that probably would never have seen the light of day and that tie into the Government’s policies on the environment and climate change. As I said to the hon. Member for Ceredigion (Ben Lake) earlier, it is not possible to stop those environmental schemes, especially where tree-planting is involved, because it is important that a number of organisations continue that work over time. The National Trust has made a commitment to plant trees in 500 of the properties for which it has responsibility. The Ulster Farmers Union and the National Farmers Union are encouraging their members to do likewise. It is vital to ensure that those schemes continue. We cannot remove a tree-planting scheme and turn the land back to agricultural land; it is not possible.
Absolutely. The Government and the Minister have ensured today that the regional Administrations in Scotland, Wales and Northern Ireland are part of this project together. It is my hope that, under this Bill as it is coming forward, direct payments can continue. I would like them to continue long beyond that, but this process moves us towards where we need to be.
There is a very important point for Northern Ireland. The Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Tiverton and Honiton (Neil Parish), referred to this earlier, and I want to conclude with this comment. In Northern Ireland, we have a history and a tradition of small farms. My farm —the farm we have in our family—is only 62 acres. Farms are getting bigger now because they have to do so to move forward, but I think it is really important that this direct payment scheme enables small farms to be viable and makes them sustainable for the years to come. Many, myself included, probably across all of Northern Ireland, were reared on a farm of 60 or 70 acres, with their children going to school, and their whole life was sustained on that. It is really important for the future that Northern Ireland and those small farms can be sustained, be viable and have a future. We wish to have that future within the United Kingdom of Great Britain and Northern Ireland. We do not want to be any different; we want to be treated the same in Greyabbey, where I live, as in Gloucester or anywhere else.
It is a great pleasure to speak on Third Reading, and to follow the hon. Member for Strangford (Jim Shannon), including to raise some of the points that he made. A point made by those all across the House is that this is a continuity Bill that we very much welcome to keep the payments going as they are. However, the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) made the point for the Opposition that the last Agriculture Bill was in the 1940s, after the war, when we were looking to increase the production of food. Later we went into the common agricultural policy, which spent all of its life increasing production across the whole of the European Union until we got to the 1980s, when we had milk quotas and all sorts of restrictions to try to limit production, and so on. We have seen a whole period of agriculture and food production that has very much been linked to production.
I very much want to raise this point: as we move forward not only with this continuity Bill but with the new Agriculture Bill, we can actually take forward production and enhance the environment at the same time. I have made this point in this House so many times. The countryside we see across the whole of the four nations of the United Kingdom is not there just as God provided it, but is a managed landscape. It is managed by farmers. That is why we can have production, but also have a great environment.
As we talk about carbon and about growing trees, we sometimes forget about the amount of carbon that permanent pasture holds in the ground. If we have permanent pasture, we as humans—I do not want to be too facetious here—cannot actually eat grass, so we do need livestock and red meat production. We also need to look at varieties, species and rare breeds to make sure that we can have a very diverse agriculture in the future.
As has been said, I think there is much to be done, and sometimes we do not realise the enormous nature of what we face. Before I got to this House, I tried to make my living as a farmer. For the whole of our lives, farming policy has been dominated by the common agricultural policy, with 28 countries of the European Union wanting different forms of crops and different types of agriculture. Even if we take sheep production, which across the four nations of this country is very much an extensive form of production, we can see in France that it is a much more intensive form of production. Farmers in France produce their sheep in a much more intensive way, whereas for us it is grassland production, and I think grassland beef and sheep are going to be very important in the future market.
The hon. Member for Strangford raised a point about smaller farmers and family farms. That is where we have to be careful to say that having good-quality, high-welfare, intensive production is not all wrong. We very often say that we have some of the best poultry units in the world, but that is intensive production. As the shadow Secretary of State said, if we compare that with the production that takes place in America, we see that the density of population of chickens is two or three times that of our own, and we see the use of antibiotics in the water as a precautionary mechanism, which we have not used now for many years.
We have spent a lot of time in this country creating agricultural production that is welfare-friendly, reducing antibiotics and making sure that we can deliver high-quality production. What we do not want to see in any future agriculture Bill or certainly in any new trade deal is those high standards of welfare being watered down, including—dare I say—in any mechanism to get a trade deal across the Atlantic. Therefore, it is absolutely key, as we move not only to the continuity of payments Bill but to the new Agriculture Bill, that we do not take our eye off the fact that we need a good trade deal. The point has been raised that, while we are talking about the continuity of payments this afternoon, many farmers out there, especially in the poultry sector, do not actually receive any payments at all. They are very keen on the trade deal that will take place to make sure they can carry on having a living.
As we move forward with the Agriculture Bill and look at the new system of payment, it is important that we in this House do not actually put farmers out of business. We want to make sure that we enhance farming; make sure that farmers can then deliver good-quality agricultural production and can afford to remain in business; and very much make sure that we can deliver the agriculture that we need.
Question put and agreed to.
Bill accordingly read the Third time and passed.