Thursday 15 April 2021
The Grand Committee met in a hybrid proceeding.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person and others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Recognised Auction Platforms (Amendment and Miscellaneous Provisions) Regulations 2021
Considered in Grand Committee
My Lords, I beg to move that the regulations, which were laid before the House on 8 March in draft, be approved. This statutory instrument, laid under the European Union (Withdrawal) Act 2018, makes consequential amendments to financial services law and related matters to provide for the safe and effective operation of the market in UK emission allowances as part of the establishment of a UK Emissions Trading Scheme.
At the end of the transition period, the UK ceased to be part of the EU ETS. As of the start of this year the UK has established its own ETS, which has been designed to ensure a consistent price for carbon. This SI was preceded by legislation laid last year under the Climate Change Act 2008 which legally established the UK ETS. In implementing the UK ETS, the Government have drawn on the best of the EU system, which the UK was instrumental in developing. At the same time, however, we are making improvements where needed to ensure greater flexibility, so that this scheme is properly designed for the UK. The new scheme allows for a smooth transition for businesses while reducing our contribution to carbon emissions from day one. Reducing emissions while supporting UK industry is central to the Government’s mission to deliver our world-leading net-zero target. The UK ETS is key to achieving that target.
Emissions trading schemes work on the cap and trade principle. This is where a cap is set on the total amount of certain greenhouse gases that can be emitted by installations and aircraft covered by the scheme. Within the cap, participants receive or buy emission allowances which they can trade with one another as needed. This cap is reduced over time, so that overall carbon emissions fall. Participants are required to monitor their emissions during a calendar year and surrender one emissions allowance for every tonne of carbon dioxide equivalent—CO2e—that they have emitted at the end of each reporting year. Thus the ETS is underpinned by the creation of a market for emission allowances. The auctioning and trading of allowances leads to the discovery of a market price for greenhouse gas emissions and will in turn drive cost-effective emissions reductions across our intensive industries, power generation and aviation sectors.
This statutory instrument amends existing financial services legislation so that it works in the context of the creation of a UK ETS. In doing so, it ensures that the Financial Conduct Authority can oversee the auctioning and trading of emission allowances and ensure the soundness and integrity of the market. This instrument is being introduced now so that it is in force in time for the first auctioning of UK emission allowances in May. In particular, this SI establishes the activity of bidding in an emission allowance auction as a “regulated activity” and establishes UK emission allowances as “financial instruments”. This means that the FCA has oversight of bidding in allowance auctions and ensures that the allowances themselves are subject to the appropriate regulatory treatment with regard to issues such as market abuse. The instrument also amends financial promotion legislation so that the promotion of investments in UK emission allowances can be undertaken only by persons with the correct permissions.
To properly empower the FCA to oversee the regime, the SI updates rules around the disclosure of confidential information so that the FCA can correctly discharge its functions with regard to the disclosure of information relating to the UK ETS and emissions allowance holdings. It ensures that the FCA has the investigation and enforcement powers to fulfil its duties with regard to preventing financial misconduct in the context of the auctioning and trading of emission allowances.
Finally, this SI amends the UK market abuse regulation so that it covers the primary and secondary market trading of UK emission allowances, and the secondary market trading of EU emission allowances where these activities are within the territorial scope of UK MAR.
This instrument will ensure the integrity of the UK carbon emission allowance market to facilitate ETS carbon pricing policy in the UK. This is integral to the Government’s ambitions to encourage cost-effective emissions reductions and, ultimately, achieve our goal of net zero.
My Lords, I thank my noble friend for that very clear introduction. I recognise his expertise—probably more particularly on the financial side rather than the climate change side—and I have several questions which I hope he will be able to answer but, if he is unable to bring to bear the relevant expertise, I am quite happy for him to write to me.
I support these regulations; their intention seems quite unexceptional. The Government have established a domestic emissions trading scheme based on our previous expertise and experience in Europe to replace the EU Emissions Trading Scheme—that is the background to this. On Monday, we were discussing accounting obligations placed on the United Kingdom in relation to the existing scheme—or I should perhaps say, in our case, the previously existing scheme—which will of course go on for some time. Although there are remaining accounting obligations, we have clearly left the EU trading system and are now entering into a new system, although some of the furniture of the scheme is clearly familiar from the previous EU scheme.
The approach of the Government, as exemplified by these regulations, is to pursue a domestic ETS rather than a carbon tax, and I applaud that. I welcome the clear emphasis on decarbonisation and towards renewables at the centre of the Government’s policy, and that they are favourable towards nuclear too. As I say, these regulations are part of our domestic emissions trading scheme and are clearly designed to provide a smooth transition for effective carbon pricing in the United Kingdom.
My noble friend said, quite correctly, that the scope of the UK ETS includes presently energy-intensive industries and the power generation and aviation sectors, as it did previously and as the EU scheme does. There is clearly an attraction in that linkage but some respondents in the consultation that we undertook favoured extending the ETS to other sectors, and the Government have indicated that they are not unfavourable to looking at that some time in the future. For example, the Climate Change Committee has suggested agriculture and land use. Could my noble friend indicate the Government’s willingness to look at an expansion of the scheme, and when that will be? What will inform the discussion and the choice some time in the future? Could he also say whether we will want to talk to—I assume we will—our previous EU partners, our partners in Europe and in other countries, and how we will arrive at that decision? That would be most helpful.
The United Kingdom is committed by law to reducing emissions to net zero by 2050 and the UK ETS is clearly vital in that endeavour. Could my noble friend indicate the level of ambition that the United Kingdom will have in setting the cap for allowances for the UK scheme, as opposed to what our ambition would be if constrained by the European scheme? How will we approach that? Will we be more ambitious and, if so, how much more ambitious than within the EU scheme?
I welcome the structure of the first phase of the UK ETS from 2021 to 2030, which matches the EU ETS phase 4 length. Most consultees similarly welcomed that development. Will my noble friend confirm that it is intended that the United Kingdom’s operational approach—I stress “operational approach”—to the ETS will broadly mirror that of the EU scheme, while not precisely, of course? That seems sensible and is the conclusion that I draw from reading around the scheme, but it would be good to have his say-so and expertise on that.
Lastly, I would welcome confirmation from my noble friend, if he is able to give it, that the United Kingdom intends to be a trail-blazer on this area in general. I do not just mean the ETS. I know that the Prime Minister has great ambition in this area, and we are hosting COP 26, obviously. There is a massive opportunity for the United Kingdom here—not just on COP 26, of course, but looking to the future more widely. I mean not just our doing the right thing internationally, although the United Kingdom rightly prides itself on doing so, but in ensuring that we establish a strong green economy with sustainable jobs and prosperity domestically.
My Lords, I am grateful to the Minister for introducing this statutory instrument, and to the noble Lord, Lord Bourne of Aberystwyth, for his contribution to this short debate. While the instrument is not formally labelled as an EU exit document, it nevertheless deals with one of the many issues arising from our withdrawal from the European Union and its various structures and policies. As the Minister outlined, the instrument makes changes to the UK legal provisions to reflect the fact that we are no longer part of the EU Emissions Trading Scheme. It then puts in place other provisions linked to the auction platform of the new UK Emissions Trading Scheme ahead of its first use later this year.
For some time, industry has sought certainty over the direction of travel on carbon pricing. It had not been clear whether the UK Government would operate a stand-alone ETS, some form of linked scheme, or an alternative approach such as a carbon tax. The decision to launch a UK ETS may have come later in the day than we would have liked, but it is one that we support. Maintaining the cap and trade principle will be important as we seek to reduce emissions in a manner consistent with meeting the 2050 net-zero target. It was not clear that alternative options such as a carbon tax would offer the same benefits as an ETS. In addition, while I will shortly turn to questions of how the UK’s scheme will work in practice, I can see that it makes sense to retain an approach that relevant companies are familiar with. However, it is regrettable that the regulations are being brought forward only now. The first auctions may not take place until later this year. It surely would have made more sense for the Government to spell out the detail and establish mechanisms further ahead of time. That would have provided greater clarity and certainty to all involved.
Establishing new markets and trading systems is always difficult, especially if you are to achieve early buy-in from companies, which generally require long lead-in times. I am sure that the Minister will be able to cite examples of engagement with business, but I cannot help observing that last-minute policy-making seems to have become one of the hallmarks of this Administration.
The relative size of the UK ETS when compared with the EU scheme raises a variety of questions. Going it alone also introduces an element of risk. Indeed, I am sure that the Minister is familiar with the concerns of the Committee on Climate Change, which pointed out potentially significant challenges in achieving market stability and liquidity.
Why has the UK set the auction reserve price at the level it has, when the EU scheme has seen prices rising sharply in recent months? We acknowledge that the auction reserve price is higher than the level initially proposed and are mindful of the need for it to be set at a level that creates a robust market and ultimately drives down emissions. With that in mind, how will the Government keep the price level under review? What importance, if any, will they place on price fluctuations within other emissions trading schemes around the world? Can the Minister provide an update on whether the UK is looking to link its scheme with others, as suggested in the White Paper published in December? Another consideration is the sectoral coverage of the UK ETS. Do the Government see a case for expanding the number of sectors covered by the scheme and, if so, when can we expect to hear more about it? If a decision were to be made this summer to include agriculture, for example, what kind of timescale would we be looking at for implementation?
I realise that many of these questions are better directed at the Department for Business, Energy and Industrial Strategy, so I am happy to wait for an answer in writing. However, in the hope of bringing the focus back to the Treasury, could the Minister comment briefly on the role foreseen for the Financial Conduct Authority? What additional knowledge or resource, if any, does the FCA require to fulfil its new responsibilities? Are the Government confident that this will be in place come the first auction?
I thank both noble Lords for their valuable contributions and questions in this short debate, and for their broad support of carbon pricing and this statutory instrument.
The noble Lord, Lord Tunnicliffe, asked several questions, and I hope to be able to give useful answers. On the timing of the decision to create a UK ETS, it is right that at the moment of leaving the EU and in the transition period we took the time properly to prepare and consider a UK ETS and a carbon tax, given that the chosen mechanism will be crucial to meeting our climate ambitions over the coming decades. There was a full consultation on the structure of the UK ETS; the FCA has already completed a consultation on the rules that it will make, following the legislation being debated today.
On the £22 level of the auction reserve price, I agree with the noble Lord’s desire for a strong carbon price signal. The auction reserve price is not the trading price but a floor price. We need to allow sufficient room in this market for price discovery. The EU system does not have a floor, as we saw when prices were extremely low in the years after the financial crisis. We have cut the UK ETS cap by 5% to start with, and I shall consult on a tighter net-zero consistent cap trajectory this year. We would then expect a steadily reducing cap, visible to all participating businesses, to drive higher prices and so reduce emissions over time.
I note that other emissions trading schemes have experienced price volatility. In years one and two of a UK ETS, the cost containment mechanism will have lower price and time triggers, providing a mechanism by which the UK Government can decide whether to intervene sooner, should very high prices occur. We stand ready to use that mechanism if necessary. The risk of price volatility must be balanced with the risk of policy volatility, whereby excessive market intervention would erode policy certainty for businesses. We remain open to linking internationally, but have not made a decision on preferred linking partners. Clearly, ahead of agreeing any link, we will need to consider whether it is in our interests.
The Government said in the energy White Paper that we would explore expanding the UK ETS into the two-thirds of emissions currently uncovered by the scheme. We will set out any plans resulting from this, including on implementation, in advance of COP 26 —which, as the noble Lord will know, is quite soon.
Finally, the noble Lord asked about the role of the FCA. I can assure him that the FCA does not require any additional knowledge or resource to fulfil its new responsibilities. The FCA will continue to oversee the UK ETS in much the same way it oversaw the market for EU emission allowances in the UK when the UK was part of the EU scheme.
My noble friend Lord Bourne asked about the scope of the ETS. As set out in the energy White Paper, we will consider expanding it, as I mentioned. We have initially cut the cap by 5% compared to the equivalent for the UK within the EU ETS. We have committed to introducing a net-zero-consistent cap trajectory and will consult on this later in the year. On the operation of a UK ETS, I can say that the environmental regulators of the four nations of the UK work in close collaboration with the UK Government and devolved Administrations as part of one UK ETS authority. I am happy to write to set out an answer in more detail on that specific question.
My noble friend is right that we want to blaze a trail on decarbonisation. To drive forward progress towards net zero, last year the Prime Minister announced his 10-point plan, which is also part of our mission to level up across the country and will mobilise £12 billion of government investment to create support for up to 250,000 highly skilled green jobs in the UK and spur more than three times as much private sector investment by 2030. At the centre of his blueprint are the UK’s industrial heartlands, including the north-east, Yorkshire and the Humber, the West Midlands, Scotland and Wales, which will drive forward the green industrial revolution and build green jobs and industries for the future. This will build on our already impressive progress to date, which has seen the UK decarbonise its economy faster than anyone else in the G20 since 2000, including France and Germany.
This statutory instrument, laid under the European Union (Withdrawal) Act 2018, will make amendments to financial services law to provide for the safe and effective operation of the market in UK emission allowances as part of the UK ETS. The ETS will drive cost-effective emissions reductions across our intensive industries and power generation and aviation sectors. As such, this legislation will ensure that the UK has a domestic carbon pricing policy that is fit for the net-zero future that we have led the world in committing to. Launching the UK ETS has allowed us the autonomy to pursue our climate goals in the way that works best for the UK. In some areas, we have already taken the opportunity to make the system work better, such as the immediate reduction in the overall size of the pool.
This instrument will ensure the integrity of the market that will underpin our carbon pricing goals and is vital in ensuring that the ETS can function as planned. I commend these draft regulations to the Committee.
The Grand Committee stands adjourned until 3 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person; others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit for this debate is one hour.
Common Organisation of the Markets in Agricultural Products (Wine) (Amendment, etc.) Regulations 2021
Considered in Grand Committee
My Lords, this instrument concerns protection of geographical indications in Great Britain. GIs are a form of intellectual property protection for the names of food, drink and agricultural products with qualities attributable to the place they are produced or the traditional methods by which they are made. Wider examples include Scotch whisky, Welsh lamb and Melton Mowbray pork pies. This instrument concerns only wines such as an English regional wine, iconic products such as champagne and Rioja, and corresponding traditional terms: for example, grand cru or sparkling. It contains a necessary amendment to the retained EU regulation which provides the legal basis for the wine geographical indication scheme.
The amendment made by this short and technical instrument corrects an error in the original legislation, identified since the end of the transition period. I express my considerable apology and regret for this. Clearly, one seeks to have all legislation in the perfect form. I can report that this error was identified within the department. We immediately sought to remedy it, hence this instrument has used the “made affirmative” procedure. It ensures that the proper registration and protection of GIs and traditional terms in Great Britain continues and that the UK maintains compliance with its international agreements.
This SI does not make any wider policy changes. It corrects article 107 of retained EU regulation 1308/2013, concerning protected wine names and traditional terms. Three separate exit instruments provided for amendments in relation to this article, but in the process an inadvertent revocation was made of the text that was intended to be in place. This instrument puts the intended provision in place, ensuring that all established wine GIs and traditional terms are fully protected and legitimately appear on a public register of wines and traditional terms. “Established” means those names that were protected under the relevant EU schemes on the last day of the transition period. This in turn ensures that the UK Government fully comply with their GI commitments under the EU withdrawal agreement, and the WTO’s TRIPS obligations—the Trade-Related Aspects of Intellectual Property Rights Agreement.
As well as making a direct amendment to a retained EU regulation, the instrument includes a corresponding revocation of domestic secondary legislation. The provision revoked is Regulation 6(3) of SI 2020/1452, one of the previous exit instruments I mentioned. As the provision has been rendered ineffective, it is being removed for clarity.
Since this instrument entered into force on 10 March 2021, the relevant entries in our public GI registers have been updated to show the date of registration as 10 March, rather than 31 December 2020. This change has been made to just over 2,000 records; seven of these are UK names, the rest are predominantly from EU countries. We have engaged with the Food Standards Agency and the network of trading standards authorities, who have confirmed that they are not aware of any wine GI infringements during this period.
We have also engaged with the European Commission and have provided reassurance that we are not aware of any breaches with respect to the affected product names given our checks with the responsible bodies. Furthermore, we have confirmed with the Intellectual Property Office that there have not been any conflicts with trademark applications during the period in question. We have also engaged with the two main UK wine trade bodies, the Wine and Spirit Trade Association and WineGB, and with the Scottish and Welsh Governments. All were appreciative of the quick efforts we had taken to rectify the error and our engagement with them; they reported no knowledge of any breaches to affected product names. I reassure your Lordships that all product names under the three other GI schemes have not been affected, including spirit drinks and agri- foods, nor are wine GIs and traditional terms which are protected domestically through other international agreements.
As I have outlined, the regulations in this instrument are essential to ensure that the UK and EU wine GIs and traditional terms are appropriately protected in Great Britain, and that we comply with our important international obligations. For those reasons, I beg to move.
My Lords, viticulture is one of our great prospects in this country. In the two years leading up to lockdown there was a 35% increase in the number of people employed by the sector. More of our acreage is given over now to the commercial growing of wine than at any time certainly since the dissolution of the monasteries and possibly ever. Wine producers are making a calculated gamble on a warming of temperature in this region. Not only is a lot of Kent, Surrey, Sussex and Hampshire growing as a wine-producing area, but traditional champagne houses are buying up land because they too are able to see the way in which temperature is moving.
As my noble friend the Minister says, this SI deals in effect with an oversight that in itself is a minor issue. What is not a minor issue is the question of geographical indications and how to get them right. One of my neighbours in Hampshire produces an outstanding English sparkling wine—I say outstanding because it wins every blind tasting and is the only foreign sparkling wine served at the George V in Paris; not the only English wine, the only foreign wine—yet he has to get a name for it, a recognised brand, that will allow him to charge what it is intrinsically worth abroad.
We need to be aware of treading the line between consumer protection and accurate information for customers and, if you like, barriers to entry. These classification schemes are often set up deliberately to be a racket. They sometimes have rather amusing anomalies; for example, Stilton cheese can be produced in half a dozen places in the East Midlands, none of which is actually Stilton. It is not in the area allowed to produce that cheese and has to call it something else. Sometimes they are very obviously a racket. The most outstanding example within the wine trade is of course the 1855 Bordeaux classifications, from which you cannot move down. We need a response that is flexible, guards against producer capture and rewards innovation and start-ups.
My noble friend the Minister mentioned the trade bodies. WineGB’s chief executive, Simon Robinson, has a nice phrase, saying that our producers will be
“the New World in the Old World”,
by which he means that we will replicate the innovative, experimental approach of new world producers, who of course are much less tied to the concept of the appellation contrôlée than the European Union and continental wine producers are.
I hope that the Government will take on board what the industry is calling for, which is that, as we repatriate control, we should not simply replicate EU rules on geographical designations. We should have a UK regime, but it should be very light-touch. What is it that the prayer book says of marriage? We should approach it “reverently, discreetly, advisedly, soberly”—if “soberly” is the right word to use when talking about the wine industry.
I finish on a light note. Did noble Lords know that it can only be called “repartee” if it is said in the Repartée region of France, otherwise it is just sparkling wit?
My Lords, it has taken me a while to come to terms with the reality that my noble friend the Minister has taken responsibility for an error in his department—a very rare occasion indeed—but his outstanding speech and excellent explanation of the GIs completely carried the Committee. We fully appreciate the way he has come back to us to give us the background.
I had the privilege of serving on the European Union Committee’s sub-committee in 2007 that undertook a detailed analysis of European wine, entitled A Better Deal for All. I had the great privilege of working with Lord Plumb at the time. I stand by all the committee’s recommendations, many of which are still relevant in the context of a post-Brexit UK, but possibly more relevant to the bureaucrats in Brussels. I am also a long-standing unpaid member of the Haberdashers’ Company’s wine committee.
These are simple and straightforward regulations and, as my noble friend the Minister said, they clarify a technical error, which is welcome. However, my noble friend’s presence at the Dispatch Box on this subject provides the Grand Committee with an opportunity to hear about a key issue during the current round of trade negotiations with wine-producing countries, being ably led by the Secretary of State, Liz Truss, who is doing excellent working securing future arrangements between the UK and a number of countries producing new world wine.
The issue in this context that should concern your Lordships is the future regime for wine import certificates, first in the context of the EU and separately in the context of all wine-producing countries with which we trade. Now that we have left the EU, I can see no national interest in nor justification for the retention of wine import certificates. Freed from unnecessary bureaucracy, the retention of these forms is a cost on the Exchequer and on the industry. In fact, they are no use, so much so that my noble friend the Minister would find it difficult—I would go as far as to say impossible—to name any other bottle of potable alcohol from vodka to rum that requires them. All are well served by standard customs paperwork.
Yet the retention of wine import certificates, which is exclusively a decision for government and Parliament, is to place an onerous and costly process on those merchants and buyers—the restaurants, pubs and bars—that buy a wide selection of wines as their unique selling point and which now have to face the bureaucratic process of obtaining a physical stamp for wine imported, which has no safety benefits and above all no consumer protection advantages. After all, if there were any consumer protection gains, we would have them for imports of every other bottle of alcohol.
With safety and authenticity being guaranteed by the importer, I am a loss to understand why the Government are looking to retain these import certificates. After all, one significant advantage of Brexit consistently argued by the Government with which I was in complete agreement was to ensure a substantial reduction in unnecessary red tape, freeing Parliament to promote freer trade and erasing unnecessary bureaucracy.
I ask my noble friend the Minister just one simple question: why does he of all people—bright, questioning and perceptive as he always is—want to keep VI-1s? What is their benefit? Can it possibly be greater than the bureaucratic costs and processes that they cause? These forms require a physical customs stamp on entry into the UK, duplicating everything that is necessary in normal commercial documentation. They do not address the historical challenge of counterfeited wine since, should there be another Australian scandal, that would not be discoverable on the face of the certificate. Counterfeited wine would be stamped at the customs point, so I cannot see how possible issues of fraud are in any way covered by these certificates.
Possibly this bureaucracy is to be retained to protect English producers, but surely my noble friend the Minister and the Committee would not conceive of resorting to red tape to protect our outstanding English producers, who can succeed on merit and quality even if they currently produce less than half a percent of total wine consumption in the UK. So what do the Government see as the benefit of VI-1s?
A simplified version of the form is good for the European Union, but the answer to that challenge is to welcome the deferred date for the EU introduction, which is now the end of the year, and use that time to introduce digital forms, moving with pace from the CHIEF to the CDS system. That is the least bad outcome with Brussels and is surely acceptable to everybody in the industry. However, importing to the EU is, of course, different from the rest of the world, where surely there is no need for these forms at all. After all, most of the wine imported from Australia is in bulk. While there may be 10,000 or more suppliers in the EU supplying major retailers in the UK, only a handful export from Australia, and the majority do so in bulk.
What can it possibly be that would make the exceptionally popular and able Liz Truss so unpopular in bars and restaurants the length and breadth of the UK, not to mention the dent in popularity of my noble friend the Minister when the Bishops’ Bar reopens? The only answer I can come up with is that this is a pawn in an otherwise much larger series of trade negotiations. If so, the Minister will understandably have little to say, particularly in answer to my only question of what is the value of a VI-1 certificate. If that is the case, I totally understand and would not wish to weaken the Government’s negotiating position in the trade negotiations under way this year. If I am wrong, then I hope this House will return to the subject in due course and be united in seeking to end this unnecessary and costly bureaucracy—costly to the Government, to the wine industry in the UK and, above all, to the consumers, who will pay the price for the bureaucracy we hoped we had left behind on 31 January 2020.
My Lords, it is a pleasure to take part in this debate, and to follow my noble friend Lord Moynihan, who, with eloquence and guile, has taken many of my points: I feel none the worse for being a shadow and an echo of much of what he said. Before that though, I welcome these regulations, straightforward but important and correcting, as my noble friend the Minister said, an error as we transpose legislation as a result of the end of the transition period. I shall focus, very much as my noble friend Lord Moynihan did, on the VI-1 forms.
In no sense do I wish to pre-empt the Minister, but I believe that my noble friend Lord Moynihan very effectively answered his own question: there is no purpose or point to VI-1 forms. Has the Minister had an opportunity to look at the Reducing Friction in International Trade paper that I alerted him to in the autumn of last year? That concerns a digital solution to this problem, a proof of concept for Australia-to-UK wine imports, not just about customs documentation but about all documentation, linking the digital, the legal, the physical, the health and safety and the viniculture all together through various new technologies, not least distributed ledger technologies, IoT and several other elements. What the proof of concept demonstrated was that we can today, if we so choose, have a real-time, effective digital solution to this issue; yes, with EU-UK trade; yes, with all trade.
It may be worth noting that we are not just an importer of fine wine from continental Europe; we have a stunning importer/exporter wine industry at all levels and at all sections of the wine industry. It is a less well-known but fabulous part of the British economy. Indeed, as my noble friend Lord Hannan correctly identified, we have a growing range of fabulous wine producers, not least across the south coast of England, which is set in only one direction, and that is positive and set for growth. Does the Minister agree that we can work together and bring in a digital solution which would be far more effective than just taking into digital means the unnecessary details currently stored on VI-1 bits of paper? Until then, does he agree that not just until 31 December this year, but well beyond, to eternity, we should not have VI-1 forms in our trade with the EU or the world? They have no purpose; they merely leave UK drinkers with an acrid aftertaste in their mouth. If the forms come back, they will leave drinkers having to swallow increased prices and reduced choice. I know that my noble friend the Minister cannot want that. I very much look forward to his response.
As the noble Baroness, Lady McIntosh of Pickering, has withdrawn, I call the noble Baroness, Lady Parminter.
I thank the Minister for his opening remarks and for agreeing to meet me and the noble Baroness, Lady Hayman, yesterday to discuss this SI, which as he says is a simple one that corrects a technical omission. I thank him for his gracious mea culpa at the beginning; we all make mistakes, but it is important to acknowledge them. As Peers are always busy dealing with SIs, the fewer we have of them in future, the better.
I do not think that the omission does anything to suggest that the Government are not serious in how they treat the issue of GI schemes. I believe that they understand their value, to both consumers and the trade, in delivering benefits to both. I would like the Minister to commend the staff for spotting this error. I think there was a nine-week period during which these regulations could have been exploited so, as I say, they should be commended. During that time, there was no protection for the investment made by companies that have invested in these high-quality products. As other noble Lords have said, those are mainly from Europe, with brands such as champagne and rioja but, as the noble Lord, Lord Hannan, says there is a growing number of English sparkling wines, which we should be and are proud of—not just in Hampshire, I would like to say, but in the neighbouring county of Surrey, where I live.
I have no wish to prolong the debate, but I ask the Minister one question. When we last debated this matter, a number of noble Lords outlined the concerns that they had around the problems that people were having in importing wine from European countries. Can the Minister update us on the situation vis-à-vis imports of European wine into the UK, given that half of all the wine that we import into this country comes from the European Union? Therefore, a problem with the amounts of importing from Europe would be a significant blow to those who enjoy drinking those products.
I also start by thanking the Minister for his very helpful meeting with me and the noble Baroness, Lady Parminter, and for his openness about what has happened and the situation that has arisen. Clearly, as the Minister said, this is a very short instrument because its sole purpose is to reinstate a previously implemented operability amendment to geographical indicators that was inadvertently revoked by another Defra SI. This error has meant that the version of the EU regulation on the statute book following the transition period was technically incorrect, but we thank the Minister and his staff for their explanations yesterday that the impact has been minimal.
As we have already considered this instrument in Committee, and other noble Lords have discussed the wider implications, I also intend to keep my remarks brief. I was pleased to hear in the Minister’s opening remarks that he and his department have discussed the situation with both—[Inaudible]—and the devolved Administrations. I draw attention to the fact that, during consideration of previous Defra EU exit SIs, we have raised concerns around the possibility of drafting errors and potential for mistakes if Defra continues to favour multiple and sometimes overlapping instruments over one or two larger consolidating texts.
If we turn to Paragraph 7.1 of the Explanatory Memorandum,
“What is being done and why?”
we can see that our concerns have come to fruition in this case. I understand that it is often more complicated when we have so many different pieces of legislation that need to be updated, changed or brought into UK law following our departure from the EU, but it is concerning that mistakes such as this have been able to be made due to the complexity of the many different small pieces of legislation that are being passed.
I join the noble Baroness, Lady Parminter, in giving thanks to the member of staff who spotted this error, as it was extremely fortunate that it was picked up at this early stage. But I hope that the Minister will be able to explain how such an error came to be made. Is the department aware of any similar issues that have arisen in other areas? If so, how many have happened, and are relevant corrections being made? Has the department reviewed how it checks the drafting of often very complex and detailed legislation? We all need to have confidence in government legislation and confusion and avoidable errors are simply not acceptable. I thank the Minister again for his sincere apologies that such a mistake has happened and ask for his reassurance that there will not be any such confusion and reoccurrence in the future.
My Lords, I thank all noble Lords who have contributed to what has been a very constructive debate. It is clearly essential that we have the right legislation in place for the effective operation of the UK’s wine GI scheme, with appropriate product name protections visibly in place.
I enjoyed my noble friend Lord Hannan of Kingsclere’s absolute endorsement of viticulture in this country, and if I could trade some counties with my him and the noble Baroness, Lady Parminter, in Suffolk we have some excellent wine production as well. Clearly, the champagne houses are not only buying land in Kent because of climate change but also because the soil structure is very similar to that obviously famous part of France—and that is why there is this commitment. The export of English and Welsh wines, in particular, around the world is an area of expansion and growth, and I am pleased that my noble friend mentioned innovation start-ups, which are really important.
I reiterate to both noble Baronesses my regret that the error has happened, but I would also like to remark upon their thoughtfulness in raising the matter of the official, whom I am not allowed to name, who detected this error. I am very grateful for their generosity. I am aware—as we all are, because we are all engaged in this—of the significant pressures on both policy and legal teams with regard to the SI programme. This was particularly the case in the run-up to the end of the transition. That is why, to pick up the important point raised by the noble Baroness, Lady Hayman, we will continue to review and improve our processes in respect of legal and policy checks and clearances of legislation. This will include a consideration as to whether there is enough resource in place. I regret every error; the perfect form is something we strive for, but sometimes these things happen. I will always be up front when they do, but we obviously need to do everything we can to stop these issues manifesting themselves.
My noble friends raised the issue of VI-1s, which already exist for wine imports from other origins, such as Australia, the United States and Chile. These wines remain extremely competitive in our, and, indeed, the EU’s, marketplace. We believe the new self-certification requirement to be appropriate and affordable.
I also say to my noble friends, particularly my noble friends Lord Moynihan and Lord Holmes of Richmond, that leaving the EU of course gives us the opportunity to consider and review changes in policy to suit the needs of British people and our businesses. We will continue to monitor all areas of retained EU law, including those concerning wine certification, to ensure that they are fit for purpose. I remember my noble friend Lord Holmes of Richmond raising the electronic transmission of wine certification strongly in debate on the Agriculture Bill. It is possible to transmit by those means and we will consider all aspects of VI-1 processes and their transmission. Our immediate attention has been focused on whether VI-1s serve a practical and useful purpose in today’s global wine trade. However, I remember the document and officials are considering this area.
A number of points were also made about the whole scenario of the wine world, including by the noble Baroness, Lady Parminter. The first thing to say is that the United Kingdom is one of the most important global wine-trading nations. The UK is second only to the United States of America in the value of imports. She also raised the point that there were issues, which we have all identified, post the end of the transition with imports and arrival. My understanding is that these matters are improving all the time, as paperwork becomes better understood. A lot of attention has been paid to this and it is improving. It was interesting that imports from France and Italy were down by 10% in 2020, compared to 2019, but imports from Spain were up by 10%. Those are the three countries which have a significant supply issue.
I certainly want to take up the opportunities that my noble friends have raised for exports of our excellent English and Welsh wines. I should also say that we have recently extended the easement where any wines arriving from the EU will not need to have associated wine certification to 1 January 2022. This will provide time for the sector to adjust to the new trading arrangements, including those set out under the UK-EU Trade and Cooperation Agreement.
I agree that there have been these initial problems with exports to certain EU member states. We have a considerable interest in wine exports to the EU, of course, which total about £400 million per annum. This is largely made up of re-exports of imported wine from countries such as Australia, Chile and the United States, and fine wines from all around the world. Those problems are very important not only for our own domestic wine but obviously for this significant re-exporting, which is a key feature and part of the employment aspects of this sector.
We have been working hard with the companies concerned in this area and with their agents, our diplomatic network and member states to resolve the immediate issues, and what can be done to ensure these problems do not reoccur for future shipments. I cannot promise that we are in the perfect form on these matters as yet. What I know is that, across the piece, as exports have been building up since 1 January, these issues have been resolved and trade is starting to re-energise itself—not only because of coronavirus but because of the work we are doing in this sector.
With those comments and, if I may say so, a general endorsement of the opportunities for domestic wine consumption and exports, I recommend that the Committee agrees to these regulations so that we can rectify an error which, thank goodness, was identified by an excellent official. There was no issue with any goods and, from the work we have done, we are clear that there was no issue of any difficulty during those nine weeks. We would of course not have wanted that to arise. I will look at Hansard in case there are some points that I may not have covered, but with those remarks I commend the instrument to the Committee.
The Grand Committee stands adjourned until 4.05 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Plant Health etc. (Fees) (England) (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, this instrument extends the current regime of charging for plant health import checks to apply to checks carried out on consignments from EU member states, Switzerland and Liechtenstein. This is in line with the standard approach that the full cost of service delivery be recovered from businesses using plant health services.
It is our responsibility to protect biosecurity across plant and animal health, and the wider ecosystem. To that end, plant health checks—documentary, identity and physical—are carried out on regulated consignments imported into England from non-EU countries which may carry pests or diseases that could pose a risk to our biosecurity. Currently, the highest-risk commodities are subject to 100% documentary, identity and physical checks. The level of identity and physical checks on other commodities is based on risk.
During our membership of the EU, plants and plant products were able to enter the UK from EU member states without the need for any import checks. However, inspections carried out as part of Defra surveillance programmes have identified instances where EU consignments have contained plant pests or diseases that could pose a threat to UK biosecurity.
To address that threat, and in line with retained law, from 1 January 2021 the existing regime of plant health checks is being extended to consignments of regulated plants, plant products and other objects imported from EU member states, Switzerland and Liechtenstein. Under the agreed phased approach, which allows businesses time to adjust to the new arrangements, higher-risk goods, such as plants for planting, have been subject to documentary, identity and physical checks from January. This has already resulted in a number of interceptions of consignments with pests and diseases, allowing appropriate statutory action to be taken. Documentary checks on other, lower-risk regulated plants, plant products and other objects will commence on 1 January 2022, with identity and physical checks applied from March 2022.
It is UK government policy to charge for many publicly provided goods and services. The standard approach is to set fees to recover the full costs of service delivery. This relieves the general taxpayer of costs, so that they are properly borne by users who benefit from a service. This allows for a more equitable distribution of public resources and enables lower public expenditure and borrowing. Charging for plant health services is consistent with the principle that businesses using these services should bear the costs of any measures to prevent harm that they might otherwise cause by their actions or inactions, since most serious plant pests and diseases that arrive and spread in this country do so via commercial trade in plants and plant produce.
Fees are applied for checks under the Plant Health etc. (Fees) (England) Regulations 2018. For lower-risk consignments eligible for reduced levels of physical checks, a proportionally reduced fee is applied to every imported consignment. This SI amends the 2018 regulations. It extends charging for plant health checks to also apply to checks carried out on consignments from EU member states, Switzerland and Liechtenstein. In addition to ensuring equity with those importing from non-EU countries, it also reflects that exports into the EU are subject to chargeable import checks, so there is a degree of reciprocity.
We have worked closely with individual operators and industry bodies, including the Horticultural Trades Association, Fresh Produce Consortium and the National Farmers’ Union on developing our approach to dealing with imports from the EU. To give businesses time to adjust to the new arrangements, the fees for documentary, identity and physical checks on the higher-risk goods, and for documentary checks on other goods, will not be applied until June 2021, despite checks being undertaken since 1 January. Fees for identity and physical checks on the remaining regulated goods from EU member states, Switzerland and Liechtenstein will be applied from March 2022.
Under the 2018 regulations, there is a single combined fee for a documentary and identity check, reflecting the fact that both those checks were previously carried out at 100% on all consignments. From 1 January the frequency of the identity check is linked to that of the physical check as both checks are carried out at the same time. So any reduction in the level of physical inspection will also apply to the identity check. This instrument therefore provides for a separate fee for documentary and identity checks for all consignments. This SI does not make any other changes to existing fees for checks on consignments imported from non-EU countries, other than Switzerland and Liechtenstein.
This SI applies to England only. The vast majority of consignments entering GB from the EU do so via England. The Scottish and Welsh Governments are following the same phased approach in terms of the timetable for inspecting EU consignments and applying fees to recover the cost of those inspections.
This instrument is necessary because it provides for fees to be charged for plant health checks on commodities imported from EU member states, Switzerland and Liechtenstein, thereby providing consistency with imports from the rest of the world, where fees already apply. I beg to move.
My Lords, I speak in support of the draft plant health regulations, which, as my noble friend alluded to, come into force on 1 June 2021 in England, together with similar provisions to be introduced in Scotland and Wales. However, it is important to note that charges are to be phased in for businesses with plant health checks from 1 January 2021. Higher-risk goods will be subject to documentary, identity and physical checks from January 2021, but for other regulated plants and plant products they will be phased through 2021-22, supporting the importance of uninterrupted business trade flow.
As well as applying legislation equally across businesses, whether large or small, the risk is relevant to whatever size of business to clearly demonstrate the importance of biosecurity, which must not be put in jeopardy at any cost. We must note accordingly that assurances are being kept, with the same arrangements post Brexit, again stressing the absolute necessity of seeking at all times to maintain the same high levels of plant health biosecurity, which is vital to ensuring that public health and the environment are fully protected 24/7.
Where consignments are authorised for identity and physical checks there are assurances for all inspectors, who are allocated strong systems for safe working, handling and inspection, with adequate light sources, the ability to fumigate gas testing and, of course, access to toilets and handwashing facilities. This all aligns with safe working practices.
This instrument provides for reasonable action coupled with cost recovery, so it is fair in outcome and maintained in line with existing fees, characterised into the following three principles: maintaining current high levels of plant health, preserving the flow of trade, and minimising any future impacts on businesses, whether large or small. I support the regulations.
My Lords, it is a pleasure to follow the noble Baroness, Lady Redfern. I thank the Minister for his explanation of the regulations. I have some questions for him regarding the operational nature of the regulations and the cost implications.
I fully concur with the Minister and the noble Baroness, Lady Redfern, that plant health and biosecurity are vital, irrespective of our constitutional position and Brexit. I note that the regulations will be phased in alongside other requirements, such as the requirement for importers to have a phytosanitary certificate. What is the timeframe for that phasing-in? Have assessments taken place regarding the operational nature of the regulations during this phasing-in period and, if so, what has been the result of such assessments?
I understand that only high priority plants and products from EU member states, Switzerland and Liechtenstein will be subject to these new requirements initially. I was going to ask the Minister what high priority plants are, but he has already told us that they are plants for planting. Are these all types or plants, or specific plants? How are they defined and will only these categories be subject to the new requirements?
With these regulations, the Government will be enabled to charge fees for plant health checks on imports from the aforementioned countries into England. Has charging already taken place in the intervening period, or will it happen only from 1 June 2021 in relation to the new factor of the post-transition period? What will be the actual cost to businesses and importers, and will there be any financial assistance from central government to mitigate the costs?
I, like other noble Lords, have been contacted by the Agricultural Industries Confederation, which stresses that the new non-tariff barriers and fees will have consequences. It asserts that the ongoing effects of both of these will continue to impact the seed industry, and could reduce choice for growers and increase the cost to consumers. As the implementation of the trade and co-operation agreement continues, the AIC urges the UK and EU to work together to balance the priorities of removing non-tariff barriers where possible, while minimising biosecurity and plant health risks. What reassurances can the Minister give in this regard? What will be the impact on importers? Has there been any assessment of how they will bear those costs, particularly during the pandemic period?
These regulations do not apply to Northern Ireland, because Northern Ireland will be covered by the protocol. But, as an aside to this particular issue, can the Minister provide any update that allows for easier ways to implement phytosanitary veterinary checks with respect to Northern Ireland? I note that the noble Lord, Lord Frost, is meeting his EU counterpart today.
An issue that was raised by the House of Lords Secondary Legislation Scrutiny Committee was the lack of an impact assessment. Perhaps the Minister could comment on the reasons for that. The committee was concerned about the potential impact of new additional costs on businesses and importers, and why this had not been considered worthy of assessment. The committee again raised the issue of costs.
These are some of the issues that I wanted to raise, but I believe and strongly contend that plant health and biosecurity are vital to the local agricultural and horticultural industry.
I am delighted to follow the noble Baroness, Lady Ritchie, who was such an effective and distinguished member of the Environment, Food and Rural Affairs Committee in the other place. I thank my noble friend the Minister for introducing the regulations before us today and being so clear about how they will apply. I assume that this is a direct consequence of our leaving the European Union, as we are now being treated as a third country.
I am also grateful to the Agricultural Industries Confederation for its briefing and I have a number of questions—harmless, friendly questions, I hope—for my noble friend in this regard. How does the department expect to work with EU counterparts, both through the European Union and directly with member states, to balance the priorities of removing non-tariff barriers going forward, wherever possible, while minimising biosecurity and plant health risks? I entirely endorse the basis that he set out as to why the regulations are required.
As this is a new regulation, and following the concerns raised in the 50th report of the Secondary Legislation Scrutiny Committee, why did the department decide not to conduct an impact assessment in this case? I am led to believe by the Agricultural Industries Confederation, a trade association representing a UK agrisupply industry that has a farm-gate value of more than £8 billion, that most of the seeds, presumably for agricultural purposes, actually come from the European Union. So the fees to which my noble friend referred, some applying from June this year and some from March next year, will apply for the first time, as they have not been importing in any great measure from the rest of the world. As the noble Baroness, Lady Ritchie, asked, does my noble friend have a ballpark figure as to what the size of the fees, the scale and percentage of the fees on their costs, will be?
I notice that the Explanatory Memorandum clearly states that there was a consultation with the relevant trade bodies, including the National Farmers’ Union, the Horticultural Trades Association and the Fresh Produce Consortium. Was the Agricultural Industries Confederation consulted as part of the preparation for the regulations before us today?
I thank my noble friend and the department for delaying the introduction of the fees, in particular those on imports from the EU, because that indicates that my noble friend and the Government are aware that there will be an impact on the agricultural businesses concerned. I ask those few questions about how wide the consultation was and about the reasons for not undertaking an impact assessment. There is, in fact, quite a major change in that most of the seeds, as I indicated, are imported from the EU and so will not previously have incurred a fee, as not many seeds were imported from the rest of the world. How will my noble friend and his department seek to remove and minimise other potential non-tariff barriers wherever possible?
I also ask, from a personal interest, whether FERA, which was in my constituency for the last five years I was in the other place, has done any work on the consignments that have been identified as having a potential issue. I am full of admiration for the work it does. I realise that its status has changed and that it does some private sector work as well, but it would be good to know that it is still assisting the Government in this regard. With those few remarks, I bid the regulations well.
My Lords, this SI has been prepared by Defra to amend existing regulations relating to fees for inspections of plant and plant produce imported into the UK from non-EU countries to reflect changes in inspection levels and corresponding fees according to risk profiles. EU law would continue to apply during any implementation period. Therefore, we are amending certain import inspection fees to give effect to changes at EU level.
My Lords, I would like a reassurance from the Minister that the challenges that plant growers in the EU and the UK have faced in importing and exporting with the new inspection regime are being addressed by this Government. The matter of the condition of plants is not new to me, as it must be some 40 or perhaps even nearer to 50 years ago that I imported camellias from Australia, my homeland. We had to have a phytosanitary certificate, all soil had to be washed from them and I had to go to the airport and pick them up instantly. As far as I know, they are still going, because I have taken a cutting from each one every time I have moved house. A man with a beautiful collection at a stately home here also took cuttings from those plants.
I understand that the RHS has reported that there are continuing problems with the movement of plants between Europe and the UK, with some even suspending trade with the UK due to the imposition of the new inspection regime. Amateur Gardening has even stopped attaching free seed packets on its magazines heading over the Irish Sea, as it would cost £1 million in the necessary health checks and certification. In addition, there is growing concern in the industry about the restriction in the choice of more specialist plants, due to the additional complexity and cost of the new certification and inspection regime. An unintended consequence of this is that some of these plants die before the order reaches these shores, despite the hefty inspection fee proposed by the regulations.
Can the Minister look at what can be done to make the process easier and quicker while also trying to keep down costs, which are ultimately passed on to the consumer in higher costs and may lead to much less choice now and in future?
My Lords, I thank the Minister and his officials for their time in providing a briefing yesterday morning, and for his introduction this afternoon. This is a fairly straightforward SI, which attempts to level up the playing field around importation of plant and plant products into the UK from across a wide spectrum of countries. It uses the same fee-charging basis to countries inside the EU, Switzerland and Liechtenstein, as currently applies to the rest of the world. As I understand it the fees may change slightly, but the methodology of calculating the fees will remain the same across GB and be based on the full recovery cost.
The fees in the schedules are extensive, ranging from £205 down to £6.40 for some seeds, per consignment. Yesterday morning, after the briefing with the Minister, I attended the launch of the Woodland Trust’s report, State of the UK’s Woods and Trees 2021. This provided some very stark detail about the state of our ancient woodlands and the wildlife that currently lives in them. Only 7% of our woodlands are in good condition, a devastating statistic given the role of woodlands in carbon stores and carbon sequestration. Many of our native trees have been lost through the importation of pests and diseases carried on imported plants and plant products.
Although woodland cover has increased, woodland biodiversity has decreased. Bird numbers are down by 29% since 1970, butterflies by 41% since 1990, and plants by 18% since 2015. Since 1990, 19 pests and diseases have been introduced into the country, threatening our biodiversity, compared with only four prior to 1990. The certification of trees, plants and plant products that come into the country is essential. Ash dieback arrived with us from the Netherlands. Xylella is also an extremely dangerous disease, which we must ensure we keep under control and prevent further importation, especially of oak saplings.
The gradual introduction of fees for health checks is to be welcomed to enable businesses to plan ahead and prosper. However, the various dates are confusing. The checks for high-risk products began on 1 January. This includes 1,200 entries on the plant risk register, including tree species. Lower-risk plant checking will begin in June 2021. However, fees will not be implemented until March 2022. I am slightly less concerned about low-risk plants, but I am very concerned about high-risk plants and trees.
At paragraph 3.3 of the Explanatory Memorandum there is mention of the devolved Administrations, and paragraph 7.7 indicates:
“Similar changes are to be introduced by the Scottish and Welsh governments.”
Can the Minister tell us whether the devolved Administrations have similarly been checking high-risk plant products since January or whether they are lagging behind? If no checks are currently taking place, a product could enter the country via Scotland or Wales without checking and then be transported into England, especially if the fees being charged are cheaper in the devolved Administrations than those being administered in England. I understand that some imports come through the island of Ireland and then into Wales. There is a possibility of some checking being avoided. Can the Minister provide reassurance?
I am concerned about the impact of costs to horticulture and other businesses of these additional fees. The noble Baroness, Lady McIntosh of Pickering, raised this as well. Although no fees will be applied until March 2022, the fees will be refreshed in October 2022, with an assessment being made of the full-cost recovery figures. At this stage there could be an uplift, which the importers, especially of seeds, might not be expecting. This could be excessive for them. Can the Minister comment on this?
This is a vital piece of legislation that should ensure the protection of our native-grown plants and trees. It should be rigorously enforced, and I fully support it.
We seem to have lost the noble Baroness.
Sorry, my computer took on a life of its own and decided to mute.
Biosecurity has become an increasingly important issue. According to the Royal Horticultural Society, UK imports of live plants have increased by 71% since 1999. But with increasing trade comes increasing risk of pests and diseases being imported inadvertently. It is extremely important that regulatory standards are not compromised following the UK’s departure from the EU, so we are pleased to support this SI. We know that there was previously some surveillance of plants coming in from the EU that sometimes found problems, so improved legislation with additional checks on plant imports from the EU provides an opportunity to detect plant pests and diseases at the border, therefore further reducing future pest and disease problems.
I turn to the detail of the instrument before us today. The Minister has explained that it enables fees to be charged for plant health checks on imports into England from the EU, Switzerland and Liechtenstein, bringing those countries into line with the rest of the world, and that under a phased approach, higher-risk consignments of regulated plants, plant products and other commodities imported from the EU, Switzerland and Liechtenstein have been subject to checks since 1 January this year, with such checks on the remaining regulated goods being phased in later this year and in 2022. As there are a number of different checks and dates of implementation, I would be grateful if the Minister could clearly outline the timetable and provide clarification as to how businesses and industry have been informed about these changes, and what information has been provided to ensure that they are fully ready.
Changing plant health regulations also provides an opportunity to increase public awareness of plant health and biosecurity risks, encourage wider responsibility and drive cultural change. Has the Minister’s department been working with stakeholders such as the RHS to ensure that the UK’s plant health regulatory requirements are presented in a way that is accessible and user-friendly in order to encourage this outcome?
We understand that Scotland and Wales are introducing similar provisions. Can the Minister provide information about what dialogue has been held with the devolved Administrations to ensure a timely and co-ordinated introduction across the whole of Great Britain? Will the fee structures be the same across the devolved Administrations, and is it likely that the fee rates charged could be different? Industry will have to consider how it reacts to the new charges, so if there are different fee rates, has the Minister considered how businesses are likely to react and also how importers will decide to pass on the increased costs?
The Secondary Legislation Scrutiny Committee asked the department about the expected additional cost to business arising from these fees and the noble Baronesses, Lady Ritchie and Lady McIntosh, have gone into detail around this. But it is important that the SLSC regarded Defra’s approach in this area as “poor legislative practice” by not having
“analysis of the expected financial impact”.
The fact that
“the Department found it necessary to phase in the fees to give businesses time to adjust”
shows that an impact on business has been recognised. As the SLSC points out, there is no real information on the anticipated impact of these changes for those in the trade.
Defra has engaged with stakeholders extensively regarding the planned changes; however, we know from previous experience that the total potential impacts of the UK leaving the single market and customs union have not always been completely clear or understood by those it affects. In earlier SIs we have raised our concerns about the capacity of ports to carry out inspections; I therefore ask the Minister: where will the inspections take place? What assessment has been made of capacity and what additional resources have been provided to ensure effective delivery of the new checks?
As a final point, in its submission to an inquiry by the House of Lords EU Energy and Environment Sub-Committee into biosecurity, the Prospect union recommended better training for plant health officers, with the re-establishment of a viable training programme for new and established inspectors, plus joint training ventures with the Horticultural Trades Association and Royal Horticultural Society. Can the Minister inform us as to whether this has taken place and, if not, whether further training of officers is planned?
My Lords, I am very grateful to all noble Lords for what has been a constructive and interesting debate. If there are any points that time does not permit me to cover today, I will of course write to your Lordships.
I was struck by all the comments about biosecurity and why we are doing this. It is to protect plant biosecurity, as was made clear by my noble friend Lady Redfern and the noble Baroness, Lady Bakewell of Hardington Mandeville. It is absolutely key that we embark on this in a very serious and important way. I was also struck by my noble friend Lady Redfern, absolutely rightly, referring to the importance of the safety of those working to deal with pests, disease and invasive non-native species, all of which impinge upon our biosecurity.
Given the points made by the noble Baroness, Lady Hayman, and others, I thought it would be helpful to summarise the timetable for the introduction of checks and associated fees. On 1 January 2021, documentary, identity and physical checks were introduced on high-risk EU goods and carried out at places of destination. No fees are currently applied for these checks. On 1 June 2021, fees will be introduced for documentary, identity and physical checks on high-risk goods and for documentary checks on other goods. On 1 January 2022, physical inspections of high-risk goods will move to border control posts. On 1 March 2022, identity and physical checks on other goods will commence at border controls posts, with fees then applied for those checks.
The noble Baronesses on the Front Benches opposite raised the devolved Administrations. The Scottish and Welsh Governments are following the same phased approach as in England in terms of the timetable for inspecting EU consignments and applying fees to recover the costs of those inspections. In all parts of GB, fees will set to recover fully the cost of services provided, in line with the general Treasury principle on cost recovery. As services in Wales are provided by APHA on behalf of the Welsh Government, fees in Wales will mirror those in England. A different cost-base applies in Scotland, so there may be some differences to actual fees, but the same methodology and principles apply.
I give the noble Baroness, Lady Bakewell, my absolute assurance that the devolved Administrations are currently checking high-priority plants. We are working very closely and extensively with our devolved counterparts on operational readiness to ensure that our policies and plans are operable. For example, a UK plant health post-transition period operational readiness board—I am sorry, that is such a long phrase—has been established to discuss planning with devolved Administrations. This includes weekly meetings to consider policy issues, including fees. We have been working closely with officials from all the devolved Administrations to design future common frameworks where they are necessary, in line with principles on common frameworks.
I understand the point about working closely with industry. My noble friend Lady McIntosh and the noble Baronesses, Lady Bakewell and Lady Hayman, raised this. We have maintained regular engagement with the industry—indeed, I have been at a number of the meetings, particularly with the Horticultural Trades Association—on post-transition planning with individual operators and through key stakeholder groups. This included an explanation of the planned charging regime for EU imports, which was followed up with details of the actual changes. Discussions were held through fora such as the plant health advisory forum, the tree health policy group and the Ornamental Horticulture Roundtable Group. In addition, there was frequent bilateral engagement on EU imports with key stakeholders, such as the Horticultural Trades Association, the Fresh Produce Consortium, the National Farmers’ Union, the Ornamental Aquatic Trade Association and—I declare my membership—the Royal Horticultural Society, which we have also been working with.
The noble Baronesses, Lady Ritchie and Lady Hayman, my noble friend Lady McIntosh and others more generally raised the important point of how best we can support business with the changes that I think we have all agreed are desirable, given the interceptions that we have identified already, and before this new regime. We have been listening carefully to the concerns of industry to make sure that the new requirements are practical, proportionate and—importantly—risk-based. The import controls on EU-regulated goods are being phased in over 14 months. Regulated goods are not currently being held at the border for import checks in order to help trade flow. All EU high-priority goods may be checked at places of destination until January 2022, minimising that disruption at the border.
On a point raised by the noble Baroness, Lady Hayman, the Government have invested £705 million to ensure that our border systems are functional from 1 January and will be fully operational in line with the phasing plan. Operating hours for plant health services have also been adjusted to service business needs, while ensuring that biosecurity standards continue to be maintained and strengthened in ways that support trade and the smooth flow of goods. I think it was my noble friend Lady Gardner of Parkes who made the point about the importance of biosecurity but also trade flows and supply.
So far as the financial costs raised in this debate, we have been clear that, in line with Treasury rules, the Animal & Plant Health Agency recovers the cost of delivering these services from businesses that use them. Low-risk goods will receive a lower frequency of checks; fees therefore need to be adapted to ensure that there is no over-recovery of costs.
My noble friend Lady McIntosh raised engagement with the EU. There is ongoing and active engagement with the EU on all these matters. She also raised the AIC report. We have regular contact and engagement with the AIC. She also mentioned FERA, which conducts seed testing to support imports and exports. The cost of seed inspections is £128.13 per consignment for a 100% inspection and £6.40 for a 5% inspection rate. Specific seeds are listed in the SI.
The noble Baroness, Lady Bakewell of Hardington Mandeville, asked about risks from Northern Ireland goods. The island of Ireland is of course a single epidemiological unit. It is really important that we respect both their biosecurity and ours. We have a risk-targeted surveillance programme, which monitors movement of plants from all origins. Again, it is important that we look at this constantly. She also raised the risks to woodlands. We review risks on a continuous basis through the UK plant health risk register and take action in response to new threats, including emergency regulations, such as those for Xylella.
The noble Baroness, Lady Ritchie, raised the definition of high-priority plants. High-priority plants are those that pose the greatest potential risk to GB biosecurity. This includes shrubs and plants for planting not intended for final users, host plants of Xylella—for instance, lavender and rosemary—and other plant material for propagation, such as seeds and cuttings. Fees are based on the actual cost and time that it takes to inspect different categories of material.
The noble Baroness, Lady Bakewell, also raised costs. The methodology used to calculate these fees was fully consulted on in 2017 and has not changed. Fee income is carefully monitored to ensure that there is no over-recovery or under-recovery. Any discrepancy would normally be rectified in the following year. However, for this year, to ensure that there is no significant over-recovery of costs, APHA and Defra will monitor fee income on a monthly basis, which is important.
The noble Baroness, Lady Ritchie, also raised Northern Ireland. In line with the principles of unfettered market access, there is no requirement for export phytosanitary certificates to accompany qualifying Northern Ireland goods moving from Northern Ireland to GB, so there are no associated fees. There will also be no import checks on those qualifying goods entering GB and no additional costs to trade as a result of plant health service delivery by APHA.
I am sorry if that was a very brisk description of some of the questions asked by the Committee. However, I commend this statutory instrument to your Lordships.
That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room.
Committee adjourned at 4.50 pm.