Tuesday 28 June 2022
Arrangement of Business
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Local Government (Exclusion of Non-commercial Considerations) (England) Order 2022
Considered in Grand Committee
My Lords, this order was laid before your Lordships’ House on Monday 25 May 2022, under Section 19(3) of the Local Government Act 1999, for approval by a resolution of each House of Parliament. The order was considered and approved in the other place on Monday 20 June.
The illegal invasion of Russian forces into Ukraine has shocked the world and has been met by unprecedented global condemnation. Soon after the invasion, many local authorities also gave their own public condemnation of the Russian state’s action. They were clear they did not want local taxpayers’ money to be used to fund this reprehensible attack, and many noted their own intentions to break contracts with Russian-controlled companies. Local authorities are, however, subject to Section 17 of the Local Government Act 1988, which prohibits “non-commercial considerations” playing a part in commercial decision-making. Such non-commercial considerations include, at Section 17(5)(e) of the 1988 Act,
“the country or territory of origin of supplies to, or the location in any country or territory of the business activities or interests of, contractors”.
With regard to Russia and Belarus, this element of the Act is untenable.
This limitation was laid out in the Cabinet Office’s policy procurement note 01/2022, which was issued in March. In this advisory note, organisations in scope—government departments, their NDPBs and executive agencies—were asked to review their contract portfolios to identify Russian and Belarusian prime contractors and consider the termination of these contracts. The PPN particularly noted that the Government were actively considering a solution for local government to enable councils to follow the Cabinet Office’s advice. Council leaders have rightly been calling for action, requesting a flexible approach for those councils that wish to divest themselves of any dependence on Russian state-owned companies. My right honourable friend the Secretary of State wrote to leaders on 11 March, preparing them to consider their exposure to Russian and Belarusian-owned companies.
Your Lordships will recall that we held a debate on 24 March regarding Gazprom UK. In that debate, noble Lords made clear their desire to amend public procurement rules to align local authorities with the rest of the public sector, so I am pleased that today we are considering this order, which will enable us to disapply the provisions I have referred to at Section 17(5)(e) of the Local Government Act 1988. The order will enable best-value authorities and parish councils in England, if they so wish, to terminate both proposed or subsisting public supply or works contracts, in accordance with the terms of the contract, where either: first,
“the country or territory of origin of supplies to the contractor”
is Russia or Belarus; or, secondly,
“the location of the business activities or interests of a contractor”
is Russia or Belarus.
As council leaders have requested, this order will allow relevant authorities the flexibility to terminate proposed and subsisting contracts should they so wish. It will allow them to take comparable action to central government, as set out in the PPN, and ensure they are not funding Putin’s war machine. It is important to note that the Government are not mandating the termination of contracts nor creating new burdens on local authorities. This is a permissive power and the decision to terminate contracts rests with the authorities in question. As the PPN sets out for central government, and as my right honourable friend the Secretary of State has advised local authority leaders, decisions to terminate such contracts should be made on a case-by-case basis, in accordance with the terms of the contract, and only where an alternative supplier can be sourced in line with value for money and affordability, and with minimal disruption to public services.
It is important to note that this policy will not enable these bodies to instigate their own unofficial municipal foreign or defence policies, but will not prevent them from undertaking their own divestment measures where these align with official government sanctions, as in this case.
As I have said, this will not add a new burden to local authorities. Nevertheless, the Government remain committed to engaging with any local authority with concerns about its financial position or service delivery or that may be facing pressures that it cannot take steps to manage locally. I reaffirm that commitment today.
This Government send a clear and strong message: Russia and Belarus should not benefit from public contracts and from the British taxpayer. We condemn Russia’s unprovoked, premeditated and illegal war. Across the United Kingdom and at all levels of government we remain steadfast in our support to ensure that Ukraine wins its battle for self-determination and that Russian forces withdraw.
This Government have introduced financial and investment sanctions. We provide military support, humanitarian aid and lead international efforts to support Ukraine’s objectives. We will continue to use all levers at our disposal in central government and, in the case of this order, local government, to cut off funds to Vladimir Putin’s war machine and demonstrate that we will not tolerate this abhorrent attack on Ukraine. I hope your Lordships will join me in supporting the proposed order. I commend it to the House.
My Lords, I support the Minister in what he has said and thank him for his introduction. I also thank him and his department for the Explanatory Memorandum, which is lengthier than usual, and very helpful. There was an echo of these matters in the Chamber less than an hour ago in one of the Questions, which was about Russia. This order is the consequence of the gangster style of Russian leadership, with its cruel and dreadful impact on the nation of Ukraine.
Time is of the essence. I will pose several questions to the Minister and, if he cannot answer at the moment, I ask that he write. First, does he know how many contracts might be involved as a consequence of his order? Following that, what might be the employment consequences? It is a question of numbers, and some answers on these matters might be helpful. Lastly, can he give an example or two—or more—of the sorts of contracts that shall be terminated? In the departmental consideration of the making of the order, surely examples were brought forward. It might help the whole House if answers to these questions were proffered, either now or later.
My Lords, I draw attention to my relevant interests as a councillor on Kirklees Council and as a vice-president of the Local Government Association. I support the terms of this statutory instrument, which, as the Minister said, is a reaction to the heinous acts of what has become a murderous Russian regime that is directing its unrelenting firepower on the citizens of Ukraine. As a result, it is incumbent on us to do whatever small act we can to reduce links that might enhance businesses based in Russia or Belarus.
Following on from the questions asked by the noble Lord, Lord Jones, does the Minister know, or can he find out for us, the total value of local government business currently placed with Russian or Belarusian businesses? If he does not have that information, will he write to us and perhaps put the information in the Library? People would widely welcome that information, I think.
When I saw this SI, I thought it demonstrated how overcentralised we have become that we must have secondary legislation to enable local government to make decisions about where it places its contracts. What the Minister said—that there was pressure from local council leaders on the Government to enable this action to take place so that local authorities did not open themselves to legal challenge—proves my point. It spoke to me. For goodness’ sake, precious government time has had to be spent on drawing this measure up so that councils can make the sane and sensible decision to stop making new contracts with Belarus and Russia. We need to change that. Perhaps we will get another SI from the Minister in future just to release councils from this burden of insensibility, but clearly I totally agree with what is contained in this order.
My Lords, first, I refer noble Lords to the register, which details that I am still a local councillor in the finest borough in the country, Burnley Borough Council. I thank the Minister for his speech outlining the sensible and pragmatic proposal before us, which responds to the sector and ensures that we show our solidarity at not only the national government but the local government level across the United Kingdom.
I am pleased to say that we on these Benches strongly support this statutory instrument. We support the Secretary of State and the Government giving local authorities the flexibility to make the decisions that are right for their localities. It is the right thing to do. We have continuously called on the UK Government to move faster and harder on economic and diplomatic sanctions against Putin’s barbarous regime. Too often we have lagged behind the EU and the US, while some promised measures have yet to be implemented. Ministers need urgently to introduce a new US-style law to act against those who act as proxies for sanctioned individuals and organisations. Supporting this statutory instrument further demonstrates that our support for Ukraine at all levels of government remains undiminished. The UK and our allies have shown remarkable strength and unity in response to President Putin’s invasion of Ukraine. We will not be party to funding his war machine. Noble Lords have spoken with great solidarity in relation to the situation in Ukraine and supporting the order.
Having listened to noble Lords—in particular my noble friend Lord Jones, who, like the noble Baroness, Lady Pinnock, asked some excellent questions—I want to ask the Minister a few questions of my own in the same spirit. How has the department engaged with local authorities to make them aware of these new powers? Will the Minister encourage local authorities to exercise these powers? If so, how? What assessment has the department made of the level of contracts in the public sector with Russia and Belarus?
I just want to pick up on the point made by the noble Baroness, Lady Pinnock, about highlighting the challenge of overcentralisation. Like the Minister and the department for levelling up, we must look to ensure that, rather than responding after pressure from local authorities, we lead from the front so that local authorities are not put in difficult positions. I look forward to the Minister’s response.
My Lords, I thank the Committee for considering the order and for all the contributions to the debate. I am sure we can agree that it will further simplify our already strong message to Russia that we stand firmly with Ukraine and will use all levers possible to cut off funding to this illegal invasion. Allow me to try and respond to the points made by noble Lords.
I start with the points raised initially by the noble Lord, Lord Jones, and then backed up ably by the noble Baroness, Lady Pinnock, around what we know about which local authorities have contracts with Russian and Belarusian-backed companies and the value of those contracts. The Government do not hold data on how many contracts and sub-contracts are held by local authorities with organisations under the control of Russia or Belarus. However, we know that there are contracts and that the Secretary of State has been asked by a number of council leaders to amend legislation to allow councils to terminate such contracts.
The noble Lord, Lord Jones, wanted some examples of contracts that fall into this. I will give one, which makes two points that have been raised by noble Lords. The first is that Portsmouth City Council has a contract with Gazprom and has decided not to terminate the contract. I make this point because it is not for Ministers or central government to use the bully pulpit. In response to the noble Lord, Lord Ahmad, I say that we are giving a permissive power for local authorities to make the decision about whether they withdraw from these contracts or not. We want them to go through the process and have the ability to do so, which currently in theory they do not, which is why we are bringing in this statutory instrument. We have been asked by the noble Lord, Lord Jones, about the impacts of employment—
Has the Minister sat down?
The Minister’s getting up, but the Minister’s getting confused. I am sorry; I meant “the noble Lord, Lord Khan”. I have been confused by people writing the wrong name. I am just reading from the top of the page—my apologies.
Here is the piece of paper. Going on to the next point, I say that we do not know about the impact on employment, and the impact on business is dependent on whether the country or territory of origin of supplies or location of business activities is Russia or Belarus and whether the relevant authority has decided to terminate contracts. Therefore it is not easy to estimate the impact on employment. But, again, this is a permissive power, and local government will ultimately make the decision in the interest of local services and value for money.
I will answer the noble Lord, Lord Khan, about what local authorities should do when these regulations come into effect. The Government will make sure that we provide guidance to local authorities as and when this order comes into force. There has been considerable engagement, and a need has been identified to do this and to bring forward the secondary legislation. These councils have been writing to the Secretary of State since the invasion of Ukraine, setting out the need for the Local Government Act 1988 restrictions in this area to be lifted, to allow local authorities to act. This statutory instrument will allow them to do this, so there has been considerable engagement, as noble Lords can see, and I hope your Lordships will support me in supporting the order.
Local Authority and Combined Authority Elections (Nomination of Candidates) (Amendment) (England) Regulations 2022
Considered in Grand Committee
My Lords, this statutory instrument was laid before the House on Monday 6 June under Sections 9HE and 105(2) of the Local Government Act 2000, and Section 114(1) of and paragraph 12(4) of Schedule 5B to the Local Democracy, Economic Development and Construction Act 2009, for approval by resolution of each House of Parliament. This instrument amends local election rules to account for the new disqualification for sexual offences introduced by the Local Government (Disqualification) Act 2022. These changes are necessary to ensure that future mayoral candidates continue to correctly declare that they are eligible to stand in elections. This will provide continued clarity for candidates and electoral administrators.
The Local Government (Disqualification) Act closes the loophole which meant that anyone who commits a sexual offence but is not given a custodial sentence could stand for local government election—or, indeed, if convicted once in office, could remain in office following that conviction. The Act passed with cross-party support earlier this year and comes into force today. Election processes now need to be updated through this instrument, which updates “consent to nomination” forms used in local authority mayoral elections. At nomination, a candidate must declare that they are not disqualified by signing such a consent to nomination form. The format and wording of these forms is prescribed in secondary legislation.
Sitting suspended for a Division in the House.
This instrument amends four instances of such forms prescribed in election rules: two instances for county, district and London borough mayoral elections; and two for combined authority mayoral elections. Regardless of the type of office, the amendments to each consent to nomination form have the same effect. The changes update the forms to add a new reference to the updated criteria inserted by the disqualification Act. Further, this instrument updates the forms to require that copies of the relevant new sections from the disqualification Act are reproduced in full and appended to these forms for candidates’ information.
Noble Lords who have been following this matter closely will recall that the disqualification Act was informed by a 2017 government consultation. In our response, we committed to seek to legislate to disqualify sex offenders from local government. This instrument is the last stage to implement this commitment fully.
It should be noted that, alongside this instrument updating mayoral election rules, a similar instrument was made by negative procedure on 30 May. The Local Authority and Greater London Authority Elections (Nomination of Candidates) (Amendment) (England) Rules 2022 updated election rules in the same manner for all tiers of councils, the London Assembly and the Mayor of London.
These amendments to election rules follow statutory consultation with the Electoral Commission. We incorporated its suggestions and the changes have its full support. It has updated its guidance to inform candidates of the new disqualification criteria. Following this instrument coming into force, it will update the nomination packs containing the new consent to nomination forms.
I should clarify the remit of these changes. This statutory instrument applies to England only. Wales has legislated to disqualify sex offenders from local government office but the changes did not require amendments to secondary legislation. Implementation of this instrument should not be delayed as the provisions of the Act are in force from today.
This instrument fulfils the Government’s commitment to protect local communities and make sure that they can have continued trust and confidence in their mayoral candidates. I commend these regulations to the Committee.
My Lords, the regulations refer to today, so time is of the essence. I rise mainly on a point of principle. The Executive should always be questioned by the legislature; it is in that spirit that I always address your Lordships’ Committee. I fought eight general elections—I am glad to say that I won them—but I never saw forms such as are in the schedule. Their drawing up internally in the department must have been quite something; if they are now in their new form, congratulations should surely go to the department. One can only assess the hours that went into painstakingly putting them together. In a general election, one’s nomination form was always of supreme importance; you had to get it right because, if you did not, you did not get on the ballot paper. It is understandable that we need exactitude.
To make progress, can the Minister say how many mayors there are now? There are not many. Everyone knows of the great mayoralty of London but can the Minister itemise their numbers and say what they are so that the record might be up to date?
My Lords, I repeat the interests that I stated in the discussion of the previous statutory instrument as a councillor and a vice-president of the Local Government Association. I welcome the addition to the disqualification criteria of anyone who is on the sex offender register. I note what the Minister said, which is also in the document, that, although we are discussing the consent to nomination for mayoral candidates, this has been laid as a negative instrument to include councillors at all levels, including in London. I welcome this.
The Sexual Offences Act was passed in 2003 so why has it taken nigh on 20 years to get what would for everybody be an obvious disqualification criterion included on the consent of candidates form? What has it taken 20 years? I was lobbied by a sitting councillor in the north of England about a parish councillor who was put on the sex offender register. There was no way of disqualifying them. I remember sending Written Questions to the appropriate Minister at the time seeking some action on behalf of the Government to rectify this error because, whatever we think about the situation, people will not stand if they are on the sex offender register. If they have already been elected, they will not be disqualified if the criterion does not exist. That is what happened in this case. If you are elected to public office, you have authority and access to institutions that are not necessarily available to others. If you are on the sex offender register, that brings an additional risk to members of the public. Why has it taken 20 years when my little network of folk knows of an example where a disqualification should have occurred but could not occur because of this lack of action by the Government?
I have a second question, which I know the Minister will be happy to answer. We have this SI for council and mayoral elections, including for combined authority mayors, but what about Members of Parliament? Why is there not an SI that changes the consent to nomination candidates’ form for Members of Parliament? They have even greater status and access to institutions than a councillor or a mayor. Why is that not here? I gently reference the fact that, currently, a number of Members of Parliament are being investigated about complaints of sexual harassment or offences. That would seem to me to indicate that we—those of all parties and none—have got to be more aware of the folk that we ask to stand for public office. Here is a way, by including this criteria in a parliamentary candidates’ consent to nomination, to provide that bar and give protection to the public.
I clearly support what is here today but I have questions for the Minister. I think that he is now trying to find answers to them; I look forward to those.
My Lords, I again refer your Lordships to my entry in the register, stipulating that I am a local councillor in Burnley Borough Council.
This instrument will update the candidate consent to nomination forms to reflect the very welcome changes introduced by the Local Government (Disqualification) Act 2022, to which the Minister referred. An overwhelming majority of local councillors, mayors and mayoral candidates serve their communities to the best of their ability in the spirit of public service and public duty. I have done so for 15 years as a local councillor. I know that the Minister served as a council leader, as did the noble Baroness, Lady Pinnock.
However, when individuals fall short of the standards we expect from elected representatives we must ensure that action can be taken to remove them from office and, importantly, prevent them standing in the first place. Labour supported the associated Private Member’s Bill, with my honourable friend the shadow Minister, Jess Phillips MP, stating that
“it is important that this change is made in relation to all representatives, but with a special focus on those who act as corporate parents.”—[Official Report, Commons, Local Government (Disqualification) Bill Committee, 1/12/21; col. 4.]
It is great to have some cross-party agreement on what is quite a sensible thing to do. It is vital that we uphold the best standards in public life at all levels of government. I echo my noble friend Lord Jones’s comments. He spoke about the extra effort and hard work that has gone on behind the scenes to get this here.
I shall finish by asking the Minister a few questions, in the spirit of previous speakers. Are any further instruments necessary to implement provisions of the Local Government (Disqualification) Act 2022? Finally, can he confirm whether these measures will be in force for any upcoming local authority by-elections? I look forward to his response.
My Lords, I thank the Committee for considering this draft instrument. I also take the opportunity to pay tribute to the sponsors of the Local Government (Disqualification) Bill. I thank my noble friend Lord Udny-Lister and the Member for Mole Valley, Sir Paul Beresford—both very distinguished former leaders of Wandsworth Council—for their diligent work to progress the Bill here and in the other place respectively.
I will take a few moments to respond to noble Lords’ questions. In response to the noble Baroness, Lady Pinnock, this has taken a long time, but it was one of those things that came to light. It is a loophole that has been closed because of the Private Member’s Bill taken forward by my noble friend Lord Udny-Lister and Sir Paul Beresford. They are to be commended. It has taken too long, but we have got there. It is one of those things where we are responding to something that, frankly, was not front of mind until, as the noble Baroness said, there was someone in office who chose not to stand down when this became apparent.
The noble Lord, Lord Khan, wanted to know about implementation. My understanding is that the SI will come into effect the day after it is made after the Act commences. The issue is not about speed and delay but whether there is enough time to prepare. Certainly, there was no need for the usual. We are moving at pace. Therefore, by-elections will be covered because of the speed of implementation.
The noble Baroness, Lady Pinnock, wanted parity, if you like, and asked why not MPs, given some of the recent incidents and cases in the other place. As I previously responded in support of the Bill at its Third Reading,
“standards and conduct for MPs and PCCs are governed under separate regimes, with their own mechanisms to disqualify or sanction unacceptable behaviour.”—[Official Report, 4/3/22; col. 1083.]
We are doing this for members of a local authority, counsellors, local mayors, members of the London Assembly or the London mayor. There are other regimes for MPs. As noble Lords know, MPs can, under certain circumstances, be recalled if at least 10% of the constituency electorate sign a petition.
The noble Lord, Lord Jones, really tested me on the number of mayors and having a schedule of mayors. This is not as easy as noble Lords would think. Obviously we have the London mayor and the London Assembly as one model. A number of combined authorities have a directly elected mayor: Cambridgeshire and Peterborough, Greater Manchester, Liverpool City Region, North of Tyne, South Yorkshire, Tees Valley, West Midlands, West of England and West Yorkshire. Obviously we are covering directly elected mayors, of which we have a number now. There are four in London, in Croydon, Hackney, Tower Hamlets and Lewisham, as well as all the ceremonial mayors. I am told that the total number of directly elected mayors is 26 in England. That is quite a bit of work in response to the question from the noble Lord, Lord Jones.
In conclusion, it is essential that the provisions of the disqualification Act are accurately reflected in mayoral election rules. That is exactly what this instrument achieves, while ensuring that local government can continue to command people’s faith and trust, both now and in future. I therefore commend these regulations to the Committee.
Plant Health etc. (Miscellaneous Fees) (Amendment) (England) Regulations 2022
Considered in Grand Committee
My Lords, this instrument makes amendments to plant health fees established in the Plant Health etc. (Fees) (England) Regulations 2018 to ensure that there is no underrecovery or overrecovery of costs.
First, it ensures that the fees charged for plant health checks on regulated commodities imported into England from all third countries reflect the frequencies of those checks established under the new risk-targeted inspection scheme set out in the Official Controls (Plant Health) (Frequency of Checks) Regulations 2022, which will be laid in Parliament on 30 June and apply from July 2022. This approach to fees does not apply to a new flat rate fee, which this instrument also introduces and which I will discuss shortly.
It is our responsibility to protect biosecurity across plant and animal health and the wider ecosystem. To that end, plant health checks, encompassing documentary, identity and physical checks, are carried out on certain regulated consignments imported into England from third countries that may carry pests or diseases that could pose a risk to our biosecurity.
Currently, the highest-risk commodities are subject to 100% plant health checks. The level of identity and physical checks on other commodities is based on risk. The new risk-targeted inspection scheme will provide a risk-based method to determine the frequency of plant health checks, focusing specifically on risks to GB biosecurity. This scheme will apply equally to certain regulated imports from non-EU countries and from EU member states, Switzerland and Liechtenstein.
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 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 businesses might otherwise cause by their actions or non-actions, since most serious plant pests and diseases that arrive and spread in this country do so via commercial trade in plants and plant produce.
In line with the standard approach that the full cost of service delivery be recovered from businesses using these services, fees for physical and identity checks will reflect the frequencies established under the Official Controls (Plant Health) (Frequency of Checks) Regulations 2022. For commodities subject to reduced levels of physical and identity checks, a proportionally reduced fee is applied.
This statutory instrument applies to England only. The Scottish and Welsh Governments are following the same approach in terms of applying fees to recover the full costs of their respective inspections. The Scottish and Welsh Governments laid corresponding legislation on 20 May and 21 June respectively.
Secondly, this instrument provides for a flat rate fee on certain plants for plants imported to England from all third countries. The new risk-targeted inspection regime will see plants intended for final users subjected to lower frequencies of checks, compared with 100% frequencies for plants not intended for final users. This flat rate fee aims to prevent plants that have completed their production stage in a third country and are ready to be sold to consumers after import benefiting from a cost advantage over plants imported to complete their production in Great Britain, while maintaining full cost recovery. The policy for a flat rate fee was proposed following stakeholder concerns. The Welsh Government have laid a similar piece of legislation to implement the flat rate fee.
We have worked closely with industry bodies, including the Horticultural Trades Association and the National Farmers’ Union, on developing our approach to the flat rate fee. Following a consultation, it was decided that a new flat rate fee should be applied to plants for planting and cuttings. After feedback that a switch to a flat rate fee would significantly increase fees for importing bulbs and seeds for the final user, we have restricted the flat rate fee to commodities where there is a clear benefit to trade. This excludes bulbs and seeds from the proposed flat rate fee.
Thirdly, this instrument extends an exemption from the payment of fees for pre-export and export certification services where goods are moving from England to a business or private individual in Northern Ireland. This will continue to enable trade between England and Northern Ireland in line with the Government’s movement assistance scheme. The Welsh and Scottish Governments are extending these exemptions in a similar fashion.
Finally, an error is corrected to reinstate in the fees regulations a provision for fees for samples taken on imports, which was omitted by the Plant Health etc. (Fees) (England) (Amendment) Regulations 2021.
This instrument is necessary because it ensures that there is no over-recovery of fees charged for plant health checks on commodities imported from third countries and maintains the full cost recovery of plant health services. If this instrument is not made, it would lead to over-recovery of fees from businesses, which would mean that proposals agreed with stakeholders on a flat rate fee for certain categories of plants would not be implemented. I beg to move.
My Lords, I thank my noble friend for introducing the regulations before us. I broadly welcome them, but I have a number of questions.
Paragraph 12.1 of the Explanatory Memorandum states:
“The impact on business … is that these changes are estimated to save businesses c. £1.2m per annum due to lower levels of checks and subsequent impact on fees.”
Obviously, a lower level of fees will be pleasing for the industry, but I had not grasped that we are introducing a lower level of checks through this instrument.
One of the difficulties of this instrument, which my noble friend just introduced, was also set out in the Secondary Legislation Scrutiny Committee’s fifth report. As my noble friend stated at the outset, there will be a second statutory instrument at the end of June that will set out the regime. Why has the way in which the fees have been structured been separated from the regime? Why have we not had an opportunity to consider them both together? I would have thought that the regime was probably of most interest. When might we expect to see that statutory instrument, as today is already 28 June?
Am I right to assume that paragraph 28 talks about the inspection fees being corrected, as they are being reinstated, when samples of imported consignments are taken for lab testing to confirm the presence of certain plant pests? Can my noble friend elaborate on whether that is done on an ad hoc basis or responding to intelligence? Does it include such laboratories as FERA, which I had the honour to represent in North Yorkshire for the last five years I was in the other place?
Also, is this one of the instruments that appears on the famous dashboard that we heard about last week? Is it one of the 570 statutory instruments that is retained EU law or is it a stand-alone instrument? Will we come back to look at this in a different context? I welcome the opportunity to debate and approve the regulations this afternoon.
My Lords, I thank the Minister for his introduction and for the helpful briefing that he organised beforehand.
The Explanatory Memorandum makes it clear that the purpose of the regulations is to help reduce biosecurity risk and to protect the environment from the spread of harmful pests and diseases. Obviously, these are objectives that we can all aspire to, but I would like to explore in more detail whether the proposed changes will achieve that result.
The new fees structure set out in this SI is based on a new risk-targeted inspections scheme which is set out in a separate SI, the Official Controls (Plant Health) (Frequency of Checks) Regulations, which this SI says will apply from July 2022, and to which the Minister referred as well. However, that SI has not been published yet. When I queried this with the department, I was told that it would be published on 30 June, which happens to be a couple of days after this debate. The noble Baroness, Lady McIntosh, also raised this point. Where is the parliamentary scrutiny in this process? We are being asked to agree the fees without seeing the risk-based scheme in the first place.
The basis of the proposed changes was set out in a government consultation. In the Government’s response to the consultation, dated 31 March 2022, they concluded that imposing full checks on all categories of plants needed to be balanced with the impact on regulators and trade. In effect, it appears that this is a watering down of our biosecurity risk regime at a time when the threat of importing new plants and diseases with new and emerging pathogens is increasing.
I think it is fair to say that this is not a very reassuring SI in terms of the impact on biosecurity, and that the proposed changes were not greeted with unanimous support during the consultation. For example, the Government’s response to the consultation flags up that concerns were raised about the ability of the plant health risk group to respond quickly to new outbreaks. Obviously, there are different sorts of outbreak; some can be predictable, as can some disease threats, but some occur unusually and out of the blue. Is the plant health risk group really in a position to be able to judge and assess that risk, and to measure the right plants that are coming across our borders? There was a feeling that the inspection methods and technology applications were out of date and that we needed to modernise them. Concerns were also raised about the need for more transparency on the interception of pests and diseases and that, if a new pest or disease had been identified on UK shores, it needed to be shared more immediately.
These are all real challenges that Parliament has not yet had the chance to discuss, so I hope that the Minister can clarify why we have had such limited opportunity for parliamentary scrutiny on a very important issue that we have debated on a number of occasions in the past. Quite rightly, everyone has said that there is an acute need to take biosecurity more seriously.
Returning to this SI, first, it acknowledges that some commodities will be subject to reduced levels of physical and identity checks, leading to a lower fee being applied. However, nowhere does it really say that those at higher risk levels will have to pay a higher fee. I am interested to know how that will work in terms of our biosecurity protection.
Secondly, the SI sets out fees for checks on high-priority commodities from the EU and/or commodities from non-EU countries. It says that the full costs of service delivery will be recovered from businesses using these services, as the Minister said in his introduction. On the practicalities of this, do Defra and the Forestry Commission, for example, have a dedicated fund for paying the staff who carry out the plant health checks? Can we ensure that this is cost neutral on that basis? Does it pay for the inspectors at the ports and entry points, as well as the laboratory staff checking for these new invasive pests and diseases? What numbers of staff are covered by the payments? Are we confident that staffing levels are at full complement to provide this new risk-based service? I think I am right that it was not necessary to carry out these checks on EU plant imports when we were part of the EU, so is this an additional charge on imported plants which will be passed on to the consumer?
Thirdly, the fees set out in Schedule 1 show a very wide disparity. For example, it will cost £1.01 to physically check branches with foliage imported from the EU, compared with £156.69 to physically check seed potatoes from some third countries. Can the Minister explain why there is such a big difference in inspection costs?
The SI also provides for a temporary flat rate fee on imports intended for final users from the EU, as the Minister explained. The Explanatory Memorandum says that this is to prevent plants finished in the EU having
“a cost advantage over plants imported for finishing in Great Britain.”
It goes on to say that Defra has decided to restrict
“the flat rate … to … goods where there is a clear benefit to trade”.
Who makes the judgment on this “clear benefit to trade”? How long is the temporary flat rate fee intended to last? I look forward to the Minister’s response.
I am grateful to both noble Baronesses for their points. To continue to protect plant biosecurity while facilitating the trade and movement of plants and plant material, it is essential that consignments that could pose a risk be subject to risk-based inspections before entering Great Britain. As I described, this instrument will maintain the alignment of plant health inspection fees with UK government policy to recover the full costs of official checks to manage risks arising from commercial activity.
I will respond in a rather random way to both questioners—I hope the Committee will forgive me. First, my noble friend Lady McIntosh and the noble Baroness, Lady Jones, asked why the two SIs are being dealt with separately and why Parliament has not been given a chance to debate measures in the other SI before deciding on this one. The Official Controls (Plant Health) (Frequency of Checks) Regulations 2022 set out the methods used to calculate the frequencies on which the fees in this instrument are based. Those methods and the resulting frequencies of checks have been published via consultation.
Both SIs are scheduled to come into force on 22 July and require scheduling to ensure that they do so in an aligned fashion. The difference in scheduling of these SIs is due to the different type of parliamentary procedure that they should follow, determined by their parent Acts. The Official Controls (Plant Health) (Frequency of Checks) Regulations 2022 will be open to full parliamentary scrutiny, as per the negative procedure, following being laid on 30 June.
I reassure both noble Baronesses that we have raised the standards of biosecurity in this country since leaving the EU. We have put resources behind it, employing 150 more inspectors, and we are approaching it in a unified way, with Border Force improving our training at ports of entry. As the Committee knows, we are rolling out our BCPs in the coming months to make sure that we stop more high-risk plants at the border, rather than at point of delivery.
The noble Baroness, Lady Jones, asked about some fees and checks being reduced significantly and whether that means that we are somehow weakening biosecurity as we will not be inspecting so intensively. The new inspection arrangements are based on international standards for categorising commodities according to risk. This will allow the Animal and Plant Health Agency to focus on those commodities representing the highest potential risk, including trees and other woody plants to be grown outdoors, while reducing input on those products representing a low risk due to their intended use, such as houseplants and many fruits and vegetables for consumption. In this way, we will be targeting resources in the most effective way to protect GB biosecurity while avoiding unnecessary burdens and costs on businesses.
The noble Baroness asked who makes this decision. Experts make the decision, not me. Our Chief Plant Health Officer, who I speak to regularly and have spoken to today, and I have a monthly biosecurity meeting where we look at risks, but the risk is managed by people who understand its evidence base. Those are the basic criteria around which we make this decision. The plant health risk group meets monthly and continuously monitors new threats, taking account of the results of import inspections and other relevant information, such as scientific reports and developments in other countries. Inspection frequencies are one tool by which risks can be mitigated, and they will be kept under frequent review. However, it is already the case that the highest-risk plants and products, including trees and woody plants, will be inspected more intensively, and that we will keep our import requirements under continuous review to determine where they need to be strengthened in response to new or altered risks, as was the case in the recent pine processionary moth incident.
Going back to my noble friend Lady McIntosh, certain goods are subject to routine sampling and testing, such as seeds. In other cases, goods are sampled when an inspector sees something concerning during an official import inspection. A sample is taken to confirm the presence or absence of a controlled pest.
A question was asked about the large difference between some fees. It is a good point to make. The risk associated with specific commodities is the basis on which the fees are set. The highest-risk commodities are subject to 100% documentary, identity and physical checks and 100% of associated fees. Lower-risk goods are subject to lower frequencies of checks and therefore proportionately lower fees. Defra and its agencies are not alone in doing this. There is a protocol across Whitehall about charging for these activities. That protocol is set by the Treasury. We work closely with it to make sure that our rules for cost recovery are in accordance with those laid by the Government.
I should say at this point that the Government announced on 28 April that the remaining import controls on goods from the EU, Liechtenstein and Switzerland, including plants and plant products, will no longer be introduced this year. Instead, traders will continue to move their goods from the EU to GB as they do now. The rest of the controls which were planned for introduction on 1 July are no longer going ahead. This means that import checks of high-priority plants and plant products will not be moving to border control posts yet. Deregulated and notifiable produce and cut flowers will not be subject to import checks from July. Low-risk Article 73 goods will no longer require prenotification but will be assessed on a risk basis.
I have received inspiration in reply to a question about who makes the decision. This is agreed on the basis of consultation with stakeholders, as we have done with this SI, which has the support of the industry. That is really important to us.
There was also a question about the flat-rate fee. The fee will be in place until a fees review has taken place. That will involve a full review of all plant health fees, including the methodologies used to determine them. It is a multi-year process involving close work with stakeholders.
The other point I would make is on the disparity in funding for foliage versus physical checks, which the noble Baroness rightly raised. There is a serious risk to seed potatoes, which is why they are charged at a higher cost. Foliage—an apple, for example—is a simple product to assess. We want to make sure that we are doing it on the basis of risk but also in accordance with cross-government rules on charging.
As I have outlined, these regulations ensure that full cost recovery of plant health services is maintained and that the costs of inspecting imported plant health-controlled material are met by those businesses using Defra’s import inspection services. With that—
I thank the Minister for his reply, which was, as ever, very comprehensive. I just want to go back to the original point about the missing SI that is not here. The Minister said that it and this SI originally came from two pieces of legislation, which is why they ended up here in a different order, but there must be somebody in Defra who can apply a bit of common sense to that ordering. I do not wish to make too much heavy weather of it but I hope that a lesson is learned from this. The department needs to ensure that, whatever the originating piece of legislation, instruments come before Parliament in a sensible order so that we can deal with concurrent bits of legislation at the same time. I leave that thought with the Minister.
That thought is well made and will be reflected on. We want to make sure that we are doing this properly. As the noble Baroness says, the instruments come from two separate pieces of legislation. Which measures are affirmative or negative, in what is brought before us in this place, is an enigma wrapped in a mystery to me. However, there are wiser minds than mine that understand these things. I accept the point: we try to apply common sense in everything we do and make it easy for noble Lords to hold the Government to account, but we are bound here by two distinct pieces of legislation. I am hopeful that they will go on to the statute book and improve the regime, and be in place by the middle of next month.
Common Agricultural Policy (Cross-Compliance Exemptions and Transitional Regulation) (Amendment) (EU Exit) Regulations 2022
Considered in Grand Committee
My Lords, I declare my farming interests as set out in the register.
These regulations apply to retained EU law relating to the common agricultural policy, specifically: rural development; the common organisation of the markets, known as the CMO; and the underlying cross-compliance rules that farmers and land managers must follow on their holding if they are claiming certain rural payments. The instrument, made using the powers of the withdrawal Act, is extremely limited in scope. It makes no policy changes to retained EU law and no provision for future funding.
This instrument corrects a number of requirements to make notifications to the European Commission, references to “member states”, references to EU funding and EU policies, reports to be prepared by the European Commission and references to prospective EU legislation not yet made. These references came into force in the EU through Regulation 2020/2220, which the European Commission published and brought into force only in December 2020. This was too late for Defra to address prior to the end of the transition period, therefore the references were brought into retained EU law in the UK at the end of that period.
These references are redundant or deficient in a domestic context. They would, if possible, have been amended or removed from the statute book by Defra’s 2020 EU exit SIs had the EU regulation that introduced them been made earlier. The provisions being amended add little to domestic law, place unnecessary requirements on the UK to comply with EU policies that the UK does not share, or actively contradict amendments that Defra and the devolved Administrations have already made to provide for the future of agriculture in the UK.
Leaving these references in force would leave an apparent ambiguity in domestic agricultural rules as it would give the misleading impression that the UK remained a member state of the EU; would receive EU funding for domestically funded schemes; was complying with the EU’s common agricultural policy strategic plans; would carry out EU reports; would make notifications to the European Commission; or would seek authorisation for programme modifications from the European Commission. This might be a source of potential confusion for some stakeholders.
This statutory instrument also amends Schedule 3 to the domestic Common Agricultural Policy (Control and Enforcement, Cross-Compliance, Scrutiny of Transactions and Appeals) Regulations 2014—a snappy title—which set out the circumstances under which a breach of the standards of good agricultural and environmental condition set out in Schedule 2 to those regulations is not a non-compliance with the cross-compliance rules.
The domestic Common Agricultural Policy (Control and Enforcement, Cross-Compliance, Scrutiny of Transactions and Appeals) Regulations 2014 implemented certain aspects of the common agricultural policy. Section 3 ensures that, where a farmer is carrying out an obligation, restriction or action under a domestic management agreement or measure, and where that conflicts with cross-compliance rules, this will not be considered a non-compliance—if noble Lords understand the double negative.
The amendment made by Regulation 2 of this instrument extends the list of management agreements and measures in Schedule 3 to the domestic common agricultural policy of the same regulations. This is in order to include new domestic scheme agreements made under Section 98 of the Environment Act 1995 and Section 1 of the Agriculture Act 2020, ensuring that the status quo prior to the end of the transition period as regards domestic agri-environment schemes continues going forward and that farmers engaging in new environmental land management schemes, for example, are not placed at unfair risk of penalisation for complying with scheme requirements.
The amendments made by this instrument to remove European references apply in England and Northern Ireland only, except for the amendments made by Regulation 4 of the instrument, which are UK-wide. This is because, with the exception of the amendments made by Regulation 4 of the instrument, Scotland and Wales chose to review and correct these remaining European references using their own legislation in 2021. The amendments made by Regulation 2 of this instrument to Schedule 3 to the common agricultural policy of the same regulations are England-only in scope, reflecting the England-only scope of these regulations. The instrument has been developed in close consultation with the devolved Administrations and laid with their consent. This instrument does no more than is appropriate to remove or correct inoperable European references and cross-compliance exemptions, and is predominantly technical in nature.
I beg to move.
My Lords, I greatly enjoyed my noble friend’s presentation of the instrument before us. I think that paragraphs 7.7 and 7.8 set out exactly what my noble friend said. I would just like to ask for a point of clarification. We were informed last week about this dashboard. I have had great amusement trying to find the dashboard and identify the 570—I am told—Defra regulations, of which I assume this is one.
Is my noble friend of the view that this instrument will come back before us within the next year? That would greatly help me. A close reading of today’s House of Lords Business will show that I have tabled a Question to help me to understand. If 570 Defra items are listed on the retained EU law dashboard, published on 22 June, which relate to phytosanitary, plant or animal health, welfare and hygiene measures? Presumably we will have the opportunity to consider each in turn when they come before us, but as a general rule many of them will fall because, like this one, they fall within a transitional period. As the CAP comes to a close and Brexit kicks in to a greater extent there will presumably be retained EU legislation such as this that will fall. Will we come back to this particular instrument in the next year or two for those purposes?
There must be other pieces of retained EU legislation that we spent hours going through in this very Room or remotely to see how they would apply, many of which I imagine we would wish to retain. Do we have to wait for the Brexit freedoms Bill—I am not quite sure what it is called—to come before us, or will we approach this on an ad hoc basis? It would certainly help me to understand, since I committed so many hours to my greater knowledge and understanding of what the EU retained legislation was at the time, what the situation will be with this and other instruments.
It strikes me that it will take up an inordinate amount of Defra officials’ time to go through this exercise. If such instruments will fall anyway, will we have to meet physically to confirm that they are redundant and that they have fallen out of use or will that happen naturally? Will we be required to go through every single regulation that we adopted as part of our retained EU law that we wish to keep on the statute book?
My Lords, I thank the Minister for his introduction to this SI and for the helpful briefing beforehand. I accept that the majority of these changes are technical in nature.
First, although it is not ideal, I understand why the changes to EU regulation 2020/2220 could not be made at this time, given that it was passed so close to the end of the transition period. It therefore makes sense to take this opportunity to remove the provisions to minimise ambiguity and potential confusion. I also accept that it is helpful to remove redundant references to the EU and member states where they no longer apply in UK law.
Secondly, with regard to the changes to cross-compliance regulations, I can see why it might be necessary to widen the scope of the existing cross-compliance exemptions as set out in Schedule 3. However, I have some specific questions about this. These new exemptions to the schedule are very specific and refer only to the specific changes we made to Section 98 of the Environment Act 1995 and Section 1 of the Agriculture Act 2020. Can we be sure that these two provisions are the only two occasions where exemptions to the cross-compliance rules should be necessary?
I am struggling with some of the detail here, but I do not think many farmers will be operating exclusively under those agreements. That raises the question of what happens if, for example, their environmental work is, say, 20% but also has a direct impact on other activities, such as food production, at 80%. Would they be penalised, or is there an element of discretion? If so, what would that look like? In other words, what is the interface between the old cross-compliance and the new arrangements? How much discretion is there in all that or is it absolutely fixed in stone?
I still do not feel, having read the SI several times, that the application of the cross-compliance rules is clear, notwithstanding double negatives and so on. I would not relish being a farmer and having to try to understand and apply them. To be absolutely clear about this, are they to be applied only to claims under the old basic payment scheme? Therefore, will the cross- compliance rules be phased out as any claims under the old CAP scheme are phased out?
Given that there is wide acknowledgement that the CAP was too rigid and the financial penalties for non-compliances were too onerous, why are the Government not taking this opportunity to introduce the lighter-touch regime we were promised when we debated the then Agriculture Bill? Can we be assured that the roll-out of ELMS and any future UK agricultural and rural payment schemes will be assessed without cross-compliance penalties? How is that all going to work in future?
I look forward to the Minister’s response. I also look forward to the Minister’s response to the very interesting questions from the noble Baroness, Lady McIntosh, which I would like to know the answers to as well.
I am grateful to the noble Baroness and my noble friend for their contributions; I will try to answer their questions.
On the dashboard, these regulations and all retained EU law will be carefully reviewed as we go through the next few months. The Bill text is yet to be finalised. We are working closely with the Cabinet Office on what will be required in Defra-retained legislation. My noble friend Lady McIntosh is right to point out that we are coming to the end of the transition period, which is why we are doing all this stuff now. The tidying-up operation we are bringing in is because the sunset element of the EU withdrawal Act will be later this year and we want to get these matters resolved.
My noble friend asked how this instrument relates to the Brexit freedoms Bill. This instrument was an EU exit instrument made using the powers of the European Union (Withdrawal) Act 2018. As such, it makes no policy changes and does no more than is appropriate to make this common agricultural policy legislation fully operable now that the transition period with the EU has concluded. The Brexit freedoms Bill makes it easier to amend or remove outdated retained EU law from the statute book, ensuring that the UK continues to seize the benefits of Brexit and utilise our regulatory freedoms. Future regulation will be in line with our new regulatory principles. This answers some of the points that the noble Baroness, Lady Jones, made. Our rules will be proportionate and create a collaboration with business to help spur on economic growth.
I would just say, to her final point on ELMS, that we are trying to generate a culture change within agriculture. The cross-compliance rules of the common agricultural policy were tedious—I speak with the scars on my back from having to fill in the IACS forms and all their successors—and you could feel the dead hand of government on your shoulder regulating every aspect of what you do. We are transferring to a system that trusts farmers to draw down from a list of possible actions they might like to take and treats them rather like we do taxpayers. We taxpayers fill in our tax returns and the Government trust us unless they have reason not to. Occasionally, they will do an inspection. Occasionally, they will do a risk-based, intelligence-based assessment of whether somebody is at risk of breaking those rules. If they do break those rules, there are sanctions, but we want to be working with farmers much more, encouraging them into the new schemes and seeing the benefits that will come from that.
The noble Baroness, Lady Jones, made a very important point about cross-compliance regulation and enforcement. We are reforming our regulatory system, as I have said, to meet the country’s need and we will deliver a clear, fair and effective system. Cross-compliance will end at the point that the CAP direct payments are dealing from land. However, protections provided by cross-compliance will mostly continue. Domestic legislation already contains most of the same rules as cross-compliance and enforcement action to deal with any non-compliance.
The end of cross-compliance provides an opportunity, as I say, to move away from an approach that is seen to be disproportionate. We are reforming our farming regulatory system using the Dame Glenys Stacey 2018 review recommendations and by working closely with farmers and others. We want a farming regulatory approach that is focused on outcomes and based on the core principles of partnership, adaptability, proportionality, transparency and efficiency.
Some questions related to the whole area of complexity. Defra is working hard to make the system as easy as possible for everyone. We have simplified the online application system to make it faster and easier for farmers to apply and revised the scheme standards to make them clearer and more self-explanatory. Farmers can be in the SFI and the Countryside Stewardship scheme or the Environmental Stewardship scheme at the same time, so long as they are not being paid for the same actions twice and the actions are compatible.
The guidance includes information on how the scheme interacts with others, and the system will automatically show people which areas of their land are eligible for the sustainable farming incentive. The department’s “Future Farming” blog has quick links to all its schemes, and its future farming and countryside engagement teams run fortnightly show-and-tell demonstrations with the top three farming organisations so that they can cascade the information to their members. I saw them in action at Groundswell last week, where they were explaining these schemes to farmers. They are going round all the shows and making themselves available by all means, electronic and physical, to convey the new regime that we want and to make sure that farmers and other stakeholders understand it in the future.
I will look through Hansard to see whether there are further points that I have missed, but without knowledge of any further points, I beg that this motion be agreed.
I am sorry, I do not normally interrupt the Minister, but can this be right? I think the Minister said, which I did not expect him to, that when the basic payment scheme is phased out, as it will be, cross-compliance will carry on after that. Is that the correct understanding of what he said?
There is some conditionality on the scheme. If you say that you are going to plant a headland, you have to plant a headland with wild flowers, and it is the same if you are doing something that comes under the heading of “public goods” that we are pushing through our new schemes under the SFI. However, as I said, we want to do this with a light touch. We want farmers to be trusted to do it. The cross-compliance elements will remain as the schemes are phased out, but then we want to move to a system that is more trusting of farmers to do the right thing.
Committee adjourned at 5.17 pm.