The Environment, Food and Rural Affairs Committee published its Tenth Report of Session 2017–19, Scrutiny of the Agriculture Bill (HC 1591), on 27 November 2018. The Government response was received on 10 March 2020 and is appended to this report.
The government thanks the Environment, Food and Rural Affairs Select Committee for its report ‘Scrutiny of the Agriculture Bill’.
The Agriculture Bill represents the first new domestic farming policy framework in over half a century. It is an ambitious piece of legislation that makes sure our farmers’ contribution to maintaining our countryside and producing healthy food will be greater than before.
We welcome the Committee’s scrutiny of the Bill which raises a number of important issues, which are addressed below; the paragraph numbers indicate the paragraphs referenced in the Committee’s Report.
Paragraph 3: Given the importance of this Bill in shaping UK agriculture for years to come, it is deeply disappointing that this Committee was not given the opportunity for thorough pre-legislative scrutiny. This unsatisfactory precedent has been swiftly followed by the publication of the Fisheries Bill without pre-legislative scrutiny. The government should explain why the Bill was not presented in draft form for pre-legislative scrutiny.
The programme of legislation for the 2017–19 session of Parliament included a large volume of critical legislation relating to EU exit. The Agriculture Bill 2017–19 was based on significant and extensive public and stakeholder consultation.
As the Agriculture Bill 2017–2019 progressed through Parliament it received a number of amendments for Committee and Report stages and was scrutinised line by line in the Committee debates. All the legislative scrutiny undertaken as the last Agriculture Bill progressed through the previous Parliament has been fundamental in the development of the current Agriculture Bill, which was introduced to Parliament on the 16th January 2020.
The government recognises the vital role of thorough parliamentary scrutiny in the legislative process and is confident both Houses will provide this before the Bill reaches the statute book. We value the EFRA Committee’s scrutiny provided in this Report and the related inquiry. When developing secondary legislation Defra will continue to work with the relevant parliamentary committees.
Paragraph 10: There is uncertainty about what the UK’s future holds post-Brexit and therefore it is appropriate for the Agriculture Bill to be an enabling bill, allowing the government some flexibility. However, we are disappointed by the extent to which powers have been delegated and by the Secretary of State’s weak justification of this approach. Delegated (or secondary) legislation cannot be scrutinised as effectively in Parliament as primary legislation. At the very least, the government should have published some indicative draft statutory instruments alongside the Bill. The government should provide us with a detailed timetable for its programme of Statutory Instruments relating to this Bill.
Paragraph 12: We are concerned that the imbalance of duties and powers in the Bill, combined with the significant delegation of powers, does not provide sufficient clarity about how the new system for agricultural support will function and how delegated powers will be used. Given the fundamental changes being proposed, the government should ensure that there are sufficient opportunities for parliamentary scrutiny as the new system and policies are implemented.
The Agriculture Bill is a departure from the lengthy and prescriptive regulations of the CAP. The Bill sets out a framework for future agriculture policy that allows for close cooperation with farmers, land managers and stakeholders in the design and delivery. The result is intended to be a more focussed and responsive agricultural policy that reflects the priorities of the government and stakeholders and that can be tailored to local situations and landscapes.
As we leave the CAP, Parliament will have more opportunities to scrutinise decisions over farming policy than it had during EU membership. In addition to the Agriculture Bill itself, and the ongoing scrutiny of parliamentary committees, Statutory Instruments (SIs) laid under the powers of the Bill will be subject to further parliamentary examination in due course. A majority of the delegated legislative powers in the Bill that provide for regulations to be made are subject to the affirmative procedure.
In response to EFRA’s request and to support further scrutiny, an indicative table of SIs can be found at Annex A. As we leave the CAP we are committed to consulting and working closely with stakeholders to shape our future policies, including the regulations that will underpin these policies. For some policy areas we will only be able to provide more detail about what regulations are required as and when decisions are made. The timings laid out in Annex A are therefore necessarily broad and based on our current programme of work. We will continue to work closely with EFRA and other relevant parliamentary committees as this programme continues to be implemented.
The House or Lords Delegated Powers and Regulatory Reform Committee’s (DPRRC) report on the Agriculture Bill mirrored some of the concerns raised by EFRA regarding the use of delegated powers. We have listened to these concerns and have looked to address them within the new Bill. These are fully laid out in our response to that Memorandum, to be found at Annex B.
Paragraph 23: The list of purposes (public goods) under Clause 1 of the Bill is sufficiently broad that most environmentally beneficial activities could qualify for funding. However, we are disappointed that this Clause does not explicitly recognise the important balance that must be struck between food production and the environment.
Defra agrees with the Committee that environmental protection does not have to come at the expense of food production. The Agriculture Bill introduces a new clause aimed at addressing the concerns relating to the balance that needs to be struck between food production and the environment. Clause 1(4) places a duty on the Secretary of State to have regard to the need to encourage food production in England (as well as its production in an environmentally sustainable way) when framing financial assistance schemes. This new duty is a check and balance on decision making in the design of future environmental land management, animal health and welfare, plant health and productivity schemes. The Secretary of State, amongst other things, will be required to consider the potential implications of policy design decisions on domestic food production.
Defra will take a collaborative approach in developing its policy. We will work with farmers and land managers to develop new schemes and promote the important role of the agricultural community in making a positive contribution to our environment and to the food sector. Our new Environmental Land Management scheme will give farmers and land managers greater control than under the CAP. There will be more flexibility over how they can use their land to deliver environmental benefits, and how best to integrate this with their food and timber production and other commercial activities.
Maintaining and improving our agricultural capacity requires us to protect the environment. For example, soil erosion and compaction from agriculture was estimated to impose an external cost in England and Wales of £305 million in 2010. Many land management activities benefit productivity as well as the environment. For example, the economic benefit of pollinators on UK fruit, vegetable and oil seed rape production is estimated at £600 million to £700 million GVA per annum. Measures that increase numbers of crop-pest predators and pollinators have been proven to improve yields.
Paragraph 24: We are also concerned that there was no indication provided by the government about how much financial assistance might be allocated to each public good or how they might be prioritised. Overall this will not give enough clarity to recipients about where to focus their efforts in order to qualify for financial assistance. The government should explain how it envisages the listed public goods would be prioritised when competing for a limited pot of funding.
We do not see the list of purposes in the Agriculture Bill as setting competing priorities. This was also the view of respondents to the Health and Harmony consultation. Respondents wanted us to deliver across all of the public goods we identified, and highlighted the interlinked nature of these public goods. In reality, farmers and land managers will be providing a whole range of benefits. They will be delivering many of the purposes for which the Secretary of State may provide financial assistance at any one time.
The case for future funding rests heavily on the value for money of our proposed policies, which are being developed in close collaboration with industry, representative organisations and other stakeholders. We have been clear that future funding will be focussed on delivering public goods. Our plans also include measures regarding improving animal health, welfare and plant health. In advance of future schemes starting, we will provide farmers and land managers with enough clarity about our objectives and priorities and how they might adapt their businesses to meet them. We will also provide farmers and land managers with resilience support to help some prepare for the upcoming changes.
The Agriculture Bill introduces a new clause 4 to place a duty on the Secretary of State to produce and publish a multi-annual financial assistance (MAFA) plan. This plan will give information about the expected use of the financial assistance powers provided under clause 1 during the period to which the plan relates. The intention of the new MAFA clause is to require the government to publish further details about how the financial assistance powers in the Bill will be used, what types of schemes we intend to run, and set out what our strategic priorities for agriculture policy will be across a longer time period. This will provide certainty for the sector, enabling it to prepare for the future.
We recognise that farmers and land managers will need time to adapt and prepare for the future so we have committed to a seven year transition, starting in 2021. Initially, there will be an interim simplified Countryside Stewardship programme running during this period (2021 to 2024), as well as a National Pilot for our future Environmental Land Management scheme (ELM) (2021 to 2024). Farmers and land managers will be able to move from these interim arrangements into the future ELM scheme when it is launched in 2024. During the transition, we will also support farmers to improve their productivity so that they are able to take up new opportunities now we have left the EU.
Paragraph 26: the government should, before 2020, outline how it would phase out direct payments over the transition period, in order to give some certainty to those who currently receive direct payments under the CAP.
Providing farmers with clarity and certainty about our plans to phase out Direct Payments is important so they can best plan for the future. To provide early certainty the government said in January 2018 that it would pay Direct Payments for the 2019 scheme year on the same basis as previously and that it planned to allocate the money paid in Direct Payments for 2020 in much the same way. On 30 December 2019 the Chancellor of the Exchequer provided further certainty by announcing funding for 2020 Direct Payments that matches the total funding for Direct Payments available for 2019.
The Government also provided early information about how it intends to phase out Direct Payments. In the Policy Statement published in September 2018, we set out a seven year agricultural transition and the reductions the government intends to apply to Direct Payments in the first year of this transition. Including this transition in the Agriculture Bill has provided further clarity about our intentions and will, when included in statute, provide further certainty for the sector.
The government will set the reductions to be applied to Direct Payments for the later years of the transition. In doing so, it will take account of its detailed plans for future schemes and wider discussions about government spending.
More generally, the government’s election manifesto guaranteed the current annual budget in every year of the new Parliament, giving significant certainty on funding for the coming years. In England this will enable the Government to provide financial support for the purposes set out in the Agriculture Bill. The government will publish further information about the payments available to farmers during the agricultural transition as soon as possible.
Paragraph 27: in 2020, or before direct payments are reduced, the government should conduct a review of whether the new environmental land management schemes are sufficiently advanced to begin replacing the direct payment system. The review should also assess whether farmers and land managers are aware of the new scheme and how to access it.
We know we need to get the design of our future Environmental Land Management (ELM) scheme right, and make sure it works before launching it in 2024. This is why we are constantly reviewing our proposals, for example by testing and trialling key design elements of the ELM scheme, working with farmers, land managers and other stakeholders to design the scheme collaboratively. Once tested, these elements will be subjected to further evaluation through the national pilot. Reducing Direct Payments from 2021 will free up funding for the delivery of this pilot which we plan to begin in late 2021, alongside releasing funds for other measures to incentivise public goods and boost farmers’ productivity.
We will use the ELM pilot, which will begin in 2021, to assess the underlying systems and processes required to deliver the scheme, and to identify and remove any barriers to participation that we may have missed during testing. The pilot will help us co-design the scheme and make sure we capture all the learning required to make ELM a success. Another key aim of the national pilot is to build momentum and increase awareness of ELM in the run up to 2024.
We will implement the ELM pilot in phases to allow for flexibility as we develop the scheme, and enable us to deliver a scheme that is valued by farmers and land managers with widespread and significant participation. We will provide updates to farmers and land managers and continue to work with EFRA as we develop ELM.
By designing, testing and piloting ELM over an extended period we will provide more time for improvement than was possible when implementing schemes to meet EU requirements.
Paragraph 29: The government should amend the Bill to require it to establish a multiannual financial framework before the agriculture transition period commences. We propose the following wording:
Clause 36, page 27, line 29, at end insert–
“(2) No payment may be made under this Act unless the Secretary of State has made regulations in accordance with subsection (3) to implement a multiannual financial framework setting out the sums available under Parts 1 and 2 of this Act during the agricultural transition period.
(3) Regulations made under subsection (2) shall be made before the beginning of the agricultural transition period and shall be subject to affirmative resolution procedure.”
Farming is a long-term business, as is enhancing the environment. We recognise the importance of certainty and it is for that reason that the government has guaranteed the current annual budget in every year of the current Parliament. In addition, we have also committed to, and in the Agriculture Bill have legislated for, a seven year transition, starting in 2021.
The government has established processes for making coherent spending decisions, based on the priorities across government. Future spending reviews will therefore determine available agricultural budgets. We intend to provide more detail about the total of funding and its allocation during the agricultural transition as soon as possible.
We have reflected on the concerns raised around the Agriculture Bill 2017–2019, including in the EFRA Committee’s report. As a result, we have introduced Clause 4 in the Agriculture Bill 2019–2020. This places a duty on the Secretary of State to publish a multi-annual financial assistance plan, setting out the government’s strategic priorities, and to have regard to those priorities when determining what financial assistance to give.
Paragraph 36: the government should put its money where its mouth is and accept an amendment to the Agriculture Bill stipulating that food products imported as part of any future trade deal should meet or exceed British standards relating to production, animal welfare and the environment. This is particularly necessary because similar amendments to the Trade Bill have, so far have been voted down. We suggest the following amendment:
To move the following Clause—
“Import of agricultural goods
(1) Agricultural goods may be imported into the UK only if the standards to which those goods were produced were as high as, or higher than, standards which at the time of import applied under UK law relating to—
a) animal welfare,
b) protection of the environment, and
c) food safety.
(2) “Agricultural goods”, for the purposes of this section, means—
a) any livestock within the meaning of section 1(4),
b) any plants or seeds, within the meaning of section 15(6)
c) any product derived from livestock, plants or seeds.”
Paragraph 37: While respecting the delicate nature of the discussions between the UK and Scottish Governments over devolved competences, we hope that the Devolved Administrations would agree with the principle that food imports produced to lower standards should not be allowed under future trade deals.
The Government recognises the concerns underlying this recommendation and is committed to upholding our high environmental, food, and animal welfare standards now we have left the EU.
At the end of the transition period, the European Union (Withdrawal) Act 2018 will transfer onto the UK statute book all EU food safety and animal welfare standards. Our current high standards, including import requirements, will continue to apply.
Any future trade agreement must work for consumers, farmers, and businesses in the UK.
All agri-food products imported into the UK under existing or future free trade agreements will, as now, have to comply with our food safety standards. We will use the opportunities provided through future free trade agreements and wider international engagement to promote high environmental and animal welfare standards among our international trading partners.
Parliament will also have the opportunity to scrutinise the government’s negotiating approach at the outset and will continue to be engaged throughout negotiations, and to scrutinise any legislation necessary to implement these agreements.
We will consider and respond to amendments to the Bill as it continues its passage through Parliament.
Paragraph 45: We are pleased that the government is introducing measures to improve fairness in the supply chain for farmers and producers. However, we do not consider that the Rural Payments Agency (RPA) is the appropriate body to oversee and enforce fair dealing obligations; it does not have the confidence of farmers and lacks relevant expertise.
While the Rural Payments Agency (RPA) understandably experienced difficulties administering an overly-complex EU payments scheme in its early years; it is worth noting improvements continue to be made and by 20 January 2020, they had paid around 97% of eligible farmers their 2019 Basic Payment Scheme (BPS) payment, which builds on a record December for the RPA where 95.7% of BPS claims were paid. The RPA also administers a wide portfolio of other responsibilities, such as the School Milk Scheme and carcase classification
We consider that the depth of expertise possessed by the RPA and their pre-existing relationships with relevant supply-chain actors, such as abattoirs, suggests they would be well placed to take on such responsibilities. However, no final decisions have been taken about the body that would oversee and enforce the new codes of practice. Decisions about the design of the new codes, and the appropriate enforcement body, will be informed by industry consultation.
Paragraph 46: The Groceries Code Adjudicator (GCA) is a more logical entity to oversee fair dealing obligations than the RPA. In addition, we see no reason why fairness in the food supply chain should be governed by two separate processes and enforcement bodies. Fair dealing obligations of first purchasers of agricultural products, as specified in the Bill, should be the responsibility of the Groceries Code Adjudicator, whose resources and remit should be expanded accordingly. The levy on large retailers that funds the GCA’s work should not be a barrier; it could be expanded so that purchasing organisations in the supply chain whose annual turnover exceeds a set amount would contribute towards it.
The Groceries Code Adjudicator (GCA) was set up after a specific competition market investigation into the groceries sector with a clear purpose to ensure large supermarkets treat their direct suppliers lawfully and fairly in their business interactions. One of the main reasons the GCA has been so successful is that the Adjudicator is focused on a tightly defined but influential section of the supply chain. As such the government believes that a broad-brush approach over the whole supply chain would be unnecessary, disproportionate and most likely ineffective.
In October 2016, BEIS and Defra undertook a joint Call for Evidence on extending the remit of the GCA to indirect suppliers and invited views on any unfair trading practices affecting the groceries supply chain. The Call for Evidence closed in January 2017.
After analysing the responses, the BEIS/Defra joint response set out that there was insufficient evidence of a market failure across the supply chain to justify a major government intervention such as extending the remit of the GCA. The main issues raised related to farmers and primary producers and the government committed to several targeted and proportionate interventions.
The fair dealings provisions in the Bill are an effective way of addressing specific issues without the risk of introducing new regulations, which will entail some administrative burdens, where they might not be necessary.
Published: 1 April 2020