Brexit: Food Prices and Availability (EUC Report) - Motion to Take Note

Part of the debate – in the House of Lords at 2:49 pm on 25th April 2019.

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Photo of Lord Bilimoria Lord Bilimoria Crossbench 2:49 pm, 25th April 2019

My Lords, it is a huge privilege to follow my noble friend Lord Devon, who made an outstanding maiden speech. It demonstrated why he will make an outstanding contribution to this House. In his hustings speech to join the House of Lords—there is big competition to get in as a hereditary Peer—he said:

“I inherited the earldom of Devon upon the death of my father, Hugh, in August 2015. He was a Cross-Bench Peer, who enjoyed the distinction of being the last hereditary to take his seat by right in 1999. I sat on the steps of the Throne as he made his maiden speech in the debate on the future of the hereditary peerage. I was never prouder of him. He spoke of his duty and of how our family has championed Devon in this House for centuries”.

That sense of duty came across in my noble friend’s speech today, and I am sure his daughter—sitting on the steps of the Throne—will be equally proud of him as he was of his father.

My noble friend’s story is tremendous. I am wearing my Cambridge University Hawks’ Club tie in solidarity with him, a fellow Hawk, who played rugby for Cambridge; he was at St John’s. He went on a rugby tour to Las Vegas in America, where there was a chance meeting with a talented and famous actress, AJ Langer. The current Countess of Devon acted in several episodes of the popular 1990s show “Baywatch”. Today the two of them look after their family heritage, which my noble friend spoke so eloquently about. He will bring to bear his legal background as a barrister—he is dual-qualified, both here in the UK and in California in the United States—and the huge experience he has in IP, technology, arbitration and legislation, having won many famous cases. He has championed Devon, rural interests and the maritime economy. Yes, he is privileged to inherit an eight centuries-old castle, farm and land, but it is also a sustainable family SME. He will hope to be sensitive to the impact of legislation on small businesses. Most importantly, when he concluded his hustings speech, he said:

“As someone of no political affiliation, occupying a role created long before modern political parties, I will be determinedly independent”.

That came across in his wonderful maiden speech just now, on which we all congratulate him.

On the topic we are talking about, the Environment, Food and Rural Affairs Committee in the House of Commons released a very good report last year, Brexit: Trade in Food, which said:

The UK’s food and farming industry generates over £110 billion a year and employs one in eight people in the UK. Trade is vital to the industry. The EU is the UK’s single largest trading partner in agri-food products, accounting for 60% of exports and 70% of imports”.

It said very clearly, a year ago:

“Brexit will inevitably introduce friction to trading routes”.

It focused on the WTO option. It also highlighted the gross value added of the agri-food sector: agriculture and fishing was £11 billion; food and drink manufacturing, £31 billion; food and drink wholesaling, £12.6 billion; food and drink retailing, £30 billion; non-residential catering, £36 billion; and the total was £121 billion. It also listed employment in the agri-food sector: agriculture and fishing was 440,000 people; food and drink manufacturing, 420,000; food and drink wholesaling, 260,000; food and drink retailing, 1.1 million; non-residential catering, 1.8 million; total food sector, 3.6 million; and total agri-food sector, 4 million.

In 2017, exports of food, feed and drink were £22 billion, up 22%, yet we imported £46.2 billion-worth of food, feed and drink. The UK’s five largest export markets are Ireland, France, America, Germany and the Netherlands. Some 60% of UK food exports go to the EU and 70% of imports come from the EU. Seven of the UK’s top 10 export markets are EU member states, and Ireland is the UK’s largest export market. The UK imported more from Holland than from any other country—we have to note the Rotterdam effect—and the top nine countries from which the UK imported food, feed and drink in 2016 were EU members. The EU is absolutely crucial to this industry.

I congratulate the noble Lord, Lord Teverson, and his committee on its excellent report, Brexit: Food Prices and Availability, which was published a year ago. It makes many points that I will not repeat, but the most important is to put this in the context of our overall trade with the EU. Roughly 50% of our trade is with the EU: 44 to 45% of our exports and 55% of our imports. The report also makes the point that, on top of that, about 17% of our trade is through free trade agreements the EU has with other countries around the world—it categorically states that. Actually, therefore, two-thirds of our trade is through and with the European Union. The report then says that if no deal happens,

“Brexit is likely to result in an average tariff on food imports of 22%”.

It says that very clearly, then goes into great detail about the dangers and problems of rolling over the existing free trade agreements that the EU has with over 50 countries around the world. What is the reality? Maybe the Minister can confirm this. To my knowledge, agreements with only about six countries—including the Faroe Islands—are ready to roll over at the moment. It then talks about food standards and says:

“We heard no evidence that non-EU imports could increase significantly; 20% of the UK’s food already comes from outside the EU and there do not seem to be many other likely sources of supply”.

In a paper earlier this year, Food Politics and Policies in Post-Brexit Britain, Chatham House said:

“For almost half a century, the UK’s food system—comprising the totality of food production, transport, manufacturing, retailing and consumption—has been intrinsically and intricately linked to its membership of the European Community and, subsequently, the EU. Arguably, for no other sectors are the challenges and opportunities of Brexit as extensive as they are for UK food and agriculture. Reforming the UK’s food system won’t be easy”.

Import substitution will not be a practical reality. It went on:

“Currently, the UK operates on a ‘just in time’ food system, maintaining five to 10 days’ worth of groceries in the country (often less in the case of fresh produce). Once the UK is outside the EU, its food industry will need to factor in time for longer inspections of food imports at its borders, and build the necessary infrastructure to conduct these checks”.

Chatham House further said:

“The complexities of reforming post-Brexit food and agriculture sectors run deeper than economic and institutional entanglement. Price, safety, nutritional content and provenance of food are all deeply emotive among populations”.

The Institute for Fiscal Studies says:

“There is a great deal of uncertainty over what the nature of the UK’s post-Brexit trading arrangements will be. Decisions over post-Brexit membership of the single market and participation in the customs union will have profound effects on the price and import mix of the foods on UK supermarket shelves. It is also unclear whether sterling will depreciate further … as Brexit proceeds. These uncertainties over tariffs and the exchange rate mean that UK households are potentially going to be affected by considerable and unpredictable changes in food prices, with the poorest households”— this is a point the noble Lord, Lord Teverson, made—

“much more exposed to this risk than the richest households”.

The New York Times, in an excellent article earlier this month, asked:

“What would a no-deal Brexit look like? … Ports could be jammed … Food shortages could erupt … Manufacturing could halt … Medicine shortages could loom … British and EU citizens will be in limbo”.

This is not project fear any more. Three years ago you could arguably say that project fear was involved. Today this is more and more project reality.

The British Retail Consortium has said that food prices have reached their highest rate of inflation in almost six years. Its chief executive, Helen Dickinson, said:

“The bigger threat to food inflation remains the risks of a chaotic no-deal Brexit, which would lead to higher prices and less choice on the shelves”.

My own business supplies thousands of Indian and curry restaurants. An owner in Wales, Ana Miah, the managing director of the Juboraj group of restaurants in Cardiff, said that the value of the pound had increased the cost of food products from abroad and that he was concerned about the impact of no deal on the economy generally. It is affecting every part of the industry.

The impact on food banks has been mentioned in this debate. In Scotland the use of food banks hit a record high in 2018, soaring by 17% over the previous year, according to a report by the Trussell Trust. It said:

“Our benefits system is supposed to anchor any one of us from being swept into poverty but it’s not working for everybody that needs it. The government has a responsibility to prevent people from facing hunger. There must be additional protection and support in place to ensure people are not swept into poverty as Brexit unfolds”.

The chair of the Food and Drink Federation said that he is “absolutely terrified” of the possibility of a no-deal Brexit. Ian Wright warned of massive disruption in the industry. I could go on. It is not just one institution, authority or expert; it is one after the other.

To top it all, we had the leaked letter that the Daily Mail discovered, written by no less than Sir Mark Sedwill—the UK’s top civil servant—which warned of a 10% food price hike. Leaving the EU without any sort of trade deal and relying on WTO rules would also see a 10% spike in food prices, he said. This is from every quarter.

Parliament has categorically said that we will not tolerate a no-deal Brexit. Will the Minister confirm that a no-deal Brexit is not an option? As the 31 October deadline looms, we will not have no deal because we do not want no deal and will not agree to no deal. What will we do?

Jacob Rees-Mogg, basking in his fame, sent out a tweet saying:

“Cheaper food, clothing and footwear are all potential Brexit benefits”.

But what do the farmers say to that? One tweeted back:

“Disagree. I don’t think you can find substantially cheaper food (if you can, at what cost?) And then no-deal means you put barriers up to trade (non-tariff ) which means added cost to the food we import. That pushes up prices in my view. And that’s before you think currency”.

Another farmer, who milks 180 head of cattle in a dairy farm in South Wales, said:

“What about us? Do we suddenly not matter? Myself & my cows produce you #milk. We deal with over 100 local businesses. We maintain our beautiful landscape. And we tell our food & farming story in schools & events”.

This report shows categorically once again that we have a deal that Parliament has not agreed to. We have a backstop that will be essential. Northern Ireland is absolutely crucial. The whole Irish question was hardly talked about in the referendum and is now a major issue. The Irish border is the Achilles heel of Brexit.

We will come to 31 October, but before that we have council elections and EU elections; we have the Brexit Party and Change UK; and we may have a Conservative Party leadership election and a possible general election. I came back from India last week, where everyone said—whether government, business or citizen—“What is this great country of yours doing? Why don’t you sort yourselves out?” We can sort ourselves out very simply by putting it back to the people and having another referendum with today’s electorate, which will vote by over 60% to remain in the European Union. That is the best option for all, including for farmers and food.