Power to modify legislation governing the basic payment scheme

Agriculture Bill – in a Public Bill Committee at 2:30 pm on 1st November 2018.

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Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs) 2:30 pm, 1st November 2018

I beg to move amendment 105, in clause 6, page 5, line 6, leave out subsection (2).

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss amendment 106, in clause 7, page 6, line 13, leave out subsection (8).

This is unnecessary as it can be done as part of the phasing out under Clause 7, the greening rules can be simplified but the payment itself can continue. If this clause remains then there is nothing to prevent the ceasing of greening payments altogether, even though the explanatory notes suggest that the intention is to remove greening requirements but pay the greening monies as part of the direct payment.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I should say in passing that there was a Henry VIII power in clause 5 that we allowed to slip through. It is one of the powers that no doubt the House of Lords will have great joy in pointing out to the Government, when and if the Bill gets there.

We are now considering clause 6 and two straightforward amendments, looking at the powers to modify from one system to another. The question is what the clause really adds to the Bill, given that clause 7 tells us that it will phase out direct payments and delinked payments. One wonders why this power is in there at all and what the Government are doing by keeping the clause there. We would question why clause 6(2) and clause 7(8) are there and whether they are necessary. As the Minister has just said, either we have the strength of our convictions and we are going towards the greening of the farm, food and environmental system, or we will always be thinking that we could go back to a basic payment arrangement if all else fails.

Will the Minister explain what the clause does? The reality is that, if it remains, in extremis there is nothing to stop the Government going away from a greening payments system altogether and looking at other arrangements, as the explanatory notes highlight. Although we question whether the clause adds anything, if it was used inappropriately it could be quite dangerous.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

I am grateful for the opportunity to address why there is a need for this subsection of clause 6. The greening provisions in the CAP, by the admission of the European Commission and the EU auditors, have achieved next to nothing in environmental outcomes.

The genesis of the subsection was the fact that in the last CAP reform voices in the European Parliament pressed for a move away from pillar 1 direct payments and for greater emphasis to be placed on pillar 2 agri-environmental schemes, while the Council of Ministers and member states resisted that and clung to the idea of direct payments. The outcome was a classic EU fudge, which attempted to put greening conditions on to the direct payments in a way that has not been effective.

We have ended up with rather ludicrous rules, such as there being one window in which land must be made fallow for the purposes of the ecological focus area rule and a separate window for the purposes of the three-crop rule. There is all sorts of confusion because people have fallow land and they have to work out whether it is fallow for the purposes of the EFA rule or for the purposes of the three-crop rule.

There are also lots of unintended consequences of the three-crop rule and problems with different species being treated as the same. I remember having a long argument with our officials some years ago about whether a cabbage and a cauliflower were the same or a different species, whether a winter cauliflower was different from a summer cauliflower, and whether spring wheat was different from winter wheat. Our contention is that introducing rules of that sort to the direct payment scheme has ultimately failed, as even the EU admits.

The inclusion of these powers gives us the ability to switch off the greening provisions. As things stand, 30% of the single farm payment is linked to the greening conditions. One of the National Farmers Union’s concerns is that we have a secret plan to remove the greening conditions and take 30% of the single farm payment at the same time. I reassure the NFU that that will not happen, because the way the wiring of the scheme’s funding works means that if we remove the greening requirements, the payments linked to them automatically go back into what is called the national ceiling—the budget allocation—and are reflected in the remainder of the basic payment scheme payments. This will not affect farmers’ payments, but it will enable us to remove a lot of the unnecessary administration and checking around the greening requirements, which have achieved very little.

My point about the clause on the power to modify legislation governing the basic payment scheme, and about many other clauses in this part, is that the transition period will be seven years. The hon. Member for Stroud is right that there is a provision here for us to de-link payments all together, but there is not an obligation to do that and we may de-link payments in the later years of the transition; we may not de-link payments for the entire period of the transition.

I want farmers to feel early benefits and gains as a result of the fact that, because we are leaving the EU, we will be able to sweep away some of the pointless rules and unnecessary administration, and make the scheme we have work that little bit better. In that way, they will feel a difference from year one of the transition period and will not have to wait all the way to the end of the transition period before we can get rid of some of the legacy of the CAP.

This provision is important for us to be able to tackle some of the inadequacies in the retained scheme for the period that it might last, which could indeed be the full length of the transition period. It is not inevitable that we would use the de-linked payments, but we want the option to be able to do so, because we think that in some circumstances it would be powerful.

I hope I have been able to reassure the hon. Gentleman about the intention and purpose, and the need for us to be able to do this and to have this power. I hope I can also reassure stakeholders such as the NFU, which is concerned about whether it would have a knock-on impact on its members’ payments. It will not.

Amendment, by leave, withdrawn.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

I beg to move amendment 76, in clause 6, page 5, line 9, leave out “negative” and insert “affirmative”.

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this, it will be convenient to discuss the following Government amendments: 2, 3, 4, 5, 7, 8, 18, 12, 13 and 14.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

It is a real pleasure to serve under your chairmanship, Sir Roger. We have heard so much from my hon. Friend the Member for Stroud this morning and afternoon: I will now give him a break. Part of the reason for that is that my hon. Friend deals with the pure farming and agriculture issues, while I seem to be doing the really boring “techy” and legalistic stuff. [Interruption.] I will try not to make it boring.

However, when it comes to the text of amendment 76—leave out “negative” and insert “affirmative”—I would forgive Committee members for returning to their online shopping or whatever it is they are doing. Nevertheless, this is quite an important issue. It occurs in several places throughout the Bill. We were concerned about it during the passage of the European Union (Withdrawal) Bill and we have not stopped being worried about it now.

I notice that the Minister has a series of amendments in the same grouping. I hope that he will confirm that they deal with the concerns that I have raised by tabling amendment 76 and various other amendments to later parts of the Bill; it seems to me that the Government may have taken our point. However, I need to hear the Minister confirm that.

Amendment 76 is to clause 6. As my hon. Friend explained, under clause 6 the Secretary of State would have the power to modify the legislation governing the basic payment scheme. The problem for us is twofold. First, the Secretary of State has that power by regulation. I will expand on these arguments now, because they relate to other parts of the Bill; if I explain them fully this time, that might avert the need to do so on absolutely every occasion when this issue arises. I see that the hon. Member for Gordon is nodding furiously.

The problem is that the Secretary of State is attempting to give himself the power to change the legislation by regulation, but he seeks to do that—as the Bill is currently drafted—through the negative procedure. I will forgive Members for not being entirely au fait with the difference between the negative and the affirmative procedure, although Sir Roger and I served together on the Select Committee on Procedure for about five years. [Interruption.] And the hon. Member for North Dorset serves on it now, so I expect he will know exactly what I am talking about. The Procedure Committee spent a great deal of time bending its head around that matter, but Members can be here for a large number of years and still have no clue what the difference is. In the interest of teaching grannies to suck eggs, I will attempt to explain what the difference is and why it matters.

Members will have heard the power that the Secretary of State wishes to have referred to as “Henry VIII clauses”. That phrase came up a lot during the passage of the European Union (Withdrawal) Act 2018: the Opposition were concerned about the extent of the use of Henry VIII powers. Those powers are not unheard of, but it is very concerning when Bills have so many. We are equally concerned that this Bill contains a large number of those powers. A Henry VIII clause enables Ministers to amend or repeal provisions in an Act of Parliament using secondary legislation that is subject to varying degrees of parliamentary scrutiny. We need to pay particular attention to those clauses, because they enable a law to be changed without what most of us would understand as a normal level of scrutiny in this House. A helpful guide about the use of statutory instruments has been produced by the House of Commons Library, if Members are sufficiently interested: it is factsheet L7—“Statutory Instruments”.

The most important thing to understand is the difference between the negative and the affirmative procedure. The negative procedure is what, in this Bill, the Government say they wish the Secretary of State to be able to use when modifying the law. What happens is this:

“The instrument is laid in draft and cannot be made if the draft is disapproved within 40 days (draft instruments subject to the negative resolution are few and far between)…The instrument is laid after making, subject to annulment if a motion to annul (known as a ‘prayer’) is passed within 40 days.”

Unless something happens—it is usually the Opposition who make that prayer, which nowadays often takes the form of an early-day motion—that change to legislation will happen. That is the negative procedure.

Under the affirmative procedure, however, an instrument cannot become law unless it is approved by both Houses. Should the Secretary of State feel that he needs all these powers—although it is regrettable that he feels he needs them, in the absence of being able to put into the Bill the schemes and schedules that we would like to see—it is far better for them to be exercised according to the affirmative procedure. Under that procedure, the instrument is laid after making, but cannot come into force unless and until it is approved, so there is a far stronger role for Parliament.

When a Bill seeks to confer so much power on the Executive, we as parliamentarians have to be very careful about giving that power away. We would be enabling the Secretary of State to make substantial changes to the measures that we are being asked to agree—and this comes up throughout the Bill, not just in this clause. That is not something we can do lightly. Parliament needs to consider the issue carefully, because we are talking about an awful lot of power in the hands of one individual, subject to precious little scrutiny. That is not something that we can be relaxed about.

Photo of Simon Hoare Simon Hoare Conservative, North Dorset

The hon. Lady is making a point that is incredibly important for us all, as parliamentarians. Does she agree that the nub is not whether it is by the positive or negative procedure that these changes could be made, but to have the discretion of Ministers —I appreciate for some that might be a leap of faith—to opine on the scale of the change? Thus, for big changes the affirmative procedure could be used, and for small, housekeeping, tidying-up exercises, the negative could be used. One would not want to go through the whole of the positive SI procedure to change a word or a letter here or there. Might that be a way of addressing the perfectly legitimate concern that she raises?

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

The hon. Gentleman makes perfect sense. Our concern, though, is that the changes that Ministers seek the power to make are not small or technical—they are quite significant, and go to the heart of what the Bill is about. For that reason, we are not inclined to allow the issue just to go through unchallenged.

At the time of the withdrawal Act, we were assured that the negative procedure would be used only in such circumstances as the hon. Member for North Dorset describes, but many would agree that with all the SIs, and there will be a lot, there is a danger that Ministers—through a desire to get things done, perhaps, or just to get to the next stage of the process—will overuse that negative procedure. I am sure there is no ill intent here and that they are not trying to do things behind Parliament’s back, but we need to be incredibly cautious about the extent of the power being held by the Secretary of State.

Photo of Simon Hoare Simon Hoare Conservative, North Dorset

I ask this sincerely, to try to get to the answer: what I do not know, but the hon. Lady might, is whether we are aware of a trigger, either in the committee chaired by, I think, the Leader of the House or in inter-ministerial discussions, where somebody turns around and says, “No, that is an affirmative; no, that is a negative.” Is it the usual channels who say that? Or is it purely at the discretion of the individual Minister of the Crown charged with the powers in a statute? Is there some offline discussion of, or weighing of the balance of, the argument? I do not know the answer.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

Unfortunately not. In the case we are looking at now, it is laid down in the Bill—well, it is at the moment, but I am optimistic that the Minister will reassure me—that it will be the negative procedure. Most often, when a Minister has these powers, it is specified, alongside where that power lies in the Act, how it should be exercised. I do not know whether that is challengeable later, although I am happy to take advice on that; I am not sure that it is, and I cannot think off the top of my head of any occasions when that has happened.

Photo of Robert Goodwill Robert Goodwill Conservative, Scarborough and Whitby

The sorts of policies we are talking about have previously been EU policies, and the decision on whether to scrutinise them has been down to the European Scrutiny Committee. However, I cannot think of a single case where the Committee has called one in for debate and it was not all done and dusted and agreed before it even got to this place.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

That is an argument we often hear. The challenge to me is, “Why are you so worried about this now? This was all done in Brussels before.” To an extent, I take that point, but the point of this exercise is that we now, for the first time in a very long time, have the opportunity to develop our own agricultural policy. If we are going to do that, let us do it right. Let us do it really well. Let us ensure that, just because Ministers cannot quite decide exactly what they want to do at this stage—I think that is what underlies a lot of the vagaries of the Bill—we do not give them too many powers or give them those powers in a way that does not enable the fullest scrutiny by Parliament.

These are important issues that are subject to amendment by Ministers, and it would be much better if today we were debating exactly what they intended to do with the powers, rather than which mechanism should apply and whether they should have the powers at all, because what people are really interested in is what will happen. What support will be available? How will it be administered? What is their right to challenge? It would be better for us to be debating that, but insufficient work of that nature seems to have been done as yet. That is a theme that we keep coming back to.

To return to discussing the negative procedure, what happens is that in the House of Commons any Member can table a motion to annul a statutory instrument subject to the negative procedure. That sounds quite open, but in practice such motions are now pretty rarely tabled by any Member. They are generally tabled as early-day motions, and those are motions for which, as we all know, no time has been fixed and, in the vast majority of cases, no time ever becomes available. It is true that a motion tabled by the official Opposition will often be accommodated, although there is no certainty of that, because as we also know the Government essentially control the time in the House of Commons and are able to control, to a very large extent, what we spend our time debating.

We really get only one chance to get this right, because, as we just discussed, what is referred to as the parent Act—in this case, the Agriculture Act, as I hope it will become—is the enabling Act. That indicates which procedure will apply to an SI, so unless anyone knows better than me and thinks that there is an opportunity to challenge that in the future and apply a different procedure, I think that this is our only opportunity to determine whether a negative or an affirmative procedure applies to these powers.

I cannot repeat it often enough that the powers under discussion are not minor. They are significant powers to create offences, as we were just discussing. I feel very uncomfortable about giving a Secretary of State the power to create an offence, determine the appeal procedure and determine fines.

I notice that in relation to the other clause, the Government have said that the affirmative procedure will apply. That does not make it okay; it does not make us relaxed about this. It is still a problem, but at least in that instance the Government have accepted that, at the very least, there should be some availability of scrutiny by Parliament, and, to that extent, it is welcome. But I say again that what ought to be happening here is this: if the Government want to create an offence, they need to say what that offence is and what the consequences of the offence will be. The provision is so vague that it is very difficult to see any Opposition waving it through and not challenging it. I think that after this measure gets to the Lords, it will probably return here pretty much unrecognisable, hence the Minister’s comments, because I think he does take the points that have been made.

Photo of Nigel Huddleston Nigel Huddleston Conservative, Mid Worcestershire 3:00 pm, 1st November 2018

I defer to the hon. Lady’s knowledge of parliamentary process, which is far superior to mine. I have heard many such debates before and I have a lot of sympathy with them, because as Back Benchers, it is really important that we ensure we respect parliamentary scrutiny. However, I am also the kind of person who likes to see speed, and I have also seen a lot of parliamentary scrutiny become parliamentary process that has bogged things down and meant that we have taken much longer to come to a decision that we could have made very quickly. That worries me as well, so does she not think that we have to strike the right balance?

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

Absolutely; I completely agree. I have sat through some of these so-called line-by-line considerations, and that can be a very underwhelming experience. The feeling is that the scrutiny of the legislation is—well, where is it? It is just a to-and-fro across the room. But if I may say so, I think that this Committee is doing a reasonable job. [Hon. Members: “Hear, hear!”]

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

We are excellent, aren’t we? We seem to have a Minister who is willing to accept that there are problems with his Bill, and we do not always get that. I hope that this will be a rather better experience than the one that the hon. Member for Mid Worcestershire and I had previously.

In reply to the hon. Gentleman’s point about balancing speed with being thorough, I would say that the Government have had quite a long time to come up with something fuller than this. The Bill is rather empty, and there is lots of detail that could have been included. The Government have had sufficient time to do that, so to turn up and say, “Actually, we just want some powers and we’ll decide what to do with them at a later date,” is not good enough. We will continue to make that point.

Some people get very anxious about the overuse of delegated legislation. I have never been a Minister, and probably never will be, but I understand the attraction of it.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

I didn’t catch what the hon. Gentleman said. [Laughter.]

I understand that Ministers will want, as the hon. Member for Mid Worcestershire said, the ease to get on with things and not have to bother with troublesome MPs, and subject themselves to hours and hours of process. However, sometimes Parliament needs to say to Ministers, “Sorry, but in the kind of democracy that we have we can’t allow you to proceed in a way that does not allow parliamentary scrutiny.” Some people get very anxious about the overuse of delegated legislation. I used to feel that they were sometimes over-fixating on it, but having looked at the Bill more closely and gone through the withdrawal Act process, I am becoming one of those people who is inclined to worry about the extent to which Ministers are gathering up powers, and how they could be used in future.

This is not just about the current Secretary of State and Minister; it is about the future. I do not think that whether people are urban or not is the point. Governments will have competing priorities in the future, and they will not be the same ones that we have now, but I want to ensure that farming and agriculture are properly supported in a stable way that allows for certainty, long-term planning, greater food security and all the good things that we have discussed.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

I am interested in what the hon. Lady is saying about the affirmative procedure. I wonder whether she thinks that in at least some cases the super-affirmative procedure would be appropriate.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

We need to have a procedure that is appropriate for what we are trying to do. I think the best procedure on this issue would be to put something in the Bill—I do not know how much more super-affirmative we can get than that. We want to see what Ministers will do with the powers. That is all we are asking for. At the moment, the Government are asking us to take a leap of faith, and we are not prepared to do that.

We were told during the passage of the withdrawal Act that statutory instruments will not be used to make policy, but I would argue that that is exactly what they are being used to do in the Bill. Joelle Grogan from the London School of Economics puts it quite well. She said that delegated powers should not be used for policy-making, and that the former Secretary of State for Exiting the European Union, Mr Davis, during the withdrawal Act process, explicitly mentioned in the foreword to his White Paper that they will not be used as

“a vehicle for policy changes—but…will give the Government the necessary power to correct or remove the laws that would otherwise not function properly once we have left the EU.”

The measures in the Bill clearly exceed that commitment, which was made by the former Secretary of State as we considered the European Union (Withdrawal) Bill. This is serious. We did not really believe that assurance—I think we have been proved right—and I am not inclined to believe the assurances being given now either. Parliament needs to hold the Government to account much better.

Photo of Sandy Martin Sandy Martin Labour, Ipswich

Is not one of the issues that the negative procedure gives very little opportunity for people outside the House to raise concerns with us? A lot of issues we have been able to raise during this process have actually been fed to us by people who know about them and have faced them on the ground.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

That is a good point. If there is any purpose to our being in Committee two days a week for however many weeks is necessary, it is that we want to improve the Bill.

The process we have followed, including our taking evidence, has enabled us to make suggestions, many of which—although not all—came from third-sector organisations, interest groups or the National Farmers Union, for example. We have really gained from their expertise. The Bill will clearly be amended—it will not be the same as it is now by the end of the process—and I genuinely think that we have benefited from that input. Input is welcome, and it ought to be available to the Government if they intend to make substantive changes to any other measures as well.

The only other thing I say to that is that we will come later to amendments that address consultation and how we might better involve other organisations in shaping our future policy. It is important to note that, by using these affirmative or negative procedures, we cut out from the process not only expertise from organisations but most MPs as well. Let us not forget that Members do not just stick their hand up and get on one of those Committees. There are filters that sometimes enable and sometimes prevent Members from exercising the privilege of taking part in the consideration of measures.

There are many reasons to be concerned about the extensive use of regulations to amend the very legislation in which those regulations are contained. I have deep reservations about the overuse of the negative procedure. I hope that the Minister will confirm that his amendments, which are grouped with my amendment 76, have been tabled to address some of those concerns. Although they will not address my concerns about the use of regulations, he might at least assure me that he intends to use the affirmative procedure, rather than the negative.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

I will also speak to a large clutch of Government amendment—amendments 2 to 5, 7, 8 and 12 to 14—in this group. To reassure Committee members, most of them are identical, so I can deal with them quite quickly.

I begin by addressing the points raised by the hon. Member for Darlington regarding her amendment 76. The amendments we have tabled will not achieve exactly what she is trying to achieve with her amendment. However, they will achieve something important, which is to establish that the affirmative procedure will be used if consequential amendments need to be made to primary legislation. I will explain that in more detail later. It is a technical point, but having been on certain Committees, she is clearly familiar with it.

On the hon. Lady’s amendment, we believe that the appropriate procedure under clause 6 is the negative procedure, for a number of reasons. We are not altering any primary legislation; we are modifying a legacy scheme that will expire during the transition period anyway. The clause relates to the exercise of powers to remove certain requirements, simplify the schemes and switch off certain bits that are not working, but that is all in the context of the fact that the schemes will end anyway during the transition period. That is where clause 6 is fundamentally different from clause 3, which is about enforcement powers, checking powers and a scheme that has a long-term future, and that will be dealt with under the affirmative procedure.

Clause 6 is also different from clause 7, which is about powers to modify and change the way payments are made, and more substantive things such as changes to the scale of payments and decisions on de-linking. We recognise that they are a different order of magnitude, which is why we have chosen to make that clause subject to the affirmative procedure. For the powers in clause 6, however, which are simply about modifying and simplifying a legacy scheme, the negative procedure is the appropriate tool.

The hon. Lady asked about comments made during the passage of the European Union (Withdrawal) Act 2018 through Parliament that statutory instruments would not be used to make policy. That is true, and I think she has perhaps confused two things. That Act will not use secondary legislation to make policy, but this is not that Act—this will be the Agriculture Act. In common with pretty much every other Act of Parliament, the Bill will create powers to change policy through secondary legislation. We do that all the time. A few months ago, with support from both sides of the House, we introduced new policies and regulations on CCTV in slaughterhouses by an affirmative resolution under the Animal Welfare Act 2006. It is very common to introduce Acts of Parliament that give us powers in secondary legislation to implement policy changes, and the Bill is no different in that regard. As I said, for clause 6, the negative procedure is appropriate.

I turn now to the Government amendments 2, 3, 4, 5, 7, 8, 12 and 13, which simply insert a pointer to new subsection (4A) in clause 29. That new subsection is introduced by amendment 14, which is the critical one. It states that regulations that modify primary legislation are now subject to the affirmative procedure. That is a technical issue. Subsection (4A) sets a further constraint on regulation-making powers by requiring the affirmative procedure to be used in cases where the power in clause 29(3)(c) is used as a Henry VIII power to modify primary legislation. We do not believe that that will be needed very often, but let me give hon. Members some examples.

Clause 29(3)(c) extends the powers in the Bill so that, where required, we can make all the necessary provisions when we exercise those powers. Those provisions may cover matters that are consequential, supplementary, incidental or transitional in terms of the main exercise of the powers, or may be savings provisions. For example, if we exercise the power in clause 6(2) to terminate greening payments from a particular scheme year, we may use the savings power in clause 29 to ensure that we can still make any remaining payments to farmers who claimed in the preceding year. It is a narrow, technical point, but if we were to simply strike down the greening payments and there was an outstanding payment, as my hon. Friend the Member for Ludlow pointed out happens quite often, we would need to ensure that we had the savings provisions to be able to tie off the loose ends on those existing payments. There may also be a need to use this power to modify primary legislation—for example, to correct cross-references, although we do not expect that to happen very often either.

The Government are proposing the amendment to enhance parliamentary scrutiny—if we need to use the power in that way—and for reasons I think the hon. Member for Darlington will support. It does not deliver everything that she sought to achieve with amendment 76, because we believe that the negative resolution procedure is the correct one, but it does mean that if any other consequential amendments require changes to primary legislation, the affirmative resolution procedure would kick in. That is what amendment 14 delivers.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union) 3:15 pm, 1st November 2018

I am not as reassured as I was hoping to be, I am afraid. I was ready to withdraw amendment 76, but I have to disagree with the Minister about the appropriateness of the use of the negative procedure in clause 6. Although he says that it is not really that important and that this is a legacy scheme, we could end up with this legacy scheme for quite a while, and it is very important to the livelihoods of many people. We cannot accept that procedure, and I would like to test the view of the Committee.

Question put, That the amendment be made.

The Committee divided:

Ayes 7, Noes 10.

Question accordingly negatived.

Amendment made: 2, in clause 6, page 5, line 9, at end insert “(unless section 29(4A) applies)”.—(George Eustice.)

This amendment and Amendments 3, 4, 5, 7, 8, 12, 13, 18, 19, 22, 23, 26, 27, 39 and 40 insert pointers into provisions of the Bill which require regulations to be made using the negative resolution procedure. The pointers are to the requirement (as inserted by Amendment 14) to use the affirmative resolution procedure instead, if the regulations make (by virtue of Clause 29(3)(c)) supplementary, incidental, consequential, transitional or saving provision modifying primary legislation.

Question proposed, That the clause, as amended, stand part of the Bill.

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss the following:

Government new clause 2—Power to reduce the direct payments ceilings for England in 2020 by up to 15%.

Government new clause 3—Power to provide for the continuation of the basic payment scheme beyond 2020.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

I will speak to new clauses 2 and 3, which are largely technical amendments. New clause 2 relates to the ability to have an inter-pillar transfer. It allows us to modify retained EU regulations to provide for a smooth transition from the current direct payments scheme to our future arrangement, in line with our stated plans. We have said that we plan to allocate the money paid in direct payments for 2020 in England in much the same way as we do now. We have also committed to uphold the current level of agricultural funding under pillar 2 until 2020, as part of the transition to new domestic arrangements.

The new clause will allow the UK Government to maintain the direct payments budget in England in line with preceding years. It is modelled on existing powers to reduce the direct payments budget, which allows member states to make a reduction of up to 15% in each year up to 2019. Up to and including 2019, we have chosen to redirect 12% of the overall pillar 1 budget to rural development schemes in England. The direct payments regulation does not allow for a similar reduction in the direct payments budget for 2020, but the new clause will correct that and allow us to make that reduction. Without the new clause, the direct payments budget would increase in 2020, which would not be in line with our stated commitment and would go against our aims for a smooth transition.

Regulations made under new clause 2 will be subject to the affirmative resolution procedure. They will affect a large number of recipients and entail a significant spending decision, so we feel it is right that they receive full parliamentary scrutiny. However, our intention is ultimately to maintain the status quo in terms of the current arrangements for inter-pillar transfer.

New clause 3, which is also a technical amendment, will ensure that we are ready for all eventualities. It has been tabled with due concern for providing a smooth transition for farmers from direct payments to the future scheme. As I said, it is our intention to de-link direct payments at some point during the transition period, but first we will stop making payments under the basic payment scheme. In other words, the basic payment scheme will not operate after we have begun making de-linked payments.

Clause 7 provides the powers to de-link payments, either at the start of the transition period in 2021 or part of the way through the transition period. However, the CAP regulations, as retained, do not allow us to make basic payment scheme direct payments beyond 2020. Financial amounts are specified in the annexes only up to and including 2020; to continue making basic payments after that, it is necessary to provide a means to determine a financial amount beyond 2020. New clause 3 does not change our intentions for de-linking, but it gives us the powers that we need to set a national ceiling to enable payments to take place.

The hon. Member for Darlington will be pleased to know that regulations made under new clause 3 will be subject to the affirmative resolution procedure. The regulations may specify the method of calculation for a ceiling, rather than an actual financial amount. We have chosen that approach because the regulations will have an effect on a large number of farmers. I beg to move the two new clauses in the name of the Government.

Photo of Roger Gale Roger Gale Conservative, North Thanet

You cannot move them yet.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

We all make slight errors from time to time.

I have some questions for the Minister. I agree that the new clauses look like technical amendments, but I do not quite understand how new clause 2 relates to the Government’s policy document “Health and Harmony”, which sets out very different percentages for the gradual reduction of the basic payment. I presume that the new clause supersedes that document—or does it?

The policy document gives very clear figures for the direct payment bands: a 5% reduction for up to £30,000, a 10% reduction between £30,000 and £50,000, a 20% reduction between £50,000 and £150,000, and a 25% reduction for more than £150,000. That clearly implies that larger holdings would have more than 15%, so I do not understand how that relates to the figure of “up to 15%” in new clause 2. Does the new clause supersede the policy document? If not, what is the status of the policy document? Perhaps the Minister might like to start by answering that point.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

May I intervene to point out the policy context? The UK Government took a decision in 2014, under the powers available to us under EU law, to modulate up to 12%—in other words, to take 12% out of the pillar 1 budget, reducing farmers’ overall BPS payment, and move it into the pillar 2 budget to support agro-environment schemes or the rural development programme. All we seek to achieve with this power is the roll-over of the legal underpinning that supported that modulation rate. Our proposed taper on the basic payment scheme will be on the existing payment; it is a taper on the payment after 12% has been modulated to pillar 2.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I think I understand that, but I will clearly have to read it back quite carefully, because I am not sure that I totally understand it. I will see if I can get this right: we have taken 12.5% out, which might well have been the pillar 2 monies, and we are now looking at a scheme, for what remains, that moves from the basic payment, through a de-linked mechanism, to some environmental payments. Is that largely right?

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs 3:30 pm, 1st November 2018

That is broadly right. Farmers currently receive a BPS payment, which is an allocation from the pillar 1 budget minus the 12% that was moved across in 2014. We reviewed that decision in 2016 and said that we would keep it the same until 2019. All we want is continuity for 2020, and this gives us the legal underpinning that we need to maintain the modulation decision taken in 2014. Any future taper and phasing down of the single farm payment, as outlined here, will be based on the BPS payment that farmers have become accustomed to receiving since 2014.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I will read this interchange back very carefully to see whether it has been about what I think or whether I have misunderstood. This matters because, at the end of the day, farmers need to plan ahead, and 2021 is not that far in the future. Some farmers will lose a considerable amount of money, which they will have to replenish by moving into the new scheme, which we do not quite have yet.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I give way to the right hon. Gentleman, who will help me out.

Photo of Robert Goodwill Robert Goodwill Conservative, Scarborough and Whitby

The hon. Gentleman will be aware that many farmers have already entered into multi-annual environmental schemes. They need the security that the support will be there for them to deliver the plans they already have.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

That is very helpful. A lot of farmers have obviously entered the countryside stewardship scheme, but a lot of farmers have chosen to come out of it because they are very unhappy with it. We have to put that right very quickly, because if farmers are to have any certainty in the payment system, they have to know that the scheme to which they are applying exists, is capable of doing what they think and rewards them appropriately, otherwise they will feel short-changed.

I see this as largely technical, but again, it is very complicated. We are moving from a scheme that pays farmers for being farmers to not paying them at all. We will pay people—they may not be farmers—to do things with the land. We therefore have to be very clear that they will not be paid anymore for being farmers; the basic payment is going. Yes, there is a taper, as the Minister says, but it rolls through quite quickly. People need to understand that they will no longer be able to do what they were used to doing and be paid for.

We will not vote against this measure, because it is a technical change. However, I ask the Minister to communicate what is involved to as many people as possible. There will be a modulation, and it was never going to be a straightforward process—when I was on the Environment, Food and Rural Affairs Committee, we struggled to understand exactly how it worked in practice. The Minister will need a proper communication strategy, so people know that, when their money goes, on the one hand, they will have other ways in which to earn it, on the other.

Question put and agreed to.

Clause 6, as amended, ordered to stand part of the Bill.

Clause 7