Declaration relating to exceptional market conditions

Agriculture Bill – in a Public Bill Committee at 10:45 am on 13th November 2018.

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Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs) 10:45 am, 13th November 2018

I beg to move amendment 46, in clause 17, page 12, line 35, leave out “may” and insert “must”.

This amendment would require the Secretary of State to make and publish a declaration if the Secretary of State considers that there are exceptional market conditions in accordance with Clause 17.

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss the following:

Amendment 97, in clause 17, page 12, leave out lines 39 to 44 and insert—

‘(2) In this Part “exceptional market conditions” exist—

(a) where—

(i) there is a severe disturbance in agricultural markets or a serious threat of a severe disturbance in agricultural markets, and

(ii) the disturbance or threatened disturbance has, or is likely to have, a significant adverse effect on agricultural producers in England in terms of the prices achievable for one or more agricultural products, or

(b) if, on the day after exit day, the United Kingdom has not entered, or secured an agreement to enter, into a customs union with the EU.’

Amendment 117, in clause 17, page 12, line 40, leave out paragraph (a) and insert—

“(a) there is or has been a significant disturbance in agricultural markets or a serious threat of a significant disturbance in agricultural markets, or”.

This amendment and Amendments 122 and 123 would allow a declaration of exceptional market conditions where there is, or there is a serious threat of, a significant disturbance in agricultural markets; and would allow a declaration to be made in respect of events in the past.

Amendment 122, in clause 17, page 12, line 44, after “achievable for” insert

“or costs incurred in the production of”.

See explanatory statement for Amendment 117.

Amendment 123, in clause 17, page 13, line 2, after “are” insert “or have been”.

See explanatory statement for Amendment 117.

Government amendment 6.

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

I shall be quick, because although I am moving the amendment, I think it is more important that I ask my hon. Friend the Member for Darlington to spend some time on it. It is important in relation to the ways in which the Bill could be improved. I ask the Minister to consider amendment 46, and then I am sure that my hon. Friend will have some other things to say.

The issue I am concerned about is the usual one about powers and duties. I make no apology for asking the Government once again to look at where they would consider toughening up the legislation. Unless we have some certainty about what the Minister must do, the Bill will just be a recipe for any subsequent Government—it will not be the Minister; it will be, understandably, his successor—to choose to cherry-pick what to do. We are again considering what duties the Government are prepared to put in place.

It is essential to define exceptional market conditions—that is what the clause is about. I am not sure that the Bill does so, and perhaps the Minister could enlighten me on that point. More specifically, it is a question of an obligation on a Minister to take action at the relevant time. We have already discussed this year’s unusual climate change. My hon. Friend Darren Jones has obtained a debate on the impact of exceptional weather conditions this morning, and we should all be attending it, if we were not here enjoying ourselves on the Bill Committee. The Government must do a bit more joined-up thinking about it, and consider whether they are serious about it.

We can see the impact of climate change, and the Government have carefully inserted a clause in the Bill about a declaration relating to exceptional market conditions. However, everyone wants to know when they would intervene to take those exceptional market conditions seriously. There is a power for them to do that, but it is a power that means the Government would sit back, rather as President Trump did until he got the message that things in California are rather more serious than he originally thought. He sits back and says, “Well, it’s nothing to do with me; it is up to the state to sort it out.” Now, of course, he is looking for emergency powers.

That is usually the way things happen. The pressure of the public and sometimes politicians means that Governments have to intervene and do what people want them to do. However, it should be a duty, not a power. Can the Minister give me some assurances on exactly when the Government understand they would have to intervene, when market conditions are severely or significantly disruptive? It would be helpful if he could do that.

This is our food industry. If people do not eat because of exceptional market conditions, they do not tend to see that as being acceptable. We must identify what the Government must do—not “may” do, but “must” do—in relation to these conditions. That is why we make no apologies for pushing this, and it is important that we see it at this stage. I hope that the Government will put at least one duty into the Bill, and there is no more important duty than to feed the population of this country. That should have the word “must” rather than “may”.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union) 11:00 am, 13th November 2018

I shall speak principally to amendment 97 and what it seeks to do. To an extent it is probing, but we are incredibly concerned about this. As my hon. Friend the Member for Stroud just pointed out, clause 17 talks about “exceptional market conditions”. We are trying to understand more precisely what the Government want us to understand by that. As paragraph (b) of amendment 97 states—this may be imminent—we would consider it an exceptional market condition

“if, on the day after exit day, the United Kingdom has not entered, or secured an agreement to enter, into a customs union with the EU.”

We are concerned about that. Exit day is at the end of March next year, about 150 days from now. That would be a significant threat to the livelihoods of farmers and others in the food and drink industry up and down the country.

We want to understand whether the Government agree that that is a significant threat and what, if anything, they intend to do to support producers through it, should it come about. The Minister may be able to say, “Actually the circumstances that would emerge in that case are covered by elements of the clause in the Bill,” but it would be good to hear him say that, so that we can at least be assured to that extent as we continue to follow the Government’s progress through these negotiations—I hesitate to use the word “progress”.

I am particularly concerned, when we are talking about a customs union, that we have no Members from Northern Ireland on this Committee, so that voice is missing. I understand that the Assembly is suspended at the moment, and I wish the Secretary of State for Northern Ireland well in her endeavours to re-establish the Assembly. It is a great pity that there is currently no access to the Assembly, particularly for the citizens of Northern Ireland, and the voices of that part of our country are limited as a consequence. That is a real problem, particularly when we consider farmers in Ulster. There are farmers along the border whose farms cross the border. It is a border of 300-odd miles, intersected by far too many roads to be able to have any meaningful customs checks.

We have all heard many times in the Brexit debates the concerns about border infrastructure and what it would mean for security and identity in Northern Ireland. That insecurity and concern is felt particularly by strong Unionist farmers I have met in Northern Ireland who tell me very clearly—as I am sure that they will have told the Minister, if he has been there, which I expect he has—that they want to be in a customs union. They have a very plain way of telling you this. I was shocked to hear how one Ulster farmer, a strong Unionist all his life, talked about it. He said that he would rather have a united Ireland than a border on the island of Ireland. That stuck with me, and we all need to keep it in mind, because it shows the strength of feeling in Northern Ireland.

I regret that we have no member of the Committee who can speak with first-hand knowledge of Northern Ireland, and that we have to rely on people like me. Although I have visited many times in recent years to talk about Brexit and its implications, it is a real missed opportunity that we do not have someone on the Committee. I am sure that the opportunity will be taken to hear those voices in later stages of the Bill.

There is growing concern that the Government’s understanding of the way that food gets in and out of our country is lacking. The Secretary of State for Exiting the European Union recently remarked that he did not realise how dependent we were on the Dover-Calais crossing, which was shocking to many people, including me. It was extraordinary to hear that at this late stage in the negotiations. If that lack of appreciation finds its way into the agreement, it could have catastrophic consequences for food producers in this country.

Photo of Robert Goodwill Robert Goodwill Conservative, Scarborough and Whitby

The hon. Lady is absolutely right to identify some of the concerns, but is that not why, when we get a deal, which I am confident we will, we should all vote for it, rather than have more uncertainty?

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

Nice try, but whatever the deal is, let us see it and judge it according to its merits. One of the tests that we will apply is the effect that it will have on manufacturers, food producers, communities and the devolved Administrations, and whether it respects the nations of our country and keeps our union together. Those are the things that we will be thinking about, and we think that having a customs union is essential. We could have referred to a single market deal or any number of things, but we have chosen to be specific in the amendment. We want to understand what the Government expect to happen should we leave without a deal and without being part of a customs union with our nearest neighbours at the end of March next year. We are deeply worried about that.

Photo of Martin Whitfield Martin Whitfield Labour, East Lothian

Is it not the case that, because of the circumstances surrounding the Bill on the question of no deal or deal, and because the Bill represents scaffolding, a lot of people are seeing what they want to see in it, when there is actually very little to see? The sort of certainty that is proposed in these amendments would go a long way towards giving our farmers and rural communities confidence about what is expected and intended.

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

That is a really important point. If I was a farmer, I would be incredibly worried by the Bill in general, but my anxiety would be heightened by this clause and by what I might anticipate happening, given the reports we are reading in the press. I do not think that any hon. Members present have any certainty about whether a deal will be reached, what a deal will look like if it is reached, whether it will be approved by Parliament, or whether it will be approved by the Cabinet, so to blithely assert that there will be a deal and that everything will be fine is not good enough.

We have one opportunity to get the Bill right. This clause could be the lifeboat for many people in the industry. It is important that we understand what the Government intend and what they would do, under the powers given to them through the clause, should we leave without a deal and without being in a customs union.

The National Audit Office report states that the Government are generally underprepared for a no-deal outcome. To be fair, DEFRA has done more than many Departments, but that is because it has had to, because so much of its activity is affected by Brexit. Because the Government are underprepared, there is now panic. A year ago, we anticipated having a deal in October, then it was last week, this week and probably next week. Where is the deal? The anxiety in Parliament is palpable, and it is starting to be felt in the country too. There is an emerging sense of panic, whether about transferring staff from valuable wildlife protection work in Natural England or about the need to stockpile food. We know that the industry has already rented out virtually all the available food storage in the country, and people are incredibly worried about that. Given the lack of clarity and information, their concern is understandable and valid.

The Government have a duty to ensure that there will be food in the shops in April. I know I will be accused of “Project Fear” mark II, mark III or whatever—I understand that, and I am being careful not to enter into that kind of thing—but we must be honest. I do not know whether hon. Members had a chance to read the Government’s technical notices, which were published this summer, but they make pretty grim reading. The Government now acknowledge and anticipate many of the concerns that were deemed to be part of “Project Fear”.

Photo of Sandy Martin Sandy Martin Shadow Minister (Waste and Recycling)

Does my hon. Friend agree that one of the points made in amendment 122 is that Brexit is likely to have a serious impact on the cost of production? It is not just about markets for produce; it is also about the cost of production. We already see some of those costs changing as a result of the decision to leave the European Union.

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

My hon. Friend is right to highlight that this is about not just trade but many other things, including access to labour, certification, standards and future trade deals. People in this industry are worried about many unknowns. It would go some way to reassure them to know that the Government are mindful of these risks and have used the Bill to make some commitments about the measures they would put in place should those exceptional market conditions come about.

The Opposition have what we think is a helpful answer: to remain in a customs union with the European Union. I do not intend to enter into a long debate about that today—we could spend the rest of the day discussing the benefits or otherwise of a customs union, and I am sure we will do so in the Chamber when we talk about the legal advice later this afternoon. The Opposition have been incredibly clear about wanting to be in a customs union for many reasons. It would deal with many of the risks surrounding trade certification, access to markets and our ability to export as we do now—“friction-free” has become the standard phrase to describe it. That really matters to this sector. It would be good to hear the Minister acknowledge that, because many voices in the sector have been increasingly clear about that as understanding has grown and the debate has progressed. I anticipate that, as we approach exit day without clarity or anything concrete from the Government, the calls for remaining in a customs union will be amplified. The sector needs certainty. It needs to know what it is doing.

The NFU reported that its modelling shows that the removal of the beef tariff and the opening of the UK beef market to imports from around the world would result in a 45% fall in farmgate prices and a 30% fall in the price of sheep. That obviously has a huge impact on producers. Would it qualify as one of the exceptional market conditions in the Bill? What if there is some kind of barrier to trade with the EU of animals and animal products, if we fall out without a deal at the end of March?

The amendment seeks to ensure that Ministers have specific powers to take sensible action to address the exceptional market conditions resulting from a crisis caused by having no customs agreement with the EU after exit. The NFU has warned of “catastrophic” consequences—their word, not mine—for the industry if there is no deal. Exports to the EU of food and drink are worth just over £13 billion a year. No deal would mean that British goods would be subject to exactly the same checks as those from China or the US.

The Government would not be able to do anything at all to keep exports flowing in the case of no deal. They may say, “We will allow EU products into our markets without checks”, but they will be able to do absolutely nothing to ensure that the EU did the same. It would be under no obligation to do so. The EU could introduce emergency legislation, but what if it does not? What would the Government do? Would that situation be covered by the clause? If it was, which measures would the Government seek to implement to support manufacturers, farmers and food producers in that situation? I have never heard an answer to that from a Government Minister. I do not think they wish to confront these difficult questions, but we are getting really close and people need to know.

The Government’s own technical notice has confirmed that the EU would require the UK to be a listed third country. That removes from us many of the established ways of operating that we enjoy and upon which our businesses are founded. The Government’s own document on preparing for no deal states that they wish to

“prioritise stability for citizens, consumers and business”.

That is good; stability is very important as we get close to exit day. Ensuring stability is the least the Government should want to do, but they need to explain what they understand by stability, and how they wish to ensure that that stability is real. A promise of something in future—in three, five or 10 years’ time—is not stability. The sector wants to know that two weeks into April, businesses will be able to trade and support themselves as they do now.

It is obvious that the Government acknowledge that leaving without a deal is a threat, but they need to say that that poses a risk to businesses. We argue that leaving the EU without being in a customs union is an exceptional market condition. I want to hear that from the Minister’s mouth, to know that he too understands that that would be an exceptional market condition. What would he do to support our producers?

The technical notice on agriculture, published this summer, refers to the Bill. It says that the Government seek to provide stability for the sector through the Agriculture Bill. That is interesting, but given how difficult it is to predict exactly what the consequences of no deal would be—except to say that they would be catastrophic, as the National Farmers Union said—we need to include leaving the customs union as a specific disturbance.

There are many voices in the sector that say the same thing on the customs union. For example, the Farmers Union of Wales has said that the need for a customs union is “incontrovertible” and that common sense “must prevail.” I hope that it does. I hope the Minister, who listens to farmers and their representatives, will hear what they are saying in this case. He needs to make these points to his Secretary of State, and his Secretary of State needs to ensure that these arguments are heard in Cabinet and form an important part of discussions around the deal. If we are not going to have a customs union and we leave with no deal, we do not get a transition either; we do not get anything. There is literally nothing in April, fewer than 200 days away.

The Minister needs to make that case very clearly at Cabinet level, because there will be other voices in Cabinet who do not want to hear it. He is a strong communicator and well able to make his case articulately and persuasively, and he will have to do so on this issue.

Another voice on this question is Stephen James, the former president of the NFU in Wales, who said that the “only sensible option” for negotiations was for the UK to remain in the customs union, at least until a free trade agreement could be reached. Another is Adam Bedford, head of the NFU in the north-east, who pointed out that 75% of our agrifood exports went to the EU and that being in a customs union made trade easier, because as a group of nations we decided to drop our customs checks and charge the same duties on the group’s external borders.

I think this is quite straightforward. We need to make a clear commitment that would satisfy our farmers’ groups and go a long way toward resolving the issues we have in Northern Ireland. The Government would get themselves out of the fix they have got into around a backstop—if they committed to a permanent, long-term customs union, the issue of backstops could be laid to rest. The negotiations could proceed, a deal could be brought back and—who knows?—it might get the support of Parliament, which must be the Government’s wish. The Prime Minister must wish that her deal secures parliamentary support, but without a customs union I would say it is difficult to see how that would happen.

Not doing that will prolong the uncertainty and, without a customs union, lead to all the problems that have been well articulated throughout the sector. I think they constitute an exceptional market condition that the Government need to understand and respond to. They need to explain how the Bill, which their own technical notice referred to as the source of that stability that it seeks to achieve, will make that stability real for farmers in the result of no deal. Unless we specify, as the amendment does, that exceptional market conditions exist if

“after exit day, the United Kingdom has not entered, or secured an agreement to enter, into a customs union with the EU”,

I would be incredibly worried if I were working in that sector.

In amendments 117 and 123 we seek to change “severe” to “significant”. That would mean that the bar is not set so high and that these provisions would be rarely used in practice. Those changes would ensure that a declaration could be made for events that have occurred in the past but were not obviously exceptional market conditions at the time. There are some things that we can anticipate; I would argue that not being in a customs union is not only something that we can anticipate, but something that the Government can decide. The Government could say today that they wish to be in a customs union and we could move forward. The paralysis that exists at the top of Government could be removed and we could move forward with much greater clarity and certainty.

It would help if the Minister explained and perhaps gave examples of the circumstances envisaged by the word “severe”. Does he think the Government will use this power frequently? Does he think it will be once a year, once every five years or hardly ever? How does he envisage these powers being used? Again, as we have unfortunately seen throughout the Bill, that could be vague. Perhaps he would look back over the recent past and say what examples there are of situations where the power could have been used.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.