Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome to the meeting John Terrington and Elaine McCrory. John and Elaine, we have had you here a couple of times. If you can, please give a very brief overview of each clause. I will then quickly highlight any specific issues that have come up so far in our evidence sessions on that clause, before I ask members whether they have any queries or comments for the Department on that clause.

We will start with clause 1, which is on aid in the fruit and vegetables sector: amendment of the common market organisation (CMO) regulation.

Mr John Terrington (Department of Agriculture, Environment and Rural Affairs): Good morning. Thank you, Chair and members. As you are aware, I head up the agri-food legislation branch. Again, I am joined by Elaine McCrory, the head of the supply chain transition branch. I had a couple of paragraphs to explain how we have got this far, but you have been much more eloquent than I would have been, so I will not take any more time.

I will start with clause 1, if I may. The Bill has six clauses. Clause 1 makes support under the legacy fruit and vegetables aid scheme (FVAS) discretionary. That is, it removes an obligation to automatically fund all eligible claims. In doing so, as the Chair has noted, it brings it in line with other agriculture support. Technically, it makes the change by amending article 32 of assimilated law EU 1308/2013, the CMO regulation, and enables the Department to continue the scheme on a discretionary basis here in Northern Ireland. A new paragraph 1A is inserted into article 32 of the CMO by the clause. It simply clarifies who is eligible for the support — a PO or an association of POs — but otherwise maintains the status quo in that regard. Finally on clause 1, it contains some transitional provisions relating to existing fruit and veg aid scheme programmes. That is a belt and braces provision to ensure that nothing in the Bill impacts on existing agreed operational programmes that are due to end in December 2025.

The Chairperson (Mr Butler): Thank you very much. We will do this clause by clause, guys, so please indicate if you want to have input.

Members, some of the respondents came back as being not in favour of the clause. Obviously, it is central to the Bill. The discretionary aspect of it is the main thrust, I imagine. The comments that came back to us included that the removal of the requirement for all eligible claims to be funded leaves growers with no future certainty. They said that the shift to discretionary funding raises the risk that decisions could be influenced by changing political agendas rather than being based on clear and transparent criteria. There was a request to remove the term "discretionary" as future funding for horticulture will not be ring-fenced. We received the comment that the Bill should not be progressed due to the absence of a replacement scheme. Members, to be fair, those comments were written before the Minister's letter confirming that he would not be closing the scheme. However, I am not sure that that would have changed fundamentally any response that the stakeholders would have made, because, while it gives certainty for an extended period, it does not give it beyond that.

There are three parts to that clause that we might want to address in this discussion. From my perspective, I certainly can understand the Minister's desire to protect the ring-fencing of the wider agriculture budget and look for discretion. I have dealt with you guys in the Department, and, from speaking to the Minister, I know that his words were good in that he tried to offer some kind of ministerial assurance that the ambition would be for the funding to still exist. The challenge for me is try to balance the fact that it is being centred around the mushroom industry in particular. It is not that there has been any blockage, but there has been no uptake by other organisations. I am keen to tease that out. I know that we are only on clause 1 and that it might have no effect on this.

Has any assessment been done of whether its being discretionary will impact other industries' taking up the opportunity?

Mr Terrington: I will start on this clause, and Elaine can talk about the wider sectors and where this or other clauses may impact. The Minister has sought to give reassurance all along and has moved to say that he will not close it. Allowing a three-year programme to be pulled together just lifts that. Hopefully, as certainly seems to be the case with the Northern Ireland Mushroom Growers Association (NIMGA), that has provided that little bit of extra reassurance that was needed. Most of the stakeholders have asked for this, so it very much brings us into line with the position in Scotland, where the schemes will not close until the end of the year, meaning that there is time to develop something new.

You will notice that the Minister said something in the letter about the horticultural scheme, so the scheme is about looking at the horticulture sector and not just the mushroom sector. As it stands, the scheme is available to other sectors and is widely used by other sectors in Scotland and England. One of the things that was looked at in the review was the reason why that uptake was not greater, certainly under the European funding or match funding that was available since then.

Ms Elaine McCrory (Department of Agriculture, Environment and Rural Affairs): I can talk about some of the other sectors that we have spoken to. We have spoken to the strawberry sector, because it used to be involved in the producer organisation (PO) that had a Northern Ireland head office. In the end, most of those in the sector left and did not want to stay in the PO structure because they felt that it did not suit them and did not want to be constrained by it. All their produce had to be marketed through the PO, and they did not like that because they had their own customer outlets and trusted relationships with customers, so they did not want to be constrained by that structure. That was one of the reasons why people did not want to be involved.

We also spoke to the fruit and vegetable committees of the Ulster Farmers' Union (UFU). I think that you received a statement from the UFU on the scheme. Those committees feel that, although the scheme does not suit their structures at the moment, they would be happy to work with us again to see whether the scheme could be amended in some way that meant that it would better suit a wider range of sectors. As for the other people in other sectors to whom we spoke, the POs facilitated a meeting with some of the English POs. As John said, they operate in herbs, salad vegetables, peas and all sorts of different sectors. They talked about their experience and why they were attracted to that structure. Some of them started as cooperatives. They were already familiar with that process of working together, so it was a natural progression for them to move to become a PO. We do not have that same — I do not know what the appropriate word is — "appetite", maybe, for working together in that way.

The Chairperson (Mr Butler): I hope that you do not mind if members bounce in on this, because there is quite a bit to get through. I am not clear, and I maybe did not ask the question clearly enough, but I am trying to tease out whether, by making the scheme discretionary, it affects its flexibility at all or whether the decision to do that was based purely on the year-on-year financial liabilities for the Department.

Ms McCrory: I do not think that it had a year-on-year basis, because the programmes are normally for three years, so it is about forecasting the spending review period and looking at what is available. Budget would be part of it, obviously, but there may also be particular priorities, so you may want to target certain areas or sectors. That is also where discretion comes in.

The Chairperson (Mr Butler): OK, thank you so much.

Mr McAleer: Thank you for the presentation. I note that the sector welcomes the fact that the Minister is not planning to close the scheme at the end of the year. Certainly, that is what the Committee had requested as well, so it is very welcome. Is there any assessment of when it will continue to run to?

Mr Terrington: As Elaine said, as the legislation stands — it is unamended — it is a three-year programme. I assume that the sector will, rightly, plan for three years.

The Minister's letter also referred to co-designing something to replace the scheme. When something comes into replace it, you could then look at the FVAS. There may be incremental changes between now and then, or there may be a new scheme under new powers. The Minister has been saying all along that he will not close the scheme until there is something better. That is reflected in the section in the statement that talks about not closing the scheme because there is not anything else there at the moment. We met stakeholders this week, and their being involved in the co-design was welcome. You know how long it has taken to get new schemes to the Committee over the past couple of years, so you could safely say that it will not happen before the end of this year. It is not going to happen quickly. It would be lovely to be able to give a time, but the two things are moving in tandem. If something were created that the sector sees as being advantageous, you would not need the FVAS any more. Conversely, if there is not anything there, the sector will continue to make the case for the scheme.

Mr McAleer: Just to be clear, the co-design process for the new scheme will continue in parallel with the FVAS. We know from the correspondence and evidence that were received from the mushroom sector that that is its only funding stream. That certainty is important, as it allows it to plan ahead. The two will run in parallel, until such time that a replacement scheme is found.

Ms McCrory: That is the plan.

Mr Terrington: That is the likely direction of travel.

Miss McIlveen: Thank you very much for your comments so far. I am a little bit concerned that, although we have some reassurance from the Minister, it does not really mean anything unless we see it in a Bill. I am a little concerned about the discussion on co-design. We have heard from other sectors about what that may or may not look like and about the reservations that they have. The fact is that the Bill was not properly discussed with the sector that is directly affected. I am saying that, given the hostility that we have heard towards the Bill. It worries me that, essentially, we are agreeing to something without knowing what it will look like at the end, so I am not assured by the Minister's comments.

Ms McCrory: I will take that to start off with, and you, John, could come in on the technicalities. I do not necessarily agree that we did not engage with the sector that is directly affected by the Bill. We engage with it very regularly on this matter, and we have done from the outset. We have spoken to the sector a lot about the Bill in tandem with the review, including what it thinks is good about the scheme and what it would like to see changed. We have been speaking to it all along about this. Some of the additional anxiety may be coming from the fact that we have only one PO with a head office here at the moment. The other two POs have their head office in England. The bulk of their turnover is generated in England. They have also been very anxious about what would happen in England. I think that they said to you that they would like DAERA to step in if DEFRA is no longer going to fund them. They got confirmation yesterday that DEFRA will close the scheme at the end of 2025. We have been asking DEFRA to clarify that for quite a while. It has now clarified that English POs will no longer be able to avail themselves of funding under the scheme. That uncertainty about what was happening in England, being an English PO, has ramped up their anxiety.

I spoke to representatives of those organisations earlier this week, I think that they are reassured quite a lot about the fact that the scheme can continue and that there has been additional confirmation of that. However, they have issues in their own structures that they will need to look at. I think that you said, Chair, that they referred to some of the operational difficulties and said that some of the timescales are problematic for them, because they will need to think about how they are to be structured. They would normally have to submit an operational programme by 15 September, so they are probably quite anxious that there is not a lot of time to do that. That is not purely because of the Bill; it is because all those other factors are coming together and creating additional uncertainties for them. Perhaps there is scope in the legislation to be a bit more flexible with the timelines.

Miss McIlveen: I appreciate what you said. My concern is that an assurance was given about the fact that there were three schemes that may have been helpful to the sector. In some ways, when we are doing our deliberations on this, we are thinking, "These are the alternatives that you can look at". It is quite clear now that those three schemes do not work, and it worries me that we were presented with those schemes as an alternative that would work alongside the Bill but that that has now been scrapped and we are now looking at potentially a couple of months of a review of FVAS, yet we do not know what the scheme that will go alongside the Bill will look like.

Ms McCrory: I will start with the College of Agriculture, Food and Rural Enterprise (CAFRE) schemes. Obviously, there are a lot of moving parts at the minute, and John talked about the sustainable agriculture programme. Developing those new schemes to follow on from what was available under the common agricultural policy (CAP) is a lengthy process. As those schemes have developed, we have been monitoring what is happening, and it is clear now that that will not suit the mushroom sector. However, to be fair to CAFRE, it is developing for the whole horticulture sector and is trying to target specific needs in the overall horticulture sector. It is just that the arrangements are not particularly suitable for the mushroom sector.

We have heard very clearly that the mushroom sector did not feel that it was involved in the development of those CAFRE schemes, and there might be all sorts of reasons for that. I cannot speculate on that, because I am not responsible for them, but we have heard that the mushroom sector wants to be closely involved. It has been closely involved in the review, which will inform the development of suitable alternative schemes, and we will continue to talk to the sector. We need to get some kind of formal mechanism in place to do that so that there is regular engagement as we co-design the replacement.

Mr Terrington: It is the very point that you are making that has made the Minister look again and say, "Right, I have always given the reassurance that I will not pull the rug". Those words have been used many times now. On reflection, and on seeing and hearing that those schemes are not replacements by any means and that none of the other schemes are available, he said, "Well OK, if there is not anything, I will not have this cliff edge, and I will let the programmes run for the time being". It is recognition of the very point that you are making that has led him to try to up that reassurance, and it means that, regardless of the outcome of any review, without any changes, we would have the scheme that is there now. The potential for changes, which we will talk about when we come to clause 2, might refine it and make it better either in the meantime or as part of the outcome of some parts of the co-design.

Miss McIlveen: I just feel that, at this point, it is nearly as though we are putting the cart before the horse.

Mr Terrington: As officials, we take a different view, particularly as the scheme is now going to run after the end of this year anyway, regardless of what happens in the review. We say that, if a review took another two months and the Minister said, "Right, I like that, but I want a co-design. It is a legacy scheme, and it takes longer to bring that through, and you have no powers in the meantime to do anything with this scheme", that would fall short of — again, I am moving into clause 2 to some extent — the powers that are there, but the Bill provides for amendments to be made in the sense that we have the powers to change it.

Powers were given in 2020 to change some of the CAP schemes to keep them alive, so it will happen in the same way. Those powers were used after that change as policy developed in order to amend what was already there, such as the fruit and vegetables aid scheme. Rather than putting the cart before the horse, they are enabling powers that allow changes. Any concern that the review might end up with the closure of the scheme and that it would be putting the cart before the horse because you have taken the discretionary power is offset by the fact that it will not close and that the review can then, as we said, help to inform any future replacement or improvement.

Miss McIlveen: My concern is that we are writing a blank cheque at this point without actually seeing the detail of what would come next.

Ms McCrory: Any changes that we make — sorry, I am getting into your territory here, John — would require regulation, which would be subject to affirmative resolution. Therefore, as we develop the policy, we would come back and say, "Right, we have talked to the sector, and this is what we think is the way forward and here are the changes that we think that we need to make to do that". The Committee can then scrutinise those proposed changes.

Miss McIlveen: That takes me on to a different point — Chair, I really apologise for this — which is the fact that we have been through that process with regulations. The most important part of all that is primary legislation, over which the Committee has a certain amount of control through scrutiny and potential amendment. We do not have that control over secondary legislation. That has been a problem for us, and it is certainly a concern of mine.

Mr Terrington: One observation is that the powers that are taken — apologies; again, we are getting into clause 2 here — [Inaudible.]

Mr Terrington: — as yet unexplained. The powers that are taken are actually quite narrow in the sense that they can change only the legislation that is already there. The RaISe report set out some of the things that could be changed, including a number of things that stakeholders have raised, such as the length of programmes, level of support and level of support for the environment. I do not disagree with your account of your recent experience, but part of the consultation period for making that will involve stakeholders. Draft affirmative legislation will be needed to bring any of those changes forward. I have certainly sat here when the Committee has not liked something in a piece of subordinate legislation, and we have gone back and reviewed it and tried to find a way forward.

Miss McIlveen: Maybe I am being devil's advocate a little, but we have to be concerned. I appreciate that there will never been full support for every piece of legislation that comes through, but we still have to ask the questions.

The Chairperson (Mr Butler): I have one final question on clause 1. If nobody else has indicated; maybe you indicated, Patsy. If you let me ask this question, I will bring you in, and then we will move on to clause 2 if nobody else indicates.

Probably the most difficult deliberation will be on clause 1, because it underpins the Minister and the Department's ambition. Is there any confidence that the definition of the term "discretionary" in that clause could be underpinned by something mandatory, which could mean that something is designed to inform what "discretionary" means? At the moment, the promise from the Minister is that, all being well, money will always be available. Based on the fact that it was launched before the Minister was able to ring-fence the agriculture budget, so I suspect that it was in a different phase of pressures — Michelle's point really rang true with me, so it might be helpful — could "discretionary" be underpinned with something robust? In this circumstance, it is moving from funding that was ring-fenced and concrete for those guys such that, if those articles were hit, it would still be available and could be ring-fenced but the discretionary piece would apply if you stepped outside the parameters. I cannot find that anywhere.

Mr Terrington: You have punched me on the nose; I do not know the answer to that. I am not too sure how you would get over that. "Discretionary" means discretion in who to pay, what to pay, how much to pay and when to pay. It covers an awful lot of bases. You mentioned other sectors, Chair. There is a genuine interest in the review in why other sectors did not get involved. In particular, had this been an EU scheme and we were out pushing it and somebody else were paying for it, as is happening in the South of Ireland, the fear would be that, if you started playing around with that, you are possibly restricting some elements. You could be talking about the mushroom sector, for example, and you asked about whether there was potential for it.

One of the potentials of this is that the scheme gets looked at and it is decided that it is worthy in some amended, updated or improved form to go forward and that scope is there for other sectors. On foot of one of the CAFRE schemes that involved getting people together, sectors did not like the idea of —

Ms McCrory: Collaboration.

Mr Terrington: — collaboration — thank you — because their argument was that they were already collaborating. You could, however, see that another sector might use collaboration opportunities to get to where they got to in England and Scotland to say, "How can we take this to another level? Why don't we form a PO and get that to address the money?". Without quite understanding your point, I will say that, if you are trying to narrow it to protect that sector, you may create the unintended consequence of limiting it from other sectors. Your very first question asked about the term "discretionary". No, it will not; it rolls forward under the same rules as previously.

The Chairperson (Mr Butler): That goes back to my first question, which was to ask whether a whole lot more flexibility is introduced under that clause. It may do that in the regulations, which, as you said, are to be made by affirmative resolution. I get that, but Michelle is quite right too. If it does not say it in the Bill and does not set out the intention, the strategy and the regulation may not reflect that intention. That is fine. I am trying to wrestle with this in my head.

Mr Terrington: I cannot think of a parallel. I have done some primary legislation, but there are people in the room who have done more than I have. I cannot see how I would get to that point by asking the Office of the Legislative Counsel (OLC) to draft that, but —

The Chairperson (Mr Butler): I can certainly furnish you with information.

Mr Terrington: — you know where we live. The word "discretionary" does not impact whatsoever on anything to do with the flexibility. One thing that it does do — I will go back to an issue that Elaine made a point about — is that, without this, the risk is that the producer organisations that are headquartered in England will bring with them English members and they would have to be paid. That would not be a direct swap, because there would be things that they and we would have to do. The discretion is for the Minister to say, "No, I am not doing that". That is, effectively, what the English legislation said before it said that the scheme was being closed completely. You would be looking at widening the discretion even further to other sectors, because it would be an open chequebook at that point.

The Chairperson (Mr Butler): Thank you very much.

Mr McGlone: I want to go back to that question. May I read out what is in the departmental letter and ask you to be devil's advocate for a minute and put yourself in the place of the manager or the accountant of a firm or the bank manager from whom the firm seeks support? The letter states:

If you present that to a bank manager, they will get the heebie-jeebies. They will say, "What? You expect me to give you £20,000, £30,000 or £40,000 as a loan per annum for the next five years based on that?". Honestly, at that point, you would have to ask how the Department commits to a level of undertaking whenever letters of offer go out. That, as it stands, says, "You might or might not get any, even if we decide that you are an eligible scheme"; you just might not be there.

If you are looking at that from a business point of view, you need certainty. You need at least certainty of income, support and sustainability to protect the business.

If a key element of that certainty, which should come from the Department, is absent, in part or in full, that will create a problem. I can therefore understand why people are not exactly jumping up and down about the scheme. If I were in business, I would be saying, "What?".

Ms McCrory: Patsy, I totally get that. I get that the uncertainty is very difficult for those folk, particularly, as I said, for the two POs with their headquarters in England. They must be so anxious about what will happen. The Minister has, however, said that he is not closing the scheme. The way in which the scheme will work in practice is that organisations that are eligible for funding here will draw up an operational programme, which, the legislation states, will be a three-year programme. That programme will come to DAERA for approval. DAERA will then write to them, saying, "Here is your maximum level of funding over the next three years". That therefore provides a bit of certainty at least. Organisations will know that, over the next three years, that is what their funding will be.

Mr Terrington: The approvals will be based on programmes meeting the legislation's requirements, which will, in effect, be exactly the same as the requirements that they have been meeting up until now. Unless we change something, for which a process would have to be gone through, that will be the case.

Mr McGlone: There is an element of discretion in the legislation, however. The Department refers to:

Ms McCrory: This is an enabling Bill, which means that, at this point, it purely enables the Department to do that. In tandem, the Minister has given a commitment that organisations can submit another operational programme.

Mr McGlone: I get that.

Mr Terrington: That line in the letter to the Committee is about discretionary funding per se. It is stating that the Minister's discretion to decide at any one time how he will use his budget is not a reflection of any intention or aim of the scheme. Whether the Minister wants to fund young farmers, do more for the environment or whatever, that will be at his discretion at the time, and a process of agreement will have to be gone through.

Mr McGlone: I get that, but we are not even getting to the point of asking whether the Department has budgets for it yet, because, as you said, it is enabling legislation. Do you get the point that I am making, however? From a business perspective, an accountant or bank manager, looking at the longer-term projection, will view that interpretation, with so many injections of uncertainty in that sentence alone, as being heavily equivocated.

Mr Terrington: A three-year operational programme will give the mushroom sector an awful lot more certainty than any other sector that is relying on transition payments or on applying to competitive aid schemes has. A three-year programme is pretty good. The industry asked for the same as what Scotland has, which is a scheme for three years, with a chance for it to be reviewed, and that is what is built into it.

Mr McGlone: I ask for your forbearance, Chair. For the record, what feedback has the sector given you on the level of commitment to a three-year programme and on the effectiveness of the programme that is being proposed?

Ms McCrory: Do we feel —?

Mr McGlone: What feedback have you got from the sector?

Ms McCrory: Are you asking about the feedback that we got earlier this week about the Minister's assurance?

Mr McGlone: Yes.

Ms McCrory: I do not want to put words into the sector's mouth, but I think that it was pleased to receive reassurance and pleased that organisations would be able to submit a programme. There are things that people will have to work through, which we touched on earlier. We cannot do that for them —

Mr McGlone: I get that.

Ms McCrory: — because it is about what they want to do and the business decisions that they want to make. All that we can say is, "That is what is here. You now need to work through some issues. We can point you to the relevant bits in the legislation, but you have to work through the issues yourselves". In tandem, we will work with them to design something that they feel is suitable alternative support.

The organisations also said that they appreciate the fact that we talk to them. They all said that they are pleased that we talk to them and continue to do so.

Mr McGlone: Forgive a stupid question, but why would you not talk to them?

Ms McCrory: Exactly, but, without wanting to blow my own trumpet, I will say that that is how I do things. I talk to people.

Mr Terrington: When the producer organisations were before the Committee, they talked about previously having been assured of things that then never happened. We think, however, that they were talking about conversations with DEFRA because two of them are headquartered in England. I do not want to undermine their presentations or the evidence that they gave, but sometimes it is difficult, as they see from where the money is coming. You may think that DEFRA should be speaking to them as well. Whether DEFRA is speaking to them or not, sometimes they feel that they have more access to us than they do to DEFRA.

Mr McGlone: All right. I am sure that we will hear the mushroom people's views at some stage. Thank you.

Mr Blair: I am not being deliberately brutal, and I do not seek to correct anyone, but, where there is a difference in emphasis or a different level of consideration being given, it is best to express that so that others can consider everyone's point of view. As guardians of the public interest and expenditure, I have to say that we have a duty to look at taxpayers' money and at how it can be most effectively spent. Based on what I have heard so far, I will outline some of my concerns.

First, I am very concerned about comparisons being made with bank loans or private-sector business. This is public-sector action with taxpayers' money. It is therefore a very different situation. A bank loan, almost without exception, is paid back with interest. This, however, is grant funding out of taxpayers' money, which is a very different scenario. It does not seem unreasonable at all to me, and I am trying to apply this fairly across the entire sector, that there should be flexibility in place where one group's need is greater than another's or where there may be emerging issues or changing demand, be it seasonal, weather-based, market-based or anything else. It therefore might be best to include in the scheme some flexibilities or discretion. What term we use is probably not important.

I do not want to put the officials on the spot, but I ask whether that forms some of the thinking behind the Bill's intent. My rationale for saying that is that there were examples in the previous mandate, during COVID, of sectors that appeared before the Committee feeling that they were being left out, because no discretion had been included in some of the funding packages that had been set up. The then Minister had to look for other funding streams, and, in fairness to him, he managed to do so. I remember that, in those circumstances, we were under considerable pressure. I therefore contend that, in a situation in which there is a market or weather change, a seasonal influence or a global political or other issue, which we are hearing mentioned in some places at the minute, we may want, because that is the fair and right thing to do, to keep in mind having some flexibilities. It is that a reasonable and credible analysis?

Mr Terrington: Without drawing any of the parallels that you have drawn, the idea of discretion is to protect the public purse and for us to have a say in how taxpayers' money is best used for the position at the time. That is a well-made point.

Mr Blair: I make a comparison with the COVID period in particular. The situation was frantic, because there was not something in place for people at the time. COVID was something that none of us saw coming. I would therefore like some safeguards to be in the Bill, not just on that issue but in general, in order to keep options open when a change in need arises.

The Chairperson (Mr Butler): I will flesh out John's point for clarity. Two of the mushroom producer organisations are based in England, while one is based here. The current scheme enables payments to be made to all three, but the proposed change means that organisations would possibly have to be headquartered here. Is that part of the —?

Ms McCrory: Under the current legislation, producer organisations have always had to be headquartered here. More accurately, the legislation was taken from EU legislation and then amended slightly. Since EU exit, it has stated that DAERA is responsible for paying those that have a head office in Northern Ireland. A head office in Northern Ireland is determined by an article in the EU legislation that states that responsibility for payment must be determined by where the POs achieve the majority of their value of marketed production but that, by agreement, it can be where they have a majority of members.

We are bound to pay only producer organisations with a head office here. The problem is that the membership of the organisation will not necessarily just be growers in Northern Ireland. There are English growers, as well as one Scottish grower, in one of the organisations here. POs can therefore have members from different locations, but the head office must be in a specific place.

The Chairperson (Mr Butler): That sits outside the Bill's remit, so the definition will still apply.

Ms McCrory: The definition will still apply —

The Chairperson (Mr Butler): That is something of which you need to aware.

Ms McCrory: — and it is do with the recognition of producer organisations, which DEFRA determines.

Mr Terrington: There was uncertainty expressed not only over what we were doing but over what was happening in England. There are POs with offices here and that have some members here, but, under the official definition in the legislation, their head offices are in England and their membership includes English producers. Confirmation was provided yesterday that the scheme will close in England. POs there will therefore get nothing, at least until England comes up with a new scheme, and that is part of an ongoing DEFRA process. The problem is that, if organisations decide that, as the scheme no longer exists in England, they can move their head office to Northern Ireland and somehow be a member here, we will be liable for them. It is not that straightforward. All the operational elements that we referred to at the start of the session are wrapped up in the location of the head office, how it can be changed and what the process for doing so is. The voting members will still be voting members while they are a PO in England, so they will have a say. You can see the complications that they have in front of them, but the situation is more a consequence of the scheme's closure in England than it is of the Bill.

The Chairperson (Mr Butler): Thank you. I am sure that the Committee will return to clause 1. I remind members that our deliberations on the Bill will take a period of weeks to complete. We are not closing out discussion on any of the clauses today. We are trying to tease out as much information as possible. I have a working paper that I will be using.

After I bring in William, if members are content, we will move on to clause 2. We may not get through all six clauses today. I do not intend to exhaust the witnesses, because we want to invite them back for the next session.

Mr Irwin: I accept that there is potential to grow the horticulture sector in Northern Ireland to double its size. You spoke about developing a new policy. My colleague mentioned putting the cart before the horse earlier. Should we therefore not develop a new policy before we go down this road?

Mr Terrington: In an ideal world, the design would provide opportunities for all sectors. The CAFRE and capital schemes look at that. It has been recognised that the horticulture sector perhaps does not get everything that it needs out of the proposals, and that is why the Minister decided to go back to the drawing board to try to design something that will be of better use and that will continue the push to double the size of horticulture sector. Yes, a new policy should have been developed, but it was not.

Mr Irwin: Do you get from where I am coming?

Mr Terrington: It is a recognition of the fact that there is not a replacement scheme yet. For all the good, bad and indifferent qualities that it may have, we will be keeping the scheme going. The review will look at that, but the scheme will roll forward as it is now, with a three-year programme.

Mr Irwin: It will be interesting to see how that develops. I have some concerns.

The Chairperson (Mr Butler): Are members content that we have teased out the information about clause 1? If so, clause 2 may not take us as long, although it might. If members are content, I suggest that clause 2 will do us today, because it is now 11.45 am. We will then deal with the other clauses next week. Members, as the information comes together, you obviously have the right to return to any points to which you wish to return. I am aware that some members may need to leave shortly. The officials may provide it anyway, but do members wish to request any information about clause 1 so that we do not have to do a big wash-up with the officials or go through it again in detail next week?

I have just one question, if that is OK, John and Elaine, and you do not have to answer it now. Are there any existing DAERA schemes that are absolutely discretionary or any that were previously ring-fenced that were then changed in legislation to being discretionary that can be cited as an example?

Mr Terrington: We are not aware of any. That is the legacy of its being an EU scheme. The EU had broader shoulders than the ring-fenced budget. It was pushing to develop the sector but said that, as long as a producer organisation could propose a three-year or five-year programme, or whatever it was at the time, that met all the requirements, that programme would be supported.

I could not see us getting it through the Department of Finance if we were to go the Northern Ireland Executive with a new scheme. Such a scheme may have existed somewhere in the distant past or in another legacy situation, but I am unaware of one.

To some extent, it is a regularisation to what would have been the norm if the scheme had been a Northern Ireland-only scheme from day 1. If that had been the case, and we had proposed it to the Committee as a potential scheme, it would have thought that it was fantastic, because it was giving producer organisations a three-year or five-year programme, or whatever. That, however, does not take away from their nervousness at our changing something, but I would be very surprised, if it had been a Northern Ireland-only scheme from day 1, if there were something at which you could point a finger.

The Chairperson (Mr Butler): Before we move on to clause 2, do you want to come in, Declan?

Mr McAleer: Very briefly, Chair. I have a closing comment to make about clause 1. On the issue of discretionary funding, I have seen in the past that, when there is a budget cut or a reduced budget in future years, discretionary schemes are viewed as the low-hanging fruit. My fear about making the scheme discretionary is that, in future budget years, it is the low-hanging fruit that will be affected.

Mr Terrington: If I may respond to that, all funding that the Department provides to the sector is discretionary. It will always be the case that the line to which Patsy referred is in there to say that the funding allocation is there but priorities may change over time. If the Minister therefore wants to push horticulture, money may have to go in that direction.

Grant aid is always low-hanging fruit, as you put it. It will be the first thing to go after the statutory requirements have been met and after the baby has been fed. Decisions will always have to be made at some time in the future about grant aid schemes. Things end up costing more, so the amount of grant aid provided ends up being reduced, because more money for elsewhere has to be found. Grant aid is always discretionary: that is the point. In that way, it competes with what else is out there. I recognise your point, however. It is well made.

Mr McGlone: On that point, just for clarity, will you expand more on the condition of the offer being a departmental commitment to fulfil its financial obligations to a scheme or a project?

Ms McCrory: If the Department gives an organisation a letter of offer, normally that is a contractual commitment. Once a letter of offer has been given, if the organisation in receipt of the grant aid delivers what it has signed up to do —

Mr Terrington: The Department is open to challenge.

Ms McCrory: — the Department is open to challenge if it does not fulfil that commitment. I do not think that discretionary bid negates giving somebody a letter of offer and saying, "This is what you are getting for the next three years".

Mr McGlone: Why I say that is that, from what I have read today, that doubt is out there as well.

Ms McCrory: You would be surprised.

Mr Terrington: I do not think so. There is a recognition that, if the legislation states that it is a one-, two- or three-year programme, or whatever length of programme the PO has signed up to, once the period is over, the Department will honour what is on the table, as it should.

Mr McGlone: I understand that. I just wanted clarification, and I am glad that you have provided it.

Ms McCrory: To be fair, the POs are very used to the scheme. They have said that they would like certainty and stability and to know, when they get their letter, that that is their approved maximum level of funding. If they do all the things that they have said that they are going to do, that is what they will get, and then they match-fund the other half.

Mr McGlone: OK. Thank you for that.

The Chairperson (Mr Butler): I am not going to look at members to see whether they have any more questions. [Laughter.]

I am not even going to make eye contact. [Laughter.]

We have a tight schedule, so I will move on to clause 2. I will, however, apply a cut-off time. We can then return to the clause next week.

I ask John and Elaine to give us a brief overview of clause 2.

Mr Terrington: It will be very brief. Clause 2 provides the Department with the power to make regulations to modify the legislation that is directly assimilated from the fruit and vegetables aid scheme. That is the clause's primary purpose. It is as important as the discretionary piece as far as the Minister is concerned. If he decides, as he has done, to continue with the scheme but does not have any powers to make it a non-EU scheme, that means that a balance has to be struck when determining which is the more important.

The clause also includes an additional power to make more specific regulations about the review of decisions relating to support provided under the scheme. That is particularly important, because, when support is no longer mandatory, people may want to appeal decisions. The regulations under that power would provide for appeal of decisions and be in line with rules that are already in place for other support, which is a reference to subordinate legislation in the clause.

The Chairperson (Mr Butler): Thank you for that overview. I will read into the record the themes of some of the responses.

Concerns include the potential to reduce the level of funding, thus causing the sector more uncertainty. NI growers need a guarantee that the current level of funding will be ring-fenced. The powers should not be given until the review is complete and there is a clear plan from DAERA on the future of horticulture in Northern Ireland. That touches on Michelle's point. Further concerns are the risk to smaller farmers, including increased uncertainty about funding rules; a risk of reduced or more selective funding; bureaucratic and administrative burdens; the potential for unequal treatment; and limited transparency and accountability.

From my perspective, we are now into a more flexible space than we were with clause 1. I am interested in that flexibility. John touched on global geopolitics, a competitive market space and unintended events, but he is also trying to give certainty to producers here. I do not have anything to say on clause 2 other than perhaps to make a few comments. Do members have any comments or questions for the officials? We are not closing out the discussion on the clause today, because we can return to it substantively next week.

No members have any questions. Thank you so much for your attendance.

Mr Terrington: If you do not mind my saying, what might help the Committee's deliberations is the RaISe report, which covers a number of issues that are in the fruit and vegetables aid scheme rules now. Attention paid to those will show you the limits to the powers. The Bill makes it clear that there will be a whole new scheme that may require new powers in their entirety. The Bill contains enabling powers to amend existing legislation. If we were doing this from the scratch, the Bill's long title would state that it is a Bill to make regulations about the amount of funding. All those things would then be listed so that you would know what producers were going to be getting. Moreover, the regulations will be made by draft affirmative resolution, so any changes will need the Assembly's approval.

The Chairperson (Mr Butler): I am glad that you mentioned the RaISe paper, because it is substantial, as you know. Having read it, I can say that the Committee will absolutely be using it as a guide. It is good to know that you are looking at it as well. Thank you so much for your time. We will see you again very soon.

The Committee Clerk: Next week.

The Chairperson (Mr Butler): Next week. Same place, same time.

Mr Terrington: It is in the diary. Thank you.