Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome again John Terrington and Elaine McCrory from the Department of Agriculture, Environment and Rural Affairs to answer questions and to discuss issues as we go along. We will go through the Bill clause by clause. We may not take up too much of your time today, John and Elaine. Thank you for coming.

We will start with clause 1, which is titled "Aid in the fruit and vegetables sector: amendment of CMO Regulation". To refresh memories, clause 1 amends assimilated law, namely regulation1308/2013, which is the common market regulation on the fruit and vegetables aid scheme (FVAS) to remove any requirement for all eligible claims to be funded and to enable the Department to continue the FVAS on a discretionary basis. It also includes transitional provisions for existing FVAS programmes.

Members, following our meeting last week, we asked whether the Minister would be minded to consider an amendment to clause 1 that would ring-fence funding set at an agreed baseline of value of marketed production (VMP) sales, which, the mushroom sector feels, should remain at 4·1%, above which the Minister can then exercise discretionary powers. In response, the Minister said that he is not minded to amend clause 1, stating that he has already provided an assurance that he will not end the existing scheme until a suitable successor is in place.

He does not believe that the amendment is in keeping with the policy aim of the Bill as agreed by the Executive, which is to make support discretionary. The response states:

Before I move on to questions, is there anything that you, John and Elaine, want to add about the Committee's writing to the Minister last week regarding an amendment to the 4·1%?

Ms Elaine McCrory (Department of Agriculture, Environment and Rural Affairs): We understand why stakeholders want to have that assurance about the funding. As we have already said, it is a three-year programme; that is what is set out in the legislation. Stakeholders apply for a three-year programme. They make their own decisions about what they do during that programme. They may decide that they do not want to go for the full three years, or they may decide to change their activities within it.

As you touched on, Chair, the CMO (Common Market Organisation) legislation sets the level of funding available to producer organisations (POs). To be clear, that is generally 50% of the eligible expenditure incurred. The stakeholders undertake activities and claim the funding back. The funding from the Department is limited to 50%. It is further limited to 4·1%, so there is a cap on the expenditure. There is the 50%, and then there is a 4·1% cap. That is 4·1% of their VMP. As I said, that is already set out in legislation. If you were to go with an amendment to the Bill, we would need to change that legislation as well, because the two things would contradict each other: there would be the 4·1% in the primary Bill and then the different provisions in the detailed legislation that applies. That is the first thing I would say.

As I touched on, it is important to note that the stakeholders have referred to that as being a baseline figure of support. The 4·1% is a cap on support. We understand that the EU brought that in to protect its budget, so that there could not be an unlimited demand and unlimited value on the programmes put forward by individuals and member states. Interestingly, it is actually a cap.

The Chairperson (Mr Butler): Do you mind if I pick up on that one in particular? I think that I get that. As you said, it is not a baseline; it is a cap. It has worked, too. In some ways, it could be a negative.

Ms McCrory: It could be a negative not just because it was originally intended as a cap but because it is 4·1% of VMP. The process for calculating VMP is also detailed in the legislation. It is a detailed and complex process. It requires a reference year; the POs have to identify a reference year for their VMP, which is used as the basis for that calculation. Although the mushroom sector might be familiar with that process, there are other sectors that are not and will find it difficult to establish that reference year. It is a clunky mechanism to put in a Bill. It is already in the secondary legislation.

As we have probably touched on already, being in the Bill, it is there until it can be changed by further primary legislation. It is not a suitable thing to have in a Bill. It is a very technical thing to include in a Bill. There would be problems if attempts were made to change it later because a better mechanism had been identified. Is this legacy EU mechanism the most appropriate one, or would it be better to talk to stakeholders about the level that the funding needs to be set at? I argue that it is the latter. This is a historical mechanism.

The Chairperson (Mr Butler): I have two wee questions. Just indicate, members; we are just doing clause 1. It may stray but hopefully not.

You said that the mandatory nature of the current FVAS was because we inherited it from the EU exit. That means that, if it was to remain mandatory, POs with the majority of their growers based in England could headquarter in Northern Ireland and a significant portion of the funding for the scheme could end up leaving Northern Ireland to growers in another jurisdiction. Is that correct?

Ms McCrory: That is correct. As it stands, we have one PO in financial difficulties that will likely close by the end of the year. The other two have their head offices in England, and most of the value of their marketed production is generated in England. For one of those POs as well, most of its members are located in England. Whilst the funding goes directly to the PO to distribute to its members, if those members are English and if they have most of the value of marketed production, they will rightly expect to benefit from the funding provided. Therefore, there would be DAERA funding benefiting people not located in this jurisdiction.

The Chairperson (Mr Butler): It is probably a wee bit Mystic Meg, but is there a calculable risk with regard to how that might manifest? Is there any awareness or fear in the Department of that manifesting?

Ms McCrory: The Minister has said in response to Assembly questions that, at the moment, we expect those two other POs to seek to have their head offices here, maybe as separate POs or as an amalgamated PO. We do not know; that is their decision. We know that much. We have some idea of the funding that those POs currently get, and we have some idea of the value of market production of the non-NI and NI members. We do not have recent figures. I think that the figures that we have are for 2024-25. Also, I would be reluctant to state in public what those figures are, since it is commercially sensitive information. We have an idea that, if that happens, our financial exposure will increase. It could increase further if people located somewhere else in the UK see that a scheme is still running here and think, "Maybe I should join a PO in Northern Ireland" because, again, they would then benefit from the money. The VMP would go up because there were more members in the POs, and that would increase our financial exposure.

The Chairperson (Mr Butler): A simplistic way of looking at that is that, as schemes close elsewhere, if ours was to remain open, it is almost as simple as, "Grow the mushrooms somewhere else, but, as long as you are a member of a PO headquartered in Northern Ireland, you can avail yourself of the support".

Ms McCrory: That is a risk.

The Chairperson (Mr Butler): Finally, is there any update on conversations between DAERA and the Department for Environment, Food and Rural Affairs (DEFRA) particularly around flexibility on the deadline date of 15 September for applications to the extended and current scheme?

Ms McCrory: There is already flexibility on that 15 September date in the current legislation. I think that the exact wording is

so we could set an alternative date. There is then a knock-on on the dates when programmes have to be approved. Again, there is flexibility in the legislation on that.

We have discussed the issues with DEFRA and the Rural Payments Agency (RPA) at length over a number of years, and we continue to discuss this with them. We had a meeting at the end of March; there was a meeting last week; and another meeting is coming up after Easter, so we continue to discuss this and to try to come to an arrangement that would facilitate POs that might want to move, bearing in mind the financial exposure, which we need to sort out.

The Chairperson (Mr Butler): A final one from me, then. An issue that had not been raised for a couple of weeks but was reinforced last week was the set-up at the moment whereby you cannot be a part of two POs; in fact, you cannot even indicate that you are going to, so you have to be out of one before you can even apply. Is that accurate?

Ms McCrory: That is putting it a little simplistically. Yes, the legislation says — it is a different part of the CMO — that it you cannot be in two POs at once. My understanding, however, is that there was an incidence of a PO — this is pre-Brexit — being a UK and ROI PO. Arrangements were made for the separation of the two parts so that the UK members formed their own PO and the ROI members formed their separate PO. That happened in a way that did not breach the legislation and did not incur unnecessary penalties for the individuals involved.

The Chairperson (Mr Butler): OK.

Ms McCrory: That is what I am talking to DEFRA about: whether we can come to an arrangement.

The Chairperson (Mr Butler): Yes. It is really important to get to the point where we do not have those —.

Ms McCrory: Andrew had mentioned it last week anyway because he was involved.

Mr McGlone: I want to get this clear in my mind. Where you are leading us is that a PO based somewhere in England could avail itself of this scheme. Could it avail itself simultaneously of the support scheme in England?

Ms McCrory: This scheme — the FVAS — is closing in England, so money will be available under that scheme only until the end of 2025. After that, we do not know what comes next. DEFRA has said that it has no firm plans around a replacement at the moment and that it will be bound up with the spending review and the funding allocation.

Mr McGlone: Here is where I am going. You have outlined that this could take three years. Say, for example, a PO in England applies to a scheme here and its project has a duration of three years, so you allocate funding for three years. Then, at the end of 2025, which you have given as a deadline, a new scheme opens in England. Do you get where I am going with this? That company could avail itself of financial support —.

Ms McCrory: You cannot have duplicate funding. The legislation is clear on that. You can get funding only once for the same thing.

Mr McGlone: Yes, but who does the due diligence on that?

Ms McCrory: We do.

Mr McGlone: So you will know if DEFRA or a similar project in England or whatever country opens up a scheme to fund the PO over in England. Would you be across that?

Ms McCrory: At the moment, there are arrangements in place. Under our governance arrangements, there are checks for duplicate funding. Going forward, there will have to be a similar approach where we can see that people are not getting funding from England, Wales, Scotland and us for the same thing.

Mr McGlone: Does that apply to the other jurisdictions — the Welsh and the Scottish?

Ms McCrory: They will want to be sure that we are not providing funding to an organisation and the same organisation is asking for money from them for the same thing.

Mr McGlone: I just want to talk through this. The mechanism is that, at the point of application for the PO, they have to tick boxes to say that they have or have not received support from another devolved Government. Is that where it goes?

Ms McCrory: Yes.

Mr McGlone: Or is there, in fact, a check mechanism?

Ms McCrory: There is a check as well. First of all, there is a declaration in the application that they are receiving no duplicate funding for the same thing, and then there are checks. There are lots of checks and inspections as part of the process, and there is an annual process where we check. We are just about to do our return, actually.

Mr John Terrington (Department of Agriculture, Environment and Rural Affairs): If I am not mistaken, funding is done retrospectively, so those checks and balances are in place as claims come in over the period of the operational programme.

Ms McCrory: Exactly. There is a check.

Mr McGlone: That check would include, for example, whether a new firm was set up with the same shareholders or whatever?

Ms McCrory: At the moment, that is not what we do, but, as part of the RPA closure project, we will look at that to see the appropriate way to make sure that there is no duplication

Mr McGlone: It is probably, in fact, an HMRC thing.

Ms McCrory: Taxation, as I understand, is for the individual.

Mr McGlone: Sorry, I am not talking about taxation; I am talking about how people can set up disparate companies to avail themselves of funding.

Mr Terrington: In this case, it is currently only a PO, and the rules are pretty clear on setting up a PO in the existing legislation. As Elaine has said before, that process is outside of our gift. It is a reserved matter. It falls to DEFRA. That will continue regardless of the fruit and veg aid scheme closing there or anywhere else.

Mr McGlone: Thank you.

The Chairperson (Mr Butler): Any other members on clause 1? No? Thank you, members.

Clause 2 is:

and it is really about the powers to modify. We will recap. Following our meeting last week, we sought clarity on the breadth of delegated legislative powers provided for in the clause, how DAERA envisages using or intends to use the powers in the future and its intentions in relation to revocation or repeal of the assimilated legislation in clause 2(1). In summary and for the record, the response states

and may be used if such parts are considered unsuitable for a Northern Ireland-only scheme. It also states:

We also sought clarification on any proposed replacement scheme and on whether, if a member of the existing FVAS submits a successful application for the extension of the current FVAS but then does not meet the criteria, or if it does not apply to a new scheme, the Department will commit to continue the funding to the end of the three-year programme. In summary and for the record, the response states:

John and Elaine, do you want to add anything on those points?

Mr Terrington: That is a pretty full answer, added to the Minister's confirmation that this is legislative. The three years are linked to that and are not subject to whim. Elaine, have you anything else?

Ms McCrory: No. As I said, the funding is provided in response to claims and will cover activities that the POs decide to undertake. The POs may change their minds, because business changes. The world is changing every second now, so businesses need to adjust their plans. For example, there could be changes in the expenditure that they decide to take forward.

Mr Terrington: Review processes are built into the existing legislation that allow POs to go back, look at their operational programme and make representations to the funder to allow them to do it. I will add that, as you read out, any changes — for example, to remove a redundant requirement from the EU that does not really suit — are draft affirmative and will be subject to the Assembly. Also, part of the ongoing process involved consultation with those who benefit or who might benefit if there are things that limit their participation in the scheme, subject to future budgets, of course.

The Chairperson (Mr Butler): OK. Thank you. Members, is any further clarification sought on clause 2? OK. Thank you.

Clause 3, then: "Information provision and promotion measures", and that is with regard to powers to modify. Following our meeting last week, we sought clarification on limitations to the powers and future intentions to revoke or repeal the assimilated legislation in clause 3 at (a) to (c). In summary and for the record, the response states that the powers will save the law in question from sunsetting and:

The Department states:

but would always be

Would you like to add anything?

Mr Terrington: Just a point of clarification. The legislation was saved from revocation at the time of the famous bonfire of EU legislation, and the Department got it saved because it was being revoked elsewhere in the UK. Northern Ireland has had benefit from it, primarily through the Dairy Council NI, which, with European funding, ran the campaigns in China and the Far East, as we explained before.

At the time, we did not want it to be revoked on our behalf without that decision being made, because it would never be used again, as has been the case elsewhere in the UK.

It is on the statute book, but it is clunky legislation. It is very much about an EU member state claiming for overseas campaigns. The powers are there to say, "Look, let's have a look and see". Rather than having to make new primary legislation to provide us with powers to do that, it is there on the books. It is subject to a call for applications, so there would be a bit of policy development for what that might look like. Part of that will be to say, as before, "Right, are there redundancies or things that just don't suit here?". That is what the power is for.

I think that there was a question a number of weeks ago about whether we would be coming to the Committee with other things that we needed new powers for because we have not seen them before. The answer is, "Maybe in the future, because that's the nature of it, but, for this, we have identified something that is on the statute that we don't have power to do anything with, so it's an opportune moment to take it". That is why it is even further away from knowing what we might do with it in the future. Again, anything that we do with it requires draft affirmative procedure and consultation.

The Chairperson (Mr Butler): Do members have any points of clarification on clause 3? No.

Clause 4 is the regulations. Following our meeting last week, we sought further clarification from the Department on how it intends to use those broad powers. In summary, for the record, the response states that it is not possible to be definitive as to what changes might be proposed or what impacts they may, in turn, have on other legislation until the future policy position is clear. The Department also states

Do you have anything that you want to add?

Mr Terrington: That has technically explained what it does. That is fine.

The Chairperson (Mr Butler): Do members have any points of clarification on clause 4? OK.

Clause 5 is the interpretation. In summary, for the record, the response states that the work on a replacement scheme is to be developed in co-design with the sector and will take some time — there were some compliments, John and Elaine, from the witnesses about how you dealt with them; I do not know if you got that, but you have definitely had an open door and a listening ear — during which the Department could use the enabling power to make improvements to the present scheme. The Department also states that

and that

We also asked the Minister whether he is minded to amend the Bill to ensure that the current FVAS could be repealed or revoked only once a suitable co-designed replacement scheme was in place with the same baseline support that is available under the FVAS. For the record, the response states that the Minister will not bring forward such an amendment as the scheme will not now close at the end of the year and a replacement scheme is to be co-designed. The Department also believes that it may need

and that those would be subject to the approval of the Assembly. The Department does not think it appropriate to earmark support for one sector or sub-sector and thinks that the Minister needs flexibility to allocate support according to DAERA priorities. Is there anything that you would like to add to that?

Ms McCrory: As you know, the legislation as we have it at the moment was brought over from the EU; it is EU law. It was amended to make it work in a UK context, but that was as a transitional arrangement; it was like day-1 operational readiness so that there was not a cliff edge when we reached exit day or the end of the implementation period. It is written on a UK basis, so there are things that we would like to change to make it specific to Northern Ireland. That is probably where the redundant bits come in; there are bits that we would like to change to make it more Northern Ireland-specific. As we have touched on before, there are things that stakeholders have said that they would like to change, and, without the Bill, we cannot do that.

The Chairperson (Mr Butler): Do members have anything that they want to add? That was clause 5. Is any clarification required? No?

Clause 6 is the commencement and short title. Following our meeting last week, we asked whether the Minister would be minded to consider an amendment to the short title to reflect the specific remit of the Bill regarding aid for the fruit and vegetable sector, information provision and promotion measures. For the record, the response states that it is the Minister’s understanding that the title adequately covers the content of the Bill, in that its subject relates to agriculture, and the specific content is made clear in the Long Title and that it is therefore neither unusual nor inappropriate. The response states:

That is a "computer says no" answer, as far as I am concerned. It is OK if you are a Bill writer and you are a legislative nerd, which obviously we are, because we are legislators, but that is not the Minister's answer; that is the advice that he has been given. I do not know who gave that answer; I am sure that it was not you guys.

Mr Terrington: I am quite happy to say that it reflects the advice that we have, and that is that there are certain rules. One is that it is short, hence "short title"; one is that it covers the subject, which "Agriculture" does; and one is that it is factual and neutral in the language that it uses. There is also the understanding that you do not read the short title in isolation: it is read with the long title and, in fact, with the full content of the Bill. That is the norm. There are — I know, but we will check — other Bills before the Assembly at the moment that could be similarly criticised, if it is a criticism. Can I give an example? The Justice Bill. We know that "Justice" covers a wide range of things. Could I tell you what is in the content of that? My research did not go that far, but it will not be all of justice; it will be certain parts of justice. That is the point. It meets the requirements, and that was the reason.

The Chairperson (Mr Butler): I get how it works, John. It is not your fault; it is not my fault. From this perspective, I still think that it is just nonsensical every time that we do it. It is horticulture; it is fruit and veg; it is pretty specific. This does not — because even in the clauses there, clauses 2 and 3, we are saying that it is so narrow: "We will not be seeking to amend other legislation, because this is so narrow. The powers within this are only going to be in this sphere". So it does not —.

Ms McCrory: It is information and promotion too.

The Chairperson (Mr Butler): It does not touch on the — it is not a criticism of you; it is a criticism of how we name Bills, and it is not the most important bit that we will discuss, to be fair.

Members, are there any other points of clarification on clause 6?

Ms Murphy: Chair, on your point there, why could the word "horticulture" not be used, given that it is so narrow in scope? I get that the Justice Bill, from what I have seen of it, is quite broad. It covers a number of areas in justice, but, in this perspective, I look at the Bill and I would nearly call it "the Horticulture Bill" rather than "the Agriculture Bill" at this stage, because it is so misleading.

Mr Terrington: Again, I do not believe that it is misleading, in the sense that horticulture is agriculture, or, at least, that is where it would be argued that it is accurate. I will make the observation that it is not just about the fruit and vegetable aid scheme; it is also about the promotion scheme, so "Horticulture", on its own, would not work. I might also say that not all horticulture is fruit and veg. We have cut flowers, for example, which currently does not fit under it. As the Chair said, it is probably a bit of an academic argument as far as the rights and wrongs of it. There is the scope that, if it becomes, as was suggested, "Fruit and Veg Aid and Promotions and Information and Agri-food", it starts to lose the "short" requirement at some point. That is why it is covered in the —.

As somebody who has been involved in legislation, I will say that, in all that agriculture legislation, be that in the old Parliament or the Northern Ireland Assembly or indeed as Orders in Council over the years when we did not have a devolved Assembly, there are a lot of things called "Agriculture" and "Agricultural (Miscellaneous Provisions)" — those are a couple that come to mind — over a number of years. It is not easy to follow. That is why lawyers get paid money, I guess, and we try to do our bit in between. All accept it, but, as I say, "Short, accurate and does not mislead or is neutral" is the guidance under which the draftspeople work. I think that that is in Westminster and here.

The Chairperson (Mr Butler): OK, members. Clause 6? OK.

Thank you very much for attending again. Just so you know, at the end of the Committee sessions, we will have a private session, as a Committee, to further discuss the Bill. Thank you again for your attendance.

Erin and Kelise have been with me for six weeks. This is their last day. They have fully enjoyed and are enthralled by the discussions on POs and mushrooms. They have mentioned it to me almost every week. Ulster University will now get a phenomenal report on this legislation.

Thank you for your time.