Official Report: Minutes of Evidence

The Chairperson (Mr Butler): We have completed our deliberations on the Bill, and, today, we will conduct the formal clause-by-clause process. That is a formal process of each clause being read out and the Committee recording consensus or otherwise on each clause.

In each of our sessions with the Department, we have had evidence from John Terrington and Elaine McCrory, who are in the Public Gallery. Thank you for your attendance again today.

Before we move to the formal clause-by-clause deliberations, do any members want to seek any final points of clarification from the witnesses?

John and Elaine, will you take your seats at the table for a couple of minutes in case any clarification is required? John Blair has indicated that he would like clarity on some points.

Mr Blair: I also thank the officials for coming along again today. Before the Committee progresses and finalises its response to the Bill, I want to seek clarification on something. Given that most of the discussion and dissension have been around clause 1, may I ask for as succinct a response as possible, if that can be done, giving examples of where the discretion mentioned in clause 1 might be used and framing those in a way that will conclude the matter for me and fellow members?

Ms Elaine McCrory (Department of Agriculture, Environment and Rural Affairs): I will start off, and then John can come in.

I will take the Committee back to what the Bill says. The main change in clause 1 is to substitute a new paragraph that states:

It is a clause that enables us to make a decision on a case-by-case basis. The first example of where we might make such a decision not to grant assistance for an operational programme might be where, in doing so, we would bust our budget allocation for the scheme, which may mean that we would have to divert funds from other schemes. The Minister may not want to do that, depending on his priorities. The second example is where the money would go to and benefit non-Northern Ireland growers. In other words, Executive-earmarked funding would be used for the benefit of people who were not growing the product in Northern Ireland. Those are two examples of where we may decide to exercise that discretion.

Mr John Terrington (Department of Agriculture, Environment and Rural Affairs): I will add that the first scenario of where we might bust our budget allocation might be because we get more producer organisations (POs), and we have no control over that. It might be because POs get more members, and we have no control over that, or it might be that the POs decide to spend a lot more of their money, and it might become unsustainable.

The point is that it is on a case-by-case basis, as Elaine said. It is not a closure in any way. If a legitimate operational programme were to come forward, the Minister would have to have a good case to refuse the funding. The examples that Elaine gave are clear and obvious, and they are right and proper in respect of diligence.

Mr Blair: I thank John and Elaine for that. That is helpful. We should also reflect that none of that might happen at all, but, in the event that it does and the budget is depleted, there may be a need for some kind of readjustment. I accept that refusal is an option, but I assume that, therein, there would be an option for adjusting remaining budgets. Somebody might not get nothing. They might get less than they requested, but they might get something, depending on the remaining budget.

Mr Terrington: That is reasonable. The discretion might be to say, "Come back with a different operational programme, please. We cannot accept that".

Ms McCrory: Yes.

Mr Blair: It is not an all-or-nothing situation. I accept the full context of that, and that helps me considerably.

There also seems to be some uncertainty over aid for producer organisations. For a PO to set up here, it would have to have all its employees in Northern Ireland and its registered headquarters in Northern Ireland. My understanding was that the first of those criteria did not apply and that only the headquarters criterion applied. Can you clarify that?

Ms McCrory: At the moment, where the head office of a PO is located is generally determined by where it derives most of its marketed production, so it is where it derives most turnover. If you derive most of your turnover in England, your head office is in England. However, by agreement, it can be where most of the members are located. That could mean that you have a PO that has most of its members in Northern Ireland. Therefore, if it was, say, an English PO and Northern Irish growers, we could say, by agreement between DAERA and the Department for Environment, Food and Rural Affairs (DEFRA), "OK, most of the growers are located in Northern Ireland. Therefore, the head office can be here". However, that requires DAERA's agreement.

Mr Terrington: The problem might be that, in real terms, some of the bigger producers might be in England.

Ms McCrory: Yes.

Mr Terrington: In that case, you could see the Minister not agreeing to that transfer. If agreeing would mean having to pay non-Northern Ireland beneficiaries, which could impact on the Northern Ireland agriculture budget — potentially to a large scale, if the bigger producers are in England — such a refusal would be reasonable.

Mr Blair: OK. Thank you for that.

The Chairperson (Mr Butler): That works with the current scheme. That is the current situation.

Ms McCrory: Those are the current rules.

The Chairperson (Mr Butler): Under the current rules, the unadjusted scheme allows for that to happen, and one of the purposes of clause 1 is to close that gap. This is the bit that gets me: it paints a better picture now. The first metric is the quantification of production, but the other is membership. A PO with numerous members — many small producers — could be up against a huge producer. That is the angle that could be [Inaudible.]

Ms Murphy: I briefly lost my train of thought on the question that you put. Essentially, it is up to the Minister. DAERA and DEFRA still reserve the right to refuse a PO under the current fruit and vegetables aid scheme (FVAS), and that same scheme will continue into the next three-year period.

Ms McCrory: If the rules remain as they are, you would determine where the head office is by where the majority of the value of marketed production is: where the majority of the turnover is generated. However, if a PO were to say to us, "We would like our head office to be in Northern Ireland", if most of their members were located here and if DAERA and DEFRA agreed, the head office could be in Northern Ireland.

Our reservations are around POs that have most of their turnover generated in England: most of their big players are in England, and the small growers are here. Under the current rules, we would be paying for a programme that would benefit the small growers who are here and the people located in England or Scotland.

Mr Terrington: It is worth adding that, under the current rules, if a PO that sets up here is made up of just Northern Ireland growers —

Ms McCrory: There is no issue.

Mr Terrington: — there is no issue. However, once that PO exists in Northern Ireland, other members can join it from England.

Ms McCrory: Or from Scotland or Wales.

Mr Terrington: The original sum of the parts — where you set up originally — is based on those two criteria, with a choice for the Department to accept or not accept the English growers. However, in later years, given that there is no funding for this in England, you might see English growers migrating to a Northern Ireland PO. Certainly, it was made clear to the Committee by the two POs that are based and have their head office in England that there is no scheme there. We could do nothing about that without the Minister's discretion.

Ms Murphy: I go back to my original question. As you have just explained, under the legislation, DAERA and DEFRA still reserve the right to refuse.

Mr McGlone: They have discretion.

Ms McCrory: It depends. Under the current rules, there would be an element of discretion where a PO asks to transfer its head office to Northern Ireland from England. That has never been tested, however, because the legislation was brought over from the EU, and, basically, we substituted "constituent nation" for "member state". It has never been tested. Yes, in theory, DEFRA would have to ask our Minister, "Do you consent to accepting this PO?". I think that our Minister would be reluctant to do that, where most of the turnover is generated in England and most of the players are English.

Mr Terrington: That would mean that Northern Ireland growers would not be able to avail themselves of the scheme, because they would still be in a PO in England, where there is no scheme.

Ms McCrory: There is no reciprocal arrangement.

Ms Murphy: NI growers would not be able to avail themselves of that scheme because —.

Mr Terrington: They are still part of a PO in England.

Ms Murphy: Yes. That is OK.

Mr Terrington: I do not think that that discretion is of any value to the stakeholders. The Department would rightly say, "No, we cannot afford that". There is no scope for them to get funded, then, which is not what we are trying to do.

Ms Murphy: I am just trying to put each of the jigsaw pieces together in my head, because the Department has raised the issue consistently with us over the past number of weeks. The ability of a PO to come over here and set up could be a serious issue for us in future. Essentially, what you are laying out is that the final decision would rest with the Minister, possibly on financial grounds, on whether to accept a new PO here.

Ms McCrory: If we are using the current legislation, yes, DEFRA could say, "Can this PO transfer under the existing rules to Northern Ireland?", and I think that the Minister would be reluctant to agree to that. However, because that has not been tested, we cannot say for certain whether he will definitely be able to sustain that. The Bill makes it clearer.

Mr Terrington: As I said, as the law is currently written, if the Minister said no and the Northern Ireland growers decided to set up a PO in order to avail themselves of the funding and moved over, the other ones could follow. It is at that point of setting up and then later on. We will assume that that will be around for a while yet.

Ms McCrory: Nothing in the existing rules allows us to say, "No, you cannot have additional members transferring into the PO".

Ms Murphy: OK.

Mr McGlone: I am intrigued by where the discussion is going. We are discussing what might happen in a hypothetical situation, which may or may not happen, in circumstances where we might or might not need to close a situation off and in a situation where the Minister has discretionary powers to do so. The debate started on the subject of discretionary powers. I find the discussion to be a bit nebulous or way over there, when we probably have much more important things to discuss.

Mr Terrington: It has the potential to become a real issue, if the POs come here looking for funding and we have to say no to Northern Ireland growers.

Mr McGlone: Here is a question for you: if that is potentially a difficult situation, where is your proposal to close it off?

Mr Terrington: By?

Mr McGlone: A legislative proposal to close it off. In the hypothetical.

Mr Terrington: The second part of the Bill —

Mr McGlone: You see, John —

Mr Terrington: — gives enabling powers, and one of the things that we would try to do is to make sure that the funds that come from Northern Ireland will fund only — [Inaudible.]

Mr Terrington: Yes, that is one of the enabling powers.

Mr McGlone: If that is such an absolute priority for you, where is your legislative proposal to close it off? Up to now, I have heard hypothesis after hypothesis about what might happen.

Mr Terrington: I would be fairly confident that, if there is time to make legislation that makes it clear that the fruit and vegetables aid scheme for Northern Ireland is for Northern Ireland beneficiaries only, that will come to the Assembly before the operational programmes are due. We are running short on time to do that.

Mr McGlone: That is grand. We will overcome that when the legislative proposal comes forward.

Mr Terrington: In the meantime, those risks are still there.

Ms McCrory: The timeline is tight, because the operational programmes are due to be submitted by 15 September 2025, which is not far off. It is this year.

Mr McGlone: I get all that. If that is the issue, deal with it legislatively.

Mr Terrington: But we need these powers.

Ms McCrory: We need these powers to do that.

Mr McGlone: I know that you need the powers to deal with it, but we also need the proposals to deal with it, which we have not had sight of. Anyway, enough of the hypothesis.

The Chairperson (Mr Butler): John?

Mr Blair: There is nothing left to say.

The Chairperson (Mr Butler): Is that it? Is everybody content now?

Mr Terrington: I would like to leave you with one point. All the comments are reasonable. The only thing is this: turning it round in my head last night, I thought that, if the Minister were to come to the Committee with an uncapped or ineffectively capped scheme for a sector, I am not sure that he would get a good hearing. Aside from the English PO bit, which is important, that was the risk. Had the Minister said, "It will be what it will be. If we get lots of people asking for it, it will bust the bank, but so be it", members would certainly have had to look carefully at that and would probably have said, "That is no way to manage a budget".

The Chairperson (Mr Butler): Áine, have you another little question?

Ms Murphy: It is a very little one, and it relates to how those discretionary powers may be used. I do not want to misquote you, but, in an earlier response to John, I think, you referred to the possibility of some financial awards under the FVAS being reduced. The question that arises is this: would it ever be the case that they might be increased by using discretionary powers?

Mr Terrington: The first thing that sets the amount of budget required — I am stepping on Elaine's toes a bit here— is what the producer organisation has in its programme: what it and its members want to do over the coming three-year period. They set that budget, and that can go up. This legislation then requires match funding with caps of 4·1% of their turnover. Is that right?

Ms McCrory: Yes, that is right.

Mr Terrington: The anticipation is that it could well go up. There is scope — I appreciate that it is hypothetical — to increase the budget for certain parts. You will have heard the stakeholders talk about more money being available for research and environmental work; not necessarily increasing the whole budget but allowing them to have to pay only 20% and the fund to pay up to 80% for environmental works. You might rightly say that the Department would consult stakeholders on that in the near future. It will definitely go up. The point is that, if it goes up because you get two or three more POs and other sectors coming on board —

Ms McCrory: The bigger POs.

Mr Terrington: — and they were the bigger POs, currently, there would be no control over that budget.

Ms Murphy: Is it possible to quantify the number of POs that could register here? I know that it is difficult, but is there any quantification or indication?

Ms McCrory: The Minister answered an Assembly question on that. He said that, at the moment, subject to what the POs decide to do, there is a fair chance that there will be two new POs. They are currently headquartered in England and will move their head office here. There could be others. It is difficult to predict exactly what people will do in the short term. Those are discussions that we have with DEFRA and the Rural Payments Agency.

Mr Terrington: That is the mushroom sector only.

Ms McCrory: That is the mushroom sector only.

Mr Terrington: One of the things that the Committee has asked us is, "Why only mushrooms?". There may be things that can be done to the rules to make it more attractive to others. Other sectors might look at it anew and think that there are things that they will want to do, and we have no control over that.

Mr Irwin: Mr Chairman, what are the implications if clause 1 does not stand part of the Bill?

Mr Terrington: All those risks.

Mr Irwin: Pardon?

Mr Terrington: The risks that we have just set out: the risk to the budget; that we have no control over it; and that English members get access to it.

The Chairperson (Mr Butler): Some Scottish as well.

Mr Terrington: Yes, and Scottish.

Ms McCrory: There are Welsh growers in POs as well.

Mr Terrington: There is scope in the current legislation for the Minister to say, "No, I am not taking those. They may have more members here, but their turnover is elsewhere". That would be to the detriment of the Northern Ireland growers, who would then not get any money.

Mr Irwin: It would exclude them too.

Mr Terrington: Yes, and there is no intention to do so.

The Chairperson (Mr Butler): OK, members, we have wrung the officials out quite well. There is not a drop left in them. Thank you.

Members, are you agreed that we commence the formal clause-by-clause consideration of the Agriculture Bill?

The Chairperson (Mr Butler): Members, I will read out the title of the clause before I ask the formal Question on each clause.

The Chairperson (Mr Butler): Thank you, members. Now that the Committee has decided that it is not content with clause 1 as drafted, I remind members that, in advance of Consideration Stage, we have the option of registering our formal opposition to the Question that clause 1 stand part of the Bill. That would ensure that the clause is debated at Consideration Stage. Does the Committee wish to table formal notice of the Committee's opposition to the Question that clause 1 stand part of the Bill?

Is there a "Yes" from anyone to that? No. "No" is the recorded answer to that.

I remind members that, in advance of the scheduling of the Bill for debate, any member can register with the Business Office the fact that they want the clause to stand part of the Bill.

The Chairperson (Mr Butler): There was some learning in clause 6. I am not necessarily content with the Standing Orders in regard to it, but that is not the fault of the drafters of the Bill. That is just the way things are, and it is, obviously, open to change through a different Committee.

The Chairperson (Mr Butler): That concludes the formal clause-by-clause consideration, and it will be added to the draft Committee report.

We have received a first version of the draft Committee Bill report from the Clerk, which is in your pack. Leaving aside the addition of the formal clause-by-clause consideration that we have just completed, we will not run through the rest of it today, because a series of amendments needs to be made to it. Time is tight, so I ask that it be re-drafted with the changes and amendments added. It will then be furnished to you, and we will return to it on 22 May, but it needs to be agreed on that date. I need confirmation that, when you receive it, if you are not content with something in it, you will liaise with the Clerk's office to ensure that we do not waste time on 22 May on things that have just occurred to us. Are members content?

The Chairperson (Mr Butler): Thank you, John. Thanks, Elaine.