RURAL ECONOMY AND CONNECTIVITY COMMITTEE AGENDA … Papers/20200513_-_R… · AGENDA 11th Meeting, 2020 (Session 5) Wednesday 13 May 2020 The Committee will meet at 9:30am in a virtual

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RURAL ECONOMY AND CONNECTIVITY COMMITTEE

AGENDA

11th Meeting, 2020 (Session 5)

Wednesday 13 May 2020 The Committee will meet at 9:30am in a virtual meeting which will be broadcast on www.scottishparliament.tv 1. Decision on taking business in private: The Committee will decide whether

to take item 12 in private. 2. Scottish Government response to COVID-19: The Committee will take

evidence from—

Michael Matheson, Cabinet Secretary for Transport, Infrastructure and Connectivity, Scottish Government, Roy Brannen, Chief Executive and Alison Irvine, Director of Strategy and Analysis, Transport Scotland, Scottish Government.

3. Scottish Government response to COVID-19: The Committee will take evidence from—

Fergus Ewing, Cabinet Secretary for Rural Economy and Tourism, Allan Gibb, Acting Deputy Director - Sea Fisheries, George Burgess, Deputy Director, Food & Drink, and Gerry Saddler, Chief Plant Health Officer for Scotland & Head of Science and Advice for Scottish Agriculture (SASA), Scottish Government.

4. Subordinate legislation: The Committee will take evidence on the Direct Payments (Crop Diversification Derogation) (Scotland) Regulations 2020 from—

Fergus Ewing, Cabinet Secretary for Rural Economy and Tourism, George Burgess, Deputy Director, Food & Drink, and Gerry Saddler, Chief Plant Health Officer for Scotland & Head of Science and Advice for Scottish Agriculture (SASA), Scottish Government.

5. Subordinate legislation: Fergus Ewing, Cabinet Secretary for the Rural Economy and Tourism to move—

http://www.scottishparliament.tv/

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S5M-21632— That the Rural Economy and Connectivity Committee recommends that the Direct Payments (Crop Diversification Derogation) (Scotland) Regulations 2020 (SSI 2020/135) be approved.

6. Subordinate legislation: The Committee will take evidence on the Land Reform (Scotland) Act 2016 (Supplementary Provision) (Coronavirus) Regulations 2020 from—

Fergus Ewing, Cabinet Secretary for Rural Economy and Tourism, Gerry Saddler, Chief Plant Health Officer for Scotland & Head of Science and Advice for Scottish Agriculture (SASA), and George Burgess, Deputy Director, Food & Drink, Scottish Government.

7. Subordinate legislation: Fergus Ewing, Cabinet Secretary for the Rural Economy and Tourism to move—

S5M-21670—That the Rural Economy and Connectivity Committee recommends that the Land Reform (Scotland) Act 2016 (Supplementary Provision) (Coronavirus) Regulations 2020 [draft] be approved.

8. Agriculture Bill (UK Parliament legislation): The Committee will take evidence on legislative consent memorandum LCM(S5-38) Agriculture Bill from—

Fergus Ewing, Cabinet Secretary for Rural Economy and Tourism, and George Burgess, Deputy Director, Food & Drink, Scottish Government.

9. Direct Payments to Farmers (Legislative Continuity) Act 2020: The Committee will consider a proposal by the Scottish Government to consent to the UK Government legislating using the powers under the Act in relation to the following UK statutory instrument proposal—

Direct Payments to Farmers (Amendment) Regulations 2020.

10. Direct Payments to Farmers (Legislative Continuity) Act 2020: The

Committee will consider a proposal by the Scottish Government to consent to the UK Government legislating using the powers under the Act in relation to the following UK statutory instrument proposal—

The Direct Payments Ceilings Regulations 2020.

11. Annual report: The Committee will consider whether to agree its annual report by correspondence.

12. Impact of COVID-19 on the rural economy and connectivity: The Committee

will consider its approach to a call for evidence.

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Steve Farrell Clerk to the Rural Economy and Connectivity Committee

Room T3.60 The Scottish Parliament

Edinburgh Tel: 0131 348 5211

Email: [email protected]

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The papers for this meeting are as follows— Agenda Item 2

Note by the Clerk

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PRIVATE PAPER

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Agenda Item 3

Note by the Clerk

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PRIVATE PAPER

REC/S5/20/11/4 (P)

Agenda Item 4

Note by the Clerk

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PRIVATE PAPER

REC/S5/20/11/6 (P)

Agenda Item 8

Note by the Clerk

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PRIVATE PAPER

REC/S5/20/11/8 (P)

Agenda Item 9

Note by the Clerk

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PRIVATE PAPER

REC/S5/20/11/10 (P)

Agenda Item 10

Note by the Clerk

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PRIVATE PAPER

REC/S5/20/11/12 (P)

Agenda Item 12

PRIVATE PAPER

REC/S5/20/11/13 (P)

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1

Rural Economy and Connectivity Committee

11th Meeting, 2020 (Session 5), Wednesday 13 May 2020

Update from the Cabinet Secretary for Transport, Infrastructure and Connectivity: Impact of COVID-19 on transport and connectivity

Background

1. The Committee will take evidence from the Cabinet Secretary for Transport, Infrastructure and Connectivity on the impact of the current COVID-19 emergency on transport and connectivity in Scotland.

2. The Committee last received an update from the Cabinet Secretary on 18

March 2020. At that meeting the Committee raised a number of topics related to the COVID-19 emergency such as the provision of freight transport services, the protection of lifeline air services, maintaining resilience in the interisland ferry network, maintaining rural bus services and cleaning of rail carriages.

Rural Economy and Connectivity Committee Clerks May 2020

http://www.parliament.scot/parliamentarybusiness/report.aspx?r=12590


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Update from the Cabinet Secretary for Rural Economy and Tourism: Impact of COVID-19 on the rural economy

Background

1. The Committee will take evidence from the Cabinet Secretary for Rural Economy and Tourism on the impact of the current COVID-19 emergency on Scotland’s rural economy.

2. The Committee last received a general update from the Cabinet Secretary on

16 November 2019. At that meeting the Committee raised topics such as the labelling of fish and fish products for export, the annual fisheries negotiations for 2020, policing of inshore waters, future monitoring of fisheries, post-Brexit access to foreign workers for fish processing and agriculture, aquaculture, the development of intra-UK common frameworks for decision-making in agriculture and fisheries and the long-term future of agricultural support.



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Subordinate legislation

1. The Committee will consider the following instruments:

Made Affirmative

• Direct Payments (Crop Diversification Derogation) (Scotland) Regulations 2020 (see Annexe A)

Affirmative

• The Land Reform (Scotland) Act 2016 (Supplementary Provision) (Coronavirus) Regulations 2020 (see Annexe B)

2. The Annexes, for each instrument respectively, contain the clerk’s note, the

instrument itself and the Scottish Government’s policy note.


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ANNEXE A

Title of Instrument: Direct Payments (Crop Diversification Derogation) (Scotland)

Regulations 2020

Type of Instrument: Made Affirmative (came into force on 1 May 2020, and will lapse unless the Parliament approves it within 28 days beginning with the day it was made (28 April 2020). Laid Date: 29 April 2020

Cabinet Secretary to attend the meeting: Yes Procedure 1. The Rural Economy and Connectivity (REC) Committee is lead committee for this

instrument and is required to report to the Parliament on its considerations.

2. Under Rule 10.6.1, these regulations are subject to affirmative resolution before they can be made. It is for the REC Committee to recommend to the Parliament whether these draft regulations should be approved.

3. The Cabinet Secretary for Rural Economy and Tourism has, by motion (S5M-21632 as set out in the agenda), proposed that the Committee should recommend the approval of this instrument.

4. The Cabinet Secretary will attend to explain the purpose and policy objective of

the instrument and to answer any questions from members. He will then (under a subsequent agenda item) be invited to speak to and move the motion seeking approval. The formal debate on the motion may last for up to 90 minutes.

5. At the end of the debate, the Committee must decide whether it agrees or disagrees with the motion, and then report to Parliament accordingly. Such a report need only be a short statement of the Committee’s recommendations.

Purpose 6. This instrument relates to the environment and climate change requirements for

“greening” payments, a type of farm subsidy. The instrument will allow farmers in Scotland to not follow some of the specific crop diversification requirements for the purposes of claiming greening payments in the claim year 2020. The removal of the requirement is called a “derogation”.

7. Specifically, the requirement being removed (the derogation) is that:

• farms over 10 hectares of arable land must grow at least two types of crop; and

• farms over 30 hectares of arable land must grow at least three types of crop

http://www.legislation.gov.uk/ssi/2020/135/contents/made

http://www.legislation.gov.uk/ssi/2020/135/contents/made

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(known as “the 3 crop rule”). 8. This derogation is seen by the Scottish Government as a necessary response to

problems caused by the recent prolonged period of wet weather and low levels of sunshine. As a result of the derogation, farmers in Scotland will not be required to plant more than one crop for the claim year 2020, but can still claim for a greening payment.

9. John Finnie MSP asked in advance of Committee consideration why no impact assessment had been made of what the derogation would mean in practical terms (such as whether it could give rise to a glut of a single crop, resulting in price collapse and a subsequent request for additional support, or give rise to a shortage of other crops, resulting in a price hike for consumers).

10. The Scottish Government response is attached below. It states that this is not a

permanent change in environment policy, which would normally necessitate an impact assessment. Additionally, it notes that any changes in crops would happen regardless of the derogation as they are a response to adverse weather conditions, and the derogation is “more about avoiding applying penalties to farmers who are not able to meet the strict regulatory requirements”.

Consideration by the Delegated Powers and Law Reform Committee

11. The Delegated Powers and Law Reform Committee (DPLR) considered this instrument at its meeting on 5 May 2020.

12. In summary, it made the unusual decision that it could not decide whether the appropriate requirements were to place to allow the Scottish Government to make the derogation. The DPLR Committee is therefore asking the REC Committee to make this decision as the REC Committee has greater policy expertise in this area. The relevant extract of its report detailing this decision is attached as follows:

“The power under which these Regulations are made (article 69(1) of the Direct Payments Regulation) can only be used to derogate from the Direct Payments Regulation where the following preconditions are met:

• the derogation must only be “to the extent and for such a period as is strictly necessary”, and

• the regulations must be “both necessary and justifiable in an emergency”.

Establishing whether these preconditions have been met involves consideration of many different policy questions. These might include whether in fact an emergency situation exists due to problems in the cultivation of crops caused by severe weather; whether the removal of the crop diversification requirement is necessary and justified; whether the extent of the derogation is “strictly necessary” (e.g. is a wholesale removal of the requirement covering for

https://sp-bpr-en-prod-cdnep.azureedge.net/published/DPLR/2020/5/6/Subordinate-Legislation-Considered-by-the-Delegated-Powers-and-Law-Reform-Committee-on-5-May-2020/DPLRS052020R26.pdf

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the whole of Scotland and all farms strictly necessary); and whether the period for which the derogation applies is no longer than is strictly necessary. While the preconditions need to be met in order for the instrument to be within vires, they are matters that the lead committee, with its policy expertise in this area, would be best placed to consider. The Committee therefore wishes to draw these preconditions to the attention of the lead committee, the Rural Economy and Connectivity Committee, so that it may consider whether they have been met.”

Recommendation 13. The Committee is invited to consider any issues that it wishes to raise in

reporting to the Parliament on this instrument, including whether it thinks the derogation has been made appropriately in response to the DPLR Committee’s report.

Rural Economy and Connectivity Committee clerking team

May 2020

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Scottish Government response to REC Committee advance query In response to the query about an assessment of what this derogation might mean in practical terms I would stress that the crop diversification requirements are not designed as a form of market control; instead they are designed to protect the environment. This is a temporary derogation for the limited period of the claim year 2020 and not a permanent change in environment policy, which would normally necessitate an impact assessment. The derogation is in response to an emergency caused by extreme weather which has meant farmers have either been unable to establish their crops or have had established crops ruined and failed. The derogation by itself will not result in a sudden glut of a single crop or cause a shortage of crops. Some crops were sown in the autumn and there will continue to be multiple crops in Scotland but not necessarily in the balance specifically defined by the regulations on individual farms. The main change will be an increase in spring sown crops as few crops were sown in the autumn due to the poor weather. It is also noted that due to the weather this would happen regardless of the derogation which is more about avoiding applying penalties to farmers who are not able to meet the strict regulatory requirements. I would note that Crop Diversification applies to arable land only, therefore there is no impact on the area of forage that would normally be grown. The derogation helps farmers to mitigate the impact of the weather and respond to this emergency to give them more flexibility to use their own expertise and discretion to establish their own alternative variety of crops in the varied landscape that Scotland provides. This legislation is a necessary response to recent extreme weather which created an unsuitable environment for farmers in Scotland to meet the crop diversification requirements. If we do not provide farmers in Scotland with a derogation from these requirements for the 2020 claim year, an immediate impact will be that they will be unable to meet the crop diversification requirements and incur a penalty reducing the Greening element of their direct payment. As the Greening element accounts for approximately 30% of the total value of Direct Payments this can be a significant reduction in payment. This would be an unfair penalty given the extreme weather conditions were outwith farmers and crofters control; it would deprive farmers of much needed income required to maintain and continue their businesses at this difficult time. Lynne Stewart Lead Official, Head of Direct Payments 5 May 2020

Regulations made by the Scottish Ministers and laid before the Scottish Parliament under Article

71B(3) of Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17

December 2013 establishing rules for direct payments to farmers under support schemes within

the framework of the common agricultural policy and repealing Council Regulation (EC) No

637/2008 and Council Regulation (EC) No 73/2009, for approval by resolution of the Scottish

Parliament within 28 days beginning with the day on which the Regulations were made, not taking

into account periods of dissolution or recess for more than 4 days.

S C O T T I S H S T A T U T O R Y I N S T R U M E N T S

2020 No. 135

AGRICULTURE

The Direct Payments (Crop Diversification Derogation)

(Scotland) Regulations 2020

Made - - - - 28th April 2020

Laid before the Scottish Parliament 29th April 2020

Coming into force - - 1st May 2020

The Scottish Ministers make the following Regulations in exercise of the powers conferred by

Article 69(1) of Regulation (EU) No 1307/2013 of the European Parliament and of the Council of

17 December 2013 establishing rules for direct payments to farmers under support schemes within

the framework of the common agricultural policy and repealing Council Regulation (EC) No

637/2008 and Council Regulation (EC) No 73/2009(a) and all other powers enabling them to do

so.

The Scottish Ministers are of the opinion that, in order to resolve problems caused by the extreme

weather conditions experienced across Scotland in recent months, it is both necessary and

justifiable in an emergency to derogate from the specified provisions of that Regulation, and that

the derogation applies to the extent and for such period as are strictly necessary.

Citation, commencement and extent

1.—(1) These Regulations may be cited as the Direct Payments (Crop Diversification

Derogation) (Scotland) Regulations 2020 and come into force on 1 May 2020.

(2) These Regulations extend to Scotland.

(a) Regulation (EU) No 1307/2013 (“the Direct Payments Regulation”) was incorporated into domestic law by the Direct

Payments to Farmers (Legislative Continuity) Act 2020 (c.2). Article 69(1) was substituted by regulation 7(2)(a) of S.I. 2020/91. The term “appropriate authority” in relation to Scotland means the Scottish Ministers as per Article 4(1)(s), as read with Article 4(1)(r), of the Direct Payments Regulation. Article 4(1)(r) and (s) was inserted by regulation 3(4)(h) of S.I. 2020/91.

Certified copy from legislation.gov.uk Publishing

2

Derogation from the crop diversification requirements

2.—(1) Articles 43(2)(a) and 44 of Regulation (EU) No 1307/2013(a) do not apply for the claim

year 2020.

(2) In this regulation, “claim year” means a period of 12 months beginning with 1 January (and

“claim year” followed by a year, means the period of 12 months beginning with 1 January in that

year).

MAIRI GOUGEON

Authorised to sign by the Scottish Ministers

St Andrew’s House,

Edinburgh

28th April 2020

(a) Articles 43 and 44 were amended by regulation 5(15) and (16) respectively of S.I. 2020/91.


3

EXPLANATORY NOTE

(This note is not part of the Regulations)

Farmers entitled to a payment under the basic payment scheme must observe certain agricultural

practices set out in Regulation (EU) No 1307/2013 of the European Parliament and of the Council

of 17 December 2013 establishing rules for direct payments to farmers under support schemes

within the framework of the common agricultural policy and repealing Council Regulation (EC)

No 637/2008 and Council Regulation (EC) No 73/2009 (“the Direct Payments Regulation”),

which are beneficial for the climate and the environment.

These Regulations make derogations from certain provisions of the Direct Payments Regulation,

disapplying the crop diversification requirements in Scotland for the claim year 2020. These

derogations are considered necessary and justifiable in order to address problems caused by

extreme weather experienced across Scotland in recent months.

No business and regulatory impact assessment has been prepared for these Regulations as no

impact upon business, charities or voluntary bodies is foreseen.


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POLICY NOTE

The Direct Payments (Crop Diversification Derogation) (Scotland)

Regulations 2020

SSI 2020/135

The Direct Payments (Crop Diversification Derogation) (Scotland) Regulations (the “2020

Regulations”) are made in exercise of the powers conferred by Article 69(1) of the Direct

Payments Regulation1. The 2020 Regulations are subject to the made affirmative procedure

and come into force on 1 May 2020.

Purpose of the Instrument The amendment made by this instrument will allow farmers in Scotland to derogate from crop diversification requirements for the claim year 2020. This derogation is a necessary response to problems caused by the recent prolonged period of wet weather and low levels of sunshine. As a result, farmers in Scotland will not be required to plant more than one crop for the claim year 2020.

1. Policy Objectives

Across Scotland we have seen fluctuations in temperature and total rainfall that is well above

average since September 2019, with particularly high rainfall in December 2019 and January

2020. The number of days in which Scotland received more than 1 millimeter of rain was above

the expected average from August 2019 through to January 2020. Daily duration of sunshine

was significantly below average from November 2019 until January 2020.

This increase in rain, coupled with the decrease in sunshine has led to an unsuitable

environment for farmers in Scotland to meet the crop diversification requirements contained in

Article 44 of the Direct Payments Regulation .

2. Explanation of the law being derogated from by the 2020 Regulations

The 2020 Regulations make amendments to provide a derogation from all of the crop

diversification requirements of Article 44 of the EU Direct Payments regulation for the claim

year 2020.

3. Reasons for and effect of the proposed change

The crop diversification rules require that:

(a) on holdings with between 10 and 30 hectares of arable land, at least two different crops

must be grown on that land and the largest crop must not cover more than 75% of that arable

land; and

1 Regulation (EU) No 1307/2013, as amended by SI 2020/91, which became part of domestic law by virtue of the

Direct Payments to Farmers (Legislative Continuity) Act 2020.

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(b) on holdings with more than 30 hectares of arable land, at least three different crops must be

grown on that land, the largest crop must not cover more than 75% of that arable land and the

two largest crops together must not cover more than 95% of that arable land.

As a result of the recent adverse weather detailed above, farming stakeholders have reported

that farmers have been experiencing difficulties cultivating crops. The two overriding issues

for Scottish farmers have been (1) the inability to establish areas of winter crops as part of their

preparations for the 2020 season and (2) the failure of crops that were established, due to the

on-going wet weather.

Having considered the evidence, the Scottish Government has concluded that it is not

reasonable to expect farmers to meet the crop diversification requirements given the

detrimental impact which extreme weather has had on their crops so far this year.

The 2020 Regulations will apply to the whole of Scotland and will remove all crop

diversification requirements for the claim year 2020 .

Further information

Consultation

The 2020 Regulations do not amount to a change in policy and are being made to provide a

temporary derogation from crop diversification requirements for the claim year 2020 in

response to recent adverse weather conditions. There has been no formal public consultation

regarding this instrument.

Impact Assessments

Full impact assessments have not been prepared for the 2020 Regulations. The temporary

derogation does not diverge from the Scottish Government’s current environmental policies

and priorities and, therefore, will not have a significant impact on the environment. No impact

on business, charities or voluntary bodies is expected.

Financial Effects

The Cabinet Secretary for the Rural Economy and Tourism, Fergus Ewing, confirms that no

BRIA is necessary as the 2020 Regulations have no financial effects on the Scottish

Government, local government or on business.

Scottish Government

Agriculture and Rural Economy Directorate

28 April 2020

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ANNEXE B

Title of Instrument: The Land Reform (Scotland) Act 2016 (Supplementary

Provision) (Coronavirus) Regulations 2020 [draft]

Type of Instrument: Affirmative Laid Date: 1 May 2020

Cabinet Secretary to attend the meeting: Yes Procedure 1. The Rural Economy and Connectivity (REC) Committee is lead committee for this

instrument and is required to report to the Parliament on its considerations.

2. Under Rule 10.6.1, these regulations are subject to affirmative resolution before they can be made. It is for the REC Committee to recommend to the Parliament whether these draft regulations should be approved.

3. The Cabinet Secretary for the Rural Economy and Tourism has, by motion (S5M-21670 as set out in the agenda), proposed that the Committee should recommend the approval of this instrument.

4. The Cabinet Secretary will attend to explain the purpose and policy objective of the instrument and to answer any questions from members. He will then (under a subsequent agenda item) be invited to speak to and move the motion seeking approval. The formal debate on the motion may last for up to 90 minutes.

5. At the end of the debate, the Committee must decide whether it agrees or disagrees with the motion, and then report to Parliament accordingly. Such a report need only be a short statement of the Committee’s recommendations.

Purpose

6. This instrument extends the amnesty period for agricultural holdings tenants,

wishing to seek compensation for certain improvements, at way go.

7. The amnesty period (which started on 13 June 2017) was due to expire on 13 June 2020. The instrument amends this period, so the amnesty will now expire on 12 December 2020.

8. The Policy Note highlights this extension is due to the COVID-19 outbreak, which

presents difficulties for landlords and tenants to meet face-to-face to discuss and inspect improvements.

Consideration by the Delegated Powers and Law Reform Committee

9. The Delegated Powers and Law Reform Committee (DPLRC) is expected to consider this instrument at its meeting on 12 May 2020. The DPLRC’s conclusions will be communicated verbally at the Rural Economy and Connectivity Committee

http://www.legislation.gov.uk/sdsi/2020/9780111045183/contents

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meeting on 13 May 2020.

Recommendation 10. The Committee is invited to consider any issues that it wishes to raise in

reporting to the Parliament on this instrument.

Rural Economy and Connectivity Committee clerking team May 2020

Draft Regulations laid before the Scottish Parliament under section 126(3)(m) of the Land Reform

(Scotland) Act 2016 for approval by resolution of the Scottish Parliament.

D R A F T S C O T T I S H S T A T U T O R Y I N S T R U M E N T S

2020 No.

LANDLORD AND TENANT

The Land Reform (Scotland) Act 2016 (Supplementary

Provision) (Coronavirus) Regulations 2020

Made - - - - 2020

Coming into force - - 12th June 2020

The Scottish Ministers make the following Regulations in exercise of the powers conferred by

section 127(1) of the Land Reform (Scotland) Act 2016(a) and all other powers enabling them to

do so.

In accordance with section 126(3)(m) of that Act, a draft of this instrument has been laid before

and approved by resolution of the Scottish Parliament.

Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Land Reform (Scotland) Act 2016

(Supplementary Provision) (Coronavirus) Regulations 2020 and come into force on 12 June 2020.

(2) In these Regulations, “the 2016 Act” means the Land Reform (Scotland) Act 2016.

Amendment of the 2016 Act

2. In section 112(3) of the 2016 Act (meaning of amnesty period), after “years” insert “and 6

months”.

Name

A member of the Scottish Government

St Andrew’s House,

Edinburgh

Date

(a) 2016 asp 18.


2

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make supplementary provision by amending the Land Reform (Scotland) Act

2016 (“the Act”).

Section 112(3) of the Act defines the “amnesty period” referred to in Chapter 8 of the Act. During

the amnesty period, a tenant of an agricultural holding who intends to claim compensation at the

end of the tenancy (at “waygo”) for certain improvements which have been carried out may give

notice of this, under Chapter 8 of the Act, to the landlord in certain circumstances. A tenant may

then be able to claim compensation for such improvements notwithstanding historical anomalies.

Regulation 2 amends section 112(3) of the Act in order to extend the amnesty period by 6 months.

The amnesty period began on 13 June 2017 and was due to expire on 12 June 2020. The amnesty

period will now expire on 12 December 2020.


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POLICY NOTE

THE LAND REFORM (SCOTLAND) ACT 2016 (SUPPLEMENTARY PROVISION)

(CORONAVIRUS) REGULATION 2020

SSI 2020/XXX

1. The above instrument is made by the Scottish Ministers in exercise of the powers

conferred by section 127 of the Land Reform (Scotland) Act 2016 (“the Act”) and all other

powers enabling them to do so. It is subject to the affirmative procedure.

Background

2. The Bill for the Act received Royal Assent on 22nd April 2016. Part 10 of the Act

contains provisions which reform the law on agricultural holdings. The provisions contained

within Chapter 8 of Part 10 of the Act relate to compensation for tenant’s improvements

(“amnesty”). The amnesty began on 13th June 2017 and was due to expire on 13 June 2020.

These Regulations make supplemental provision to the effect that the amnesty will now

expire on 12th December 2020.

Policy Objective

3. The overall policy objective of Part 10 of the Act is to modernise legislation relating to

agricultural holdings. Chapter 8 of Part 10 introduces a three year amnesty period, during which

time tenants have the opportunity to serve notice on landlords that specific relevant

improvements are to be treated as tenant’s improvements capable of compensation at waygo,

if certain criteria are met.

4. The policy objective of these amnesty provisions is to give tenants an opportunity to

establish entitlement to compensation for improvements that were not previously notified or

consented to, or where notice and consent were given but records of such are not available. It

is to help both sides have a clearer idea of their respective rights and liabilities in the event of

termination of the tenancy.

5. These Regulations extend the amnesty period, so it will now expire on 12th December

2020. The amnesty period is being extended as a result of circumstances that could not have

been reasonably anticipated when the Act was passed, and which have a direct effect on the

ability of landlords and tenants to have meaningful engagement around tenant’s improvements.

Amnesty negotiations often involve on-farm, face-to-face discussions when parties can view

and discuss the various improvements. The public health circumstances arising from the

coronavirus mean that such visits cannot take place at a crucial time as the amnesty period was

due to draw to a close.

6. Chapter 8 of the Act intended to give parties a period to discuss and agree the treatment

of eligible tenants improvements, failing which a formal process could be initiated by way of

a tenant giving an amnesty notice under s114 of the Act. Due to COVID 19 landlords and

tenants have lost time in which they can discuss improvements in the normal way and this has

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affected the time that is available for individuals to reach agreement during the amnesty period,

for reasons outwith parties’ control. This extension seeks to give an opportunity for current

restrictions on movement to lift and allow people to conclude discussions within a broadly

equivalent period that the Act intended, had the COVID 19 outbreak not taken place.

7. It is still open for tenants to give amnesty notices to landlords under the amnesty

provisions of the 2016 Act. Extending the amnesty period does not reopen discussions which

have already concluded or allow those who otherwise would not be eligible for the scheme to

take advantage of it. Rather, it extends the time period in which parties may come to agreement

without those parties having to rely on the formal dispute resolution mechanisms in the Act.

Consultation

8. This extension was requested by representatives of tenant farmers. No formal

consultation has been carried out in relation to these Regulations. However, informal

discussions took place with stakeholders to establish what was required.

Impact Assessment and Financial Effects

9. These Regulations do not change the impact assessments prepared for the Act. Both

an Equality Impact Assessment and a Business and Regulatory Impact Assessment were

carried out in relation to the Land Reform (Scotland) Bill (which became the Act). The

Financial Memorandum which was prepared for that Bill considered the financial impact and

remains valid. The links below show the relevant documentation.

Link to the Equality Impact Assessment: http://www.gov.scot/Resource/0048/00480754.pdf

Link to the Business and Regulatory Impact Assessment:

http://www.gov.scot/Resource/0048/00481018.pdf

The Financial Memorandum can be found at:

http://www.parliament.scot/parliamentarybusiness/Bills/90675.aspx

Scottish Government

Agricultural Holdings

Agriculture, and Rural Development

May 2020



http://www.parliament.scot/parliamentarybusiness/Bills/90675.aspx

REC/S5/20/11/7


11th Meeting (Session 5), Wednesday 13 May 2020

Agriculture Bill – Legislative Consent Memorandum

Background to the process

1. The Legislative Consent Memorandum (LCM) process is the mechanism for the Scottish Parliament to give its consent to the UK Government to legislate in the UK Parliament on matters which are within the legislative competence of the Scottish Parliament.

2. Legislative Consent Memorandums are usually lodged in the Scottish Parliament by the Scottish Government. They relate to Bills under consideration in the United Kingdom Parliament which contain what are known as “relevant provisions”. These provisions could:

• change the law on a “devolved matter” (an area of policy which the UK Parliament devolved to the Scottish Parliament); or

• alter the “legislative competence” of the Scottish Parliament (its powers to make laws) or the “executive competence” of Scottish Ministers (their powers to govern).

3. Under an agreement known as the ‘Sewel Convention’, the UK Parliament will not normally pass Bills that contain relevant provisions without first obtaining the consent of the Scottish Parliament. Committees will undertake scrutiny of the Memorandum after which the Government can lodge a Legislative Consent Motion which is taken in the Chamber.

4. The procedure for scrutiny of Legislative Consent Memorandums and Motions is set out in Chapter 9B of the Parliament’s standing orders.

Agriculture Bill

5. A Legislative Consent Memorandum has been lodged regarding the Agriculture Bill. The memorandum and a link to the Bill can be found on the Scottish Parliament website. The LCM is also attached at Annexe A. It is anticipated that the Parliamentary Bureau will refer the LCM to the REC Committee for consideration.

6. The Agriculture Bill was introduced to the House of Commons on 16 January

2020. Many aspects of it are similar to the Agriculture Bill in the 2017-19

session, which when the UK Parliament was dissolved on 6 November 2019,

but it contains some new provisions. It gives the UK Government broad

powers to provide support for agriculture in England, both for an initial

agricultural transition period and for the longer term, and to extend similar

powers to Wales and Northern Ireland. The Bill is described in detail in the

attached LCM.

https://www.parliament.scot/parliamentarybusiness/Bills/115054.aspx

REC/S5/20/11/7

7. Some provisions in the Agriculture Bill deal with matters within the legislative

competence of the Scottish Parliament, as well as altering the executive

competence of the Scottish Ministers. The Scottish Government supports

some of the provisions for which consent is required, but does not support the

UK Government’s current provisions for others.

Scottish Government’s position

8. Whilst the Scottish Government has indicated that it can accept the main purpose of the Agriculture Bill, as replacement legislative underpinning is required in a number of the areas covered by the Bill, it does not support all detailed aspects of the Bill’s provisions. It also does not accept that the approach taken to this Bill is entirely consistent with devolved responsibilities. The LCM states as follows—

“The Scottish Government intends to lodge a legislative consent motion in relation to certain provisions of the Bill, namely food security, fertilisers and the red meat levy only. The Scottish Government intends to continue to work with the UK Government to secure an approach to the provisions on organic products (clause 37(1)(a)), the identification and traceability of animals (clause 32(1)) and the WTO provisions that the Scottish Government can support. As such, there is no recommendation, at this time, that these provisions on organics, animal identification and traceability and WTO should be considered by the UK Parliament and they do not form part of the proposed legislative consent motion.”

9. The Scottish Government therefore recommends that Parliament be invited to

agree to the consent of the provisions on red meat, fertilisers, food security at this time. The Scottish Government also recommends that the Parliament should note that a supplementary LCM could be brought forward to cover organic products and livestock identification and traceability, at a later stage in the Bill’s progress should the UK Government bring forward amendments to introduce statutory consent requirements within the Agriculture Bill.

10. The draft motion which the Scottish Government intends to lodge is set out at paragraph 28 of the LCM.

Consideration by the Delegated Powers and Law Reform Committee, and the

11. The Delegated Powers and Law Reform (DPLR) Committee will consider this LCM at its meeting on 12 May 2020. The Committee clerks will advise as to any DPLR recommendations to the REC Committee, as lead committee, on the relevant delegated powers in the UK Bill.

12. Additionally, the Committee has received correspondence from the

Environment, Climate Change and Land Reform Committee on the

environmental impact of the Agriculture Bill, which asks the REC Committee to

investigate several issues with the Cabinet Secretary. The correspondence is

REC/S5/20/11/7

attached as Annexe B. Members may wish to ask the Cabinet Secretary about

the environmental issues raised.

Committee action

13. The Committee is required to reflect upon the Memorandum and then reach a view on whether it is content with its terms and report its findings to the Parliament.

14. The Committee may also, in its report, make a recommendation to the Parliament as to whether it should agree to the draft motion, and to the Scottish Government’s position on the various relevant provisions as described in the attached LCM, and may wish to reflect on any issues raised in its report.

Clerking team

Rural Economy and Connectivity Committee May 2020

LCM-S5-38 Session 5 (2020)

LEGISLATIVE CONSENT MEMORANDUM

AGRICULTURE BILL

Introduction

1. The Agriculture Bill was introduced into the House of Commons on 16 January2020. Many aspects of it are similar to the Agriculture Bill in the 2017-19 session, whichfell on dissolution, but it contains some new provisions. It gives the UK Governmentbroad powers to provide support for agriculture in England, both for an initialagricultural transition period and for the longer term, and to extend similar powers toWales and Northern Ireland.

2. The Scottish Government considers that it is a relevant Bill under Rule 9B.1 ofthe Parliament’s Standing Orders.1 This memorandum has been lodged by FergusEwing, Cabinet Secretary for Rural Economy and Tourism, in accordance with Rule9B.3.1(a). The Bill and supporting documents can be found athttps://services.parliament.uk/Bills/2019-20/agriculture/documents.htmlThis memorandum relates to the Bill as introduced.

3. The Bill is necessary as a result of the UK’s withdrawal from the EU. TheScottish Government deeply regrets the withdrawal of Scotland, as part of the UK,from the EU on 31 January 2020. This action was taken with no democratic mandatefor withdrawal in Scotland.

4. However, the Scottish Government accepts the need to make preparations forthe exceptional circumstances which arise as a result of that withdrawal and to ensurethat Scottish citizens, families and businesses are not adversely affected by the impactof EU exit on agricultural support.

5. The Scottish Government intends to lodge a legislative consent motion inrelation to certain provisions of the Bill, namely food security, fertilisers and the redmeat levy only. The Scottish Government intends to continue to work with the UKGovernment to secure an approach to the provisions on organic products (clause37(1)(a)), the identification and traceability of animals (clause 32(1)) and the WTOprovisions that the Scottish Government can support. As such, there is norecommendation, at this time, that these provisions on organics, animal identificationand traceability and WTO should be considered by the UK Parliament and they do notform part of the proposed legislative consent motion (see para 28).

6. As noted above, progress continues on the provisions on organic products, theidentification and traceability of animals and WTO, although positive outcomes aremore advanced specifically in relation to organics and animal identification andtraceability. The Scottish Government has been pressing the UK Government toamend the organics clause 37(1)(a) and identification and traceability of animalsclause 32(1) to include a requirement for consent of the Scottish Ministers when theSecretary of State makes subordinate legislation on matters relating to the devolved

1 http://www.parliament.scot/parliamentarybusiness/26512.aspx

Annexe A

https://services.parliament.uk/Bills/2019-20/agriculture/documents.html

http://www.parliament.scot/parliamentarybusiness/26512.aspx

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aspects of these subject areas, and understands that the UK Government is now likely to bring forward such an amendment. If the UK Government is prepared to amend clauses 37(1)(a) and 32(1) of the Bill to this effect, the Scottish Government would be able to recommend consent to the organics and identification and traceability of animals provisions in the Bill. The Scottish Government may therefore lodge a supplementary legislative consent memorandum and motion later in the Bill’s passage through the UK Parliament. Content of the Bill 7. The Explanatory Notes2 accompanying the Bill set out the UK Government’s view of its purpose and main functions, which operate alongside the powers conferred by the European Union (Withdrawal) Act 2018. The UK Government describes the principal purpose of the Bill as providing the legal framework for the UK to leave the Common Agricultural Policy (CAP) and establish a new system, based on public money for public goods for the next generation of farmers and land managers, (paragraph 1 of the Explanatory Notes). The main provisions of the Bill are as follows:

Part 1 – Financial Assistance Chapter 1 – New Financial Assistance Powers Chapter 1 of this Part creates new powers for the Secretary of State to give financial assistance, in England, for or in connection with a range of purposes including land management, environmental protection, plant and animal health and welfare. This now includes rules on the forms and conditions for granting support, and on monitoring and enforcing compliance with these rules, allowing the creation of a new policy to replace the CAP in England after the end of the Implementation Period. Chapter 2 – Direct Payments after EU Exit Chapter 2 of this Part deals with financial support in England after exiting the EU, providing for a seven year agricultural transition period in England, phasing out or delinking basic payments during that period, and termination of basic payments at the end of that period. Chapter 3 – Other Financial Support after EU Exit Chapter 3 of this Part empowers the Secretary of State to make regulations that modify, in relation to England, the “horizontal basic act”3, retained direct EU legislation made under it, and related domestic subordinate legislation (as incorporated into domestic law and modified under the EU (Withdrawal) Act 2018).

2 https://publications.parliament.uk/pa/bills/cbill/58-01/0007/en/20007en.pdf 3 Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008

https://publications.parliament.uk/pa/bills/cbill/58-01/0007/en/20007en.pdf

http://www.legislation.gov.uk/eur/2013/1306/contents




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Part 2 – Food and Agricultural Markets Chapter 1 – Food Security Chapter 2 of this Part places a duty on the Secretary of State to produce a report to lay before the UK Parliament, at least once every five years, on UK Food Security. This report will provide a broad understanding of what food security is, the challenges and risks to UK food security in a global context, and the Secretary of State’s current assessment of the state of UK food security to inform the UK Government’s policy thinking on the resilience and security of food supply. Chapter 2 – Intervention in agricultural markets Chapter 2 of this Part provides the Secretary of State with powers to declare a period of exceptional market conditions in relation to England, and to give financial assistance to support farmers who have been affected. They also enable the Secretary of State to use the additional public intervention and private storage powers in retained EU legislation concerning the CAP in response to a declaration of exceptional market conditions. Public intervention and private storage are market support measures that can be used to help stabilise the price of certain products; the Bill, mirroring provisions in the CAP, provides that when the price of these products drops below a certain reference threshold due to a supply surplus, product can be removed from the market thus increasing prices. However, the Bill contains powers to amend the retained direct EU legislation on public intervention and private storage aid. This includes the power to ensure legislation on private storage aid and public intervention ceases to have effect except in exceptional market conditions. Part 3 - Transparency and Fairness in the Agri-food supply chain Chapter 1 – Collection and Sharing of Data This Chapter provides new powers for the Secretary of State to collect and share data from those within or closely connected to the agri-food supply chain in relation to their activities in England. Chapter 2 – Fair dealing with agricultural producers and others in the supply chain This Chapter contains powers to create statutory fair dealing obligations in agri-food supply chains. It gives the Secretary of State regulation-making powers to promote fair contractual dealing by business purchasers of agricultural products. It applies to the whole of the UK. It allows obligations to be imposed on business purchasers of agricultural products, including in relation to the need for written contracts, and the terms of such contracts which may relate to matters such as the quantity and quality of the product, pricing mechanisms and payment, and variation of the contract, as well as the enforcement of

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compliance with such obligations through a complaints procedure and/or imposition of penalties. Chapter 3 – Producer organisations This Chapter sets out rules on giving special status to groups of farmers (i.e. producer organisations) to exempt them from some parts of competition law. These clauses give the Secretary of State power to amend or revoke retained EU law in relation to producer and inter-branch organisations, and to introduce new legislation regarding the recognition of and rules governing such organisations, including the extension of the rules to non-members and their exemption from competition law. The Secretary of State’s powers in this Part extend to the UK as a whole. Part 4 – Matters relating to farming and the countryside Fertilisers Clause 31 of the Bill amends provision in connection with the regulation of fertilisers in the Agriculture Act 1970 (“the 1970 Act”). In particular the definition of “fertiliser” in section 66 of the 1970 Act is amended to enable a broader range of materials to be regulated as a fertiliser in the UK. It also amends section 74A of the 1970 Act which confers powers on Ministers in the United Kingdom to make subordinate legislation for the regulation of fertilisers. The amendments to section 74A expand the power to make subordinate legislation so that fertilisers can in future be regulated on the basis of their function (as well as composition and content) and to make provision for an assessment, monitoring and enforcement regime to ensure compliance. Identification and Traceability of Animals Clause 32(1) of the Bill amends the Natural Environment and Rural Communities Act 2006. The amendment to the Natural Environment and Rural Communities Act 2006 gives the Secretary of State powers to assign, by order, to an agricultural board established by the Secretary of State under that Act functions exercisable in Scotland that relate to a) collecting, managing and making available information regarding the identification, movement and health of animals and b) the means of identifying animals. Clause 32(2) amends, in relation to England and Wales, powers in the Animal Health Act 1981 to make subordinate legislation regulating the movement of animals. Clause 32 (3) & (4) make amendments to two EU Regulations on the identification of cattle and the identification of sheep and goats respectively, so that they will not apply in relation to England and Wales.

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Red Meat levy Clause 33 provides the Secretary of State, the Scottish Ministers, and the Welsh Ministers with the power to jointly make a scheme which will allow for red meat levy4 collected by the levy body of one GB country to be paid to the levy body of another GB country. Agricultural tenancies Clause 34 and Schedule 3 make provision in relation to agricultural tenancies in England and Wales, amending the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995. Provisions will deal with disputes where tenants wish to challenge restrictive clauses in their lease which might prevent them from receiving relevant financial assistance or complying with statutory duties. Types of financial assistance or statutory duties will be defined in regulations, as will the dispute process. Other changes deal with expanding the list of organisations who can appoint arbiters, amending the rent review process in relation to referring a dispute for arbitration/determination and dealing with certain improvements to the holding, amending succession procedures and changes around retirement age. Part 5 – Marketing Standards, Organic Products and Carcass Classification This Part provides the Secretary of State with powers to set and amend marketing standards for agricultural products (not extending to Scotland), make regulations on organic products (extending to Scotland), to make provision about the classification of carcasses by slaughterhouses (not extending to Scotland) and to make regulations on designations of origin, geographical indications and traditional terms in the wine sector (extending to Scotland). Part 5 (clauses 36 and 37) in particular, provides the Secretary of State, and where appropriate Scottish Ministers, with powers to make regulations relating to the certification, import and export of organic products and the enforcement of organic regulations.

Part 6 – WTO Agreement on Agriculture This Part (clauses 40 to 42) provides the Secretary of State with regulation-making powers in relation to the United Kingdom’s compliance with the World Trade Organisation (WTO) Agreement on Agriculture (AoA)5. This includes powers to set financial ceilings in relation to the amount of agricultural support that each administration of the UK can provide, and the establishment of a decision-making process in relation to the classification of

4 The red meat levy is a sum of money paid by red meat producers and slaughterers, per head of animal and collected at the point of slaughter. This money is used by Quality Meat Scotland for specified activities to assist the industry e.g. with red meat industry promotions, see the Quality Meat Scotland Order 2008. 5 https://www.wto.org/english/docs_e/legal_e/14-ag_01_e.htm

https://www.wto.org/english/docs_e/legal_e/14-ag_01_e.htm

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support for the purposes of the WTO AoA, including a dispute resolution process. It also includes powers requiring devolved authorities to provide information to the Secretary of State to allow for the classification and reporting of agricultural support to the WTO. In practice, this would allow the Secretary of State to decide how schemes, such as the Beef and Sheep coupled support schemes and the Less Favoured Area Support Scheme, would be classified under WTO rules, and how much money could be paid from them. The powers also enable the Secretary of State to act as the final arbiter if any devolved administration disputed this classification. The Secretary of State’s powers in this Part extend to the UK as a whole. Part 7 and Schedules 5 and 6 – Wales and Northern Ireland This Part, and these schedules, create similar powers, at their request, for the Welsh Government and for Northern Ireland Departments to those in parts [1 to 5] of Bill. The Scottish Government has included relevant provision in the Agriculture (Retained EU Law and Data) (Scotland) Bill in relation to marketing standards and carcass classification, market intervention and aid for fruit and vegetable producer organisations. Part 8 General and Final Provisions Part 8 lays down general provisions on data protection, regulation making powers, interpretation, consequential amendments, power to make consequential provision, extent, commencement and short title.

SCHEDULE 1 – AGRICULTURAL SECTORS RELEVANT TO PRODUCER ORGANISATION PROVISIONS

Schedule 1 lists the agricultural sectors relevant to the producer organisation provisions. The list in schedule 1 can be amended by the Secretary of State using powers in clause 28(14).

SCHEDULE 2 – RECOGNISED ORGANISATIONS: COMPETITION EXCLUSIONS This relates to clause 29 of the Bill. It provides for competition exemptions for recognised organisations i.e. producer organisations. This is achieved by making amendments to Schedule 3 to the Competition Act 1998 (general exclusions). The effect is that certain provisions of competition law do not apply to producer organisations in certain circumstances.

SCHEDULE 4 - AGRICULTURAL SECTORS RELEVANT TO MARKETING STANDARDS PROVISIONS

This Schedule lists the agricultural sectors which are relevant to the marketing standards provisions in the Bill. These agricultural sectors are subject to the power to make regulations in respect of marketing standards as provided for in Part 5, clause 35 of the Bill.

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SCHEDULES 5 & 6 – POWERS RELATING TO WALES AND NORTHERN IRELAND See comments under Part 7 above. SCHEDULE 7 – THE CMO REGULATION: CONSEQUENTIAL AMENDMENTS This schedule provides for consequential amendments to the CMO Regulation (Regulation (EU) No 1308/20136 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products) contained in Part 9, clause 31 of the Bill as follows:

• Part 4 (intervention in agricultural markets: England); • Part 4 of Schedule 3 (intervention in agricultural markets: Wales); • Part 3 of Schedule 4 (intervention in agricultural markets: Northern

Ireland); • Part 5 (marketing standards and carcass classification: England); • Part 5 of Schedule 3 (marketing standards and carcass

classification: Wales);

• Part 4 of Schedule 4 (marketing standards and carcass classification: Northern Ireland).

Requirement for legislative consent 8. The Explanatory Notes to the Bill7 set out the UK Government’s view that the legislative consent of the Scottish Parliament is required for a number of its provisions (clauses 17, 31, 32, 33, 36 and 37)8. The Scottish Government agrees with this view on these specific provisions. However, the UK Government also sets out its view that the legislative consent of the Scottish Parliament is not required for Chapters 2 and 3 in Part 3 of the Bill (clauses on fair dealing and producer organisations) and Part 6 (WTO). The Scottish Government does not share this view in relation to Chapters 2 and 3 in Part 3 of the Bill (see below paragraphs on Fair Dealing with Agricultural Producers & Others in the Supply Chain, paragraph 12, Producer Organisations, paragraph 13 and World Trade Organisation Agreement on Agriculture, paragraph 20). 9. The Scottish Government believes the Bill is “a relevant Bill” within Rule 9B.1.1 of Standing Orders, as it makes provision applying to Scotland for purposes within the legislative competence of the Parliament, and alters the executive competence of the Scottish Ministers. 10. In particular, the Scottish Government considers that legislative consent is required for Part 2, Chapter 1 (clause 17), Part 3 Chapters 2 and 3 (and schedules 1 and 2), Part 4 (clauses 31 – 33), Part 5 (clauses 36 and 37) and Part 6 of the Bill (and 6https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02013R1308-20190101&qid=1588087940003&from=EN 7 https://publications.parliament.uk/pa/bills/cbill/2017-2019/0266/en/18266en.pdf 8 See paragraphs 46 – 48 and Annex A of the Explanatory Notes

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02013R1308-20190101&qid=1588087940003&from=EN

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02013R1308-20190101&qid=1588087940003&from=EN


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Part 8 of the Bill so far as relating to those Parts – in particular, clauses 46, 47 (apart from paragraphs (2), (6)(c) and (d), and (7)(c) and (d) and (9)); 48; 50; 52; 53 and 54). Food Security 11. Clause 17 imposes a requirement on the Secretary of State to lay a periodic report before the UK Parliament providing an analysis of statistical data on food security in the UK. This report is to cover food availability and sources, supply chain resilience, household expenditure, food safety and consumer confidence. Food is generally a devolved subject. The UK Government, in its Explanatory Notes to the Bill, recognises that this provision requires the legislative consent of the Scottish Parliament. Fair dealing with Agricultural Producers & Others in the Supply Chain 12. The UK Government takes the view that this provision (clause 27) is reserved. The Scottish Government disagrees with this view, and considers that this requires the Scottish Parliament’s consent as it is for devolved purposes, namely the regulation of unfair contractual terms in commercial contracts by agricultural producers in Scotland. It does not relate to the competition law reservation which is specifically directed at the regulation of anti-competitive agreements – i.e. agreements which adversely affect the competitive structure of the market - and the abuse of a dominant position. The regulation of contract terms which are considered to be unfair on other grounds is not within the scope of that reservation. Producer Organisations 13. Clauses 28 to 30 give the Secretary of State power to amend or revoke retained EU law in relation to producer and interbranch organisations, and to introduce new legislation regarding the recognition of, and rules governing such organisations, including exemption from competition law. 14. The UK Government takes the view that this is a reserved provision. The Scottish Government disagrees with this view, and considers that it requires the Scottish Parliament’s consent as it is for a devolved purpose, namely the promotion of an effective agricultural market. It effectively replaces the EU producer organisation regime, which was clearly for that purpose. That, in pursuance of that purpose, it is necessary to exempt producer organisations from the Competition Act regime does not mean that the provisions relate to competition law: their purpose is not to regulate anti-competitive agreements. Whilst clause 29(1) and schedule 2 (amendments to the Competition Act 1998) would not be within the legislative competence as those modify the law on reserved matters, these provisions pursue the same devolved purpose as the remainder of the provisions in clauses 28 to 30. Fertilisers 15. Fertilisers is a substantially devolved matter in Scotland, and clause 31 in the Bill reflects this, as the powers to make subordinate legislation amended by the Bill are, so far as exercisable within devolved competence, exercisable by the Scottish

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Ministers for Scotland. The UK Government recognises that the fertilisers clause extending to Scotland triggers the LCM process. Identification and Traceability of Animals 16. The provision for the identification and traceability of animals in relation to Scotland (Clause 32(1)) is for a purpose within the legislative competence of the Scottish Parliament. The UK Government recognises that extending the clause to Scotland triggers the LCM process. Red Meat Levy 17. Clause 33 of the Bill concerns the red meat levy. It requires the Scottish Parliament’s consent because the provision alters the executive competence of the Scottish Ministers, enabling them to work jointly with the Welsh Ministers and the Secretary of State to set up a redistribution scheme to resolve the inequity caused by the current operation of the red meat levy system. As it confers functions on the Scottish Ministers and relates to a devolved area, consent is required. The UK Government agrees with the requirement for consent for this provision. Organic products 18. Part 5 (clauses 36 and 37) of the Bill concerns powers to make regulations relating to organic provisions. It requires the Scottish Parliament’s consent as elements of it are for devolved purposes, namely to make new regulations and amend existing regulations relating to the certification, import and export of organic products and the enforcement of organic regulations where the content of the regulations would be within the competence of the Scottish Parliament if contained within an Act of the Scottish Parliament. 19. Clause 37(1)(a) gives the Secretary of State powers to make regulations on matters relating to devolved aspects of organics regulations without securing the consent of the Scottish Ministers (and of the Welsh Ministers and NI authorities as appropriate) as a pre-requisite to making such regulations. The Scottish Government has been pressing the UK Government to amend the clause to include a requirement for consent of the Scottish Ministers when the Secretary of State makes regulations on matters relating to the devolved aspects of organics, and understand that the UK Government is now likely to bring forward such an amendment. World Trade Organisation Agreement on Agriculture 20. Part 6 (clauses 40 to 42) of the Bill requires the Scottish Parliament’s consent as it concerns the implementation of international obligations (namely those arising from the WTO AoA) as regards matters (agriculture support) which are not reserved. The establishment of UK-wide arrangements for allocating financial ceilings under the WTO AoA to the various jurisdictions of the UK, in so far as it is concerned with the implementation of an international obligation in non-reserved matters, requires the Scottish Parliament’s consent. Although the allocation of a quota requires to be dealt with on a UK-wide basis, respect for the allocation of competences implicit on the Scotland Act 1998 requires that this should be on the basis of consent. In any event,

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clauses 40 to 42 contain provisions which would affect the executive competence of the Scottish Ministers as regards the exercise of functions concerning agricultural support in Scotland. The UK Government has now indicated that it considers that consent is required, to the extent that the provisions affect the executive competence of the Scottish Ministers, but not otherwise. The Scottish Government agrees that consent is required for the provisions which affect the executive competence of the Scottish Ministers but disagrees that the executive competence provisions are the only WTO provisions which require consent. As indicated above, the requirement for consent is wider than that. Clauses for which the Scottish Government Considers Legislative Consent is required 21. The clauses which the Scottish Government considers that legislative consent is required for are shown in the table at Annex A. 22. The legislative consent memorandum on the European Union (Withdrawal) Bill, submitted to the Scottish Parliament on 12 September 20179, set out the Scottish Government’s position that policy responsibility and expertise for matters within devolved competence lie with the Scottish Government, accountable to the Scottish Parliament10. As set out above, a number of provisions of the Agriculture Bill deal with matters within the legislative competence of the Scottish Parliament, as well as altering the executive competence of the Scottish Ministers. The Scottish Government supports some of the provisions for which consent is required, but does not support the UK Government’s current provisions for others. Organic products and identification and traceability of animals 23. In relation to the provisions on organics (clauses 36 and 37) and identification and traceability of animals (Clause 32(1), the Scottish Government believes that regulations under these provisions extending to Scotland and relating to devolved matters, when made by the Secretary of State, should be made only with the consent of the Scottish Ministers. If the UK Government is prepared to amend the Bill to this effect, the Scottish Government would be able to recommend consent to these provisions in the Bill. Fair dealing in the supply chain, producer organisations and WTO Agreement on Agriculture 24. In addition, the Scottish Government does not accept that the provisions set out in Part 3, Chapter 2 (clause 27) and 3 (clause 28 to 30) and Part 6 (clause 40-42) of the Bill is an accurate reflection of devolved responsibilities in the area of producer organisations, fair dealing and WTO Agreement on Agriculture and would not support or recommend to the Scottish Parliament that consent should be given to powers for the Secretary of State in the areas covered by this provision in the Bill.

9 http://www.parliament.scot/S5ChamberOffice/SPLCM-S05-10-2017.pdf 10 See paragraph 17 of that Memorandum.

http://www.parliament.scot/S5ChamberOffice/SPLCM-S05-10-2017.pdf

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25. Whilst the United Kingdom is responsible in international law for compliance with its international obligations, Paragraph 7(2) of Schedule 5 to the Scotland Act 199811 explicitly provides that observing and implementing international obligations are not reserved matters. 26. Part 6 of the Bill places constraints on the Scottish Ministers’ ability to exercise functions within devolved competence in relation to agriculture support in Scotland. In particular, the Scottish Ministers’ powers to adopt policies to support farming in Scotland would be affected by decisions made by the UK Government in exercise of powers under Part 6 of the Bill. The Scottish Government has proposed that regulations under this Part of the Bill extending to Scotland should only be made with the consent of the Scottish Ministers. Red meat levy, food security and fertilisers 27. The Scottish Government currently recommends that the Scottish Parliament should be invited to give its consent to the provisions of the Bill relating to the red meat levy (clause 33), food security (clause 17) and fertilisers (clause 31). As noted above, the Scottish Government expects to be able to recommend consent to the provisions on organic products (clauses 36 and 37) and identification and traceability of animals (clause 32) should necessary amendments on consent to the making of regulations be brought forward by the UK Government. The Scottish Government intends to continue to engage with the UK Government on these matters and will lodge a supplementary legislative consent memorandum to reflect any progress in these discussions. Draft Legislative Consent Motion 28. The draft motion, which the Cabinet Secretary for Rural Economy and Tourism intends to lodge is:

“That the Scottish Parliament agrees that the provisions related to food security, fertilisers and the red meat levy in the Agriculture Bill, introduced into the House of Commons on 16 January 2020, so far as these matters fall within the legislative competence of the Scottish Parliament and alter the executive competence of the Scottish Ministers, should be considered by the UK Parliament.”

Involvement of the Scottish Government in the Development of the Bill 29. As noted at paragraph 1, much of the current Bill has been carried over from the Agriculture Bill considered by the UK Parliament in the 2017-19 session. Defra discussed aspects of that previous Bill prior to its introduction, although the views of the Scottish Government were not always taken into account. The position of the Scottish Government in relation to that Bill is set out in the Legislative Consent Memorandum lodged on 29 October 201812.

11 http://www.legislation.gov.uk/ukpga/1998/46/schedule/5/part/I/crossheading/foreign-affairs-etc 12 https://www.parliament.scot/S5ChamberOffice/SPLCM-S05-19.pdf

http://www.legislation.gov.uk/ukpga/1998/46/schedule/5/part/I/crossheading/foreign-affairs-etc

https://www.parliament.scot/S5ChamberOffice/SPLCM-S05-19.pdf

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30. The provisions on the red meat levy were added to that Bill by amendment made in Committee. Those were based to a large extent on detailed proposals and drafting instructions produced by the Scottish Government. 31. Prior to the introduction of the current Bill, Defra again discussed some aspects of the Bill with the Scottish Government, although generally too late in the process for the Scottish Government’s comments to be taken into account. As a result, there are remaining issues with the new provisions on organic products and identification and traceability of animals that have still to be resolved. Common Frameworks 32. Common frameworks are being developed under the principles agreed between the UK Government and Scottish and Welsh Governments at the Joint Ministerial Committee (European Negotiations) (JMC(EN)) in October 2017. Areas covered by this Bill have been proposed for the development of frameworks. In relation to organic products and fertilisers, non-statutory frameworks have been proposed, with clauses 31, 36 and 37 providing any required statutory underpinning. 33. Part 6 (WTO Agreement on Agriculture) establishes a statutory framework. The UK Government takes the view that it is needed to ensure compliance with international obligations. In the view of the Scottish Government, it fails to meet the agreed principles that frameworks “be based on established conventions and practices, including that the competence of the devolved institutions will not normally be adjusted without their consent”, and that observing and implementing international obligations are devolved matters. Financial Implications 34. The Bill has few financial implications for Scotland. The provisions of Part 1 (Financial Assistance) do not apply in Scotland. Based on current market flows, and the precise terms of the scheme that is being developed, the provisions on the red meat levy in clause 33 are expected to result in a significant ongoing net payment from the Agriculture and Horticulture Development Board to Quality Meat Scotland in respect of sheep and cattle reared in Scotland but slaughtered in England. 35. The provisions in Part 6 (WTO Agreement on Agriculture), as noted at paragraph 7 above, includes powers to set financial ceilings in relation to the amount of agricultural support in certain classifications that each administration in the UK can provide. In practice, this would allow the Secretary of State to decide how schemes, such as the Beef and Sheep coupled support schemes and the Less Favoured Area Support Scheme, would be classified under WTO rules, and how much money could be paid from them. 36. Clause 36 (organic products) allow for regulations made under that clause to provide for the charging of fees in respect of functions under those regulations. That would effectively replicate current practice with approved control bodies dealing with certification and the Soil Association maintaining the database.

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Conclusion 37. It remains a matter of regret to the Scottish Government that the UK is withdrawing from the EU. The Scottish Government considers this will have widespread detrimental effects on the UK and Scotland, and has deep concerns over the harm that will be inflicted on Scotland by withdrawal from the European Union. 38. Whilst the Scottish Government can accept the main purpose of the Agriculture Bill, as replacement legislative underpinning is required in a number of the areas covered by the Bill, it does not support all detailed aspects of the Bill’s provisions and does not accept that the approach taken to this Bill is entirely consistent with devolved responsibilities. The Scottish Government therefore recommends that Parliament be invited to agree to the consent of the provisions related to the red meat levy, fertilisers, and food security at this time. The Scottish Government also recommends that the Parliament should note that a supplementary LCM could be brought forward to cover organic products and identification and traceability of animals, at a later stage in the Bill’s progress should the UK Government bring forward the expected amendments to introduce statutory consent requirements within the Agriculture Bill. SCOTTISH GOVERNMENT May 2020

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ANNEX A CLAUSES FOR WHICH THE SCOTTISH GOVERNMENT CONSIDERS THAT LEGISLATIVE CONSENT IS REQUIRED Provision Effect Part 2, Chapter 1, Clause 17 Food Security

Requirement for consent acknowledged by the UK Government. The legislative consent motion at para 28 above recommends that the Scottish Parliament agrees that the provisions on food security should be considered by the UK Parliament.

Part 3 Chapter 2 (clause 27) Powers relating to fair dealing obligations of business purchasers of agricultural products

Requires the Scottish Parliament’s consent as it is for devolved purposes, namely, the regulation of unfair contractual terms in commercial contracts by agricultural producers in Scotland. Requirement for consent is not acknowledged by the UK Government. No recommendation that these provisions should be considered by the UK Parliament at this time.

Part 3 Chapter 3 (clauses 28 to 30) Powers relating to the official recognition of producer and interbranch organisations, and associated exemptions from competition law.

Requires the Scottish Parliament’s consent as it is for devolved purposes, namely the promotion of an effective agricultural market. Requirement for consent is not acknowledged by the UK Government. No recommendation that these provisions should be considered by the UK Parliament at this time.

Part 4 (clause 31) Fertilisers

Requirement for consent acknowledged by the UK Government. The legislative consent motion at para 28 above recommends that the Scottish Parliament agrees that the provisions on fertilisers should be considered by the UK Parliament.

Part 4 (clause 32)

Requirement for consent acknowledged by the UK Government.

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Identification and Traceability of animals

No recommendation that these provisions should be considered by the UK Parliament at this time.

Part 4 (clause 33) Red Meat Levy

Requirement for consent acknowledged by the UK Government. The legislative consent motion at para 28 above recommends that the Scottish Parliament agrees that the provisions on the red meat levy should be considered by the UK Parliament.

Part 5 (clauses 36 and 37) Powers relating to Organic Products

Requirement for consent acknowledged by the UK Government. Clause 37(1)(a) however does not seek the Scottish Ministers’ consent when the Secretary of State makes regulations on matters relating to devolved aspects of organics regulations. No recommendation that these provisions should be considered by the UK Parliament at this time.

Part 6 (clauses 40 to 42) Powers to introduce regulations in relation to the WTO Agreement on Agriculture.

Requires the Scottish Parliament’s consent as it relates to the implementation of international obligations (namely those arising from the WTO Agreement on Agriculture) as regards matters (agriculture support) which are not reserved, and contains provisions which would affect the executive competence of the Scottish Ministers as regards the exercise of functions concerning agriculture support in Scotland. Requirement for consent is acknowledged only in part (alteration to executive competence only) by the UK Government. No recommendation that these provisions should be considered by the UK Parliament at this time.

Part 8 (clauses 46, 47 (apart from paragraphs (2), (6)(c) and (d), (7)(c) and (d) and (9)); 48; 50; 52; 53 and 54) Ancillary provisions e.g. extent and interpretation

Those require the Scottish Parliament’s consent so far as those relate to provisions in Parts 2 to 6 listed above, within the legislative competence of the Scottish Parliament or so far as affecting the executive competence of the Scottish Ministers. In so far as these provisions relate to food security, fertilisers and the red meat levy the legislative consent motion at para 28 above recommends that the Scottish Parliament agrees that the provisions should be considered by the UK Parliament. Otherwise (i.e. where the provisions do not relate to food security, fertilisers or red meat levy) there is no recommendation that these provisions should be considered by the UK Parliament at this time.

This Legislative Consent Memorandum relates to the Agriculture Bill (UK legislation) and was lodged with the Scottish Parliament on 4 May 2020

LCM-S5-38 Session 5 (2020)

AGRICULTURE BILL – LEGISLATIVE CONSENT MEMORANDUM

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REC/S5/20/11/7

Annexe B – Correspondence from Environment, Climate Change and Land

Reform Committee, 6 May 2020

UK AGRICULTURE BILL You will be aware the Environment, Climate Change and Land Reform Committee has been considering the implications of the UK Agriculture Bill on the environment in Scotland and on devolved competence, as far as it relates to our remit. We wrote to the Scottish Government with a number of questions and the Cabinet Secretary for Rural Economy and Tourism’s response is attached. We considered the Cabinet Secretary’s response on 17 March and agreed to write to you with our comments in order to inform your consideration of the LCM— We asked the Scottish Government what environmental considerations or protections the UK and Scottish governments should have regard to when exercising powers under this Bill. The Scottish Government responded that it was “not appropriate for it to seek to interpret the effect of these regulations”. Given some powers in the Bill are exercisable within devolved competence and would directly impact on Scotland’s environment, we think it is appropriate for the Scottish Government to have a view on this issue and we ask the REC Committee to pursue this further. In particular, we ask for clarification about what environmental standards would apply to the Secretary of State, when exercising powers under the Bill within devolved competence, and to Scottish Ministers, when exercising the powers conferred on them by the Bill (clauses 31(3), 31(4) and 36(1)). We continue to seek clarity on Scottish Ministers’ scope to exercise their powers in this policy area after the transition period; it is not clear to us the extent to which constraints will limit policy divergence within the UK. We raised similar issues in our letter to you in relation to the Agriculture (Retained EU Law and Data) (Scotland) Bill but feel they continue to be pertinent and require detailed consideration. We ask the REC Committee to pursue with the Cabinet Secretary the extent to which constraints such as trade agreements and the clause 40 power in the Bill would limit Scottish Ministers’ policy options within devolved competence after the transition period; for example, with regard to maintaining a level playing field on environment, animal welfare and food safety. This also raises the question about the extent to which the Scottish Government is involved in, and contributes to, any negotiations conducted on behalf of the UK by the UK Government. We also ask the REC Committee to explore with the Cabinet Secretary the other practical constraints which may limit Scottish Ministers’ policy options within devolved competence after the transition period. We note the following in particular may limit Scottish Ministers’ policy options—

• the operation of the UK internal market; querying what, for example, would be the impact of different marketing standards in Scotland to the rest of the UK, or changes to cross-compliance rules in England as a result of this Bill. We note the Finance and Constitution Committee’s current inquiry into the UK internal market;

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• the extent to which the UK Government replaces lost EU funding across the UK, and whether this is included in the block grant; recognising that a cut in funding, or restrictions on how it can be spent, might limit Scottish Ministers’ policy options. It is a matter of significant regret and concern that there is still no clarity about how lost EU funding will be replaced by the UK Government. We are particularly keen to have clarity on whether the UK Government’s current commitment extends to all Pillar 2 funding and ask the REC Committee to pursue this further. In the light of recent statements from the UK Government that the agricultural budget for England will be cut, we also ask the REC Committee to explore with the Cabinet Secretary what impact lower agricultural spend in England may have on the agricultural budget for Scotland and Scotland’s resultant ability to deliver environmental ambitions through sustainable land management; and

• the proposed common framework on agricultural support. We are concerned about the number of concomitant, or shared, powers that significantly extend UK Government powers in areas of devolved competence, where previously any such shared power was restricted to implementing EU measures. There will be broader, constitutional implications in the (potential) redrawing of the boundary of where the Scottish Government alone was expected to act within devolved competence. This will also likely create considerable challenges for Scottish parliamentary scrutiny where these powers are exercised by the UK Government. We note the Scottish Government is “not content with and does not support” the inclusion of clause 36 as read with clause 37(1)(a) in the Bill. We are concerned that this power has been conferred on UK Ministers within devolved competence and note the UK Government does not provide an explanation in the Explanatory Notes. We also note the Scottish Government “is not satisfied with the UK Government’s approach to obtaining consent”. The Committee queries what mechanisms and protections are in place to apply where the Scottish Government does not consent, or the Scottish Government feels its consent was not sought, to the UK Government exercising shared powers within devolved competence. We ask the REC Committee to explore with the Cabinet Secretary these points, as well as the circumstances under which the Scottish Government anticipates these powers being used by the UK Government. We think it would have been helpful and transparent if the Scottish Government had used the LCM document to provide further information about the Scottish Government’s expectations about the circumstances in which the UK Government would exercise its powers in devolved competence and how the UK Government would consult/seek the consent of the Scottish Government. We also think the LCM should set out information about how the Scottish Government intends to support Scottish parliamentary scrutiny of both UK and Scottish Ministers exercising powers in devolved competence. We ask the REC Committee to pursue this information during its consideration. This letter is being copied to the Cabinet Secretary and we ask the Scottish Government to give careful consideration to how it might wish to present information about shared powers – and shared powers and common frameworks – in future EU exit LCMs. We note that information is not yet available about the common frameworks which will set out the detail of the governance arrangements in those policy areas where the

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four UK administrations have agreed that a common approach would be useful. In his response, the Cabinet Secretary states that “early indications” are that the frameworks on agricultural support and organics will focus on “collaboration, co-ordination and co-operation and will be designed to work alongside any legislation”. We consider it is extremely unhelpful that it is not possible to scrutinise the governance arrangements covered by the common framework alongside the legislative proposals. We ask the REC Committee to seek an update from the Cabinet Secretary about the development of relevant common frameworks and the extent to which they could impact on Scottish Ministers’ ability to exercise their powers in devolved competence. Referring back to our comments in relation to the UK Government’s use of shared powers in devolved competence, we recommend that the process by which the UK Government exercises powers in devolved competence should be clarified and included – as standard, where relevant – as part of the common frameworks. As indicted in the above paragraph, we believe this information should be made available during consideration of the legislative proposals. Finally, given the impact of agri-environmental policy on devolved competence – which the UK Government accepts by seeking the Scottish Parliament’s legislative consent to this Bill – we believe it is imperative for the Scottish Government to be involved in all international agreement negotiations relating to agricultural and environmental policy. We intend to write separately to the UK Government to stress our support for this. Yours sincerely, Gillian Martin MSP, Convener

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LETTER FROM THE CABINET SECRETARY FOR RURAL ECONOMY AND TOURISM, DATED 11 MARCH 2020, IN RELATION TO THE AGRICULTURE BILL 1. Agriculture falls within devolved competence but the SG’s powers and functions have been exercised, to date, in the context of the UK’s membership of the CAP, which provides scope for regional divergence. To what extent does the SG anticipate that legal constraints, such as trade rules, and practical constraints, such as UK internal market forces and the replacement of EU funding, will affect agricultural policy divergence within the UK after the transition period ends? At this early stage, given we do not yet know what trade agreements may be in place at the end of the transition agreement period; we have limited information available to answer this query. However, we do note that UK membership of the WTO would require obligations to be complied with. This government is clear that we want to remain aligned with EU regulations and standards and we will press for this in all appropriate discussions and circumstances. The committee should note that Scotland has devolved powers over agriculture as a nation not a region and that we would assert our right to exercise those powers to protect and promote Scotland’s needs and interests when Scotland leaves the EU with the UK after the implementation period. As noted below, discussions on a proposed framework for agricultural support are in their early stages but initial indications are that it will complement the legislative positions across the different UK Administrations. The UK Government's agreeing to the Northern Ireland protocol creates challenges in maintaining frictionless trade across the UK, not least in relation to phyto-sanitary measures, which we continue to press the UK Government to address. We expect the UK Government to at least match EU funding previously received under CAP, as it promised to do, and as with other monies for devolved purposes provide that through the Scottish block grant. 2. To what extent would regulations made under the Bill be required to have regard to environmental considerations or protections? Given this is a UK bill introduced by the UK Government, it would not be appropriate for us to seek to interpret the effect of these regulations. We suggest this question should be addressed to the UK Government. 3. A list of all SIs made under the European Union (Withdrawal) Act 2018 which relate to the matters covered by this Bill, and the extent to which these SIs are superseded or amended by the Bill. The instruments made under the European Union (Withdrawal) Act 2018 are intended to fix ‘deficiencies’ in retained EU law so that it is able to operate as domestic law. The UK Agriculture Bill does not supersede those instruments, and the new powers in that Bill will so far as they enable the modification of retained EU law only apply to the deficiency fixed versions. 4. Information about how the legislative powers conferred on UK Ministers under this Bill would relate to the proposed common frameworks, specifically in relation to fertilisers, organic farming and agricultural support.

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Scottish Government officials continue to work together with UK Government and the other devolved administrations to develop common frameworks where they are in Scotland’s interests, on the basis of consensus, and in line with the framework principles agreed by JMC(EN) in October 2017. Discussions on a proposed framework for agricultural support and organics are in their early stages but early indications are that it will complement the legislative positions across the different UK Administrations. Its focus will be on collaboration, co-ordination and co-operation, and will be designed to work alongside any legislation. These arrangements, in whatever form they take, will make clear that Scotland has devolved powers over agriculture as a nation not a region and that we would assert our right to exercise those powers to protect and promote Scotland’s needs and interests when Scotland leaves the EU with the UK after the implementation period. 5. Are there any matters which are not dealt with by this Bill and which Scottish environmental or agricultural stakeholders, or the Scottish Government, would prefer to see included? I refer you to my letter to the Secretary of State on 20 February 20201. This contained a number of amendments that we wished to see made to the Agriculture Bill. As well as improvements to existing provisions, this letter included new clauses on protection of standards in international trade agreements, geographical indications, and funding for Scottish agriculture. 6. Will the UK Agriculture Bill impact on the Agriculture (Retained EU Law and Data) (Scotland) Bill? If so, how? I refer you to my letter to the REC Committee of 5 February 2020.2 7. To what extent would legal constraints, such as trade agreements, or practical constraints, such as a common framework or UK internal market forces, impact on the Scottish Ministers’ ability to make regulations under s74A of the Agriculture Act 1970? The potential impact of frameworks is addressed in the answer to question four. There is good progress on development of a fertiliser framework. All parties have operated in good faith and relationships have been increasingly constructive. Scottish Government officials are engaged with counterparts in Defra to ensure that fertilisers provisions in the Agriculture Bill are acceptable for Scottish interests.It is unclear at this stage what the outcome of future trade negotiations may be and how consequent trade agreements may impact on fertilisers’ regulation. As noted previously, the Scottish Government is clear that we want to remain aligned with EU regulations and standards. 8. How would this provision affect the regulation of fertilisers in Scotland? How would this provision operate alongside other controls of fertiliser production, sale and use to protect the environment in Scotland?

1 https://www.gov.scot/publications/proposed-amendments-to-the-uk-agriculture-bill/ 2 https://www.parliament.scot/S5_Rural/General%20Documents/20200205_-_FE_to_E_Mountain_-_Agriculture_(Retained_EU_Law_and_Data)_(Scotland)_Bill.pdf)

https://www.gov.scot/publications/proposed-amendments-to-the-uk-agriculture-bill/

https://www.parliament.scot/S5_Rural/General%20Documents/20200205_-_FE_to_E_Mountain_-_Agriculture_(Retained_EU_Law_and_Data)_(Scotland)_Bill.pdf)

https://www.parliament.scot/S5_Rural/General%20Documents/20200205_-_FE_to_E_Mountain_-_Agriculture_(Retained_EU_Law_and_Data)_(Scotland)_Bill.pdf)

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Clause 31 of the Bill amends the Agriculture Act 1970 to amend the definition of fertilisers, which enables a broader range of fertilising material to be regulated, including materials that have potential to be used as less harmful alternatives to traditional mineral fertilisers. It also provides the opportunity to embed environmental protections and standards into the product function and compositional requirements for fertilisers. The clause enables the regulation of fertilisers, through the making of secondary legislation, based on their function (as well as composition and content) and to create an assessment, monitoring and enforcement regime. Analysis has shown that existing domestic regulations and primary powers are inadequate for the purposes of providing for an up to date and fit for purpose regulatory system for fertilisers. This is true across all parts of the UK due to equivalent domestic regulations and existing primary powers. 9. To what extent would legal constraints, such as trade agreements, or practical constraints, such as a common framework or UK internal market forces, impact on the Scottish Ministers’ ability to regulate within this area? Clause 36 as read with 37(1)(b) gives Scottish Ministers powers to make regulations on aspects of organics, which fall within the competence of the Scottish Ministers. The EU system of organics regulation is widely recognised, and a de facto international standard, which already allows for recognition of organic products from other jurisdictions. The Scottish Government sees no value in departing from that consistent approach. In terms of UK Ministers making regulations in devolved competence under c36— 10. Does the SG consider it appropriate that the power is shared by UK and Scottish Ministers insofar as within devolved competence? The Scottish Government is not content and do not support with the proposed measure in the Bill as they do not respect devolved competence in Scotland. 11. In what circumstances does the SG envisage the power will be exercised by UK ministers? New EU regulation 848/2018 comes into force on 1 January 2021. The Scottish Ministers will continue to engage with Defra and the other devolved administrations. A decision on how and where to legislate would be taken nearer the time. 12. Does SG intend to ask the UKG to make regulations under c36 or does it intend to bring forward its own regulations? New EU regulation 848/2018 comes into force on 1 January 2021. The Scottish Government will continue to engage with Defra and the other devolved administrations and decide on how and where to legislate nearer the time. We will of course update the Scottish Parliament at the appropriate juncture.

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13. There is no requirement for the Secretary of State to consult or seek the consent of the Scottish Ministers before making Regulations under c36. Does SG expect consent to be requested or consultation required, in practice? The Scottish Government has concerns surrounding the provisions in clause 37(1)(a). The UK Government has indicated that, as a matter of policy, it will consult with, and request the consent of, the devolved administrations when making regulations under clause 36; however, the Scottish Government is not satisfied with the UK Government’s approach to obtaining consent. However, the UK Government intends to act, it is not acceptable for it to unilaterally assume legislative control over areas which have been devolved to the Scottish Parliament through the devolution settlement and the 1998 Act. The Scottish Government, together with the other devolved administrations, has been pressing the UK Government since Bill introduction to amend clause 37(1)(a) to include a requirement for the Secretary of State to obtain the consent of the Scottish Ministers, Welsh Ministers and DAERA when making regulations on organics where the subject matter falls within the competence of the appropriate devolved administrations. 14. What impact would the level of financial assistance given in England have on the budget available for financial assistance in Scotland? We would regard these as separate issues. However, we continue to seek clarification and confirmation from both UK Ministers and HM Treasury regarding future funding. We expect the UK Government to at least match EU funding under CAP, as it has previously promised to do. 15. Has the UKG committed to providing the full replacement of EU financial assistance for agricultural support? We note that the Part 1 Chapter 1 new financial assistance powers do not relate to EU financial assistance. However, we also note the UK Agriculture Bill does not abolish Pillar 2, and indeed, there are express powers to modify the Rural Development Regulation in clause 16. We have pressed the UK Government continually since summer 2016 for clarity and certainty on future funding arrangements and have still not received from the UK Government the answers we need to our queries on this matter, particularly on whether its current commitment extends to all Pillar 2 funding. Therefore, we continue to seek clarification and confirmation from both UK Ministers and HM Treasury regarding funding. 16. If so, how would this funding be calculated? How would it take account of any policy divergence between English and Scottish agricultural and agri-environmental policy? We have pressed the UK Government continually since summer 2016 for clarity and certainty on future funding arrangements and have still not received from the UK Government the answers we need to our queries on this matter, particularly on whether its current commitment extends to all Pillar 2 funding. Therefore, we continue

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to seek clarification and confirmation from both UK Ministers and HM Treasury regarding funding. 17. Has the UK government given an indication whether it intends replacement EU funds to be provided via the block grant? We have pressed the UK Government continually since summer 2016 for clarity and certainty on future funding arrangements and have still not received from the UK Government the answers we need to our queries on this matter, particularly on whether its current commitment extends to all Pillar 2 funding. Therefore, we continue to seek clarification and confirmation from both UK Ministers and HM Treasury regarding funding. As with other monies for devolved purposes, we would expect the UK Government to provide any future funding through the Scottish block grant. 18. Has the SG had any commitment from the UKG that replacement funding will not be ring-fenced (as the replacement funding for direct payments for 2020 has been)? We have pressed the UK Government continually since summer 2016 for clarity and certainty on future funding arrangements and have still not received from the UK Government the answers we need to our queries on this matter, particularly on whether its current commitment extends to all Pillar 2 funding. Therefore, we continue to seek clarification and confirmation from both UK Ministers and HM Treasury regarding funding. As with other monies for devolved purposes, we would expect the UK Government to provide any future funding through the Scottish block grant. 19. What would be the practical impact on farmers operating under different financial regimes? Currently the CAP provides different approaches to financial support. For example, each administration operates different capping levels to basic payments under Pillar 1. Until recently, the Scottish Government was the only part of the UK providing coupled support, support for new entrants and young farmers and additional support for those farming in less favourable areas. Within the current scheme, there are a small number of farm and land management businesses with cross border holdings that cover different territories in the UK. As noted above, discussions on a proposed framework for agricultural support are in their early stages but initial indications are that it will complement the legislative positions across the different UK Administrations. 20. What would be the impact of a UKG 7-year transition period in England on the SG’s proposed 5-year transition period? We understand that UK Ministers are now looking at moving to a new regime from 2024 but they are best placed to advise on what their plans are. The Scottish Government will of course take note of any of the proposals for future rural support from DEFRA and indeed, the other devolved administrations. As the committee knows agriculture is devolved and we need to design support that is best suited to Scotland’s needs. Our Stability and Simplicity consultation proposed

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a 5-year transition period, as recommended by the Scottish Government’s Agriculture Champions, and this approach was endorsed by the sector. Rural Scotland needs a bespoke, evidenced based future policy that supports the rural economy, produces high quality food for the nation, lowers emissions, enhances biodiversity, grows businesses and strengthens communities. 21. Would the modifications to the basic payment scheme in England have any effect on the legal power to operate the basic payment scheme in Scotland? Clause 52 (1)(a) provides that the whole of Part 1 on Financial Assistance (including the Chapter 2 clauses 7 to 13 on direct payments and the power to amend direct payments) only extend to England and Wales. Any modifications made to the basic payment scheme using this power should have no effect on our devolved powers to operate this scheme in Scotland. 22. What would be the impact in Scotland of a decision by the UKG to extend basic payment scheme in England beyond 2020? We do not anticipate any impact in Scotland. The administration of agriculture support schemes is devolved to Scottish Ministers. However, we do understand the UK Government will do this as the current Direct Payments Regulation only makes provision for payments up to 2020. We have to do this as well, and the equivalent power is in section 3 of our Agriculture (Retained EU Law and Data) (Scotland) Bill. 23. What would be the impact on the funding provided to SG if the UKG decides to extend the basic payment scheme in England beyond 2020? We do not anticipate that this decision should have any impact on the funding provided to SG. 24. What would be the impact in Scotland of a decision by the UKG to phase out the basic payment scheme in England? Could this be done without impacting on how the SG decides to provide financial assistance for agriculture? What, for example, would be the implications for the SG if the UKG decided to phase out greening payments but the SG decided to continue? We do not anticipate these decisions would have any impact in Scotland. The administration of agriculture support schemes is devolved to Scottish Ministers. 25. Does the SG have any concerns that environmental measures or rules could be interpreted as a ‘burden’ under c9(3)? Could the regulatory powers in c9 (to modify legislation governing the basic payment scheme) be used by the UKG to remove or reduce such a burden? Clause 52 (1)(a) provides that the whole of Part 1 on Financial Assistance (including the Chapter 2 clause 9 on the power to amend direct payments) only extend to England and Wales. Given these provisions do not fall within our devolved responsibility, it would not be appropriate for us to seek to interpret the effect of these provisions.

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26. How does SG anticipate the exercise of powers under c40 by UKG would impact on Scottish Ministers’ ability to pursue its environmental objectives? As we set out in the Legislative Consent Memorandum for the equivalent provisions in the Agriculture Bill considered in the 2017-19 Session3, these clauses provide the Secretary of State with regulation-making powers in relation to the United Kingdom’s compliance with the World Trade Organisation (WTO) Agreement on Agriculture (AoA). This includes powers to set financial ceilings in relation to the amount of agricultural support that each administration of the UK can provide, and the establishment of a decision-making process in relation to the classification of support for the purposes of the WTO AoA, including a dispute resolution process. It also includes powers requiring devolved authorities to provide information to the Secretary of State to allow for the classification and reporting of agricultural support to the WTO. In practice, this would allow the Secretary of State to decide how schemes, such as the Beef and Sheep coupled support schemes and the Less Favoured Area Support Scheme, would be classified under WTO rules, and how much money could be paid from them. The powers also enable the Secretary of State to act as the final arbiter if any devolved administration disputed this classification. While the clauses in the new Agriculture Bill are an improvement on the provisions in the previous Bill, in that they are more clearly tied to domestic support of a type in respect of which the WTO AoA sets limits on the UK, the fundamental issues remain. The clauses therefore continue to have potential to impact on the Scottish Ministers’ ability to pursue environmental objectives, for example should any future agri-environment scheme go beyond cost recovery to provide an incentive. At this stage, however, the UK Government has not published any detail on its proposed use of the powers. 27. Given that there is no requirement for UKG to consult or obtain the consent of the Scottish Ministers in relation to regulations made under clause 40, what does SG anticipate its role will be, and how will it ensure effective scrutiny by the Scottish Parliament, given the significant devolved interest acknowledged by the UKG? The Scottish Government considers that the consent of the Scottish Parliament is required in relation to the WTO AoA provisions in the Bill, and has proposed to the UK Government a number of amendments to the Bill4 including one which would require the consent of the Scottish Ministers to any regulations under clause 40 which extend to Scotland. Without this, we cannot be assured that the significant devolved interests will be taken into account, nor that there will be any formal role for either the Scottish Government or Scottish Parliament in the process. 28. Why is the Scottish Parliament’s consent not being sought in relation to c40 when consent is being sought in relation to c36 (power to make provision for

3 https://www.parliament.scot/S5ChamberOffice/SPLCM-S05-19.pdf 4 https://www.gov.scot/publications/proposed-amendments-to-the-uk-agriculture-bill/

https://www.parliament.scot/S5ChamberOffice/SPLCM-S05-19.pdf

https://www.gov.scot/publications/proposed-amendments-to-the-uk-agriculture-bill/

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the purpose of implementing an international obligation) of the UK Fisheries Bill? As set out at paragraph 15 of the UK Government’s Explanatory Notes to the Bill5, the UK Government takes the view that the consent of the Scottish Parliament is not required in relation to this clause, and accordingly has not sought it. As set out in the Legislative Consent Memorandum for the previous Bill, the Scottish Government considers that these provisions do require the Scottish Parliament’s consent as they concern the implementation of international obligations (namely those arising from the WTO AoA) as regards matters (agriculture support) which are not reserved. The establishment of UK-wide arrangements for allocating financial ceilings under the WTO AoA to the various jurisdictions of the UK, in so far as it is concerned with the implementation of an international obligation in non-reserved matters, requires the Scottish Parliament’s consent. Although the allocation of a quota requires to be dealt with on a UK-wide basis, respect for the competency of the Scottish Parliament requires that this should be on the basis of consent. In any event, the clauses contain provisions that would affect the executive competence of the Scottish Ministers as regards the exercise of functions concerning agricultural support in Scotland. In contrast, the UK Government has recognised the competences of the Scottish Government and Parliament in relation to fisheries, and the clauses in the Fisheries Bill proceed on that basis. 29. More generally, does the SG anticipate that primary UK legislation will be required to implement other trade agreements? On the basis that the UK Government has needed to put in place the European Union (Withdrawal) Act 2018, the Taxation (Cross-border Trade) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 to extract the UK from one trade agreement, and had brought forward a Trade Bill in the 2017-19 Parliament. It seems highly likely that further primary UK legislation would be required to implement future trade agreements. There is no general provision in place under which future trade agreements can be implemented. The Committee may wish to seek an explanation from the UK Government. 30. Does the SG anticipate that it would implement any such trade agreements insofar as within devolved competence, or does it expect that any such trade agreements would be implemented on a UK-wide basis? The Scottish Government’s general stance is that the most appropriate place for legislation on devolved matters is the Scottish Parliament. 31. Given agriculture falls within devolved competence, what role does the SG expect to have in any future negotiations relating to the WTO AoA?

5 https://publications.parliament.uk/pa/bills/cbill/58-01/0007/en/20007en.pdf


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The Scottish Government set out its proposals for meaningful engagement in the development of trade agreements in “Scotland’s Role in the Development of Future UK Trade Arrangements”, published in August 2018 that would include multilateral and plurilateral trade arrangements such as those dealt with in the World Trade Organisation. We await a response from the UK Government. In the meantime, the Scottish Government will continue to seek to engage with the UK Government, in particular through Defra, on the WTO Agreement on Agriculture and any proposals for amendment to that Agreement, eg at the forthcoming Ministerial Conference in Kazakhstan in June. We recently set out our key concerns in relation to trade negotiations6.

6 https://www.gov.scot/news/reckless-approach-to-us-trade-talks/

https://www.gov.scot/news/reckless-approach-to-us-trade-talks/

REC/S5/20/11/9


11th Meeting, 2020 (Session 5), Wednesday, 13 May 2020

Direct Payments to Farmers (Amendment) Regulations 2020 Introduction

1. This paper supports the Committee’s consideration of a consent notification sent by the Scottish Government relating to the following UK statutory instrument (SI)—

• The Direct Payments to Farmers (Amendment) Regulations 2020

2. These regulations are being laid in relation to the Direct Payments to Farmers (Legislative Continuity) Act 2020. To assist the consideration of such instruments, a protocol has been put in place between the Scottish Government and Scottish Parliament. Further detail on this protocol is available in a letter from the Cabinet Secretary for Government Business and Constitutional Relations. Whilst this protocol does not strictly apply to this notification, the Scottish Government has undertaken to act as if the protocol does apply.

3. As set out in the protocol, referred to above, the Scottish Parliament has a maximum of 28 days in which to consider the notification.

4. Under the protocol, the Committee has the following two options following its consideration of the UK SIs—

a) Write to the Scottish Government to confirm it is content for consent for a UK SI to be given; or

b) Consider the matter further, take evidence if appropriate and make a report to parliament.

5. If it chooses to report, it may make one of the following three recommendations—

a) it is content for consent to be given for a UK SI to be made in the UK Parliament only.

b) it is not content with the Scottish Government granting its consent and that the proposals should be made by an SSI; or

c) it is not content with the Scottish Government granting its consent and that the proposals should be included as a UK SI in both parliaments made under the joint procedure.

6. The Committee’s role in the protocol is to decide whether it agrees to the Scottish Government offering its consent to the UK Government to make regulations on its behalf. However, there are broader policy issues which may arise in future, not as a direct consequence of the notification, but due to Brexit itself. The Committee may wish to note these issues in its response to the

http://www.parliament.scot/S5_Delegated_Powers/20180911CabSec.pdf



REC/S5/20/11/9

Scottish Government and request that it be kept up to date on any developments on these matters.

INSTRUMENTS

7. This table is intended to give a brief overview only. The notification letters and documentation for the instruments are included in annexes to this paper.

Instrument Category

The Direct Payments to Farmers (Amendment) Regulations 2020

(see Annexe)

A

DECISION

8. The Committee is asked to consider the consent notification referred to in this paper and determine whether it is content to write to the Scottish Government to confirm it is content for consent for the UK SI referred to in the notification to be given.


1

NOTIFICATION TO THE SCOTTISH PARLIAMENT

DIRECT PAYMENTS

1. Name of the SI

The Direct Payments to Farmers (Amendment) Regulations 2020

2. A brief explanation of the law that the SI amends

The Direct Payments to Farmers (Amendment) Regulations 2020 (“proposed SI”) will be made under the Direct Payments to Farmers (Legislative Continuity) Act 2020 (c. 2) (the “2020 Act”). On 16 January 2020 the Scottish Parliament approved the Legislative Consent Motion lodged by the Cabinet Secretary for the Rural Economy in respect of the 2020 Act following the approval of the REC Committee the previous day.

The proposed SI will be made by the Secretary of State for Environment, Food and Rural Affairs under sections 3(1), (7) and (9) of the 2020 Act and will apply to Scotland. Section 3(2) of the 2020 Act provides that the Secretary of State may only make regulations under section 3(1) with the consent of Scottish Ministers.

The proposed SI amends retained EU law governing the 2020 Common Agricultural Policy Direct Payment schemes for farmers (the “Direct Payments legislation”). The Direct Payments legislation became domestic law at 11:00pm on 31 January 2020 pursuant to the 2020 Act and as a consequence of Article 137 of the Withdrawal Agreement which disapplied Regulation (EU) No. 1307/2013 for the UK for claim year 2020.

The amendments in the proposed SI confirm the euro to sterling exchange rate for payments under the Direct Payments legislation and address other operability issues arising from the UK’s exit from the EU. The amendments will enable the retained EU law to operate effectively in the UK for claim year 2020.

The proposed SI would apply throughout the UK and make changes to the following legislation:

Regulation (EU) No 1306/2013 of the European Parliament and of theCouncil on the financing, management and monitoring of the commonagricultural policy

Commission Implementing Regulation (EU) No 809/2014 laying down rulesfor the application of Regulation (EU) No 1306/2013 with regard to theintegrated administration and control system, rural development measuresand cross compliance

Regulation (EU) No 1307/2013 of the European Parliament and of theCouncil establishing rules for direct payments to farmers under supportschemes within the framework of the common agricultural policy

Annexe

2

Commission Delegated Regulation (EU) No 639/2014 supplementing Regulation (EU) No 1307/2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy

The Common Agricultural Policy (Control and Enforcement, Cross-Compliance, Scrutiny of Transactions and Appeals) Regulations 2014.

3. Summary of the proposals The direct payment schemes are the largest source of farm subsidy in Scotland. Many farmers and land managers are reliant on this income to support their businesses. The amendments made by the proposed SI will help ensure that the direct payments schemes continue to operate effectively for the claim year 2020. At the time of EU exit, no operability amendments were made to the provisions in the retained EU law concerning exchange rates. This was because the UK Government and Devolved Administrations had yet to decide on the exchange rate they wished to set for payments to be made under the Direct Payments legislation for the 2020 claim year, which will be domestically funded. The Government and Devolved Administrations have now decided that the exchange rate to be used is the same rate used for the 2019 claim year. The proposed SI would amend Regulation (EU) 1306/2013 to set this exchange rate. The other operability amendments made by the proposed SI are minor. The need for these minor changes was identified after EU exit. The proposed amendments include removal of some cross-references which are no longer relevant, such as cross-references to articles which have been removed and removal of references to the Commission’s budgetary management system of financial discipline which no longer forms part of Direct Payments legislation. Some would clarify that, in some instances, the EU legislation being referred to is the version as it had effect immediately before exit day as appropriate. The proposed SI also addresses other outstanding minor operability issues, such as removing references to the “Commission”. The proposed SI does not make policy changes. Instead, it maintains the status quo and will have no noticeable impact on the ground for farmers. 4. An explanation of why the change is considered necessary The proposed changes are considered to be necessary to ensure that the Direct Payments legislation remains functional and can operate effectively for the claim year 2020. 5. Scottish Government categorisation of significance of proposals The Scottish Government considers that the proposed SI falls within Category A, as the changes are minor and technical in nature and policy change is being avoided to preserve the current status quo.

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6. Impact on devolved areas The Scottish Government agree that the changes in the proposed SI are a pragmatic way of ensuring that the direct payments legislation remains functional and can operate effectively for the claim year 2020. The proposed SI respects the current devolution settlement and it is subject to the consent of the Scottish Ministers. No impact on business, charities or voluntary bodies or the public sector is anticipated. Beneficiaries will continue to receive direct payments similarly to before EU exit. 7. Summary of stakeholder engagement/consultation The proposed SI has not been subject to formal consultation because it aims to retain the status quo for the direct payments 2020 claim year, makes no substantive policy changes and is technical in nature. 8. A note of other impact assessments, (if available) An impact assessment has not been carried out in relation to these regulations as they are aimed at preserving the effect of the current direct payments regulatory regimes. 9. Summary of reasons for Scottish Ministers’ proposing to consent to UK Ministers legislation If these deficiencies are not corrected and the amendments are not made by the proposed SI, the Scottish Ministers believe that this would risk compromising the effective functioning of the legal framework for continuing to make payments and the administration of the applicable direct payments schemes for the 2020 claim year. This would cause problems for stakeholders who need as much certainty and continuity as possible to help plan and operate their businesses. This could also pose risks for agriculture and the rural economy in Scotland. The Scottish Ministers propose to consent to the corrections and amendments by the proposed SI. The Scottish Ministers believe that, in the circumstances, consenting to the proposed SI would be the most effective way to help ensure a clear and effective statute book. The approach of the proposed SI respects the devolution settlement and continues to provide for a transition from an EU to UK regulatory framework with devolved options for Scotland. The Scottish Government has worked constructively with the UK Government and the other Devolved Administrations and, in light of that, is satisfied that the proposed amendments to the applicable legislation will ensure that it continues to operate effectively.

4

The Scottish Ministers consider that it is appropriate for the fixing legislation to be made on a UK-wide basis by the UK Government. This provides an effective achievable solution in current circumstances of limited resources and significant resource intensive legislative work needing to be completed under extremely tight time constraints. It also reduces the risk of conflicting provisions being produced by UK administrations that could result in confusion. The Scottish Ministers believe stakeholders need clarity and continuity in the immediate future in so far as possible to continue to operate their businesses during this period of transition and consenting to the proposed SI is the most likely way of achieving that aim at this time. 10. Intended laying date (if known) of instruments likely to arise Given the most recent information provided by the UK Government, we assume it is intended that the proposed SI will be made and laid at Westminster on the 9 June 2020. The made affirmative procedure applies to the proposed SI. 11. Does the Scottish Parliament have 28 days to scrutinise? The Scottish Parliament have 28 days to scrutinise the proposed SI assuming the date of 9 June 2020 when it will be made and laid as indicated to us by the UK Government . In terms of the made affirmative procedure the proposed SI will have to be approved by each of the Houses of Parliament within 28 days of it being laid. 12. Information about any time dependency associated with the proposal See above as explained in clause 11. 13. Are there any broader governance issues in relation to this proposal, and how will these be regulated and monitored post-withdrawal? No 14. Any significant financial implications? The proposed SI is not expected to have any significant financial implications for stakeholders in Scotland.

REC/S5/20/11/11


11th Meeting, 2020 (Session 5), Wednesday, 13 May 2020

Direct Payments Ceilings Regulations 2020 Introduction

1. This paper supports the Committee’s consideration of a consent notification sent by the Scottish Government relating to the following UK statutory instrument (SI)—

• The Direct Payments Ceilings Regulations 2020

2. These regulations are being laid in relation to the Direct Payments to Farmers (Legislative Continuity) Act 2020. To assist the consideration of such instruments, a protocol has been put in place between the Scottish Government and Scottish Parliament. Further detail on this protocol is available in a letter from the Cabinet Secretary for Government Business and Constitutional Relations. Whilst this protocol does not strictly apply to this notification, the Scottish Government has undertaken to act as if the protocol does apply.

3. As set out in the protocol, referred to above, the Scottish Parliament has a maximum of 28 days in which to consider the notification.

4. Under the protocol, the Committee has the following two options following its consideration of the UK SIs—

a) Write to the Scottish Government to confirm it is content for consent for a UK SI to be given; or

b) Consider the matter further, take evidence if appropriate and make a report to parliament.

5. In normal circumstances, if it chooses to report, it may make one of the following three recommendations—

a) it is content for consent to be given for a UK SI to be made in the UK Parliament only.

b) it is not content with the Scottish Government granting its consent and that the proposals should be made by an SSI; or

c) it is not content with the Scottish Government granting its consent and that the proposals should be included as a UK SI in both parliaments made under the joint procedure.

6. However, in this specific case, the key recommendations that the Committee can normally make under the protocol, if not satisfied with the proposal, are not available to the Committee. The protocol envisages that if the Committee is not content with a proposal, the Committee can recommend to the Parliament that the proposal should be contained in an instrument laid in




REC/S5/20/11/11

the Scottish Parliament (not just laid at Westminster). However, that option is not available here because the power in question has been conferred on UK Ministers alone. The legislation conferring this power does not give the Scottish Ministers an equivalent power.

7. On this basis, the key matter for the Committee’s scrutiny in relation tothis proposal is to decide whether it is content with the policy that the instrumentwill implement for Scotland.

INSTRUMENTS

8. This table is intended to give a brief overview only. The notification lettersand documentation for the instruments are included in annexes to this paper.

Instrument Category

The Direct Payments Ceilings Regulations 2020

(see Annexe)

B

DECISION

9. The Committee is asked to consider the consent notification referred toin this paper and determine whether it is content to write to the ScottishGovernment to confirm it is content with the policy that the instrument willimplement for Scotland.


1

NOTIFICATION TO THE SCOTTISH PARLIAMENT

DIRECT PAYMENTS

1. Name of the SI

The Direct Payments Ceilings Regulations 2020

2. A brief explanation of the law that the SI amends

The Direct Payments Ceilings Regulations 2020 (“proposed SI”) will be made under Regulation (EU) No. 1307/2013 (the “Direct Payments Regulation”).

Article 137 of the Withdrawal Agreement, which came into effect at midnight on 31 January 2020, dis-applied the Direct Payments legislation for the UK for claim year 2020.

The Direct Payments Regulation is therefore made retained EU law by, and modified under, the Direct Payments to Farmers (Legislative Continuity) Act 2020 (c. 2) (the “2020 Act”). The modifications include the powers being exercised in the proposed SI.

On 16 January 2020 the Scottish Parliament approved the Legislative Consent Motion lodged by the Cabinet Secretary for the Rural Economy in respect of the 2020 Act following the approval of the REC Committee the previous day.

The proposed SI will be made by the Secretary of State for Environment, Food and Rural Affairs under Articles 6(3) and 7(3) of the Direct Payments Regulation. It is subject to affirmative procedure.

The powers to make the proposed SI are conferred on the Secretary of State, who may not however make any regulations without the consent of each of the relevant authorities for Wales, Scotland and Northern Ireland. The Scottish Ministers are the relevant authority in relation to Scotland.

The powers in Articles 6(3) and 7(3) enable the Secretary of State to adapt the ceilings for the amounts of direct payments in any year as set out in Annexes II and III of the Direct Payments Regulation.

In addition, the 2020 Act inserted a new Article 7A into the Direct Payments Regulation. That Article enables the Secretary of State, having regard to the recommendations of the Bew Review, to increase the total amount of direct payments that could otherwise be granted in relation to the claim year 2020.

The proposed SI amends the Direct Payments Regulation. It adjusts the national and net ceilings for the 2020 claim year for the United Kingdom set out in Annexes II and III of the Direct Payments Regulation. The amendments will enable the retained EU law to operate effectively in the UK for claim year 2020.

Annexe

2

The proposed SI would apply throughout the UK. 3. Summary of the proposals The proposed SI would amend the Direct Payments Regulation to enable ceilings to be set as required for all UK administrations following the Bew review for the 2020 claim year. In particular, the ceiling proposed for Scotland for the 2020 claim year is acceptable as it maintains the same level of funding compared to 2019. The proposed SI reflects the fact that direct payments are no longer funded by the EU and the UK monies will now replace that funding. The direct payment schemes are the largest source of farm subsidy in Scotland. Many farmers and land managers are reliant on this income to support their businesses. The amendments made by the proposed SI will help ensure that the direct payments schemes continue to operate effectively for the claim year 2020. At the time of EU exit, no operability amendments were made to the provisions in the retained EU law to provide for increased ceilings. This was because the UK Administrations had yet to decide if they wished to raise the ceilings to allow for increased payments to be made for the 2020 claim year following the Bew review. The Bew Review resulted in Scotland being allocated an additional £25.7 million funding each year in respect of the 2020 and 2021 claim years. The proposed SI and this notification only relates to the 2020 claim year 2020/21 allocation. In their letter giving notification of the Bew review funding, HM Treasury set broad conditions that the funding was “ring-fenced” and “to be spent on farmers and land managers”. The Scottish Ministers have decided that the Bew monies will not be included in the direct payments ceilings for the 2020 claim year, and the proposed SI will give effect to that decision. Instead the Scottish Ministers consider that a more flexible approach will better support our farmers and land managers, and decisions on how to allocate the Bew monies will therefore be made by Scottish Ministers in accordance with the above HM Treasury conditions. For example, these options to be considered could include support for agriculture in response to the covid 19 outbreak. 4. An explanation of why the change is considered necessary The proposed changes are considered to be necessary to ensure that the Direct Payments legislation ceilings remain functional, and can operate effectively for the claim year 2020. 5. Scottish Government categorisation of significance of proposals The Scottish Government considers that the proposed SI falls within Category B, as although the changes to the ceilings are technical in nature, it follows on

3

significant policy decisions as explained above on the amount of direct payments for the 2020 claim year. 6. Impact on devolved areas The Scottish Government agree that the changes in the proposed SI are a pragmatic way of ensuring that the Direct Payments legislation ceilings remain functional and can operate effectively for the claim year 2020. The proposed SI respects the current devolution settlement and it is subject to the consent of the Scottish Ministers. No impact on business, charities or voluntary bodies or the public sector is anticipated. Beneficiaries will continue to receive direct payments similarly to before EU exit. However as explained above the proposed SI does follow on significant policy decisions, including those in respect of the allocation of Bew review funds for the 2020 claim year. 7. Summary of stakeholder engagement/consultation The proposed SI has not been subject to formal consultation because it retains the status quo for the direct payments 2020 claim year, makes no substantive policy changes, and is technical in nature. However, it should be noted that given the £160 million of convergence funds is being paid as direct payments in the 2020 and 2021 claim years, stakeholders -including NFUS and crofters - were keen to see the Bew review funds spent differently to support the industry to change and move forwards, particularly as we will be out with the EU and facing specific climate change and now Covid 19 challenges. 8. A note of other impact assessments, (if available) An impact assessment has not been carried out in relation to these regulations as they preserve the effect of the current direct payments regulatory regimes. 9. Summary of reasons for Scottish Ministers’ proposing to consent to UK Ministers legislation The Scottish Ministers propose to consent to the UK ceilings provided for the 2020 claim year by the proposed SI. The approach of the proposed SI respects the devolution settlement and continues to provide for a transition from an EU to UK regulatory framework with devolved options for Scotland. The ceiling proposed for Scotland is acceptable as it maintains the same level of funding. The Scottish Government has worked constructively with the UK Government and the other Devolved Administrations and, in light of that, is satisfied that the new

4

ceilings in the proposed SI will help ensure that the Direct Payments legislation continues to operate effectively for the 2020 claim year. The Scottish Ministers believe stakeholders need clarity and continuity in the immediate future in so far as possible to continue to operate their businesses during this period of transition and consenting to the proposed SI is the most likely way of achieving that aim at this time. 10. Intended laying date (if known) of instruments likely to arise We understand from the UK Government that the proposed SI will be laid as a draft affirmative at Westminster on 2nd June 2020, and is therefore subject to approval before being made. 11. Does the Scottish Parliament have 28 days to scrutinise? The Scottish Parliament has 28 days to scrutinise the proposed SI assuming that it is laid on 2 June 2020. 12. Information about any time dependency associated with the proposal See above as explained in clause 11. 13. Are there any broader governance issues in relation to this proposal, and how will these be regulated and monitored post-withdrawal? No 14. Any significant financial implications? The proposed SI is not expected to have any significant financial implications for stakeholders in Scotland. But as explained in section 3 above, it implements a financial policy decision on ceilings for the 2020 claim year, and on the allocation of the Bew review funds for Scotland.