Rural Affairs Committee, 01 Feb 2000

Meeting date: Tuesday, February 1, 2000

Official Report 168KB pdf

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Hill Livestock (Compensatory Allowances) (Scotland) Regulations 1999 (SSI 1999/187)

There are two explanatory notes attached to SSI 1999/187. The first, from the clerk, sets out the key dates for action. The second, from SERAD, is provided at the committee's request, and explains the order.

We are obliged to take into account the report from the Subordinate Legislation Committee, which was published on 25 January. The report draws our attention to some drafting errors, and an extract from the report was circulated with the agenda papers. Have members all received that and had the opportunity to consider it? I see that they have.

This order has come to our attention as a negative procedure, which means that, unless a formal motion to annul the order is agreed, the order comes into effect. No such motion for annulment has been lodged, so the purpose of our discussion today is to examine the instrument. Are members content that they have enough information to examine the instrument?

Yes.

Representatives of the Scottish Executive rural affairs department who are prepared to speak to the instrument have come to our meeting. I therefore ask David Dickson, Ian Stewart, Heike Gading and Ailsa MacLagen to come to the table and explain the regulations to us.

As all members of the committee will be aware, support for farming in Scotland's less favoured areas is vital, not least because 85 per cent of the country is classed as less favoured areas.

The Agenda 2000 proposals, which were part of the common agricultural policy, incorporated discussion on the future of less favoured areas support. As a consequence of that, the council agreed that there should be a move from headage payments to area payments. At that juncture—and with the Scottish Executive in the vanguard—we argued with the council and the European Commission that there should be some form of transition. Agreement was reached that there would be a roll-over year for headage payments. Having had that agreed in principle, we had to go through the long process of getting the Commission to come up with the necessary legislation. That process dragged on until virtually the end of the year, which is why this order was put forward at relatively short notice.

The order provides for the continuation of headage system support similar to the hill livestock compensatory allowance. Such support existed prior to the council's decision that the system should be area based. Legislation that was drafted closely follows previous UK legislation. We note that legal queries have been raised about the negative statutory instrument that is before you. My colleagues would be pleased to answer questions on that. We do not necessarily agree with everything that is said by the legal advisers who have drafted the memorandum and we would be glad to avail the committee of our opinion either today or later, by letter.

Obviously, the EU agreed that a transition period was necessary before moving to a system of area-based payments. Is the new system on target?

The proposals for the area-based system have been lodged with the European Commission as part of the Executive's rural development plan. The Commission has six months in which to approve the plan. We have met the timetable, but the matter is now in the hands of the Commission. We are on target, subject to the Commission's agreeing to the plan, particularly the less favoured areas element. If the Commission wants us to change our plan, there might be delays.

I will take advantage of David Dickson's presence to ask a general question. How will the change from headage payments to area payments affect tenant farmers? Would the payment go to the landowner?

No. The system remains unchanged. The support is for sustainable farming, so the farmer is the beneficiary.

Some weeks ago, when we were discussing this legislation, I asked the Minister for Rural Affairs whether there were proposals to include HLCA payments to deer farmers. He indicated, at that time, that that possibility was not being considered, and I do not see that included in the document. Is it implied that the area-based payments would include all types of agriculture, including rare breeds, goats and deer?

As I have explained, the document that you have in front of you is a roll-over of the headage system that is based on the traditional coverage of that headage system, namely, sheep and cattle. The less favoured area proposals that have been sent to Brussels, which the committee incorporated in the rural development plan that it was given copies of, propose the extension of area-based coverage beyond the traditional categories of cattle, sheep and deer farming. Support for dairy farming in the ring-fenced areas and for goats is included in the plan. It will be a matter for the Commission, in the first instance, to say whether that is acceptable. The Scottish Executive and the Parliament will eventually decide on the precise coverage, in the light of the availability of funds.

I have a brief question on the provision that is made for appeals. The Subordinate Legislation Committee seemed to be concerned about that. I know, from the briefing that we received, that the appeals mechanism is to be established by SERAD in the autumn. However, as this is a roll-over of a previous scheme, I would have thought that there would be a system of appeal in place that would relate to the previous scheme. Is there no such system in place?

A system of appeals for all the livestock schemes is in place, as for the mainstream integrated administration and control system scheme and for arable schemes. Any claimant or producer who feels unhappy with either the service that they receive or decisions that have been made can appeal to the local office and ask for the matter to be referred to headquarters, where it will be considered by the scheme manager, who may take advice from our solicitor's office.

I presume that that will continue to exist during the transitional period.

Yes. That is enshrined within the wider appeal discussions that are going on at the moment.

The Subordinate Legislation Committee raised a concern over the time limit beyond which prosecution for offences cannot take place, particularly in relation to section 19. Is that section identical to what was in regulations in previous years?

It is identical to the 1996 hill livestock compensatory allowance regulations.

In other words, whatever problems there are, those problems were there in the past?

Or not there, as the case may be.

Touché.

Let us move on a little. The only difference is that, under the rules governing this Parliament, any legislation that is passed by this Parliament is subject to consideration by the European Court of Human Rights. That also was brought to your attention by the Subordinate Legislation Committee. Do you feel that there are any inherent dangers in that aspect of the changed circumstances?

The provisions in these regulations are not in danger of breaching article 6. Article 6 guarantees a person the right to a trial within a reasonable time, when they have been charged. That means that, when the state has approached a person, that person will not be in a state of uncertainty. The time limits for prosecution, as they are in these regulations, relate to the question of when the prosecution is initiated: within six months of it coming to the knowledge of the prosecutor and not later than 12 months from the commission of the offence. That is the rule as it stands in these regulations, and there is no risk of article 6 challenges to it.

I have a question on the HLCAs. What is the total amount payable this year?

For this year, £61.8 million will be paid out from the end of February.

How much is that per ewe?

There are different rates depending on whether a farm is in a severely disadvantaged area or in a disadvantaged area and there are different rates for the Highlands and Islands. We can provide that information.

I can find that out. It occurred to me that because the sheep annual premium has dropped by about £2.50, the HLCA might rise to compensate.

Unfortunately not. The hill livestock compensatory allowance scheme is self-standing and has a self-contained budget. It is independent of the market mechanism that determines the sheep annual premium.

The Commission regards less favoured areas support as being a reflection of the degree of natural disadvantage and therefore something that does not fluctuate according to economic circumstances. There is no link between them.

The point that was made to me was that the sheep annual premium was a safeguard: when sheep prices were low, the sheep annual premium would rise. However, this year the prices are low, but the sheep annual premium has also fallen.

That is because the sheep annual premium is based on weighted European averages. Although prices in this country are low and returns to the farmer have been low, the overall average price calculated by the European Commission is higher than last year. The deficiency payment represented by the sheep annual premium is higher than expected.

Yet it is still £2.50 less than last year.

That is correct.

Is that because of the currency?

No. Currency is an influence, but the payment reflects market prices in Europe. This year, market prices across Europe are higher than last year, so the deficiency payment is less.

Our job as a committee is not to engage in a general discussion about hill livestock compensatory allowances, interesting as the topic may be, but to address the legislation before us. I would like to confirm that the Subordinate Legislation Committee concluded that while there are concerns, most of those relate to the form and structure of the regulations, rather than to the content. There appear to be no matters of substance that cause the committee serious concern. Is that your interpretation of the committee's report? Are you content with that conclusion?

Yes. There was one amendment to the legislation, which we have undertaken to make. My legal colleagues understand why the other legal points have been raised, but do not necessarily accept them. We hope that the committee will support the legislation, or at least not vote against it, because there would be serious problems if it did.

I thank the ladies and gentlemen for their attendance and for the information that they have given us.

During the course of our discussions, it struck me that this could be one of the rare occasions on which I should raise the issue of declarations of interest. Are any committee members claiming the hill livestock compensatory allowance?

I am.

I am.

Aah.

It is in my declaration of interests.

Declarations that appear in the "Register of Members' Interests" should always be repeated when business is dealt with that relates to those interests. John Farquhar Munro and Jamie McGrigor indicated that they are claimants of that allowance. I was a claimant until a few years ago, but I am no longer one.

Having heard the explanation, and taken into consideration the report from the Subordinate Legislation Committee, are members content that they have enough information to make a decision on this matter? It seems they are. Are members content with the proposal? Does the committee wish to make no recommendation in its report to Parliament?

Members indicated agreement.