Subordinate Legislation
Scotland Act 1998 (Cross-Border Public Authorities) (Adaptation of Functions etc) (Amendment) Order 2002
Item 2 is the Scotland Act 1998 (Cross-Border Public Authorities) (Adaptation of Functions etc) (Amendment) Order 2002—I wish that I had not started to read that out. Members have copies of the draft instrument, which is on the functions of the Meat and Livestock Commission as they relate to Scotland and levies raised in Scotland. We have previously considered similar matters in a different context, when we looked into the establishment of Quality Meat Scotland. Members will remember that we had a lot of discussion about that matter, on which we received a lot of evidence.
I welcome Ross Finnie, the Minister for Environment and Rural Development, and his officials, Simon Hodge and Paul Cackette. The other two officials who are present are here for a later agenda item. I thank the minister and his officials for attending.
Members should note that the Subordinate Legislation Committee has made no comments on the order. I invite the minister to make some opening remarks. Members will then, while we have the officials at the table, be free to ask questions on any points that require explanation. When members have asked for all the clarification that they want, we will, if required, move to a debate on the motion. We cannot involve officials in answering questions at that point, so members are urged to clarify any questions that they have at the earlier stage.
As the convener has expertly described the order, I will not repeat the title, save to say that it is made under section 89 of the Scotland Act 1998. Section 89 allows provision to be made in relation to cross-border public authorities, as defined under section 88, in consequence of the act. The section allows arrangements to be tailor-made for allocating accountability and control between the United Kingdom Government and the Scottish Executive and between the UK Parliament and the Scottish Parliament.
The order amends schedule 16 of a previous Scotland Act 1998 section 89 order—statutory instrument 1999/1747. The schedule relates to the functions of the Meat and Livestock Commission, to which I will refer hereafter as the MLC. The committee will be aware of the importance of the sector and it will be aware of these matters as it was involved in the drafting of legislation on Quality Meat Scotland, which was established in 1999.
Quality Meat Scotland was formed by the MLC, the National Farmers Union of Scotland and the Scottish Association of Meat Wholesalers. QMS derives its functions and a large part of its funding from the MLC. The MLC has the statutory responsibility to promote greater efficiency in the livestock industry in Great Britain. It collects general and promotional levies on slaughtered or exported cattle, sheep and pigs. The Scottish general levy is currently retained by the MLC. That is because the MLC retains responsibilities for functions such as collection of market information, research and product development, livestock improvement, training and health education.
The period since devolution and the formation of QMS has highlighted the need for a more distinctive and locally appropriate strategy for each part of the United Kingdom and, in particular, for new accountability arrangements between the MLC and Scottish ministers. The Executive undertook a consultation exercise in April to gauge industry views on strengthening the role of QMS. The consultation was based on four core proposals: first, that QMS should become responsible for all MLC functions in Scotland; secondly, that QMS should be given the autonomy to develop a strategy for Scotland focused on Scottish red meat development and promotional priorities; thirdly, that QMS should receive the full Scottish general and promotional levies to address Scottish priorities for red meat development and promotion; and, fourthly, that QMS should continue to invest in GB-level MLC services where that confers benefits on the Scottish industry.
Respondents to the consultation included all the key stakeholder groups. They indicated a high level of support for the proposals on the role and functions of QMS, transfer of the Scottish levy to QMS and the increased accountability to Scottish ministers. The MLC has also been consulted on the terms of the order as is required by section 89 of the Scotland Act 1998.
Respondents also expressed the view that continued links with the MLC were important in order to prevent duplication of effort, ensure the retention of valued services, protect core expertise, maintain the integrity of GB programmes and secure best value for the Scottish red meat sector.
As a consequence of devolution, the order makes provisions on the financial arrangements, control and accountability of the MLC. It will do that by transferring to Scottish ministers the function of giving general directions to the MLC in relation to the use of the Scottish levy. The Agriculture Act 1967 currently gives that function jointly to agriculture ministers. That does not change the arrangements for the setting of Scottish levy rates or the collection of the levy. The order will not affect the MLC's status as a GB body. It will require that the function of giving directions in relation to the use of the levy for England and Wales will cease to be exercisable by Scottish ministers.
For Scottish ministers to exercise the function of general direction over use of the Scottish levy, the levy must be defined. To do that, the order will require the Secretary of State for Environment, Food and Rural Affairs, Scottish ministers and the National Assembly for Wales minister with responsibility for agriculture and rural development, acting jointly, to make a determination to define the basis for the share of levy income.
The order will require the MLC to prepare for Scottish ministers an annual report on the discharge of its functions in Scotland. That will play an important part in strengthening accountability to Scottish ministers.
The delegation of functions in Scotland from the MLC to QMS will be achieved—after the order has been made—through a joint ministerial direction under the provisions of the Agriculture Act 1967. Delegated functions will include the preparation of an annual report for Scotland, which will be submitted to the Parliament. I hope that the Rural Development Committee will agree to the terms of the order.
Thank you very much, minister. I will invite members to ask questions, but I would like to ask a question first. You mentioned that QMS is still free to invest in the MLC services that it feels are important to its work. Will requests for such action need to be ratified by you, or is QMS free to decide to take such action within its budgetary constraints?
I do not intend to run QMS. If QMS decides that research or investigations into the quality of meat or aspects of other services that have been provided in the past would be of benefit to its clear objectives of promoting the Scottish red meat sector, it will be free to invest in those services as it requires.
How will the board of QMS be accountable to people who are not members of the organisations that are represented on the board, such as the National Farmers Union of Scotland? How will such people feed into QMS and how will QMS be accountable to them? We are discussing the Scottish levy, which relates to all farm produce.
The Scottish levy comes from all livestock produce. It is important to note that there is a slight lacuna at the moment, in the sense that because QMS has assumed some of the functions of the MLC, it is not, strictly speaking, accountable to Scottish ministers. Therefore, a radical transformation of accountability will be one of the key changes that will arise from the order and from the subsequent directions. That is an important change, because it will mean that, in relation to strategy and general direction, there will be a link back to Scottish ministers.
On day-to-day functioning, the difficulty remains that QMS has been established as a company limited by guarantee and is therefore accountable to its members. The constituent body is still perhaps rather narrowly defined, but there is a vast preponderance of members who are meat wholesalers or who produce pigmeat, sheepmeat or beef—there are not huge numbers of people who are not directly represented by the body. At least there will be a loop round to the Parliament and Scottish ministers, which was not there previously.
There is an obvious question to ask about the order, which states in article 6:
"The Secretary of State, the National Assembly for Wales and the Scottish Ministers, acting jointly, may from time to time make a determination of the Scottish levy."
It is not specified what criteria will be used to determine the Scottish levy. What criteria will be used? Have those criteria been agreed with the Secretary of State for Environment, Food and Rural Affairs and the National Assembly for Wales?
There are two aspects to that. The levy arises according to where animals are slaughtered—that is the key element. The agreement that led to the formulation of the draft order arose from consultation with the key stakeholders, who indicated that they had no desire to have a differential levy between Scotland and England or between Scotland and Wales.
The approach must be to set the levy in consultation with the industry. After all, the industry bears the levy. The industry is looking for the outcome and asking what QMS can do for it. I am not trying to be over-simplistic, but I genuinely believe that ministers ought not to impose a levy that the industry is not seeking. We would have to consult the industry before we set any figure other than the levy that it has today.
I understand the reasoning. Perhaps, once the consultation has been completed, we could be advised what conclusions have been reached and, in answer to my question, what criteria will be employed to determine the Scottish levy.
The criteria would be twofold. As with any business, QMS will need to be businesslike—as it is now and has been since it was formed a year ago—in the way in which it approaches its activities and it will have to draw up a plan of what it proposes to do for the forthcoming year. That plan is determined by the number of people that it can employ and the functions that it intends to carry out. It produces a budgeted head of expenditure, but does not necessarily produce all the relevant income.
It is for QMS to say what it wants to do and what it needs to do it, to which the industry might say, "Well, that's all very interesting." The first criterion must be the objectives and outcomes for QMS, but the second criterion is what the industry is prepared to bear.
It sounds as though everything is up for grabs.
That has always been the way. The industry has always accepted that there are benefits. The proof of the pudding is in the service that QMS delivers. If the members of QMS—and the farmers individually—believe that the promotion, quality assurance, quality standard and marketing of Scottish red meat are of a high order, that is the evidence that they will need to agree to a levy.
I fear that I was guilty of cutting Rhoda Grant off just as she got going. I am happy to let her back in.
Would it be possible to review how stakeholders felt that the arrangements were working after, for example, a year? My concern is the same as the one that was raised in petition PE138, which is that QMS is not representative of all operators. There are also issues for those people—such as crofters—who feel that they do not have the input into QMS that they might wish to have. Is there any possibility of a review? How do you envisage the arrangements working? Would such producers be able to express their concerns to Scottish ministers, who could then change the direction of QMS if there was a problem?
Ministers would always have to be sensitive to any constituency of interest. Rhoda Grant mentioned crofters in particular. If they felt excluded from the process, or if anyone felt that QMS was approaching its task to promote the Scottish red meat industry on behalf of all of Scotland in a way that addressed itself only to certain sections of the community, Scottish ministers would have to act on the basis of the evidence.
However, I am reluctant to give the committee undertakings to review any bodies, given that the introduction of the order has necessitated a review of the operation of QMS and its relationship with the MLC. QMS will now be responsible to the Scottish ministers on strategy and direction. That strategy and direction must be about how QMS responds to the red meat sector throughout Scotland, not in certain areas only. We have opportunities to address such concerns now that we have the direct link.
I did not hear the petitioner, but I think that some people were concerned that there was no access to QMS other than through membership. The only people to whom QMS was responsible, as a company limited by guarantee, were its members. If someone was not one of the members, they were excluded. The introduction of the strategic link to the Scottish ministers is important to me—as I am sure it is to the committee and the Parliament—for the accountability that it provides.
If there are no further questions, I invite the minister to move motion S1M-3281.
Motion moved,
That the Rural Development Committee, in consideration of the Scotland Act 1998 (Cross-Border Public Authorities) (Adaptation of Functions etc.) (Amendment) Order 2002, recommends that the Order be approved.—[Ross Finnie.]
Motion agreed to.