Environment, Food and Rural Affairs Committee
Oral evidence: Work of the Department and its arm’s-length bodies, HC 415
Tuesday 20 May 2025
Ordered by the House of Commons to be published on 20 May 2025.
Members present: Alistair Carmichael (Chair); Sarah Bool; Charlie Dewhirst; Helena Dollimore; Sarah Dyke; Jayne Kirkham; Josh Newbury; Andrew Pakes; Jenny Riddell-Carpenter.
Questions 176 - 269
Witnesses
I: Rt Hon. Steve Reed, Secretary of State, DEFRA; David Hill, Director General for Strategy and Water, DEFRA; Emily Miles, Director General for Food, Biosecurity and Trade, DEFRA.
Witnesses: David Hill, Emily Miles and Steve Reed.
Q176 Chair: Good morning and welcome to this meeting of the Environment, Food and Rural Affairs Select Committee. We return this morning to our inquiry into the work of the Department and its arm’s-length bodies. Good morning, Secretary of State. Welcome back to the Committee.
Steve Reed: It is a pleasure to be back.
Chair: You are the first person we have brought back, so it is good to see you and have you with us. Can I invite you, just briefly, for the benefit of those who are following our proceedings and for our own record, to introduce yourself and your colleagues?
Steve Reed: I am Steve Reed. I am the Secretary of State at DEFRA.
David Hill: I am David Hill. I am the director general strategy and water at DEFRA.
Emily Miles: I am Emily Miles, director general for food, biosecurity and trade at DEFRA.
Q177 Chair: You are all very welcome. Secretary of State, I want to start with a few questions around yesterday’s summit. As you might expect, it will have some wide-reaching implications for your Department. What role did you have in the negotiations leading up to the summit yesterday?
Steve Reed: I suspected that this issue might come up.
Chair: We know that it was Nick Thomas-Symonds in the Cabinet Office who led it, but where were you in the whole picture?
Steve Reed: I was not part of the negotiating team, clearly. However, there were conversations that we all participated in around our particular areas, pushing the outcomes that we were looking for, many of which were achieved and some of which were not.
In the round, this is a really good deal for the sector. It comes on the back of the US and India trade deals. We have had all three within just about two weeks of each other. This is a huge boost for the UK agri-food and food and drink sectors, particularly since food and drink exports from the UK into the European Union have declined by 21% since 2018. This is a real chance to reset that, get our good British food exports moving across the border again and get money into the businesses here that need it to grow, thrive, create new jobs and pay their own people securely for the future. It is a really good outcome.
Q178 Chair: You will find there is a fair degree of agreement around the table in relation to that. One area, though, that is feeling a bit aggrieved this morning is the fishing industry. Why did you bring fishing into these negotiations when, in fact, you have another year before the TCA review needed to happen? Was that not just signalling a willingness to trade fishing off against other areas?
Steve Reed: It would be very damaging indeed for that sector, as it would be for any sector, to be living year to year with no certainty about what is going to happen in the future. This is a reasonably good deal for the UK fishing sector, compared to what some of the speculation was and given the pressures on our negotiating team. The EU was interested in more quota and more access to UK territorial waters. It was looking for a deal on fishing in perpetuity and trying to achieve that by making what I felt was a spurious link between fishing and an SPS deal.
Our negotiating team held absolutely firm and, as a result of that, we have a deal for 12 years. If you compare that to what the fishing sector has had for the last few years, we are rolling over the best of the years that the fishing sector has had under the previous Government’s deal. It is better than every single year under the current arrangements, until the final year, to 2026, and then that is rolled forward for 12 years. There is no loss at all of quota or our own access into territorial waters, but there are further benefits as well, because the UK fishing sector exports 70% of our catch into Europe. That has now become much easier, simpler and less costly, so they can export more of our British fish across the border. Less of it is likely to rot at the borders.
I will just make this one final point, if I may. We have been pushing for a very long time for live bivalve molluscs to be exported back into Europe, and they will be. There is no downside to this for fishers. There is a big upside in what they can export. We announced at the same time the new fishing and coastal growth fund, which, over the period of the deal, is worth £360 million. That will be allocated in close consultation and engagement with the fishing sector itself. It has made criticisms of a previous fund that the previous Government introduced because it did not work with or for the sector. We will be co-producing it with the sector so that it meets precisely what it needs to take advantage of the wider opportunities that this deal presents for the UK fishing sector.
Q179 Chair: You say that it is a good deal. The chief executive of the Scottish Fishermen’s Federation said that it is “a horror show”. She said that it “highlights the total indifference of the British political establishment to the interests of our fishing sector, with Sir Keir becoming the third Prime Minister after Edward Heath and Johnson to betray the industry”. The National Federation of Fishermen’s Organisations said that it was very disappointed with today’s deal and its impact on fishermen and their communities. Are they wrong?
Steve Reed: Very respectfully, I completely disagree with them, given that we could have been sat here this morning talking about a reduction in UK quotas, increased access of EU vessels into UK territorial waters, no investment fund for those communities and potentially, had there not been the kind of deal that we have got, no increased ability in the ease of exporting into the European Union. That is what we could have been facing, so I think this is a fair deal for the fishing sector. It has lost nothing compared to what it has at the moment, but it has gained easier access into the EU markets. We can now export items of shellfish that previously we could not.
Q180 Chair: If they had been happy with Boris Johnson’s deal, that would be one thing, but you have rolled it over. You have locked it in for another 12 years. They were looking for exclusive access to the 0 to 12 nautical mile zone for UK fishing vessels. They wanted to maintain the UK’s regulatory autonomy in matters relating to the management of fisheries within its waters, and improve collaboration on the sustainable and equitable management of non-quota species. You have made no progress on any of these things at all. In fact, you have locked them into a deal where that is all off the table for another 12 years.
Steve Reed: You will appreciate, and I am sure that they do too, that this was a negotiation. We, of course, pushed for more, but it is a negotiation. I would have liked it if we had got even more firm. We pushed hard. I engaged with the two bodies that you have referred to ahead of the negotiations and fed their views in.
At the end of the day, I still think that this is a good deal. We have retained regulatory autonomy. There is no return to the common fisheries policy of the European Union. Take the issue of sandeels, for instance. We have retained our autonomy and our position on that. In the round, and that is how you have to judge these things, this is a good deal, standing on its own, for fish. If you look at the wider impact on the economy, it is a huge boost for the fishing sector, because of course it wants to sell its fish, or some of it, into the UK economy. If the economy is thriving, people are going to buy more of its produce. It is a good deal.
Q181 Chair: This has been the history of fisheries since we entered the common market. They get traded off against something else. By taking it forward into this year’s negotiation, instead of leaving it as a standalone, you invited that compromise, and they will tell you that that is what has happened again.
You mentioned sandeels there. We have had the arbitration decision, which I think was generally pretty welcome. Does that embolden you in thinking that there are other things you can do for different fisheries? In particular, I am thinking of industrial-scale gillnetting, which is one of the most unsustainable practices that you will find anywhere. Is that something that you would now move on, in terms of what we allow within our territorial waters?
Steve Reed: As I say, we have retained regulatory autonomy as part of this deal. I am broadly pleased with where we got to on sandeels. The outcome has been largely in our favour. That is to be welcomed. Then, of course, we will look at other species as well where we think there is action to be taken.
To address your first point, I want to really emphasise this point, because you said fishing was traded out in this deal. It was not. It has lost absolutely nothing and gained things, particularly access, that we did not have before.
Q182 Chair: That is market access, not fishing access.
Steve Reed: It is general access. I mean access into the European markets for exports. In addition to that, the fishing and coastal growth fund is worth £360 million specifically for the fishing communities in those coastal areas. I will say it again: this is a good deal for fish, although we pushed for more. It is a good deal but, in the round, it benefits the entire economy, and that of course includes the fishing sector.
Q183 Chair: We are under pressure of time. We have a lot to get through today. While I would love to carry on talking fish, I am going to move on to other stuff. A future SPS agreement with the EU includes dynamic alignment with exceptions. What will this alignment look like and what exceptions do you expect to be included?
Steve Reed: The alignment that we are looking for and have secured as part of this deal is to reduce trade friction at the border. The reasons for doing that are that it protects thousands of jobs in our economy, helps to create new jobs in our economy and means we can export more of our good, high-quality British produce across the border and sell it into that vast European market that is right on our doorstep.
I was very struck by a little example that I read in the press this morning. Simon Spurrell, a cheesemaker, had to close his business four years ago because he was incurring £600,000 losses under the previous Brexit deal. If he was sending £35-worth of his good British cheese to a customer in the European Union, they had to pay £180 for checks on that product. It is simply undoable and by getting this different deal we have removed the need for those checks and that cost, and he is thinking of opening his business up again. That is a difference it makes to British entrepreneurs and businesses that can now get their food across the border.
You would think every single party in this Parliament would welcome the fact that this is good for business and trade. Where we are seeking exceptions—there are still negotiations going on around this—for instance on precision breeding or gene editing, whichever terminology you want to use, I want to see our farming sector benefit from the potential higher productivity and yields that can come from using that technology. We are somewhat ahead of the European Union in regulations there.
Q184 Chair: You announced earlier in the year your aspirations on precision breeding and gene editing. How achievable are those aspirations now if we are aligned again with the EU?
Steve Reed: No, we are continuing with the legislation. If you have seen the deal, you will see that the door remains open to an agreement around that. That is what we are working towards. I am optimistic we will achieve that, but it is an important part of the wider programme. I have to increase profitability in the farming sector. If we can increase yields, everything else being equal, we increase profitability for the farming sector.
Of course, there will be issues in relation to the European Union as to what can and cannot be exported into the EU, but we are not members of the European Union. There are areas where those freedoms will benefit us, and this is one of them. In the continuing negotiations, those conversations will continue. The door, as you will have seen in the agreement, remains open to that.
Q185 Chair: Moving on briefly to the question of border checks, do you expect the infrastructure at the border for inspecting goods from the EU to be scaled back or even decommissioned as a result of this agreement?
Steve Reed: I am going to call in one of my colleagues on this—I suspect that that is Emily—in a moment. Obviously, things will change once this deal is implemented. It needs to go through a process before there is implementation, so there is time to work through this. As part of the deal, the UK will have access to the EU’s systems and databases.
In particular, I am very concerned indeed about biosecurity and the risks of any plant or animal health diseases coming into the country. We want to completely reassure ourselves that, with access to those databases and systems, we can take appropriate measures as and when we need to.
Also, if there is an issue, as we have seen recently with foot and mouth, in Germany initially and other parts of central Europe, subsequently, we need the ability to act at pace to ensure that we remain protected from those diseases. We will be looking at that.
Q186 Chair: Emily, what is happening with border control points?
Emily Miles: Once the deal is done and the final arrangements are sorted, we are expecting that there will be a scaling back of some checks, so there will be a decommissioning of some facilities. We need to work through where and how. The consequences of having fewer checks on food coming in means that there will not need to be as many checks done at the border, so we will need fewer. We must not decrease the ability to look at illegal imports. A lot of the facilities that got built for Brexit were for trade and people who want to be compliant.
Q187 Chair: This is properly traded commercial imports, not personal use.
Emily Miles: Yes, exactly.
Q188 Chair: On the border target operating model, the fruit and veg sector is currently gearing up for additional checks on 1 July. Should it continue with that?
Emily Miles: The question of 1 July is under active consideration. I think that that is the phrase.
Q189 Chair: We are sitting here on 20 May; 1 July is not very far away. What should they be doing? Should they be preparing for something on 1 July that they are then going to have to ditch on 1 September?
Emily Miles: At the moment, in law, the 1 July checks have to come in. We are reviewing that and we need Government to agree whether that is going to proceed.
Steve Reed: The important thing to say to anybody from the sector is that, until they hear otherwise from Government, they will be required to comply.
Q190 Chair: Yes, but, on the other hand, you can understand their anxiety that they are going to make changes to their business, then be told in a few months’ time, “Actually, you did not need to bother”. It is back to the same situation that you had with the construction of border control points in Dover and Portsmouth, where local authorities invested a lot of money—in Portsmouth’s case it was an extra £6 million over the money it was given by the Government of the day—only then to be told, “No, I’m sorry. We have changed our mind. We are not going to do it”.
Steve Reed: The previous Government introduced an awful lot of friction at the border, having promised that they would not. This deal enables us to reduce that friction so that trade can flow more easily. I completely appreciate the need for rapid information to the sector so that it can plan, but, in the round, this is going to be good for importers and exporters. As I said right up front, exports declined 21% and imports declined 7% since 2018. We want our food on European shelves and to be able to import the items that British people want to buy.
Chair: Helena, you wanted to talk about fishing for a second and then we will move on.
Q191 Helena Dollimore: Secretary of State, as we discuss the fishing implications, I wanted to bring in a practical example from my constituency of a local business that exports a lot of seafood to the EU. At present, it is paying around £200 a shipment. It has to obtain a health certificate and often stuff gets stuck at the border. It goes off. The business has stopped exporting some seafood as a result. Can you tell us, in practical terms, what this deal, when implemented, will mean for that fishing business in my constituency?
Steve Reed: It will mean a dramatic reduction in paperwork. Export health checks will no longer be required. We are working through the specifics of it with the European Union, so it will have to wait a while, while those conversations continue. The deal was only signed, after all, yesterday at Lancaster House. The intention and the effect of it will be to dramatically reduce that paperwork and get goods moving across the borders much more quickly. Of course, fish and seafood is highly perishable. Even a day’s delay can reduce the saleability and income back to the producer, so this is going to mean more money going back to businesses like the one that you are talking about.
David Hill: To add a couple of stats to that, British fish products and seafood products are currently subject to 100% document checks at the border; 30% of consignments are subject to physical checks. All of that will go.
Q192 Sarah Bool: Secretary of State, you mentioned biosecurity and that you are very keen on supporting it. I wanted to ask what is happening now about the ban on EU products coming into the UK for personal use. At the moment, from 12 April, there is a ban on cattle, sheep, goat and pig meat, and dairy products. When I have come in from an international European airport, there is no signage of that at all. What are you doing on that, if it is a priority?
Steve Reed: That remains in force. When I came back on a flight from France, there were posters everywhere. I was delighted to see that, because it was only the day after we imposed the ban, so I thought that the speed with which the airports had acted was commendable. It is very important that we take that action. We do not know for certain what caused the foot and mouth outbreak in 2001, but the speculation has focused on it being potentially a sandwich that somebody threw away, so it is very important.
Q193 Sarah Bool: Have you done a check and seen all the airports, because it is not rolled out across the board at all?
Emily Miles: Baroness Hayman has written to all the airports.
Q194 Sarah Bool: I appreciate that it is a letter, but a letter is not good enough in this day and age. It was taken off X as well. The post from the Government got taken down, so there is still more to do.
On the SPS, I know that you are saying it is a very good agreement, but it now means that we will be subject to the European Court of Justice. It says that we are only able to contribute as far as we can for a member that is not part of the EU and that we are going to have to pay an appropriate financial contribution. Are you sure and satisfied that this is going to give us the right levels of protection in this dynamic alignment?
Steve Reed: Absolutely, I am. The European Court of Justice has a role, but it does not have jurisdiction over the UK. That is reserved to the UK Parliament. It is the UK Parliament that will take any final decisions on these matters, not the European Court of Justice. It is common—I mean common to the point that it exists in every international trade deal—that there is a dispute resolution mechanism. Ours reserves our regulatory and judicial autonomy, and that is the right thing to have done.
I have heard people who have been making spurious arguments about this to try to undermine the deal. I would urge them to look at the wider economic benefits to the whole UK economy and UK businesses from being able to move forward with this deal. We have maintained regulatory and judicial autonomy. It is a good deal.
Sarah Bool: I am not quite sure, actually. If you are going to be aligning, we are going to lose power.
Q195 Jayne Kirkham: This is just a quick point about the fishing and coastal growth fund. That works out, I think, as £30 million a year over the 12 years, which is great. In Cornwall, for example, our shell fishers all down the Fal and across Cornwall have gone bust, basically. They have gone out of business because of this. Will this fund be used specifically for fishing? What will it be used for? How will they get it? How will you go out and talk to the industry to make sure it is used in the best places for some of our smaller fishers and boats, rather than the big ones, which is where it went last time?
Steve Reed: Those are really good points and similar to points that were made to me by the fishing representative organisations. They are critical of a fund that was made available by the previous Government because it did not reach the fishers, and particularly the smaller fishers, who needed access to it. I have said to the fishing sector that we will work with it to focus this fund on enabling its members, and the fishing community more widely, to benefit from the opportunities that come from this deal.
The things they have said to me they are interested in are skills development and training to bring new entrants into the sector and upskill people who are already in the sector; the deployment of new technology and AI, where that can help make fishing more productive; and safety. Many of our vessels, particularly the smaller vessels, have safety standards that should be improved and that they want to improve. This fund will enable them to access that.
As well as all that, we are working with our network of trade attachés in the European Union, India and the United States to support our fishing sector to be able to export more of its products into these markets where it now has more access. The intention is to support the fishing sector specifically with this funding.
Q196 Chair: We are almost half an hour into the session and we have only dealt with yesterday’s business.
Steve Reed: It was a big day, Chair.
Chair: We have some questions in relation to the other trade agreements. We will maybe just do that in correspondence, if we may, and move on then to the future of farming.
Q197 Jayne Kirkham: I was going to start with the SFI scheme. When the current scheme was closed, there was an error. It was a computer error, it seems. A message was sent to people when they saved their draft to say that they would have six weeks before the scheme was shut and they would be warned, and they were not. That scheme has now closed, but DEFRA has now changed the position and said that those 3,000 draft applications that were still in there will now be heard and considered, but under slightly different terms and conditions. This scheme was shut quite bluntly, and that is partly why this happened. Was the money overspent and what will the extra cost be of having to reopen these 3,000?
Steve Reed: You will allow me, if I may, to contextualise what has happened here. We set the biggest ever budget for SFI as part of the biggest budget for farming and sustainable food production that we have ever had. We had been highly critical, and so had the farming sector, of the previous Government for setting smaller budgets but then not getting it out the door. They allocated money and it never left the Treasury. It did not get into the hands of the farmers who needed it.
We were highly critical of that. My intention was that, when we agreed that bigger budget, we would get it out the door and all of it would be in the hands of British farmers. Indeed, there is now more money in the hands of more farmers under this scheme than at any point under the previous Government. However, when you have fully allocated a budget, you cannot keep spending it.
Q198 Jayne Kirkham: Was there a late realisation that the budget had been completely spent?
Steve Reed: These were very strangely designed budgets. It is the reason we are having to reform them. They were not prioritised in any way and were not capped. It is quite strange to inherit budgets that are in that shape. We would not have designed them in that way, so we are looking at how we reform them. We will be working with the sector so they can be prioritised and there can be caps on what is available. We do not want to have a situation where the money just goes to those who apply for it first, whereas those who may need it more then find that they do not have access.
It is an important point to make. When we say that we closed the scheme, these are multi-year funding contracts, so everybody who was in the scheme continues to get money. When we closed it, it was to new applicants. Everybody in the scheme—and there are more of them than ever before—continues to be paid for multiple years. We closed the scheme to new entrants when it became apparent that the budget that had been allocated had been fully spent.
Q199 Jayne Kirkham: These extra 3,000 that were in draft were not originally going to be paid out and now are. Where will the costs come from to do that?
Steve Reed: Also, there is how it happened. There was a notice on the online forms, a message that was sent to applicants, telling them—wrongly, because it was not part of the scheme—that they would have six weeks’ notice before the scheme closed. We were not aware that that notice was on there. It was a legacy from a previous scheme.
Q200 Jayne Kirkham: The Minister said that, and that was why the scheme was reopened. My question is where that money will come from, because obviously that has not been budgeted for.
Steve Reed: We will find the money for that from our own budgets inside DEFRA. That is the right thing to do. The intention always was, and remains, that, when we have done some work, properly engaging the sector on how we need to reshape SFI for when it reopens, it will reopen. Many applicants had not got their application in on time, including those who were in the six-weeks period, but there will be others who were not within that period as well, and they will then have the opportunity to bid in.
Q201 Jayne Kirkham: That was going to be my next question. The SFI will be reopening and be redesigned. We have had previous evidence that that will be reconsidered in July. There are a number of farmers, particularly those smaller farmers, who did not have the advice to apply initially. What is the timeframe? When will that scheme be reopened for those farmers? They really need to make those applications sooner rather than later.
Steve Reed: We will provide that information as soon as we can. You will appreciate that we need to work through the process for reforming it so we do not end up with the kind of uncapped, ill-defined scheme that we had before. It needs simplifying and we need to make sure it is prioritised for those who need it the most. That will take some time. Once I have clarity around that, I can give you a firm deadline. I expect it to be early in the new year. That is what I expect it to be.
Q202 Jayne Kirkham: Do you mean early in the new year next year?
Steve Reed: Yes.
Q203 Jayne Kirkham: We looked at this and trust has been damaged with the farmers because of this very swift closure. How will the Department rebuild that trust going forward?
Steve Reed: You are right. Trust has been damaged. I would point out, with the greatest respect, and recognising that a mistake was made and that we have apologised for that as Ministers, that there is now more money in the hands of more farmers under SFI than at any point under the previous Government. Although the scheme was closed to new applicants, those who are in the scheme—and they are at record numbers—continue to be paid and funded under the scheme.
It clearly needs reform because of what has gone wrong with it. Many people who need access to it were not able to get access to it, and not just because of when it was closed to new applicants but because the scheme was poorly designed in the first place. There is a piece of work that we need to carry out. It will reopen and many of those applicants who did not get their application in on time will then be able to apply under the new scheme. They will get paid and enter into multi-year agreements, just like those who are already in the scheme.
Q204 Sarah Dyke: I am really pleased to see that around 3,000 SFI applicants are now going to be eligible, but these farmers have been left in the lurch. There have been considerable mistakes that should not have happened. Farming takes long-term planning. During the last couple of months those farmers have been severely disadvantaged in their ability to plan properly. Could you assure me that those 3,000 that are in the system will be properly informed that the funding is available to them? What timescales will be made available to ensure that that funding is dropped down appropriately to them?
Steve Reed: I will bring in my colleague, who I feel is itching to say something. I have been reassured that those 3,000 have been contacted. They will be given an appropriate amount of time to make their applications. In terms of the error itself, I am very keen that there should be no repeat of that, so I have the team working with the RPA to try to identify what went wrong in this miscommunication, so we can make sure that it does not happen again.
In saying that, I am not trying to disparage anybody who works there. There are a lot of people who work very hard and do a fantastic job for the people they are trying to support, but clearly something went wrong that should not have gone wrong. I am keen and determined that that should not happen again, so we are looking at what is wrong with its systems so that we can correct it.
Emily Miles: For the 3,000 who are now eligible, we will be writing to them individually to let them know and that will then give them notice that we will then write to them again to say when the application window opens. We did not want to open the window straightaway. We wanted to give everyone some notice that that was the case. The first letter will happen imminently and then the application window will open within a few weeks.
Q205 Sarah Dyke: It feels that there needs to be some really proactive support for some of these farmers who will have just closed the door on it and assumed that there was not any funding. My issue here is that, despite it being reopened, some of these farmers are going to be severely disadvantaged over the course of the last couple of months with the decisions that have been made. The other thing I wanted to cover is to check off where the money is coming from for these now 3,000 farmers who will be able to re-enter into the scheme.
Steve Reed: These are multi-year contracts they are entering into, so the bulk of it, because it is for more than the current financial year, will come from future allocations under the budget for the SFI scheme. We will find residual elements that fall within the current year within the departmental budget, but I need to know first of all how much that is.
Q206 Sarah Dyke: That is not going to squeeze future budgets.
Steve Reed: No, it should not squeeze future budgets. The way it works is that, once you are in the schemes, the schemes roll forward for multiple years. The phrase goes, “They closed SFI”. It is only closed temporarily to new applicants. Everybody in it—and we have a record number of farms in SFI now—is continuing to be paid in the same way that they always have been paid.
Q207 Sarah Dyke: I picked up on something you said a minute ago. You said that many farmers will be eligible going forward into the next schemes. Can you clarify? When you say “many farmers”, is that all farmers, or are there going to be certain different eligibilities?
Steve Reed: The reason I did not say “every single farmer” is because of what I said earlier on. We inherited an uncapped, un-prioritised budget. Money was allocated to it and there was no mechanism to stop that budget being overspent. Indeed, in many previous years it had been seriously underspent, so money that should have gone to farmers did not go to farmers and yet, particularly if you speak to smaller farmers, those who perhaps cannot afford to pay an agent to do the application for them, they found it very difficult to access the funding.
I want to make sure that it is a much fairer scheme and that those smaller farmers who do not have agents are not unnecessarily disadvantaged by it. I say “many farmers” rather than “every single farmer”, because, inevitably, through a process of prioritisation, there will be people who should be coming into the scheme who currently are not in the scheme.
Q208 Sarah Dyke: You do not think that any particular sector will be disadvantaged in any future schemes.
Steve Reed: I do not have a set view of how this should be done yet. I want to work with the sector and representative bodies such as the NFU and others on the new scheme. It needs to be capped, because there is only a limited amount of money allocated under the budget, so you cannot keep spending it when it has been fully allocated. I want to make sure that we have thought through the process about who needs the money the most and that they are not disadvantaged just because they are a smaller farm. The current scheme disadvantages smaller farmers and I do not think that it is right to continue in that way.
Q209 Sarah Dyke: The closure of the SFI means that there is no support for land being entered into organic conversion for the first time for 30 years. This support was only transferred outside of the countryside stewardship scheme just several months before. Does the Department continue to support organic farming and will you reinstate support for organic farmers?
Steve Reed: I will ask Emily to comment as well. When you say “close the scheme”, it was only closed to new applicants. Remember, there are more farmers already in the scheme than at any point in its existence previously. All those people continue to be paid, including for the actions that you are talking about, so it would not be true to say that, for the first time ever, there is no support for organic farming. We have record amounts of funding going in to support organic farming, and indeed to support the transition to a more nature-positive model of farming.
Part of the work that we will do to reform the scheme and the farming roadmap more generally is to support farmers to farm in a more nature‑positive way. That is not only because that is good for nature, although that is a good outcome, but also because, if farmers can reduce their major input costs, particularly for pesticide and fertiliser, by farming in a different way, lower input costs with the same yields means higher profits. We are trying to ensure that our farming sector becomes much more profitable, so that it is resilient well into the future.
Q210 Sarah Dyke: I am going to be very clear about the organic conversion, because that is the next step that many farmers will be wanting to take. It takes three years to convert to organic. You will be continuing to support that conversion to organic farming and that certification.
Steve Reed: Yes, but I am very keen that, as part of the farming roadmap, we are much more explicit about how we support farmers through that transition to a more nature-positive model of farming, for the two reasons I said before. It is better for nature, but also for farm resilience. Did you want to add anything to that, Emily?
Emily Miles: We are aware of the consequences for organic farmers with the SFI application window closing. With the reformed SFI, there are a lot of decisions to be made, as the Secretary of State said, about where to allocate money, so that will be considered.
Q211 Sarah Dyke: I am very keen to get an answer that you will be supporting organic farmers and those who wish to transition to organic farming in the future.
Steve Reed: Yes, we will. The intention is to support more farmers to transition to nature-positive models of farming, and that includes organic.
Q212 Chair: You have mentioned a few times the underspend. Could you not use some of that underspend, which I recall you, right at the start of your tenure, managing to secure within the DEFRA budget, to tidy up the somewhat disorderly ending of SFI24? From the point of view of farmers, they had the BPS withdrawal accelerated in the Budget. They were looking for SFI to compensate for that. It is the smaller farms, the upland farms and the rest of it, who are left with nothing at the end of the day. What has happened to the underspend?
Steve Reed: I think that it was underspent for something like three years in a row under the previous Government. At the end of each year, the money that is underspent does not just sit in the Treasury. It gets reallocated. The previous Government reallocated it, so it is not there.
Q213 Chair: It is not there.
Steve Reed: No. There is not just a fund of unspent budget that waits there until someone thinks of something to do with it.
Q214 Chair: That money went back to the Treasury.
Steve Reed: At the end of that year, the Treasury will have reallocated it, under the previous Government. It is not there any more. The thing that we need to get right, and the thing I think we did get right, is that I was determined that we are not going to allocate money for farmers and then not give it to farmers. In a way, we at least got the money out the door. I just wished we had been able to—and we apologise for the error that happened—properly notify farmers.
Q215 Chair: It is fine for those who had actually started an application, but there are still thousands who had not even got to the point of starting an application. For them, they have no BPS and no prospect of SFI. If they are going to stay in business, they are going to have to find ways of farming more intensively or whatever. That is surely not what you are wanting.
Steve Reed: Those are precisely the reasons why we need to reform the way that these farming budgets work.
Q216 Chair: That is jam tomorrow. Farmers are dealing with that problem now.
Steve Reed: We have inherited a scheme that was uncapped and un‑prioritised, so we have to change that. We will do it with the sector. Whenever a budget is allocated, we are not going to spend money beyond the allocated budget, which was the implication behind the scheme that we inherited. The Government need to control their own finances, but I want to make sure that every penny of the budget that is allocated is used as effectively as possible to support those farmers who most need it. That is the purpose of reforming the scheme and of the work that we are doing, through the roadmap and the farm profitability unit, to ensure that farming becomes more profitable and resilient and can attract investment, so those businesses thrive into the future.
Chair: None of that helps them in the here and now.
Q217 Sarah Bool: Going back to the SFI, given the change for those who applied in those two months before, those ones who you are opening it for, DEFRA has capped the applications at £9,300, based on the average of all those who applied. Given that the average application for a commercial farm, as opposed to a few meadows or pony paddocks, is about £27,000, can you see why farmers are not really happy with that £9,300 cap?
Steve Reed: Yes, I can see why farmers are not happy, but it is very important that we control our budgets. This Government inherited a £22 billion blackhole because the previous Government did not control their budgets. They thought there was a magic money tree. They allocated funding that did not exist and hoped that future generations would pay the price for it.
Sarah Bool: It does not help farmers to keep quoting that.
Steve Reed: We are not going to do that, because that does not just damage farming; it damages the entire economy. This Government will be responsible with taxpayers’ money. We are not going to treat it as if it is running out of fashion.
Q218 Sarah Bool: You talk about being responsible with taxpayers’ money, but, in terms of giving farmers certainty, in the autumn Budget, as the Chair mentioned, you brought forward the end of BPS early and started the reforms of APR. In November 2024, you closed capital grant schemes and then reopened them in February. In March you closed SFI and now you have partially reopened it. This does not really suggest a Government who respect long-term vision, does it?
Steve Reed: We inherited a situation where large swathes of British farming are unprofitable. Any sector that cannot make profit does not have a future. My intention is to reprioritise these funding schemes so they support farms to transition to models of farming that will enable them to be profitable into the future. My view is that there is an alignment in transitioning to more nature-positive models of farming, therefore reducing your input costs, while maintaining yields.
We have opened trading opportunities with India, the United States and the European Union, all of which we will support farms to take advantage of. We are changing the planning rules so that farmers can more quickly build new facilities to support productivity on their land or convert existing buildings to other uses to get new revenue streams into their businesses. All of this is intended to support farming to become more profitable into the future.
We cannot just stand by and continue with a status quo that had left much of this sector on its knees. The problem, I am afraid, is not changes to inheritance tax. It is the fact that the whole sector had not been supported, with every single lever available to Government, to become profitable. My focus is on making this a profitable sector so it has a bright future.
Q219 Sarah Bool: You say about that. Have you read our report, “The Government’s Vision for Farming”, yet?
Steve Reed: I have it with me here, yes.
Q220 Sarah Bool: Perfect. Within that, you talk about support. Just then you were rather dismissive about the inheritance tax, but that is a huge element of giving long-term support to our farmers to know that they actually have their farms in the future. You talk about diversifying as a means of profitability, but they will get hit by BPR claims under that, so it does not quite work together. Will you take our advice and recommendations, and speak to the Treasury about delaying the APR and BPR changes to give our farmers that long-term support that they need?
Steve Reed: I know that the Treasury is in pretty regular contact with the NFU and other representative bodies, and so am I. Their representations, and indeed yours, are being heard.
On inheritance tax, I do not think that it is unreasonable to expect the agriculture sector to pay its fair share, just like any other business would. Farms are only being asked to pay at half the rate of other businesses. Instead of being asked to pay in one go, they can pay it off over 10 years following the death of a farmer. From the Treasury’s own statistics, three-quarters would be exempt in any case. The vast majority of farms will be able to pass on ownership, just as you can with any other valuable asset, seven years before your likely death and then pay absolutely nothing at all.
Q221 Sarah Bool: Those who unfortunately are at this point now cannot.
Steve Reed: The overwhelming proportion of the sector will not be paying this inheritance tax.
Q222 Sarah Bool: I beg to differ. There are the 75,000 farms that we actually think are affected and all the farming protests we have had. You know that that is a very different situation.
Steve Reed: Do you not think for a moment that those farmers might pass on the farm in their, say, late 60s and therefore avoid payment?
Q223 Chair: The ones who farmed into their 70s and 80s because they were given that advice specifically as being the best means maybe do not have seven years to wait. What happens to them?
Steve Reed: I recognise that there is a particular issue at that point.
Q224 Chair: What is going to happen about it?
Steve Reed: The Treasury has made the announcement. To be fair, the opposition parties go on as if no farmer will ever hand over ownership while they are in their 60s. The vast majority of them will and therefore will not incur any liability whatsoever.
Q225 Chair: The NFU and CLA, as you say, are in constant discussion with Treasury. They came forward with a proposal for clawback over 10 years. Treasury said that that would raise much less money. When it was challenged, because the analysis that NFU, CLA and others did was that it would raise much the same, the Treasury was asked for its working that shows why you think it would raise much less money, and it will not release it. That is surely no way to have a respectful dialogue with an industry such as this, is it?
Steve Reed: I was not privy to those particular conversations.
Chair: There was a freedom of information request.
Steve Reed: I am not aware of the details of it. I know that the inheritance tax scheme, as it has been designed—this is OBR as well—will raise, I think it is, half a billion pounds a year for the initial period. That money is helping to fund the national health service, the improvements that we need in mental health support, and the mental health hubs that will be placed in every community. There are particularly high levels of mental ill health in rural communities.
Q226 Sarah Bool: You are stressing them out more.
Steve Reed: Those who say they do not want to raise the revenue to fund these benefits need to tell us which of these benefits they would cut as a result of changing it.
Chair: I think that farmers around the country will hear your words and be shouting at television screens saying, “We already pay our taxes”.
Q227 Sarah Bool: I am staggered by what you have just said there. The mental health strain is unbearable. I have heard farmers telling me this weekend about family members planning things they should not be doing to get away from this. I am really upset to hear you say it like that, because you are saying this money is going to help mental health. Please consider doing this postponement, which will secure much better mental health for our farmers. I am staggered.
I want to ask one further question, which is to do with the future of farming. Ed Miliband has a big plan for large solar, which is going to take land out of food production, and battery energy storage systems, which are toxic if they catch fire. In your manifesto, you talked about championing British farming while protecting the environment. Do you really feel that plans for these solar farms and toxic battery energy storage systems are going to secure that?
Steve Reed: A few months ago, I launched a consultation on the land use framework. We will publish the strategy on that in the autumn. The land use framework was something your party supported while in government, but now opposes in opposition. The land use framework provides granular data for decision makers, including landowners, about what the best way to deploy their land will be. The information that that provides us will help to protect prime agricultural land for food production and identify that land that is most suitable for use for solar farms, so that we can get a win-win here.
We need to maintain food security, because it is national security. I want to protect the highest-producing agricultural land for food production, but we also need to know where the best places to put solar farms are. We need to support this country to take back control of our own energy from petrochemical dictators such as Vladimir Putin, whose actions have caused energy prices to spike massively in this country, damaging farmers as much as anyone else in the country.
Q228 Sarah Bool: I do not think we disagree about getting energy security. That is fine, but solar is only effective about 11% of the time and there are other spaces that should be used. You mentioned about the land use framework. One thing from our consultation was that actually there is not this effective mapping. That was something that was being called for and it was being said that we are not doing enough. There is no talk about proper mapping for where the plans are going to be for solar in the future.
More to the point, it is a problem now. There is a real tension within that land use framework, because it talks about energy, food security and infrastructure. The problem is that energy is pushing far ahead and there is not that proper plan for the food security in place now. In the next two or three years, 1.5% of my constituency will be covered in solar farms. The energy sector can push faster than the food policy is coming. Can you see that there is this tension? I do not think that we are going to keep up with it.
Steve Reed: The argument you are making is why we need the land use framework and the information that it will provide.
Q229 Sarah Bool: We do, but it does not address enough and that is a problem.
Steve Reed: You are saying that it is not here already, and that is because the previous Government did not publish it and get on with the work. I think that they had three false starts where they announced dates it would be launched and did not launch it. I launched it. Now it is out there. If the previous Government had done it, we would be far further ahead than we are, but in 10 months I have done what your Government did not do in 14 years. Given that you are making a very strong argument for the land use framework, I hope your party will change its position and come back to support it.
Chair: We are straying from the subject at hand. Charlie, you wanted to come in on this.
Q230 Charlie Dewhirst: I want to go one step back here. You are here today accepting that a certain section of the farming community is massively unfairly impacted by these changes to APR and BPR.
Steve Reed: No, I did not say that.
Q231 Charlie Dewhirst: Had you done an impact assessment prior to introducing these policies, you could have recognised it and mitigated it. You are now talking about, “It is fine because farmers in their 60s should pass on their business”. Do you not accept that you should look specifically at those cases of farmers who are not in a position to do that and actually change the tune? Then we can start to take some of the emotion out of this for those families who are so horrifically impacted.
Steve Reed: The tax policy has been set in the last Budget and that is how it is going to be. I have already given my reasons why I think that it is right that every sector of the economy should pay its fair share.
If you speak to farmers, some of them will say that the reason it is difficult to pay inheritance tax is that their businesses are not profitable. Why are the businesses not profitable? It is because the previous Government did not do anything to make them profitable. My intention is to make those businesses profitable. I am not getting that argument from any other sector where people pay inheritance tax for passing on valuable assets. In any case, as I said earlier on, the vast majority of farms will be exempt.
Q232 Charlie Dewhirst: You can argue about the vast majority but, quite frankly, you are not going to make them profitable by whacking them with a great inheritance tax bill, are you? Even if it is spread over 10 years, you just wipe out 10 years of profit, so they do not invest in new buildings, modernising the farm or new machinery. That affects the wider agricultural economy and, frankly, it just seems to be an absolute disaster.
Let us go back to the figures. This is going to raise £520 million per year. The Prime Minister told the Chair at the Liaison Committee that this is a revenue-raising measure. The tax experts who have come in front of this Committee and corresponded with this Committee have all said that £520 million is dependent on no changes in behaviour. You are here today saying that farmers will change their behaviour to avoid this, so it is not £520 million, is it? It is a hell of a lot less.
Steve Reed: In the long term that is probably right, but the arguments have been made. They have been established. The Chancellor has set out the tax proposals in the Budget and they will come into force.
My focus is on supporting farming to become profitable. I have set up a farming profitability unit under Baroness Batters, the former head of the National Farmers Union. She is doing work to look at what levers Government can use in order to make farming profitable. It was irresponsible of the previous Government to leave so much of this sector living hand to mouth and not making profit.
Chair: We are going to come on to the profitability.
Q233 Charlie Dewhirst: I have one more question on the future of farming in general. There is a lot of speculation that the Government and Downing Street want to reorganise Government Departments. Can you categorically tell the Committee today that there are no discussions that mean DEFRA will not exist in its current guise this time next year?
Steve Reed: I am not aware of any such discussions, no. You will have to let me know if you hear anything more.
Chair: On the subject of farm profitability, Andrew, you are going to lead the questioning.
Q234 Andrew Pakes: I am really pleased that you have raised issues around profitability; I have a few questions on that. Farming is really important to those of us in the east. I know you are a friend of Peterborough and the fens. I remember a couple of the visits you have done. On one early visit pre-election, profitability was one of the big themes that came up from farmers and food producers you met. Particularly, I think we talked about cut flowers, people in horticulture and food producers. A lot of the talk was around red tape in terms of getting goods and services out, shipments delayed and wasted money. That is really important in terms of profitability. Could you start by reminding us how the EU deal will help them be more profitable?
Steve Reed: Thank you very much for raising profitability. I was in private business myself for 16 years. If the business I was in did not make a profit, that business would not survive. It is extraordinary that so much of the farming sector has been allowed to get into a position where it tells me it is not making profit. If that is the case, it cannot attract investment or attract new entrants and younger people into the sector. I know that young people growing up on farms in many cases watch their parents working all the hours God sends, six or sometimes seven days a week, and yet they are not making any money out of it. They choose not to go into that lifestyle. I want to have intergenerational opportunities for people to get into farming. I want this sector to be profitable, so that it is stable and resilient into the future.
I am really grateful that Baroness Batters has accepted this very important role of leading the farm profitability unit that I have set up in DEFRA. It is a six-month piece of work and she is looking, with a team, at how Government can support farming to become more profitable. You are quite right to spot those opportunities in the trade deals that have been signed over the last couple of weeks. You asked about the European Union deal in particular.
Since 2018, UK food exports to the European Union have declined by 21%. That is an awful lot of money that could have been going to British food producers, including farmers. By lowering those barriers to trade and getting food moving across the borders again—and we have trade attachés in the European Union that can help with this, through Government, to make sure the sector is supported—we can get those great, high-quality British products into the European markets and get that money supporting investment, growth and employment in UK farming.
There are many other things we can do to support farm profitability other than that. One thing we will be looking at, as we reform the SFI, and perhaps other farming schemes as well, is how we can support them to become more profitable. The current planning Bill going through Parliament will speed up decision making to make it more worth while for farmers and landowners investing in new facilities to boost food productivity on their land.
We are looking at how we can support agri-tech and investment in new technology that can support farming. Just yesterday, I spent a couple of hours, which was not long enough, sadly, at the Chelsea Flower Show. While I was there, I saw some of the robotics that can carry out fruit picking, ultimately at lower cost than bringing people in from overseas to carry out that work.
There are such opportunities to boost British farming and food production and make it more profitable. I find it extraordinary that the Government have never focused on that before. We could not have a better person than Baroness Batters, a lifelong farmer herself, a tenant farmer, 10 years president of the NFU and its first female president, leading this piece of work. She has huge credibility with the sector and huge insight into the sector. I am very excited about the work that she is doing to support and boost British farming and food production.
Q235 Andrew Pakes: Farmers across the fens will welcome any focus in the Department around profitability. When you launched the profitability review, you said to the NFU conference, “I will consider my time as Secretary of State a failure if I do not improve profitability for farmers up and down this country”. What achievements are you hoping will come out of the review?
Steve Reed: The metric is quite a simple one. It is their profitability. Coming from a private sector background myself, that is one of the big differences between the private sector and the public sector. The public sector is quite complex. It tries to do many things and has many measures, and that is the way that it needs to be. In the private sector, there is always this issue about profitability within any business. Farms are private businesses. They need to be profitable to be able to attract new entrants and investment, and to know that they are sustainable financially long into the future. We will be looking squarely at profitability, because that is how you can support farms and farmers to stand securely on their own two feet. They are proud people. That is what they want to do.
Q236 Andrew Pakes: Is there a case for one of the outcomes of this review being Government Departments, and particularly DEFRA, needing to understand how they bring more business thinking into the way that the civil service works?
Steve Reed: To an extent, that is right. Having operated in both sectors, I do not think that you can entirely transfer one sector to the other, either way round. They both have strengths. They can both learn from each other. I do not think that one is right and one is wrong.
What I want to see through the public sector, and particularly the portion of it that I am responsible for across the DEFRA group, is a much stronger focus on serving our users and customers better than we had before, and driving efficiency through the organisation, so that I can feel reassured that every penny of taxpayers’ money that we spend is spent in the most effective way possible on delivering the outcomes that we were elected to deliver. With focuses such as that, you can drive change through the organisation while respecting what is different about the public sector from the private sector.
Q237 Andrew Pakes: One of the discussions that we and sectors have had is around the choice that has been made by the Department to have it as an internal review rather than an independent review. Can you talk to us around your thinking on the choice that you made?
Steve Reed: The piece of work that Baroness Batters is doing is akin to the piece of work that Sir Jon Cunliffe is doing on water, or that Dan Corry did for me on regulatory reform and streamlining regulation so that it is more effective. I have found the best people I could find to lead a piece of work. They are all engaging outwardly before they publish their findings. The findings are published. You, this Committee, or anyone else, can scrutinise or comment on them, and then we will take them forward. That strikes me as the best and quickest way to take that work forward.
Q238 Andrew Pakes: Can I ask you one final question, which is a segue, because of time, into my broader interest around the fenlands reservoir that is coming up? Water resources, drought conditions and access to water is a huge issue for housing infrastructure and farming in the east and my part of the world. It is very welcome that the Government have given almost a historic green light to the new reservoirs, given the pitiful inheritance of building infrastructure and reservoirs in the UK, particularly England. Can you give us some reassurances about the timescale for that and that it is not just about getting water resources in place, but also that communities such as mine will see the jobs and benefit from the construction of something as important as a reservoir?
Steve Reed: Yes, absolutely. We lack the kind of water infrastructure that this country needs to secure water supplies into the future. At the end of the price review period, we secured investment that will be worth £104 billion over five years, which includes funding for new reservoirs as well as other infrastructure. We get more rain in the west than in the east of the country, so we need better infrastructure to shift the water from where it is falling to places where it may be required.
The funding that we have secured—which, I should add, is private sector funding—will enable us to build that water infrastructure. The state that we were in when we came into office was that, by the middle of the 2030s, demand for clean drinking water would start to outstrip supply, and the country would have been looking at rationing. That is something that no one wants to see. Because of the investment that we have secured, we can give the country the reassurance that it needs that that problem has been averted, and that is a very good thing.
For the reasons that you mentioned, farming also needs access to water. In your part of the country, as well as the Oxford-Cambridge arc, if we are going to get in these new data centres and gigafactories, they are very high users of water. We need to make sure that water is available for the new housing that will be built right across the country, as well as in your part of the country. Water supply and sewerage infrastructure need to be in place; otherwise the development cannot go ahead. We have secured the funding for that major national infrastructure to make sure that water does not become, for the future, the problem that it was when we were elected last July.
Chair: We are coming to water in a few minutes, but we still have some more mileage in farming profitability.
Q239 Jenny Riddell-Carpenter: While I appreciate that this is outside of your remit in the Department, the Groceries Code Adjudicator is an issue that many of us on this Committee, collectively and individually, are very passionate about. What assessment have you made of the effectiveness of the GCA and how it can be strengthened to support farmers and profitability?
Steve Reed: A key part of making farms more profitable is making sure that the supply chains are fair, and the Groceries Code Adjudicator has an important role to play in that. I am going to ask my colleague Emily to say something more about this, but, in the way we are working through these issues, we have already secured agreements over milk. We are bringing forward milk supply. Before that happened, you had farmers who were being forced, in some cases, because of unfair contracts and unfair practices, to sell milk below the cost of production. That is the path to ruin for any business.
We have secured a better position for milk. We are working now for pork products, poultry and eggs to do the same things, bringing forward statutory instruments in order to make sure that we start to see that supply chain fairness. The GCA has an important part to play within this, but it is not the only regulator in that sector that we need to be supporting.
Emily Miles: I do not have loads to add, and we talked about this when I was here with the Minister a few weeks ago, but the GCA regulates the supermarkets and their price at that point. The Agricultural Supply Chain Adjudicator has a different role, which the Secretary of State has just been setting out. At the moment, the fair dealing regulations are in the middle of being consulted on. When implemented, they are going to have a significant impact particularly for primary producers.
We need to think of the Groceries Code Adjudicator and the Agricultural Supply Chain Adjudicator as a piece. In terms of the GCA, there is a formal review out at the moment, which the Department for Business and Trade has just published, so we will be very interested in what it concludes about that. We do think that it is a very significant and important body in terms of protecting farmers’ incomes.
Q240 Jenny Riddell-Carpenter: Yes, absolutely. Secretary of State, do you acknowledge that supermarkets are letting farmers down and are a big part of the issues that we face in trying to tackle profitability in farming?
Steve Reed: There are lots of problems in the supply chain, and it is unfair to point to just one part of it. Supermarkets want to support the producers of origin, because they need those producers to be successful businesses if they are going to keep supplying the products that the supermarkets want to sell. There are problems in the whole supply chain. It is not just the point of origin and the point of sale. In looking at how we make the system fair, we need to make sure that it is fair to everybody. The supermarket chief execs I have spoken to support that just as much as the farm representatives I have spoken to.
Q241 Jenny Riddell-Carpenter: Farmers in our communities would say that the practices are not fair, that there is farm washing, and that they are often forced into agreements that they have very little negotiating power over, so I would urge you to hold that in your mind when you are having those conversations.
I will move on to “back British farming” and backing British produce. There are lots of ways in which we can support profitability. Some is rhetoric. Some is reform. Some is investment. Rhetoric costs nothing. Do you back buying British to support farmers and profitability?
Steve Reed: Your point on unfair contracts is exactly the point that I was making about milk. It is not fair that the producer of origin should be forced into a contract, where, if there is a spike in costs, as happened, say, with the energy increases, the producer bears the cost of that and it is not shared fairly. I do agree with your point.
On buying British, yes, we want to do more to support aspects of the public sector, where they have significant contracts for food buying, to spend more of it on buying British. That is taxpayers’ money. Taxpayers would be pleased to know that their money is being used to support British produce, where that can be done.
Q242 Jenny Riddell-Carpenter: It would be wonderful if we could see a DEFRA-led campaign to back British and buy British. Communities are really proud to support their local farm and produce. When we speak to our constituents, everybody feels proud of our British produce, and it is no less important now than it was yesterday.
My final question, if I may, is on the upcoming Planning and Infrastructure Bill. We heard a bit about it earlier from an energy perspective. I have laid an amendment to it. We in Suffolk Coastal have a huge number of energy infrastructure projects going on. Some of them are going to be on CPO’d farming land. There seems to be a lack of awareness that, when you lay large energy infrastructure cables underground, anything that is less than 1.8 metres in depth below the land means that that land will not be able to be used for arable farming again.
I put forward an amendment to request that, when cables are laid in ground, we make sure that it is always to a minimum depth of 1.8 metres. I have experience in my constituency of cables being laid to less than one metre, meaning that that land is taken out of agriculture, which continues to threaten food security. Do you have any comments on that? Could you also commit to that point that, where we are laying very critical and necessary energy infrastructure, it takes land use and farming sustainability into consideration going forward?
Steve Reed: You make some very fair points there, and I am happy to have conversations with my colleagues in MHCLG who are leading on the Planning and Infrastructure Bill. As I was saying in my earlier comments about the land use framework, we want to support agricultural land being able to produce as much food as it can, and then put other infrastructure where it can be more appropriately located. There will be some areas, as you are saying, where the two have to work together, but we should be looking for the best outcome on both sides and not disadvantaging food production.
Chair: We are almost at 12.20 and still have really important stuff on water to deal with, but Sarah and Jayne want to come in with very quick questions. I will maybe take them both and then come to you, Secretary of State.
Sarah Bool: Thank you, Chair. I am really pleased to hear that Baroness Batters is leading on the farm profitability review. Could you just quickly tell me what resources and expertise are available to support her work? You also mentioned that it is a six-month review. That does not really seem enough time to get under the skin of this and put meat on the bones of the work that she is doing.
My second question is around farmers’ profitability and their ability to add value at the farm gate. I have been doing a lot of work on small abattoirs, which are closing at an alarming rate at the moment. Can you make sure that they are part of the farming roadmap? They are key players in ensuring that farmers are able to find different routes to market to help ensure their profitability.
Q243 Jayne Kirkham: My question was just very quickly on the Planning and Infrastructure Bill. Natural England is going to have responsibility for writing and delivering environmental delivery plans. I was going to ask about the resource within Natural England to be able to cope with that. Can it cope with that? Where will the extra resource come from to enable it to cope with that?
Steve Reed: I will invite Emily to comment on the Natural England point. Is that in your remit?
Emily Miles: No, not really.
David Hill: I can do that.
Steve Reed: Sorry, David will comment on that. On your points, Baroness Batters has a small team that she is working with, and they are doing a lot of outreach work into the sector. It is hard to think of anyone who is better networked in the farming sector than Baroness Batters.
Six months is enough time to get a piece of work done and, if anyone can do it in that time, Baroness Batters can. She is a woman on a mission. She is a whirlwind of energy and is enthusing the people around her, and I am very confident that she will be able to do the work in that timeframe. She is not slow in sharing her opinions on things. If she felt that that was not enough time, she would have let me know, so I will give her her head, and we will see what she is coming up with.
I am getting regular reports back from her and speaking to her regularly. I know that she looking at the issue of small abattoirs, which she has raised with me. I will give her time to draw her own conclusions. She will publish her report and we will see what she has to say, and then I am sure that, collectively, we can have a further conversation about how we take that work forward.
Chair: Small abattoirs?
Steve Reed: Yes, those are in scope.
David Hill: Natural England would have that delivery role in relation to the environmental delivery plans. It would also be responsible for a number of other delivery measures in the Bill, such as the nature restoration fund, if approved by Parliament.
As you would expect, we are in a spending review negotiation right now with the Treasury. Clearly, a big part of our planning for that spending review is about making sure that we will be ready to implement the provisions in that piece of legislation. I cannot give you a number right now, because that is a live negotiation with the Treasury, but once the final outcome of the spending review is announced in June, we should be able to confirm the final position. Clearly, resourcing Natural England to do the job properly is a high priority for us.
Q244 Helena Dollimore: I am going to start with some general questions. Secretary of State, there is huge public anger about the behaviour of the water industry. As a Committee, we have been leading an inquiry into the water industry. Time after time, as we have been calling the water bosses in, we have heard about this bad behaviour. We have heard about them spending huge money on legal bills and challenging customers, only to concede that there is, in fact, pollution in the places where the customers and citizen scientists said that there was. We heard about shocking treatment of staff. We heard about bonuses being paid despite massive failings in the water companies. We wanted to just share a couple of examples of this behaviour with you and also ask some wider questions.
To start with, we had witnesses from Thames Water in front of our Committee last week. What we heard from them was more evidence of this bad behaviour. In their case specifically, they had put back around 100 critical infrastructure projects two or three years ago and allocated that money, which had been earmarked in the price review and agreed by Ofwat in 2019 for critical infrastructure projects, to paying bonuses and dividends.
At the same time in that period, we saw a 40% increase in pollution by Thames Water last year. People are rightly very shocked to hear about these kinds of experiences. It cannot be right, can it, that, at the same time as having a 40% increase in pollution incidents, they put back critical infrastructure projects that could have been fixing pipes and, looking forward, they are now telling us that, despite this increase in pollution, they still want to pay bonuses to their top leadership at Thames Water?
Steve Reed: It is fair to say that the situation in the water sector had become intolerable. The system was failing everyone. It was failing customers. It was failing the environment. It was failing investors as well. That is why I have asked Sir Jon Cunliffe to lead a piece of work—and we are due to see the interim report later this month—to look at regulation and the regulators, and how we can reset it so that the problems that were allowed to grow and lead to the outcomes that you have just described can never happen again. We look forward to his report on that.
I have already taken some action ahead of Sir Jon’s work. Seven days after the general election, I had the water company chief executives in my office, and we agreed that money earmarked for investment would be ringfenced, so that it can never again be diverted in the way that you have just described towards the payment of bonuses and dividends. It was absolutely wrong that that was able to continue for so long. Any company that does that again in future will refund that money to customers through a discount on their bills, so they have a huge disincentive to continue the kind of practices that you are describing, which were very worrying.
Customers are right to be furious at the level of bonuses that chief execs were paying themselves for overseeing often catastrophic levels of failure. The level of water pollution in this country, which hit a record high last year, is nothing short of scandalous. The people responsible for failing to take action to correct that should not be richly rewarded for overseeing failure. In the eyes of the great British public, it offends against a sense of fair play.
In the Water (Special Measures) Bill, which passed through Parliament earlier this year, the regulator has been given the power to ban the payment of unfair and undeserved bonuses. Indeed, just over the last few days, we have seen a very unfortunate situation where Thames Water appeared to be trying to circumvent that ban by calling its bonuses something different, so that it could continue to pay them. I am very happy indeed that Thames has now dropped those proposals. It was the wrong thing to do. It offends against its own customers’ sense of fair play. We need to reset this sector so that the failings that you have described can never happen again.
Q245 Helena Dollimore: The public were rightly furious to hear from Thames bosses last week this assertion that they might still take their bonuses in the forthcoming year, or “retention payments”, as they wanted to call them. You are confirming to the Committee today that that is off the table and they will not be doing that.
Steve Reed: They will not be doing that. I was very clear in public that the Government would take any action necessary to prevent them trying to circumvent the ban that we have now put in law. They have now withdrawn their proposal to make those payments.
Q246 Helena Dollimore: That is good to hear. One of the things that Sir Adrian, the chairman of Thames water, said when he was before us and was trying to justify the paying of these retention payments, or bonuses by any other description, was that Thames Water’s creditors had said that it was a condition of the loan that they had to allocate money for the top leadership to get retention payments, which many members of the public were rightly furious to hear about. Since that evidence to our Committee, we have seen documents filed in the High Court that suggest that Sir Adrian misled in his wording. He has written us a letter, which we have published as a Committee, saying that he may have mis-spoken when he said that. This is very serious behaviour from the bosses of Thames Water at our Committee.
Steve Reed: I agree with you. The Committee has its own authority and powers, and will deal with that in the way that the Committee feels is appropriate. As for what the Government are doing, we have enacted the Water (Special Measures) Bill. I took those actions within seven days of the election, including ringfencing customers’ money so that it cannot be diverted to be misspent on bonuses and dividends when it should be spent on fixing our broken water system and the broken pipes that are leaking sewage at such levels into our waterways.
Perhaps the most significant of all these reforms in the long term will be the work that Sir Jon Cunliffe is carrying out. I know that you are excited to see his interim report, which is due in just a couple of weeks’ time, and where he has got to with that report. We will then have his final report when he has had feedback on the interim report towards the end of June, or perhaps early July. That will be making his final recommendations on how we reset a regulatory system that is absolutely broken and has led to the catastrophe of record levels of sewage poisoning our waterways. This Government will not allow that to continue. One of the most important pieces of work that this Government as a whole can do is to restore the cleanliness of our rivers, lakes and seas.
Q247 Helena Dollimore: On this point more broadly, there has been lots of speculation about Thames Water. How confident are you that Thames Water will avoid special administration?
Steve Reed: Thames is a private company, and it is for it to sort out its own finances. As you will be aware, because it is in the public domain, it is currently in conversations with its creditors about new sources of equity and the status of those creditors’ debt. It is for it to manage those conversations. Government are closely monitoring the situation, as we should, but it needs to be given the space to get on with that within the regulatory environment as it exists.
Helena Dollimore: Moving on more broadly to some of the themes that we have heard about in our inquiry into the water sector, as well as pollution, we have heard about a number of incidents where customers were left without water supply. We had a very serious incident in Devon, where a parasite in the water supply meant that customers were getting sick from the water supply, and were without supply too.
We heard from the boss of South West Water that she thought that it was acceptable to evade media interviews during that period. That is shocking behaviour.
We then heard from Southern Water, which serves my own constituency, about two major water outages in Hastings and in Rye, and the impact that that had. People were left for up to five days without water and not being able to go to the toilet or to wash, drink or prepare food.
There are two questions that I would like to ask you about water outages. You will be aware that this is governed by the guaranteed standards of service, a framework that this Government are committed to updating. The level of compensation that has been paid has been very low historically. This Government have committed to raising that compensation. Could you give us an update on the timeline for that?
Linked to that point, as we have been hearing these examples as a Committee, what really comes through is that, aside from the specification about the level of compensation that a customer might get after the incident, there does not seem to be any framework set out around what reasonable provisions a customer could expect from a water company when they are left without water.
For example, if you are on a delayed flight, there is very clear guidance that, after three hours, you are entitled to this and, after six hours, to this. Is there scope perhaps for the Government to look at setting out some guidelines to water companies on what they should provide while they are trying to get that supply back on, such as portaloos and showers, or provision to prepare food? Can you comment on the timeline for raising the compensation and that wider point?
Steve Reed: I will bring in my colleague here in a moment, who I am sure will have a more detailed response to give you than I do. Of course, I had the opportunity to meet some of the businesses in the beautiful town of Rye when you invited me down there, and to hear their frustration at the extent of the water outages, the lack of communication, the lack of alternative provision and, ultimately, the lack of compensation or even an apology for what had gone on.
Clearly, things need to change. You are a ferocious champion of water consumers, and they need people to be out there advocating for a circumstance that has been completely unacceptable for water consumers. We are increasing rates of compensation. We are looking to improve those water standards in the way that you have described. I believe that the SI is due to be laid very shortly on that, but my colleague here will have more detail.
David Hill: The standards that we have announced set out what we intend to do in terms of the doubling of the compensation, but also extending the circumstances in which compensation can be offered. For example, the case that you referred to in Brixham, where boil notices were issued, would previously not have been eligible for compensation, but now will. In terms of timing, we expect to lay the SI imminently, so within the next few weeks. It is almost ready and we are just looking for a slot to lay that, so that will be literally within the next few weeks.
If I may address your second question around provision during an incident, water companies should be making provision, for example, for bottled water. They should know who vulnerable customers are in their area, and should have a plan for targeting them, as well as facilities such as hospitals, including tankering and so on. If there are any improvements that we need to make to ensure that that is codified or formalised in any way, we can look at that.
Q248 Helena Dollimore: We have heard time and again that the water supplies do not get delivered to vulnerable customers, people get missed, and it is very chaotic. It often causes traffic gridlock when they try to provide water supplies, because they do not open enough water stations. It is more than just bottled water that people need. When we are talking about a prolonged crisis of 36, 48 or 72 hours, it affects people’s ability to use the toilet safely. It affects their ability to prepare food in a clean way. The Department should look at a broader set of guidelines about what should be provided.
David Hill: They should make provision commensurate with the scale and severity of the incident, but we are very happy to pick up those points and look at those further.
Q249 Helena Dollimore: I have one final question. With the warm weather that we are experiencing at the moment, we are hearing warnings of a drought. It is a very serious situation for the country to be facing, particularly for consumers, but also for our farmers, as we heard from colleagues earlier. Secretary of State, how will DEFRA ensure that our country is prepared for a drought and that our water companies are taking the necessary steps that they need to in order to prepare?
Steve Reed: We are engaging regularly with the EA over the state of the weather. Of course, we have not had rain for quite a long time this early in the year. That is worrying. We are not at the point where there is a drought yet, but water companies are required to have drought plans that they refresh every five years. Those plans are in place to make sure that appropriate action can be taken when it needs to be taken.
The improved water infrastructure that we will be building as a result of the £104 billion that we secured at the close of the most recent price review period will mean that the country will be better placed to deal with this in the long term. Because the infrastructure has not been invested in over recent years, you are right to highlight the importance of making sure that preparations are as good as they can be, just in case we get to the position where we are facing a drought. David, do you want to comment any further on that?
David Hill: I do not have a huge amount to add. As a bit of context, this is the driest spring in England since 1956. Currently, it is areas that are reliant on surface water, which are typically the north and the centre of England. They are at what is called prolonged dry weather status. Areas that are more reliant on groundwater are currently at normal status. Clearly, we are upping our contingency planning for the summer. We have upped the frequency of the national drought group, which the EA convenes and the Water Minister attended in May. That brings together water companies, local authorities and agencies involved in drought planning. All of that work will keep a close eye on the situation running into the summer.
Beyond that, as the Secretary of State said, it is about investing in the long-term resilience of the water infrastructure. Water efficiency and water demand are also really important parts of that picture. Measures such as bringing forward water efficiency labelling for water-intensive appliances will also be an important part of increasing overall water resilience in the future.
Q250 Jayne Kirkham: Helena may have covered this when I was out, but we were struck by the fact that only one preferred bidder, KKR, has been accepted by Thames Water, and that it seems to have been trying to negotiate with Ofwat to reduce some of the penalties that it may face for some of the breaches of the rules. Is this acceptable?
Steve Reed: It is a private company. It is for it to—
Q251 Jayne Kirkham: Negotiate with the regulator?
Steve Reed: No, not that aspect of it. It is for it to look at who it wants to bring in as a potential investor to resolve some of the financial challenges of its own making that it is dealing with at the moment—
Q252 Jayne Kirkham: It is more about it being let off penalties as well, to make itself more saleable.
Steve Reed: —but it will do that within the rules. The rules are very clear. The regulations are very clear. My intention is that Thames will follow the regulations and the rules as they apply to everyone else.
Chair: Josh, we will maybe move on to the animal welfare questions at this stage.
Q253 Josh Newbury: This is something that has a lot of interest out there. I am sure that your inbox is as full as ours of messages from passionate constituents who want to push the Government to do as much as possible on animal welfare. I am aware, of course, that the Government are supporting several private Members’ Bills that will strengthen animal welfare, but I would like to touch first, if I may, on what the Government are doing to improve the enforcement of existing animal welfare legislation.
In particular, enforcement of the Hunting Act is quite often raised by my constituents. As we seek to build on that bit of legislation, are you confident that it is as effective in 2025 as it was in 2005? What more can we do to make sure that it is enforced?
Steve Reed: Those are good points. Enforcement is carried out by a range of partners, agencies and organisations, and DEFRA maintains very close contact with them to ensure that it is happening in the way that it should. The Home Office has oversight of the police, who have a role in this, as does the Ministry of Justice. NGOs such as the RSPCA also have a role to play in this, and there will be others. We closely monitor what is happening with enforcement of that kind and, where issues are brought to our attention, we can take action on them. I do not know whether you want to dig into the hunting aspect of that further. I can comment more if you want me to.
Q254 Josh Newbury: One particular pressure on animal welfare legislation in general is on local authorities, because they have a huge role in enforcing this, and the pressures on them are clear for all to see. They often cannot maintain proper enforcement and deterrence by themselves. For example, the British Veterinary Association has highlighted a real postcode lottery on this, given the fact that nearly half of all English councils do not have a single dedicated animal welfare officer. Are we at risk of getting to a point where the enforcers cannot meet their statutory duties, which could embolden criminals and undermine the credibility of the laws that we already have?
Steve Reed: Local authorities have many statutory duties, including the ones that you are describing. For some years now, they have been saying that funding has become so inadequate that they may not be able to carry out those statutory duties, not only on animal welfare but on issues such as child welfare and support for the elderly and the disabled. These are all areas where they have statutory obligations, but resources have shrunk so low after 14 years of austerity under the previous Government that they can no longer guarantee that they are able to meet those obligations.
In the Budget last year, local authorities were given an above-inflation increase in their funding, so I am pleased to see that situation start to turn around. You cannot, overnight, fix a problem that had become that profound, but it is an area that I, my team and my Ministers have been focusing on. We have been engaging with local authorities to make sure that they are carrying out their obligations where they are required to.
Emily Miles: There has been a change in the law so that local authorities can pursue more fixed penalty notices rather than full prosecutions. The burden of doing a full prosecution is very resource intensive, and so, while recognising that that does not solve the funding issue that the Secretary of State describes, that will, hopefully, mean they can work a bit more efficiently. The Animal and Plant Health Agency also does some enforcement work on animal welfare.
Josh Newbury: That is really welcome to hear. My local authority, Cannock Chase District Council, has a really good record on this, with a really strong set of officers who pursue things, so the fact that they are going to have that kind of strength and powers to deal with it is really welcome. Chair, Helena wanted to ask one question on this. If I could come back in briefly, that would be much appreciated.
Q255 Helena Dollimore: Secretary of State, in the manifesto, you committed to banning trail hunting, ending the use of snare traps, and ending puppy farming. Can you give the Committee an update on these commitments?
Steve Reed: We remain committed to all of that. Of course, there are still four years of the Parliament to run, so we will find the appropriate time in the parliamentary and legislative schedule to make sure that those can happen. They remain commitments. We have the schedule only for the current session, not for future sessions, but we will make sure that those all get carried out. They are very important. They are in the manifesto for that reason. We were elected on that manifesto, and we will deliver it.
Q256 Josh Newbury: We have an upcoming report, we understand, into the phasing out of using animals in research, which is much awaited. Could you tell us about how that is going to balance that really lofty ambition with existing scientific capabilities and resources in the UK?
Steve Reed: This is interesting, because it is a cross-departmental agenda. DEFRA has a role in it, as do the Home Office and DSIT. The Departments are working together on a strategy that will be published later this year, so we will see more of the detail when it comes out. It is probably best that I do not anticipate what might be in it.
I am very committed to this. I have spoken to a lot of the companies that are required to carry out testing on animals and, in many cases, they will tell you that they carry it out only because they are required to by regulation and legislation, not because it adds anything of value that they can use in developing better or safer products. Clearly, this is an area of law that requires reform and I am looking forward, as I am sure many other animal lovers will be, to this strategy being published, so that we can scrutinise, discuss and then enact it, and get to a much more sensible situation around the use of animals in science research and testing.
Q257 Josh Newbury: Yes, absolutely. It is another example of where technology and innovation have moved on at pace, and legislation perhaps has not kept pace with that, so that is really welcome.
Steve Reed: I completely agree.
Q258 Josh Newbury: Do you know whether the strategy will include a proposed date for achieving that phasing out? Will it have milestone targets along the way for research and testing?
Steve Reed: Those are all very sensible things to look for in it. I have not seen it, so I cannot answer those questions, but any sensible strategy has an implementation plan attached to it so that we know what needs to change in law and when it will change. Those companies that are being required to carry out this testing need to know when they can stand those facilities down, and that will take some planning work and preparation on their part. I would be looking for that in the strategy when it comes forward.
Q259 Josh Newbury: We will definitely be looking forward to that. Finally, can I raise another animal welfare policy that seems to be stuck in departmental limbo at the moment? This is about labelling on welfare standards on food products. It was not a commitment in the manifesto that we both stood on, but the previous Government did lots of work on this, which, it has to be said, was very long and drawn out, including a public consultation that concluded more than a year ago. Could you commit that DEFRA will respond to that consultation as quickly as possible? Could you shed any light on how you are going about balancing the views and interests of animal welfare organisations on one side, and of farmers, abattoirs and the wider supply chain on the other?
Steve Reed: I will give you a response, but my colleague here, who has some professional expertise in that sector, might have something to add to it. We are looking at food labelling as part of the food strategy. That is a piece of work that we are carrying out with stakeholders from right across the food and drink sector without any fixed view at this stage about where we need to get to.
I am not in favour of compulsion around what consumers choose to buy and eat. I am very much in favour of giving the best possible information in the most usable way to consumers, and this is clearly part of the information that would inform those consumer choices. As part of the food strategy, we will be looking at that aspect of it, as well as many others.
We can look at the system that we have currently and see whether there are better ways to do it. Other countries do it in different ways, so we will take all of that in the round, and proposals will come forward.
Emily Miles: It is interesting how, in the UK, there is a significant consumer appetite for strong animal welfare standards. You can see that in the amount of free-range eggs that get bought. Something like 60% of eggs bought in the UK are free-range. It is very different in France, where it is much less. There is a huge appetite.
In terms of the consultation that was done, I will discuss with Ministers how to take that forward. The question of how it plays out in a food label is significant. There are a lot of pressures on a food label. It is a very contested document that has a lot of information on it. The thing that we need to remember as well, though, is that there are third-party certification standards, such as Red Tractor, which look at animal welfare standards, so we need to make sure that we have the right mechanism for providing consumers with that information about high animal welfare.
Q260 Josh Newbury: Yes, absolutely. It is just quite a muddled landscape at the moment. People sort of understand what Red Tractor means, but perhaps not from a welfare angle. Then you have organic standards, which are different, and the Soil Association and EU organic standards. You have RSPCA Assured. Waitrose has now introduced its own voluntary labelling scheme. It is becoming quite confusing and cluttered for consumers, and so anything that we can do, not to overtake that and mandate things but to bring that information in a format that is a lot easier for consumers to understand, would be really welcome, because it is building on what is already happening. As you said, there is a huge appetite among consumers. Do we have a timescale for the food strategy at all? I appreciate that we seem to be asking timescales all the time.
Steve Reed: It is due to be published after the summer recess, is it not?
Emily Miles: We are aiming to do an update before the summer. It will be a framework, but there will also be a series of policy announcements that need to flow from it, so I would not see it as a one-off event.
Q261 Charlie Dewhirst: To follow up on what Josh just said, we talk about the move to free-range eggs. That was a decision made by retailers in response to consumers and did not require the intervention of Government. We need to bear that in mind, because it is not necessarily the way forward.
I just wanted to very briefly segue into precision breeding and gene editing, because we missed it earlier and it is slightly connected. A lot of progress has been made by this and the last Government, particularly on plant gene editing. It is a huge opportunity in terms of farm profitability and food security, et cetera. Are you concerned that the EU deal, dynamic alignment and the EU’s different position on gene editing puts that at risk?
Steve Reed: I am very optimistic. I recognise, first of all, what you have said about this and the previous Government. That is a very important agenda. It is very important for my ambitions to make the farming sector more profitable and that farms can get higher yields from the crops that they are growing. The way that we have managed to feed the world’s growing population over the last 100 years is by improving crop yields. There is further to go, and gene editing and precision breeding are a key part of that.
In the deal with the EU that was signed yesterday, the door remains open to seek exemptions so that the gene editing programme in the UK can continue. It is fair to say that this country is ahead of Europe on this. There are many parts of the European Union that are looking to us for leadership, so we have their support in this, but it is an area that the agreement leaves open. There are some further negotiations that need to take place, but this is one of those areas where I am very optimistic that we will get an outcome that will benefit British farming in the way that we need to on this agenda.
Q262 Charlie Dewhirst: I would just implore you to keep pushing that, because we do not want to allow this deal to pull us back into—
Steve Reed: We are pushing that very hard. I gave a commitment to the NFU president on precisely that just yesterday.
Q263 Chair: Almost as if we could influence other countries in Europe by co-operating with them. Who’d have thunk it?
Steve Reed: I know, incidentally, that the NFU president made those points to Maroš Šefčovič at Downing Street yesterday, so he is in no uncertainty about the importance of this and the strength of feeling.
Q264 Sarah Dyke: Just moving back to animal welfare in the countryside, we are seeing a huge rise in illegal gangs, hare coursing, badger baiting and trespassing on farmers’ land, coupled with, at the same time, a reduction in rural crime units. In Somerset, for example, we have four officers in the rural crime unit. Quite often, they are dispatched off to other departments where there is a need. How is the Department working with the Home Office to provide protection to farmers and, at the same time, support animal welfare?
Steve Reed: Rising levels of crime in rural areas should concern all of us. The Government are putting together the first ever cross-Government rural crime strategy. DEFRA is working with the Home Office and the MOJ to look at how we can make sure that those issues are properly addressed and being tackled. That will include an increase in the number of police officers in rural areas to help make sure that the resources are there to detect and then prosecute those who are responsible for what is going on.
Chair: Josh, we are going to come back now to the circular economy.
Q265 Josh Newbury: I am really grateful to have the opportunity to speak on this. It was something that we did not manage to get to when we last had you in front of the Committee, because of certain other things that we talked about at length. As a Committee, we will shortly be launching an inquiry into the circular economy, which you previously told us is a very big priority for your Department. We understand that the circular economy taskforce is working on a strategy, which, hopefully, will be published in the autumn. Is that still on track?
Steve Reed: Yes. First of all, I am really pleased to hear that the Committee is looking at the circular economy. It is a new agenda for UK Government, and something that I am very keen that we should push and promote. It will be very beneficial for the environment, because it will enable us to reduce waste, and that is going to be a good thing.
It also means that, with much more volatile international supply chains, there are materials already in this country that we can reuse to reduce dependency on those more insecure international supply chains. Ultimately, it will be cheaper to reuse those materials than to bring new materials into the country. Any reduction in input costs for business is an increase in profitability, and that is something that we want to see underpinning economic growth. It contributes to the net zero agenda of this Government as well.
There are so many wins, including investment in regional economies with the new facilities that we will need to repurpose and reuse those materials. We have fallen behind many of our nearest neighbours in continental Europe and beyond. There is an opportunity for us to not just catch up but overtake them on the circular economy. DEFRA’s own figures show that there is a potential £16 billion per annum boost to the economy from moving to a circular economy. That is something that we want to see our country, and every region of our country, benefit from.
Under the chairmanship of Andrew Morlet, the circular economy taskforce is now working sector by sector and engaging with the sectors. It is important that different economic and manufacturing sectors engage and lead this agenda. We need them to own it if it is going to work.
The taskforce has selected for prioritisation those sectors where the potential for economic growth is the greatest, those being chemicals, plastics, construction, textiles, electrical, agri-food and transport. It is now working with those sectors to start to develop roadmaps towards zero waste. The way that that would work would be by gradual and incremental regulatory change at a pace that the sector is comfortable with and wants to work with in order to get to zero waste and enable each sector, and the wider economy, to benefit in the way that I just described. When are we due the strategy on this?
David Hill: I am not sure of the timing of that one. We might have to come back on that.
Steve Reed: We can write back to you. It is very good that it is up and running, and is moving forward. We have already been working through elements of it. We have the bottle deposit return scheme, and the legislation is already in place for that. That comes into force in 2027. Extended producer responsibility is under way now, and the oversight mechanism, which is industry-led, is about to be set up as well. There is much more to the circular economy than even just those two quite eye-catching pieces of legislation.
Q266 Josh Newbury: Yes, absolutely. It is encouraging to hear that the conversations with each sector are happening as part of this overall strategy. Hopefully, we can knit all of that together, because these sector-by-sector conversations can sometimes be quite siloed, and you miss the wider gains that you get from the whole system, so that is really encouraging.
Just lastly—spoiler alert—our first piece of work as part of this inquiry will be on the global plastics treaty. We understand that talks on this are planned for August in Geneva. What are the prospects of a successful outcome from that? What will the Government be doing to lead the way on this, as the UK Government have done so many times in the past, and set that level of ambition as high as possible?
Steve Reed: It was disappointing that no agreement was reached on the treaty at the conference in Busan, South Korea, towards the end of last year, although there was a statement on polymers signed by over 100 countries, and the UK was party to that. We have continued to engage with partners since Busan, looking towards Geneva in August. You are right to say that the UK plays a leading role in this. We have a very well-respected negotiating team.
By the nature of these things, you have to remain optimistic in the run-up to the decision point, and I am optimistic. There was a lot of good will. We could not quite get it over the line in South Korea, but we are all doing what we need to do with partners to make sure that that happens at Geneva in the summer
Josh Newbury: That is fantastic. All power to your elbow for that. We will look out for that as well.
Q267 Sarah Dyke: On the back of that, this is great stuff, but if the global plastics treaty does not have a legally binding target attached, will that be a failure?
Steve Reed: It needs to be as robust as we can get agreement behind. From memory, the amount of plastic entering the oceans by 2050 will be four or five times what it was in 2016. That is shocking when you think of the images that we have all seen of sea animals being strangled in the water because of plastic that has ended up there. We cannot tolerate this continuing destruction of the marine environment, so the UK will be pushing for the strongest possible outcome that we can get with other countries that are willing to sign up to it.
Q268 Sarah Dyke: Glass is a highly recyclable material. Particularly in my constituency of Glastonbury and Somerton, I have lots of traditional cider makers and brewers. I will not list them all, because there are so many of them. They are really worried about the impact that EPR is going to have on their business and about the delay. What assurances can you provide them to give them the certainty that they need to be able to plan properly?
Steve Reed: We are working with organisations in the sector. It is a sector-led process that we are pursuing now. The final fee structures will be available later this year, which are likely to be lower than the fees that were published earlier this year. The Department is engaging with the whole sector and listening to its concerns, and we will do everything we can to support it through what is, inevitably, a period of change. It is the right thing to do. The public agree with the principle that the polluter should pay. The public want to see less waste and more reuse of materials. Ultimately, this is something that the sector will benefit from.
Q269 Sarah Dyke: A lot of the EPR fees are going to go to local authorities. What assurances can you give me that that money will be ringfenced to make sure that it is spent on waste-related activities?
Steve Reed: We are in discussions with local authorities and MHCLG about that right now. The key thing to focus on with anything of this kind is that the outcomes are what we expect to see. That is the priority for me, but we need to make sure that the money that is allocated to local authorities is spent in the way that it was intended to be.
Chair: To come back to where we started, it would be remiss of me if I were not to point out at this stage that the industrial-scale gillnetting that I spoke about is a massive contributor to plastic pollution in the oceans. Whole nets are just abandoned. It is unsustainable for all sorts of reasons.
We are, however, out of time. We have not quite covered everything that we wanted to talk about, but we have covered just about everything. You are out of time, and the effects of my Lemsip have well and truly worn off, so we will thank you for your attendance and your engagement today. We do appreciate it, and we shall, no doubt, return to some of these subjects in the future. For the moment, we are concluded for today.