I thank the noble Baroness, Lady Randerson, and the noble Lord, Lord Bruce of Bennachie, for tabling this amendment and for their concern for the agricultural sector. This amendment seeks to exempt agricultural subsidies and schemes from the requirements of the
new domestic regime. I appreciate that the devolved Administrations are particularly concerned about the inclusion of agriculture in the new domestic regime. This issue has come up during our regular engagement, both at ministerial and official level. We have worked hard to understand concerns here, particularly in relation to existing schemes and how they might be considered under the new regime, as well as in relation to the development of guidance on the principles. We have sought to reassure that existing schemes and subsidies will be able to continue indefinitely.
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There is good reason for including agriculture in the new regime. Having agriculture covered by the same single, coherent set of rules as other sectors will protect competition and investment within agriculture while ensuring consistency for public authorities and subsidy recipients. The Bill’s design ensures that public authorities are empowered to give subsidies that best fit their local needs. The purpose of a subsidy control regime is to provide common subsidy control rules for all authorities in the UK, allowing devolved authorities and all other public authorities to spend and carry out their own policy principles.
I know that the noble Lord, Lord Whitty, was concerned about agriculture in the EU. It is not quite right to say that agriculture was entirely exempt from the EU subsidy control mechanisms. Although most activity under the CAP was carved out from state aid rules, the CAP itself aimed to minimise distortions of competition and trade in the agriculture and forestry sectors, alongside state aid block exemption rules. Some activity was notified under the general state aid rules.
In response to the point made by the noble Baroness, Lady Randerson, it is also not entirely right to say that agriculture was fully exempt. This regime will impose far fewer constraints on public authorities, including the devolved Administrations, to give agricultural subsidies compared to the CAP. This approach elicited a strong response in the public consultation on the future subsidy control regime with, as I know we have mentioned, 75% of the respondents who answered the question on agriculture agreeing that it should be included in the scope of the new domestic regime. As the noble Baroness set out, not every respondent answered every question in the consultation; that is absolutely clear from our consultation response.
The subsidy control principles and other requirements in the Bill are sensible and straightforward and should apply equally to agriculture as they do to other sectors. I do not believe that any public authority should seek to give a subsidy that does not comply with these common-sense principles. I believe that these rules will allow public authorities to tailor subsidies to local needs and agriculture-specific market failures, which, as the noble Baroness, Lady Randerson, and the noble and learned Lord, Lord Thomas, emphasised, is so important. The duty on public authorities with respect to the subsidy control principles helps to protect competition and investment within the UK and ensures good value for the taxpayer. In response to the noble Lord, Lord Fox, this is the key benefit of their inclusion.
As the noble Lord, Lord Bruce, pointed out, the new regime is the most important aspect of the Bill. I believe that it will empower the UK Government and the devolved Administrations to design agricultural subsidies in ways that meet their policy needs and particular circumstances, whether that is a different legislative framework, a different financial support mechanism or a different type of land—for example, for hill farmers, as the noble Lord, Lord Purvis, pointed out. I am happy to confirm that, with specific market failures based on specific conditions, such as type of land, there is no requirement to treat every farmer in the same way. None the less, in response to the noble Lord, Lord McNicol, it is worth noting that the Bill also makes provision so that any subsidy schemes that are already in place at the time the Bill comes into force, such as rural development programmes or basic payment schemes, are considered legacy schemes and can continue on the same terms as before.
Finally, in response to the query of the noble Lord, Lord McNicol, we are keeping streamlined routes for agriculture under consideration. I hope noble Lords will recognise the importance of including agriculture within the regime, but also the provisions in the Bill that ensure that existing schemes, even with some permitted modifications, are able to continue as they do now. To respond to the noble Lord, Lord Wigley, now that the UK has left the EU, agriculture is no longer subject to EU state aid rules or the common agricultural policy. This has created a regulatory gap, which is best addressed by including agriculture in the new UK domestic regime.