Letter from the Secretary of State for Wales to the Chairman of the Committee

Draft National Assembly for Wales (Legislative Competence) (Agriculture and Rural Development) Order 2009

The Welsh Assembly Government has today laid the above mentioned draft Order in Council before the National Assembly for Wales. The National Assembly will debate the draft Order on 31 March and, subject to its approval, I will lay the draft Order for approval by resolution of the House.

I would like to thank the Welsh Affairs Committee for having undertaken thorough and effective scrutiny of the proposed Order, and for its report published on 23 February. Both the UK Government and the Welsh Assembly Government have considered it carefully. I am pleased the Committee concluded that the Welsh Assembly Government has identified a clear need for the Order, and that it represents a useful addition to the Assembly's powers.

The substance of the draft Order and accompanying Explanatory Memorandum remain the same as proposed Order presented for scrutiny to the Committee last October.

Rt Hon Paul Murphy MP

Secretary of State for Wales

24 March 2009

Explanatory Memorandum to the proposed National Assembly for Wales (Legislative Competence) (Agriculture and Rural Development) Order 2009

Introduction

1. This Memorandum has been prepared and laid in accordance with Standing Order (SO) 22.14. It sets out the background to the provisions in the attached government draft Legislative Competence Order (LCO) which would confer additional legislative competence upon the National Assembly for Wales.

2. Section 95 of the Government of Wales Act 2006 ("the 2006 Act") empowers Her Majesty, by Order in Council, to confer competence on the National Assembly for Wales to legislate by Assembly Measure on specified matters. These matters may be added to Fields within Schedule 5 to the 2006 Act. Assembly Measures may make any provision which could be made by Act of Parliament (and therefore can modify existing legislation and make new provision) in relation to matters, subject to the limitations provided for in Part 3 of the 2006 Act. An Order in Council under Section 95 of the 2006 Act is referred to as a Legislative Competence Order (LCO) in this memorandum.

3. The draft Legislative Competence Order would confer further legislative competence on the National Assembly for Wales, in the field of agriculture, fisheries, forestry and rural development (field 1 within Schedule 5 to the 2006 Act). Schedule 5 of the 2006 Act is attached at Annex 1.

4. New legislative powers in respect of the specified matter will enable the Assembly Government, Assembly Members and Assembly Committees to bring forward coherent proposals for legislation, in the form of Measures, which are based on Welsh priorities and timescales. These Measures will be subject to thorough scrutiny and approval by the Assembly.

Background

5. As a result of the devolution settlements of 1998, agriculture is devolved to all of the devolved administrations of the UK.

6. Within Wales, as a result of the devolution of agriculture, the Welsh Ministers exercise extensive powers in the areas of animal health and welfare, the common agricultural policy (both single payments and grants for rural development, including food processing and marketing), forestry, fisheries, plant health and animal by-products.

7. Included in the Welsh Ministers' devolved powers are powers under various Acts of Parliament including the Agriculture Act 1967, which included certain provisions (some of which have been repealed) relating to agricultural levy raising, promotion and development.

8. By way of background to the specific issue of agricultural levy raising, prior to 2008, several UK or Great Britain wide bodies collected and distributed levy in specific agricultural and horticultural sectors. One such body was the Meat and Livestock Commission ("the MLC"), established under the Agriculture Act 1967 which raised and collected levy from the red meat sector in Great Britain. Following a 2005 review of the agricultural and horticultural levy boards in the UK and Great Britain by Rosemary Radcliffe ("the Radcliffe Review"), the UK administrations agreed in principle to establish a single UK levy board, which would be a non departmental public body and would act as a holding company for six sectoral companies covering beef and lamb, pigs, horticulture, cereals, dairy and potatoes respectively. The purposes of the new UK levy board and its sector companies (according to the Radcliffe Review) were to include increasing efficiency, productivity, marketing, development and sustainability in the UK agriculture sector, and such purposes were to be funded from industry levies. The Radcliffe Review suggested a UK board with subsidiary sector companies or, in relation to specific demands from Wales, Scotland or Northern Ireland, the ability for devolved administrations to create levy and promotional boards to operate within their own territories.

9. The Welsh Assembly Government consulted on the Radcliffe Review and on how the provisions of the Natural Environment and Rural Communities Act 2006 ("the NERC Act") should be implemented in Wales during the early passage of the Bill through Parliament. The consultation results concluded that the agricultural industry in Wales wanted to have a separate red meat levy and promotion board, but to be a part of the UK levy board in all other respects. The Assembly Government accepted these conclusions but decided that it would be preferable for the power to raise levy from and promote, market and develop the red meat sector in Wales to be conferred directly upon the National Assembly for Wales (now Welsh Ministers), rather than by the creation of a separate statutory levy and promotion board. However, the timing of the consultation meant that it was not possible for the Welsh Assembly Government's policy requirement to be reflected in the Bill and subsequent NERC Act.

10. Consequently the NERC Act conferred powers on the Secretary of State to dissolve existing levy bodies or boards and to create new ones with cross-border functions by means of secondary legislation. It also conferred powers on the National Assembly for Wales (now the Welsh Ministers), the Scottish Ministers and the relevant Northern Ireland department in relation to matters which only concerned their respective territories, to create boards to promote marketing, development and sustainability in their respective agricultural industries.

11. The Welsh Assembly Government's general policy is that where functions are governmental, either policy or delivery, then they should remain in-house with the focus on working directly with clients and customers and placing front line service delivery at the heart of the Assembly Government's culture. Retaining functions in-house ensures Government is more democratically accountable and streamlined. As a result, the option conferred upon the Welsh Assembly Government by the NERC Act to create a separate levy and promotional/development body, rather than undertake those functions itself, was unsatisfactory.

12. As a result, the Welsh Ministers are seeking the conferral of legislative competence in this area upon the National Assembly with a view to bringing forward legislation on the development, marketing and promotion of the red meat industry in Wales. The National Assembly, with these powers, would be able to confer promotional/development functions directly upon the Welsh Ministers or delegate functions to other bodies in this area. At present, this would not be possible using the powers under the NERC Act.

13. The current statutory framework for the development, marketing and sustainability of the agricultural and horticultural sectors in the UK is set out in the NERC Act and the Agriculture and Horticulture Development Board Order 2008. In Wales, a separate levy raising and promotional/development board for the red meat industry was established by the Welsh Levy Board Order 2008.

14. The following paragraphs set out in more detail the basic principles of these pieces of legislation and how they interact.

The Natural Environment and Rural Communities Act 2006

15. The relevant provisions of the NERC Act are set out in Chapter 2 of Part 8 (section 87 onwards) and include powers for the appropriate authority, by order:

a. to establish a body for a purpose or purposes falling within section 88, and

b. assign to it a function or functions falling within section 89.

16. In relation to matters concerning Wales only, the appropriate authority was the National Assembly for Wales[1] (a function which has transferred to the Welsh Ministers, by virtue of paragraph 30 of Schedule 11 to the Government of Wales Act 2006). For matters relating to England and Wales, or to the existing levy bodies, the appropriate authority is the Secretary of State acting with the approval of the National Assembly (now the Welsh Ministers).

17. Section 88 provides that the permissible purposes of a body (a board) established under section 87 are:

a. Increasing efficiency or productivity in an agricultural or related industry;

b. Improving marketing in an agricultural or related industry;

c. Improving or developing services that an agricultural or related industry provides or could provide to the community; and

d. Improving the ways in which an agricultural or related industry contributes to sustainable development.

18. Sections 89 to 97 (and Schedules 8 to 10) make further detailed provision relating to agricultural boards, the permissible functions of a board, powers to dissolve existing levy bodies, powers of the appropriate authority (i.e. powers to make grants and to issue binding directions to a board) and order making procedures.

19. Two relevant pieces of legislation have been made under the NERC Act:

• The Agriculture and Horticulture Development Board Order 2008 (SI 2008/576); and
• The Welsh Levy Board Order 2008 (SI 2008/420 (W.39)).

The Agriculture and Horticulture Development Board Order 2008

20. The Agriculture and Horticulture Development Board Order 2008 ("the AHDB Order") applies to[2]:

a. the beef and sheep industry in England;

b. the cereal and oilseed industries in the United Kingdom;

c. the horticulture industry in Great Britain;

d. the milk industry in Great Britain;

e. the pig industry in England; and

f. the potato industry in Great Britain

21. Within this scope, the AHDB Order establishes a body called the Agriculture and Horticulture Development Board, whose purposes (in line with Section 88 of the NERC Act) are[3]:

a. Increasing efficiency or productivity in the industry;

b. Improving marketing in the industry;

c. Improving or developing services that the industry provides or could provide to the community; and

d. Improving the ways in which the industry contributes to sustainable development.

22. The functions of the Board are in line with the functions provided for in section 89 of and Schedule 9 to the NERC Act. They are listed in 20 paragraphs in Schedule 1 to the Order and include (by way of examples): promoting or undertaking scientific research; providing or promoting the provision of training for those engaged in or proposed to be engaged in the industry; and promoting or undertaking research for improving arrangements for marketing and distributing products.

23. In order to provide services for each industry covered by the Order, the AHDB must impose a levy[4].

24. In relation to the geographical areas mentioned in Article 2 of the Order, the Board replaces the British Potato Council, the Home-Grown Cereals Authority, the Horticultural Development Council, the Meat and Livestock Commission and the Milk Development Council, all of which are dissolved[5].

The Welsh Levy Board Order 2008

25. Under the NERC Act, provision was made in separate Welsh legislation to give effect to the conclusion of the Assembly Government's consultation that there should be a Wales specific red meat levy raising and promotional body. As a result of the Welsh Ministers being unable to confer levy raising and promotional/development powers upon themselves under the NERC Act, the Welsh Ministers made the Welsh Levy Board Order 2008 ("the WLB Order") as a temporary measure on 19 February 2008. The Welsh Levy Board came into existence on 20 February 2008, and started to exercise its levy raising and promotional/development functions on 1 April 2008. This Order had the effect of keeping the promotion and marketing of Welsh red meat within Wales.

26. The WLB Order is very similar in form and content to the AHDB Order, though with a much more limited scope, namely the beef, sheep and pig industries in Wales (i.e. it completes the gaps left by the AHDB Order - see paragraph 20 above). The WLB Order defines the beef, sheep and pig industries in a similar way as the AHDB Order, but with the addition of "processing", namely:

"beef and sheep industry" means all the activities comprised in the production, processing, marketing and distribution of—

a. cattle and sheep, including the carrying on of slaughterhouses and cattle and sheep auctions and markets;

b. meat and meat products (other than milk and milk products) from cattle and sheep;

"pig industry" means all the activities comprised in the production, processing, marketing and distribution of pigs or pig products, including the carrying on of slaughterhouses and pig auctions and markets.

In relation to these industries the purposes of the Welsh Levy Board are those set out in the AHDB Order, and listed at paragraphs 17 and 21 above.

27. To this end, the WLB may impose levies (Article 6), may act through subsidiaries (Article 5) and has the same functions as the AHDB has in relation to the beef, sheep and pig industries in England (see Schedule 1).

28. In practice, the Welsh Levy Board has delegated many of its functions by way of a delegation agreement to Hybu Cig Cymru (a company limited by guarantee and wholly owned by the Welsh Ministers) ("HCC").

Scope

29. The scope of the LCO is aligned very closely to the relevant provisions of the NERC Act, and it reproduces the wording of section 88(1) of that Act (which sets out the permissible purposes of the Boards) in relation to the red meat industry. These purposes are listed at paragraph 17.

30. The LCO would confer a Measure making power on the National Assembly for Wales relating to those purposes insofar as they relate to the red meat industry in Wales; purposes for which secondary legislation can currently be made under the NERC Act. In doing so, the LCO would give the National Assembly the flexibility to organise the structure of the promotion, marketing and development of the red meat sector in Wales in several possible ways, including conferring such powers directly upon the Welsh Ministers.

31. In the LCO, "cattle" and "pigs" are precisely defined in order to provide clarity. As the term "cattle" has a variety of definitions in existing legislation, leaving this term undefined could cause ambiguity regarding the animals that the term is intended to cover. Additionally, because the term "cattle" has been defined, without further definition, an inference could be drawn that the term "pigs" is meant to be limited to common, domestic pigs whilst, in reality, the term is meant to include wild boar and other feral pigs.

32. For the purposes of the definition, "cattle" means bovine animals, including bison and buffalo, and "pigs" means porcine animals, including wild boar and other feral pigs. These definitions seek to capture the Welsh Assembly Government's red meat policy, to enable the National Assembly to have the necessary scope to deal fully with the substance in a future Measure.

33. The red meat industry is defined in the draft LCO as all of the activities comprised in:

(i) breeding, keeping, processing, marketing and distributing cattle, sheep and pigs (alive or dead), and

(ii) producing, processing, marketing, manufacturing and distributing products derived to any substantial extent from those animals (apart from milk and milk products, fleece wool and hides).

34. The wording, "products derived to any substantial extent from those animals" has been chosen to reflect the wording of the NERC Act closely. The term "breeding" also reflects the NERC Act (which refers to "breeding and keeping").

35. In the same way, the term "manufacturing" used in the LCO has been chosen as it more closely reflects the wording of the NERC Act.

36. In order to avoid doubt, the LCO is clear on its face that fleece wool and hides are specifically excluded. The British Wool Marketing Board administers a separate marketing scheme for fleece wool.

37. The draft LCO is consistent with the wider legislative framework set out in the NERC Act. It would confer sufficient powers on the National Assembly for Wales to allow the Welsh Ministers to carry out the activities currently carried out by the Welsh Levy Board (namely raising a levy in the red meat sector), apart from any activities involving fleece wool and hides. The primary intention is to confer those powers on the Welsh Ministers and to dissolve the Welsh Levy Board through secondary legislation. As such, the draft LCO is intended, primarily, as a means of addressing the policy issues that could not be addressed during the progress of the NERC Bill through Parliament.

38. This draft LCO is unchanged from the proposed LCO which preceded it. The proposed LCO was scrutinised by the Proposed Welsh Red Meat Industry LCO Committee of the National Assembly for Wales and the House of Commons Welsh Affairs Committee. The Committees published their reports on 11 December 2008 and 23 February 2009 respectively. Neither Committee recommended any changes to the proposed LCO.

Geographical limits of any Assembly Measure

39. Section 94 of the 2006 Act imposes a prohibition upon Assembly Measures having effect other than in relation to Wales. It provides that a provision of an Assembly Measure is not law in so far as it is outside the Assembly's legislative competence. A provision is outside competence if it applies otherwise than in relation to Wales or confers, imposes, modifies or removes functions exercisable otherwise than in relation to Wales (or gives power to do so). There are limited exceptions for certain kinds of ancillary provision, for example provision appropriate to make the provisions of the Measure effective, provision enabling the provisions of the Measure to be enforced and provision to make consequential amendments to other legislation.

40. The limitation relating to functions other than in relation to Wales prevents the Assembly from passing any Measure conferring on the Welsh Ministers, Welsh local authorities or any other public authority, functions which do not relate to Wales.

Minister of the Crown functions

41. This draft Order in itself does not seek to modify or remove any functions of a Minister of the Crown. By virtue of Part 2 and Part 3 of Schedule 5 to the 2006 Act, the Assembly may not by Measure alter the functions of a Minister of the Crown without the consent of the Secretary of State. In relation to any future proposals that may impact on Minister of the Crown functions, the appropriate UK Government Departments will be consulted and agreement sought to any future proposals to change or modify those functions.

42. The Secretary of State will remain the appropriate authority for the purposes of the NERC Act in relation to cross-border levy raising bodies, although the Secretary of State can only act on cross-border issues under the NERC Act with the approval of each devolved appropriate authority (as appropriate).

Conclusion

43. For the reasons outlined above, the Welsh Assembly Government proposes that the legislative competence of the National Assembly for Wales should be extended in accordance with the draft LCO to which this Explanatory Memorandum relates.

Elin Jones

Minister for Rural Affairs

March 2009

2   Article 2 of the Order (scope) Back

3   Article 3 (Establishment of the Agriculture and Horticulture Development Board) Back

4   Article 6 (Levies) Back

5   Article 17 (Dissolution of existing bodies) Back