Moved by Lord Goldsmith of Richmond Park That the Grand Committee
do consider the Direct Payment to Farmers (Reductions) (England)
Regulations 2022. Relevant document: 30th Report from the Secondary
Legislation Scrutiny Committee The Minister of State, Department
for the Environment, Food and Rural Affairs and Foreign,
Commonwealth and Development Office (Lord Goldsmith of Richmond
Park) (Con) My Lords, I hope it will be useful to your Lordships if
I speak...Request free trial
Moved by
of Richmond Park
That the Grand Committee do consider the Direct Payment to
Farmers (Reductions) (England) Regulations 2022.
Relevant document: 30th Report from the Secondary Legislation
Scrutiny Committee
The Minister of State, Department for the Environment, Food and
Rural Affairs and Foreign, Commonwealth and Development Office
( of Richmond Park) (Con)
My Lords, I hope it will be useful to your Lordships if I speak
to all the instruments, beginning with the draft Direct Payment
to Farmers (Reductions) (England) Regulations 2022, which were
laid before this House on 3 February 2022. The matters in these
instruments are closely related. Made using powers under the
Agriculture Act 2020, they implement important aspects of our new
agricultural policy, as set out in the agricultural transition
plan published in November 2020 and updated in June 2021. The
three instruments apply only in relation to England.
The Direct Payments to Farmers (Reductions) (England) Regulations
2022 apply progressive reductions to direct payments to farmers
in England for the 2022 scheme year. By doing so, it continues
the process of phasing out direct payments in England which began
in the 2021 scheme year. The Government remain committed to
phasing out direct payments in England over the seven-year
agricultural transition period. We are doing so as area-based
payments are unfair: they go primarily to larger landowners,
artificially inflate land rents, stand in the way of new entrants
to farming getting access to land, and offer little return for
the taxpayer.
To help farmers plan, we initially committed in 2018 to phase out
direct payments. The specific reductions provided for in this
instrument were announced in November 2020. As was the case for
2021, higher percentage reductions will be applied to payment
amounts in higher payment bands.
Although direct payments are reducing, total funding to farmers
is not. We will make money from the reductions available to
targeted schemes, which will increase farm productivity, improve
the health and welfare of animals, and enhance the natural
environment. In the coming year, that reallocated money will be
used to meet the rising demand from farmers for countryside
stewardship, our current environmental offer, which has seen a
40% increase in applications. That funding will also be used in
the launch of the first of our new environmental land management
schemes: the sustainable farming incentive. Further, we will also
fund the initial wave of the landscape recovery scheme, with
projects focused on supporting native species and restoring
rivers.
We are also making available free business advice to farmers and
will continue to offer a range of popular grant offers so that
farmers can invest in their businesses and become more efficient
and sustainable. We will also be offering a new suite of
opportunities for farmers, supply chains and researchers to
collaborate on researching and developing innovative but
practical solutions to the challenges and opportunities that
farming faces. This is an essential reform that puts England on
track to meet its legally binding environmental and net-zero
targets, while creating a thriving and self-reliant farming
sector.
The Agriculture (Financial Assistance) (Amendment) Regulations
2022 amend the Agriculture (Financial Assistance) Regulations
2021, approved by this House on 22 March 2021. Those regulations
put in place financial data publication and enforcement and
monitoring requirements for four new financial assistance schemes
established under the Agriculture Act 2020. This amending
instrument extends the range of financial assistance schemes
covered by the 2021 regulations to ensure that any new financial
assistance scheme launched in 2022 and thereafter is subject to
the same checking, monitoring and enforcement requirements that
applied to the original schemes launched in 2021.
The 2021 regulations gave Defra the opportunity to test, refine
and develop these new requirements. The amendments made by this
instrument will now allow the Government to move on to the next
stage of agricultural policy set out in the agricultural
transition plan.
This instrument also strengthens the investigative powers in the
2021 regulations to ensure that where there are suspicions of
offences in connection with financial assistance —for example,
fraud offences—the Secretary of State can, where appropriate,
fully investigate the matter. The amendment will allow the
Secretary of State to investigate not only agreement holders but
applicants, and in certain circumstances the employees or agents
of an applicant or agreement holder. These investigative powers
mirror powers Defra holds in relation to CAP schemes, while
allowing Defra to use them in a more proportionate manner,
reflecting the objectives of the Agriculture Act.
This instrument also removes a reference to grants in Regulation
13 of the 2021 regulations. The amendment will ensure that
“financial assistance” is not limited to grants and can include
other forms of assistance, as provided for in Section 2(1) of the
Agriculture Act.
In drafting the 2021 regulations, Defra engaged with key
stakeholders in a targeted consultation exercise between 4 August
and 1 September 2020, giving stakeholders the opportunity to
review Defra’s proposed approach and express their views.
Feedback gathered during the consultation exercise was used to
inform the content of the 2021 regulations and this amending
instrument.
I turn to the Agriculture (Lump Sum Payment) (England)
Regulations 2022. As part of our wider agricultural reforms, we
want to support farmers who wish to leave the industry, as well
as those who want to stay. We know that some farmers would like
to retire or leave farming but have found it difficult to do so
for financial reasons. That is why this instrument allows a
scheme to be introduced in 2022 which provides lump sum payments
to farmers in England who wish to leave the sector. These
payments will be in place of any further direct payments to the
recipient during the remainder of the agricultural transition.
This is not new money and will not impact the funding of other
schemes. This scheme should also free up land, creating more
opportunities for new entrants and farmers who wish to
expand.
These instruments implement provisions in the Agriculture Act
2020. They continue the transition away from the inefficient
direct payments model of the CAP and they build upon the already
implemented financial assistance framework to cover new schemes,
in line with the agricultural transition plan. I beg to move.
(Con)
I thank my noble friend for introducing these regulations. I
would like to put one or two questions about each in turn.
Could my noble friend the Minister clarify an issue that has been
raised? The Secretary of State for Environment, Food and Rural
Affairs said at Blackpool, if I have understood correctly, that
farmers have more than made up for any income lost since these
new provisions came in—or, in fact, since we left the European
Union. My contacts told me over the weekend that is anything but
the case. It would be welcome to know the basis for the Secretary
of State’s remarks; perhaps there is something I am
misunderstanding.
Regarding direct payments to farmers, the subject of the first
regulation before us, as my noble friend said, this is putting us
on the path to reducing the direct payments until we eventually
come into ELMS. What has been identified, I think by the CLA
especially, is that there will potentially be a 50% gap in the
funding that farmers have been receiving between the regulations
before us this afternoon and the end of the transition period. If
that is the case, and I am sure my noble friend’s department will
be aware of that, I would like to understand how that gap will be
filled so that farmers do not lose out.
I am concerned that there is a lack of understanding. We are
meant to be levelling up the economy and unleashing the rural
economy. I think, at the moment, the rural economy is performing
below par. One reason is that we simply do not have the
tools.
I will take the North Yorkshire moors as an example, or the
Yorkshire Dales, where my brother lives: we still have woeful
broadband internet connections there and the mobile signal
contacts are often potentially extremely dangerous. We learned at
a recent meeting that masts have apparently been put in by two
providers—I believe it is O2 and EE—but these have not been
linked up in this rather broad area of North Yorkshire. My noble
friend’s department is responsible for rural affairs—it is in its
title—so perhaps he could use his good offices to ensure that, as
we leave direct payments and move to an alternative form, farmers
will be given the tools to do the job.
To conclude on the first regulations, there is also a lack of
understanding that tenants are unable to qualify under the new
schemes. I would be interested to know to what extent that is
reflected in contacts that the department has had with tenants. I
know that our honourable friend the Farming Minister in the other
place, , is aware of this. I
commend the work of the Rock review on tenant farmers, but
tenants are being evicted as we speak. There simply will not be
that many of them left, if we carry on at this pace, when we
reach the end of the transitional stage for direct payments to
farmers.
I make a plea to my noble friend: will he help me to understand
how, when it is gone, the direct payments relief will be replaced
for those tenants who cannot claim for anything other than farm
schemes owing to the nature of their farm tenancy agreements?
Those are enshrined in a great many agricultural Acts, not least
the 1947 Act. Can he put my mind at rest on the plight of tenant
farmers?
I add that on common land graziers and those with shooting rights
are trying to compete side by side. I am sure my noble friend
will be aware that there is currently an issue with food
security, not least because we understand that Ukrainians have
been picking most of our fruit and vegetables in the last two or
three years. It appears that, added to the cost of wheat, we may
perhaps soon have in this country a local shortage of such
staples. I wonder how my noble friend expects to address
that.
I turn briefly to the Agriculture (Financial Assistance)
(Amendment) Regulations. Paragraph 7.6 of the Explanatory
Memorandum says that the department will perhaps try to look more
favourably and proportionately on how the offences are to be
inspected; I think my noble friend alluded to this. However, the
first sentence does not entirely fill me with confidence. It
states:
“The instrument also expands the power of the Secretary of State
to investigate suspected offences in connection with applications
for, or receipt of financial assistance.”
That will not go down well, particularly with the owners of small
family farms, who have said at every turn how they are finding
that, if anything, the administrative burdens are increasing. I
would like to hear a little more detail from my noble friend
about how these regulations will applied. How will the full force
of Defra be applied more proportionately?
The third and final instrument before us states clearly that
direct payments are to be replaced. My noble friend referred to a
lump sum payment. This might seem very attractive, particularly
to older farmers. I refer again to my experience of North
Yorkshire in this regard. The difficulty they have asked me about
is: if they apply for this lump sum grant, how will that affect
their tax situation? Did I understand my noble friend to say that
it could be up to £100,000?
We have a shortage of affordable homes in the countryside. Very
few new houses being built across North Yorkshire—and, as far as
I can see, in other rural areas of England—are one- or
two-bedroom, which would be ideal for farmers who have moved off
the farm and want to stay in a village. If we do not make it more
attractive for them, we will prevent newer, younger farmers
coming in, which is a desire of Defra. With those few remarks, I
look forward to my noble friend’s responses.
4.00pm
(CB)
My Lords, I declare my interests as a farmer and landowner, as
set out in the register. I am broadly supportive of the
Agriculture Act and the introduction of the new system of public
funds for public goods, but I need to hear what the Government
have to say about the very different circumstances that apply
today from when the Act was passed.
Like other noble Lords, and this was referred to by the noble
Baroness, Lady McIntosh, I am most concerned with how the
Secretary of State is reported to have said that rising input
prices will be matched by rising output prices. This demonstrates
a lack of understanding, particularly of businesses. The
consultant Andersons has calculated that, whereas the average
rate of inflation for consumers is 5.5%, it is 10% for farmers,
when it is recognised that their principal inputs are fuel, feed,
fertiliser, seeds and labour.
The Financial Times reported yesterday that the European Union
is
“reviewing the bloc’s sustainable food strategy after a concerted
push against the planned reforms by national governments, farmers
and the agriculture industry.”
Is this debate happening here? Surely, in the unfolding
circumstances of inflation and Ukraine it would be sensible, as a
minimum, to delay the planned cuts in BPS payments for this year
and maybe next. This would not involve additional government
funding, only a delay to the introduction of the new schemes.
The new sustainable farming incentive support is, after all, a
fraction of what farmers are due to lose in the BPS. This is
important for smaller farmers with weaker balance sheets, as the
stronger cash flow provided by the BPS would enable them to
purchase inputs, such as fertiliser, on a more timely basis.
In this country, the Food and Drink Federation is now calling for
a national food security council, which could work alongside the
industry to enable a collective response to supply chain
disruptions caused by immediate issues such as rising energy, CO2
and fertiliser prices. Please could the Minister give us some
indication of what the Government are doing to address all these
important issues?
Finally, on the regulation on lump sum payments, I believe the
payment is totally inadequate to encourage farmers to retire. It
is also a disincentive for new farmers to enter the industry. A
payment of up to £100,000 is attractive only if the farmer owns
his own house, particularly in the south of England. This
excludes most tenant farmers. Nothing is achieved if the farmer
rents from the landowner the farmhouse he has been living in, at
an open market rent, as this could be the same or more than his
farming rent.
As a means to free up land for new farmers, this scheme suffers
from the basic problem that the BPS is not available any more,
while the other funding that is available is much smaller. The
only likely “beneficiary”—in inverted commas—both from the
reduction of the BPS and from the lump sum scheme is the
well-financed larger farm. From a farming, environmental and
social point of view, this is not what we want to achieve.
(Con)
My Lords, I thank my noble friend the Minister for galloping us
through these measures. The challenge for us in this Committee is
not to detain him too long, so as to allow him to resume all the
work he is doing. I echo much of what the noble Lord, , said. I declare my
peripheral interests; my agriculture and land are all in Scotland
so I am not directly involved.
The rationale for this process of cuts is the same as when this
was carried out in New Zealand. All input costs and other
things—my noble friend the Minister mentioned rents—dropped in
parallel with the cuts in government funding. In the current
economic situation, there is no way that fertiliser companies
have the slack to cut prices. They are being forced up, as my
noble friend the Minister will know, by 200% or more. Will the
Government be monitoring how this works out in practice and will
they create powers to delay the introduction? It will stretch the
lump sum payments if they are the only remedy that is available,
and people are going to be forced out of business.
My noble friend the Minister has promised that there will be no
reduction in payments to farmers, and I am sure he believes that,
but what proportion are the Government expecting to go to
conservation projects that are not related to farming? Will that
considered to be part of the payment or are they going to be
financed from elsewhere?
The (CB)
My Lords, I declare my agricultural interests as detailed in the
register, although they are not particularly relevant to the
point I want to make.
I do not think the Minister was in this House when we considered
the Agriculture Bill in 2019—I cannot quite remember but I hope I
am right about that. During the passage of that Bill, there was
quite a lot of comment from many parts of the House about the
position of smaller farmers, particularly hill and livestock
farmers, most of whom are marginally profitable, if at all, and
nearly all of whom depend wholly or almost wholly on the public
subsidy that they receive. I made a plea at that point for the
Government to consider not reducing the lowest band of the direct
payments because those are directed only at the relatively small
farmer.
I see in the regulations in front of us that, in fact, the
smaller farmers—that is, those receiving £30,000 or less—are to
receive a cut of 20%. That seems rather harsh. Although I am
perfectly aware that there is no possibility of this regulation
being amended, I wonder whether the two Ministers here would
discuss with their ministerial colleagues the state of the small
farms in this country. I do not believe that this Conservative
Government really want to see small farms eased out of business.
I am really worried about them.
The larger farms will get by. They have efficiencies, they are
usually better capitalised; they will probably be all right under
changed circumstances. But the small family farms, in many cases
tenanted farms and/or livestock farms, are struggling and will
struggle even more with these proposed cuts. I just do not feel
that Ministers are sufficiently sympathetic to the position of
small farmers at the moment. I would be grateful if the Minister
could comment on that.
of Hardington Mandeville
(LD)
My Lords, I thank the Minister for his introduction to these
three statutory instruments dealing with proposals for the
transition to the new financial support payments for farmers in
England post Brexit.
The first SI, which deals with direct payments and reductions,
has been well publicised since Brexit and during the passage of
the Agriculture Bill. Farmers’ payments under CAP have already
started to decrease and this year will see a further reduction in
their payments, from 20% for those on £30,000 up to 40% for those
in receipt of more than £150,000. This sliding scale has been
well trailed and there should be no surprise among farmers about
its further reduction. What is more problematic for them is the
lack of the implementation of ELMS to replace this lost income.
Small farmers will be hit particularly hard.
Consultation on the transfer took place back in February to May
2018 and the new arrangement is now beginning to bite. Are the
Government considering a further consultation on the actual
effects of the sliding scale of reduction in direct payments,
especially as the implementation of ELMS is only slowly coming
into effect during the transition period? Meanwhile, food
security is moving rapidly up the agenda.
While it is to be welcomed that the Government are focused on
biodiversity and carbon sequestration targets, the knotty issue
of food production is somewhat ignored. The British farmer is
very disillusioned at the trade deals with countries on the other
side of the globe which have a very different landscape in which
to produce their livestock and huge economies of scale that are
not open to British farmers. They also have less stringent animal
welfare rules than those which operate here. It is, therefore,
much easier for Australian and New Zealand farmers to undercut
our own hard-working farmers. Does the Minister agree that
farmers are angry about the way they are being treated by the
Government and undercut by cheaper imports?
I turn to the financial assistance amending SI. This seems to be
all about monitoring of farmers’ financial assistance and
enforcement. Over the five pages of the Explanatory Memorandum to
this short SI, there are no fewer than nine references to
monitoring and enforcement. The whole instrument gives the
impression that the farming community is systematically and
deliberately attempting to defraud the Government out of
money.
There is reference to the tree health pilot scheme and annual
health and welfare reviews being exempt from the publication
requirements which apply to all other payment schemes. Can the
Minister say why this is?
Under paragraph 6 of the Explanatory Memorandum, bullet point 5
refers to the Secretary of State being able to investigate
suspected offences. Given the general tenor of this SI, what is
the current level of offences? Paragraph 7.1 again refers to
checking, monitoring and publication of information. In paragraph
7.3, the fourth bullet point refers to
“investigation of breaches and suspected offences in connection
with applications for, or the receipt, of financial
assistance”.
Can the Minister say whether wholescale fraud existed in the
farming community over payments?
Paragraphs 7.5, 7.6, 7.7 and 7.9 refer to suspicion of fraud,
breach of conditions, investigative powers and, again, suspected
offences. It would appear that farmers are being accused of
wholesale fraudulent activity over their payment claims. The
whole statutory instrument wields an awful lot of stick and
hardly any carrot in its treatment of farmers. Can the Minister
please give the Grand Committee some clarity on just what the
basis is for the tone of this statutory instrument, which I find
offensive?
Paragraph 7.10 states:
“The instrument does not impose duties that are significantly
more onerous than before”.
Can the Minister say, however, whether he thinks a family farmer
would be likely to agree with this statement?
4.15pm
Paragraph 11 refers to Defra planning to provide detailed
guidance for each financial assistance scheme. Can the Minister
say when this guidance will be published? No impact assessment
has been produced, on the basis that participation in the
Government’s financial assistance schemes is voluntary. This is
insufficient reason for not producing an impact assessment. What
will happen if farmers decide that they simply cannot make a
living out the new schemes and vote with their feet? The country
will still need to engage in biodiversity, and it will certainly
still need to produce food, especially given the current
situation with the decline in food being imported from Ukraine
and the rising cost of energy and fuel supplies.
I regret to say that I think it would be more truthful if this SI
were renamed the “Agriculture (Financial Assistance) (Prevention
of Fraud) (Amendment) Regulations”. British farmers are not all
dishonest and on the fiddle. They are committed and hard-working,
diligently and desperately trying to make a living during a very
difficult time when there is little certainly for them, in an
industry which is under threat in the long term. I look to the
Minister to give reassurance that the ethos of this SI is
misplaced and not borne out by the evidence.
Lastly, we come to the Agriculture (Lump Sum Payment) (England)
Regulations 2022. It is important that new, hopefully younger,
people are able to enter agriculture. Encouraging farmers to
retire is important as this releases land for new entrants. I
note that the SI refers to releasing land for existing farmers to
expand. Can the Minister give reassurance that farmers wishing to
expand will not push out the interests of new entrants? While it
is important for small farmers to be able to expand their
holdings when land is released, it should be in proportion to
those wishing to get a toe-hold on the farming ladder.
The regulations make it clear that farmers have to release the
land before they can receive the lump sum payment but may retain
five hectares of land. Can the Minister say what the rationale is
behind retaining five hectares? This may be standard practice
but, as I am not a farmer, nor come from a farming family, it
would be useful to know just what is behind this.
Paragraph 7.8 of the EM indicates that applicants who are part of
a woodland creation scheme would not have to transfer their land.
Can the Minister give reassurance that the woodland creation
schemes do not include rapid growing conifers but the type of
trees that are slow growing and likely to increase the
biodiversity of the land and the return of species which have
previously abandoned the area?
The instrument contains a formula for calculating what the lump
sum payment will be. I readily admit that algebra is not my
strong point, but can understand how this will be calculated. The
maximum amount payable is £100,000 and Defra calculates that 87%
of farmers will not reach this cap. This does not seem a
sufficient reward to encourage farmers to leave the land after a
lifetime of desperately early mornings, slogging through all
weathers and very late evenings in order to supply milk, meat,
vegetables and grain, often for a poor monetary return. Perhaps I
am overly simplistic in my view, but I am not sure this is going
to make the room for new entrants which the Government were
hoping for—the noble Lord, , referred to this.
This suite of SIs work together to give a package of measures
across the farming industry which should bring some certainty to
the farming community but which I fear are not likely to do so.
Together with the existing trade deals and those currently under
negotiation, it is no wonder that the British farming industry
does not feel that the Government have its back.
(Lab)
My Lords, I thank the Minister for his introduction to these SIs,
which, as he said, follow on from the detailed debates we had
during the passage of the Agriculture Act, and indeed previous
SIs which began to roll out the detailed proposals.
First, addressing the SI which introduces year 2 of the basic
payment scheme reduction, as has been said, this is not a
surprise, as the plan for this reduction in 2022 has been set out
in previous documents. Nevertheless, even for the lowest category
of claimants, a drop from 5% to 20% is significant. Already the
farming press is reporting significant cases of hardship, and the
noble Lord, , recently admitted in the
Chamber that it was hard to see how many upland farmers could
continue to make a living under the new regime. We know, for
example, that pig farmers have been particularly badly hit by
what , the Minister in the
other place, has described as an “exceptionally challenging
period.” I therefore share the concern that several noble Lords
raised about the Secretary of State’s comments last week, in
which he said that the reductions in the basic payment scheme for
farmers would be more than recouped by their increased income
from the sale of produce. I do not think anyone of us felt that
that was a reality, and indeed I very much share the comment of
Minette Batters, who said
“one of us is … living in a #ParallelUniverse”.
I think she summed up the views of many when she said that.
Perhaps the Minister could comment on what seems to be an
unrealistic comment of the Secretary of State and say whether he
agrees with it.
Of course, the Welsh Government have de-risked the changes by
postponing the basic payment cut for a year to allow the farming
community to adjust to the new arrangements. Can the Minister say
what the impact of this is, with farmers receiving different
subsidies throughout the devolved nations, and what is the impact
on the internal market from the phasing out happening at
different timescales?
I am conscious that this SI is for one year only, as was the
previous year’s SI. In the current climate that probably makes
sense given the huge traumas that are going on in the sector. As
noble Lords have said, we are seeing the impact of unforeseen
world events causing massive increases in the cost of fuel and
gas, and shortages of feed and fertiliser. The Explanatory
Memorandum in paragraph 14 makes it clear that these arrangements
will be kept under review, saying that
“Defra and its agencies will monitor and review the impact of
this instrument as part of its standard policy-making
procedures.”
Can the Minister shed more light on what these monitoring
arrangements are? I would have thought that in the current
climate that is exactly what such flexibility was designed to
address, and presumably at this moment risk analyses are taking
place as to the impact of these huge world events. Can the
Minister say what tests would have to be met before the
Government agreed to deviate from the rollout of the basic
payment cuts? If not now, when would they ever agree to do
it?
Can the Minister also give more information about the savings
being made from the first year of the basic payment cut? Again,
as noble Lords and the Minister said, it has been said that no
money will be lost from the overall pot of money if it is not
reallocated via other ELM schemes, but we know that many of those
other ELM schemes are not fully up and running yet. Can the
Minister reassure us that none of the unallocated money in that
first year has been reclaimed by the Treasury? We know what the
Treasury is like, and it is hard to imagine that it has allowed
that money to sit in a pot awaiting its allocation for future
years—it is very generous if it is thinking like that. I think we
would all like to be reassured that the cuts in one pot are there
and can be shared and made available for this and future years.
Just so that we can have some further reassurance on that, when
will we be able to see the accounts to give us some factual
information?
The noble Duke, the , raised the split in the
distribution of the ELM schemes. Can the Minister say whether it
is still the intention to split it evenly between the three
pillars so that a third will still be available to go to
individual farmers rather than the larger projects that were also
envisaged under the ELM portfolio?
The second SI tightens up the rules for checking, monitoring and
enforcing the applications for financial assistance. I do not
have a great deal to say on this, although I agree with the noble
Baroness, Lady Bakewell, that the tone is rather unfortunate.
Obviously, it is important that schemes are watertight and not
open to fraud, but it is also important that we have the right
degree of flexibility in terms of the investigations that take
place. However, I point out the irony of Defra deciding to go its
own way on leaving the EU, only for it to concede in paragraph
7.7 of the Explanatory Memorandum that the changes that it is now
introducing
“will bring Defra’s investigative powers closer to those …
previously created under Common Agricultural Policy … rules”.
I turn to the third SI on the arrangements for lump sum payments;
again, noble Lords have raised a number of concerns about this.
My first reaction on reading this SI was: is this it? Is this all
we are going to get? I had expected a much more detailed document
setting out the criteria, any exemptions and much more detail
about how and to whom the land could be transferred. We
understand the need for and potential benefits of having a scheme
that allows farmers to retire with some dignity if they do not
want to participate in managing their land for environmental
benefits, but we also need to be confident that these retirement
payments will transform the way that the land is subsequently
managed and owned. This was very much our ambition during the
passage of the Agriculture Act.
The Minister may have seen the briefings that we have been sent
by Sustain, which echo many of our concerns about this proposal.
A fundamental concern is that there is no priority for the land
that becomes available to be offered to new entrants. In the
Commons debate, the Minister, , said:
“The lump sum exit scheme sits alongside extra support to help
new entrants into the industry.”—[Official Report, Commons,
Delegated Legislation Committee, 15/3/22; col. 13.]
But these two schemes are not linked up. There is currently no
incentive for a retiring farmer to offer the land to a new
entrant. It is far more likely that, as we have always feared,
the land will be gobbled up by the large landowner next door, who
will have an inside track on details of the sale and will use it
as an opportunity to expand their landholdings. This was the
point made by the noble Lord, , who also made a good point
about these sums of money simply not being sufficient for people
who want to move off the land to be able to buy a house away from
the farm.
Another alternative is that the land will be bought up by large
corporations that have no farming background but are keen to
offset their carbon emissions or to use it for biodiversity net
gain to offset developments elsewhere. We know that the
Government are encouraging this, and in many ways those schemes
have merit, but we need to know where the land will go and who
will be making use of it.
If we are not careful, both those depressing scenarios —the
landowner and large corporations—are very likely unless the
provisions in this SI for disposal of the land on retirement are
tightened up. The end result is that we will see small family
farms squeezed out of the sector, which was the point made by the
noble Duke, the .
Will the Minister look at this again and provide some reassurance
about new entrants and where that land will go? Will he also look
again at the very narrow definition of “connected person” in
Regulation 7(1) of the Agriculture (Lump Sum Payment) (England)
Regulations 2022, because, as it stands, you can transfer the
land to any family member as long as it is not your partner or
spouse. I ask again whether this been fully thought through,
because it seems likely that the payments will be made within a
family—maybe to the father—with other members of his family
carrying on farming much as before. Again, we are facing a
scenario where new entrants will find it very difficult to make
headway in coming on to the land.
4.30pm
Finally, what are the specific exemptions where payments can be
made but land does not need to be transferred? As the noble
Baroness, Lady Bakewell, said, the example given in the
Explanatory Memorandum is that if a farmer plants trees under a
woodland creation scheme, they do not have to transfer the land.
Is there not a danger that this will encourage a huge shift to
planting trees, where a more holistic environmental use of the
land makes more sense? Of course, we all want trees to be
planted, but we want this to be, as we always say, “the right
tree in the right place”. It seems very worrying that this will
lead to a wholesale obsession with planting trees when we need to
be more in line with the full holistic needs of that land use for
the future. The woodland exemption was given only as an example.
What other exemptions are being considered to avoid the land
being transferred?
I find these proposals depressing, because I do not think that
they will achieve the promise, set out in the Agriculture Act, to
broaden land ownership and bring a new generation of
environmentally focused farmers into the sector. It feels like
the proposals are rushed and flawed. I am sorry to have asked a
number of questions here, but I think it is important for the
future of the farming community and of our environmental land
that we have a substantial reassurance that our concerns are
misplaced and the right outcomes will be achieved. If the
Minister is not able to do so today, I hope he will feel able to
write with more detail about how the retirement scheme in
particular can breathe new life into the sector.
of Richmond Park (Con)
I thank all noble Lords who have contributed to the debate. I
will do my best to answer the many questions that have been put
to me without exceeding my time slot.
The noble Baroness, Lady Bakewell, asked a number of questions in
relation to the reduction of direct payments. We do not plan to
consult further on the reductions, but the Government have
published an evidence paper, updated in September 2019, setting
out the expected impacts of removing those direct payments, and
that included an analysis by sector, location and type of land
tenure. It provided an analysis of how farm businesses across all
sectors can offset the impact of reductions in direct payments.
An update to that analysis was due to be published shortly, and
it has been delayed—only slightly, I hope—in light of what is
happening in Ukraine and the impact this will have on farm
business incomes; that point was made by a number of noble Lords.
We are reviewing this to ensure that the analysis remains fit for
purpose.
All funding released from reductions in direct payments in
England is being reinvested into delivering other schemes for
farmers and land managers in this Parliament. I hope that is some
reassurance to the noble Baroness, Lady Jones, as well.
The noble Baroness raised other issues about reductions to direct
payments. A small number of farmers leave the industry each year;
that has been the case for some years now. They do so for a whole
variety of reasons. According to the data we have from the Rural
Payments Agency, in 2020 around 1,000 basic payment scheme
claimants in England can be assumed to have exited the industry.
It is too soon to produce equivalent data following the 2021
scheme year, but for the basic payment scheme 2021, the
reductions for most farmers were modest. Around 80% of claimants
would have received a reduction of around 5%, which is within the
scope of the year-to-year variance experienced historically in
any case due to currency fluctuations.
On the impact on the internal market from phasing out direct
payments, these payments are largely decoupled from production
and therefore they should not be trade distorting. Within the UK,
there are already significant differences in the implementation
of direct payment schemes, and while direct payments currently
form an important contribution to farm income, as the noble Duke,
the , said, in many cases it
is critical—the reason they are still in business. They can
nevertheless hamper productivity growth in the agriculture sector
and drive up land rental prices. Removing them should raise our
agriculture sector’s productivity across the board, leaving our
farmers in a better position to compete.
The noble Baroness, Lady Jones, also asked what tests would have
to be met before the Government agreed to deviate from the
rollout of the basic payment cuts. Defra regularly gathers and
publishes statistical data on the current state of the industry;
for example, the results from the 2021-22 Farm Business Survey,
which will cover the first year of progressive reductions, will
be published this autumn. Data is also gathered through bodies
such as the Animal and Plant Health Agency and the Rural Payments
Agency, and that includes information on various aspects of the
sector, such as the impact of reductions in direct payments. That
allows the Government to monitor the sector and to make better
decisions on the future of farming.
The Government are committed to phasing out untargeted direct
payments. We do not believe that they are the best way to support
farmers, as I tried to explain in my introductory remarks. The
noble Baroness also asked about the savings being made from the
first year of the basic payment reductions. For 2021,
approximately £178 million was freed by reductions to the
payments. This is being redirected into delivering other schemes
for farmers.
The noble Baroness, Lady Jones, also asked for reassurance, as I
think did my noble friend Lady McIntosh, that none of the
allocated money from direct payment reductions has been reclaimed
by the Treasury. All the funding released from reductions in the
direct payments is being reinvested into delivering other schemes
for farmers and land managers during this Parliament; it is not
being hoarded for long-term future use. That amounts to an
average of £2.4 billion a year over the period 2021-22 to
2024-25.
We have been clear all along that we will spend money where it
delivers for the environment, alongside food production, and we
need to support changes across the entire farm landscape to
deliver those broad and connected ambitions. That is why we have
increased the countryside stewardship payments by an average of
30% and introduced the sustainable farming incentive. Direct
payments are not about food production. The decoupling of
payments from food production took place around 15 years ago. Our
evidence suggests that the removal of direct payments in England
would have only a marginal effect, if any, on overall food
production.
With regard to the Agriculture (Financial Assistance) (Amendment)
Regulations 2022, a shared enforcement framework was previously
established by the Agriculture (Financial Assistance) Regulations
2021, ensuring that powers of entry will be exercised, and
inspections carried out consistently across the schemes. This
instrument extends that framework to cover additional new
financial assistance schemes and broaden the investigative powers
of the Secretary of State, in a manner consistent across the
different schemes. Training and guidance will also be provided to
those authorised with powers of entry or to carry out inspections
to ensure that these are exercised in a consistent way.
The noble Baroness, Lady Bakewell, asked about the tree health
pilot scheme and the annual health and welfare reviews being
exempt from publication requirements; she wanted to know why that
was the case. Specific location details and personal information
identifying a land manager or landowner in relation to tree pest
and disease findings will not be published. This information is
considered to be sensitive and potentially damaging to the
individuals or businesses concerned. It could also inhibit the
reporting of future cases of pest and disease outbreaks. We will,
however, publish aggregated data for these payments.
The noble Baroness, Lady Bakewell, also asked about the level of
fraud in the farming community and overpayments. These
regulations offer a range of enforcement measures to deal with
fraud or breaches of scheme rules, including the withholding of
financial assistance, recovering financial assistance previously
awarded, and prohibiting a person from receiving financial
assistance for up to two years. Appropriate sanctions will be
available and applied where there are clear cases of misuse of
public funds; for example, through neglect, serious cases of
non-compliance or fraudulent behaviour. The noble Baroness asked
for specific numbers but I am afraid I will have to get back to
her on that because I do not have them, but the point she made,
echoed by the noble Baroness, Lady Jones, will have been heard
loud and clear.
The noble Baroness, Lady Bakewell, asked when the guidance will
be published for each financial assistance scheme. I understand
the importance of giving farmers as much time as possible to
plan. Detailed guidance for stakeholders will be published in
good time ahead of each scheme being launched, giving farmers
support to implement the standards and understand the new rules.
This guidance will be written in plain English, which will set
out and explain the detailed scheme rules and requirements. Some
schemes, such as countryside stewardship and landscape recovery,
are already live and appropriate guidance has been published. For
other schemes, guidance will be published in good time ahead of
their launch. For example, for the SFI scheme, we will publish
final details of the offer for 2022 and scheme information later
this spring—some might say we are in spring now, so shortly—ahead
of opening for applications later in the year.
Without the Agriculture (Lump Sum Payment) (England) Regulations
2022, we will not be able to meet our public commitment to offer
farmers a lump sum exit scheme this year. This would limit the
options we can provide farmers as direct payments are phased out;
it would also limit structural change in the farming sector. We
believe that the calculation of the lump sum payment is fair. Our
calculation means that, for most farmers, the lump sum will be
approximately equivalent to the amount they might otherwise
receive in direct payments for the years 2022 to 2027, as these
are phased out over the remaining years of the planned
agricultural transition.
The noble Baroness, Lady Bakewell, asked about the rationale
behind the stipulation to retain five acres. Well, farmers will
be able to keep up to five hectares of agricultural land. This
allows, for example, a farmer to keep some land around or near
their farmhouse. We feel this flexibility will help with uptake
of the scheme, which will create more opportunities for new
entrants and expanding farmers. In relation to the question that
she asked about trees, all publicly subsidised planting has to
comply with the UK forestry standards. They are based on a
UN-sanctioned approach to sustainable forest management. The UK
forestry standards are, in effect, a live document that is being
updated all the time. At the moment, the emphasis is placed
heavily on the need to use public money to deliver the maximum
possible public good. This means not just having monoculture
conifer plantations, but ensuring we have a genuine yield in
biodiversity and numerous other public benefits, such as flood
management and flood prevention. As it happens, the overwhelming
majority of woodland creation supported by the Nature for Climate
Fund grant schemes will be native broadleaf. That can be judged
by the applications coming in, even though this very new fund is
in its first year.
Returning to a question put to me by the noble Baronesses, Lady
Bakewell and Lady Jones, which I realise I did not answer, we
think that the lump sum exit scheme will free up land for new
entrants and expanding farmers. It is about providing
opportunities for farmers, rather than aiming for a particular
balance between those entering the sector and existing farmers
who wish to expand. We recognise the importance of providing
additional support for new entrants alongside that lump sum exit
scheme. Attracting new talent into food and farming is vital, if
we want a sustainable and productive agricultural sector.
As set out in our agricultural transition plan for 2021 to 2024,
we will provide funding to create lasting opportunities for new
entrants to access land, infrastructure and support to establish
successful and innovative businesses. In January this year, the
Secretary of State announced the development of incubator pilots
for new entrants, with council farms playing a key role. The
details of the pilots are currently being designed and we hope to
launch the pilot scheme later this year.
The noble Baroness, Lady McIntosh made a number of comments and
raised questions, some of which overlapped with points made by
the noble Duke, the , particularly on small
and tenant farmers. At the end of January this year, the
Secretary of State announced an independent review, chaired by
the noble Baroness, Lady Rock, dedicated to looking at how Defra
schemes can better support the tenanted sector, as farming in
England is reformed to be more sustainable. The review period is
expected to be six to nine months, and it will publish its
findings and recommendations later this year. I will not go into
all the details on the group of experts—who has been selected and
how, or who they represent—but it is a broad range and I am happy
to provide that information if the noble Baroness would like me
to. I could tell her now, if she asks, but I am worried about the
time.
4.45pm
The tenancy working group, as it is called, will collect evidence
and bring forward recommendations on a whole range of issues: how
scheme design can facilitate the participation of and benefit to
tenant farmers in the new environmental land management schemes;
what policy initiatives will secure the long-term sustainability
of England’s tenant farming; how best to foster positive and
long-term tenant/landlord relationships; ways to minimise any
potential loss of land from the tenanted sector to avoid damaging
its resilience; why it might be necessary to look for new
legislative or regulatory powers in the future—I shall stop
there, because the list is rather long.
(Con)
I have that already. I am just slightly disappointed that the
working group will not now report for nine months; it was meant
to report within six months.
of Richmond Park (Con)
I said six to nine months; I am afraid that is the answer I
received. I shall check on the timescale, but I assume six to
nine months is correct, since that is what my colleague, my noble
friend , has told me.
The noble Duke, the , raised a broader point
beyond tenant farmers, about small farmers. He is right: small
farmers are the backbone of our countryside, and any policy that
results in a reduction in the diversity, breadth and viability of
our small farmers is not a good one. They are critical to the
future sustainability of our countryside. Farmers will be
supported throughout the seven-year transition period to the new
system. We are reducing direct payments, as the noble Duke said,
but that will be gradually over the seven years, which will give
farmers time to adapt and take advantage of the new offer. Money
saved by direct payment reductions will be reinvested directly
into English farming and agriculture through our new schemes. The
Government are committed to providing the same cash total to the
sector in each year of this Parliament. Some £10.7 million of
funding has already been awarded through the interim phase of the
future farming resilience fund. That provides, among other
things, free business support to farmers and land managers to
help them navigate the changes during the early years of the
agricultural transition period.
Upland farmers have a particularly important role to play in
addition to that of food production, and that is in land
management. In their contribution to alleviating the threat of
floods, which blight so many communities in this country, there
is almost no one in a more important position than those farmers.
They are absolutely in the mix when it comes to the new system
that has been designed.
I turn to the questions asked by the noble Lord, , and my noble friend the
. My noble friend asked
what proportion of the money would be spent on schemes which are
not related to farming and are purely conservation. Again, I
cannot give him a direct number, but there are schemes beyond the
system being described today which are designed to support, for
example, natural regeneration or tree planting, most of the
funding for which comes from the nature for climate fund. We are
talking here about a slightly different system which the nature
for climate fund supports, but ultimately this is all about good
land management.
The Government published a paper, which was updated in September
2019—I may have mentioned it earlier—setting out the impacts of
removing the direct payments. That paper is being updated as we
speak. The delay is caused by the conflict in Ukraine.
My noble friend and the noble Lord, , talked also about the
impact on consumer food prices. The analysis that we have made in
Defra suggests that any effect of direct payments on consumer
food prices is limited. However, we are doing a full impact
assessment on food security up to 2024, and the results will be
made available and will inform future policy design.
It is important that we continue with the transition as planned.
Applying reductions to direct payments frees up money which we
can use to pay farmers and land managers to encourage
environmental protection and enhancement, public access to the
countryside, and the safeguarding of livestock and plants. We
must also provide opportunities for farmers who wish to leave
farming to do so in a managed way. These instruments will allow
the Government to ensure that this can be done. I hope that I
have answered the key questions put to me today. I beg to
move.
Motion agreed.
Agriculture (Financial Assistance) (Amendment) Regulations
2022
Considered in Grand Committee
4.50pm
Moved by
of Richmond Park
That the Grand Committee do consider the Agriculture (Financial
Assistance) (Amendment) Regulations 2022
Relevant document: 30th Report from the Secondary Legislation
Scrutiny Committee
Motion agreed.
Agriculture (Lump Sum Payment) (England) Regulations 2022
Considered in Grand Committee
4.50pm
Moved by
of Richmond Park
That the Grand Committee do consider the Agriculture (Lump Sum
Payment) (England) Regulations 2022
Relevant document: 30th Report from the Secondary Legislation
Scrutiny Committee
Motion agreed.
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