Support for Hill Farmers

Wednesday 12th February 2020 Westminster Hall

[Mr Peter Bone in the Chair]

16:00

[Tim Farron (Westmorland and Lonsdale) (LD)]

I beg to move,

That this House has considered support for hill farmers.

It is an honour to serve under your chairmanship and to be guided by you today, Mr Bone. It is also a real honour to be asked to speak on a subject that is of massive importance to my constituents and to people across the country.

South Cumbria’s landscape is spectacular. Much of it is within the Lake district and the Yorkshire dales, and pretty much all of it has been maintained over generations by our hill farmers. The UK’s uplands are vital to us all, yet they are generally exposed and remote. Furthermore, upland farms are disadvantaged compared with lowland ones due to a shorter grass growing season. Hill farming is therefore often a marginal occupation. My fear is that the unintended consequences of transition to new payment methods and new export arrangements could push hundreds of marginal upland farms out of business. In this debate, I want to help the Government to get this transition right, so that our hill farmers do not pay an unbearable cost and so that Britain does not lose a priceless asset.

I speak regularly to hill farmers in our communities in Cumbria. Many of them are terrified of what is to come and do not have confidence in the Government plans revealed thus far. Right now, their No. 1 concern is the plan to phase out the basic payment scheme from next January, before the environmental land management system is ready to be delivered. The figures from the Department for Environment, Food and Rural Affairs tell us that an average of 85% of livestock farm incomes come from the basic payment.

Despite regular calls from the National Farmers Union, the Tenant Farmers Association and others to think again, the Government have not listened so far. A ham-fisted phasing out of the basic payment may see farm failures across the country, especially in the uplands. The stark reality is that the phase-out of the basic payment begins in 10.5 months’ time, but environmental land management schemes will not be available for everyone until 2028. Rolling out schemes before they are ready can have a catastrophic impact. The lesson of universal credit should have taught the Government that.

We have already had the first predictable evidence of slippage in the timetable. The plan to test a national pilot scheme for ELMS this year has already been pushed back to the autumn, yet the Government insists on ploughing ahead with the phase-out before anyone is ready, least of all the Government themselves. Removing the existing support before the new system is properly tested and ready to implement seems reckless and will surely cost many hill farmers their businesses, and many farming families their future.

Projections prepared by the Uplands Alliance using DEFRA’s farm business survey data from the Andersons Centre consultancy suggest significant reductions in farm business incomes by 2024, and further show a net loss of income to the average farm in 2028, even assuming that ELMS is fully rolled out by that stage. Put simply, the Government are asking hill farmers to endure seven years of lost income, seven years of uncertainty, and seven years when we may lose the backbone and future of our industry, with devastating long-term consequences for our food supply and our environment. I simply urge the Minister to delay the phasing out of the basic payment until the environmental land management system is fully operational for everyone. It would be a tragedy if the Government messed up what might well be a positive new scheme by botching the implementation period.

For all that uncertainty, the outline of the new environmental land management system is cause for some optimism. It is right that we should reward farmers for public goods. The industry is behind that and so am I, but let us get the details and the implementation right. The greatest public good that comes from our uplands is of course the production of food: 45% of UK lamb is produced in the uplands, as is 55% of the UK suckler herd and 35% of UK milk. Given that straw and feed grown in the lowlands go to feed animals in the uplands, if hill farming recedes, clearly lowland farming would soon sadly follow. A country that loses capacity to feed itself is a country in big trouble.

An alarming 50% of the food we consume is imported. Twenty years ago, that figure was more like 35%. Our food security looks more and more tenuous as every year goes by, although it is not just the Government’s stubborn insistence on the premature phase-out of basic payments that threatens our food security but the worry that ELMS itself may inadvertently or deliberately see the draining of funds from upland farms.

One mistake would be to fail to use the skills of hill farmers to fight against climate change. For example, commendably, the National Trust wants to increase the amount of its land used for trees from 7% to 17%, but one means of delivering that would be completely to bypass farmers. Indeed, any other landowner might do the same. However, if we bypass hill farmers, we will lose hill farmers, and if we lose hill farmers, we will lose the very people whom we most need in order to deliver the whole range of vital environmental goods to tackle and to mitigate climate change. I therefore ask the Minister to ensure that ELMS is delivered only to active farmers. After all, it would be a disgrace if the replacement of the common agricultural policy was a policy that removed agriculture from the commons.

Recently, our rural and farming network took the DEFRA policy team to a hill farm near Slaidburn. The farm is already in a higher-level stewardship scheme and doing all it possibly can, but it is still more reliant on the basic payment than on environmental payments. They asked the DEFRA team what else the farm could do environmentally to make up for the imminent loss of the basic payment. The Department offered no ideas. Perhaps the Minister will be able to reassure hill farmers that ELMS will not be biased against certain categories of farm simply because of the nature of their landscapes.

In addition, a concern among farmers in my community is that the new ELMS will be much easier for some farms than others by virtue of location and, to some extent, sheer good luck. For example, a grassland farm, with mostly fences for boundaries and not so many walls or hedges may struggle to tick sufficient environmental boxes, compared with a farm with some existing woodland, perhaps a bit of wetland, or hedges.

Hill farmers are essential to the promotion and protection of biodiversity. They maintain rare natural habitats and ensure the upkeep of our rich heritage landscapes. They protect iconic British breeds such as Herdwick, Swaledale and rough fell sheep. We have to be prepared, through ELMS, to count the rearing of such breeds as a clear public good worthy of attracting public money. Indeed, many of the public goods provided by farmers are by-products of the fact that we have viable farms producing food. That is why a major focus must be to ensure that hill farmers get a fair price for their produce.

That is why, to be honest, I am disappointed that the Government are not more forthcoming about plans to expand the role of the Groceries Code Adjudicator, a piece of machinery that the Liberal Democrats were proud to help deliver in government—but we were sad that the Conservatives chose to water it down before it reached the statute book. Will the Minister commit to ensuring that the Groceries Code Adjudicator has its remit widened so that it can look at the whole supply chain and act on referrals from advocates such as the NFU, the Tenant Farmers Association and indeed Members of Parliament, and so that it is given the power to levy sanctions that will truly hurt those retailers and processors who abuse their market power to pay our farmers a pittance?

Water management work in the uplands is utterly vital—the impact of Storm Ciara over the weekend was a reminder of just how important that is. Farmers protect our towns and villages from flooding. In December, we marked the fourth anniversary of Storm Desmond; the memories and the financial and emotional impact of the devastation it caused are still fresh for many of our communities in Cumbria and elsewhere. Amidst the pain there is much to be celebrated, and we can be proud about how our communities responded and coped. Farmers were a key part of that; they did essential work in places such as Kentmere and Longsleddale. For our farmers to do vital work to mitigate flood damage and, indeed, be part of natural flood management schemes, they need to be equipped. The scope of public goods must be broad enough to reward them for it.

Central to environmental land management schemes must be farm succession. Attracting young people to hill farming, incentivising them to enter the industry and supporting them as they grow their business means allowing older farmers to retire with dignity and to an affordable home. Given the astonishing price of housing in rural communities such as mine, that will take serious Government intervention.

Contrary to popular myth, many hill farmers voted remain—the majority in my patch did—but those who voted leave often tell me that they were motivated by a desire to do away with the red tape and bureaucracy of the CAP—or rather, the British application of the CAP. I trust that the Minister will not replicate or even add to the burdens of bureaucracy, badly run payment agencies, excessive farm visits and insecurity that have been the hallmarks of a hill farmer’s lot in recent times.

To achieve a fair deal for hill farmers, it is essential that the Bill defines public goods to recognise the incredible work that they are doing. The public good that I fear may be in most danger is perhaps the hardest one to quantify, measure or reward: the work that farmers do to maintain the aesthetics of our landscape. I can look down Langdale from the Pikes. I do not know how to quantify and codify a financial reward for the farmers who carefully maintain the view below me, but I know that it takes my breath away.

Those farmers underpin the £3-billion-a-year Lake district tourism economy that employs 60,000 people throughout our county. Our farmers’ work was acknowledged in 2017 when UNESCO granted world heritage site status to the Lake district. It will not be easy to quantify and codify that, which is why the Government should not fool themselves that they will be able to do so competently and without teething trouble in just a few years. The Government need to give themselves time and not rush the phasing out of basic payments.

Britain’s uplands feed us. They give us biodiversity, protection from flooding, carbon sinks, heritage and rare breeds. They underpin a multi-billion-pound visitor economy. They give us space to breathe, to soak up awesome creation in its rawest form; they stir us and they settle us.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate the hon. Gentleman on securing this debate. He has outlined a number of major strategic objectives, and said that farmers are part of the solution, not the problem. Does he agree—I am sure he does—that the four Governments of the UK need to work with our farming community to achieve the strategic objectives he outlined?

[Tim Farron]

The hon. Gentleman makes an important point. The essence is this: farmers manage our landscape and work it as owners or tenants—many of our constituents are tenant farmers who have even more insecurity in the current situation. Without their being able to make a living as active farmers—food production is their primary motivation—we lose their presence on the landscape to deliver all those public goods. First and foremost, the Government must maintain the current farmers on the uplands. If by a slip between cup and lip over the next seven years, we lose a chunk of a hill farming community, we will not get them back. Even if we do, it will be at vast expense.

The delivery of public goods is undoable without the people to deliver them. That seems basic common sense. ELMS fills me with some optimism; the thinking behind the new scheme is positive and the industry as a whole welcomes it. What I am bothered about is that the transition could be so clunky, and lacking understanding of how marginal the incomes of those farmers are, that we end up losing them in the process, and they will see it as a seven-year notice to quit.

We borrow Britain’s uplands from the generations to come, and we are beyond grateful to those who maintain them. We must not, either by design or by accident, threaten the future of our uplands or their stewards.

16:15

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Westmorland and Lonsdale (Tim Farron) on securing this debate. He is a champion for hill farming areas, and hill farming is particularly important in his constituency. As he described quite eloquently, hill farming is a critical part of some of our most important landscapes in this country.

Those areas are the home of important heritage native breeds, which I will come on to. The sheep farming industry, which is predominantly based in hill farming areas, using some of those breeds, is large: worth around £1 billion a year. The UK sheep sector, despite what some say, is world leading—we are the largest producer in Europe by a very long way. Over a third of sheep production in Europe is carried on in the UK. Internationally, we are the third or fourth largest exporter of lamb after countries such as Australia and New Zealand. There is a very strong brand for UK sheep production, and we have strong regional brands—whether west country lamb, lamb from upland areas such as the hon. Gentleman’s, or Welsh lamb, which is famous around the world. Let us not forget Scottish lamb for good measure, including on Shetland.

We are going through a big change in our industry as we leave the European Union and chart a different course. The first thing I want to say relates to our trade with the European Union. We export a significant amount of lamb to the European Union: about a third of what we produce nationally. That is why the political declaration—the heads of terms on the future partnership—being discussed envisages zero tariffs on all goods. If that were not to be possible, depending on how negotiations go as far as the sectors affecting the Department for Environment, Food and Rural Affairs are concerned, getting at least tariff-free access or a tariff rate quota on lamb would be a very high priority. We hope that it will be possible to get zero tariffs on all goods, since that is what both parties have committed to try to achieve.

[Jonathan Edwards]

When it appears in the news that British Cabinet members are talking about there being trade barriers, or the Prime Minister says that he is looking forward to importing Ugandan beef, does the Minister think that alleviates or heightens anxieties in the rural communities we represent?

[George Eustice]

The Prime Minister is also very keen that we open up new markets. There are great opportunities for our lamb sector in markets such as the middle east and the far east, including in countries such as Japan. We should not always take a glass-half-empty view when it comes to trade. We also have offensive interests, particularly in our livestock sector.

We are looking at those opportunities around the world for our lamb sector. I have already had discussions with New Zealand, for instance, about whether together the UK and New Zealand could develop the market for lamb in the United States. There is a very small, underdeveloped market for lamb in the US at the moment, but it is growing, particularly among younger consumers in the US. These are all opportunities that we have as we leave the European Union and take back control with an independent trade policy.

I want, though, to spend most of my time talking about future agriculture policy, as concerns about the loss of the basic payment scheme—direct payments—and the speed of the transition were at the heart of the opening remarks made by the hon. Member for Westmorland and Lonsdale. I will simply say that, in terms of future policy, I do not think it possible to defend the idea of arbitrary, area-based payments, because in essence they are a subsidy for land tenure or land occupation and land ownership. That means that the biggest payments go to some of the wealthiest landowners in the country. It means that people who perhaps sell a business and get millions of pounds in profits can invest that money in land, to shelter their wealth, and then on top of that claim a BPS payment, a subsidy, from the taxpayer. That just is not sustainable, justifiable or defensible in the long term.

Therefore the premise behind our Agriculture Bill is this: let us get rid of the subsidy on land tenure or ownership and instead pay farmers properly and reward them adequately for the work that they do for the environment. The system will be based on payments for delivering public goods and environmental outcomes and for protecting genetic heritage through rare breeds, protecting water quality and so on.

[Scott Mann (North Cornwall) (Con)]

My hon. Friend the Minister will know as well as I do that many upland farmers also support some of the tributaries that run into our main estuaries, and we have declining populations of salmon and sea trout in those. Will ELMS be trying to repopulate some of our rivers with salmon and sea trout? Is that something that we can do through upland farming?

[George Eustice]

It is absolutely the case that one key priority of the future scheme and one objective set out in clause 1 of the Bill is about improving water quality. Any measures and interventions that farmers implement that will lead to improved water quality will be exactly the type of project that we would want to support.

I also point out that it seems already to be the case, from some of the work that we have done, that when it comes to sheep farmers in particular, around 30% of them do not actually receive the BPS payment; they are in some kind of contract farm agreement and effectively their landlord takes the BPS payment while they are the ones doing all the work and raising the sheep. It is not at all clear that the current area-based BPS payment is in fact in the interests of the sheep sector.

[Tim Farron]

I want to be very clear that I have agreed with everything that the Minister has said about the area-based payment, its unjustifiable nature and how it is not a basis on which to continue—indeed, I support in principle what we are talking about with the environmental land management scheme. However, my concern is that we have a seven-year transition in which we are about to phase out the current scheme more quickly than we are to phase in the scheme to replace it. That is where we lose the people we need in order to deliver the public goods in the long term.

[George Eustice]

I entirely appreciate that and I assure the hon. Gentleman that I was not going to skip over that point; I have some time left.

The upland areas in particular are well placed to benefit from a system of support based on the delivery of public goods. Some 66% of blanket bog in England is in “triple SI”s—sites of special scientific interest—and is in those upland areas, so projects such as peatland restoration are certainly things that the uplands could do. Some of our rare and endangered bird species are in parts of the uplands so projects to support their recovery also lend themselves well to such areas. I am also thinking of projects that might mitigate the risk of floods by holding water uphill and projects such as the mires project down in the west country, on Exmoor, that can improve water quality by rewetting some of those peatland areas.

All those things mean that the potential for some of the uplands to be rewarded for what they in some cases already do, but may well do even more of in the future, is very high. The reality is that our current system pays the moorland areas, the severely disadvantaged areas, less money than it does the lowlands, even though they are probably doing most of all for our environment. The change in emphasis to payment for delivering public goods means that those severely disadvantaged areas, which historically have been told, “We will give you less subsidy because your land is less productive,” may actually be able to deliver and achieve far more.

I come now to the issue of the transition. The hon. Gentleman is absolutely right, and I agree, that getting the sequencing of the transition right will be very important. Although we have not made final decisions in these respects, I will make a number of points to him. First, the Bill provides for us to make available grants and payments to farmers to help them to improve their productivity, invest in equipment and reduce costs, and that will help farmers to get to a position in which they are less reliant on the subsidy payments that they receive now.

The Bill also provides for us to make several years’ payment in one lump sum to help—aid—the retirement of those farmers who decide that now is the time to leave. Linked to that, we know, from all the work that we have done, that if we want to encourage new entrants into the sector, the critical element is freeing up access to land. That is why, if we want new entrants to come in, we have to have projects and ideas to help farmers, who are sometimes in their 70s or 80s and still going, to make the sometimes difficult decision to retire. The measure gives us the option to be able to do that.

The Bill also gives us the power to modify the legacy scheme, to simplify some of the rules around the basic payment scheme, or indeed to simplify and modify the current pillar two countryside stewardship scheme. The integrated administration and control system that is a requirement of EU law is particularly burdensome on some of the current schemes, and we would have the option, should we wish it, to remove that.

Let me deal with some of the hon. Gentleman’s other points. He suggested that the pilot was delayed. The pilot is not delayed: we always intended to go to a full pilot in 2021, and still do, and will. The issue is that we have had trials running. We have 30 trials already up and running—already under way. There has been no delay, and further trials will be added. He suggested that we would not be in a position to roll out the new scheme until 2028. That is not the case. We intend to be rolling out the new scheme to every farmer—a full launch of the scheme—probably around 2024, so we will not be waiting until the end of the transition before we start the new scheme. We envisage that, as the legacy scheme tapers out, we will be opening up versions of the new scheme in advance of that.

The hon. Gentleman suggested that we ought to have an active farmer test. I am reluctant to get into that kind of EU rule making, as it was not particularly successful when the EU tried it. However, he makes a very good point: some of the environmental benefits that we need explicitly require grazing, and grazing by the right type of animal, to be taking place on our upland areas, to keep the bracken down and the sward at the right length so that conditions are made most favourable for invertebrates, which in turn helps farmland birds. It is therefore not the case that we want to take land out of grazing; indeed, grazing has an important part to play. We have amended the Bill so that it recognises native breeds and rare breeds in particular as a public good. We changed that in its latest iteration so that we can reward those hill farmers who are using and encouraging the preservation of some of our important genetic resources.

The hon. Gentleman is right that we need to get farmers a fair price for the food that they produce. Although we chose not to extend the remit of the Groceries Code Adjudicator, we have in the Agriculture Bill taken wide-ranging powers to be able to legislate in the field of contracts to ensure that there is fairness in the supply chain and transparency around what farmers are paid as well as on issues such as carcase classification. There are quite wide powers in the Bill dealing with those things.

My final point is that it is not correct to say that we watered down the GCA. There was a delay in the introduction of penalties for breaches, but those were put in place—I think even under the last coalition Government, but possibly after the end of the coalition Government and under the Conservative Government from 2015. But substantial sanctions are in place and available to it.

I hope that I have been able to reassure the hon. Gentleman that we see a vibrant future for hill farming. We believe that hill farmers will be able to benefit from our new system of payment for public goods, and they can look to the future with confidence.

Motion lapsed (Standing Order No. 10(6)).