(7 months, 1 week ago)
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The Minister for Food, Farming and Fisheries (Sir Mark Spencer)
I beg to move,
That the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2024, which were laid before this House on 16 April, be approved.
I declare my farming interests, as set out in the Register of Members’ Financial Interests. The instrument continues the important agricultural reforms that we are making in England—reforms that support the long-term prosperity of the sector. It applies progressive reductions to delinked payments for 2024. Delinked payments were introduced on 1 January 2024 in place of payments to farmers under the basic payment scheme in England. The reductions in the instrument were first announced in our agricultural transition plan in November 2020. They continue the progress of gradually phasing out untargeted subsidy payments over our seven-year agricultural transition period in England. We are now in the fourth year of that seven-year transition.
We remain committed to moving away from untargeted payments, which have served our industry so poorly. Most of the money has been paid to the largest landowners, and the payments have done little to improve food production or the environment over that time. I reiterate that the overall annual farming budget is being maintained at an average of £2.4 billion per year across this Parliament —money that is no longer being spent on untargeted subsidy payments and is not lost to farmers. Instead, it funds the sustainable farming incentive and other farming support.
As was the case under the basic payment scheme, we are applying the reductions to delinked payments in a fair way. Higher percentage reductions are applied to amounts in higher payment bands. We plan to make delinked payments in two instalments each year, which will of course assist with farmers’ cash flow. By continuing to gradually reduce the subsidy payments, we are freeing up money so that farmers can access a range of environmental land management schemes and grants to suit all farm types. We planned for the agricultural transition, and we are delivering on it.
Sir John Redwood (Wokingham) (Con)
I am pleased that the Minister and the Prime Minister are keen on promoting more home-grown food. As the transition occurs, what proportion of total subsidies paid will be for promoting food? It still seems to be too small.
Sir Mark Spencer
My right hon. Friend will understand that the basic payment scheme did not motivate food production at all, as it was not linked to it. As we move to the new regime, we are promoting better productivity through grants for better equipment. We are investing in new technology. Alongside that, we are pushing to improve gene editing and gene technology, to try to make agriculture more sustainable and more productive at the same time. As we go through this transition, we are certainly keen to increase the productivity of our agricultural sector.
Jim Shannon (Strangford) (DUP)
I thank the Minister as always for his positivity about the farming sector. The farmers’ union has asked me a specific, technical question that I would like to have on record. Does the Minister agree that since the transfer window for delinked payments closed on 10 May, clarity is needed that that will not apply to cases of inheritance, with the ability to transfer ownership not affecting payments that can be made when a business is passed on through a death in a family? Should that not be reiterated to those who may believe that they would lose necessary payments? The Minister may not be able to answer that right away, but could he let me know?
Sir Mark Spencer
The hon. Member will be familiar with how matters of inheritance tax are for the Treasury rather than this Department, but we want to see that fair transition between generations so that family farms can be passed from one generation to the other to continue to maintain our landscapes and produce top-quality food, as we have for a long time. I will ensure that he gets the right answer to his question as soon as possible.
Our new schemes are investing in the foundations of food security and profitable farm businesses, from healthy soils to clean water. This year, we have increased payment rates for our environmental land management schemes by an average of 10%. Some payment rates went up by significantly more: species-rich grassland rose from £182 to £646 per hectare.
Mike Amesbury (Weaver Vale) (Lab)
The frustration that farmers in the Cheshire part of my constituency have raised with me is about the speed at which money gets out the door and into farms. The Minister will also be familiar with the unprecedented weather patterns that we have had. What extra provision will be put in place to deal with some of the consequences of climate change and, in particular, flooding that we have seen recently?
Sir Mark Spencer
I am grateful to the hon. Member for raising that important topic. We have listened to those farmers and improved the speed at which we pay for new SFI agreements, moving those payments forward to help farmers with cash flow. That is why we changed the basic payment scheme to ensure that we made payments not in one chunk in December but in two payments, with one in July and one around December.
The hon. Member also mentioned the unprecedented season that we are in the middle of and the pressure that will put on farmers in the autumn. That is why we introduced the support fund that is now trying to help affected farmers in the east of England in particular—I know that does not apply to Cheshire. We have committed to extending that scheme to try to help people. We are still in conversations with the National Farmers Union and farmer groups to try to look at what more we can do to mitigate the impact that the season will have.
Many of those farmers will not feel the effect of that weather in their cash flow until this autumn. Many of those who have not been able to plant arable crops have had the benefit of not having to pay out for fertiliser and agricultural sprays during this season—ironically, that will help their cash flow—but they will have an empty shed at the end of that process, which will put huge pressure on cash flows in the autumn when they would have had crops to sell.
Mr Laurence Robertson (Tewkesbury) (Con)
I am pleased with the Minister’s last remarks: he is recognising the problems that farmers have. This morning, I received an email from the NFU referring to its recent survey and stating that short and mid-term confidence among farmers is at its lowest level since records began, and that production is expected to decrease over the next year. Given all the problems that farmers are facing, is he absolutely sure that now is the right time to make these reductions?
Sir Mark Spencer
I should be clear and gently push back when my hon. Friend mentions reductions. The budget for the basic payment regime was £2.4 billion, and £2.4 billion is still the budget. So the size of the cake is completely the same, but the way in which the cake is being cut is different. Those are the changes we are making. The way in which we are dividing that cake is different, which is causing some challenge to some farmers.
My hon. Friend mentioned farmer confidence and the fact that some farmers are saying that productivity rates will be lower this year than they have been in the past. I think there is some truth in that: many farmers—I again draw attention to my entry in the register—have experienced unprecedented weather events and have been unable to plant crops, so they will see lower productivity this season. We are very much aware of that, and we continue to talk to farming representatives about how we can help to mitigate some of the impact later this year.
Jim Shannon
The Minister is gracious in giving way, which I appreciate very much. If farmers cannot plant their crops, they cannot produce the food, as he knows. If they cannot produce the food, prices increase. The Government are committed to reducing inflation, as they should be, and we welcome the fact that it is coming down. However, if we do not help the farmers with food production, inflation has the potential to rise. What can the Government do to alleviate those problems?
Sir Mark Spencer
The hon. Gentleman highlights a long-term challenge that we face: if we are going to be impacted by climate change and increasingly difficult weather patterns in future, we need to ensure that farmers have the resilience needed to manage those. That means investing in gene technology to make sure that we have varieties that can deal with different swings in climate, new machinery, new technology and new farm equipment. We were able to take money from the basic payment scheme and invest it in grant schemes, in order to help farmers invest in the new machinery and technology to mitigate some of those impacts. There is a lot that we can and are doing to help them along on that journey.
Sir Mark Spencer
I will give way one more time, but I am conscious that other Members want to speak.
Mike Amesbury
I thank the Minister for giving way; he is being generous with his time. Has any impact assessment of ELM been done? Has it been published? I feel that we are operating blind here.
Sir Mark Spencer
We have consistently and regularly engaged with farmers and stakeholders to listen to their concerns. The hon. Gentleman will be aware that in January we announced increases in many of those sustainable farming incentive opportunities, because we listened to farmers telling us that some of those payments were not right and were not high enough. We listened and we increased those payments. We are constantly scanning and listening to the sector and working hand in hand with farmers to ensure that the schemes we devise and introduce are farmer friendly and are understood by the farming sector.
This year we have increased payment rates in our environmental land management schemes by an average of 10%, although some payments went up by significantly more. We have also doubled the management payment for the sustainable farming incentive, which is now worth £2,000 for the first year of an agreement. That will encourage even more smaller farms to join the scheme, on top of the many that have already done so.
From the summer we will launch up to 50 new actions that will allow farmers to access the scheme funding for things such as precision farming and, for the first time, agroforestry. The new actions give even more choice to farmers in what they can do, especially those on moorlands and grasslands. Nearly half of all farmers are now in one of our schemes. So far there have been almost 22,000 applications to the sustainable farming incentive under our 2023 offer, and there are now more than 35,000 live countryside stewardship agreements in place.
Farmers taking part in the sustainable farming incentive are typically more than making up their lost basic payments. The value per hectare of applications to date is £148. That, alongside delinked payments for small farms this year of equivalent to £117 per hectare, adds up to more than the value per hectare of the basic payment scheme before we started our reforms: £233 per hectare under the old basic payment scheme versus a total of £263 under delinked payments and the SFI.
Smaller farms potentially have access to more income than before. Under the basic payment scheme, half the money went to the 10% of largest farms. Under SFI, payments are based on the actions the farmers take rather than simply the amount of land they have. There are many credible ways in which SFI agreements can produce more income than the basic payment scheme for a typical farm.
The sustainable farming incentive can also help to deliver a reduction in costs and waste on farms to make them more resilient and improve food production—for example, by paying farmers to plant companion crops to help manage pests and nutrients, assessing and improving the health of farmers’ soil, and growing cover crops to protect the soil between main crops. This year we will make it even easier for famers to access funding by allowing them to apply, through one application process, for actions that were previously in countryside stewardship —particularly in mid-tier—and the sustainable farming incentive. That is part of our commitment to make it as easy as possible for those who want to apply.
We have also announced the largest ever grant offer for the agriculture sector, totalling £427 million. It includes a doubling of the investment in productivity and innovation in farming to £220 million this year. That will provide support for farmers to invest in automation and robotics, as well as in solar installations to build on farm energy security. It also includes £116 million for slurry infrastructure grants and £91 million for grants to improve the health and welfare of our farm animals.
Selaine Saxby (North Devon) (Con)
I thank the Minister for clarifying the details of today’s announcement. Farmers in my constituency are delighted about being able to apply for the slurry grant, but the works imposed alongside it by Natural England mean that it is not viable for them to continue with their herds.
Sir Mark Spencer
Of course, we continue to engage with Natural England and the Environment Agency, which have an interest in ensuring that we get slurry infrastructure in the right place. If my hon. Friend has specific examples of the system not working, I would be delighted to take those cases up for her. We want to see investment in the south-west, and in other constituencies, to ensure that we manage on-farm nutrients and slurries in the best environmental way. Not only does that benefit the environment and those farms; it also helps the farm business, in that farms are managing their own nutrients and do not have to spend money on costly artificial fertilisers because they can replace some of that with organic manures.
We are providing a range of other support for farmers and land managers, including a third round of our landscape recovery scheme later this year. The farming resilience fund continues to provide free business support to help farmers to plan and adapt their business. To date, over 20,000 farmers have received that support. Our schemes and grants help to support viable businesses, to maintain or increase food production, and to achieve better outcomes for animals, plants and the environment. All that is possible only because of the regulations, which I commend to the House.
Steve Reed (Croydon North) (Lab/Co-op)
I am grateful to have the chance to discuss the motion. The environmental land management scheme was meant to be the centrepiece of the Government’s farming policy—a new dawn for British agriculture post Brexit. Approving each annual transition should have been run of the mill, as farmers were eased into a new and better system. Labour agrees that we need a fairer system of payments based on the principle of public support for public goods. That is why we have not opposed the agricultural transition plan and will not oppose this instrument to set out the level of delinked payments. However, it is vital, as we discuss the regulations, that we look at the context in which they sit for farmers and the wider industry.
The truth is that, because of this Government, our farming communities are in crisis: 6,000 agricultural businesses have collapsed since 2017; tragically, farming now has the highest suicide rate of any sector in the UK economy; and, as we have heard, last week’s NFU survey showed that farmers’ confidence has hit record lows. Farming is a difficult business and times are hard—the recent flooding has caused real distress, destroyed crops and threatened livestock. But farming has been made much harder by a Government who do not value or back our farmers.
Under the Conservatives’ disastrous withdrawal deal, farmers have faced a mountain of red tape and higher costs at our borders, blocking the export of high-quality British produce. The Government’s failure to invest in home-grown clean energy has left farmers crippled by skyrocketing energy prices. They have sold farmers’ interests down the river with dodgy trade deals, opening the door to low-welfare, low-standard imports that undercut higher-quality British producers—a point made by a previous Secretary of State, the right hon. Member for Camborne and Redruth (George Eustice). Even though we know how devastating flooding can be for rural businesses, this Conservative Government have left communities unprotected. This is a dereliction of duty by the Secretary of State.
That brings us to today’s motion. This Government have botched the implementation of the environmental land management schemes, threatening the basic financial support that has long been a lifeline for so many family farms. The transition from the common agricultural policy to ELMS has been shambolic, with hard-pressed farmers left to pick up the pieces. It has left many unable to plan properly and facing mounting bureaucracy and red tape. Some farmers, particularly those in uplands and those with smallholdings, have been abandoned to fend for themselves.
Such is the incompetence of this Government that they have failed to spend hundreds of millions of pounds of the support that was intended for farmers—money that would make a difference to struggling farmers today; funds that should be in farmers’ pockets now, not sitting in Government spreadsheets. Why are the Government not using that money—over £220 million of underspend—to offer help right now to farmers, who have been the people most affected by this dreadful flooding during the wettest 18 months since 1836? Belated plans for spending that money were announced with great fanfare by the Secretary of State in February, yet many months later it is still locked away in the Government’s coffers. Will the Minister agree to publish this week a plan for how he intends to distribute those funds urgently to farmers who desperately need that support right now?
The NFU is calling on the Government to pause the roll-out of ELMS so that they can distribute the underspend under the basic payment arrangements. I completely understand and sympathise with the NFU’s frustration, but it is not in anyone’s interests to delay ELMS; we should instead be looking to make it work better, and the Government should be going much faster to get that underspend out to the farmers who need it so desperately. To make ELMS work better, we need to understand how it is currently operating, yet the Government still refuse to publish their impact assessment of the scheme. I wonder whether the Secretary of State and the Ministers are afraid of the public reaction if they did publish it, because the scheme is failing. It is frankly astonishing that we are being asked today to wave through substantial changes with no data or proper assessment. Since the Minister has that information, can he please explain why he will not publish it?
Labour recognises that food security is national security, and unlike the Government, we value the critical role that our farmers play in the security of this nation. We also value the role that farmers play in protecting our great British countryside. This year’s wet weather is a further reminder of the importance of tackling climate change for the sake of our long-term security. Farmers want to play that vital role, but they need better backing from the Government: they need certainty, they need clarity, and they need to be able to plan.
The principles behind ELMS make sense, but the way the Government have run the scheme has been chaotic, and we can only assume that their refusal to publish the impact data is because they do not like what it says. It would be wrong to scrap or delay ELMS, which is why we will not oppose today’s motion, but it needs to be made to work far better, and farmers need the underspend today that the Secretary of State promised months ago but still has not delivered.
The Government cannot continue to sit by and do nothing as our farmers face this crisis. The Government risk trashing not only our countryside and our food security, but thousands more livelihoods up and down the country. The Government need to get the support they promised out of the door, come clean on ELMS impact data, and get the scheme back on track. Farmers and our countryside deserve much better, but they have been sorely let down by this Government.
Sir Bill Wiggin (North Herefordshire) (Con)
DEFRA is often a watchword for incompetence, and the approach to bluetongue is no exception to that. We need to be competing with Germany and Holland in the way we approach agriculture. This statutory instrument is particularly interesting—I declare my interests as listed in the Register of Members’ Financial Interests, but also in that I farm—because our farmers in England did not riot like their European counterparts and, to be fair, their Welsh brethren for different reasons. This is an interesting time for farming. However, who thought it was a good idea to take this statutory instrument on the Floor of the House? But it will turn out to be so because, by doing this very action and closing off the last of the basic payments, the Government will have to look again at how much money farmers get.
The incomes of the 2,000 farmers in my constituency are going down because, as the Minister said earlier, more people are eligible for a piece of the cake. I would have perhaps described it more as a custard pie being rubbed into our farmers’ faces, but the cake is the same size, and incomes cannot be the same size if it is being distributed to more and more people, and the Royal Society for the Protection of Birds, the National Trust and all sorts of other organisations are now getting more of that cake or pie.
At the end of the day, we need to look at the business that farmers are in and, if their business does not make money, they cannot go on. The ELM scheme does not increase payments to farmers; it simply redistributes them. Therefore, I would ask the Minister to get His Majesty’s Revenues and Customs to look at the incomes of the 88,000 farmers, and make sure that they are not falling. We need to use the Treasury much more cleverly, we need better tax breaks, rather than handouts, and we need to look at the cost of red diesel, because that is a direct way of subsidising food production.
Ultimately, our food security is critical. Food security should be linked with health security. We had a report out today talking about the cost of obesity. The way to stop obesity is to ensure that the food we are eating is of the highest quality, and grown, raised and produced in England. We need more powers for the supermarket regulators. We need to amalgamate Natural England and the Environment Agency. We need to have risk-based inspections—really properly risk-based inspections—not the Rural Payments Agency measuring how much hedge someone has. When it comes to hedges, I am particularly irritated because one of the standards pays generously for hedge laying—hedge laying is an expensive and difficult skill—but it excludes hedges that go along the side of roads, just in case the council come and cut the hedge. There is a massive difference between hedge cutting and hedge laying, so I hope the Minister will look at the standard on hedge laying so that hedges along the side of roads can be properly looked after, restored and provide wildlife security, which is why this is one of the standards.
We need to have a much more joined-up approach to what we are doing. We have a dangerous threat to farming and, if the polls are to be believed, that will be from an anti-farming Government. I know the hon. Member for Croydon North (Steve Reed) made a good speech. I suspect there are not that many farmers in Croydon North, yet I agreed with a lot of what he said. He is doing the best he can, but I fear his colleagues will not be as sympathetic and that old “Oh, you only get subsidy to buy yourself a new Range Rover” agenda will come back if this Government are not returned at the general election. Therefore, we do need to accept this SI. We do need to ensure that we are putting more and more money into food security through our farmers. Otherwise, we might as well give it to Tesco, and nobody has advocated keeping food affordable by subsidising the supermarkets.
We must strengthen the supermarket regulators, sort out some of these standards, make sure that the farming recovery plan is expanded—I think that is going to happen—and make sure that we keep a proper watch on the income tax of farmers because, if we cannot keep them in business, we will have to export the damage that bad farming does by importing food from abroad. We cannot win by not supporting farming properly; we simply export bad practice to countries that really do not have the ability or the responsibility to look after themselves.
If we can get the Treasury more involved in DEFRA, make sure that the RPA is risk-based rather than comfort-based and deliver the cost savings that businesses in food production need, I know that my right hon. Friend the Minister, who is a magnificent champion for farming and has been dealt a particularly difficult hand on this SI, will continue to stick up for our farmers and make sure that our food and health are secure into the future.
Tim Farron (Westmorland and Lonsdale) (LD)
Like the official Opposition Front-Bench team, we do not seek to oppose this SI, not least because we do not want to give the Government any excuses to be slower in the roll-out of the new schemes than they already are, but it is absolutely right that we do not allow this moment to pass without there being a debate because I would not wish anybody either in this place or elsewhere to think that the roll-out of ELMS was going well—for most farmers it is going the opposite of well.
Britain desperately needs its farmers. Whether in Westmorland, in my own communities or across the whole of the country, we need our farmers to protect the built-up areas around rural Britain and in our urban areas from flooding, with water retention and all the other things we can do to slow the flow in the uplands. We need our farmers for developing biodiversity and for tackling the greatest need, which is greater carbon sequestration. We need them because of our landscape heritage and because of tourism. Twenty million people visit Cumbria every year. It is the biggest destination in the country outside of London. They visit not just because the hotels are great, but because the landscape is epic. In the Lake district, we were given world heritage site status not many years ago and the UNESCO document granting it world heritage status gave as much credit to the farmers for how the landscape looks as it did to the glaciers that carved those valleys in the first place. So we are desperately in debt to our farmers, both in our neck of the woods and across the country, for various reasons, but none as great as the fact that they feed us. We see too little focus on the fact that Britain’s farmers are first and foremost food producers in our discussion of public policy. This transition has been botched to the detriment of our farmers, to our ability to deliver environmental goods and especially to our ability to feed ourselves as a country.
At the last general election, £2.4 billion was the pot set aside for England’s farmers. We know of course that £2.4 billion now is worth an awful lot less than £2.4 billion four and half years ago, in large part because of the behaviour of this Government in trashing the economy, fuelling inflation and therefore making everybody’s pound in their pocket worth significantly less, but no more so than in the case of Britain’s farmers.
Over the last two years, £400 million of that £2.4 billion each year has been unspent, which is utterly inexcusable. There is a danger in this, which I am almost scared to say publicly, although I do not imagine the Treasury has missed it: when the Treasury, whether in the hands of the party now or in those of a party that might be in power soon, sees that a Department cannot spend its budget, it asks questions about whether that Department needs its budget. Britain’s farmers need every bit of that £2.4 billion and more, yet the incompetence of this Government to spend the money set aside for farming and the environment via agriculture means that we are putting farming at risk generations ahead. The Minister’s reply to a written question from me just last week confirmed that last year the Government underspent by more than £200 million—that was just in one financial year.
Therefore, there is a range of things that are the fault of this Government which put our farmers at risk and under pressure, and seriously put at risk our ability to feed ourselves in this country and care for our environment. Then there are some things that are not the Government’s fault. I do not blame the Government for the weather, I am sure the Minister will be pleased to hear me say. [Interruption.] The hon. Member for North Herefordshire (Sir Bill Wiggin) says I am not trying hard enough. I will perhaps find a way of blaming the weather upon the Conservative party. But, no, I do not blame the Government for the weather. However, we need to accept the consequences of the unusually wet weather of the past few months on farming in every part of the country, including those where the weather was not so awful, because the reality is that it has an impact on our ability to sow crops. We have seen crops rotting in the fields, unable to be reaped. The impact on arable farming is obvious, but the impact on livestock farming is also huge. The availability and affordability of straw and other forms of animal feed later in the year and next year are particularly precarious. We have already talked about inflation, the cost of living for farmers and how margins are massively under pressure, but if feed prices go through the roof over the next year or so because of this weather, it will put our farmers into serious problems.
Let us not forget that livestock farmers have seen a massive impact, by which I mean the awful tragedy that in my constituency the 2% average rate of lamb mortality—that is always utterly tragic and heartbreaking for farmers and their families—is up to 15% this year because of the weather. We can imagine what that is like for farmers and their families as they deal not only with that mortality, but what that does to their businesses.
Alongside our compassion for farmers struggling through these terrible circumstances, we need to be aware of what the situation is doing to the cash flow of our farms. We hear the Government saying, “Right, there has been an underspend of £400 million over the past couple of years. We will get it out the door by grant support”. Grants can be useful. In the lakes and the dales in Cumbria, farming in protected landscapes—FIPL, as we refer to it—has been a positive thing. Some grants have done a lot of good for the farming sector, but let us not forget that, with most grants, the additional money will only be available after the election anyway, so it will not help people in the here and now, and we are expecting most of these grants to be delivered to farmers who can co-fund the project. If farmers have no money, what are they co-funding with?
It is more important that we think more intelligently about how we can support farmers with their cash-flow needs during this difficult time. The Minister says the cake is the same size, but is being distributed differently. I am afraid that for farmers the cake is not the same size for the time being. I have talked about the inflationary impact shrinking the size of the cake, but the fact is that several slices of the cake are stuck in the Treasury and are not out there with farmers, who see no sign of them.
One of the reasons we do not oppose this statutory instrument today is that, like everybody in the House today, we agree that ELM schemes are a good thing in theory. I have said it before, so I do not mind saying it again: as we search high and low for Brexit benefits, this potentially is one of them. The common agricultural policy was indefensible for all sorts of reasons, some of which the Minister spoke about. The ability for Britain to design a scheme that is better is absolutely to be lauded, which is why it is so frustrating that we are missing that opportunity so badly. The underlying principles of public money for public good is something that farmers across the country absolutely welcome. I welcome it, as do communities across Westmorland. What is deeply troubling is that the production of food in a country that only produces 60% of what it eats is not seen as a public good. That is criminal, ridiculous, foolish and unwise.
We are talking about the roll-out of ELM schemes and how we make these new schemes land. Among the positive projects is landscape recovery. We can see lots of good potentially coming through it. I saw a very good scheme up Kentmere just a few weeks ago, but I have also seen schemes rolled out badly and poorly, to the detriment of our environment, communities and farmers. I saw the failure of a landscape recovery scheme in the Lyth valley that the Winster farmers were supportive of. It failed because it wanted to keep productive land dry. We should not be putting public money into stopping productive agricultural land being used for agricultural purposes. We should be making sure that less productive land is used for environmental purposes and that we bring farmers with us. When farmers see themselves principally as food producers, we need to work with their motivations to do good for the environment.
Bringing in these changes, particularly landscape recovery, before the Government have enacted many of the most serious and important of the Rock review’s recommendations seems to be putting the cart before the horse. It is good that the Government embrace Baroness Rock’s proposals for a code of practice for tenants and landlord relationships, but they have so far shown no sign of introducing a tenant farmers commissioner. I tabled a private Member’s Bill calling on the Government to do just that. There is no point having a code, rules and regulations without a referee to enforce them and to protect tenants.
What troubles many of us at the moment, as has been mentioned, is that farmers are facing a frightening transition. For a variety of reasons—including the fact that 50% of farmers’ basic payment will be taken by the end of the year—livestock farmers’ incomes have reduced by more than 40% just during this Parliament. Who in this place could live with a 40% drop in their income in four years? It is outrageous. We need to take action here to defend that cash flow.
Sir Oliver Heald (North East Hertfordshire) (Con)
I wonder where the hon. Gentleman stands on the issue of how many sheep there should be in the Lake district. As he will know, there is a lively debate about whether the numbers should be reduced, and the future of the Herdwick. I would be grateful to know his views on that.
Tim Farron
As I said, our landscape in the Lake district is crafted by many hands, including sheep. I am deeply concerned that we may see the complete destocking of some of our fells. There is a notion that somehow we are overstocked—we probably were during foot and mouth, but that is more than a generation ago. There may be some give and take about what the numbers should be in different valleys, but I am deeply concerned not to see the roll-over of the stewardship schemes, because to continue in a scheme, folks are being asked to lose up to 80% of their stock. Let us ensure that we do things that work with the motivation of our farmers. We can do a woodland pasture, for example, and carbon sequestration and livestock farming can continue at the same time. If we do not work with farmers, we will not deliver environmental goods. I share the concerns that I suspect the right hon. and learned Member for North East Hertfordshire (Sir Oliver Heald) has.
Let us look again at what has been discussed, and some of the proposals from other places. The hon. Member for Croydon North (Steve Reed) talked about the NFU’s proposals, which I think have been slightly misunderstood. The NFU says that one way to get cash into farmers’ pockets is to pause the cancellation of the basic payment system for the next year or two. That is not pausing the roll-out of ELMS—I want the Government to speed up that roll-out. I want more people in stewardship schemes, landscape recovery and SFI. The fact that 100% of farmers in my community are losing their basic payments but only one in seven of them is in an SFI scheme tells us all we need to know about why farm incomes are plummeting.
The proposal is worth taking into consideration. We could come up with a cleverly worked out, bespoke scheme to support farmers though this terrible period. How many months would that take to put into practice? How hard would that be to make work? We could do grant support, as the Government propose, but that will not happen until after the election. In any event, unless farmers have the money up front, the grants will be of little value to them. There is great merit in the NFU’s proposals and I ask the Secretary of State and the Minister to consider them, in thinking that we can continue to roll out ELMS and green our farming programmes, but not threaten the livelihoods of farmers in the interim. My great fear is that we are forcing excellent farmers out of the system, or they decide that the only way to keep the wolf from the door is to double their livestock numbers to take advantage of lamb and beef prices, and therefore opt out of environmental schemes all together. That would be completely counterproductive to what the Government, all the environmental groups and we rightly want.
It would be far better to ensure that we keep farmers farming. It would be tragic to see hundreds, if not thousands, of farmers around our country—hundreds in my communities alone—whose families may have farmed those valleys for generations, feel that because of this moment of flux botched by this Government, they might be the one to lose the family farm. How heartbreaking, terrifying and shaming would that be to many people in my communities and beyond? Let us protect those people’s mental health, wellbeing and their ability to feed us.
The greenest, most environmentally positive thing that this or any Government could do is to keep Britain’s farmers farming to feed our country. By doing so, we ensure that we do not import excessive amounts of food and damage the environment through all the extra carbon miles entailed, and we do not displace our demand on to other countries, many of which are poorer. We should not rob the poorest people of this world by raiding the commodity markets because we cannot afford to feed ourselves. The best environmental policies on the planet are but useless bits of paper in a drawer if we do not have our farmers, from Westmorland to every corner of this great country, delivering them. The botching of the transition is causing heartache, pain and poverty in my community. It is robbing us of food production for the country as a whole. It is damaging our environment and the Government need to listen to our farmers.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a pleasure to speak in this debate.
I am very conscious that the transition has been uncomfortable. Although the Conservative Government and Conservative Members have always prioritised, and continue to prioritise, the primary purpose of farmers, which is to put food on our plates, I am also fully aware that one element of SFI is to help farmers to farm sustainably and to be sustainable, and that must be a key element of the transition.
I welcome the fact that there will be 50 new actions this year—the sooner the better, because I am somewhat uncomfortable about the time it is taking for farmers. They are losing guaranteed income that may be used in a variety of ways; often, frankly, to pay rent; in the past, sometimes, as a consequence to subsidise, in effect, rent going to other landowners rather than to the tenant farmers themselves. Although I see the benefit of what we are doing, it is important that the Department and the Rural Payments Agency make every effort to ensure that the transition is as straightforward as possible for farmers.
Last year, only six options were available—an increase on what DEFRA had originally planned—but to improve that, along with the take-up of the greater scheme and the premium from getting the best environmental outcomes of farmers working together, it is vital that the Department analyses what is happening around the country. It was never expected that every single farmer who received BPS would make the transition—they might have chosen not to, recognising some of the extra demands—but I would be grateful if colleagues in the Department looked further at some of the add-on decisions as a consequence of people joining the SFI and a combination of factors. I am thinking of the recent destocking undertaken by Natural England, which led to the Dartmoor review. There was an excellent outcome and I appreciate the work the Government are doing not only to look at Dartmoor, but around the country. My right hon. Friends on the Government Front Bench know they cannot make the transition happen without farmers and landowners, and nor would they want to. Nobody should think that the Government are trying to get farmers to stop farming—far from it—but we want to ensure that the impact is positive in both ways.
Thinking through some of the changes ahead, I note that the Liberal Democrats are not voting against the regulations—I hope that will be on their election leaflets—so they will be supporting the change. We need to ensure that the options that are coming through, come through quickly. As the money transitions down and we get a lever from one end to another, there will always be a variation in how much money a year would be spent. I believe that more farmers will be taking up the options and that will lead to an increase in average spending in years to come, so it is still vital that analysis is undertaken.
In my constituency, 305 people are receiving BPS. As of last month, 94 had applied for SFI this year and just 75 had been accepted. That is only about a quarter of the farmers who were receiving BPS who will now get payments this year. I do not know if they will get more money than they had in the past, but it does mean that three quarters are not doing so. What concerns me is that the farmers in my constituency are some of the most environmentally minded of all the farmers in the country, so I am keen for analysis to be undertaken to understand why three quarters of the farmers receiving BPS today are not now applying for SFI. I cannot find that out myself. The RPA refuses—plain blank refuses—to tell me which farmers receive BPS today. I am not interested in that in terms of campaigning; I am genuinely interested in trying to understand, farm by farm, what it is that I can do, as a former Secretary of State and as a Member of Parliament for that constituency, to put forward their case and their understanding. Nationally, the NFU has to put across a broader range of issues. I appreciate that it has made an intervention regarding this statutory instrument for only a small number of recipients. I understand that we need to keep the journey going, but it needs to be done with as much analysis and understanding as possible.
I am pleased that my right hon. Friend the Secretary of State continues to ensure we try to get this right, and I look forward to further announcements this month. I think back to Thomas Binns, who stood up for upland farmers. He wanted to make that change and was making sure that DEFRA listened. We certainly did listen and we learned. For the first time we went beyond just the income forgone, which had been the traditional EU approach in calculating different figures. Moving to a more market systems basis opens the door to much more private investment. The green finance strategy, alongside this important transition, is a key part of how we make farming sustainable for the future.
On other aspects, can the Minister say a bit more about the stacking of options and whether that is still possible? Again, that is something farmers have asked for and I believe he has listened. We did remove the bureaucracy. They are now called delinked payments. We also stayed ahead of the game and ensured we addressed the key issue of hedgerows, and implemented those regulations, too.
I have one final request to my right hon. Friends on the Government Front Bench. BPS is going and we have the delinked payments, but we need to go beyond those farmers. For example, in my constituency pig farmers never got BPS in the first place—they were not eligible for that support. What are we doing to ensure we open the doors to welcome them into SFI and countryside stewardship? There has to be a conversation, and farmers sell best to farmers. I have to say that the Minister for Food, Farming and Fisheries, my right hon. Friend the Member for Sherwood (Sir Mark Spencer) is one of the most eloquent champions I know, both within the Department and out at the county shows and on the farm visits that all Ministers do, but we need to ensure that we bring people with us and make it as straightforward as possible, doing what we can on the maps and doing what we can with the agents, so that people feel they really are part of the journey and part of the solution, and that, most importantly, in farming sustainably they have a sustainable farm themselves.
Sarah Dyke (Somerton and Frome) (LD)
I declare an interest as my family are sixth-generation farmers in Somerset, with my brother still farming.
The Liberal Democrats support the shift from basic payments to the ELM scheme, but I am still desperately worried about the general lack of support from this Government for British farmers. I am not alone. I have spoken to farmers right across my constituency, from North Barrow to Muchelney, who have all raised with me their fears about the industry. They want to farm. They want to rear animals. They want to grow crops. But the landscape is becoming more and more difficult for them to produce food for our tables. Tomorrow’s annual Farm to Fork summit will focus on UK food security, a topic I have spoken about here many times.
However, as the House will know, one of the major risks to national food security will be the loss of British farmers and agricultural businesses. There has been a long-term downward trend in the number of farms in the UK, with a staggering 110,000 closing their gates for the last time since 1990. Climate change continues to be strongly felt by British farmers—and nowhere more than in Somerset, a county that is so often at the forefront of it. The last 18 months have been the wettest since records began, and that, alongside squeezed margins and the reduction of support, has left many farmers on a cliff edge. The Agriculture and Horticulture Development Board and the Soil Association have recently warned that many farmers are on the brink of quitting because of the enormous financial and mental strain.
Not long ago, I met a farmer in my constituency who farms near Langport. He told me that his land had been flooded for nearly six months over the winter, that that had cost him thousands of pounds in lost crops and water draining, and that it would limit his ability to use the land for grazing his cattle during the summer. However, it is not this year but next year that he will feel the financial impact of the winter flooding. He has been forced to turn out his cattle early on to grazing land that simply has not recovered from those floods. As a result, he will not be able to make silage from the fields, and will be forced to reduce his herd by half next year because he will be unable to make enough food to feed his stock during the winter months. He understands that farming land must sometimes be sacrificed to flooding in order to save thousands of homes further down the river catchment, but he should be able to realise compensation as a consequence; the alternative will be to risk losing his business. He told me that following the end of basic payments and the limited options available within the sustainable farming incentive scheme, the farm is solely dependent on income from agriculture to cover the lost earnings due to flooding.
Farmers in Somerset are fully aware that flooding is only likely to increase over the coming years, and will probably last longer and cause more damage, but it is not just in Somerset that this problem is felt; it is a nationwide problem. Farmers need to be resilient, and they need proper public support for providing public goods. I implore the Minister to listen to Liberal Democrat calls to raise the ELMS budget by £1 billion immediately, so that farmers can be properly rewarded and helped to make the transition to environmentally sustainable farming. Such calls have also been made by key industry stakeholders such as the Nature Friendly Farming Network. Raising the budget, while also introducing a range of other public funds for public goods schemes and specified support for farmers in lowland flood areas such as Somerset, could provide a major boost to the nation’s food security. We need to ensure that those who provide the nation’s food are properly supported, and we need to recognise that the crisis affecting the farming sector requires urgent action.
I look forward to attending the Farm Safety Foundation’s annual conference next week, when it will celebrate its 10th birthday. The conference will focus on mental wellbeing within the sector, and on building resilience for the future of farming. The biggest causes of mental strain in farming are the spiralling costs, environmental pressure and uncertainty over the future following Brexit. Up to 94% of UK farmers under 40 say that mental ill health is one of the biggest hidden problems that they face from day to day. The Liberal Democrats want to provide funding for the Agricultural Development and Advisory Service to help farmers with transitions, giving them greater certainty and assurance. So far, the Government have been unwilling to provide that support.
As we heard earlier from my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron), DEFRA had a £170 million underspend on the farming and countryside programme last year. Farming businesses operate on a multi-year planning cycle, so they have a desire for predictability and steady cash flow. Without that, many are left without the security that they need, and without such security, the future of British farming is left unsecured, along with the nation’s food security.
In this continued transition period, I urge the Government to increase support for our farmers and give them the financial predictability that they need to invest in their businesses and go on producing food for our tables, while also protecting our precious environment.
George Eustice (Camborne and Redruth) (Con)
I, too, draw attention to my entry in the Register of Members’ Financial Interests: I am a trustee of shares in Trevaskis Farm Ltd, our family business.
I disagree with my hon. Friend the Member for North Herefordshire (Sir Bill Wiggin), who questioned the wisdom of bringing the statutory instrument to the Floor of the House. I think it important that the Government have signified that this is an important issue—it is an issue that matters to farmers and that therefore warrants proper consideration on the Floor of the House. I also note that it has flushed out a consensus—somewhat unlikely, so close to an election—among all the major parties. Everyone now seems to accept that area payments, which are subsidies for land ownership, have no place in the future, and that the general thrust of the Government’s plan, although everyone has articulated their differences on it, is indeed the right one. It is welcome that we have that cross-party consensus on the overall direction, because this is a long-term endeavour and it is important that all parties, to a greater or lesser extent, buy into the journey that we are on.
It is also important for us to understand why the Government decided to get rid of direct payments—payments for the ownership of land, which is what the basic payment scheme and, before it, the single payment scheme essentially were. This dates back to fairly recent history in the mid-2000s. In 2005, there were negotiations on reform of the common agricultural policy, and as part of the so-called Fischler reforms, there was a great deal of talk about decoupling farm subsidies from production. Economists throughout the European Union, and here in our own Treasury, were obsessed with the need to get rid of what they called production subsidies, which they regarded as being market-distorting, but they only ever intended the payments for the ownership of land to be temporary. Indeed, when this was discussed by the European Union in the early 2000s, it was mooted that the direct payments, or area payments, would be phased out by about 2020.
However, what we really did by introducing direct payments was to replace one subsidy—for production, which was market-distorting—with another, which was equally distorting. There is a fair amount of evidence that within the first two to three years of the introduction of direct payments for the ownership or tenure of land, about half the entire BPS budget disappeared in inflated land rents, which meant that those who owned land were able to charge higher rents to those who needed to rent land in order to farm. That is a classic example of what happens when we introduce a market-distorting subsidy, which is what the BPS payment was.
It is sometimes said that the BPS payment is an income support payment—that it helps to support farm incomes, and that it has a value almost as a social security payment—but I think that is absolute nonsense, and I did look at the issue carefully during my time at DEFRA. The truth is that 50% of the BPS budget goes to about 10% of the wealthiest landowners in the country. If we were seeking some sort of income support mechanism to help farmers who could not afford to carry on, and we wanted to keep them in the landscape that they were in for social reasons, we would means-test that benefit. We would not have a system whereby the vast majority of the budget went to the wealthiest landowners while some of those trying to make a living in marginal landscapes received nothing, or next to nothing.
It is often said, too, that the BPS helps to support food security. Again, that is absolute nonsense. By its very definition, the introduction of a subsidy for land ownership was, as it was described at the time, a decoupled payment. It was explicitly delinked from any food production. Look at the way the BPS payment worked in the last 10 years or so of its life. Look at the big sectors in the UK that produce most of the agricultural output. Look at horticulture, the top-fruit industry and companies such as G’s, which produces a big proportion of this country’s salads. Look at the pig and poultry sectors. None of those sectors gained anything whatsoever from the BPS payments, even though they were the backbone of food production in this country.
There would probably have been thousands of people across the country who were able to claim BPS payments just because they had more than 5 hectares of land, even though in many cases they were messing around with a few ponies and not producing any food at all. When I was in DEFRA, I discovered a rather extraordinary statistic: 30% to 40% of sheep farmers never received BPS payments. The reason is that the landowner kept the BPS payment and got the sheep farmers to act on a grazing licence, making them ineligible to claim the payment. The sheep farmers producing the food got nothing, because the landowners who were renting out the land captured the BPS payment. For all those reasons, it made sense to get rid of area subsidies.
Some people have said that, in a year when a lot of weather events have brought into sharp focus the risks associated with agriculture, maybe we need something like the BPS to help mitigate the risk. Again, that makes no sense whatsoever, because the sectors that really shoulder the risk are those involved in veg production and top-fruit production, and the BPS payment is a drop in the ocean in their accounts; it is not a significant part of their business model. In my constituency, I have some of the biggest brassica growers—growers of cauliflowers—in the country. They have had a horrendous year, but the few tens of thousands of pounds that they get from the BPS payment is neither here nor there in the scheme of things.
There is a final reason why the SI is absolutely right: this House has already taken the decision to delink the legacy payments from the need to own land, and we now have a fixed reference period, which is what the delinked payments between now and 2028 will be based on. It makes no sense to delay the trajectory of winding down those payments, given that some farmers might have exited agriculture altogether, and others might have come into agriculture as new entrants and will not be eligible for the BPS payment. Having delinked payments from the need to own or have tenure of land, we must now stick to the programme and move forward.
I disagree with the caricature by the Opposition Front Benchers that we have not stuck to the plan for the introduction of the phase-out, ELMS and the agricultural transition. I have to say to the hon. Member for Croydon North (Steve Reed) that that is nonsense. The truth is that the agricultural transition plan of 2019 set out, with great clarity, the eight-year transition that we would follow. We would gradually reduce the BPS payments and then delink them in 2024, because we recognise the financial dependence that some farmers had on such payments. Even earlier than that, we made it explicit in the Agriculture Act 2020 that there would be an agricultural transition over eight years. Indeed, when the Bill was first introduced to the House in 2018, we made it explicit that we would have such a transition. In Committee, we debated at some length whether that was the right length of transition. The Government have absolutely stuck to the plan that has been set out since at least 2018, and they deserve credit for doing so.
For all the reasons I have given, we got rid of BPS altogether and decided to move away from area subsidies for land ownership. Not every part of the UK did that. The Labour Government in Wales decided to keep a partial direct payment—an area subsidy—but to add lots of additional conditions to it, including the requirement to plant trees on 10% of a farmer’s land. That has led to protests in Wales, because it is a deeply unhelpful policy and is counter to the interests of Welsh farmers. We should give farmers a choice about how much they do on the environment, not dictate to them that they must act and then give them just a partial slice of the BPS payment they used to have. For the same sorts of reasons, the European Union has had huge difficulties and huge protests. Again, it has tried to retain a subsidy for the ownership of land, which makes no sense. To try to justify it to the public, the EU loaded even more conditions on to it, bringing all sorts of contradictions to the fore.
I believe that it was absolutely right for the Government to take a different approach. We should stop talking about subsidies, because there will no longer be any subsidies to farmers in the future. The Government have statutory targets under the Environment Act 2021—notably, for the delivery of species abundance—and they are a market player. They are paying farmers and landowners for the delivery of ecosystem services, and those services attract a margin. We are no longer just paying farmers a subsidy for owning land, and we are no longer saying to farmers who do a good turn for the environment, “We’ll give you income foregone—we’ll compensate you for your loss.” We are now saying to farmers, “We have targets that we want to hit, and we will allow you to make a profit margin on the delivery of ecosystem services that will help the Government to meet their environmental objectives.”
The hon. Member for Westmorland and Lonsdale (Tim Farron) referred to a 40% reduction in incomes. He was talking about a reduction in the BPS payment, but there is a difference between farm income and that payment, which I will come on to. My hon. Friend the Member for North Herefordshire invited the Minister to ask His Majesty’s Revenue and Customs to collect data on farm incomes. The Farming Minister and the Secretary of State will know that DEFRA already does that, and the farm business survey, run by the Department, is very long running. It shows unequivocally that since 2016, when we had a devaluation of sterling against the euro, farm incomes have been boosted considerably. It shows that dairy farms saw sharp increases in profitability between 2016 and 2023, and the same is true of arable farms. To a lesser extent, the same is true of some beef sectors, although in less favourable areas—suckler beef production has remained quite marginal. The potato sector and others have not done so well but, overall, farm business income has seen a sustained boost.
None of that takes away from the fact that this is an appalling year. Farmers will lose money because they have suffered dreadful weather and dreadful crop losses, which I completely understand and acknowledge. As we contemplate future policy, however, we must see this in the context of overall farm profitability over the eight years since the referendum result. The truth is that, overall, farm incomes have been stronger than they were previously.
I welcome the fact that the Government have brought forward this statutory instrument. I know that reducing the BPS payment is obviously not popular with many farmers, but as a point of coherent policy, it is absolutely the right thing to do. Ministers deserve credit for sticking to the programme.
Sir Mark Spencer
I thank all hon. Members who have contributed to today’s debate. I also thank the Secretary of State for being in his place to demonstrate his support. Two former Secretaries of State turned up in the Chamber to offer their support, and I pay tribute to my right hon. Friends the Members for Suffolk Coastal (Dr Coffey), and for Camborne and Redruth (George Eustice), for their measured contributions to today’s debate.
As we have said, it is vital that we continue to gradually move away from untargeted subsidies, as planned. Such payments have inhibited productivity improvements, and are fundamentally unjust. Our farmers deserve better. Applying reductions to delinked payments means that we can fund our other farming schemes. Our new schemes are designed to support farmers to be profitable and resilient, while delivering improved environmental outcomes and supporting sustainable food production.
In January, we announced the biggest upgrade to our farming scheme since leaving the EU. We will be adding up to 50 new actions for which farmers can be paid on their farms, which means that there will be more choice than ever for our farmers, and our increased payment rates ensure that they will be rewarded fairly under our environmental land management schemes. There are a wide range of schemes, grants and advice that farmers can access right now, and I encourage farmers to take advantage of these offers, which will support their businesses in both their profitability and their environmental footprint. For example, our new schemes are providing support to farmers to help them reduce costly artificial imports and increase their productivity.
Food production is, and always will be, the primary purpose of farming, but delinked payments are not about food production. Instead, we are investing in our new schemes, which support farmers to produce food sustainably alongside improving the environment. The vast majority of land in the sustainable farming incentive continues to produce food. The Government take food security very seriously.
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am grateful to my right hon. Friend for giving way, and I apologise to the House for not being present at the opening stages of this debate; I was in the Public Accounts Committee. I also declare my interest as a working farmer. Does he agree that there is a danger in this system that if farmers’ incomes get squeezed, it is the infrastructure that is likely to suffer? Will he make sure that there are sufficient incentives in the new scheme for farmers to invest in infrastructure—in cattle barns, in grain stores and in drainage? These sorts of things are likely to suffer and therefore productivity could also suffer.
Sir Mark Spencer
I am grateful for that intervention. That is why we are offering grant schemes for such infrastructure projects. For example, there will be grant schemes to improve on slurry infrastructure, on calf housing and on beef housing, to make sure that we not only invest in that infrastructure, but do it in a way that is sensitive to our environmental and animal welfare footprints. That is exactly what we are trying to achieve. While I am talking about infrastructure, it is also vital to the rural economy that we support things such as local abattoirs to ensure that they are there for the future. We have introduced the abattoir support scheme for those small abattoirs, to make sure that that infrastructure is in place to support the farming network as we move forward.
The Government take food security very seriously. Underlining our commitment to improving food security, at the National Farmers Union conference this year the Prime Minister announced the introduction of the annual food security index. This underpins the three-yearly UK food security report. Applications under our 2023 sustainable farming incentive already cover over 2 million hectares of land. The scheme has already had a higher uptake than in the first few years of countryside stewardship and is on track to achieve a higher uptake than the first year of environmental stewardship. We know that 81% of farmers that took part in research rated the existing sustainable farming incentive offer positively, which is an increase from 51% at a similar point in the pilot. This shows that we are listening to farmers and making improvements to the scheme so that it works on the ground for those individual farmers. We are making even more improvements in our 2024 offer.
Turning to some of the comments, it is worth noting that there is consensus in the House that this is the right thing to do. There was some criticism, and some political points were made by the Opposition, which is entirely their right, but this Conservative Government are backing our farmers, improving food security and protecting the environment. Let us take a moment to look at what is happening in Wales. The Leader of the Opposition was clear that the Welsh Labour Government were a blueprint for what they would do in the UK if they got into power, but if Welsh Labour’s approach was applied to England, an estimated 20,000 farms would be forced out of business. That would be a complete catastrophe for the rural economy and for farming in England and would detrimentally affect food security in the UK. In Wales, Labour politicians have suggested that farmers hit by TB should simply go out of business. We on this side of the House will never turn our back on farmers that face those challenges. We will always be there to support them and make sure that we back them. Following that blueprint would take us back to square one. This instrument is essential so that we can fund our schemes that support farmers to be resilient and sustainable over the long term, and I commend it to the House.
Question put and agreed to.
Resolved,
That the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2024, which were laid before this House on 16 April, be approved.