Sustainable Farming Incentive: Flood Prevention and Drought Resilience

Thursday 23rd April 2026 Lords Chamber

Question

11:28

Asked by

[Baroness McIntosh of Pickering]

To ask His Majesty’s Government whether funding will be available under the Sustainable Farming Incentive to permit farmers to undertake environmental measures for the purposes of flood prevention and drought resilience.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)]

The sustainable farming incentive will continue to support flood prevention and drought resilience. The streamlined SFI offer for 2026 includes actions that slow the movement of water during periods of heavy rainfall, keep soil covered and increase organic matter, which improves the soil’s ability to retain water. Applications will open in June this year for small farms and those without an existing environmental land management revenue agreement, and in September for all farms.

[Baroness McIntosh of Pickering (Con)]

My Lords, I welcome that Answer and the information. I also welcome the department’s recently published independent report on flourishing uplands, which highlights graphically the tensions between farmers and environmentalists. It makes no economic sense at all for productive farmland to be flooded when farmers are providing 62% of the UK’s food. In those circumstances, does the Minister agree that there is a positive role for farmers to play, particularly in the uplands, in flood prevention and drought resilience? Will she therefore make sure that not just the SFI but all forms of environmental payments will look to putting livestock back on the land and making farmland productive and, at the same time, contributing to flood resilience and drought resilience?

[Baroness Hayman of Ullock (Lab)]

The noble Baroness is right: it is important that we recognise the role that farmers, land managers and landowners have in supporting the Government’s ambitions on flood and drought resilience, and that this should be delivered through any way that is practical and possible, while at the same time looking at continuing to support farm profitability.

[Baroness Grender (LD)]

My Lords, will the Government consider adopting the Chartered Institution of Water and Environmental Management’s recommendation requiring large corporates to disclose climate-related and nature-related risks in their supply chains, and to align that with the UK’s sustainability disclosure requirements, using the Taskforce on Nature-related Financial Disclosures? Will they also use that transparency to direct more private investment into flood prevention and drought resilience on farms?

[Baroness Hayman of Ullock (Lab)]

The noble Baroness makes some really good points. The Government are keen to look at how we can encourage more private funding and support for much of the work that needs to be done, whether that is in the climate sector or in nature restoration. I completely take on board the points she has made.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, action under the ELMS budget, such as establishing buffer strips along watercourses or restoring peatlands, can improve biodiversity while naturally reducing flood risk, and would be important to consider, particularly with our changing weather patterns, which result in persistent rainfall during the winter and periods of drought over the summer. Can further thought therefore be given to storage ponds for such water to help with food security, farm production and overall resilience in our farming sphere?

[Baroness Hayman of Ullock (Lab)]

Storage ponds are incredibly important. In where I live in Cumbria, for example, the West Cumbria Rivers Trust has been working closely with landowners to do exactly that—to look at storage ponds and balancing ponds, because they have an important role to play in flood management on land.

[The Lord Bishop of Chester]

My Lords, the Minister will be aware that there are 28,000 agri-environment agreements which cease either this year or next, and the applicants must wait for agreements to expire before they can start a new SFI application. We can imagine in terms of sustainability and the welfare of our farming community that those who have such environments need assurance that they will be able to apply and to continue delivering the outcomes without a break in their payment. Can the Minister give such an assurance?

[Baroness Hayman of Ullock (Lab)]

As I mentioned in my initial response, the window for all applications will open in September. We are also trying to give a bit more stability around the SFI. The aim is to completely minimise any changes from now onwards, because farmers need stability to support long-term planning. Having said that, there may be changes because we have targets that we want to reach and outcomes that we want to see, but the right reverend Prelate makes a good point.

[The Earl of Kinnoull (CB)]

My Lords, flood prevention still requires affordable insurance to back it up, because floods still happen when you try to prevent them. The eligibility criteria of Flood Re mean that for the outbuildings of small farms, if the farm office is inside the farmhouse, the farmhouse is not eligible for Flood Re. Flood Re’s eligibility criteria in this respect were set 10 years ago—is it time to look at them again?

[Baroness Hayman of Ullock (Lab)]

I know the challenges around Flood Re and insurance that the noble Earl is referring to. The issue we have with the kind of outbuildings the noble Earl describes is that they are registered as businesses in the insurance field. As I am sure he is aware, businesses are not eligible for Flood Re. There are complications around including businesses in Flood Re, and I do not think that the Government are likely to change their position on that. Having said that, we need to consider how we look long-term at flood insurance for businesses so that it will be possible to insure them in these cases in the future.

[Lord Roborough (Con)]

My Lords, I refer the House to my interests in the register as a farmer and landowner. The Government have stated that each farm can have only one SFI agreement, even if that agreement does not reach the £100,000 cap. Given the ever-increasing importance of flood prevention and drought resilience, will the Minister commit to allow related SFIs to be exempted from these rules and stacked on other SFIs without a cap?

[Baroness Hayman of Ullock (Lab)]

It is not something I can confirm today, but I am more than happy to take that back to the department and to discuss the different options.

[Lord Bellingham (Con)]

My Lords, as the Minister is obviously aware, all these schemes will require funding contributions from the farms in question. That will probably rule out most small farms, so we are discussing medium to larger-sized farms. The Minister mentioned sustainability, long-term planning and profitability, but these are the very farms that will be hammered by the family farm tax, which, as well as destroying jobs and family farms, will prevent money going into these schemes. I suggest that, if she wants to rebuild credibility and trust with the farming community, she and other Ministers should now call for this policy to be reversed.

[Baroness Hayman of Ullock (Lab)]

I am sure that the noble Lord is aware that the Government made some changes to the inheritance tax policy. We are continuing to listen to farms and farm businesses. I am sure noble Lords know that we have a small holding; I am very aware of the challenges for small farms and know a number of small farmers where we live. It is important to look at how we get farms into profitability—that has to be the focus—which is why I was so pleased to see the report from the noble Baroness, Lady Batters. The Government are looking to introduce many of her recommendations.

[Lord Watts (Lab)]

My Lords, is not transferring resource support to smaller farmers and tenant farmers the right thing to do to stop rich billionaires getting funded, rather than the farmers who are trying to provide food?

[Baroness Hayman of Ullock (Lab)]

As I have already said, when the new SFI offer opens, it will be targeted at small farms. It is important that we look at how we support all farmers to ensure that they can support us with our aims on food stability and security.

[Lord Fuller (Con)]

My Lords, does the Minister appreciate that the arbitrary cap on SFI, which was mentioned by the noble Lord opposite, militates against economies of scale and driving the farm productivity and profitability that the nation needs and the land use framework requires?

[Baroness Hayman of Ullock (Lab)]

The most important things we can do to move forward on farm profitability and to support farms are, first, to listen to them and, secondly, to look at what the noble Baroness, Lady Batters, says in her report. It is an extremely impressive, comprehensive report on how we improve farm profitability. We should listen to someone with her expertise and experience on how we move forward to increase farm profitability.

[Baroness Sheehan (LD)]

Can the Minister say whether the SFI will provide support for on-farm reservoir projects aimed at mitigating environmental impacts from drought at the catchment scale?

[Baroness Hayman of Ullock (Lab)]

The SFI26 offer has 71 separate actions, of which 35 are designed to support flood and drought resilience. It is incredibly important that we recognise the huge damage that drought can cause to our farmers. The new SFI offer, in looking very carefully at both flooding and drought, recognises the long-term implications of climate change for our farms and food production, which is important as we move forward.