Draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026
(Limited Text - Ministerial Extracts only)
Read Full debateThe Committee divided: - Ayes: 9 / Noes: 5 - Question accordingly agreed to.
The Minister for Food Security and Rural Affairs (Dame Angela Eagle)
I beg to move,
That the Committee has considered the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026.
It is a pleasure to serve under your chairmanship, Sir Desmond. This is the first time that you and I have been in the same room in this context.
The draft regulations, which were laid before the House on 10 March, will set the reductions applying to delinked payments for England for the years 2026 and 2027. In doing so, they will deliver on our commitment to phase out those subsidies by the end of the seven-year agricultural transition period, as we redirect funding to our other schemes for farmers. The last year of delinked payments will be 2027.
The Government are committed to supporting our farmers and the vital role they play. We will continue to invest in our farmers and land managers, to make their businesses, food production and our country more sustainable and resilient in the years ahead. Reducing delinked payments is essential if we are to fund the other schemes that will help us to achieve that. Delinked payments do not address the underlying challenges affecting farm profitability; they do not support the healthy soils, abundant pollinators and clean water needed to produce good food, or promote innovation and provide good value for money.
The reductions to delinked payments will complete the move away from the previous scheme, which rewarded land ownership, with 50% of payments going to the largest 10% of firms. We are applying the reductions fairly, with larger reductions to amounts of the higher payment band. We announced the reductions last June to help farmers to plan ahead.
The money released from delinked payments is being reinvested in the sector. Farmers and land managers will benefit from an average of £2.3 billion a year over the period 2026-27 and 2028-29 through the farming and countryside programme, and get up to £400 million extra from additional nature schemes, including those for tree planting and restoring peatlands. The investment includes increasing annual funding to the environmental land management schemes from £1.8 billion in 2025-26 to more than £2 billion by 2028-29. That means we are backing farmers with the largest nature-friendly budget in history to support them to restore nature and boost farm productivity. There are now 50,000 farm businesses, and half of all farmland is managed under our environmental land management schemes.
Earlier this year, we announced plans for a new sustainable farming incentive offer, and the first application window will open later this month. The new offer will ensure that more farmers can access funding. A range of improvements are being introduced to make the sustainable farming incentive 2026 simpler, more streamlined and easier to navigate. The new offer will continue to support sustainable farming by strengthening the environmental foundations of farm profitability and our long-term food security.
Last September, the new countryside stewardship higher tier opened for applications for those who have been invited to apply. They have received pre-application advice and completed any preparatory work. Landscape recovery projects that were awarded funding in rounds 1 and 2 are continuing to progress towards the delivery phase. Plans for a third round will be confirmed in due course.
The latest round of the environmental land management capital grant offer will open in July, backed by £225 million in funding—a 50% increase from the last financial year. We have also announced plans for £120 million in innovation and productivity grants in 2026-27. Such grants can help the sector to access cutting edge technology and techniques, such as robotic weeders, which reduce chemical use in our countryside and help farmers to grow more food. This funding forms part of the Government’s commitment to invest at least £200 million in agricultural innovation by 2030 to improve productivity and to trial new technology as part of the UK’s modern industrial strategy. We will spend up to £30 million over three years on a new approach to farm collaboration and advice, and we are working with Dr Hilary Cottam to develop a place-based approach for upland communities. We have also extended the farming in protected landscapes programme for another three years, until March 2029.
We want to continue to work in partnership with the sector. We have established a farming and food partnership board, which brings together voices from farming, food, retail and finance to drive profitability, building on the recommendations made in Baroness Batters’s farming profitability review. We have also engaged with farmers and stakeholders on the 25-year farming road map, which will set out the Government’s long-term vision for farming, giving farmers the clarity they need to plan ahead.
We want farm businesses that are productive, profitable and resilient, while contributing to food security and nature recovery. The reductions to delinked payments are essential to enable us to make the planned investments in the future of farming and the countryside. I commend the draft regulations to the Committee.
Dame Angela Eagle
I thank all those who have contributed to this short but perfectly formed debate.
The draft regulations were announced last June as part of a process that commenced under the previous Government following Brexit, when they announced a seven-year programme to transition away from the common agricultural policy, which makes delinked payments, to a much more focused environmental policy. The previous Government created that policy and the then Labour Opposition supported it, because we both accepted that farming has to be done on a more sustainable basis. We must see nature recovery, we must invest in healthy soils and in recreating healthy pollinator populations, and we must ensure reasonable food production rather than degrading our natural assets and resources to maximise food production at any cost. We are shifting to a much more sustainable model, and although the Opposition indicated that they will vote against the draft regulations, I hope that everybody can support that shift in principle.
The hon. Member for Keighley and Ilkley said that we are going too fast, but the farming transition was a seven-year transition. All the ELM schemes and support for farmers will be involved in protecting nature and increasing sustainability, rather than going towards delinked payments. He seems to object not to the end point, but to the speed of the transition over the next two years. I understand what he is saying, but I think that he is dancing on the head of a pin.
Robbie Moore
If the Minister were speaking to a farmer, would she say that this is dancing on the head of a pin? We are talking about reducing an annual delinked payment to a farming business from a potential £30,000 to about £600. Given all the additional overheads placed on farming businesses that produce food, the Opposition believe that that is too quick a drop, and it comes without sufficient notification.
Dame Angela Eagle
Sufficient notification has been given, since the transition began seven years ago—everybody has been expecting it. It is important that we get the transition done. I can assure the hon. Gentleman that the money being taken away from delinked payments is going straight back into the system and will be available for the transition.
The Government remain convinced that delinked payments are not an effective way of supporting our farmers, protecting food security or restoring nature. Former Secretary of State Lord Gove certainly agreed with that when he began the transition after Brexit. We continue to invest in our environmental land management schemes and our range of grants and other support for farmers to deliver public goods, reward sustainable farming and boost productivity. Without the reductions contained in the draft regulations, spend on delinked payments in each of the years 2026-27 and 2027-28 would increase to £1.8 billion, leaving a shortfall in the remaining farming budget for each of those years that then could not be spent on financing the transition. Those who believe in the principle of the transition need also to believe in the means.
My hon. Friend the Member for South West Norfolk spoke extremely well about his farmers, and I welcome his support. I understand that the transition can be difficult and worrisome, but it is crucial for the future of our farming profitability and resilience that we manage to get this done. The Government are determined to assist farmers all we possibly can in achieving the transition. The vast majority of them know that it has to happen, and we will see what we can do to ensure that it does.
The money released by reducing delinked payments is not being lost to the sector; it is being reinvested through our other schemes for farmers and managers. We are being transparent about how the money is used. Each year, we publish a farming and countryside partnership annual report, which shows how the farming budget has been spent. The report for the financial year 2024-25 was published last September. We will publish our next report later this year. That will be transparent about where the money has gone and how it has been spent. We have provided a breakdown of how we plan to spend an average of £2.3 billion a year through the farming and countryside programme, showing planned spend for each of the years between 2026-27 and 2028-29. That was set out in a farming blog, which is available on the Government website.
It is clear that we cannot achieve our environmental goals or have food security unless farm businesses are profitable. By increasing investment in our environmental land management schemes, we are helping farmers to protect the environment and the business foundations of farming—our soils, our water and our pollinators—which will help to reduce their input costs and boost productivity.
We know that there is high demand from farmers for our ELM schemes, so I am pleased that SFI26 will be opening to small farms later this month. The hon. Member for Keighley and Ilkley said that it was for small farms only, but the first window is also open to those without an existing agreement, so it is a slightly wider opening than he hinted at in his speech.
As was announced at the NFU conference, in 2026-27 we will invest £120 million in new productivity grants, which can help businesses to cut costs, improve efficiency and protect profits. Farmers can also boost their businesses through the animal health and welfare pathway, a programme designed to strengthen biosecurity, manage disease risks and improve animal health and welfare outcomes, which, in turn, boost farm productivity and profitability. We are also continuing our work to ensure fair competition across the supply chain, and have announced planning reform to unlock food and farming infrastructure development. The Government’s new farming and food partnership board has set out how it will work to drive growth in all sectors, improving productivity and profitability. It is beginning its work with two sectors—horticulture and poultry—but it will get on to work in others.
Our vision is to help farmers to improve their productivity and profitability, and to collaborate with them on delivering positive environmental change. Continuing to phase out delinked payments will enable us to invest in the long-term future of farming, by ensuring that funding is targeted where it can have the greatest impact. I commend the regulations to the Committee.
Question put.