Carbon Budget Order 2026

Lord Harlech Excerpts

Tuesday 23rd June 2026 Lords Chamber

[Lord Harlech (Con)]

My Lords, it is a pleasure to follow my noble friend. I declare my interest as the owner of a Welsh upland portfolio with agricultural tenancies, livestock, woodland and heritage assets serviced by renewables. I am therefore someone who lives with both the duty of stewardship and the economics of the transition we are debating. Let me say at the outset that I am not going to deny the science nor unpick the architecture of the Climate Change Act: climate change is a real and present threat to our food, our water, our coasts and our security, and the Conservative tradition of conservation demands that we take it seriously. My concern today is not with the direction of travel, it is with the means. The means before us are too reliant on central direction, too costly and too inattentive to the people and the industries asked to carry them.

Let us consider the foundation of this budget. The Climate Change Committee tells us that electrification must deliver around 60% of the savings through heat pumps in our homes and electric vehicles on our roads. Yet we ask families and businesses to electrify while our electricity remains among the most expensive in the developed world.

The ratio of electricity to gas prices in this country is roughly 4:1, against the European average of 3:1. If we want people to make the switch, the most effective step this Government could take is to make clean electricity cheaper, through levy reform, market reform and competitive auctions, rather than through state-led projects that risk crowding out private investment and adding further cost to the bill.

Let me give your Lordships an example. At the house in north Wales that I mentioned in my interests, the domestic hot water and heating is generated by two water-source heat pumps. However, electricity becoming so expensive has blown out of the water all the projections of cost saving and non-domestic RHI—they went completely out of the window. We have had to consider whether it would be more worthwhile to turn them off and go back to LPG. I am sure we are not alone in facing that cost crisis. Affordable power is not a threat to this budget: it is the condition for delivering it.

Then there is the land. The committee’s pathway implies halving the national flock and herd and reducing consumption of meat and dairy by a quarter. I know the people who farm that land. They are the ones who plant the trees, restore the peat and work to hold carbon in our soils, because good farmers have long been among our first conservationists. However, we do not decarbonise this country by reducing British livestock production and importing food from countries that farm to lower standards. That approach moves emissions abroad, rather than removing them. The better course is to reward farmers for the public goods they already provide and support domestic food production alongside the recovery of nature.

I put this question directly to the Minister: if the Government intend to press ahead with these reductions in livestock numbers, will they pay farmers full market value in compensation for the herds and flocks they are asked to give up, or is this simply another thinly veiled attack on farmers and the rural economy?

This brings me to the second order, and to the concern that my noble friend Lord Moynihan sets out in his regret amendment, which I support. A limit of zero on overseas credits, set against a carbon price among the highest of any market in the world, risks a self-defeating outcome. Energy-intensive industry may relocate abroad, taking its jobs, tax revenue and emissions with it, so that those emissions reappear on another country’s account while global emissions are no lower at all. Carbon leakage of that kind is not decarbonisation, and it weakens our industrial base in the process.

Let me conclude where I began. I support the framework and the goal. The United Kingdom should lead, but leadership means delivery that is affordable rather than not, that supports our farmers rather than reduces them and that keeps industry here rather than driving it overseas.

King’s Speech

Lord Harlech Excerpts

Thursday 18th July 2024 Lords Chamber

[Lord Harlech (Con)]

My Lords, I declare my farming and land management interests in Wales as set out in the register. It is a great pleasure to participate in this humble Address on three of the most pressing issues of our time. Farming is an absent theme from any day of the debate on the humble Address, and rural communities were not mentioned in His Majesty the King’s gracious Speech. However, I know, with the appointment of the noble Baroness, Lady Hayman of Ullock, as the Minister, that this is merely an oversight, not an indicator of the new Government’s lack of interest.

We know that British farmers are concerned but also ambitious for the future. With policies that revitalise business confidence, the new Government can kick-start economic growth, deliver affordable, climate-friendly, high-welfare food, improve the environment, and stimulate clean energy supply. The Government must set secure and ambitious agricultural budgets for England and Wales. Food security and environmental delivery can be achieved only with a proper budget, which should be £4 billion in England and £1 billion in Wales.

Phasing out direct payments has required changes in many businesses to maintain profitable farming. Many studies suggest that the scale of funding needed to meet the targets in the Agriculture Acts of England and Wales is higher than current funding. Although private sector finance will be welcome, these markets still need to be established, and the level of funding that they will provide still needs to be determined.

Applications for higher-tier and mid-tier Countryside Stewardship in 2023 were higher than in preceding years, demonstrating the industry’s commitment to deliver for the environment. Given the increasing popularity of these schemes, an increasingly large figure will be needed to fund them. Farmers have started getting behind environmental land management schemes, and the uptake is positive. Uncertainty will damage this promising outlook. A vote of confidence in the schemes from the Treasury that the resources needed to invest in them will remain will help to give confidence to those still wavering, driving uptake further still. I also hope that the new Government build on the Genetic Technology (Precision Breeding) Act to support industries such as vertical farming, which will increase food production and security while reducing the carbon footprint.

New pressures are also pushing the agriculture budget to stretch further. Most of the woodland creation targets are funded outside the agriculture budget by the five-year nature for climate fund, which finishes this year. However, the scheme’s delivery is expected to be included in ELMS from 2024, which will add pressure if the budget is not increased to accommodate new requests.

The situation in Wales is much more challenging, and there are serious questions about whether the budget will be available to deliver the new schemes as we advance or even maintain the funding for existing ones, which will be vital in meeting the Welsh Government’s environmental and climate targets. The relationship between the Welsh Government and the farming community must be reset. A clearly defined agriculture budget allocated and ring-fenced for these specific aims would end the uncertainty and resentment that has been created.

Bridging the productivity gap between rural and urban areas in Wales could significantly contribute to the UK’s economic growth, adding £43 billion to the national GVA. With targeted support and investment, rural businesses in Wales can spearhead growth, create quality jobs and enhance prosperity across communities. This must be done by providing clarity and support for sustainable farming practices and environmental stewardship, alongside funding; by reforming the planning system to expedite development and permitted development rights, and support sustainable growth; by offering fiscal incentives and support to boost rural tourism and business innovation, while doing away with incredibly harmful disincentives such as the tourism tax; by promoting investment in renewable energy projects and improving grid infrastructure, including inside national parks; by ensuring robust food security measures and promoting the provenance of Welsh produce and other world-class UKGI food produce from across the United Kingdom to boost trade exports; and by investing in broadband and transport links to improve access and integration in rural areas.

Over the past decade, demand for housing in rural areas has grown faster than in urban areas, outstripping supply and making the countryside unaffordable for many who live and work there, while rural housing policy has been left behind. To deliver affordable homes, the Government must build more homes in rural communities, with the philosophy of a small number of houses in a large number of villages. They must also make it easier to convert agricultural buildings into homes in national parks and national landscapes, and enable the repurposing of redundant agricultural buildings and sites. They must incentivise land to be brought forward for affordable housing, and help with funding for decarbonising rural, and specifically listed, buildings, where there should be VAT parity when repairing and maintaining listed buildings, as with new builds.

As my noble friend Lord Young of Cookham mentioned, bolstering local planning departments is good news. However, local authorities must have trusted planners who can advise on agricultural planning applications. Access to this expertise is critical, and I would like Defra to act in an advisory role to ensure adequate guidance is given to local communities. Updating the planning practice guidance to include explanatory notes on farming activity and the rationale for applications would be a simple solution to ensure that the planning system does not prevent this vital investment for farming businesses. Where major infrastructure projects have the potential to disrupt and damage farmland and farm businesses, steps must be taken to ensure that farms can keep operating profitably and that they are properly and promptly compensated for any land taken and damage caused.

Our best and most fertile agricultural land must be utilised for food production. Lower-quality agricultural land or brownfield sites can be prioritised for new housing, infrastructure projects and land use for emissions offsetting. This would allow us to safeguard food security while investing in communities and infrastructure. While many farmers want to invest in producing renewable energy, they continuously find themselves constrained due to planning issues. We urgently need the Government to push local authorities to recognise that small-scale energy generation can help farm businesses become more sustainable.

To conclude, I congratulate my noble friend Lord Fuller on an excellent maiden speech, and the noble Lord the Minister—who is not in his place—and the noble Baroness the Minister on their appointments. I wish them the very best of luck in their endeavours and implore them not to forget that, while solar panels and wind turbines are great, you cannot eat them. The farmer feeds us all.