Common Agricultural Policy

Baroness McIntosh of Pickering Excerpts

Monday 7th July 2014 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I welcome the opportunity to debate the implementation of the common agricultural policy in England. I welcome the Minister to his place and look forward to his comments.

Looking at the estimates for the forthcoming year, it appears that there will be a 2% increase in the overall budget against last year’s final position in the 2012-13 supplementary estimate. It appears that the £43 million increase in programme spend is largely due to the £124 million increase due to the transfer of the CAP disallowance funding from 2013-14 to 2014-15, in line with a Treasury agreement to allow flexibility in disallowance funding between years. There is also a £38.4 million increase to the Environment Agency’s flood management budget, which is extremely welcome and includes the £20 million announced in the 2014 Budget. It would be helpful if the Minister, in his response, reassured us that this is new money and that we are not being asked to make savings from, for example, the EA’s Yorkshire and Humber budget to transfer to other parts of the country. That leads to the question, since I understand that the National Audit Office is not in the position to provide figures for the debate, of what the projected figures for disallowance, and any quantifiable fines from the new CAP reform coming into effect next year, will be.

Against that backdrop, the Select Committee on Environment, Food and Rural Affairs was extremely pleased to consider the Department’s proposals. When we reported last year, we found much to like. We support the Government’s intention to raise the minimum level of claim threshold to five hectares, and to move money uphill. It is extremely important to state at the outset, however, that that money must go to active farmers and not simply to those who own the land. I would like to go into some detail in that regard, and the Minister cannot help but be aware of our particular concerns.

I would like to record my particular thanks to the previous Minister with responsibility for farming, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), who was mindful of our concerns about areas where common land is prevalent. The Committee supports the Government’s position that England should adhere, as closely as possible, to the greening measures set out in the direct payments regulation, and not adopt a national certification scheme approach to greening. In our conclusions, we recommend that the Government maintain the 9% rate of transfer from pillar one to pillar two, and only move to 15% in 2017 if they can demonstrate that additional funds are required and that there is a clear benefit from the projects proposed. Clearly, a compromise of 12% is less than 15% and more than 9%. Perhaps the Minister will share the Government’s thinking in that regard, but we are pleased that the farming voice, and that of the Committee, was heard.

The Committee recommends that the Government take steps to ensure that those actively farming receive the direct payments and that those farmers who have responded to the call to diversify are not captured inadvertently on the “negative list” of business types ineligible for CAP funding under pillar one. We recommend that the Government update the commons registers and allow commoners associations to claim on behalf of all those who actively farm commons, so that the commons attract the share of pillar one money intended for them. I am aware of the position in North Yorkshire and Cumbria, and that the register will be updated from October. I believe that in County Durham and other parts the situation might be slightly different. My concern, which I am sure the Committee shares, is that the update to the register cannot take place before 1 January 2015, so a number of eligible claims will be excluded. What will happen to specific claims that are relevant and should be awarded, but may not be in place by 1 January 2015? It would be extremely helpful to put the minds of those farmers at rest.

The Committee supports the continuation of dual use under pillar two, but we think that Natural England must display a lot more rigour in arranging agri-environment contracts to ensure that payments under those schemes go to those who do the work and whose income is forgone. We make a specific recommendation that I hope will be echoed across the House this evening—that Natural England must be in a position to give advice. It should not be seen just as the policeman; it must be there to provide advice to farmers who seek it.

One of the central recommendations—it is certainly close to my heart, given the area that I represent—is that where there is a dispute between landowners, tenants and graziers, they must have access to a dispute resolution mechanism, set up along similar lines to that suggested by the tenancy reform industry group. In this day and age, it is worrying that those whose interests are sometimes ignored or trodden on should not have access to arbitration or a simple, swift dispute resolution mechanism along the lines we propose.

The Select Committee highlights the risks associated with the Government’s plans to develop a new single IT system for CAP funding through which all agencies would be able to administer the CAP. We do not wish to rehearse the grief from previous Administrations, but we are aware of recent history and we do not wish it to be repeated. An undertaking and some assurance from the Minister that that is not intended would be most welcome this evening.

We support the Government’s ambition to encourage and support as many people as possible to apply for CAP funding online, but that approach will simply not be available to some farmers. We received an assurance from a DEFRA Minister in our recent deliberations that a paper-based application process would be retained and that guidance will be provided in paper format in the run-up to the new scheme. It was thus of some concern when the chief executive of the Rural Payments Agency, in giving evidence to the Committee in April this year, told us that there is absolutely no way that a paper format application can be made. That will send shockwaves through rural areas.

In my own constituency, I had a briefing from NYnet, the county council’s regime that is working in tandem with BT to try to roll out broadband in the area. By 2015-16, however, only 78% of my Thirsk, Malton and Filey constituency will be covered. That means that 22% of Thirsk, Malton and Filey will have no access—I repeat, no access at all—to fast-speed broadband. That 22% is where all the farming communities live, and it means that they will be severely disadvantaged. We are all familiar with those trying to apply online who find either no access or receive internet access that is so slow that all the information that has been entered can be lost just as people are trying to press the send button.

I say to the Minister that it is no comfort to farmers to be told that they should seek a satellite connection, as they simply cannot afford the prohibitive cost. I repeat the Committee’s recommendation to the Government that the BT money that is being rolled out—particularly the element coming from the BBC licence fee and the next round of licensing—should go to those rural communities across England that have the slowest speed and the weakest broadband coverage. We cannot expect the farming community to go digital by default from 1 January, yet have no access to broadband.

[Ms Margaret Ritchie (South Down) (SDLP)]

I, too, am a member of the Select Committee on Environment, Food and Rural Affairs. Does the hon. Lady agree that throughout the UK and particularly in isolated rural areas, farmers are being marginalised because of lack of proper access to broadband, and that the Minister should use his good offices to make representations to BT about that problem? That issue was highlighted in our rural communities report. Does the hon. Lady further agree with me—on a compelling point that she made—that there is a need for proper guidance and form filling to be available in paper form?

[Miss McIntosh]

I thank the hon. Lady for her sterling contribution and excellent work on the Select Committee. I agree that this goes to the heart of how applications will be made from 1 January. We need clarification, because we cannot have the Minister saying one thing and the RPA saying another. If, as the RPA assured us, paper forms will not be available to submit, intensive tuition must be made available to those required to go digital from 1 January.

I want to raise one or two more points before putting some questions to the Minister. Another issue that the RPA shared with the Committee during the evidence session in April is that the reality will be less than was first hoped and more complex, even without the known unknowns such as the disallowance or fines. The cost to implement will, according to the RPA, be between 15% and 40% higher than previous schemes and, possibly, than previously thought. I shall ask the Minister a couple of direct questions about that.

The impact of flooding on farmland is another important issue that cannot be underestimated. Thousands of acres in Yorkshire and the Humber area were under water in 2012-13 and 2013-14, and thousands of acres were under water in Somerset and the south-western parts of Scotland at the time of flood incidents. The impact on the productivity of farming has been severe.

Will the Minister confirm whether farmers will be eligible for parts of the CAP, perhaps under pillar two, and the rural development fund, if not agri-monetary schemes, for storing water on land? How long would it take? Will such storage constitute reservoirs? When will DEFRA be in a position to publish the reservoir safety guidance, for which we have been waiting for some months, if not two years, because it will have a direct bearing on this matter?

Is it a source of disappointment to DEFRA that the CAP reforms have in many respects become more complex and less simple in an already complex system? Is it indeed the case that the CAP schemes are likely to be between 15% and 40% higher than previous schemes, and how has the Department budgeted for that in the estimates? Is the Department seeking to simplify and minimise the administrative cost in the new schemes, even against that backdrop?

Will the Minister respond to a question that has been asked by me and by the hon. Member for South Down (Ms Ritchie)? In April, the RPA told our Committee:

“It is not actually possible to submit by paper to the new scheme, because of the way that it is structured.”

That completely contradicts what Ministers told us in their evidence. I repeat that farmers in areas with no broadband service face considerable problems. Will the Minister assure us that making access to CAP funding digital by default will not cause problems for farmers in areas that lack broadband coverage or significant speeds? Will he also assure us that the new digital support centres, which form an important part of the assisted digital service, will be accessible to all farmers, including hill farmers in relatively remote locations such as mine? Will he confirm that there will be a certain degree of privacy, and that farmers will not be expected to sit in a public place, such as a library, sharing commercially sensitive information with members of the public? The Committee believes that that would not be appropriate.

What makes the Minister think that the United Kingdom’s allocation of pillar two funds, which was much less than had been predicted, will not adversely affect the competitiveness of English farmers, especially in view of the fact that the Government now say that they will modulate 12% and that the proportion will increase to 15% if they believe that to be necessary? What will be the criteria for the move to a 15% rate of transfer from pillar one—direct payments—to support in the final two years of the pillar two rural development programmes? As I have said, we are pleased that the Government listened to the views of the farming community and those of the Committee before reaching their decision, but it would nevertheless be helpful to know what those criteria will be.

In June, the Secretary of State unveiled the details of how the Department would implement the greening rules in England, and referred to a specific problem relating to hedges. He said that the need to validate all claims and map digitally every hedge to EU standards might significantly increase the risk of delayed payments to those who adopted that option. What progress has DEFRA made in talking to banks to ensure that farmers who receive late payments as a consequence of the inclusion of hedges in ecological focus areas will be treated sympathetically? What guidance will it give farmers in regard to how hedges should be measured? I am sure that the Minister will want to allay our concerns, and those of farmers who have contacted us, about any change in the date on which farm payments will be made. What effect will the inclusion of hedges as an option enabling farmers to comply with EFA requirements have on disallowance risk? Will the Minister tell us how the Department will forecast what that risk will be?

During the evidence session, when asked about the level of disallowance that the agency expected to incur under the new CAP, the chief executive of the RPA told the Committee

“we would be doing incredibly well if we can hold disallowance to 2% of future scheme expenditure”,

which is calculated to be in the order of £40 million. From that, it would be reasonable to infer that the UK’s disallowance risk will be increased. We are at a disadvantage this evening because we are debating the subject without the figures from the National Audit Office.

The proposal to move money uphill is obviously welcome, but, as I said earlier, we must ensure that it is those who are actively farming, particularly on common land, who will benefit. DEFRA announced in April that farmers in England who operate within the moorland line would receive approximately £26 more per hectare in direct payments under the new CAP, an increase of about 90% in the moorland rate. That is great news, and a victory for commons, given that 96% of upland commons are above the moorland line. I repeat, however, that we must ensure that the money goes to the commons and the graziers. I hope that the Minister will respond favourably to our request for a dispute resolution mechanism. It would be great if he could also assure us that commoners and graziers who wish to claim payments under the new CAP schemes will not be disadvantaged by the poor state of the registers in North Yorkshire, Cumbria, County Durham or elsewhere.

The new environmental management schemes which are open to all upland farmers are obviously welcome, but I hope the Minister will assure us that those farmers will not be left worse off overall by the changes introduced under the new scheme if, as a result of the comprehensive area assessment, the new environmental land management schemes are not open to farmers who are currently operating the uplands entry level stewardship schemes.

I would like to end by highlighting how current payments have worked least well: in respect of rewarding active farmers and graziers on the common land. It is crucial that those who are actively involved in the commons—those active farmers and graziers, or at least those who perform an active part in managing the commons—receive payment timeously, whereas people who do nothing with the commons should not receive a payment where that is not appropriate. Therefore, I urge the Minister to agree that lessons must be learned from how the existing direct payment scheme—the single payment scheme—was implemented in relation to common land, and to ensure that those who till the land on our behalf are indeed the beneficiaries of the new proposals.

With those comments and questions, we await with great interest the Minister’s response.

[Helen Goodman (Bishop Auckland) (Lab)]

I congratulate the Environment, Food and Rural Affairs Committee and its Chair, the hon. Member for Thirsk and Malton (Miss McIntosh), on producing a very pertinent report.

On previous occasions I have found the Minister to be a very reasonable, intelligent and empathetic person, and I hope those qualities are going to be on display at the Dispatch Box tonight. I was slightly disappointed when I initiated a debate about the hill farmers in Teesdale that he was not able to respond, but I am going to put the points again in the hope of getting a slightly more sympathetic response than I received previously.

In my constituency, there are a large number of hill farmers who are very much affected by these CAP changes. It is an unusual area, because they are almost entirely tenant farmers farming on common land. They have been farming in the same way for about 500 years, and they have produced a very special way of life and a very special and valuable ecology, so I applaud the remarks in the report and from the Select Committee Chair on common land.

When I went to see the Upper Teesdale Agricultural Support Services, it was particularly concerned because it felt that the European Union had not understood the way commons operate in this country and that the rules at European level were not very sensitive to the needs of English hill farmers for that reason. There was also concern about the change in the payment times in the underlying reforms: payments had previously been made on a six-monthly cycle but people were going to have to wait much longer—sometimes 18 months and in one case as long as nine years. That is a significant problem.

[Miss McIntosh]

I am most grateful to the hon. Lady for giving way, and it allows me to refer to the register, which is out of date. My brother and I have shared a farm in Teesdale, of which the hon. Lady is aware. Does she realise that Teesdale is often cited as the area whose farmers earn the lowest income of any hill farmers in England and Wales?

[Helen Goodman]

The hon. Lady is right. Newcastle university estimates that the average income of a farmer in my constituency is £11,000 a year. Many of them are on working tax credits—or were on them under the previous Government, but I am not sure how many of them are still getting the working tax credits.

The Select Committee report is excellent on the major problem such hill farmers face, which is to do with delivery: the totally inadequate service that the farmers receive from the Rural Payments Agency because of the requirement to apply for money online and because the system is constantly collapsing. The Select Committee report states at paragraph 34 that

“farmers can be heavily penalised for a genuine mistake but not appropriately compensated when it is the Rural Payments Agency who is in error.”

What has happened repeatedly in recent months is that the farmers have gone to upload their data and information, and the RPA computer system has been down, necessitating the farmers to go home and come back another day. That is absolutely absurd. Sometimes they have a round trip of 20 miles to access the computer in the UTASS centre in Middleton in Teesdale. When the system is down, they have wasted several hours and have to go back another day in the vain hope it will be up again. I wrote to the Minister about this, and I really think he should not be penalising the farmers when the RPA is at fault.

The next extremely pertinent recommendation from the Select Committee is recommendation 36, which states:

“The IT system remains, however, one of the standout challenges of this round…Given the lessons of the past we question whether this is the right time to be introducing a new IT system.”

How very right the Committee is. It is not just about a new IT system, with all the risks, complexities and problems that a new system always seems to entail in this country; one of my local farmers calculated that because DEFRA’s systems are so complex, and because he has to apply to so many different things and for each system he is meant to have a different authentication, he is supposed to remember 27 different personal identification numbers. This is absurd. This is grotesque. This is Kafkaesque. I find it difficult to remember my bank number and the number to get into the House of Commons, so how can these farmers, whose real job is farming up on the hill, be expected also to run the sort of complex IT system that would make a banker blench?

The Select Committee’s next point, which is absolutely right, was about the importance of encouraging and supporting people to apply online but realising that

“there will be some for whom such an approach is not appropriate. A paper-based application process must be retained”.

That is absolutely essential. Once upon a time, the farmers got the forms through the post, sat at their kitchen table, had a cup of tea, filled the forms out, put the stamp on the envelope, shoved it in the post box and, boom, the whole thing was done. Now that is not possible and the farmers have to drive to the library or the UTASS centre to get help with the uploading.

The whole thing is completely inefficient because, as recommendation 38 indicates, the rural broadband programme has not succeeded so far. We know that 5 million people in this country do not have access to broadband. Until 100% of people have access to broadband, how can it make sense to have a totally online approach and not have a paper-based approach alongside it? In my constituency, 40% of the farmers have no access to rural broadband, so DEFRA and the RPA are taking an absurd approach. It is essential to maintain a paper-based system. It is not reasonable for the Government to make public spending cuts through a digital-by-default process and pass all the burden back to the farmers for delivering the Government’s own administration system. The farmers experience that as oppressive and nerve wracking; it raises anxiety levels to a completely unreasonable pitch, given the significance of what the Government have to do.

--- Later in debate ---

[George Eustice]

There were serious administrative difficulties in terms of allowing hedgerows and all landscape features to count towards the environmental focus area, because each one has to be mapped, and we took the decision in the end that hedgerows were so important to many parts of the country that in the first year we should include those hedgerows and endeavour to get the mapping done, and where it could not be done in year one—we have three years to complete the mapping— farmers would self-declare the hedgerows. We do not rule out adding things like stone walls in years two or three, once we have got hedgerows in place. The task of mapping every single individual feature on every farm is an enormous one, however, and we therefore wanted to start first with hedges, before moving on to things such as dry stone walls.

[Miss McIntosh]

Will my hon. Friend give way?

[George Eustice]

I am going to try to make progress, I am afraid, and I will address many of the points my hon. Friend made if I have time to get to them.

On the agri-environment schemes, we have been clear that 87% of the pillar two budget will go on the new environmental land management scheme. At the higher end, the scheme will be broadly similar to the existing higher level stewardship scheme, but we will also have an additional rate that has more requirements and obligations than the existing entry level stewardship scheme, and which is more proactive and is almost a middle rate. These will be more targeted, and my right hon. Friend the Member for South East Cambridgeshire raised concerns that this would effectively lead to white areas or deserts where there would be no such support. Alongside this scheme we intend to deal with the problem of so-called white areas by ensuring that there will be directed options right around the country so that whole areas of the country will not be excluded, and grants to support the planting of woodland, for instance, will be universally available.

Many Members touched on matters relating to the three-crop rule, which will cause difficulty for some farmers—up to around 7%, possibly more. We gave serious consideration to advancing what is called a national certification scheme—a nationally designed scheme that would achieve the same thing—because, as my right hon. Friend the Member for South East Cambridgeshire said, the three-crop rule does not in itself guarantee crop rotation. Indeed, there are all sorts of anomalies, not least that a cabbage and a cauliflower are regarded as the same crop botanically as far as the EU is concerned, and there will be lots of similar complications to work through. When we looked at the alternatives, however, we found that they were all more complicated and even more difficult to administer than what was already on the table.

A number of hon. Members have mentioned the uplift to the single farm payment, which is important. It recognises the value we place on upland and moorland farmers, not just as custodians of the countryside, as my hon. Friend the Member for York Outer (Julian Sturdy) mentioned, but as food producers. We are, therefore, equalising the basic payment for upland farmers and lowland farmers, and we will almost double the rate for moorland farmers to about €70 per hectare.

My hon. Friend the Member for Thirsk and Malton raised a number of issues, the first of which related to commons. We understand the concerns about the commons register, which has always been the starting point for the mapping of commons. There are disallowance risks in departing too far from the system we have had in place to date, but I can confirm that in addition to starting with that existing commons register, the RPA will utilise other information available to it, such as aerial photography, to help ensure that those who are entitled to claim on common land can.

My hon. Friend also mentioned the issue of disallowance, and I can confirm that we have set aside a figure of 2% to plan for that. It is our aspiration to get to zero disallowance, but the way in which the disallowance scheme works is incredibly complicated and convoluted. Frequently, the disallowance we get is through no fault of our own; it is often because the European Commission does not understand its own rules, and we can get into very protracted arguments. For instance, the fruit and veg scheme has been notorious as a cause of disallowance. The system is very complicated and I do not think we will ever be able to eliminate disallowance altogether.

A number of hon. Members, including my hon. Friend the Member for Thirsk and Malton, have highlighted the issue of the modulation rate—the inter-pillar transfer. We have made it clear that we will modulate at 12% initially and have a review in 2016. She asked what the criteria for that will be. There are two basic criteria, the first of which is whether there is sufficient demand for those agri-environment schemes to warrant an increase in that budget. That links to a question raised by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). The second is an assessment of the impact on the competitiveness of British agriculture.

Many hon. Members, including the hon. Member for Bishop Auckland (Helen Goodman), have raised concerns about the new IT system. The existing RPA computer system is simply not fit for purpose and we need a new system. The new common agricultural policy is far more complicated, and there are coefficients attached to some environmental focus areas. Somebody growing peas or beans will find that that counts for only 0.7% towards their EFA—0.7% of the area declared—whereas for hedges there is a coefficient of up to 10 times the area of the hedge. The idea that we could do this by drawing things on maps with pencil, as we do under the existing system, and sending that in to the RPA is simply not credible. We therefore believe that to cope with the new system we have to have a digital by default approach and to have everyone adding their data by computer, because that will be simpler.

I completely understand the point that many hon. Members have made about broadband access. We are investing £500 million through BDUK—Broadband Delivery UK—and a further £250 million in phase 2. We have a third fund of £10 million to pilot creative ideas for those really hard-to-reach areas. In addition, we will have an assisted digital package. We will send paper guidance to every farmer in year 1, so although they will not have a paper application form, they will have paper guidance. That guidance will include detailed information on our digital offer. The crucial thing for those lacking the computer literacy to complete their form online or those who have no broadband access is that we will be setting up a number of digital service centres right around the country, particularly targeted at those areas where there is a problem. Farmers will, thus, be able physically to take their information into an office, which will have privacy and be discreet, and work with an RPA agent to enter that information on the system. That is the right thing for everyone. It is right for those farmers, because it removes the risk of them getting penalties and disallowance.