Direct Payments Ceilings Regulations 2020

Baroness McIntosh of Pickering Excerpts

Wednesday 1st July 2020 Lords Chamber

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I thank my noble friend for bringing forward these regulations today, sandwiched so neatly between the Fisheries Bill and the Agriculture Bill next week. Like other noble Lords, I express my concern about how these regulations under the current system apply to smaller farmers and, in particular, those on hill farms, where I grew up and which I represented for 18 years in the other place, and tenant farmers.

I welcome the certainty that my noble friend has presented today, with the rate being fixed at an exchange rate of 89p to the euro. My question is one which I am sure has been asked in other years. I understand that the euro currently stands at 90p, or even slightly higher. Who picks up the shortfall in the costs of the exchange rate? Does that mean that fewer funds are available to the farmer, as it has to come out of the £2.8 billion allocated to the direct payments? I would be interested to know. Obviously, someone has to pay if there is a currency discrepancy there in this particularly volatile current period.

My noble friend referred to the ceilings regulation and the fact that, as I understand it, the ceiling is being kept the same. As we go into the transition period, where these will be phased out, will my noble friend say whether the Government intend to keep the pro rata within the ceiling, so that as the total comes down, the pro rata will remain the same and there will be a similar cap in future years? Can my noble friend address specifically a potential continuity gap between the regulations before us today and the new regulations, which will not come into effect until the end of the payments transition period? I understand that a consultation on ELMs has reopened, and I accept that that is an issue for another day. However, it is difficult to respond to a consultation if the farmers or those who wish to respond do not know the outcome of the trials and we have no idea what the nature of the pilots will be. Any light that my noble friend can cast on that would be very welcome.

The continuity gap that concerns me, which I hope my noble friend might briefly address, is: as we phase out these payments over the period to the end of the 2020s and the new payments come into effect, how does my noble friend intend that the Government will address that? Obviously, this is an argument for another day, but I hope that he will look favourably on the amendment to delay the transition phase from 2021 to 2022 in the context of the Agriculture Bill when we reach that next week.

Looking ahead to that Bill, I know that a number of noble Lords today have argued for transfers of payments from pillar 1 to pillar 2. My concern is that we are taking money away from the active farmer and often giving it to those not involved in farming at all. That will be an even bigger issue when we come to address financial assistance or public goods. I hope that my noble friend will address that when he comes to consider the comments that we have made in this little debate, but I thank him and I support these regulations.