Draft Direct Payments to Farmers (Reductions) (England) Regulations 2023 Draft Agriculture (Financial Assistance) (Amendment) Regulations 2023

Daniel Zeichner Excerpts

Tuesday 28th February 2023 General Committees

[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to serve with you in the Chair, Mr Hollobone. I was uncharacteristically cheerful last week—I enjoyed the NFU conference—but I can assure the Minister that normal service will now be resumed. The statutory instrument on direct payments is short, and the Minister will be pleased to know that we will not oppose it, although we have reservations about how the agricultural transition is being managed. We are keen to see environmental land management schemes succeed, but we have questions.

Here we are again, for the third year running, going through the same process. Why have we had three separate annual phases, given that the plan was set out in a timetable at the beginning? There might be good reasons, but I am not sure they have ever been made explicit. It would be helpful to understand the Department’s thinking on why we are repetitively discussing the same ground.

I note that this is proposed to be the last year. Paragraph 7.6 of the explanatory memorandum suggests moving to a de-linked payment. Will the Minister clarify whether that process will require a further SI or whether this is effectively it?

I will also refer, as I have on both previous occasions, to paragraph 7.2, which the Minister referenced in his opening speech. It states:

“Direct Payments are untargeted, can inflate land rent prices and can stand in the way of new entrants to the farming industry.”

That is possibly true, but it is conjecture. It is also true that basic payments can provide stability and keep many people afloat. I have said this before: the explanatory memorandums should be statements of fact, not conjecture.

I am normally at pains to praise civil servants for their work in dealing with the complexities of secondary legislation, but given that this was pointed out last year and the year before, there is only a certain number of conclusions I can come to. I suspect that this is a cut-and-paste job that has been carried forward from year to year and that no one listens to these proceedings—I can possibly understand why that might be, but I think it is wrong.

More worryingly, this may be what the Department actually thinks. Given that this point touches on the most basic issue of whether public support for our food system is needed, it is not inconsequential. With food shortages being highly topical, there could hardly be a more sensitive moment to reflect on whether the special circumstances the farming sector faces—in particular, unpredictable weather—merit special treatment. I ask the Minister to reflect on whether it is laziness, complacency or an ideological aversion to intervention that explains the offending account of how basic payments worked.

Given that we have had a couple of years of these reductions, it should be possible now for the Minister to stand up the assertions at paragraph 7.2, so perhaps he could tell us what impact the reduction in basic payment so far has had on land prices and on new entrants. He mentioned new entrants in his introduction, but as far as I am aware we have not yet had the details of the new entrant scheme. Could he tell us where that has got to?

I have referred to the point, at paragraph 7.6 of the explanatory memorandum, on de-linking. Given that it is not entirely clear whether we will have further discussion about that, I will ask a couple of questions. Many of us, I think, are still slightly puzzled as to why farmers will get paid for the next few years whether they farm or not. I would welcome a comment from the Minister on the reasoning behind that. Will he also clarify what happens to those who are restructuring businesses, ending arrangements or starting new arrangements in these key years—the so-called reference years? Is there not a danger that some will unintentionally miss out on support and, perhaps more seriously, that decisions will potentially be skewed, distorted or delayed to ensure that they qualify for the right reference year? I would be interested to know how many people the Minister thinks will be affected by that. Has any estimate or assessment been made? I fear that there are some unanswered questions.

If I was slightly irked by paragraph 7.2, that is as nothing compared with paragraph 12, headed “Impact”, on page 4 of the explanatory memorandum. The SI reduces payments to farmers by between 35% and 55%, yet paragraph 12.1 says there is

“no, or no significant, impact on business”.

Can the Minister square those two points? Of course there is an impact. If half the support is taken away, there is bound to be an impact. We have been probing that at every opportunity, and in response to written questions the Minister pointed to the assessment published at the end of October, which tells us not a lot about the impact on individual farmers.

The real question for the Minister to answer—even roughly—is, how many are getting less income than before under this new process? I put that to him now, just as I did in a slightly different form at DEFRA questions on Thursday. I once again ask him where in the DEFRA accounts the reduction set out in this SI is offset by money being taken up, or not, in other schemes. Will he tell us? Will he explain how any underspend will be dealt with and for how many years it will be rolled forward? I am advised that underspends in the EU schemes could be carried forward for up to three years. Will DEFRA mirror that arrangement?

There is a wider, completely unanswered question on impact: what assessment has been made of the environmental benefits, or not, from reducing area-based payments and redirecting, or not, that resource to environmental schemes? Can the Minister tell us? I have to say that I do not expect an answer, and I will take his likely silence as confirmation that no such assessment has been made. That is hardly surprising, given that it is actually quite a hard thing to do without the proper baseline assessment we called for at the beginning.

The second SI is more straightforward and has to do with checking the financial assistance schemes replacing area-based payments. Regulation 5(c) seems to say that, where data is not required to be provided annually, an annual declaration can be made instead. That sounds reasonable, but can the Minister confirm which schemes it applies to and how many cases are likely to fall into that category? On regulations 7 and 8, the publication of data is an important principle, but the publication of sensitive data can sometimes cause difficulties, so we understand why what is being done is being done.

These SIs are the next stage in the transition to a “public money for public goods” approach to agricultural support. We support that transition and we want it to work—we need to move to a more environmentally friendly and nature-positive food production system—but we remain concerned that the complexity of the schemes currently proposed will hamper take-up. In terms of both food supply and environmental gain, that is something we simply cannot afford.