Direct Payment to Farmers (Reductions) (England) Regulations 2022

Duke of Wellington Excerpts

Monday 21st March 2022 Grand Committee

[The Duke of Montrose (Con)]

My Lords, I thank my noble friend the Minister for galloping us through these measures. The challenge for us in this Committee is not to detain him too long, so as to allow him to resume all the work he is doing. I echo much of what the noble Lord, Lord Carrington, said. I declare my peripheral interests; my agriculture and land are all in Scotland so I am not directly involved.

The rationale for this process of cuts is the same as when this was carried out in New Zealand. All input costs and other things—my noble friend the Minister mentioned rents—dropped in parallel with the cuts in government funding. In the current economic situation, there is no way that fertiliser companies have the slack to cut prices. They are being forced up, as my noble friend the Minister will know, by 200% or more. Will the Government be monitoring how this works out in practice and will they create powers to delay the introduction? It will stretch the lump sum payments if they are the only remedy that is available, and people are going to be forced out of business.

My noble friend the Minister has promised that there will be no reduction in payments to farmers, and I am sure he believes that, but what proportion are the Government expecting to go to conservation projects that are not related to farming? Will that considered to be part of the payment or are they going to be financed from elsewhere?

[The Duke of Wellington (CB)]

My Lords, I declare my agricultural interests as detailed in the register, although they are not particularly relevant to the point I want to make.

I do not think the Minister was in this House when we considered the Agriculture Bill in 2019—I cannot quite remember but I hope I am right about that. During the passage of that Bill, there was quite a lot of comment from many parts of the House about the position of smaller farmers, particularly hill and livestock farmers, most of whom are marginally profitable, if at all, and nearly all of whom depend wholly or almost wholly on the public subsidy that they receive. I made a plea at that point for the Government to consider not reducing the lowest band of the direct payments because those are directed only at the relatively small farmer.

I see in the regulations in front of us that, in fact, the smaller farmers—that is, those receiving £30,000 or less—are to receive a cut of 20%. That seems rather harsh. Although I am perfectly aware that there is no possibility of this regulation being amended, I wonder whether the two Ministers here would discuss with their ministerial colleagues the state of the small farms in this country. I do not believe that this Conservative Government really want to see small farms eased out of business. I am really worried about them.

The larger farms will get by. They have efficiencies, they are usually better capitalised; they will probably be all right under changed circumstances. But the small family farms, in many cases tenanted farms and/or livestock farms, are struggling and will struggle even more with these proposed cuts. I just do not feel that Ministers are sufficiently sympathetic to the position of small farmers at the moment. I would be grateful if the Minister could comment on that.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for his introduction to these three statutory instruments dealing with proposals for the transition to the new financial support payments for farmers in England post Brexit.

The first SI, which deals with direct payments and reductions, has been well publicised since Brexit and during the passage of the Agriculture Bill. Farmers’ payments under CAP have already started to decrease and this year will see a further reduction in their payments, from 20% for those on £30,000 up to 40% for those in receipt of more than £150,000. This sliding scale has been well trailed and there should be no surprise among farmers about its further reduction. What is more problematic for them is the lack of the implementation of ELMS to replace this lost income. Small farmers will be hit particularly hard.

Consultation on the transfer took place back in February to May 2018 and the new arrangement is now beginning to bite. Are the Government considering a further consultation on the actual effects of the sliding scale of reduction in direct payments, especially as the implementation of ELMS is only slowly coming into effect during the transition period? Meanwhile, food security is moving rapidly up the agenda.

While it is to be welcomed that the Government are focused on biodiversity and carbon sequestration targets, the knotty issue of food production is somewhat ignored. The British farmer is very disillusioned at the trade deals with countries on the other side of the globe which have a very different landscape in which to produce their livestock and huge economies of scale that are not open to British farmers. They also have less stringent animal welfare rules than those which operate here. It is, therefore, much easier for Australian and New Zealand farmers to undercut our own hard-working farmers. Does the Minister agree that farmers are angry about the way they are being treated by the Government and undercut by cheaper imports?

I turn to the financial assistance amending SI. This seems to be all about monitoring of farmers’ financial assistance and enforcement. Over the five pages of the Explanatory Memorandum to this short SI, there are no fewer than nine references to monitoring and enforcement. The whole instrument gives the impression that the farming community is systematically and deliberately attempting to defraud the Government out of money.

There is reference to the tree health pilot scheme and annual health and welfare reviews being exempt from the publication requirements which apply to all other payment schemes. Can the Minister say why this is?

Under paragraph 6 of the Explanatory Memorandum, bullet point 5 refers to the Secretary of State being able to investigate suspected offences. Given the general tenor of this SI, what is the current level of offences? Paragraph 7.1 again refers to checking, monitoring and publication of information. In paragraph 7.3, the fourth bullet point refers to

“investigation of breaches and suspected offences in connection with applications for, or the receipt, of financial assistance”.

Can the Minister say whether wholescale fraud existed in the farming community over payments?

Paragraphs 7.5, 7.6, 7.7 and 7.9 refer to suspicion of fraud, breach of conditions, investigative powers and, again, suspected offences. It would appear that farmers are being accused of wholesale fraudulent activity over their payment claims. The whole statutory instrument wields an awful lot of stick and hardly any carrot in its treatment of farmers. Can the Minister please give the Grand Committee some clarity on just what the basis is for the tone of this statutory instrument, which I find offensive?

Paragraph 7.10 states:

“The instrument does not impose duties that are significantly more onerous than before”.


Can the Minister say, however, whether he thinks a family farmer would be likely to agree with this statement?