Support for Hill Farmers

George Eustice Excerpts

Wednesday 12th February 2020 Westminster Hall

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Westmorland and Lonsdale (Tim Farron) on securing this debate. He is a champion for hill farming areas, and hill farming is particularly important in his constituency. As he described quite eloquently, hill farming is a critical part of some of our most important landscapes in this country.

Those areas are the home of important heritage native breeds, which I will come on to. The sheep farming industry, which is predominantly based in hill farming areas, using some of those breeds, is large: worth around £1 billion a year. The UK sheep sector, despite what some say, is world leading—we are the largest producer in Europe by a very long way. Over a third of sheep production in Europe is carried on in the UK. Internationally, we are the third or fourth largest exporter of lamb after countries such as Australia and New Zealand. There is a very strong brand for UK sheep production, and we have strong regional brands—whether west country lamb, lamb from upland areas such as the hon. Gentleman’s, or Welsh lamb, which is famous around the world. Let us not forget Scottish lamb for good measure, including on Shetland.

We are going through a big change in our industry as we leave the European Union and chart a different course. The first thing I want to say relates to our trade with the European Union. We export a significant amount of lamb to the European Union: about a third of what we produce nationally. That is why the political declaration—the heads of terms on the future partnership—being discussed envisages zero tariffs on all goods. If that were not to be possible, depending on how negotiations go as far as the sectors affecting the Department for Environment, Food and Rural Affairs are concerned, getting at least tariff-free access or a tariff rate quota on lamb would be a very high priority. We hope that it will be possible to get zero tariffs on all goods, since that is what both parties have committed to try to achieve.

[Jonathan Edwards]

When it appears in the news that British Cabinet members are talking about there being trade barriers, or the Prime Minister says that he is looking forward to importing Ugandan beef, does the Minister think that alleviates or heightens anxieties in the rural communities we represent?

[George Eustice]

The Prime Minister is also very keen that we open up new markets. There are great opportunities for our lamb sector in markets such as the middle east and the far east, including in countries such as Japan. We should not always take a glass-half-empty view when it comes to trade. We also have offensive interests, particularly in our livestock sector.

We are looking at those opportunities around the world for our lamb sector. I have already had discussions with New Zealand, for instance, about whether together the UK and New Zealand could develop the market for lamb in the United States. There is a very small, underdeveloped market for lamb in the US at the moment, but it is growing, particularly among younger consumers in the US. These are all opportunities that we have as we leave the European Union and take back control with an independent trade policy.

I want, though, to spend most of my time talking about future agriculture policy, as concerns about the loss of the basic payment scheme—direct payments—and the speed of the transition were at the heart of the opening remarks made by the hon. Member for Westmorland and Lonsdale. I will simply say that, in terms of future policy, I do not think it possible to defend the idea of arbitrary, area-based payments, because in essence they are a subsidy for land tenure or land occupation and land ownership. That means that the biggest payments go to some of the wealthiest landowners in the country. It means that people who perhaps sell a business and get millions of pounds in profits can invest that money in land, to shelter their wealth, and then on top of that claim a BPS payment, a subsidy, from the taxpayer. That just is not sustainable, justifiable or defensible in the long term.

Therefore the premise behind our Agriculture Bill is this: let us get rid of the subsidy on land tenure or ownership and instead pay farmers properly and reward them adequately for the work that they do for the environment. The system will be based on payments for delivering public goods and environmental outcomes and for protecting genetic heritage through rare breeds, protecting water quality and so on.

[Scott Mann (North Cornwall) (Con)]

My hon. Friend the Minister will know as well as I do that many upland farmers also support some of the tributaries that run into our main estuaries, and we have declining populations of salmon and sea trout in those. Will ELMS be trying to repopulate some of our rivers with salmon and sea trout? Is that something that we can do through upland farming?

[George Eustice]

It is absolutely the case that one key priority of the future scheme and one objective set out in clause 1 of the Bill is about improving water quality. Any measures and interventions that farmers implement that will lead to improved water quality will be exactly the type of project that we would want to support.

I also point out that it seems already to be the case, from some of the work that we have done, that when it comes to sheep farmers in particular, around 30% of them do not actually receive the BPS payment; they are in some kind of contract farm agreement and effectively their landlord takes the BPS payment while they are the ones doing all the work and raising the sheep. It is not at all clear that the current area-based BPS payment is in fact in the interests of the sheep sector.

[Tim Farron]

I want to be very clear that I have agreed with everything that the Minister has said about the area-based payment, its unjustifiable nature and how it is not a basis on which to continue—indeed, I support in principle what we are talking about with the environmental land management scheme. However, my concern is that we have a seven-year transition in which we are about to phase out the current scheme more quickly than we are to phase in the scheme to replace it. That is where we lose the people we need in order to deliver the public goods in the long term.

[George Eustice]

I entirely appreciate that and I assure the hon. Gentleman that I was not going to skip over that point; I have some time left.

The upland areas in particular are well placed to benefit from a system of support based on the delivery of public goods. Some 66% of blanket bog in England is in “triple SI”s—sites of special scientific interest—and is in those upland areas, so projects such as peatland restoration are certainly things that the uplands could do. Some of our rare and endangered bird species are in parts of the uplands so projects to support their recovery also lend themselves well to such areas. I am also thinking of projects that might mitigate the risk of floods by holding water uphill and projects such as the mires project down in the west country, on Exmoor, that can improve water quality by rewetting some of those peatland areas.

All those things mean that the potential for some of the uplands to be rewarded for what they in some cases already do, but may well do even more of in the future, is very high. The reality is that our current system pays the moorland areas, the severely disadvantaged areas, less money than it does the lowlands, even though they are probably doing most of all for our environment. The change in emphasis to payment for delivering public goods means that those severely disadvantaged areas, which historically have been told, “We will give you less subsidy because your land is less productive,” may actually be able to deliver and achieve far more.

I come now to the issue of the transition. The hon. Gentleman is absolutely right, and I agree, that getting the sequencing of the transition right will be very important. Although we have not made final decisions in these respects, I will make a number of points to him. First, the Bill provides for us to make available grants and payments to farmers to help them to improve their productivity, invest in equipment and reduce costs, and that will help farmers to get to a position in which they are less reliant on the subsidy payments that they receive now.

The Bill also provides for us to make several years’ payment in one lump sum to help—aid—the retirement of those farmers who decide that now is the time to leave. Linked to that, we know, from all the work that we have done, that if we want to encourage new entrants into the sector, the critical element is freeing up access to land. That is why, if we want new entrants to come in, we have to have projects and ideas to help farmers, who are sometimes in their 70s or 80s and still going, to make the sometimes difficult decision to retire. The measure gives us the option to be able to do that.

The Bill also gives us the power to modify the legacy scheme, to simplify some of the rules around the basic payment scheme, or indeed to simplify and modify the current pillar two countryside stewardship scheme. The integrated administration and control system that is a requirement of EU law is particularly burdensome on some of the current schemes, and we would have the option, should we wish it, to remove that.

Let me deal with some of the hon. Gentleman’s other points. He suggested that the pilot was delayed. The pilot is not delayed: we always intended to go to a full pilot in 2021, and still do, and will. The issue is that we have had trials running. We have 30 trials already up and running—already under way. There has been no delay, and further trials will be added. He suggested that we would not be in a position to roll out the new scheme until 2028. That is not the case. We intend to be rolling out the new scheme to every farmer—a full launch of the scheme—probably around 2024, so we will not be waiting until the end of the transition before we start the new scheme. We envisage that, as the legacy scheme tapers out, we will be opening up versions of the new scheme in advance of that.

The hon. Gentleman suggested that we ought to have an active farmer test. I am reluctant to get into that kind of EU rule making, as it was not particularly successful when the EU tried it. However, he makes a very good point: some of the environmental benefits that we need explicitly require grazing, and grazing by the right type of animal, to be taking place on our upland areas, to keep the bracken down and the sward at the right length so that conditions are made most favourable for invertebrates, which in turn helps farmland birds. It is therefore not the case that we want to take land out of grazing; indeed, grazing has an important part to play. We have amended the Bill so that it recognises native breeds and rare breeds in particular as a public good. We changed that in its latest iteration so that we can reward those hill farmers who are using and encouraging the preservation of some of our important genetic resources.

The hon. Gentleman is right that we need to get farmers a fair price for the food that they produce. Although we chose not to extend the remit of the Groceries Code Adjudicator, we have in the Agriculture Bill taken wide-ranging powers to be able to legislate in the field of contracts to ensure that there is fairness in the supply chain and transparency around what farmers are paid as well as on issues such as carcase classification. There are quite wide powers in the Bill dealing with those things.

My final point is that it is not correct to say that we watered down the GCA. There was a delay in the introduction of penalties for breaches, but those were put in place—I think even under the last coalition Government, but possibly after the end of the coalition Government and under the Conservative Government from 2015. But substantial sanctions are in place and available to it.

I hope that I have been able to reassure the hon. Gentleman that we see a vibrant future for hill farming. We believe that hill farmers will be able to benefit from our new system of payment for public goods, and they can look to the future with confidence.

Motion lapsed (Standing Order No. 10(6)).