Direct Payments to Farmers (Legislative Continuity) Bill

James Cartlidge Excerpts

Committee stage & 3rd reading: House of Commons & Committee: 1st sitting: House of Commons & 3rd reading & Committee: 1st sitting
Tuesday 28th January 2020 Commons Chamber

[George Eustice]

My hon. Friend will remember the debate that took place in 2016. The UK has typically received back roughly half of what it put into the EU budget, and our contribution to the common agricultural policy on average has been double what we have received from it, historically.

[James Cartlidge (South Suffolk) (Con)]

Further to the intervention from my right hon. Friend the Member for Wokingham (John Redwood), and so that I understand this point, am I right that in this transition year we effectively pay as if we were members, but we are also funding domestically this farming payment under the Bill? Is it netted off, or are we in effect paying more for this year overall? Does that make sense?

[George Eustice]

It is complicated—as ever—with the common agricultural policy, but I tried to explain this point in my opening remarks. It is a quirk of the way that the EU budget works that the EU borrows the money for the pillar one payment—the BPS and area payments—from next year. Because the payments are made typically from December onwards, the money comes out of the 2021 budget. The pillar two payments come out of the 2020 budget—the year in which the money is spent. Put simply, we have not contributed to the 2020 capped budget because it is borrowed from 2021. I know that is complicated, but in essence we are not paying twice.

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[George Eustice]

Yes, my hon. Friend makes a very important point, and that is why we have set a very different course with our future agriculture policy, though it is based on payment for public goods. It is important that we support our farmers and properly reward them for the work they do for the environment.

[James Cartlidge]

Farming in South Suffolk is fairly horizontal—fairly flat—so I welcome these regulations. On a key technical question, under all those regulations the top level of payment awarded at EU level is in euros, whereas, of course, the allocation for the payment in UK law is in pounds sterling. Is there therefore any currency risk through the year to the payments that will ultimately be received by our farmers?

[George Eustice]

There is no currency risk for British farmers in this year, because the total size of the budget has already been set by the Treasury, and it has been set at the same level as last year. Under the regulations, we have to go through the formal process of setting the exact payment rate, but, because the budget has been guaranteed and it has been guaranteed that the payment system will be the same, farmers have a high degree of confidence that—barring any minuscule changes—their payment will be the same as it was last year.

My hon. Friend has put his finger on an important problem with the common agricultural policy. It introduced an entirely unnecessary exchange rate risk for our farmers, in that money was sent to the European Union in pounds and was then denominated in sterling at a fixed point in time, typically in September each year. That meant that if the pound had had a good year and had rallied against the euro, farmers found that their payment would be lower, whereas sometimes when the pound fell, as it did after the 2016 referendum, they had an early Brexit dividend and received a higher payment than they might otherwise have expected. That unnecessary exchange rate risk has now gone, and the budget is set for this year.

I do not want to bore people too much with these regulations. I have listed them all in detail, and there is a reason for that. In the European Union, particularly in the context of the CAP, there are three types of regulations. There are the basic regulations, which the Council of Ministers has quite a bit of involvement in shaping, and on which, through working groups, the member states have a vote. There are delegated Acts or regulations, in which there is far less involvement for the member states. They collectively have a kind of veto power, but have less of an amending role. Then there are the implementing Acts or regulations, which the Commission pretty much just makes up without any particular involvement of the member states.

That said, I am conscious that Members will never have debated any of these regulations. Ministers will have been aware of debates and discussions taking place in working groups as the basic regulation was formed, and they will have received submissions letting them know that something alarming had been handed down in an implementing Act and we could not do anything about it. Obviously, as we make regulations in future, the scrutiny of the House will be brought to bear, and Members will be able to engage in and scrutinise every bit of the detail of future agricultural policy.

The regulations that I read out earlier may have seemed like a list of rather meaningless numbers, but I can tell Members who are interested in what they mean collectively, in terms of what the farmer is required to do, that basic payment scheme rules are published annually by the Rural Payments Agency. Let me give Members a flavour of those.

The publication “Basic Payment Scheme: rules for 2019” sets out the key dates during that scheme year to which farmers must have regard. It includes, for instance—and all this is born out of the regulations that are being brought across today—the setting of 1 January as the official start of the year. The period between 1 January to 30 June is regarded as the

“EFA period for EFA fallow land” .

That is the period during which land must be fallow if farmers want to claim it. On 13 March, the “window opens”, and farmers can start sending in their applications. Between 1 May and 30 June, the so-called three crop rule kicks in, along with the

“EFA period for nitrogen-fixing crops”.

During that period, farmers must demonstrate that in that window and that window only, they have three crops on their farms. Another rule states that one of those crops can be fallow land, but the qualifying period for that type of fallow land is different from the one for the type that is covered by the EFA period.

There is a deadline of 15 May for farmers to submit their BPS application forms. They are then given a couple of weeks’ grace during which they can make changes, and they have until 31 May to do that. There is then a “late application” deadline, which means that farmers are effectively given 21 days to submit late applications, but will lose, typically, 1% of their payment for each late application day.

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[Neil Parish]

I very much welcome my new hon. Friend—it is great to have her here representing Brecon and Radnorshire. She makes an interesting point. I believe we are almost going too fast in transferring from one payment to another, given the history of not always getting these things correct in the first place, and so I would take a bit more time. The Welsh Government are going faster and that is the wrong way to go, because we have to make sure that the environmental schemes are up and running, and that they are not only delivering for the environment, but delivering cash into the pockets of farmers. I made this point last week when I said on Second Reading that some farmers believe they can replace all the money that comes from the basic farm payment with the new environmental schemes. They may or may not be able to do that. Perhaps some on permanent pasture, upland and grassland might do so, but others might not, and in Wales, that will be piling on the agony if they are not at all careful.

[James Cartlidge]

Obviously, I congratulate my hon. Friend on his re-election success. I very much agree with him that we need a lengthy transition and a stable period as we move to the new system; surely the important thing is investment from farmers, as ultimately we need higher productivity, but in order to get to that they need to have stability in the interim to plan that investment, with security about the outcome, until the new system is in place.

[Neil Parish]

I welcome my hon. Friend’s comment, because he is absolutely right. I see a problem in the future, not only with this Bill, but with the future Bill; we rightly talk much about enhancing the environment, but we also talk about the productivity and profitability of agriculture, and we must make sure the two knit together. I am absolutely not convinced that they do at the moment—I am sure the Minister and Government will persuade us otherwise. I accept what my hon. Friend the Member for South Suffolk (James Cartlidge) says, because farmers will not want to earn all their income from environmental payments, and that is not the way forward, so they therefore need to earn an income from what they produce. That is the important bit: how we have a productive agricultural system and a more environmentally based one, and how we incorporate the two. I am sure that we can, and I know the Minister has many ideas, so I look forward to that.

This Bill also deals with the Rural Development Programme for England—the development money that sometimes goes to rural areas; it goes into village halls and all sorts of wider aspects. I take it that the Bill will also cover those sorts of payments for the forthcoming year, because I know that in my area in the Blackdown hills and in others it is very important.

I intervened on the Minister to ask about the issue of our payments to the EU, but I do not think I got a complete answer. He assured us that we will not be making a double payment—the payment we pay to our farmers will not then also be paid to the EU. At the moment, we pay more into the CAP than we receive from it, so, to some degree, we subsidise agriculture across the whole of the EU. As we leave this year, we will not be making that payment to them and so we should be saving money. My question was about that and he may be able to deal with it in his summing up. I do not know whether we have the detail of that yet, but it is essential that we make that saving.

Going back to Wales and Scotland, I very much welcome the extra money there. I am very much looking forward to the Second Reading of the Agriculture Bill next week. One thing that we hope we will be able to do when we get the Select Committees back up and running is look at detail about how these new schemes are going to work on the ground, and how they are not only going to deliver a better environment and better biodiversity, but allow good quality, high animal welfare production. We very much enjoy that in this country, across the whole of our four nations, and it is essential.

One or two Conservative colleagues might throw up their hands in horror at this last statement. We have to make sure that as we roll out the new system, we take some of the parts of the basic farm payment scheme and the CAP that have worked reasonably well and we do not throw all the babies out with the bathwater. We need to make sure we take those aspects of what is good about the current system and enshrine them in the new one, while making it more adaptable and much lighter on its feet, and changing the culture of the RPA and DEFRA. We have good Ministers and a Secretary of State who will be able to interpret and help farmers into this new world, so that in the end we can deliver a better environment and better food production, and produce more food in this country, not less, and look forward to a bright future. I very much welcome this Bill.

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[Simon Hoare]

I welcome the Bill for several reasons. First, it provides us all with an opportunity, in this increasingly urbanised media and world, to remind ourselves of the important role that farming plays, not only crucially in respect of food security but, as other Members have alluded to, in respect of landscape management, which clearly assists our tourism sector, and water quality, which clearly affects tourism in coastal areas.

The role that agriculture plays is pivotal. Part of the problem is that a lot of people glean their knowledge or experience of farming and the agricultural sector only from “Countryfile” and “The Archers”, which provide a slightly narrow picture of what it is like. They are both great programmes; they are staple listening and viewing in the Hoare house—and, indeed, where I live, as well. Sorry, I just could not resist. Nevertheless, too many people think that farmers are loaded and that the Bill is just a bung to already wealthy people. Those of us who know farmers, represent farmers and talk to them in our constituencies know that that is very far from the truth.

It is important that in times of uncertainty, as we transition from a 40-year membership of the EU to striking out on our own, we provide certainty where we can. As I said to the Minister in an intervention, arable of course needs certainty, but so too do those sectors where there are greater fluctuations, either in consumer trends, price fluctuation, weather or disease. The lamb sector, beef sector and dairy sector are the mainstays of the Blackmore Vale’s agricultural focus, while the Cranborne Chase in the east of my constituency is more chalk land—

[James Cartlidge]

That’s Cheltenham!

[Simon Hoare]

Yes, chalk land, just like the constituency of my hon. Friend the Member for Cheltenham (Alex Chalk). I thank my hon. Friend for that sedentary heckle. It is more chalk land and therefore is predominantly, although not exclusively, arable.

Certainty is important because we are dealing with long-term planning. Do farmers have the confidence to ask lenders for money to buy a new piece of farm equivalent? Do they have the confidence or certainty to plant a certain crop? Some of my local farmers in North Dorset now grow milling grains for the German beer sector. Some of them are growing white poppies, the stalks of which are exported to Hungary for medical purposes—so that medical opium can be extracted to provide painkillers. If someone is going to put their herd or flock into a growth spurt, and if they want to see them calve and lamb, they want certainty that there is some basic underpinning to their sector. That is what the Bill does, which is why it is to be supported.

The huge scope for agritech is important, and I am certain that we will hear that echoed in the debates on the Agriculture Bill—this Bill and the Agriculture Bill are in effect two sides of the same coin. Again, the agritech sector needs certainty. There are productivity benefits and environmental benefits to it, so we must make sure that the sector, which is growing and really taking root in the UK, has the confidence to continue.

My final point is with regard to audit. Various Members have probed the Minister about the performance of the Rural Payments Agency and how, effectively, it will look. Some within the agency will be suffering from Stockholm syndrome, and they need to be freed from that and to be able to take a lighter touch. However, in reference to the point about the audit trail made by the Chairman of the Select Committee—I congratulate him on his recent election—we must not throw the baby out with the bathwater. The British taxpayer must be certain that the payments made to farmers are fair, needed and transparent. Therefore, let us make sure that there is a clear audit trail on this homegrown UK system, so that not only British farmers have confidence and certainty, but the British taxpayer has certainty that their money is being put to good purpose to support and to encourage agriculture, that vital mainstay of the British economy.