Draft Direct Payments to Farmers (Reductions) (England) Regulations 2022 Draft Agriculture (Financial Assistance) (Amendment) Regulations 2022 Draft Agriculture (Lump Sum Payment) (England) Regulations 2022

John Hayes Excerpts

Tuesday 15th March 2022 General Committees

[Victoria Prentis]

As ever, it is a great pleasure to serve under your chairmanship, Mr Hollobone. It is also a great pleasure to be part of the Committee, and a particular honour to welcome my right hon. Friend the Member for South Holland and The Deepings, with whom it is always a pleasure to serve.

A draft of the Direct Payments to Farmers (Reductions) (England) Regulations was laid before the House on 3 February. Although I do not directly benefit from agricultural support, I should say that I come from a farming family who very much benefit from agricultural support schemes. The matters in the statutory instruments are closely related. The instruments are being made under powers in the Agriculture Act 2020. They implement important aspects of our new agricultural policies, set out in the “Agricultural Transition Plan 2021 to 2024”, which was published in November 2020 and updated in June 2021.

The direct payment to farmers regulations apply progressive reductions to direct payments for the 2022 scheme year. The Government remain committed to phasing out direct payments—the basic payment scheme, as we used to call it—in England over the seven-year agricultural transition period. We are doing so because area-based payments obviously go, in the main, to larger landowners. Almost 50% of the total £3.7 billion budget goes to the largest landowners. Those payments artificially inflate land rents, stand in the way of new entrants to farming accessing land, and offer the taxpayer little environmental return.

To help farmers plan, we committed in 2018 to phasing out BPS direct payments. The specific reductions provided for in the statutory instrument were announced as far back as November 2020. As was the case last year, higher reductions will be applied to payment amounts in higher payment bands—that is, to people who own more land. Although direct payments are reducing, total funding to farmers is not reducing. We will make money from the reductions available for targeted schemes to increase farm productivity, improve the health and welfare of animals and deliver environmental gains.

In the coming year, much of the reallocated money will be used to meet the rising demand from farmers for the countryside stewardship scheme, which is our key environmental offer at the moment. My family’s farm also takes part in the scheme. We now have 52% of farmers enrolled in countryside stewardship, and the intention is very much that we farmers will transition automatically to the mid-tier of the new schemes.

Farmers today face significant challenges because of rapidly increasing input costs. The war in Ukraine has directly affected the price of food and fertiliser. I am very keen to target support at those who need it most. We will offer a new suite of opportunities to farmers, supply chains and researchers to enable them to collaborate on research and development, so that they can find practical solutions to the challenges and opportunities that farming faces.

The draft Agriculture (Financial Assistance) (Amendment) Regulations update a similar instrument approved on 23 March 2021. They put in place requirements relating to financial data publication, and to enforcement and monitoring, for four new financial assistance schemes that we established under the Agriculture Act 2020. The amending statutory instrument extends the range of financial assistance schemes covered by the 2021 regulations to ensure that any new financial assistance schemes launched in 2022, and thereafter, will be subject to the same checking, monitoring and enforcement requirements that applied to the original schemes that we launched last year.

As we have set out for several years, as part of our wider agricultural reforms, we want to support farmers who wish to leave the industry, as well as those who want to stay. Some farmers would like to retire or leave farming but have found it difficult to do so for financial reasons. That is why the lump sum payment regulations allow a scheme to be introduced in 2022 that provides lump sum payments to farmers in England who want to leave the sector. Some who wish to retire can find it very difficult to do so, and the lack of finance is the barrier to retiring with dignity. We surveyed farmers during the planning for the Agriculture Act 2020 and found that about 6% wanted to leave but felt unable to, with financial reasons obviously being the biggest obstacle. The scheme in the regulations provides those farmers with a way out. More than 1,000 farmers have so far requested a forecast statement, showing the lump sum amount that they could receive if eligible. Obviously, that does not mean that they will take that sum, but it is an indication that there is a group of farmers who will find the new scheme useful. The payments will be in place of any further direct payments to the recipient during the remainder of the agricultural transition. It is not new money, and will not have an impact on the funding of other schemes.

[Sir John Hayes (South Holland and The Deepings) (Con)]

I am grateful to my hon. Friend for her remarks. The direct payment instrument before the Committee is a consequence of the decision that was taken to incorporate into a new law in 2020 direct payments of the kind that my hon. Friend has described. It is uncontentious and this is the regulatory application of that change. She has spoken about farmers leaving the industry receiving direct payments. I do not imagine that she will be able to commit to it now, but will she think about direct payments to people entering the industry? It is very hard now for someone to become a farmer. The barriers to entry are very high—the price of land is prohibitive—but we need to get more people, young people in particular, drawn into agriculture and horticulture. Will my hon. Friend give that further consideration?

[Victoria Prentis]

As ever, my right hon. Friend makes a very valid point. I had a really useful meeting this morning with the National Farmers Union new entrants, who came to the Department for Environment, Food and Rural Affairs. They were full of ideas and practical solutions to the problems faced globally and by their farming businesses. Yes, DEFRA has very ambitious plans for new entrants; we are working them up in conjunction with those new entrants. We are approaching the agricultural transition hand in hand with farmers. We have 4,000 farmers testing things for us and checking that the new schemes actually work.

The new entrants policies will be rolled out next year. The exit lump sum is partially designed to enable the retirement of older farmers, but it is also envisaged that it will free up land that we hope may be made available for new entrants. The new entrants at the Department today had many other ideas, as do other groups, about how we can support new entrants to the sector generally.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am not sure who chose me to serve on this Delegated Legislation Committee, but we do not often have the chance to discuss something in which we have a genuine interest. I represent a rural constituency, and it is a great pleasure to do so. The Minister has been fantastic in her engagement with my farmers, and she knows some of their concerns about many of the areas that have been discussed. I really appreciate her engagement.

I shall make a few short points. My very good friend, the Minister, has talked about the quantum staying the same with regard to what farmers will receive when moving from one system to another. Can she confirm that the amount that farmers receive overall will be the same? There is a worry that we are moving from a simple, stable system, as has been alluded to, to a much more complex system that must include lots of checks and balances, because we are looking at an outcome-based policy—people are paid for outcomes, rather than acreage. How much of that money will be absorbed by the administration and bureaucracy of the process? It is hugely important that farmers receive the right amount, and the amounts that they have been used to.

As has been said, the amount that farmers receive directly is reducing, and other schemes are supposed to compensate for that. I think that my hon. Friend has acknowledged that some of the pilot schemes are not particularly well explained, detailed or clear. A lot of farmers have seen a reduction in revenue—vital support—particularly hill farmers, and they have not seen a commensurate increase in revenue arising from other schemes that they might be in. As my hon. Friend knows, in the past the countryside stewardship scheme was hugely bureaucratic and often it felt like people gave more money to be involved in it than they received in compensation for running the scheme itself. I know that my farmers would very much like to see a delay in the proposed reduction and more development work on the pilots before we move to a system of reduced payments.

We all know that food security and energy security are really important. I am seeing an increasing amount of my productive farmland—the best and most versatile land—going under solar farm applications. That is equivalent to hundreds and hundreds of acres in what is a very productive part of the country. Our local authorities in their wisdom have declared climate emergencies, and they are using that as a way to get round any requirements to keep the best and most fertile land for farmland. They argue, “Actually, we have a climate emergency, and therefore that overrides the need to keep the best and most fertile land for growing food.” We have energy production imperatives and targets because of the race to net zero, and at the same time we have not got food production targets. Our self-sufficiency was 75% in 1985, but it is now 60%. If we had a target for self-sufficiency to grow to that higher amount, perhaps that would act as a check and balance against local authorities giving consent for solar farms.

[Sir John Hayes]

I am extremely grateful to my hon. Friend for giving way. There was a debate in Westminster Hall about this last week, and the points he is making were amplified. The critical thing is that these two things are not unrelated. You can shorten the food chain, reduce the number of air miles and grow more of what we consume locally. Then one is both serving the objective of aiding the planet and making us more secure in food in these uncertain times. He is absolutely right that there is a need for an urgent review of Government policy, and a change in planning law, if necessary, to prevent monstrous solar parks from taking up valuable agricultural land.

[Kevin Hollinrake]

I was lucky enough to speak at the end of that debate, although I was able to be there only for the last few minutes of it. It is absolutely true. It seems perverse that we are putting solar farms on productive farmland and not putting solar panels on top of every commercial building, school, hospital and prison. There must be some reason why we are doing it that way, but it would make obvious sense to put panels in those locations rather than on farmland. It is a debate that we need to have. I have been to see the Secretary of State for Environment, Food and Rural Affairs, who is very supportive about the need for more clarity.

We are moving away from acreage payments, as the rest of Europe has, for example, to a system that is based on public goods. That means that we are putting our farmers at a competitive disadvantage. That is the reality, because they have to do stuff to get that money. That means investment and the cost of capital. We must maintain that fair and level playing field through trade agreements and through the system of payments that we make. I fear, and I know that the Minister has some sympathy with this thought, that we are potentially putting our farmers at a disadvantage. That is something we need to be very careful about.