Direct Payments to Farmers (Reductions and Simplifications) (England) (Amendment) Regulations 2021

Lord Gardiner of Kimble Excerpts

Monday 22nd March 2021 Lords Chamber

Moved by

[Lord Gardiner of Kimble]

That the draft Regulations laid before the House on 24 February be approved.

Relevant document: 48th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)]

My Lords, I declare my farming interests, as set out in the register. As the matters in these two instruments are closely related, I hope that it would be helpful to your Lordships to consider them together. Made using powers under the Agriculture Act 2020, they implement important aspects of our new agricultural policy, set out in the agricultural transition plan published in November 2020. Both instruments apply only to England.

I turn first to the Direct Payments to Farmers (Reductions and Simplifications) (England) (Amendment) Regulations 2021, which sets reductions that will be applied to direct payments made to farmers for the 2021 claim year. The Government are committed to phasing out direct payments that are poorly targeted and offer poor value for money. This will be done over a seven-year agricultural transition period, and it will free up money to fund a new system of paying farmers and land managers for delivering public goods. This includes paying farmers to improve the environment, improve animal health and welfare, and reduce carbon emissions. All funding released from these reductions will be reinvested into new schemes in this Parliament. Help will be offered to those who need it to plan and manage their businesses through the transition.

The reductions will be applied in a fair way, with higher reductions initially applied to amounts in higher payment bands. The reductions for the 2021 scheme are modest, at 5% for around 80% of farmers. This is within the margin of the currency rate changes often experienced in previous regimes. We first published these reductions in 2018, so farmers have had time to prepare.

The Government are on track to introduce new schemes this year, while continuing to fund new and existing countryside stewardship agreements. From this year, farmers will be able to apply for grants under the farming investment fund to help them invest in equipment and technology and boost their productivity. This year, we will also begin the sustainable farming incentive, the first of our pilots under the environmental land management national pilot scheme. Payments to the first pilot participants will be made before the end of the year, before the scheme is rolled out more widely from 2022. These will be funded from the reductions to direct payments. The instrument also makes minor amendments to reflect the fact that direct payments will be calculated in sterling rather than euros from the 2021 claim year onwards.

The instrument also amends the direct payments rules to remove the euro thresholds below which the Rural Payments Agency does not need to recover overpayments or payment entitlements, or charge interest. When deciding whether recoveries should be made, the Rural Payments Agency will apply the principles in the Treasury’s Managing Public Money guidance.

Finally, this instrument makes two consequential amendments which were not covered in the Direct Payments to Farmers and Cross-Compliance (Simplifications) (England) (Amendment) Regulations 2020. It removes a redundant cross-reference relating to the greening rules which were removed by that previous instrument. It also changes a percentage figure used to calculate young farmer payments, ensuring the value of these payments will not be affected by the removal of the greening payment.

The Agriculture (Financial Assistance) Regulations 2021 put in place financial data publication and enforcement and monitoring requirements for four financial assistance schemes: Countryside Stewardship, the Farming Investment Fund, the environmental land management national pilot scheme, and the tree health pilot. All these schemes are established under the Agriculture Act 2020. The environmental land management pilot scheme will comprise three schemes, the first being the sustainable farming incentive.

This instrument will provide a critical opportunity to test, refine and develop environmental land management and tree health schemes in pilot form, ahead of their full launch. Countryside Stewardship will be a simplified version of the EU countryside stewardship and environmental stewardship schemes, and a further iteration of the domestic scheme, which opened for applications in 2020 and 2021. I say for the sake of clarity that this instrument provides for rules applying to schemes opened under domestic legislation, while earlier countryside stewardship and environmental stewardship agreements remain subject to enforcement and monitoring under CAP rules. The Farming Investment Fund will provide grants to farmers, foresters and growers so they can invest in equipment, technology and infrastructure to help their businesses prosper while improving resource efficiency and enhancing the environment.

This instrument will require information about financial assistance given under these schemes to be published, consistent with the Government’s commitment to transparency in the use of public funds. Information published will include the total or aggregated payment received by a beneficiary for each scheme they are in and a description of activities financed by the payment, and could enable public analysis; for example, university research. Publication of personal data will not be required for payments below a de minimis level or in respect of payments made under the tree health pilot, where, instead, aggregated data will be published.

In terms of checks, enforcement and monitoring, this instrument provides for a flexible and proportionate framework ensuring that the purposes of schemes are delivered. Provisions include checking eligibility criteria at application stage and monitoring compliance with individual grant agreements and scheme conditions. A range of enforcement options are available under the instrument in the event of a breach, including withholding of payments, recovering payments previously awarded and prohibiting a person from receiving payments under any scheme for up to two years, thereby ensuring that public funds are properly expended, suitably protected against fraud and provide value for money.

The instrument provides powers of entry and inspection to enforce compliance with scheme agreements; for example, to check or inspect land, livestock, crops, plants or machinery and to verify compliance of conditions and review any activities carried out under the schemes. A formal complaints and appeals process is available if agreement holders are aggrieved by certain decisions taken by the department.

These instruments implement provisions in the Agriculture Act 2020. They begin the move from the inefficient direct payments model of the CAP and provide an important framework allowing new financial assistance schemes to operate effectively in line with the agricultural transition plan. I beg to move.

--- Later in debate ---

[Lord Gardiner of Kimble (Con)]

My Lords, I thank all noble Lords for contributing to this very interesting debate. I am afraid that, inevitably, there are matters of detail on which I will have to write to noble Lords. I open with the reference of the noble Lord, Lord Rooker, to Defra: I think not only of socks but of other garments that have been worked extremely hard. In turn, I reference the work of farmers, which has been so evident last year—as it has been throughout history—in the production of food for our nation. Also, as my noble friend Lord Caithness said, contrary to some of the contributions, my experience of farmers and landowners includes the work that they do that has not been rewarded on enhancements on their farms. They do it free of charge because they want an attractive farm and are custodians of their land for the next generations.

The noble Baroness, Lady Jones of Whitchurch, asked about the SI situation. Our intention is that we may well lay an SI every year—a point that the noble Lord, Lord Rooker, made. We intend to allow Parliament to debate the reductions closer to when they will be applied. The savings from reductions in direct payments will be ring-fenced for agriculture—a point raised by noble Lords. The noble Earl, Lord Devon, and my noble friend Lord Northbrook asked about the money saved on direct payments and where it is to be redeployed. The 2021 direct payments reductions will free up between £169 million and £179 million to be redirected into more Countryside Stewardship agreements, higher-level stewardship extensions and other schemes for farmers.

The reductions that we plan to apply to direct payments for 2021 to 2024 were set out in our agricultural transition plan on 30 November 2020. We intend to continue to make gradual reductions in direct payments across the rest of the transition period until the last year of direct payments in 2027. The new schemes will address productivity, hence profitability, and environmental enhancement. Mindful of my own farm, on productivity improvements, I think of what precision farming and integrated pest management present in terms of enhancement of the environment but also increasing productivity. That is a point I make to the noble Lord, Lord Berkeley of Knighton.

The noble Baroness, Lady Jones, and the noble Lord, Lord Rooker, referred to the future farming resilience fund phase 2 and its launch. The grant application process for the next round of funding is planned to open at the end of this month.

The noble Baroness, Lady Bakewell, asked for clarification on percentages. This instrument changes a figure used in the calculation of the young farmer payment from 25% to 17.5%. This ensures that eligible farmers receive roughly the same amount for their young farmer payment as they did before the greening payment was removed. I say to my noble friend Lord Trenchard that the removal of the greening payment was indeed, I think, a sensible simplification.

My noble friend Lord Caithness and several other noble Lords would like more information on new schemes. Obviously, I understand that. The Farming is Changing leaflet was made available to farmers and land managers last November. We have since published further information about the schemes. The Countryside Stewardship scheme opened an application window on 9 February. Details of the sustainable farming incentive scheme pilot were published on 10 March.

Perhaps I may unite my noble friend Lord Caithness and the noble Lord, Lord Berkeley, on this matter. They both spoke about ensuring that visitors and, indeed, their dogs respect the countryside. I was at a meeting on this last week. Natural England is working on a refresh of the Countryside Code alongside stakeholders, and a relaunch of advice to the public is planned for Easter. There is much more to be done on educating the many people we want to come to enjoy the countryside to respect it. It is a working and living countryside that we all want to enjoy.

The noble Lord, Lord Rooker, raised an important point about new entrants, and my noble friend Lady McIntosh raised the issue of retirement schemes. These are clearly all part of what we want to do to encourage new entrants. We plan to carry out a consultation on the proposed lump-sum exit scheme, but it is not covered by the regulations.

A number of noble Lords raised the issue of upland farms and lowland farms—a range of farms. As I said before, our pilots are intended to involve farms of all sizes, topography and tenures, and it is very important that they work. That is why the pilots are all about a codesign—a point I should have made—with the people who will take them forward, and we will then have a national rollout.

The noble Lord, Lord Whitty, raised an issue that I do not see as an either/or. I am absolutely convinced that benign pastoral farming of livestock is a net benefit to the environment and a producer of healthy food, as is the production of fruit and vegetables. I am not sure that fruit and vegetables would be very easy to produce on some of the uplands that we all know of. Different parts of the country produce different parts of our food and all sectors are important in the balanced diet we wish.

My noble friend Lord Lilley raised an interesting point about the taxpayer and the consumer, one of which I am very conscious as a farmer and a receiver of support. I do not have time to get into it today, but I was talking to a New Zealand Minister of a previous Administration about the consequences of the change that my noble friend mentioned there for the environment and how unpopular it was with many parts of the electorate. That is why we seek a balance and why I spent quite a lot of time during the passage of the then Agriculture Bill stressing that the farmer has many purposes. The first, of course, is producing food but, with 70% of the land of this country of ours farmed, farmers play a crucial role in ensuring that we address emissions, climate change, environment enhancement, clean water, clean air and many other things besides.

My noble friend Lady McIntosh and the noble Baroness, Lady Bakewell, asked about the devolved Administrations, with whom we work closely; as I said before, the future agriculture framework is important in that regard. I should also say that the time-limited package to support farmers in protected landscapes, particularly upland farmers, is an important scheme that we are working on.

Turning to financial assistance, the noble Baroness, Lady Jones, asked about the onus on the Secretary of State to come up with the detail of schemes. The scope of this instrument is specifically enforcement, monitoring and data publication in relation to the schemes. This reflects the relevant powers of the Agriculture Act 2020. The detail of the schemes themselves will be set out in guidance.

The noble Baroness, Lady Bakewell, and my noble friend Lord Caithness asked when detailed guidance for the four schemes would be published. Detailed guidance for each scheme will be published ahead of its launch so, for tree health, we will publish this summer; for environmental land management, guidance will be published ahead of the application window for pilot opening in June.

A number of noble Lords raised the issue of the new schemes. Our ambition is to deliver new schemes which are simpler for farmers than their predecessors, and we have worked closely with a range of stakeholders to ensure that.

The noble Baroness, Lady Jones, asked about the agency’s readiness for the pilot. The RPA inspectorate has been preparing inspectors over the past 18 months to move towards a more supportive tone of inspections. Indeed, the RPA payment record has become very impressive.

The noble Baronesses, Lady Jones and Lady Bakewell, asked about consultation. During the consultation, Defra engaged with 59 key stakeholder organisations to ensure that it had a thorough understanding of their views. Those views became extremely helpful and their responses were invaluable. The results of the consultation were summarised in a response document.

The noble Earl, Lord Devon, and the noble Baronesses, Lady Bakewell and Lady Jones, asked about the independence of the appeals process. Under Regulation 31 of the Agriculture (Financial Assistance) Regulations 2021, the Secretary of State must appoint a person or persons to consider appeals. In practice, this will be an independent panel, which is the process currently in use. The Independent Agricultural Appeals Panel is an advisory non-departmental public body; members are independent external experts.

I am afraid that I will have to write on many other points. I will deal with the definitions referred to by the noble Earl, Lord Devon, which will give him reassurance. I say to my noble friend Lord Northbrook that we are working on this, but there is more to be done—many of the export problems have now been resolved. The tree health pilot is being delivered by the Forestry Commission. With those details and many more to come, I beg to move.

Motion agreed.