Agriculture (Delinked Payments) (Reductions) (England) Regulations 2024

Lord Teverson Excerpts

Monday 20th May 2024 Grand Committee

[Lord Teverson (LD)]

My Lords, perhaps I can ask simple question. I very much welcome the fact of the transition from basic payments to SFI. Let us be quite clear: there has been a heck of a lot of uncertainty during that process, which now hopefully is more concrete, so that everybody knows the direction. I welcome the number of farmers who are now involved in SFI. Coming back to the question about the environment and the objective of bringing back nature into the countryside, how does Defra intend to assess whether these various SFI programmes have been successful, so that they can be modified in future to make sure that they achieve the goals that we all want them to achieve? That is what I would like to understand as we move into the future. Given the flexibility that SFI gives in terms of various individual incentives within it, how do we assess that, how do we manage it, how do we calculate it and how do we change it into the future to make sure that effectiveness is still there?

[Earl Russell (LD)]

My Lords, on these Benches we have real concerns and questions in relation to these regulations. This instrument was debated in the Chamber of the other place. The Explanatory Memorandum states:

“This instrument sets the percentage reductions which will be applied to delinked payments in England for 2024. Delinked payments were introduced on 1 January 2024 in place of Direct Payments to farmers under the Basic Payment Scheme … in England … As part of moving away from the Common Agricultural Policy, the Government has been gradually phasing out Direct Payments in England. It is doing this over an agricultural transition period (2021 to 2027), as provided for in its Agriculture Act 2020”.


We support the overall approach, so we will not be opposing the SI, but we have concerns about the process of transition of farm payment mechanisms in general, the resultant department underspend to date and the impacts that these are having on farmers, their economic welfare and, in many cases, their very economic survival.

The debate today so far has largely mirrored that which happened in the other place, most people being supportive of the long-term transition and policy objectives, but equally being deeply concerned about the implementation of that transition. These changes need to be assessed against the broader implementation of the whole package of measures. The truth be told, our farmers are really struggling to survive financially.

As has been said, we have had one of the wettest winters since 1836. In many cases, winter and spring crops have not been planted and livestock farmers have also suffered. The NFU farming confidence survey, published just a few weeks ago, showed that mid-term confidence is at its lowest since records began in 2010. Because of a lack of confidence, production intentions are plummeting within all farm sectors. That cannot be good for farmers or our food security. Also, the relentless wet weather has caused farmers real hardship: 82% of respondents to the NFU survey said that their business had suffered, which cannot be good either. We are increasingly seeing the impacts of climate change and I ask the Government and the Minister to be more flexible and responsive to the impacts of climate-related events on our farmers. The Government must recognise the role that farmers play in flood prevention and adequately reward them for the important work that they do in mitigating floods and protecting us from further flooding.

We have this £200 million underspend in Defra and are now four years into a seven-year transition under the SFI. The NFU survey also found that profitability had fallen for 65% of respondents. We have this big period of transition, weather events and real economic hardship for our farmers, so questions must be asked about the impact of these regulations against this overall background.

The Explanatory Memorandum states that

“compared to applying no reductions at all, the 2024 reductions set in this instrument will release around £970 million to £1,010 million”.

These are huge amounts of money, and we are worried about the impact of this change. The Government must be in possession of an overall impact assessment of the transition to ELMS to date, but this information has not been published. I ask them to be more open and flexible with the information they provide.

The Minister in the other place said of the overall budget that it is the same cake and that budgets are not being reduced. Against this, some of the slices have not been eaten because there were underspends, the department is undertaking new and more complex sets of measures around supporting farmers to undertake environmental stewardship, with a greater number of schemes being developed overall, and new organisations are now eligible for payments. Added to this, we have had the rise in inflation, which means that the budgets were not as large as set out.

All of this is adding increased financial impact; farmers are being asked to do more and there are more schemes, so the money is being subdivided to a greater extent. Given that no impact assessment is included with this SI, how does the Minister expect us to make adequate judgments about the money being provided and the decisions that lie behind that? What is the factual basis for the figures the Government have put forward? How confident are they that they have the right figures, that they are set at the right rates and that they are capable of achieving the policy objectives?

Finally, what is Defra doing to improve the situation for our farmers? What assessment has it made of the overall support that farmers need and how best it should be provided at speed and at scale? What other problems has it had to date with the implementation of the present system? What is being done to support small farmers and tenant farmers, in particular to make applications? The Minister proudly stated that half of farmers have made applications; by that same logic, half have not engaged with these schemes as yet, so how can we do more to bring them into these schemes and make them work more effectively?

--- Later in debate ---

[Lord Douglas-Miller (Con)]

It is pretty early days in this transition, so I am not anticipating that we would have that evidence. We do a lot of consultation directly with farmers and with the industry through organisations such as the NFU, and we have developed a new food index to look at how that might be impacting food security, so quite a lot of measures are evolving and coming through. I would suggest that it is a little early to try to measure impacts at this stage.

I think the noble Lord, Lord Teverson was keen to understand what consultation we are doing with industry and how we are working with it. Have I got that right?

[Lord Teverson (LD)]

I thank the Minister for asking. What I am really trying to say is that we have here a unique instrument that can use various elements of the SFI to get the sort of environmental improvement goals we all want. How are we assessing them so, that over time, we make sure that this state aid, in effect, that we are giving to farmers is used effectively to achieve what we want to achieve? How does that assessment work—not now, but as we start to move through the implementation?

[Lord Douglas-Miller (Con)]

I thank the noble Lord for that helpful clarification. There is a lot in that, and if I may I will write to him with the details rather than go through them all now.

Unless anybody has anything further they would like to ask, I think I have covered most of the questions. I believe—and the Government are right behind this too—that this instrument is essential for our agricultural reforms. We must press ahead as planned so that we can fund our schemes that support farmers to be resilient and sustainable over the long term.