Draft Direct Payments to Farmers (Reductions) (England) Regulations 2023 Draft Agriculture (Financial Assistance) (Amendment) Regulations 2023

Mark Spencer Excerpts

Tuesday 28th February 2023 General Committees

[The Minister for Food, Farming and Fisheries (Mark Spencer)]

I beg to move,

That the Committee has considered the draft Direct Payments to Farmers (Reductions) (England) Regulations 2023.

[The Chair]

With this it will be convenient to consider the draft Agriculture (Financial Assistance) (Amendment) Regulations 2023.

[Mark Spencer]

The Direct Payments to Farmers (Reductions) (England) Regulations 2023 were laid before the House on 31 January. I draw Members’ attention to my entry in the Register of Members’ Financial Interests. The matters in these two instruments are closely related and apply in England only. The instruments implement parts of the agricultural reforms we are making in England, using the powers in the Agriculture Act 2020.

The direct payments regulations apply progressive reductions to direct payments made to farmers in England for the 2023 scheme year. These reductions were first announced in the agriculture transition plan in November 2020 to help farmers with their business planning. We are now into the third year of our seven-year agricultural transition period, during which we are gradually phasing out direct payments.

We are committed to these reforms. We remain convinced that direct payments are not the right way to support farmers or to improve the environment. The payments are untargeted, provide poor value for money and have imposed unnecessary bureaucracy on farmers. We are continuing to reduce the payments in a fair way, with higher percentage reductions for payment amounts in higher payment bands. We also plan to continue to make direct payments in two instalments each year for the remainder of the agricultural transition period to help farmers with their cash flow. By continuing to phase out direct payments, we are freeing up money so that we can reward farmers through our new and existing schemes. That will deliver improved environmental outcomes and support sustainable food production. The Government will do that while remaining committed to maintaining average levels of investment in farming of £2.4 billion per year in England over the life of this Parliament.

The funding being released from direct payments is being reinvested back into farming and the countryside. That means we can accelerate the roll-out of the sustainable farming incentive, with six additional standards being added this year. As we announced in January, we will be making the sustainable farming incentive more attractive —particularly to small farms—by introducing a new management payment. We have also increased the payment rates under our simplified countryside stewardship scheme. That will help more than 30,000 farmers, who are already enhancing the environment, to keep up with the rising input costs they are facing.

Under the farming equipment and technology fund, we are offering grants for equipment to increase productivity, boost environmental sustainability and improve animal health and welfare. Under round 1 to date we have paid over £31.5 million, supporting over 3,000 farmers with their investment plans, with a further round of the fund opening last week.

[John Spellar (Warley) (Lab)]

The Government are outlining policy objectives. Given the impact on supply chains over the last year, and particularly in the last few weeks, to what extent will increasing the domestic content of food production be part of those objectives?

[Mark Spencer]

It is very much front and centre; these things are not diametrically opposed. We can have a positive environmental benefit and an increase in biodiversity while also becoming much more efficient in the way we produce food. Looking back over the last few decades, we have got about 1% more efficient every year. We think we can accelerate and improve on that with investment. Some of the grant schemes are aimed directly at allowing farmers to invest in new technology and new equipment to make the way in which they produce food more effective and efficient.

There is an array of other schemes and policies that the funding released from direct payments will go into. Those include slurry infrastructure grants to help farmers invest in better storage; the new entrants pilot, which will bring new talent into land-based businesses; and a tree health pilot that will help farmers tackle tree pests. The instrument also makes a minor change to correct an error made by the Direct Payments to Farmers (Reductions) (England) Regulations 2022. It does not change the reductions figures that were applied to direct payments in the 2022 claim year.

Turning to the Agriculture (Financial Assistance) (Amendment) Regulations 2023, many of our new financial assistance schemes are launched under part 1 of the Agriculture Act 2020. They are part of the transition as farmers move from direct payments to payments that produce a specific benefit, and that includes the schemes I have just detailed. The schemes pay farmers and land managers to improve their productivity, the environment and the health and welfare of animals and livestock. The Agriculture (Financial Assistance) Regulations 2021 provide the legal framework for the Department for Environment, Food and Rural Affairs and its delivery bodies to enforce and monitor schemes and to publish data about grant payments.

The instrument makes technical amendments to those regulations to support the requirements of the financial assistance schemes we plan to deliver in 2023 and beyond. The amendments include removing the definitions of three financial assistance schemes from the 2021 regulations so that we can be more flexible in adapting our schemes to suit farmers’ needs. For example, we will launch the animal health and welfare grants through the farming investment fund.

We are amending the data publication requirements so that the Secretary of State may exempt financial assistance schemes awarded to improve the health of livestock or plants if publication would hinder the scheme’s purpose. For example, identifying a land manager who has received grants related to diseases in livestock could be damaging to their business and deter them from reporting future cases.

We are also amending data publication requirements so that, where the Secretary of State is required to publish the aggregate of financial assistance paid under the scheme, they must also publish the number of agreement holders who receive financial assistance under that scheme. That will ensure that the taxpayer still knows where our funding is going.

The amendments allow the financial assistance schemes to run more efficiently and effectively for farmers while still making sure that there is accountability to the public. I hope that I have assured Members of the need for these instruments, which will help safeguard the long-term prosperity of the farming industry in England and protect the environment for future generations.

--- Later in debate ---

[Mark Spencer]

I genuinely welcome the Committee’s scrutiny. To be fair to the hon. Member for Cambridge, I also welcome the scrutiny he brings to the role of ELMS and his desire to hold us to account, particularly over the £2.4 billion. That is a manifesto commitment, and he is right to continue to ask whether we are committed to delivering it. I am more than happy to reassure him again that we will deliver that cash. I also welcome his comments about how he wants to see ELMS succeed, bringing environmental and biodiversity benefits, as well as keeping our country well fed.

On the SIs, the hon. Gentleman asked why we have done things the way we have previously and whether this is the final time. The honest truth is that I am the Minister now and I do not think we should keep coming back and talking about the same question. I challenged the team, and we decided to make this the final time. To be fair to previous Ministers, the process has allowed for scrutiny and for the debate to take place annually. Originally, we set out a seven-year plan, and allowing some flexibility in the system and an opportunity to revisit decisions is always sound political practice.

I do not think we have seen a negative impact on land values; if anything, I think the opposite might be true. Land values continue to go up exponentially, and it is probably now beyond the means of most traditional farmers to make a return on land, given the value it seems to attract today. So we have not seen that impact on land values, but what is more interesting is the impact that that might have on rental values going forward, and we will have to monitor that to see what impact some of these changes will have on the rented sector especially.

We are keen to roll the scheme for new entrants out soon, and it will not be long before the hon. Gentleman sees the details of that. If ever there was a moment when we wanted to see the brightest and best young people coming into our sector, this is it. Encouraging new entrants into agriculture, farming and food production is the right thing to do. It has always been difficult, but somehow people have managed to defy economic gravity and enter UK agriculture. In the ’30s and ’40s that was traditionally through dairy farming. We then saw a change to outdoor pigs and poultry. Now we are seeing a lot of people getting into food production through flying flocks. Given some of the changes that ELMS are bringing—with overwintered stubbles and cover crops—we are seeing real opportunities for people to set up flying sheep flocks to graze off those cover crops in the spring. That is another great opportunity for people moving forward.

As we move into these new schemes, we will transfer all that cash from one pot into the other. That is the right thing to do. We must take people on this journey at time and a speed that they can cope with, and I think we are pitching that just about right. That goes to some of the comments from my right hon. Friend the Member for North West Hampshire. We are moving in that direction and giving people the chance to readjust.

My right hon. Friend mentioned hedgerows. They are a really good example of where we can have a very positive impact. There are quite generous capital grants available to people through countryside stewardship to put in new hedgerows. The SFI standards also allow people to monitor and log the quality of their own hedgerows, so that they can improve them and change the way they manage them.

[Clive Lewis (Norwich South) (Lab)]

I want to pick up on the point the right hon. Member for North West Hampshire made about an army of people in high-vis holding clipboards. One issue that has been raised with the Environmental Audit Committee in our food security inquiry is that enforcement may be an issue, and we were wondering what extra support and resource would go into the enforcement side. If the payments go to farmers, people could be paid but not actually do the work on hedgerows and sustainability. I would be grateful for more information on that.

[Mark Spencer]

I was just coming to that, because it is a really important point to land, so I am grateful for the two interventions that have given me opportunity to do that. We want to move in a direction that is much less about enforcement and catching people out and more about supporting and encouraging people to do the right thing. Instead of inspectors, we will have assistants and people going on to farms to advise and support. People will not be turning up with a tape measure and saying, “Aha! You’re 50 cm short on that margin.” Rather, they will be saying, “This is what you need to do, and this is how it needs to work.” We want to help and support people to move in the right direction.

There is another side to that. With modern technology it is possible to monitor things via satellite. We can see cropping and improvements to hedgerows via satellites. If individuals take the mickey, do not do the right thing and try to commit fraud, we will of course go after them and prosecute them for defrauding the taxpayer. We aim to support the people who want to do the right thing, while penalising the very small number of people who want to take the mickey.

My right hon. Friend the Member for North West Hampshire made a point about pest management and the use of pesticides on a crop. The purpose of pest management buffer strips is to encourage the production and growth of natural insecticides—in other words ladybirds, lacewings and predators that will go and eat aphids, which are the pests we want to get rid of. We are encouraging people not to use insecticides. They can still use herbicides and fungicides, but they cannot use insecticides, which are the chemicals that will kill those ladybirds and lacewings. I accept that there may be a time where a farmer, having committed to not using insecticide, has to backtrack on that agreement because of a huge aphid infestation. They would have to make a commercial decision as to whether they wanted to stick to receiving taxpayers’ money for not using insecticides or wanted to backtrack on that, use insecticide and not receive payment for that crop.

[Kit Malthouse]

There is a third element to the decision that should surely be of interest, which is whether we want the food. For example, there are certain crops that are particularly prone to aphids—for example, beans. If someone grows beans, the risk is much higher, because that crop is much more likely to get aphids. As the Minister will know, there can be a massive infestation, and the farmer will have no choice—either they lose their crop or they spray it. If they spray it, they lose their subsidy. Quite a lot of farmers will say, “You know what? Beans are too much trouble. I am not going to grow beans. I will grow something else, because I know what is going to happen with beans. They are going to get aphids, because that is what they do.” We may see a migration away from the farming of some crops, because of that risk.

From the Government’s point of view, it is perfectly possible for the inspector in a high-vis jacket with a clipboard to come along and say, “Do you know what? On balance, we would rather have the beans, so we will give you a bit of flex on the pesticide. We recognise that you have a huge infestation that needs to be dealt with, and if we do not deal with it, we are not going to have any beans.” That is the conundrum that a lot of farmers with those particularly pest-prone crops are juggling.

[Mark Spencer]

I thank my right hon. Friend for that intervention. We are getting very much into the detail of the personal management decisions farmers will have to make. Farmers may be thinking that they need to use a chemical to kill those aphids, but there is quite a lot of evidence to suggest that if they have put in insect buffer strips and give the lacewings and ladybirds three or four more days, those lacewings and ladybirds will go and do the job for them.

If you will allow me to digress, Mr Hollobone, I spoke to a gentleman called Martin Lyons—I am sure he will not mind me giving his name—who farms in Cambridgeshire. He had such an event in a field of beans. He went to inspect the field, but on arriving he saw that the beans were swarming with aphids. When he got back to the yard, the sprayer—the machine he was going to use to apply the chemical—was broken. By the time he got the part, four or five days later, he thought he had probably lost the crop, but when he went to look at it before applying the chemical, he found literally tens of thousands of ladybirds all over the beans, and they had removed the aphids. He was able to return the chemical to the company that had supplied him and save the money.

We have become a little bit too dependent—I say this as a farmer myself—on chemical solutions, when nature often finds the solutions for us. We need to do more of that and to get back to some of the practices we saw in the ’30s and ’40s, working with nature rather than against it. That is what many of the changes we are bringing in will deliver.

To turn to the second part of today’s proceedings, there are two schemes to which the financial assistance regulations are applicable—he says, looking for inspiration from his officials to his left. It is really important that we understand that we want to motivate people to do the right thing. My right hon. Friend the Member for North West Hampshire referred to avian influenza, which is slightly different, in that it is a notifiable disease. There may be other examples, such as bovine viral diarrhoea in cattle. If people become aware that that disease is in a herd, they will not want to trade with it. Where farmers want to be part of the scheme and engage in data recovery, we do not want those who are being supported, who do not have BVD, to be penalised because people think their being on the list of those who have received support to prevent the spread of the disease means they have the disease in their herd—we do not want them to be blacklisted. Anecdotal evidence shows that if people are allowed to keep the matter private, they are much more likely to come forward and report any issue they have, rather than hide it.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does my right hon. Friend agree that regenerative agriculture is valued, particularly in my constituency, through the Groundswell Festival? I do not know whether he has ever attended, but it is interesting to see the new techniques that are being pursued, which actually go back to the old techniques he referred to. I endorse what he has been saying, because if farmers have cover crops and use their sheep or cattle to eat them, what they see coming through, as exemplified by Groundswell, are fantastic worms and wonderfully improved soil. Will my right hon. Friend say a word more about that, because it is very important in North East Hertfordshire, where we have a cluster of farmers who are pursuing those techniques?

[Mark Spencer]

I thank my right hon. and learned Friend for his intervention. It is worth putting on record the fact that the farmers I talk to want to do this stuff and move in the right direction. They want to embrace working with nature. That is something they have done for generations and want to continue to do, and we are delighted to be able to support them in that direction.

My right hon. Friend the Member for North West Hampshire made a flippant remark about a trampoline park standard. Technically, it would still be possible today for DEFRA to come forward with a trampoline park standard, if it was minded to. However, public scrutiny, along with that provided by my colleagues and by members of the Opposition, would probably make it unlikely that we would proceed with such a standard. We need to trust the democratic processes we have in place and the scrutiny available to us.

I hope I have covered the points that hon. Members have raised, and I thank them for their genuine interest in this topic and their questions.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Direct Payments to Farmers (Reductions) (England) Regulations 2023.

DRAFT AGRICULTURE (FINANCIAL ASSISTANCE) (AMENDMENT) REGULATIONS 2023

Resolved,

That the Committee has considered the draft Agriculture (Financial Assistance) (Amendment) Regulations 2023.—(Mark Spencer.)