[Relevant documents: Seventh Report from the Environment, Food and Rural Affairs Committee, Session 2013-14, Implementation of the Common Agricultural Policy in England 2014-20, HC 745, and the Government response, HC 1088.]
Motion made, and Question proposed,
That, for the year ending with 31 March 2015, for expenditure by the Department for Environment, Food and Rural Affairs:
(1) further resources, not exceeding £968,601,000 be authorised for use for current purposes as set out in HC 1233 of Session 2013-14,
(2) further resources, not exceeding £371,350,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £1,308,388,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Gavin Barwell.)
I welcome the opportunity to debate the implementation of the common agricultural policy in England. I welcome the Minister to his place and look forward to his comments.
Looking at the estimates for the forthcoming year, it appears that there will be a 2% increase in the overall budget against last year’s final position in the 2012-13 supplementary estimate. It appears that the £43 million increase in programme spend is largely due to the £124 million increase due to the transfer of the CAP disallowance funding from 2013-14 to 2014-15, in line with a Treasury agreement to allow flexibility in disallowance funding between years. There is also a £38.4 million increase to the Environment Agency’s flood management budget, which is extremely welcome and includes the £20 million announced in the 2014 Budget. It would be helpful if the Minister, in his response, reassured us that this is new money and that we are not being asked to make savings from, for example, the EA’s Yorkshire and Humber budget to transfer to other parts of the country. That leads to the question, since I understand that the National Audit Office is not in the position to provide figures for the debate, of what the projected figures for disallowance, and any quantifiable fines from the new CAP reform coming into effect next year, will be.
Against that backdrop, the Select Committee on Environment, Food and Rural Affairs was extremely pleased to consider the Department’s proposals. When we reported last year, we found much to like. We support the Government’s intention to raise the minimum level of claim threshold to five hectares, and to move money uphill. It is extremely important to state at the outset, however, that that money must go to active farmers and not simply to those who own the land. I would like to go into some detail in that regard, and the Minister cannot help but be aware of our particular concerns.
I would like to record my particular thanks to the previous Minister with responsibility for farming, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), who was mindful of our concerns about areas where common land is prevalent. The Committee supports the Government’s position that England should adhere, as closely as possible, to the greening measures set out in the direct payments regulation, and not adopt a national certification scheme approach to greening. In our conclusions, we recommend that the Government maintain the 9% rate of transfer from pillar one to pillar two, and only move to 15% in 2017 if they can demonstrate that additional funds are required and that there is a clear benefit from the projects proposed. Clearly, a compromise of 12% is less than 15% and more than 9%. Perhaps the Minister will share the Government’s thinking in that regard, but we are pleased that the farming voice, and that of the Committee, was heard.
The Committee recommends that the Government take steps to ensure that those actively farming receive the direct payments and that those farmers who have responded to the call to diversify are not captured inadvertently on the “negative list” of business types ineligible for CAP funding under pillar one. We recommend that the Government update the commons registers and allow commoners associations to claim on behalf of all those who actively farm commons, so that the commons attract the share of pillar one money intended for them. I am aware of the position in North Yorkshire and Cumbria, and that the register will be updated from October. I believe that in County Durham and other parts the situation might be slightly different. My concern, which I am sure the Committee shares, is that the update to the register cannot take place before 1 January 2015, so a number of eligible claims will be excluded. What will happen to specific claims that are relevant and should be awarded, but may not be in place by 1 January 2015? It would be extremely helpful to put the minds of those farmers at rest.
The Committee supports the continuation of dual use under pillar two, but we think that Natural England must display a lot more rigour in arranging agri-environment contracts to ensure that payments under those schemes go to those who do the work and whose income is forgone. We make a specific recommendation that I hope will be echoed across the House this evening—that Natural England must be in a position to give advice. It should not be seen just as the policeman; it must be there to provide advice to farmers who seek it.
One of the central recommendations—it is certainly close to my heart, given the area that I represent—is that where there is a dispute between landowners, tenants and graziers, they must have access to a dispute resolution mechanism, set up along similar lines to that suggested by the tenancy reform industry group. In this day and age, it is worrying that those whose interests are sometimes ignored or trodden on should not have access to arbitration or a simple, swift dispute resolution mechanism along the lines we propose.
The Select Committee highlights the risks associated with the Government’s plans to develop a new single IT system for CAP funding through which all agencies would be able to administer the CAP. We do not wish to rehearse the grief from previous Administrations, but we are aware of recent history and we do not wish it to be repeated. An undertaking and some assurance from the Minister that that is not intended would be most welcome this evening.
We support the Government’s ambition to encourage and support as many people as possible to apply for CAP funding online, but that approach will simply not be available to some farmers. We received an assurance from a DEFRA Minister in our recent deliberations that a paper-based application process would be retained and that guidance will be provided in paper format in the run-up to the new scheme. It was thus of some concern when the chief executive of the Rural Payments Agency, in giving evidence to the Committee in April this year, told us that there is absolutely no way that a paper format application can be made. That will send shockwaves through rural areas.
In my own constituency, I had a briefing from NYnet, the county council’s regime that is working in tandem with BT to try to roll out broadband in the area. By 2015-16, however, only 78% of my Thirsk, Malton and Filey constituency will be covered. That means that 22% of Thirsk, Malton and Filey will have no access—I repeat, no access at all—to fast-speed broadband. That 22% is where all the farming communities live, and it means that they will be severely disadvantaged. We are all familiar with those trying to apply online who find either no access or receive internet access that is so slow that all the information that has been entered can be lost just as people are trying to press the send button.
I say to the Minister that it is no comfort to farmers to be told that they should seek a satellite connection, as they simply cannot afford the prohibitive cost. I repeat the Committee’s recommendation to the Government that the BT money that is being rolled out—particularly the element coming from the BBC licence fee and the next round of licensing—should go to those rural communities across England that have the slowest speed and the weakest broadband coverage. We cannot expect the farming community to go digital by default from 1 January, yet have no access to broadband.
I, too, am a member of the Select Committee on Environment, Food and Rural Affairs. Does the hon. Lady agree that throughout the UK and particularly in isolated rural areas, farmers are being marginalised because of lack of proper access to broadband, and that the Minister should use his good offices to make representations to BT about that problem? That issue was highlighted in our rural communities report. Does the hon. Lady further agree with me—on a compelling point that she made—that there is a need for proper guidance and form filling to be available in paper form?
I thank the hon. Lady for her sterling contribution and excellent work on the Select Committee. I agree that this goes to the heart of how applications will be made from 1 January. We need clarification, because we cannot have the Minister saying one thing and the RPA saying another. If, as the RPA assured us, paper forms will not be available to submit, intensive tuition must be made available to those required to go digital from 1 January.
I want to raise one or two more points before putting some questions to the Minister. Another issue that the RPA shared with the Committee during the evidence session in April is that the reality will be less than was first hoped and more complex, even without the known unknowns such as the disallowance or fines. The cost to implement will, according to the RPA, be between 15% and 40% higher than previous schemes and, possibly, than previously thought. I shall ask the Minister a couple of direct questions about that.
The impact of flooding on farmland is another important issue that cannot be underestimated. Thousands of acres in Yorkshire and the Humber area were under water in 2012-13 and 2013-14, and thousands of acres were under water in Somerset and the south-western parts of Scotland at the time of flood incidents. The impact on the productivity of farming has been severe.
Will the Minister confirm whether farmers will be eligible for parts of the CAP, perhaps under pillar two, and the rural development fund, if not agri-monetary schemes, for storing water on land? How long would it take? Will such storage constitute reservoirs? When will DEFRA be in a position to publish the reservoir safety guidance, for which we have been waiting for some months, if not two years, because it will have a direct bearing on this matter?
Is it a source of disappointment to DEFRA that the CAP reforms have in many respects become more complex and less simple in an already complex system? Is it indeed the case that the CAP schemes are likely to be between 15% and 40% higher than previous schemes, and how has the Department budgeted for that in the estimates? Is the Department seeking to simplify and minimise the administrative cost in the new schemes, even against that backdrop?
Will the Minister respond to a question that has been asked by me and by the hon. Member for South Down (Ms Ritchie)? In April, the RPA told our Committee:
“It is not actually possible to submit by paper to the new scheme, because of the way that it is structured.”
That completely contradicts what Ministers told us in their evidence. I repeat that farmers in areas with no broadband service face considerable problems. Will the Minister assure us that making access to CAP funding digital by default will not cause problems for farmers in areas that lack broadband coverage or significant speeds? Will he also assure us that the new digital support centres, which form an important part of the assisted digital service, will be accessible to all farmers, including hill farmers in relatively remote locations such as mine? Will he confirm that there will be a certain degree of privacy, and that farmers will not be expected to sit in a public place, such as a library, sharing commercially sensitive information with members of the public? The Committee believes that that would not be appropriate.
What makes the Minister think that the United Kingdom’s allocation of pillar two funds, which was much less than had been predicted, will not adversely affect the competitiveness of English farmers, especially in view of the fact that the Government now say that they will modulate 12% and that the proportion will increase to 15% if they believe that to be necessary? What will be the criteria for the move to a 15% rate of transfer from pillar one—direct payments—to support in the final two years of the pillar two rural development programmes? As I have said, we are pleased that the Government listened to the views of the farming community and those of the Committee before reaching their decision, but it would nevertheless be helpful to know what those criteria will be.
In June, the Secretary of State unveiled the details of how the Department would implement the greening rules in England, and referred to a specific problem relating to hedges. He said that the need to validate all claims and map digitally every hedge to EU standards might significantly increase the risk of delayed payments to those who adopted that option. What progress has DEFRA made in talking to banks to ensure that farmers who receive late payments as a consequence of the inclusion of hedges in ecological focus areas will be treated sympathetically? What guidance will it give farmers in regard to how hedges should be measured? I am sure that the Minister will want to allay our concerns, and those of farmers who have contacted us, about any change in the date on which farm payments will be made. What effect will the inclusion of hedges as an option enabling farmers to comply with EFA requirements have on disallowance risk? Will the Minister tell us how the Department will forecast what that risk will be?
During the evidence session, when asked about the level of disallowance that the agency expected to incur under the new CAP, the chief executive of the RPA told the Committee
“we would be doing incredibly well if we can hold disallowance to 2% of future scheme expenditure”,
which is calculated to be in the order of £40 million. From that, it would be reasonable to infer that the UK’s disallowance risk will be increased. We are at a disadvantage this evening because we are debating the subject without the figures from the National Audit Office.
The proposal to move money uphill is obviously welcome, but, as I said earlier, we must ensure that it is those who are actively farming, particularly on common land, who will benefit. DEFRA announced in April that farmers in England who operate within the moorland line would receive approximately £26 more per hectare in direct payments under the new CAP, an increase of about 90% in the moorland rate. That is great news, and a victory for commons, given that 96% of upland commons are above the moorland line. I repeat, however, that we must ensure that the money goes to the commons and the graziers. I hope that the Minister will respond favourably to our request for a dispute resolution mechanism. It would be great if he could also assure us that commoners and graziers who wish to claim payments under the new CAP schemes will not be disadvantaged by the poor state of the registers in North Yorkshire, Cumbria, County Durham or elsewhere.
The new environmental management schemes which are open to all upland farmers are obviously welcome, but I hope the Minister will assure us that those farmers will not be left worse off overall by the changes introduced under the new scheme if, as a result of the comprehensive area assessment, the new environmental land management schemes are not open to farmers who are currently operating the uplands entry level stewardship schemes.
I would like to end by highlighting how current payments have worked least well: in respect of rewarding active farmers and graziers on the common land. It is crucial that those who are actively involved in the commons—those active farmers and graziers, or at least those who perform an active part in managing the commons—receive payment timeously, whereas people who do nothing with the commons should not receive a payment where that is not appropriate. Therefore, I urge the Minister to agree that lessons must be learned from how the existing direct payment scheme—the single payment scheme—was implemented in relation to common land, and to ensure that those who till the land on our behalf are indeed the beneficiaries of the new proposals.
With those comments and questions, we await with great interest the Minister’s response.
I congratulate the Environment, Food and Rural Affairs Committee and its Chair, the hon. Member for Thirsk and Malton (Miss McIntosh), on producing a very pertinent report.
On previous occasions I have found the Minister to be a very reasonable, intelligent and empathetic person, and I hope those qualities are going to be on display at the Dispatch Box tonight. I was slightly disappointed when I initiated a debate about the hill farmers in Teesdale that he was not able to respond, but I am going to put the points again in the hope of getting a slightly more sympathetic response than I received previously.
In my constituency, there are a large number of hill farmers who are very much affected by these CAP changes. It is an unusual area, because they are almost entirely tenant farmers farming on common land. They have been farming in the same way for about 500 years, and they have produced a very special way of life and a very special and valuable ecology, so I applaud the remarks in the report and from the Select Committee Chair on common land.
When I went to see the Upper Teesdale Agricultural Support Services, it was particularly concerned because it felt that the European Union had not understood the way commons operate in this country and that the rules at European level were not very sensitive to the needs of English hill farmers for that reason. There was also concern about the change in the payment times in the underlying reforms: payments had previously been made on a six-monthly cycle but people were going to have to wait much longer—sometimes 18 months and in one case as long as nine years. That is a significant problem.
I am most grateful to the hon. Lady for giving way, and it allows me to refer to the register, which is out of date. My brother and I have shared a farm in Teesdale, of which the hon. Lady is aware. Does she realise that Teesdale is often cited as the area whose farmers earn the lowest income of any hill farmers in England and Wales?
The hon. Lady is right. Newcastle university estimates that the average income of a farmer in my constituency is £11,000 a year. Many of them are on working tax credits—or were on them under the previous Government, but I am not sure how many of them are still getting the working tax credits.
The Select Committee report is excellent on the major problem such hill farmers face, which is to do with delivery: the totally inadequate service that the farmers receive from the Rural Payments Agency because of the requirement to apply for money online and because the system is constantly collapsing. The Select Committee report states at paragraph 34 that
“farmers can be heavily penalised for a genuine mistake but not appropriately compensated when it is the Rural Payments Agency who is in error.”
What has happened repeatedly in recent months is that the farmers have gone to upload their data and information, and the RPA computer system has been down, necessitating the farmers to go home and come back another day. That is absolutely absurd. Sometimes they have a round trip of 20 miles to access the computer in the UTASS centre in Middleton in Teesdale. When the system is down, they have wasted several hours and have to go back another day in the vain hope it will be up again. I wrote to the Minister about this, and I really think he should not be penalising the farmers when the RPA is at fault.
The next extremely pertinent recommendation from the Select Committee is recommendation 36, which states:
“The IT system remains, however, one of the standout challenges of this round…Given the lessons of the past we question whether this is the right time to be introducing a new IT system.”
How very right the Committee is. It is not just about a new IT system, with all the risks, complexities and problems that a new system always seems to entail in this country; one of my local farmers calculated that because DEFRA’s systems are so complex, and because he has to apply to so many different things and for each system he is meant to have a different authentication, he is supposed to remember 27 different personal identification numbers. This is absurd. This is grotesque. This is Kafkaesque. I find it difficult to remember my bank number and the number to get into the House of Commons, so how can these farmers, whose real job is farming up on the hill, be expected also to run the sort of complex IT system that would make a banker blench?
The Select Committee’s next point, which is absolutely right, was about the importance of encouraging and supporting people to apply online but realising that
“there will be some for whom such an approach is not appropriate. A paper-based application process must be retained”.
That is absolutely essential. Once upon a time, the farmers got the forms through the post, sat at their kitchen table, had a cup of tea, filled the forms out, put the stamp on the envelope, shoved it in the post box and, boom, the whole thing was done. Now that is not possible and the farmers have to drive to the library or the UTASS centre to get help with the uploading.
The whole thing is completely inefficient because, as recommendation 38 indicates, the rural broadband programme has not succeeded so far. We know that 5 million people in this country do not have access to broadband. Until 100% of people have access to broadband, how can it make sense to have a totally online approach and not have a paper-based approach alongside it? In my constituency, 40% of the farmers have no access to rural broadband, so DEFRA and the RPA are taking an absurd approach. It is essential to maintain a paper-based system. It is not reasonable for the Government to make public spending cuts through a digital-by-default process and pass all the burden back to the farmers for delivering the Government’s own administration system. The farmers experience that as oppressive and nerve wracking; it raises anxiety levels to a completely unreasonable pitch, given the significance of what the Government have to do.
I hope that the hon. Lady is not painting a picture of the old system through rose-tinted spectacles. As I am sure she will recall, when the right hon. Member for Derby South (Margaret Beckett) was in charge of DEFRA there was a paper-based system whereby farmers were not paid for years, never mind weeks. At least under the current regime the majority of farmers are paid on 1 December, allowing their cash flow and business to flourish.
We will see whether the hon. Gentleman’s picture of the current system turns out to be right—I do not think it is accurate. I do not think that my right hon. Friend the Member for Derby South was particularly happy with the criticisms I made of the system in the previous Parliament—they were also significant—but the fact is that this Minister is in the DEFRA hot seat now and it is his responsibility to run a system which is usable and farmer friendly. That patently is not happening at the moment. I am extremely concerned to hear the Chair of the Select Committee say that the head of the Rural Payments Agency is considering not having a paper-based system when we know that the rural broadband roll-out programme will take another three or possibly four years. It is absolutely plain that we need a paper-based system for another five years, and I hope that the Minister will be able to stand at the Dispatch Box, allay all the fears of our farmers and tell us that that is what he will ensure happens.
May I start by reminding the House of my interests, which are in the Register of Members’ Financial Interests?
It fell to me as the then Minister to start the negotiations for what is now seen as the reform of the common agricultural policy. I never know why we use the word “reform” because that is the last thing that we actually have. We have ended up with a complete mish-mash, which is really unacceptable in today’s world. The CAP is about to be implemented. The subject of tonight’s debate bears all the relevance and the power of initiation by the Commission and reflects the impossibility of 27 Ministers managing to agree on any suitable alternative. For the Commission to claim that it represents a stroke of common sense is clearly nonsense. We have ended up with a very complicated system that will not help farming move forward and that does not face up to the changed realities of the world in which we live—a world in which, in the next 30 or 40 years, the supply of food may well not meet demand. European agriculture will not reform as it should to meet those challenges.
I welcome the fact that the Prime Minister negotiated an overall reduction in the CAP spend—the first for many years. I am sorry that it necessitated what can only be described as “handsome bungs” to France and Italy to get their agreement to the cut, and that we therefore ended up with a reduction to pillar two funding, which is unfortunate.
The Government are absolutely right in the way that they have gone about implementing much of these reforms. I particularly welcome the measure to help young farmers. I suspect that deep in the belly of Government, particularly in the Treasury, there is some resentment that that decision has been made compulsory. It is something that I have always believed should be part of British policy, and it is something that has been commonplace elsewhere in Europe. I am delighted that it is now part of the system.
The Government are also right to continue the same entitlements and regions, and I strongly support the moving of support uphill—the increased funding for moorlands—for all the reasons that we have heard. Of course I entirely support the move towards simplicity and the way that the Government have tried to reduce some of the burdens. Getting rid of the soil protection review, for example, is one measure I strongly welcome. None the less, I have a few comments to make.
My first comment relates to the three-crop rule that has now been imposed. I understand why it arose. I believe that it originated from the problems in Germany where there has been constant mono-cropping of maize for anaerobic digestion, which has been damaging to the environment. But what we have will achieve nothing. We have not achieved a rotation. There is nothing to stop farmers growing the same crop in the same field year after year as long as they grow the right percentages overall on their farm. Whereas farmers who actually practise a rotation by block-cropping with another farmer—the whole farm goes into wheat in year one and the next door farm goes into oilseed rape or beans and then they swap the following year—will not be allowed to do so under the new rules. They will have to grow a bit of each on each farm, which will add considerably to their costs. As it is not creating genuine rotation, it is a pointless and bureaucratic exercise that will achieve nothing for the environment.
Secondly, there are the environmental focus areas. Again, a broad-brush arbitrary figure of 5% has been decided on at European level. There is ample evidence now from a number of research bodies, including work the Department for Environment, Food and Rural Affairs has done, that what really matters is not the area of land we manage for conservation but the way that we manage it, ensuring that it is properly managed and not neglected year after year. This plan makes no reference to that, and that is a major error in the system.
I welcome the decision to include hedgerows in the ecological focus areas. It is right that they should be included, but I am concerned about what that will mean not just for mapping, which has been mentioned, but for entitlements. The Minister might want to reflect on that. The areas of land that farmers farm—that is, the area that they claim against—might not include their hedgerows, but when those areas are taken in, as they need to be in order to be within the 5%, farmers might not have enough entitlements for the overall amount of land that they will then be considered to farm. I hope that the Minister will look into that.
Contrary to what the hon. Member for Bishop Auckland (Helen Goodman) said, I pay tribute to how the Rural Payments Agency has made dramatic strides since the days when her party were in government. When we took office, every farmer in the land was incensed by the performance of the RPA and it is now, as my hon. Friend the Member for Sherwood (Mr Spencer) rightly said, delivering the vast majority of payments on day one of the window, at the beginning of December. That is a considerable achievement by the present management and I think they should be rewarded and recognised for what they have managed to achieve.
The challenges of implementing the new system are huge. It is far more complicated and, as the Chairman of the Select Committee, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) said, will cost a considerable extra amount that the Government can ill afford. It is also an absolute waste of money given the bureaucracy that I have described. For the hon. Member for Bishop Auckland to suggest that the present system should be continued and that now is not the time to change systems belies belief. The present system is, metaphorically, held together by string and sticky tape. It is completely obsolete, even for the process it currently tries to operate, and it is a tribute to the RPA that it has managed to improve performance even using such an obsolete system. To suggest that it could somehow manage the new process is ludicrous.
I also wanted to mention appeals. I hope that under the new system the Government will ensure a satisfactory appeals process. I must confess, even though I had to judge those appeals for a time, that the current system is not satisfactory. Individual responsibilities, the responsibility of the RPA and the whole background of penalties and EU disallowances are not clear. Let me use one of the most ludicrous cases I saw as an example to demonstrate what has to change. Somebody had sent all the forms in to the RPA by registered post and yet the claim was rejected on the basis that it had never arrived. When the farmer submitted the registered post docket to the RPA to show that the letter had gone, he got a letter back saying that that proved that an envelope had been received but did not say what was in it. I felt that that was ludicrous, but there was no absolute proof that the RPA had received the forms and it was impossible to allow the claim. The new appeals system must cover such situations.
I strongly support the points that have been made about digital by default. I hope that the Minister will reconsider it and ensure that farmers are entitled to continue to use paper at least until they can access broadband. I am trying to be constructive, so if he concludes that that is not possible I suggest that he finds a way of ensuring that farmers who employ land agents—as many do, of course—solely because they cannot access broadband themselves should be recompensed in some way, perhaps by a small discrete sum within pillar two.
That leads me to pillar two and the rural development programme. I take issue with the Government over how the funding has been split, because they seem to have fallen for the line that if one spends more, one gets more. That does not always work. Even though we all know that the pot is not as large as we would like it to be, I regret the Government’s decision to increase the share of the pot going to the environment, not because I do not care about the environment—I strongly care—but because it has been abundantly clear over the past 10 years or so that simply spending money on the environment does not necessarily produce results. What really matter are outcomes and far more should be directed at those. We could have ensured that a greater share of the rural development pot was used for other purposes, in particular the economy and innovation in farming, to enable farmers to face the inevitable decline in the basic payment, as it is to be called, and no doubt its eventual disappearance. Farmers need to be able to invest and face up to that day. Just £140 million out of £3.5 billion to assist farmers is not a good deal.
On the new environmental land management scheme, my hon. Friend the Minister will know what I am about to say. I recognise that there is a £2.2 billion overhang from the current system of entry-level schemes and higher level stewardship, which must clearly be allowed for, but I am concerned about the way the new scheme will operate and the potential for cherry-picking. The implication is that funding will go only into schemes where it is likely to do most good. There are vast areas of the country, including much of my constituency in the north, in the fens and further up into northern Cambridgeshire and Lincolnshire, which nobody will pretend are the most beautiful areas, or that they contain a massive abundance of wildlife, but if such areas receive no funding and are completely outside the new scheme, the situation will get worse. We might end up with biodiversity deserts, because the funding has been concentrated on the hotspots. I hope the Government will look at that carefully.
Our land is precious. The report that came out two weeks ago from Cambridge university about agricultural land use over the next few decades makes salutary reading. It demonstrates that in the worst-case scenario we could be 7 million hectares of land short in the next 30 or 40 years. Clearly, that cannot be made up. It demonstrates that all policies must address the use of our land in the most effective way to combine looking after the environment with food production, its primary purpose. There is a great deal more to be done to achieve that. These reforms are not the right way forward, but I commend the Government on the way they have tried to implement an impossible task.
I, too, draw the attention of hon. Members to my entry in the Register of Members’ Financial Interests regarding agriculture.
The debate tonight is on the CAP in England, and my farm is in Wales so it is not covered, but the common agricultural policy and the way it is delivered in the United Kingdom have implications for all the devolved nations as well. The important word is “common”. While the UK farmers continue to compete within the European single market, we need a common policy. It is important that we remain within the single market: 40% of all lamb produced in the UK is exported. Although we welcome some of that lamb going to the middle east, and some, we hope, to China in the future and perhaps even to the United States, the bulk of the lamb goes to the continent.
We have a single market there, a market that is open for every second of every minute of every hour of every day throughout the whole year. I can remember when we did not know whether that market was open or not. We could take lambs to market and one day they were worth £10 less because the market was closed; the next day they were worth £10 more because the market suddenly opened. That was no way to do business.
The original purpose of the common agricultural policy was to lift incomes in rural areas, and that is as important now as it was then; incomes in rural areas are still lower than in urban areas. A reduction in the European Union budget naturally resulted in lower pillar one and pillar two allocations. I am particularly concerned about upland areas, where incomes are very low. Hardly any farm businesses would show a profit without the single farm payment, and those that did would generate no cash for investment, yet in his written evidence about food security to the Select Committee on Environment, Food and Rural Affairs, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Camborne and Redruth (George Eustice), said:
“Farm subsidies can allow inefficient farmers to continue to operate a farm rather than exit the industry.”
Giving oral evidence to the Committee, he said:
“we can support farming better through Pillar 2”.
I can tell him that that causes considerable apprehension in farming communities, particularly in the uplands.
The family farm remains the foundation of the rural community and the rural economy. Money received by farmers gets recycled among many local businesses—garages, shops and other tradespeople. The single farm payment enables farmers to invest, become more efficient, and be more market-facing. It gives farming businesses the resilience to come through periods of poor weather when outputs are reduced and costs soar, as in spring 2013. Any suggestion of moving away from direct payments would devastate many rural areas, break down the cohesion of rural communities, and have a drastic effect on traditional production chains and, indeed, total food production.
I turn to the thorny issue of voluntary modulation, which turned into an almighty row between farming organisations and environmentally focused charities—and one can understand why. Those on both sides of the argument were going to receive less money. Pillar one was reduced by 2.7%, and pillar two by 5.5%. One might ask why there is not this row in other countries. Only five other countries of the 27 in the European Union even engage in voluntary modulation at all, and two do it in the reverse order, moving money from pillar two to pillar one. The Flanders area of Belgium modulates by 5.5%, Germany by 4.5%, France by 3.3%, Latvia by 7.4%—we have to remember that it had a 50% increase in its pillar two allocation—and the Netherlands by 2.5%.
Of course, as we have heard, in England the modulation is 12%, probably rising to 15% in 2018. In Wales, there is 15% modulation. In Scotland I believe it is 9.5%, and it is zero in Ireland. Why is the UK such an exception to all this? The answer probably lies in the UK’s pillar two allocation. The UK receives €2.3 billion for pillar two in this financial period, whereas Poland receives €9.7 billion, Italy €9.2 billion, France €8.8 billion, Spain €7.3 billion, and Germany €3.3 billion. Why does the UK have such a poor allocation for pillar two? I will not go into the suggested reasons, but there is common cause to be made. The farming unions could combine with the environmental charities to review our pillar two allocation fundamentally, which would be good for farmers, the environment, rural communities and the UK as a whole. Our pillar two allocation is low, which I do not understand. I cannot find any reason why we have such a poor allocation. Increasing the allocation would be good for our farming community, but it would be good for our environment, too.
It is a great pleasure to take part in this debate and to follow my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), who made a good case for Welsh farmers. I pay tribute to my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice). He referred to the Rural Payments Agency and how much it has improved, much of which was down to his stewardship when he was a Minister. He worked very hard, and payments are getting out on time. We inherited quite a mess, which leads me on neatly to my first point.
When the single farm payment was introduced in 2003-04, there was no doubt that the Beckett formula was complicated. It took years to sort that out, and we paid more than half a billion pounds in fines to the EU for the mistakes that were made. We do not want to repeat those mistakes, and I appeal to the Minister to ensure that we do not do so. I have been sold on the idea that the maps are best done digitally, especially because of the hedgerows and everything else, but if farmers do not have access to broadband, they either have to have somewhere to go—not just a library but somewhere where they can access broadband securely and privately—or they have to be able to use agents. Farmers do not expect to be given a fortune, but they need money to do that. We are working hard to deliver rural broadband, and I am certain that we will get there, but we are not there now. If we make a mess of introducing the reform in the first year, it will carry on year in and year out. That is precisely what happened with the previous system, and it took years to sort it out. In fact, there are some cases that have never been sorted out.
I hope that people who were not able to register under the old system for various reasons—some people pursued their registration for years—are able finally to register their land under the new system. I also pay tribute to the idea that young farmers should be helped, because the population of this country and the world is growing and we need to produce more food.
I share my hon. Friend’s views on the importance of supporting young farmers. On the question of broadband, does he share my view that there is scope for supporting wireless broadband to reach rural areas that are hard to reach by wired means, as it were?
I could not agree more with my hon. Friend. Wireless broadband will reach parts of my constituency in the Blackdown hills that fibre optics will not, but wireless broadband will not necessarily get there in time to ensure that applications for the single farm payment can be made online. That is why we must take care to get the payment right in the first year.
Ensuring that it is the working farmer who receives the payment is a good idea, and I am interested in what the Minister has to say about that, but we do not want to create the biggest bureaucratic nightmare to prove whether someone is or is not the farmer. If we are not careful, we will make the system increasingly complicated.
I spent rather a long time—some might say too long—dealing with the CAP in another place, and I think that one of the overall problems is that across 28 countries, from Finland to Greece, from Poland to Germany and right through to Great Britain and Ireland, there are so many crops that can be grown, so many soil types, so many temperatures and so many amounts of rainfall, with some areas getting very little and others being flooded, that if we try to come forward with a common policy, we will end up with the biggest mess known to man and woman. There is no doubt about it. We cannot have a common policy unless there is much greater flexibility.
Are we to have a policy that demands three rotational crops, because Germany grows solidly maize, maize and maize? This country has very diverse farming and lands, with uplands and grasslands, but many countries have hardly any grassland. Somebody driving from Calais to Berlin will see hardly a single hedge the whole way there, because they have all been ripped up over the years as a result of a different policy on the way they farm. We have great hedges, and it is good that they have become ecological focus areas. In my view, the hedges are probably the most important part of a field, because they are home to wildlife and birds. That, above all, is what we need to concentrate on.
I wonder whether one of the unexpected outcomes of trying to apply that policy across the whole of Europe is that we will end up supporting the least efficient farmers and those that are economically challenged, perhaps because they farm in arid areas or small alpine villages, whereas we should actually be supporting the most efficient farmers, many of whom are in France or the UK.
My hon. Friend is right to a degree, but is it right that the most productive land across the whole of Europe, including in East Anglia, should get the highest payments, given that farmers there can make the most from that land? We must have some balance in the process. We have talked about the uplands tonight, and there is no doubt that upland livestock farmers struggle. In my view, it could be argued—my right hon. Friend the Member for South East Cambridgeshire will probably jump out of his seat—that some of those farmers in East Anglia, Cambridgeshire and elsewhere across the country who can grow very good arable crops, perhaps 10 tonnes of wheat per hectare, could see just a little bit of those payments move uphill. That is what we are trying to do, but I think that we probably need to do a little more. There is an argument there, but I think that we need to ensure that we support farming in those marginal areas, which is more difficult.
We must also ensure that in the end we deliver a policy that encourages food production. It is great to support the environment, but we must remember that in the uplands and on a lot of the permanent pasture on the hills it is the cattle and sheep that will keep farming as it is. It was not put there by God; it was put there by farmers. We must remember that it is the farmers who look after the countryside. We must remember that in order to support them, we must ensure that they have an income. We have to spread that as far and wide as we can.
First, I congratulate my hon. Friend on reaching that great age. There are—dare I say it?—others in the House who have reached an even greater age. He asks a difficult question. We are limited by how much of it we can decide ourselves, as a lot is decided by the European Commission and, finally, the Council. As my right hon. Friend the Member for South East Cambridgeshire said, it is very difficult to change things at that stage. We can tweak some of the environmental schemes a bit—there are the odd things we can do—but in the end we have to go along with much of what is in the policy.
Overall, the CAP overall should be moving towards a simpler system, but we are not getting that. We should be weaning farmers off more and more public support, but I want that to happen across the whole of Europe. As the hon. Member for Brecon and Radnorshire said, there are many different types and levels of payment. Margaret Thatcher said, “Don’t buck the markets”, but that is exactly what we do. We have all sorts of different levels of payments across the whole of Europe and then expect farmers to compete in a single market, which is almost impossible. More and more of the subsidy should be phased out, and farmers should increasingly stand on their own two feet. We should make sure that we get a decent price for food and use biotechnology to produce even more food so that in the end we can feed the growing population.
I start by drawing Members’ attention to my declaration of interest in the register.
As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said, the countryside we see today is the result of many generations of farmers who have managed it and created the landscape that we hold so dear. For many generations, they did that without any support from politicians or Governments because they cared for the countryside and wanted to farm for many generations to come.
The common agricultural policy is probably the single most successful policy ever dreamt up by a politician in that it was designed to keep Europe well fed. For three generations, our nation has enjoyed supermarkets and shops full of food, and people have become used to having food on the shelves when they demand it. During the war, my grandmother would go to the shops to buy lamb chops and be told, “You can’t have lamb chops—you’ll have beef dripping”, and she would have accepted that. We have now had two or three generations of consumers who have no concept of what food insecurity is like. We should be very grateful not only to the common agricultural policy but to our farmers for giving us this period of being well fed.
Many changes are coming in the common agricultural policy shakedown, and not all of them should be welcomed. There are large implications for how the UK’s food will be produced in future. We should bear in mind that food production and our being well fed as a nation is the fundamental point of this policy. Putting that at risk would be a great disaster.
The National Farmers Union has said:
“A modulation rate of 9%”
on pillar two
“would have been able to fund all current DEFRA rural development programmes, renew all agreements expiring within the funding period and have a further £1 billion to spend on new commitments.”
Does my hon. Friend agree that makes it harder for UK farmers to compete, and has this not worked out as well as well as he would have liked?
As I was saying, a number of challenges are coming up. UK farmers are particularly skilled at competing. For at least two generations, they have competed on an uneven playing field and managed to continue their business in doing so. I accept my hon. Friend’s point. It is also worth bearing in mind that the taxpayer is putting an enormous amount of cash into the system and so has to get not only food security but a benefit to the environment that they are not getting at the moment.
It is very easy to stand up in this Chamber, be critical of Ministers and say that they could have done this or that. What we do not hear about, however, is the stuff that the Secretary of State and the Minister block—the ideas from Europe that did not make it into the final agreement. If the Minister has time during his summing up, it would be interesting if he could indicate some of the things he was able to stop happening that would have had us jumping up and down in the Chamber if they had made it through and some of our near neighbours on the continent had got their way.
Many Members have referred to the need for broadband in order to deliver the documentation required to make an application. There are farmers in Nottinghamshire who are based within 5 miles of the city centre of Nottingham whose current internet speed is 3 megabits. It is almost quicker to drive to Nottingham to collect a form than it is to try to dial-up on the internet to download it. They are very close to a major urban population, but BT has no plans to take them out of that not spot. Nottinghamshire county council has a programme to roll out broadband across Nottinghamshire, but unfortunately those farmers are not part of that programme. We have to find a way to help them.
The other day, I took an entrepreneur to see another Minister about setting up a private system of wireless connection. In north Dorset over a period of weeks, he has got hold of some very big names to establish a system of up to between 30 and 50 megabits. The point he made was that BT needs to be far more transparent with the public and tell all of us what exactly it will be able to achieve and, if it cannot do that by a certain time, entrepreneurs should be given far more encouragement by our Government to get in there and sort out this problem.
I recognise that new technologies may be able to assist, but there will always be not spots—those little black holes—where people are left out of the system. We need to find a way to help those farmers.
I think that the three-crop rule is one of those well-intended European Union rules that will have unintended consequences. My right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) has referred to the fact that many areas are block-farmed. Large contracting companies that help their neighbours with farm contracts and that block-crop from farm to farm will no longer be able to do that, which will lead to a number of extra road miles, inefficiency and environmental damage as a result of the amount of fuel burned and road traffic. That is not a desirable consequence and it will not benefit the environment at all.
I draw attention to my declarations in the Register of Members’ Financial Interests. Does my hon. Friend agree that a solution to this problem would be that every single piece of land eligible to claim should grow three crops in three years, which would eliminate the problems of the mono-cropping of maize in Germany and, as I saw last week, between Paris and Strasbourg?
If I could extend my hon. Friend’s proposal to three crops in five years, that would allow for a normal cropping rotation of two weeks for oil seed or pulse, followed perhaps by a spring crop. We do not recognise some of the challenges that face UK agriculture today as we take more and more agricultural chemicals out of our toolbox. The rise of resistant black grass, certainly in the midlands and East Anglia, is a real challenge and we are going to have to allow spring cropping to deal with it.
On the 5% greening, I am glad that the Government are allowing hedgerows to be used. We must, of course, move as quickly as we can to incorporate stone walls and other environmentally beneficial margins at the same time. If the mapping has to be digital, I remind Members of the challenges the previous Administration faced while trying to move to a mapping system. If I may use a Sherwood expression, the Minister must make sure his ducks are in a row and that, when we get to that system, farmers can get their payment as soon as possible. If there are delays, and if the system is complicated and farmers have to wait for their single farm payment, will the Minister engage with the banking sector to make sure that the banks support farmers through that break in cash-flow and that there is other such support?
In summary, three things matter to this nation: that we are well fed; that the environment is maintained and protected; and that, in order to deliver those things, we have profitable farmers. At the end of this monumental process of CAP reform, I hope that we can deliver all three of them.
It is a privilege to follow my hon. Friend the Member for Sherwood (Mr Spencer). I will not detain the House for long, but as a farmer by trade—I make hon. Members aware of my declaration of interests—I could not let this opportunity pass without commenting on CAP reform and its implications in England, and without congratulating the Environment, Food and Rural Affairs Committee on its report.
For me, CAP reform should always be about simplification, encouraging a level playing field and inspiring competition and innovation as we strive to break through plateauing crop yields and to stop declining livestock numbers, and as we endeavour to become more self-sufficient and to increase food production to meet the ever-increasing global population. However, I realise that a balance has to be struck on the environmental impact of modern-day farming, which my hon. Friend mentioned. It is worth pointing out that the vast majority of farmers see themselves as custodians of our countryside, and want it to be preserved for future generations.
I entirely agree. UK farmers have set the gold standard for many years, and will continue to do so, but the issue is now about giving them the tools of support for them to take that next step forward.
To go back to the environmental schemes, sadly, I fear that we are starting to tilt the balance of CAP reform too far from the primary aim of farmers, which is ultimately to produce food. For centuries, we have taken our peacetime food supply for granted, mainly because of how easy it was in the past to import food from abroad. Agricultural policy in both the UK and throughout the rest of the EU has moved away from maximising food production towards rewarding environmentally friendly practices.
As the National Farmers Union has pointed out, we have only 36 harvests in which to increase our global food production to a level at which it can feed 9 billion people, and just 11 harvests before another billion people need to be fed. It may surprise some hon. Members, but I will be in my late 70s when we reach the 36th harvest. What that shows is that we only get one chance a year to advance crop yields, and the number of years is counting down rapidly.
I want to turn to the greening elements of CAP reform. With the ecological focus areas and what farmers will have to do to meet the 5% requirement—buffer strips, laying land fallow, catch crops, nitrogen-fixing crops and hedges, the inclusion of which I join many hon. Members in welcoming—it is probably not as bad as the farming community first feared, but some more detail is still to come out. By “detail”, I mean that the most important thing is to get clarity as soon as possible.
Overall, the Government have definitely made the best of a bad job. We must have a practical approach to greening. Sadly, the three-crop rule is far from being an example of that practical approach. I am sure that it will prove to be a bureaucratic nightmare that serves no purpose and delivers no environmental benefit in the UK or across Europe.
The UK is currently 68% self-sufficient in terms of food that can be produced here. Sadly, there has been a steady decline in that level over the past 20 years. Nearly a quarter of the food that is eaten in the UK is imported, when it could be produced here. Yields have levelled off and cereal, potato, orchard fruit and fresh vegetable production are well below their 1991 levels. CAP should give more weight to sustainable intensification because we have to produce more food on a finite amount of land in a sustainable way.
The decline is not irreversible, as has been shown in the fresh fruit market, where the growth is driven largely by demand. British shoppers want to buy British produce and back British farmers, especially in the wake of the horsemeat scandal. According to a recent NFU survey, 78% of shoppers believe that supermarkets should sell more British produce.
Ultimately, the best way to boost yields, increase production and ensure our future food security is to invest in cutting-edge technology. I am delighted by today’s announcement that the hard work of the York, North Yorkshire and East Riding local enterprise partnership has paid off. Sadly, I was not called in the statement earlier, so I thought that I would take this opportunity to comment on it. My constituency will benefit from three new Government-backed projects to facilitate the provision of cutting-edge agricultural technology. The £11-million investment in the food science campus at Sand Hutton will create 800 new jobs in agri-food research and product testing. The £8-million investment in the BioVale initiative at the university of York will provide a biotechnology cluster that will host a range of high-tech industrial biotechnology companies, creating a further 500 highly skilled jobs. The £1-million investment in Askham Bryan college, where young farmers learn their craft, will enable a new state-of-the-art training centre and engineering centre of excellence to be constructed.
We have to be upfront about the fact that it will remain a challenge to feed the growing global population. However, such investment demonstrates the Government’s commitment to meeting that rising challenge. It will ensure that research is carried out in close collaboration with the farming community, so that it benefits the businesses on the ground and delivers a far-sighted, coherent, joined-up approach to the future challenges of food security. The investment will deliver growth and jobs across my region. Most importantly, it will help to give the UK the competitive edge that it needs to unlock the potential in the agriculture sector, to become a world leader in combating the growing threat to food security, and to set the gold standard.
In conclusion, like many other Members, I welcome the young farmers’ scheme. Sadly, I do not fall into that category any more. I also welcome the moving of the funding up the hill. That move is long overdue, but I welcome it. Like a number of Members, I still have concerns over the bureaucratic nature of the new scheme. My fear for the long term is that if we continue to pump taxpayers’ money into agri-environmental schemes that take land out of production when food insecurity is an ever-growing problem, and food prices rise on the back of that, there will come a point when there is a public backlash and the Government of the day could ultimately pay the price.
I am delighted to take part in this very important debate.
I thank the hon. Member for Thirsk and Malton (Miss McIntosh) for providing a comprehensive analysis of her Committee’s report in relation to CAP. She took it a stage further with some detailed technical points to which I am sure the Minister will respond. She also raised issues relating to broadband access to the new IT system, which will in many ways be universally rolled out overnight. There are great concerns about that. The issue was picked up by other hon. Members, including former Ministers, was digital by default.
My hon. Friend the Member for Bishop Auckland (Helen Goodman) also raised that issue and asked how people would be able to access the new IT system when it is the only game in town. She spoke with passion about the financial and IT challenges facing her hill farmers, pointing out that 40% of them have no access to rural broadband. She called for something that I think we can all agree on: a useable and farmer-friendly system of payments.
The right hon. Member for South East Cambridgeshire (Sir James Paice), with his expertise in the Department, bemoaned, rightly, the lack of progress on real reform. He supported the idea of moving payments uphill—I think that that has universal support across the Chamber, with many hon. Members speaking to that point—and described the three-crop rule, another matter raised by many hon. Members, as pointless and bureaucratic. It has received universal condemnation not only from farmers but from environmentalists too.
The hon. Member for Brecon and Radnorshire (Roger Williams) spoke up for direct payments to support hard-pressed farmers. I think that at one point he was talking against modulation of pillar two, but he then flipped it around and said that there could, and perhaps should, be common cause between environmental groups and farming organisations to argue for greater pillar two payments to support very hard-pressed farmers. That was an interesting twist at the end.
The hon. Member for Tiverton and Honiton (Neil Parish), in a very good contribution, said in response to an intervention that we are limited in how much we can decide. I will come on to that in a moment, but I think that even with this mish-mash, as it was described by the right hon. Member for South East Cambridgeshire, there is scope for some decisions within England and in the other nations and regions.
The hon. Member for Sherwood (Mr Spencer) praised the CAP, praised farmers and praised Ministers—it was a very praiseworthy speech. He spoke well for his constituents and farmers.
The hon. Member for York Outer (Julian Sturdy) opened his remarks by calling for a balance to be struck between the environment and farming and food security. That relates to the gist of what I want to talk about in a moment. It is fair to say that although there has been praise in various areas, there has also been a feeling of weary resignation among many of the contributions tonight. I think the phrase he used was “the best of a bad job”. I say to Members on all sides that in the next stage of reform we really have to do better, go further, take a lead and do a much better job.
This round of CAP reform has been criticised by all sides. Peter Kendall, the president of the National Farmers Union until February this year, complained last year that the Secretary of State had disadvantaged farmers with his stance on CAP negotiations. He complained that the Secretary of State had come back with
“less than he started with”
for British farmers. The NFU described the round last year as “disappointing” and as a “missed opportunity”.
The newly-elected NFU president, Meurig Raymond said more recently that we now have
“a CAP package which has huge practical hurdles for all concerned in agriculture. It’s not the promised simplification; policy measures distort farmers’ commercial decisions and do little to help us gear-up to the long-term food production and environmental challenges which we know are ahead.”
The criticisms from farming unions come from one perspective. Environmental organisations come from another viewpoint, but they have also derided CAP reform. In particular, they have derided the greening measures as so much “greenwash”. The greening proposals linked to direct payments are described as
“so vague as to be useless”
in a study by the authoritative journal Science, which estimates that as many as nine out of 10 farms would be exempt from key greening measures.
As the hon. Gentleman commented, I am an optimist and I was optimistic in my speech, but surely he must recognise the challenges of linking agricultural systems such as those in Greece, where it is so arid it is only possible to grow olives, and the large plains of East Anglia?
Yes, indeed. That is why it is essential that the framework works in respect of what CAP reform has always set out to do—to break the link between pure production subsidy and the targeting of the subsidy at public goods, increased innovation and productivity, and not just production. It cannot be a one-size-fits-all model. The framework has to be there at an EU level, but the implementation at the level of the nation state is critical. We should not be afraid to take the lead on that and to try to get our balance right as between the environment, farming and food security.
The conservation director of the Royal Society for the Protection of Birds, Martin Harper, observed that the proposals
“failed to maximise the amount of money that it could have invested in wildlife-friendly farming and now it has made the greening measure meaningless.”
So we have “meaningless” and “useless” from the perspective of environmental organisations; and “deeply disappointed” and “a missed opportunity” from the perspective of farming unions. A change is needed in Europe and in the UK on how CAP is done. We need to show real leadership and real direction on both farm productivity and sustainability—it is not happening.
The key question is whether the more than £15 billion annual subsidy payment to farming in the UK—and £11.5 billion in England specifically—provides the best value for taxpayers’ money. A study last year suggested that sensitively adjusting the focus of the subsidy in the UK to enhance environmental and public goods, including things like flood alleviation, rather than purely units of production, could produce annual additional benefits of over £18 billion in the UK. The study did not take into account the additional benefits of cleaner air and cleaner water, which would further improve the net gains.
The Secretary of State—one would think he would find favour with that sort of approach—said last year:
“I do believe there is a real role for taxpayer’s money in compensating farmers for the work they do in enhancing the environment and providing public goods for which there is no market mechanism.”
He also said specifically last year:
“I believe that transferring the maximum 15% from Pillar 1 to Pillar 2 would be the right thing to do where we can demonstrate it would deliver worthwhile and valuable outcomes for farming and society and contribute to rural economic growth and enhance the environment”.
He was quite specific on that. When the Secretary of State said that repeatedly, wildlife and environmental groups had every right to be optimistic at least on pillar two funding, even with their disappointment on the greening elements of direct payments. As the RSPB said in its response to the consultation earlier this year:
“We…welcome the Secretary of State’s assertion that Pillar II ‘unquestionably represents the better use of taxpayers money’”,
and it went on to urge the Government to
“follow through on their intention to maximise the benefits that Rural Development can deliver.”
The Secretary of State, then, was unequivocal, unyielding and unbowed all the way through—until he crumbled, U-turned and settled on 12%. I have to ask why he was outflanked and outgunned by other forces; what happened to his unequivocal stance?
The Government have signalled that they will review the situation in 2017, but I have to say that this looks like a smokescreen to cover the Secretary of State’s embarrassment at being forced to retreat from the repeatedly stated 15% modulation that he had repeatedly promised. That is not the only sign of weakness either, as the decisions on degression and capping of CAP are also spectacularly lacking in ambition and vision.
I cannot, I am afraid; I do not have time.
The Secretary of State’s minimalist position, choosing to go no further than the bare minimum prescribed by the European proposals, shows a worrying lack of leadership as well as a depressing lack of ambition for the best use of public money. Farming unions and landowning associations must understand—I hope they do—and have to engage with the growing public discontent of hard-pressed people and families who face a cost-of-living crisis at public money going to some of the wealthiest and most powerful landowners in the country on the basis of the size of land that they farm.
Last year, more than 35 of the wealthiest and most powerful landowners in the UK claimed over €1 million each a year in farm subsidies. A couple of hundred others claimed in excess of €300,000 a year. That is divorced from the reality of what we have heard about today—the reality of small-scale upland farmers struggling to get by; the reality of medium-sized mixed, traditional family farms that are vital to the fabric of our rural economy struggling to compete; or the reality of tenant farmers struggling to get their first foot on the rung of purchasing land against a backdrop of rising land prices fuelled by lucrative subsidies. It is certainly a world away from squeezed UK consumers facing rising food bills, and the exponential growth in food banks in every town and village in the country.
There might be some rationale if the biggest payments were tied to additional investment in agricultural innovation, to productivity improvements, to encouraging new entrants to farming, to pioneering environmental improvements in large-scale arable agri-businesses, or indeed to any marginal improvement. However, those payments are not for “additionality”; they are for scale and units of production, pure and simple. They are a reward for being big, and the bigger you are, the more European money—I am sorry; public money—you get.
As long as there is still subsidy flowing through the common agricultural policy to farmers across the EU, we must ensure that the right share of that funding comes to our farmers in the UK, but placing rigorous demands on the highest CAP payments is about demanding more—in productivity, environmental innovation and entry to farming—for the public money that is spent on the very biggest of the biggest subsidy recipients.
This is a value-for-money argument, and a fairness argument. I am talking about fairness for smaller and tenant farmers who lose out as the big money goes to the biggest landowners, fairness for the public who want real and transparent value for the money that they pay out each year, and fairness for this and future generations who are concerned about the environment, about the countryside that they love, and about sustainable agricultural production.
It is time to challenge the accepted wisdom, and to shake off any sense of the cosy complacency adopted by the Secretary of State. We must not assume that this is the way it must be. We can change things for the better for farmers, for the public, and for the good of the nation. If we do not do so, the voices of discontent over CAP payments will grow and grow. We need to do better than this.
Let me end by again thanking the Select Committee for the very good report that was introduced by the hon. Member for Thirsk and Malton. I am sure that the Minister will respond to the detailed points that have been made.
It is a pleasure to be in the Chamber with so many fellow farmers. I have heard many of them declare their interests this evening. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing the debate, and thank members of the Select Committee for their report.
Let me begin by saying a little about the approach that the Government took during the negotiations. My right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) explained very clearly the difficulty that we experienced. We set out to secure a common agricultural policy that was simpler and greener, but despite the best endeavours of my predecessors and a very talented negotiating team, we have ended up with a CAP that is more complex because it was not possible to move the European Commission, or indeed sufficient numbers of other member states, to our position. Our view all along had been that we should keep pillar one—the single farm payments—as simple as possible, and that pillar two was the right option to deliver for the agri-environment.
There are two key issues about which farmers are expressing concern. One is the issue of the three-crop rule, which will affect at least 7% of farmers; the other is the issue of the environmental focus areas and some of the administrative burdens connected with them.
It is important to note the successes that my predecessors achieved in the negotiations. My hon. Friend the Member for Sherwood (Mr Spencer) asked what had been my achievements. I have to say that I was not involved in the negotiations, so the credit for what we achieved should go to my predecessors. However, when it came to the three-crop rule, we did manage to increase the threshold to holdings with 30 hectares or more. We did manage to get the Commission to accept that there should be a distinction between spring barley and winter barley, or spring wheat and winter wheat. And we did manage to move the Commission away from its initial proposal for action that would have been very intrusive—looking at farmers’ incomes to see exactly how much they were earning from agriculture—and, instead. to establish a negative list to remove, for instance, airports, railways and golf courses. So there were successes in the negotiations.
On implementing the CAP, however, we have tried to stay true to that basic stance that we adopted during the negotiations: first, we should keep the implementation of pillar one as simple as possible so farmers can implement this in the most flexible way that works for their own individual holding; and, secondly, we should take the environment very seriously, and we want to deliver for the environment through pillar two—through the agri-environment schemes for which this country has built up an admirable track record.
Does my hon. Friend share my surprise that the shadow Minister should be so strong in his condemnation of the position the Government have ended up with through these negotiations, without in any way spelling out what the Labour party would do on any of the issues?
Well, I think there was quite a degree of consensus. I suppose we have to recognise that the last Government gave up a chunk of our rebate supposedly in order to get CAP reform, but that did not work either. I want to stay on the substance of the issue before us this evening, however.
In terms of applying this basic approach of keeping the pillar one payments as simple as possible, when it came to greening we were clear we wanted to have the flexibility to allow farmers, for instance, to use hedges to count towards their environmental focus areas.
The inclusion of hedgerows as being eligible for pillar two payments is one of the Government’s successes. On that point, while many areas of the country have hedgerows as field boundaries, there are other areas, such as the Cotswolds, that have stone walls as field boundaries. May I ask him to press the Commission hard that those sorts of landscape features should also be included for payment?
There were serious administrative difficulties in terms of allowing hedgerows and all landscape features to count towards the environmental focus area, because each one has to be mapped, and we took the decision in the end that hedgerows were so important to many parts of the country that in the first year we should include those hedgerows and endeavour to get the mapping done, and where it could not be done in year one—we have three years to complete the mapping— farmers would self-declare the hedgerows. We do not rule out adding things like stone walls in years two or three, once we have got hedgerows in place. The task of mapping every single individual feature on every farm is an enormous one, however, and we therefore wanted to start first with hedges, before moving on to things such as dry stone walls.
I am going to try to make progress, I am afraid, and I will address many of the points my hon. Friend made if I have time to get to them.
On the agri-environment schemes, we have been clear that 87% of the pillar two budget will go on the new environmental land management scheme. At the higher end, the scheme will be broadly similar to the existing higher level stewardship scheme, but we will also have an additional rate that has more requirements and obligations than the existing entry level stewardship scheme, and which is more proactive and is almost a middle rate. These will be more targeted, and my right hon. Friend the Member for South East Cambridgeshire raised concerns that this would effectively lead to white areas or deserts where there would be no such support. Alongside this scheme we intend to deal with the problem of so-called white areas by ensuring that there will be directed options right around the country so that whole areas of the country will not be excluded, and grants to support the planting of woodland, for instance, will be universally available.
Many Members touched on matters relating to the three-crop rule, which will cause difficulty for some farmers—up to around 7%, possibly more. We gave serious consideration to advancing what is called a national certification scheme—a nationally designed scheme that would achieve the same thing—because, as my right hon. Friend the Member for South East Cambridgeshire said, the three-crop rule does not in itself guarantee crop rotation. Indeed, there are all sorts of anomalies, not least that a cabbage and a cauliflower are regarded as the same crop botanically as far as the EU is concerned, and there will be lots of similar complications to work through. When we looked at the alternatives, however, we found that they were all more complicated and even more difficult to administer than what was already on the table.
A number of hon. Members have mentioned the uplift to the single farm payment, which is important. It recognises the value we place on upland and moorland farmers, not just as custodians of the countryside, as my hon. Friend the Member for York Outer (Julian Sturdy) mentioned, but as food producers. We are, therefore, equalising the basic payment for upland farmers and lowland farmers, and we will almost double the rate for moorland farmers to about €70 per hectare.
My hon. Friend the Member for Thirsk and Malton raised a number of issues, the first of which related to commons. We understand the concerns about the commons register, which has always been the starting point for the mapping of commons. There are disallowance risks in departing too far from the system we have had in place to date, but I can confirm that in addition to starting with that existing commons register, the RPA will utilise other information available to it, such as aerial photography, to help ensure that those who are entitled to claim on common land can.
My hon. Friend also mentioned the issue of disallowance, and I can confirm that we have set aside a figure of 2% to plan for that. It is our aspiration to get to zero disallowance, but the way in which the disallowance scheme works is incredibly complicated and convoluted. Frequently, the disallowance we get is through no fault of our own; it is often because the European Commission does not understand its own rules, and we can get into very protracted arguments. For instance, the fruit and veg scheme has been notorious as a cause of disallowance. The system is very complicated and I do not think we will ever be able to eliminate disallowance altogether.
A number of hon. Members, including my hon. Friend the Member for Thirsk and Malton, have highlighted the issue of the modulation rate—the inter-pillar transfer. We have made it clear that we will modulate at 12% initially and have a review in 2016. She asked what the criteria for that will be. There are two basic criteria, the first of which is whether there is sufficient demand for those agri-environment schemes to warrant an increase in that budget. That links to a question raised by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). The second is an assessment of the impact on the competitiveness of British agriculture.
Many hon. Members, including the hon. Member for Bishop Auckland (Helen Goodman), have raised concerns about the new IT system. The existing RPA computer system is simply not fit for purpose and we need a new system. The new common agricultural policy is far more complicated, and there are coefficients attached to some environmental focus areas. Somebody growing peas or beans will find that that counts for only 0.7% towards their EFA—0.7% of the area declared—whereas for hedges there is a coefficient of up to 10 times the area of the hedge. The idea that we could do this by drawing things on maps with pencil, as we do under the existing system, and sending that in to the RPA is simply not credible. We therefore believe that to cope with the new system we have to have a digital by default approach and to have everyone adding their data by computer, because that will be simpler.
I completely understand the point that many hon. Members have made about broadband access. We are investing £500 million through BDUK—Broadband Delivery UK—and a further £250 million in phase 2. We have a third fund of £10 million to pilot creative ideas for those really hard-to-reach areas. In addition, we will have an assisted digital package. We will send paper guidance to every farmer in year 1, so although they will not have a paper application form, they will have paper guidance. That guidance will include detailed information on our digital offer. The crucial thing for those lacking the computer literacy to complete their form online or those who have no broadband access is that we will be setting up a number of digital service centres right around the country, particularly targeted at those areas where there is a problem. Farmers will, thus, be able physically to take their information into an office, which will have privacy and be discreet, and work with an RPA agent to enter that information on the system. That is the right thing for everyone. It is right for those farmers, because it removes the risk of them getting penalties and disallowance.
I will finish now, because we are nearly out of time. My right hon. Friend the Member for South East Cambridgeshire highlighted the issues of appeals and a proportionate system. I can tell him that I am now the one who looks at those appeals, this issue is close to my heart, and we are examining it and reviewing it as I speak. The hon. Member for Brecon and Radnorshire (Roger Williams) talked about pillar two, and said that we still needed those single farm payments of pillar one. Part of the 2016 review will examine the competitiveness of agriculture.
In conclusion, we have introduced a CAP that is more complicated than we would have liked, but in the way that we are implementing it, we are staying true to the approach that we took in negotiations to make it as simple as possible
Question deferred (Standing Order No. 54 (4)).
The Speaker put the deferred Questions (Standing Order No. 54)
Department for Work and Pensions
That, for the year ending with 31 March 2015, for expenditure by the Department for Work and Pensions—
(1) further resources, not exceeding £45,438,318,000 be authorised for use for current purposes as set out in HC 1233 of Session 2013-14,
(2) further resources, not exceeding £74,721,000 be authorised for use for capital
purposes as so set out, and
(3) a further sum, not exceeding £44,850,071,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.
Department for Environment, Food and Rural Affairs
That, for the year ending with 31 March 2015, for expenditure by the Department for Environment, Food and Rural Affairs—
(1) further resources, not exceeding £968,601,000 be authorised for use for current purposes as set out in HC 1233 of Session 2013-14,
(2) further resources, not exceeding £371,350,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £1,308,388,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.
The Speaker then put the Question on the outstanding Estimate (Standing Order No. 55)
That, for the year ending with 31 March 2015:
(1) further resources, not exceeding £256,135,013,000 be authorised for use for current purposes as set out in HC 1233, HC 1231, HC 1208, HC 1186 and HC 1234 of Session 2013-14, and HC 124 of this Session.
(2) further resources, not exceeding £32,926,583,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £214,518,524,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament—(Mr Gauke.)
Ordered, That a Bill be brought in upon the foregoing Resolutions relating to Estimates, 2014-15;
That the Chairman of Ways and Means, Mr Chancellor of the Exchequer, Danny Alexander, Nicky Morgan, Mr David Gauke and Andrea Leadsom bring in the Bill.
Supply and Appropriation (Main Estimates) Bill
Presentation and First Reading
Mr David Gauke accordingly presented a Bill to authorise the use of resources for the year ending with 31 March 2015; to authorise both the issue of sums out of the Consolidated Fund and the application of income for that year; and to appropriate the supply authorised for that year by this Act and by the Supply and Appropriation (Anticipation and Adjustments) Act 2014.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 33).