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Agricultural Transition Plan

Volume 685: debated on Monday 30 November 2020

With permission, Mr Speaker, I would like to make a statement on the Government’s agricultural transition plan, published today.

The Agriculture Bill received Royal Assent on 11 November. The Agriculture Act 2020 sets out powers to reward farmers and land managers who protect our environment, improve animal welfare and produce high-quality food in a more sustainable way. These powers will also help farmers to stay competitive, with measures to increase productivity and invest in new technology. We will also improve transparency in the supply chain to help food producers strengthen their position in the market and seek a fairer return for the food they produce.

Today, we are publishing further details of our approach to exercising the powers under the Agriculture Act over the next seven years. We will remove arbitrary area-based subsidies on land ownership or tenure and replace them with new payments and new incentives to reward farmers for farming more sustainably, creating space for nature on their land, enhancing animal welfare and delivering the other objectives set out in the Agriculture Act.

The central plank of our future policy will be made up of the three components of environmental land management. The sustainable farming incentive will pay farmers for actions that they take to manage their land in an environmentally sustainable way. This could include schemes encouraging catchment-sensitive farming, integrated pest management and sensitive hedgerow management. Local nature recovery will pay farmers for actions that support local nature recovery, creating space for nature and habitats on farm and encouraging co-operation between farmers. Finally, the landscape recovery component will support the delivery of landscape-scale projects to deliver ecosystem recovery through longer-term land use change. This will help us meet our targets to plant 30,000 hectares of woodland a year by 2025, create and restore peatland, protect 30% of UK land by 2030 and reach net zero by 2050.

We know that this policy marks a significant change. I am also very conscious of the fact that many farm enterprises are dependent on the area-based subsidy payments to generate a profit, and that without them, some might judge they would not be profitable, so we have created a seven-year transition period. We want this to be an evolution, not an overnight revolution. That means making year-on-year reductions to the legacy direct payments scheme and simultaneously making year-on-year increases to the money available to support the replacement schemes.

Between 2021 and 2024, we will help farmers prepare to take part in our environmental land management offer. This will include expanding the existing countryside stewardship scheme and opening the new sustainable farming incentive to every farmer from 2022 onwards.

We recognise that there is a problem with poor profitability in agriculture. The premise behind our new policy is to tackle the causes of that poor profitability rather than simply masking it with a subsidy payment. Our new financial incentives for sustainable farming and nature recovery will be set at a rate to incentivise widespread participation and give consideration to natural capital principles. So in some areas they will go beyond the “income forgone” methodology of the past.  

We will also make a significant number of grants available to support farmers in reducing their costs and improving their profitability, to help those who want to retire or leave the industry to do so with dignity, and to create opportunities and support for new entrants coming into the industry.  

The dysfunctional, top-down rules and draconian penalties that were a feature of the EU era will be removed or reformed. The binary divide between advice and enforcement will also be broken down. Instead, there will be a modern approach to regulation, with more holistic assessments of regulatory compliance and greater emphasis on advice and improvement so that farmers and regulators work together to improve standards.  

By 2027, we want to see a reformed agricultural sector. We want farmers to manage their business in a way that delivers profitable food production and the recovery of nature, fusing the best modern technology available today with the rediscovery of the traditional art of good farm husbandry. Our plan delivers those objectives, and I commend the statement to the House.

I thank the Secretary of State for advance sight of the statement, even if most of it was announced this morning in his online conference. For transparency, I remind hon. Members that my little sister is a sheep farmer in Cornwall.

The Secretary of State has majored on the green elements of the announcement, but this is about more than our environment. Of course Labour supports public money for public goods, but that is not what the statement is about. Strip away the green coating and the proposals are a full-throttle attack on English family farms. I say “English” because Scottish, Welsh and Northern Irish farmers are going in a different direction because the devolved Governments are maintaining support for small farms for longer. Under the Government’s proposals, many small farmers will lose up to half their current support payments within just three years, leaving many financially unviable.

The public and farmers back high standards, but many farms will not be sustainable economically if the economic foundations of their business are undercut by food produced to lower standards abroad. British farmers remain at risk from future trade deals as the Government have chosen not to require food imports to meet the same standards that we hold our own farmers to.

Farmers themselves have not given today’s announcement a ringing endorsement. The panel that farmers convened to heap praise on the Secretary of State’s speech this morning described it as, “disappointing”, “lacking detail” and, “an announcement about further announcements”—not a glowing endorsement.

I am concerned about the 5% cuts for all, the 50% cuts in three years and the new system not even starting until 2022. Why was no sustainable farming initiative announced for next year, just a 5% cut and no bridge to environmental funding? Why was there so little detail on that and why is there a gap? Given that we are both west country MPs, does the Secretary of State share my concern that many south-west farmers will be forced out of business because of the changes? Does he have regional figures on the expected farm bankruptcies? The estimates that I have heard are deeply worrying. With the Government’s new farm exit schemes, there are huge incentives for people to leave agriculture early. How many small farmers does the Secretary of State expect to take that exit scheme rather than go bust?

Labour has five simple tests for the effectiveness of the policy. Will there be more family farms in 2024 than there are now? I doubt it. Will there be more family farm bankruptcies under the proposals? I expect so. Will Britain produce more of its food here rather than importing it? Will we be more reliant on food from America and Australia in future? Will English farmers have a tougher time than farmers in Scotland, Wales and Northern Ireland with their mix of direct payments and environmental funding? Labour backs our British farmers. I am very concerned that the Secretary of State’s announcement today risks breaking English family farms.

First, let me confirm that the policy we set out today is for England. Indeed, most of the powers in the Agriculture Act 2020 were for England. It will be open to the devolved Administrations to pursue their own policy. Even under the common agricultural policy, devolved Administrations had some freedom about the pillar 2 schemes that they could put in place. We will also co-ordinate policy with the devolved Administrations to ensure that there is no disturbance within the internal market. It is the case that over time, albeit at different paces, other devolved Administrations will not want to be shackled to the common agricultural policy that we have inherited, and they will want to take the opportunity to do things better.

The second point I would make relates to the profitability of agriculture. The hon. Gentleman mentioned the position of smaller farms. In fact, work done by AB Agri on farm productivity shows that there is not a correlation between farm size and productivity. Indeed, it is often the case that highly technically proficient, smaller family farms will have lower overheads and can look forward to the future with confidence. Agriculture is an industry that needs attention to detail, and that attention to detail is often best given by some smaller enterprises.

The other point I would make relates to food standards, which have been debated extensively in this House during the passage of the Agriculture Bill, now the Agriculture Act. We made changes to the Bill to introduce the Trade and Agriculture Commission and to require the Secretary of State to bring a report to Parliament outlining the impacts of any trade agreements on those standards. We have also been very clear as a Government that we will protect our producers from being undermined by substandard products produced overseas by using a combination of sanitary and phytosanitary policy in trade agreements and tariff policy.

I do not accept the criticism that the plan lacks detail. It is a 65-page document with many detailed annexes. It sets out in great detail the pace at which we intend to reduce the basic payment scheme, the other schemes we intend to roll out and the years we intend to roll them out. There will be some further consultations in the new year, in particular on the design of the voluntary exit scheme that we have said we will offer to those farmers who want to exit the industry with dignity.

I should make one final point, which is that our Agriculture Act requires the Government to report on food security every three years. The coronavirus pandemic has proven to us that domestic food production is a critical component of the food security of our nation, and that is something we will continue to measure and to support, so that we can have a vibrant food-producing agriculture sector in this country.

I broadly welcome the thrust of these transition arrangements to improve the environment, although as a farmer I am concerned about farming viability—given the phased 50% cut in support over the next three to four years—for those who will miss out on the environmental land management scheme pilots for 5,500 successful applicants, until the new ELM scheme comes in from 2024. The Secretary of State is offering a lump sum exit scheme to encourage farmers to retire and a new scheme for new entrants from 2022, but in view of the high costs of mechanisation and the time to achieve the viability of a new enterprise, does that not risk continuing the process of consolidation of farming businesses into larger holdings, in particular in disadvantaged areas?

My right hon. Friend makes an important point, and we are considering that in the design of our schemes. We are working with county farms across the country to improve the offer that county farms have, to create opportunities for new entrants and to encourage them into partnership with other landowners so that there can be more opportunities for those new entrants and to create an incubator model for these new entrants.

In terms of the viability of farms as we progressively reduce the basic payment scheme, it is important to recognise that this is an evolution, not a revolution. It is the case that from 2022 we will open the sustainable farming incentive to all farmers.

I see the headlines of stories that the Government have planted today promising that Brexit will transform our fields and farms. One would have to agree, although that transformation will not only be in ways that many in agricultural areas will necessarily welcome. The speed and scale of the reductions proposed worry many others, including, it seems, the Minister’s own colleagues, with the head of the National Farmers Union describing the Government’s approach as

“high risk and a very big ask”.

Lack of clarity on the detail of the replacement environmental land schemes remains a big concern for agricultural and environmental representatives alike. It seems to me that what qualifying criteria we have been made aware of could lend themselves equally well to shooting estates as to hill farmers, for example. I would be grateful if the Secretary of State could enlighten us further on that point.

I find it astonishing that the Government have had since 2016 to construct replacement schemes, and yet here we are, just days away from either a no-deal or a low-deal Brexit, amid fears of lower imported standards and enduring the uncertainties of a global pandemic, with so many details still to be outlined. Scottish farmers and crofters do not face the same difficulties, because in Scotland the Government have committed to continuing payments at their current level. However, our Ministers were told just days ago in the spending review that, despite the Government’s manifesto commitment to match EU support, rural Scotland will be £170 million short of what was promised by 2025. The chair of NFU Scotland has said that this shortfall will undermine environmental and biodiversity targets for Scottish farmers and crofters. How does the Secretary of State answer that?

Finally, I would like to hear from the Secretary of State what the United Kingdom Internal Market Bill and control over state aid being in the hands of Westminster means for the Scottish Government’s ability to maintain a divergent path to England on farming support. Can he provide assurances that the Bill will have absolutely no impact on Scotland’s ability to set support in Scotland independent of the system chosen for England?

It is the case that England is a long way ahead of Scotland in terms of developing future policy. We want to take the opportunities that come from leaving the European Union to chart a different course and put in place a policy that makes more sense. Our view is that arbitrary area-based subsidies for people based only on the amount of land that they own or rent makes no sense in this day and age, and we should be directing those funds in a different way.

The hon. Lady mentions funds for Scotland. In line with our manifesto commitment, Scotland will have £595 million for its agriculture budget. She should note that we chose an exchange rate fixed in 2019 that is far more favourable for farmers right across the UK than the average exchange rate across the last perspective. She should also note that the European Union has just slashed its agriculture spending by 10%, while the UK Government have maintained it, and changes to the exchange rate mean that the rate of payment is some 20% higher than it would have been had we not voted to leave the European Union.

On the hon. Lady’s final point about divergence, Scotland and other devolved Administrations will have more freedom than ever before to design a policy that they judge to be right for them. We will set up a joint group across the UK to do market surveillance, to ensure that there is not disturbance to the internal market and to share ideas on what works.

As it is St Andrew’s day, it would be remiss not to highlight the excellence of Scotch beef, lamb and other agricultural products. The Secretary of State said that the measures he has announced will not apply in Scotland. Does he agree that the Scottish Government should now get on with devising a bespoke support scheme for Scotland to take into account our unique geography and climate—for example, continuing with an enhanced less favoured area support scheme—rather than pursuing an independence agenda, which would disrupt Scottish farmers’ biggest single market: the rest of the UK?

My right hon. Friend makes an incredibly important point. When the current incarnation of the common agricultural policy was put in place, NFU Scotland was very clear that area-based payments could not be made to work properly in Scotland. It is difficult therefore to see the justification for maintaining a policy built solely on area-based payments, given the large variance in land types. I agree with him that the Scottish Government should, in line with all other parts of the UK, take this opportunity to do things differently and to do them better.

British farming genuinely is the best in the world, fundamentally because of the family farming unit upon which it is based. The Government’s plan to deliver environmental goods through the environmental land management scheme is good and laudable, and we support it. However, the transition whereby, in a revolutionary way, people will lose half their income in three years’ time—when the average livestock farmer is reliant on basic payment for 60% of their revenue—will lead to hundreds upon hundreds of those family farms going out of business and therefore not being in a position to deliver those environmental goods by 2028. The landscape of the Lake district and the Yorkshire dales is shaped by centuries of family farming. By accident, the Government could undo all of that in a few short years—even months—so will the Secretary of State think again, not penny pinch, and make sure that the basic payment is rolled over in full until the point at which the environmental land management scheme is available for everyone?

The concept of area-based payments has only been around for about 15 years, and it has not always been in the interests of agriculture. The truth is that farmers may be the recipients of the BPS, but they are not the only beneficiaries: the BPS payment has inflated land rents and input costs, prevented people from retiring, and also prevented new entrants from getting on to the land. That is why we believe there is a better way to pay and reward farmers in future.

I believe that replacing the common agricultural policy with these reforms will help us to achieve crucial goals on protecting nature and the natural environment, and to improve animal welfare—things our constituents really care about. I want the Secretary of State to also confirm today that another crucial goal of these schemes will be food security, and ensuring we are supporting people to make a living from growing food.

Let me commend the role that my right hon. Friend played in the development of this policy and, indeed, some of the changes that were introduced in the latest incarnation of the Agriculture Bill. During her time in this post, she was passionate about the importance of food security and the financial viability of our farms.

The Secretary of State will be aware that farmers need time to transition to a new system. He will also be aware that over 100,000 people are employed in the agrifood sector in Northern Ireland, and therefore direct support to farmers is vital. Will he give assurances to UK farmers that the Government will fund agriculture appropriately, to ensure we deliver a productive, profitable and sustainable farming business model for generations?

Since agriculture is devolved, it will be for Northern Ireland, the Northern Ireland Executive, and the Department of Agriculture, Environment and Rural Affairs to develop a policy that is right for them. However, I can confirm that we have maintained the budget for every part of the UK at the point at which we left the EU, and we will maintain that for every year of this Parliament. For Northern Ireland, that equates to £330 million per year.

I thank my right hon. Friend for his statement. Will he outline the importance being placed on flood mitigation in the environmental land management scheme, and urge the Welsh Government to adopt similar measures to help protect communities such as St Asaph and Rhuddlan from flooding?

My hon. Friend makes an important point. We will be looking to use the powers in the Agriculture Act to make provision to support and financially reward farmers who may allow their land to be used in certain water catchments to protect communities from flooding—a nature-based solution to that flood risk, as it were. We will also be using this money to support improvements in water quality by supporting an expansion of catchment-sensitive farming. It will be for the Welsh Government to decide their own priorities and the pace at which they detach themselves from the legacy schemes, but we believe that redirecting support in this way is the correct way to go.

I welcome the emphasis on ensuring that farm subsidies in the future encourage animal welfare, environmental sustainability and nature recovery. However, given that this new policy will see income for some farms fall by 50% over the next three years, what assessment has the Secretary of State made of the numbers that will be impacted by these changes, and what opportunity is there in the nature recovery initiative he has outlined for those with marginal farm holdings, often in the urban fringes, where the land now has more of a recreational and environmental benefit than an agricultural one?

It is the case that some of those lands that are in more marginal areas, where it is less productive, will see more opportunities to access local nature recovery, and in some cases even landscape recovery, to get some significant support from the Government for either land use change or making more space for nature on their land. Some of those upland and more marginal areas will be able to get access to the scheme. As I said in my statement, we will also be looking at different payment methodologies to calculate the payment, departing from the income forgone methodology of the past.

I am pleased to hear from my right hon. Friend that there will be a period of engagement with farmers, landowners, managers and other key stakeholders in Cheshire before finalising the detailed design and operation of this fairer farming system. To that end, will my right hon. Friend tell the House what economic impact assessment his Department has done to help inform these significant and potentially transformative policy decisions?

My hon. Friend makes a very important point. We are looking at this matter. We believe that by removing the area-based subsidies, there could be some adjustment in land rents to reduce costs for farmers. Through the changes that we are making in the supply chain, it could also be the case that farmers will have a fairer share of the value for the food that they produce. By investing in technology, we can help farmers to reduce costs so that they become profitable without the need for area-based subsidies.

The Secretary of State knows that I believe him to be an honourable man, but he is a member of a Government who are now notorious for their chumocracy and favours for friends. What he is ushering in today is a charter for City slickers, carpetbaggers and spivs to take over our farming sector, and to drive out the traditional smaller English farmers, who have been feeding our nation for so many years. Will he please think again before he eradicates the good English farmer?

The hon. Gentleman has a habit of starting off by suggesting that he is going to pay me a compliment, and things go downhill quite quickly thereon. The area-based subsidy that we currently have has a habit of giving the largest payments to the wealthiest landowners. Sometimes these are people who are not really actively farming. Sometimes it is people who made their wealth in the City and are trying to shelter it in land, and then also qualify for taxpayers’ payments—sometimes running into millions of pounds. That cannot be right. The system that we are developing will reward people for what they do with their land and what they do to help nature recover.

My right hon. Friend has said that he hopes that this plan will encourage new entrants of people trying to get into farming. Will he briefly outline in what way it will be different from what happens now?

All the studies that have been done on this issue have shown that the single most important thing that we can do to help new entrants on to the land is to help those who perhaps should retire, or those who want to retire, to retire with dignity, so that more holdings come on to the market, land rents adjust to a sustainable level and there are opportunities for new entrants. We will then make available grants to support new entrants to invest and set up in their new enterprises.

A recent poll from AgriScot’s online annual event has shown that 75% of Scottish farmers now oppose Brexit. That is hardly surprising, given the harm, disruption and uncertainty that Brexit has caused the agricultural sector. Does the Secretary of State understand why so many have now turned their backs on his Government’s flagship policy, and does he understand the need for this Government to listen to their concerns?

Agriculture policy is devolved, so Scottish farmers are not turning their backs on the policy that I have announced today for England. Perhaps the lack of enthusiasm is because of the failure of the Scottish Government to show leadership in this area.

Earlier this year I was fortunate enough to visit Hobkin Ground farm in my constituency, which is actively pursuing regenerative farming and trying to reduce the carbon footprint of raising a cow from field to fork through measures such as new grasses. What assurances can my right hon. Friend give to farmers like Megan and Mark that the new environmental management scheme will help us to help them meet our stringent net zero targets?

My hon. Friend makes an important point. We are looking at a number of different disciplines within regenerative farming, including methods such as mob grazing, the use of different types of leguminous nitrogen-fixing plant mix in grassland and reduced fertiliser use. If we manage grassland and soils correctly, they can be a really useful store of carbon and contribute to net zero.

Food poverty in my Hull North constituency is already a huge issue. Will the Secretary of State guarantee that under the new agricultural transition policy we will not see higher food prices for working families who are only just managing?

We think that the policy will lead to stable food prices, but also to a situation in which we change the way we reward farmers. We will reward them not just for occupying land but for farming their land in a nature-sensitive way and a way that enhances animal welfare.

I welcome the statement and, as a vet, the fact that high animal welfare and health will be recognised as a key public good. Farmers in Penrith and The Border and throughout the UK produce top-quality food to the highest standards. Will my right hon. Friend assure the farmers and land managers in my constituency and throughout the UK that when the direct payments scheme ends, the new way of funding will be secure and long term, so that they can plan accordingly and continue to produce local food sustainably to benefit our rural communities for generations to come?

Yes. The Agriculture Act 2020 sets out clear objectives on animal health and welfare, as well as the environmental objectives. We recognise that animal health and welfare is a public good, and it is right that the public are willing to support improvements in that regard. The Act also includes support for genetic resources—such as our native and rare breeds—that many farmers in many parts of the country will be able to access.

The Secretary of State is a farmer himself, so he will know that farms cannot simply be turned on or off, as local farmers around my constituency in Cheshire have pointed out to me. They have noticed that participants in the ELM scheme will be paid a “competitive” rate; when will they be given details of what that competitive rate is, so that they can start to plan for the future and know exactly when they can alter their long-term plans for the management of their farms to meet the requirements proposed in the White Paper?

We will consult on the design of the sustainable farming incentive in the first half of next year.

Jacob Young is next on the call sheet, but he is down as both physical and virtual. If he is not going to appear, I shall call Alistair Carmichael.

The Secretary of State has told us that the Scottish Government’s budget for the scheme will be £595 million, which is the budget that they carry over at present. That figure is not going to last forever; by what means will future budgets be fixed? What mechanisms will be used to resolve any disputes? What will happen if the divergent agricultural policies in any part of the United Kingdom, including England, then have a distorting effect on the UK’s internal market?

The Government set out in our manifesto that we will keep the budget for each part of the UK the same in cash terms for every year of this Parliament, and that is what we intend to do. Matters thereafter will be a matter for all the political parties in their manifestos for future elections and, of course, for future spending reviews. I should point out that the European Union’s budget runs for only seven years and it has cut its budget by 10% for the next perspective.

Many of us were woken this morning by the Secretary of State speaking on Times Radio about the need to end bureaucracy for farmers. Now that he is, with this statement, pushing the fact that DEFRA is going to be a help, not a hindrance, will he explain how ending the bureaucracy and unnecessary form-filling is going to help to ensure that all our farmers are exactly where they need to be, which is on the land?

My hon. Friend makes a very important point. Under the current common agricultural policy, we have rules about the maximum width of a gateway, the minimum width of a hedge, the maximum width of a hedge, whether a cabbage should be treated the same as a cauliflower for the purposes of the three-crop rule—the list goes on and on. It makes no sense at all and we will sweep away those unnecessary rules.

I am not sure that the answers so far from the Secretary of State on the United Kingdom Internal Market Bill will provide much reassurance to the agricultural sector or, indeed, anyone in Scotland who values the devolution settlement. Can he guarantee that the Government will not use powers in the Bill to prevent the Scottish Government from pursuing their own agenda on issues related to standards or state aid?

When it comes to standards in trade agreements, which is one of the issues that was debated, that of course is a reserved matter, since it is a matter for those international negotiations. Of course, when it comes to setting standards around animal welfare, those matters are devolved now and will remain devolved, as will the design and administration of any future scheme to replace the common agricultural policy scheme.

On Friday, I visited the Wynnstay Group headquarters in Montgomeryshire, who supply supplies and services to agricultural communities across England and Wales. My constituency has cross-border farms, so I welcome the tone—especially of evolution, not overnight revolution —of the Secretary of State’s comments. Can I draw him on the funding? We welcome that commitment in Wales, but my farmers have long dealt with the modulation from pillar 1 to pillar 2 in Wales, which is 50%: the highest in the United Kingdom. While Opposition Members talk strong on agricultural funding, for the last decade they have been taking out of direct payments to my farmers. May I draw him on that support and welcome what he is doing in England more broadly?

My hon. Friend makes an important point. Indeed, the indications to date are that the Welsh Government will probably strike a similar approach to that which we are taking in England. It may be that Northern Ireland, because of its proximity to the Irish Republic and, indeed, Scotland, for other reasons, may decide to change things at a slower pace. But it is the case that Wales has, even in the last five years, transferred money from the pillar 1 basic payment scheme to the pillar 2 agri-environment schemes.

Cutting income payments by 50% over a period of three years, starting in January, is not evolutionary as the Secretary of State said, but revolutionary. In fact, some might argue—including me—that it is downright stupid. It needs to be rethought. On consultation, there are plenty of voices out there at the moment expressing real concern about the future of local farms in Weaver Vale and Cheshire.

We will not be cutting the budget: we will be cutting the payments that go through the rather dysfunctional legacy basic payment scheme, and we will instead be directing that money into new schemes, including the sustainable farming incentive that farmers will be able to access from 2022.

Hill farmers are hugely important to the landscapes and communities of Thirsk and Malton, particularly in the North York Moors national park. They are very dependent on financial support. Will the Secretary of State commit to looking after their interests and also consider delegating the distribution and administration of moneys direct to the national parks, so they can work directly with their farmers, who understand their landscapes most closely?

I do think that there will be opportunities for some of those upland and moorland areas to be able to really benefit from a new policy that is based on payment for the delivery of environmental goods. There have been many opportunities for them to do so alongside their food production. We are also looking at ways to involve local partners in terms of designing schemes that fit a particular geography. That could include the national parks and local nature partnerships.

I thank the Minister for his statement. I note that the changes will be designed to ensure that by 2028 farmers in England can sustainably produce healthy food profitably without subsidy, while taking steps to improve the environment, improve animal health and welfare and reduce carbon emissions. That is all very laudable and welcome, but it would be remiss of me not to ask what discussions have taken place with the devolved Northern Ireland Assembly to ensure that this transition will be applicable—and therefore funded—UK-wide.

It  is obviously a devolved policy area, so the Northern Ireland Executive and DAERA will make their own decisions. I suspect that it is likely that they will depart from the legacy schemes in a more cautious fashion, given their proximity to the Irish Republic and some of the cross-border trade that takes place, but it will be open to them and they will have the freedom to design policies that work for them. I suspect that, in common with other parts of the UK, they will quite quickly want to switch off some of the bureaucratic requirements that have been there in the existing basic payment scheme.

As well as wanting to be custodians of the land, people farm because they want to produce food. While I warmly welcome the thrust of the plan, will my right hon. Friend confirm that the Government remain committed to increased food security and, if so, can he clarify how this plan will help farmers to maintain or increase food production?

My hon. Friend makes an important point. We are absolutely committed to domestic food production and the crucial role that that plays towards our food security. The Agriculture Act 2020 requires that every three years, there will be a review of our food security, and that will look at the viability and profitability of our domestic food production. The paper that we have published today sets out plans for a farm investment fund that will have a whole suite of grants available to support farmers to produce food in a more cost-effective way and to add value.

The Secretary of State continues to say that he has maintained the budget for the devolved nations. However, farmers in Wales will be £95 million short compared with if they were still in the EU, due to what would have been a crossover of the programme. I find it quite tedious that the hon. Member for Montgomeryshire (Craig Williams) and the UK Government point the finger at the Welsh Government, who are rightly acting in accordance with the EU rules for agricultural funding until 2023, which the National Farmers Union of Wales confirmed with me just over an hour ago. Will the Secretary of State back up the promises that he has made to farmers and rural communities in my constituency of Gower and across Wales?

The confusion on this stemmed from the fact that the EU budget runs on a cycle called n+3, where n is seven years, so effectively, the EU budget is across a decade. The budget that we have announced is across a Parliament and we have guaranteed the same in each year. A typical spending review cycle is five years. We cannot compare a 10-year EU budget with a five-year UK one that will be renewed at the end of that. The reality is that we have set a favourable exchange rate that is 22% higher than before the referendum result, and that benefits farm incomes. The reality is also that the European Union has had to slash spending on agriculture by 10%.

I draw attention to my involvement in family farms as detailed in the Register of Members’ Financial Interests and I thank the Secretary of State for his statement. To enable farmers to access new markets and to obtain fair prices for their high-quality UK-reared-and-grown produce, both at home and abroad, there is a need for investment in food and drink processing facilities. I would be grateful if the Secretary of State could outline the strategy for securing this.

Our paper today outlines plans for a farming investment fund. That can include small grants to support the deployment of new agricultural technology and larger grants—transformation grants—that could support adding value through food processing facilities on farms, but also for groups of growers or producers to come together and collectively invest in such a way.

We know that the Tories have already broken a manifesto promise on matching EU funding and that it is going to cost Scotland £170 million, but we have real concerns that the Government are going to use the United Kingdom Internal Market Bill to prevent the Scottish Government from providing the right level of support for Scottish farmers. Can we get absolute clarification that the Tory Government will not use the Bill to block any devolved policies, such as using headage payments for the production of cattle and sheep?

I reject the hon. Gentleman’s claim that the budget is not what was promised. We promised to maintain the budget in each part of the UK in cash terms at the juncture where we left. That is exactly what we are doing. It means that Scotland will receive £595 million per year, 22% higher than it would have received had we used the exchange rate at the start of the last EU programme, and 10% higher than it would have received had we stayed in the EU since it has cut the agriculture budget. This is a good deal for farmers. Indeed it will be open to the devolved Administrations to design their own policy and that could include if they wanted an element of coupled payments.

Can my right hon. Friend reassure farmers in Wiltshire that food production will still be supported under the new scheme and that they will not be undercut by farmers, including in the devolved nations, who are subsidised for food production or by area, not just for stewardship?

I can give my hon. Friend that commitment. The aim of this policy is very much to support and reward farmers for farming more sustainably, but the emphasis throughout is on sustainable food production, not on taking land out of production.

In his statement, the right hon. Gentleman made mention of the production of high-quality food in “a sustainable way”, and I say amen to that. The reputation and quality of British farm produce is second to none—it is a world beater—so will he consider having a discussion with the devolved Administrations with a view to setting up an agency to promote British farm produce for export, thereby earning money for the Exchequer of our United Kingdom?

The hon. Gentleman makes a very important point. We do work with the devolved Administrations on the design of future policy. There will be a co-ordinating group on future policy. We also work with all the levy bodies through the Agriculture and Horticulture Development Board, and the devolved equivalents of those, on a joint approach to marketing our fantastic food and produce around the world.

It is right that the equipment and technology fund and the transformation fund should focus on core agricultural business and productivity, but can my right hon. Friend also reassure me that his Department will continue to support farm diversification, which has been so important to so many Hampshire farmers?

My right hon. Friend makes a very important point and I can confirm that that will be possible. We made some changes to the Agriculture Bill that was brought through this Parliament to ensure it could support farm diversification projects to help farmers add value.

Many farmers in my area of Warwick and Leamington and the villages around are really concerned. As far as they are concerned, they are in business—they have been farmers for generations to look after and steward the land, but also to look after their herds and to produce the grain and crops that we depend on. Their real concern is to do with livestock, where 80% of their income has come from the BPS—basic payment scheme—payments. They see the proposed changes as being all about preserving a landscape, not about preserving food resilience and their businesses.

It is important to note that since the advent of area-based payments the subsidy payments have been totally decoupled from production. Indeed, had we had our time again a better way to have done it might have been to introduce conditionality to the old payments that were there before. It is already the case that there are people who own a plot of land and claim on it but who are not actually producing food. The logic of our policy today is to focus the payments towards what farmers do with the land, not just dole out money based on how much land they own.

The chalky soils of the Meon Valley are very different from the peatlands of the Derbyshire dales, so how will my right hon. Friend ensure that farmers in all areas are incentivised to improve soil quality, for sustainability as well as for farming?

My hon. Friend makes an incredibly important point. We made an explicit change to the Agriculture Bill in this latest incarnation to ensure that soil health was recognised as a public good. Different soil types need different approaches and different treatments to bring them back into health. We are working with a number of stakeholders and universities now to establish how best to manage and measure soil health on a range of different soils, and we will have incentives in place to support that endeavour.

While this statement refers to the future of English policy, what future does the Secretary of State see for Welsh farming following the shortfall of a third in Welsh agricultural support, which revealed itself in last week’s comprehensive spending review? This is labelled by the Welsh farming unions as a Brexit betrayal.

As I have said several times, we do not recognise the caricature that the budget has been cut. We were clear that we would maintain the budget in cash terms for each year of this Parliament. That is precisely what we have done.

I very much welcome what the Minister has had to say about the restoration of peatlands, but can he go a little further in terms of the natural environment? Does he guarantee that there will be less use, for example, of phosphates and therefore less phosphate run-off? Does he guarantee that we will see no return to the use of the pernicious neonicotinoids that are so damaging to our pollinators, which are so necessary to our agriculture?

As we have outlined in the paper published today, we want to incentivise farmers to embrace integrated pest management. Across the piece, we are likely to see reductions in the use of synthetic chemistry and the adoption of other processes to tackle the problems of pests and diseases. It is also the case that we want to be able to support the restoration of peatlands and so forth.

I thank my right hon. Friend for outlining the principles and programmes for these changes in payments. As he will be aware, however, it will be in the implementation of those programmes and the inspection of those schemes that issues will appear. Farmers will have worries about the implications of not changing, transitioning and falling in accordance with the new plans. What reassurance can he give to farmers about how implementation will take place?

I can reassure my hon. Friend that I am alive to that danger. When introducing any new scheme, it is critical that we do not over-engineer its design and that we tack towards simplicity to make sure that things are deliverable. What we want to do on this new scheme is move away from the endless form filling, endless mapping, and arguments over maps, and instead get to a position where a trusted adviser or agronomist walks the farm with the farmer, sits down around the kitchen table and helps them put together a plan that is right for their farm.

Moran Taing, Mr Deputy Speaker, agus Latha Noamh Anndra sona dhuibh. A happy St Andrews Day to you.

I recently met Fife and Kinross representatives of the National Farmers Union, Scotland. They already face severe problems because of combined impacts of the covid pandemic, the looming chaos of Brexit and serious difficulties in recruiting seasonal workers. Now we find that farmers in Scotland are likely to face a funding loss of £170 million compared with what the Tories promised in their manifesto. The president of the NFUS says that this will undermine the crucial delivery of promises to meet climate change and biodiversity challenges. Why should I believe that the Minister is right and that the president of the NFUS is wrong?

I think I have explained at the Dispatch Box several times the cause of the confusion that there might have been. It is because people are trying to compare a seven plus three year—a 10-year—EU budget with a five-year parliamentary term that we have set for the current budget. We cannot compare two entirely different timescales for a quantum of sum of money.

For transparency, I remind the House that my wife’s family are farmers in receipt of subsidy. I warmly welcome my right hon. Friend’s statement and, as we set our own trade policy for the first time in decades, have enormous optimism for the future of British farming. It is also the case, though, that farmers face a great deal of uncertainty as demonstrated by the weather conditions that led to a particularly poor 2020 for so many. With that in mind, will he outline when the detail of the sustainable farming incentive and other bridging schemes will come forward so that farmers can have certainty as they plan for the future?

We will be publishing more papers in the new year on some of the more specific elements of scheme designs, including the voluntary exit scheme, which we mention in the paper today. As I said earlier, in the first six months of next year, we will be consulting on the design of the sustainable farming incentive.

Happy St Andrew’s day to all my Scottish friends, wherever you may be. I thank the Secretary of State for his statement and for responding to 39 questions. The House is suspended for three minutes.

Sitting suspended.