I beg to move,

That the Committee has considered the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025.

It is a pleasure to serve with you in the Chair, Mr Twigg.

The draft regulations were laid before the House on 13 February. They set out the reductions that will apply to delinked payments in England in 2025. The reductions are part of the transition to more targeted public investment, supporting farmers to boost nature and sustainable food production. The Government will support businesses to be more profitable, addressing the underlying problems. Delinked payments do not achieve that.

Delinked payments do not offer and have never offered good value for money for farmers or the taxpayer. They are part of the move away from the basic payment scheme that saw 50% of the money go to the top 10% of farms, while doing little for food production or nature. We are now in the fifth year of the seven-year transition away from those subsidies, and some of us have been involved in these same discussions year on year over those five years. The reductions to delinked payments set out in this draft instrument were announced last October. They accelerate the end of the era of payouts to large and wealthy landowners simply for owning land.

According to Knight Frank data, the average English less favoured area livestock farm will, as a consequence of these changes and assuming no other income streams change, see its profit fall by almost half. I am slightly concerned that, according to the explanatory notes, no financial impact assessment has been done. Will the Minister explain why no financial impact study has been done?

I am grateful to the hon. Gentleman for making that point. I will come to broader arguments about what we are putting in place in a moment, but the reason why it appears that no impact statement was done is that impact statements were done earlier in the process, when this was all looked at as a consequence of the Agriculture Act 2020 being passed. I am happy to point him back to all the charts and figures that were available at the time and have been available throughout.

The rate of decrease has been increased substantially. Does the Minister not agree that that will have a negative impact on financial viability? The change in the pace of the decrease of the delinked payments makes an old impact assessment unreliable.

The hon. Gentleman is right up to a point, but he is missing the point of the agricultural transition, which is a move to environmental land management payments. The economic impact is a secondary consequence. All those figures were there, however, and still hold good.

I should have referred to my entry in the Register of Members’ Financial Interests. I personally benefit from these payments, and I am the director of a farming company that benefits indirectly from the payments. I want to make that absolutely clear , Mr Twigg.

On a point of order, Mr Twigg. I seek your guidance. The Minister has just said that no economic impact assessment has been carried out on the draft legislation that we are considering. He noted that previous impact assessments were done under the Agriculture Act passed in a previous Parliament, but that was a significant time ago. I therefore seek your guidance on how we can robustly scrutinise this piece of legislation when the very crux of it is to have a negative impact on our many farming businesses. Without an economic impact assessment undertaken with due regard to that, how can we continue this debate without the information before us?

I thank the hon. Gentleman for making his point, but that is not a matter for the Chair.

Further to that point of order, Mr Twigg. Can utilisation of the rules of this House bring a closure motion before the Committee. If we do not have before us the information needed to consider properly this legislation’s impact on many farming businesses, is a mechanism available to me to move a closure motion, so that we can reconsider the legislation when an impact assessment has been undertaken?

I believe that once the Minister has finished moving the motion, you can put your motion, Mr Moore. He has to move the motion first. You can do that after he has finished. I will tell you when you can put yours.

A technical reason why an impact assessment was not produced is that this is not a regulatory provision; however, we publish regular statistics on farm incomes and other data related to farm businesses. That includes the farm business income statistics published on 14 November 2024, and the plethora of farming evidence packs, which I refer Conservative Members to. I am sure they will find plenty of information available, including the recent figures, which suggest that farm incomes last year were rather better than previously.

I hope we can proceed on the basis that we are moving to a different system, which is about environmental land management. I recognise the impact that the changes will have on some farmers, which is why we are trying to introduce them in the fairest way possible. We are applying the reductions in payment bands in the same way as the income tax bands work, which means that those with the broadest shoulders will see the highest reductions. I assure the Committee that every penny of the reductions in delinked payments stay within the sector. The planned reductions will help to fund investment in environmental land management schemes and our other grants for farmers.

Our support for farmers remains absolutely steadfast. We have committed £5 billion to the farming budget over a two-year period, with £2.4 billion of that for 2025-26. That includes the largest ever budget directed at sustainable food production and nature recovery in our country’s history.

The Minister has mentioned the £5 billion over two years on a number of occasions—not just in this debate, but in previous ones—but does he accept that if we take the £2.4 billion per year that started in 2019, at the start of the previous Parliament, and simply update that for inflation, the figure of £5 billion over two years actually represents a real-terms cut in support for our farmers of several hundred million pounds? My second question, which I would love him to answer, is what happens afterward? The Red Book suggests a £600 million reduction in support thereafter.

A figure is a figure—£5 billion. Many thought that that would not be achieved in the spending review, and I am very proud of it. We are happy to be able to provide that amount of money, which is actually going out to farmers, rather than being held back as it was under the previous Government, who failed to spend the money.

rose—

I am delighted to give way to the former Secretary of State who was responsible for that.

The Minister said a moment ago that all the money will stay in the sector. I assume he means the farming sector, but is that correct if some of the money goes to nature schemes or well-respected nature charities, which by nature are not part of the farming sector? Will he confirm that he is assuring the Committee that all that money will remain within the farming sector?

We will find ourselves arguing over definitions. Many farmers will now be environmental land managers and will be able to get money for schemes that protect nature.

We have allocated £1.8 billion in 2025-26 for the environmental land management schemes. That will boost Britain’s food security and accelerate the transition to a more resilient and sustainable farming sector. We are on track to spend the budget in full. Furthermore, record numbers of farmers—50,000 farm businesses—are in our environmental land management schemes, and more than half of all farmed land in England, more than 4 million hectares, is now managed under such schemes. That includes about 38,000 live multi-year sustainable farming incentive agreements. We expect to publish more information about our revamped SFI offer following the spending review.

The new countryside stewardship higher tier offer will open for applications from invited farmers and land managers this summer. The stand-alone capital grants will also reopen this summer after a short pause. We are investing in about 50 landscape recovery projects, which were awarded funding through rounds 1 and 2. We recently announced increased payment rates for higher level stewardship across a range of options from this year. We are also extending the farming in protected landscapes programme until March 2026. That extension will support farmers in protected landscapes in transitioning towards profitable food production at the same time as delivering nature recovery and mitigating the impacts of climate change.

We are continuing to invest in farmers through our other grant offers, with up to £110 million available in new grant competitions starting this spring. That includes up to £47 million for farming equipment and technology fund grants, as well as up to £63 million available for farming innovation programme grants. Those will help to improve productivity, trial new technologies and drive innovation in the sector. We are also expanding the animal health and welfare pathway, with more funded vet visits now available to farmers. Also, I am pleased that more than 26,000 farmers have made use of free one-to-one business support through the farming resilience fund to help them through the agricultural transition.

By investing in healthy soils, abundant pollinators and clean water, the Government are investing in the foundations that farm businesses rely on to produce high crop yields and turn a profit. Adopting the sustainable farming practices rewarded under our schemes will also help farmers to reduce their input costs. Reducing delinked payments as planned enables us to make those investments through our other schemes. That will serve the best long-term interests of farming. We are also developing a 25-year farming road map to make the sector more profitable in the decades to come. As we set out in our “Plan for Change”, we are focused on supporting farmers, supporting rural economic growth and boosting Britain’s food security.

On a point of order, Mr Twigg. Before I start my speech, I would like to go back to the comments that I made earlier. With the motion now having been moved, I seek your guidance on how we can consider these regulations without any financial impact assessment having been undertaken.

That is a matter for the Minister to debate with you, not a matter for the Chair.

Further to that point of order, Mr Twigg. I seek clarity on whether I can move a closure motion. I am seeking your guidance on that.

I have considered what the hon. Member has said and what the Minister has said. The Member has made his point, and I am not persuaded that the question should be put before the Committee, so we will proceed with the scheduled business.

Okay, thank you, Mr Twigg.

As the Committee debates this delegated legislation, I would like to take us back to why we are where we are, in the sense of being in year 5 of a seven-year transition period. This direction was positively set out by the previous Administration as we moved from the common agricultural policy to a transition away from the basic payment to the environmental land management scheme, which enabled farmers to enter the sustainable farming incentive, the countryside stewardship schemes and landscape recovery schemes, all of which aimed at inviting farmers to make applications so that they could make up any financial loss from not receiving the equivalent amount of basic payment scheme moneys. They were to be paid for delivering public goods.

As the Minister rightly said, we are in year 5 of a seven-year transition period; but the direction rightly set under the Conservative Administration had to do with a steady tapering down of payments that could be made through what was previously called the basic payment scheme—in other words, the move to the revised delinked payment scheme. However, without any warning or suggestion before the general election, in November, in a sneaked-out blog on the Department for Environment, Food and Rural Affairs’ farming website, there was an indication that dramatic reductions would be taking place through delinked payments. Our wider farming community was given no warning of the change, which will have a dramatic impact on cash flow in all of our farming community.

Under this instrument, farmers will receive significantly less through their area-based payment schemes than they originally expected—the anticipated reduction is 76% The reduction climbs even higher or larger farms as payments for farmers receiving over £30,000 will be ended. No matter what payment they were anticipating, how big their farming business is or how much land they are farming, it will be capped at £7,200.

For a farm, short-term planning is for longer periods than in any other sector. Improving fields, livestock herds and farm infrastructure takes many years, and delinked payments alongside being able to get into the sustainable farming incentive were the key guaranteed income that allowed farmers to invest with the assurance that the moneys would be coming in..

My hon. Friend is making an excellent speech. I just want to highlight the briefing from the National Farmers Union, which I think all Members received, expressing real concerns about what the Government are proposing. The NFU is strongly opposed to the way the Government are approaching this. It has highlighted that this measure, together with the changes to inheritance tax, will threaten investment in the future of UK food production. Does my hon. Friend share my concerns, first, about the Labour Government’s disregard of the NFU and farmers, and secondly, about investment in farming and our ability as a nation to produce our own food?

I thank my hon. Friend for his intervention. That is why an impact assessment is so important if we are to consider this piece of legislation.

Not only are farmers facing the collective economic impact of a dramatic reduction in delinked payments, but they are now faced with being unable to receive sustainable farming incentive payments, the increase in employer’s national insurance and the rise in the minimum wage going up. All of those increase the overheads of farming businesses.

The delinked payments whereby farmers were looking to progress their plans to increase the productivity of their holding or indeed their own investments over the seven-year transition period, were dramatically reduced through a sneaked-out announcement in November last year.

We all enjoyed the emergency Budget earlier today. One of the core elements that the Chancellor of the Exchequer planted her flag on was economic stability. How does my hon. Friend the shadow Minister think farmers can have economic stability when schemes such as the SFI are removed without any notice, while at the same time they suffer a 76% reduction in the first £30,000 of the delinked payments and nothing above? How do we get economic stability with that approach?

The reality is that we cannot, because of the Government’s announcement of dramatic reductions to the delinked payments that many farming businesses relied on. The explanatory note itself states that the reductions for 2025 will result in

“increased demand from farmers for the Environmental Land Management schemes”,

but the Government have closed the entry for any applications that were live and stopped any new applicant coming in. So where is the money going to? How will it be utilised by the farming sector?

Slashing the payments without warning ahead of the expected timeframe has thrown thousands of farming businesses across the country into disarray and forced to reconsider their financial position and many of the ongoing projects and investments on the farm. I can use an example in my own constituency. Just this week I spoke to a farming family in Stanbury in the Worth Valley who have experienced a dramatic reduction, with this being the fifth year of the delinked payments going down dramatically to £7,200 from an annual payment of about £20,000. They have been locked into a higher level stewardship scheme for a five-year period, but because the Government have announced that the SFI application window has closed, they do not now have the ability to enter a new SFI opportunity that has a higher financial payment rate than the higher level stewardship that they have been locked into. That is just one example of many farming businesses across the country that are being negatively impacted.

My hon. Friend is, as ever, making an excellent speech. One of the uncertainties is that there is no sense of when the scheme will open and what the budget will be. Briefings from Government insiders—particularly in the Treasury—say that non-protected Departments will be subject to significant cuts in the forthcoming spending review. Does he share my concern that it is very difficult for farmers to plan when the Government’s approach gives them 30 minutes’ notice and no clear information on these issues?

That is absolutely the point: it causes huge concern to many farming businesses because they are not able to forecast what financial investment will go into the business, whether from delinked payments or any sustainable farming incentive scheme that they were hoping to enter.

Is the problem not worse than that? Farmers can no longer rely on the schemes that seem to be applicable to them because the SFI can be paused or cancelled without notice. What confidence can they have that any scheme to which they seem able to apply will be there when they need it most?

It comes back to both points that have been made, and perhaps the Minister will pick them up in his response. There is no absolute clarity about the deadlines or timelines for new announcements that will come forward to replace the sustainable farming incentive extended offer, which opened to all applicants only in November 2024. Cutting that option is therefore causing huge concern. We do not know—perhaps the Minister can pick this up when he responds—whether, as has been indicated, the design of whatever may replace the SFI will be based on the land use framework consultation. I would like to understand from the Minister when that consultation will conclude and when the Government will make a positive announcement to reassure our wider farming community.

Just yesterday, the Government revealed in answer to a written question that more than 6,600 applications from farmers trying to do the right thing and transition to SFI—the replacement scheme that covers the dramatic reduction in the delinked payments that we are considering today—have been frozen out of the system. That means that about 20% or 25% of the 37,500 live applications are still in in-flight mode, sitting on the Rural Payments Agency’s database and locked out of consideration. What does the farming Minister say to those 6,600 applicants, who have spent months working up a replacement scheme? How will he provide financial reassurance to the businesses that will not be able to benefit?

What is my hon. Friend’s view on the fact that this dramatic reduction in delinked payments does not seem to align with the Government’s claim that food security is national security? How can that be, when farmers in this country do not have any certainty?

My hon. Friend makes an excellent point. The Government’s narrative is that food security is national security, but those are just warm words because they are not followed up at all by any policy setting an attractive agenda for our farming community. Indeed, every Government announcement seems to negatively impact it.

I am grateful to my hon. Friend for allowing multiple interventions. We have heard about food security, but the Government have a number of other legal obligations, one of which is to halt biodiversity net loss by 2030. If SFI—the key measure to help farmers in the fight against biodiversity loss—is effectively cancelled, how on earth will they hit their legal obligations?

That is the crux of the issue. I am sure that all Members have been contacted by many of those in the environmental lobby who are deeply concerned that closing the SFI applications is having a detrimental impact not only on our many farming businesses, but on the environmental benefit for which the SFI schemes are designed to set the right direction.

The idea of SFI, and public services for public goods, is the right one. The changes we are discussing today would be understandable had they been announced alongside a massive increase in the SFI offering to make up the difference in the shortfall. The question that not only I but my colleagues who shadow the Department for Environment, Food and Rural Affairs have been constantly asking the Government is: where is the money from the dramatic delinked payment drop going? It does not seem to be going to any of the other measurables.

The Government will say that they have reached the cap, but they have given no explanation as to what the cap is for SFI nor, indeed, where it has been reached and where the applications in the pipeline would have got to. Much more is clarity needed, which is why, Mr Twigg, I felt pushed to raise my point of order. We feel that there should have been a proper economic impact assessment of this piece of delegated legislation. We needed to be more informed before we could discuss it. Will the Minister confirm what date he expects the SFI to open?

At the same time that the Government have cut the two primary sources of support for farmers, budgetary changes have also had a huge impact on the wider cash-flow position of farm businesses. The introduction of the double cab pick-up tax punishes family farmers for using one vehicle for both personal and business use; perhaps the Minister would prefer that they owned two. The fertiliser carbon tax is likely to come down the line, and wider sources indicate that it is likely to push the price of a tonne of fertiliser up by £50. That is a clear political choice to push net zero no matter the cost to farming businesses and food prices. The changes to employers’ national insurance have hiked up the average cost of a worker by £900. Far from reducing energy prices by £300, the Government are about to oversee a hike in the energy price cap of about 6.4%.

The reason why I go through all those other budgetary changes is because they are highly relevant to this piece of delegated legislation. The Government are making a choice today to vote on dramatically reducing delinked payments in the fifth year of a seven-year transition period, despite the certainty that was provided to the wider farming community. That is why the NFU, the Country Land and Business Association, the Tenant Farmers Association and the Central Association of Agricultural Valuers do not support the direction of this legislation.

Then, of course, there is the family farm tax, which will force a family farm to anticipate an inheritance tax bill of hundreds of thousands of pounds. That will be an additional burden on our many family farming businesses, which in many cases are already struggling to make a profit. We know that the return on an average family farming business is about 1%, and many of those businesses are highly geared. To then have a huge change in the amount of positive cash coming into those businesses through the dramatic reduction in delinked payments does not give them any clarity or certainty.

An additional point is that the change will affect not only farm businesses but the wider rural economy. All the other businesses within communities that depend on the farm businesses spending money in the local economy will also be impacted, not just by this measure but by the inheritance tax change and all the other terrible things this Government are doing to the rural economy.

My hon. Friend is absolutely right. I was at the Yorkshire agricultural machinery show just a month or so ago, and I spoke to many farming businesses and many people associated with them, including machinery dealers and feed merchants. Many of them are saying to me that already their order books have dramatically reduced as a result of the collective impacts of the budgetary changes that were announced in October and November. The wider rural economy is being impacted by the legislation before us.

I drove a tractor to Fakenham racecourse about five or six weeks ago, to take part in a demonstration that not only involved farmers but encompassed the wider rural community, including farming industry suppliers. Does my hon. Friend agree that the mood in relation to the Government is sulphurous?

I absolutely agree. That takes me back to a point I made to the farming Minister at DEFRA questions just last week. I told him that many farming businesses are deeply concerned about the collective impacts of the wider budgetary changes, and he said that I need to get out more and speak to more farming businesses. Just last week I was in Nottinghamshire, Lincolnshire, Shropshire, Warwickshire and Staffordshire —and that was just three days of last week. Not one of the farming businesses I spoke to agreed with the approach the Government are taking. [Interruption.]

Order. Can we not have exchanges between Members when one is speaking, please?

It sounds like in one week my hon. Friend has seen more farms than the Secretary of State has since the general election. I draw his attention to the story in the Farmers Guardian that suggests the Secretary of State has been to only four farms since the general election. On a more serious point, that story also draws attention to the 84% of farmers who feel that their mental health has been affected by the autumn Budget. My hon. Friend is correctly setting out the financial implications of the changes, but does he share my concern about the mental health issues as well?

My right hon. Friend makes a very serious point, and I will develop my thinking on that later in my speech. If the Secretary of State has visited very few farms—just a handful—since the general election, how could he and the Government have come to the conclusion that there is no need for a financial impact assessment? That is why we want to challenge the Government on the fact that there has been no impact assessment at all of the collective negative impact of the Budget on our many family farming businesses.

I highlight all these points because of the collective impact on our farming businesses of this piece of legislation, as well as the reduction in the SFI, the dramatic cuts in the capital grants and all the other budgetary challenges I have mentioned. As I indicated, I have had so many conversations at kitchen tables around the country—believe me, I have sat at many of them—in which the concerns I have outlined have been specifically raised. The point put to me consistently is that the Government keep coming out with warm words—“We will support our farmers”—but do nothing at all to support our many family farming businesses.

Does my hon. Friend accept that farmers right across the country are currently seeing a cash-flow crisis? A business may be profitable in one, two, three or five years’ time, but if it cannot pay the bills now, it will go bust. Does my hon. Friend accept that the Government’s cumulative actions are putting farmers at risk?

That is why this debate is so important. I come back to the point that a financial assessment is crucial, because farming is like no other industry. An arable farmer relies on the cash coming into the business when they sell their crop. They are able to sell that crop only once it has been harvested. They may sell it on futures, or retain the grain in store and sell it at the appropriate time throughout the year, but the reality is that they do not have guaranteed cash coming into their business regularly, as people do in many other sectors. It is the same for a hill farmer selling lambs for meat and for a lowland arable farmer. These businesses are highly geared financially, given the level of debt they carry, and an irregular level of income is coming into their business. The Government have taken away or dramatically reduced the one certainty of financial gain that these businesses would have through the delinked payments or, indeed, the SFI.

The impact on mental health has also quite rightly been raised. The Government are actively making choices that negatively impact farmers’ cash flow. They have made decisions on the family farm tax. Their decisions are affecting tenant farmers’ ability to pay their rent and farmers’ ability to service their debts. The Government’s collective decisions are negatively impacting on the health and wellbeing of our many farming businesses. I therefore urge the Government and the farming Minister to get out and speak to as many farming businesses as possible. The Minister needs to pick that issue up and engage with it.

We have asked time and again from the Dispatch Box about what data the Government are collecting on the negative impact on the health and wellbeing of our farming community. Those who farm work in an incredibly lonely environment. People who are lambing sheep, as many are right now in the moorlands of the Worth valley in my constituency, are working on their own, and it is incredibly lonely. They then have all the financial pressures that the Government are actively choosing to put on them. That is not a healthy state of affairs for farmers, which is why I urge the Government to reconsider this legislation.

The explanatory memorandum does not refer to the United Kingdom Internal Market Act 2020. Has the Minister —he is the farming Minister—considered the dramatic impact of the delinked payments and the choice to remove the sustainable farming incentive? English farmers are now very much at a disadvantage compared with farmers in Scotland and Wales, because the amount of public money they will be able to receive is significantly different. Have the implications for that Act been considered?

My hon. Friend makes an important point. When the House considered the 2020 Act, we were expecting that different Governments in the UK might give extra subsidy to different businesses, but the converse can also happen: taking subsidies away can affect the competitiveness of different industries. I am a Scottish MP and will always stand up for Scottish farming, but the severe reduction in the cash flow of English farmers will arguably put them at a competitive disadvantage.

That is my point. This weekend I will visit farmers in Northumberland, who have contacted me to make the point that some of our cross-border farming operations will have access to very different subsidy schemes and environmental payment schemes north of the border and south of the border. Has the Minister has considered the impact of that in relation to the need to put everybody, no matter where they farm, on the same level playing field?

Hon. Members will by now be tired of my asking the Minister and the Department for impact assessments, not just of the Government’s farming measures in isolation but of the collective impact. The explanatory memorandum suggests that taking away 76%-plus of principal payments to farmers, shortly after announcing that the scheme designed to replace them is being frozen, will have no significant impact. Of course it will.

How has the Minister’s explanatory memorandum come to the conclusion that there will be no impact whatsoever? That does not seem to ring true. Paragraph 9.2, on the impact on businesses, charities and voluntary bodies, states:

“There is no, or no significant, impact on business”.

I do not understand how that conclusion has been reached. It goes on:

“However, the reductions to delinked payments will be used to help fund other schemes, including Environmental Land Management schemes, which offer funding streams for farmers and land managers.”

When the SFI has been closed, how can the Minister conclude that there has been no impact whatsoever? I would like to understand that.

One question remains, and I hope the Minister will be able to address it directly. Where will the money go that has supposedly been saved by the instrument? The NFU estimates that the total saving to the Department next year will be £400 million. In answer to my recent written question, the Minister declined to provide a spending breakdown of the farming budget for this year and next year. Instead, he provided those figures across the two-year period, neatly hiding where the £400 million will go. I would greatly appreciate it if he could explain where that £400 million is going.

Can the Minister assure farmers across the country and those watching that the funds will not be going back to the Treasury and the Chancellor, and that they will at least find their way, through some mechanism, back into farmers’ pockets, including the 6,600 who have applied for SFI but have had their applications blocked by the Government? At the very least, farmers need certainty, and since last July they have been blindsided time and again by this Government, including by this legislation. Perhaps the Minister could provide that small piece of reassurance in his remarks.

To conclude, it will come as no surprise that we will not support this legislation. At the end of the debate we will push for a vote, so we can at least demonstrate that the Opposition are on the side of our farming community.

It is an absolute pleasure to serve under your guidance, Mr Twigg.

For what it is worth, had we gone for a closure motion I would have voted with my Opposition colleagues. There should have been an impact assessment. However, it is worth bearing in mind that many times during the last Parliament—I could comb through Hansard to check the exact number, but it is in double figures— I asked the previous Farming Minister for an impact assessment of, for example, the reduction of the basic payment scheme and the failure to introduce the transitional changes in a timely fashion, and answer came there none.

I can inform the Committee that livestock farmers were 44% worse off in terms of income at the end of 2024 compared with 2019. The Conservative spokesman, the hon. Member for Keighley and Ilkley, can visit as many farmers as he likes, and I hope the Minister also visits many farmers, but every last one of them will be poorer because of the actions of the last Conservative Government. It is important to have that on the record.

The reality is that all parties in this place, certainly the ones represented on the Committee today, signed up to ELMS and the principle of public money for public goods. That is a good principle, but the transition has been marked by two clear things: imprecise timing of the reduction of the old scheme and the old money, and the failure to get people into the new schemes. Of course that is also the case under this Government, but we had the same conversations with the former Farming Minister, Mark Spencer, and he said the exact opposite of what the Conservative spokesman has said today.

The failure of the transition between 2019 and 2024 led to a £200 million underspend. The Government are always talking about £5 billion over two years. My maths is not brilliant, but I reckon that is £2.5 billion a year, which is £100 million more than before. That is a good thing, because we worried ahead of the Budget last autumn that the new Labour Government would bake in the consequences of the underspend and the Tories’ incompetence, but they did not do that. However, it is right that Opposition Members have mentioned on more than one occasion that freezing the budget at £2.4 billion, which is what it was at the point we left the EU in early 2020, is hardly a great achievement.

Of course, there was inflation through all the years of the Conservative Government. If they were serious about the transition being funded properly, the budget would have been more than £2.4 billion when the Labour Government came into power. Inflation has been huge over those five years, especially in the farming industry when it comes to feed costs, fertiliser, fuel, energy and so many other things. The industry barely washes its face, so we are left in this situation.

I do not buy the Conservative party’s references, either before or since, to today's financial statement being an emergency Budget. If it had been an emergency Budget, it would have said something. The Chancellor could have had the day off, bless her, because it contained very little. One of the few things in the statement of any potential impact was the day-to-day budget savings for various departments, including DEFRA. I reckon it is about £200 million from a budget of which ELM makes up 40% or 45%. A pro-rata cut in day-to-day spending means we would potentially see the £2.5 billion shaved. It would be good to hear from the Minister whether that will be the case.

One of the real problems with the transition, and the reason I am angry about the situation in which we find ourselves—on behalf of the farmers I represent in Westmorland and Lonsdale, and across the United Kingdom, and especially the farmers in England who are specifically affected—is that entry to the new schemes has been crudely marked by larger landowners, corporates and those with the wherewithal either to have land agents or to allow farmers time off to negotiate with Natural England, the Rural Payments Agency and DEFRA. Those people are inside the schemes; the typical farmer outside the scheme is, for example, a hill farmer in Westmorland, working 90 hours a week, either on their own or with no family members working on the farm. They cannot afford a land agent and are utterly isolated, feeling beleaguered. They are the ones outside the various environmental schemes, particularly SFI.

When the drawbridge was pulled up, for the time being, on SFI, we worked out that there were 6,100 entrants to the scheme. Of those, a grand total of 40 were from severely disadvantaged areas, particularly the uplands. That gives a snapshot of who is in and who is not. When the Minister defended the Government’s decision on the SFI closure a few weeks ago, he made some points that were right, but with the wrong conclusions. He said, of course, that SFI was “first come, first served”. The big landowners were therefore typically on the inside and the smaller businesses were on the outside, but that is not a good reason to pull up the drawbridge, just at the point that these smaller farmers were about to cross the moat and enter the castle, so to speak.

According to DEFRA’s own figures, the consequence of all this is that, as things stand, by the end of the transition in two years’ time, the average farmer in a severely disadvantaged area will be on 55% of the minimum wage. That is an absolute outrage. By the way, owner-occupiers in my neck of the woods could also be sitting on an asset that is technically worth £2 million or £3 million, so they will be clobbered by the family farm tax as well. Those people on half the minimum wage, earning £12,000 or £13,000, will have to pay 20 grand a year in inheritance tax. Come off it! That is not fair.

The consequence is that those people will have to sell up. Where will that farm go? Will the neighbouring family buy it? No, of course not, because they are in the same pickle. Instead, it will be sold to a corporate that probably does not produce any food whatsoever. That ought to make Labour Members feel deeply uncomfortable. What a lack of social justice that implies.

My concern is that we are now being asked to vote for the hastening of something that is already doing huge damage to the sector. A 76% cut to the basic payment in one fell swoop will be crippling for many farmers, particularly those who are not yet inside the other agri-environment schemes, particularly SFI. I worry about tenant farmers in my constituency and around the country. That money was probably paying the rent this year.

Both this Government and the previous Government accepted the recommendations of Baroness Rock’s excellent review, yet neither implemented them. To do all of this and put tenants, in particular, in a moment of extreme fragility and vulnerability before the Rock review could protect them was doing it the wrong way around. That is why the reduction to the BPS should have been parked until the Rock review’s recommendations were in practice, so that tenant farmers could be protected. In parts of my community, I am seeing something akin to a lakeland clearance. People who have farmed the valleys, the lakes and the dales for generations are being forced off because of both Governments’ failure to plan ahead.

I agree with the NFU, which clearly has the same sources as me, that there will be a £400 million shortfall and underspend based on what we know about the 76% cut to the BPS and the failure to roll out the agri-environmental schemes more comprehensively. All that builds a deeply troubling picture.

A few weeks ago DEFRA officials appeared before the EFRA Committee, chaired by my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael). On behalf of the Department, they proudly said that they reckon 92% to 93% of farms will survive this process—I beg your pardon? That means DEFRA appears to be counting on 7% to 8% of farms not surviving. I know the kinds of places where they will not survive: places like the lakes and the dales, which is outrageous.

This all boils down to a deep injustice, but it is foolish as well. At a time when the UK is in a very dicey situation internationally, for us to do anything that undermines our food security is incredibly stupid, as well as unjust. The consequences of this move will cause, and are causing, huge hardship. It is worth saying that people who will suffer the most are the people of the uplands and SDAs. It seems to me that Britain’s poorest farmers, in Britain’s prettiest places, are the ones who will take the hit.

That will have consequences for our ability to feed ourselves. We produce only 55% of the food we eat in this country, which is nowhere near enough, and it needs to be at least 20 percentage points higher. Farmers care for our environment and our landscape. The Lake district’s world heritage site status could be at risk if we do not care for it properly.

I am also seeing the consequences of a lack of trust in the Government’s transition—both this Government and the previous Government—which is leading farmers to take the exact opposite decision to the one the Government want. Just a week and a half ago, when I spoke to a group of farmers from Penrith and elsewhere in Cumbria, the overwhelming sense was of anger and, more than that, disillusionment with the whole system.

What will those farmers do? They will opt out of environmental schemes altogether. They will think, “Do you know what? Perhaps I will pay the rent more easily if I quadruple my livestock, even if I undo all the good work that my mum and dad, and their parents before them, did on environmental issues for decades.” That is all because they have lost trust in the system.

As other Members have rightly mentioned, all of this has a huge impact on the wellbeing and mental health of these folks. Typically, and certainly in my area, farmers are one-person bands farming in isolated scenarios, and they are the fifth, sixth or seventh generation to have farmed that valley and that community. They find themselves staring down the barrel of being the one who loses the family farm. It is not their fault, but they will believe it is. Do you know what that will do to people in those extreme circumstances?

I will also vote against the motion for all the reasons that have been set out. There is a way forward for farmers, if this Government take food security seriously and seek to deliver public money for public goods, as was promised at the beginning of this process.

I rise to speak on yet another attack by this Government on our farming community. The decision to punish and penalise farmers by reducing the delinked payments they receive from April 2025 will have a hugely detrimental impact on the farming community in my Chester South and Eddisbury constituency, and indeed across the country.

Delinked payments are an important transitional mechanism to new schemes, and an important income stream in themselves. The accelerated reduction in delinked payment rates, along with the other measures we have already heard about—the changes to agricultural property relief, the unreasonably abrupt halting of all future SFI applications with immediate effect, rather than the six weeks’ notice that farmers were led to believe that they would be given, and the ever-increasing cost of running a farming operation, from equipment to supplies—means we must ask the Government this: when will they give farmers a break?

That is the message I hear when I speak to farmers in Cheshire. They have no confidence in this Government or in their management of the economic conditions to farm. There is a genuine, deep concern among farmers that their livelihoods are unsustainable under the current Government.

My hon. Friend is making a first-class speech, standing up for her constituents in Cheshire. Is she aware that the Confederation of British Industry forecast has said that Labour’s rural and farming policies are set to cut turnover, jobs and investment across Britain. Further, according to the CBI forecast, family farms will shrink by 9% and cut staff by nearly 9%. Does she agree that that is a real concern?

I thank my hon. Friend for that excellent intervention. It is an attack on family farmers, rural communities and all the businesses that rely on those farmers to keep our rural communities going. As I said, it is unsustainable. That should stop us all in our tracks and make us think of the impact of having a country without farming.

The cash-flow challenges that face farmers are well known. If we remove another layer of the support provided to them, as we are debating today, the negative consequences will continue to grow. The Government will be putting our food security at further risk and causing detriment to the stewardship of our countryside. The personal impact on farmers will be significant—and ultimately, that is what it comes down to. It is not just about figures; it is about people. This measure is another economic burden that will be felt by farmers, and I can assure the Minister that the stress and uncertainty that they have been put under by this Government are taking their toll.

I conclude my remarks with the same message that I have asked the Government to heed on numerous occasions in the main Chamber, in Westminster Hall debates and in meetings: “Please consider the real impact of the relentless attack on the people who provide our food, care for our countryside and maintain our rural economies.” There is so much to do to reverse the damage done to our farming communities since July, but we can start with the measure we are debating here.

I praise you for your forbearance, Mr Twigg; at one point, I thought you might move a closure motion yourself, because we have strayed a long way from delinked payments. In fact, we seem to be back in the general farming debate from a couple of weeks ago. I am astonished at Opposition Members’ complete lack of understanding of their own policies. I remember sitting in the shadow Minister’s seat five years ago, discussing the Agriculture Act 2020. Indeed, I raised some of the same points that the shadow Minister raised today. However, we are in a transition from the previous scheme, which paid out to everybody—the common agricultural policy and the £80,000 scheme—to a different scheme. It was always the case that some people would not get the money.

I just want to make it clear that we did not indicate dropping the delinked payments at the speed at which the Government are doing it—in the fifth year of the seven years of transition. That is the clear difference and the reason why we are debating this piece of legislation today.

Of course, the hon. Gentleman will know that there was never clarity on the pace of that transition. I can also tell him that, despite his assertions earlier, the announcement on the changing level of delinked payments was actually made back in October—but I will make some progress now.

It is astonishing that, listening to the Opposition, a person would not understand that the amount of money going into the system is exactly the same as before—in fact, it is more. The question is how it is distributed. There are legitimate grounds for a discussion on that, but that was never done by the previous Government. We inherited schemes and we have had to work with them. We will try to improve them, because I have many criticisms of them myself, but these are the previous Government’s policies that we are implementing. In fact, the previous Government should be proud of some successes because we now have 37,900—maybe 38,000—people in SFI. We initially inherited a situation which was under-subscribed; it is now oversubscribed. That is a success. The question for the future is how we can find ways to bring more people in to it.

The Opposition need to understand that once the budget has been spent, it is spent. We cannot keep spending time after time. That is a basic principle that they did not seem to understand in general when they were in government, and they are illustrating that again today. I am interested to know whether they understand the consequences of voting against the legislation today, because I can tell them what those are.

On the Minister’s point about the SFI—“When it’s spent, it’s spent”—when did he know that the SFI budget had been spent in full? How long did he know it before he made the announcement to farmers, without giving them the minimum six weeks’ notice that had been promised?

I said in the Chamber the other day that it was perfectly obvious that this would happen from the moment we introduced these new schemes. I knew five years ago that this would happen at some point. We monitor the schemes on a regular basis and the closure was decided a few weeks ago when it reached the limit—[Interruption.] I will not take any further interventions.

Hon. Members present need to understand the consequences of voting against this statutory instrument. Without it, the agricultural transition effectively goes into reverse. No reductions at all will be applied to the payments. The subsidy levels would go back to what they were not in 2024, but in 2020. Hon. Members must think carefully about what they are voting for. Without this instrument, the spend on delinked payments in ’25-’26 would increase to £1.8 billion, leaving a £1.5 billion shortfall in the farming budget. They need to think carefully: they can vote against the instrument, demonstrating their complete financial irresponsibility and tying them back into the kind of approach they took in the previous Parliament, or they can be grown up and understand the consequences of their actions—but I can guess what they are going to do.

The Minister can write to me later if he cannot answer now, but what is the saving to DEFRA of the 76% cut in basic payment? The idea that this is financially literate would add up only if he had not created a saving, but he clearly has. By closing SFI when he did, he is clearly not spending that saving—so how much is it? Is the NFU right to say that it is £400 million?

The overall amount of money is, as we said, £5 billion over the two years. I had a decision to make back in October whether I could maintain the delinked payments at a higher level or put the money into SFI. I am unashamedly following the path that the previous Government set out for an agricultural transition to a better farming system. Opposition Members appear to be harking back to a system that most of us thought was completely discredited.

I was asked about the impact assessments and what assessments we have made. Average farm business income is forecast to have risen for all farm types in ’24-’25, with the exception of cereal farms, as I referred to a few minutes ago. The projected contribution of delinked payments and agri-environment payments to farm incomes in 2024-25 is included in that average farm business income forecast. Not only is all the information the hon. Member for Keighley and Ilkley wants, but it has been published, had he chosen to look at it.

Alongside that, the recently updated farming evidence packs set out an extensive range of data to provide an overview of agriculture in the UK and the contribution of farm payments to farm incomes, including analyses by sector, location and type of land tenure. My sense is that all this information is available—it is just that Opposition Members do not want to hear it.

Will the Minister give way?

No—I am going to conclude now.

Delinked payments are not the answer to the long-term challenges farmers face, despite the Opposition’s hankering after them. This Government will not shy away from making the right and tough decisions to build a profitable and sustainable farming sector and to deliver Britain’s food security. Reductions in the 2025 delinked payments are necessary so that we can fund our committed and planned spend under our other farming schemes, which support sustainable food production, exactly as I have laid out, including meeting the unprecedented demand for capital grants, which will reopen in a few months’ time. The money released from the reductions to delinked payments is being fully reinvested through our other schemes. I reiterate that every penny is staying within the sector.

This instrument is the essential next step as we continue to move away from the failed, untargeted payments of the past. It enables us to invest in the long-term future of farming while delivering for nature. I commend the regulations to the Committee.

Question put.