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Agricultural Transition Plan

Volume 808: debated on Tuesday 8 December 2020


The following Statement was made in the House of Commons on Monday 30 November.

“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.”

My Lords, I start by declaring two interests—at Rothamsted agricultural research institute and as a member of the South Downs National Park Authority, which is involved in several of the tests and trials.

To those of us who sat through the many hours of debate on the Agriculture Bill, the premise of this Statement is very familiar. As we have said many times, the shift from payments made on the basis of land ownership or tenure to payments for improved environmental performance and other social benefits is very welcome. I am sure that the new levels of detail contained in the transition plan are appreciated by those directly affected. Given that we voted to leave the EU in 2016, I am inclined to say, “What took you so long?”.

The Minister will be all too aware of the criticisms from the farming community that these details have been published only three weeks before they are due to take effect. Although the Minister talks about a seven-year transition, the confirmation of an immediate cut in basic farm payments from 1 January 2021 is a bitter pill to swallow, so I would like to probe this decision in more detail.

The transition paper spells out a minimum cut of 5% in subsidies next year, but the opportunity to reclaim these payments does not kick in until 2022. The Statement talks about wanting farmers to come with us on a journey, but this seems the wrong way to go about building their good will towards the huge upheaval necessary to deliver the transformation. Why do the Government feel that this payment gap is necessary? Have they done a risk assessment on the number of farmers who will be unable to operate with this reduced income? Will there be any financial compensation as part of the resilience package for those whose livelihoods are threatened? How will the £170 million saved by this cut in the first year be reallocated? What proportion will be available in 2022 for individual farmers to claim through the sustainable farming incentive?

Between 2021 and 2024, a total cut of 50% in basic farm payments is proposed. The NFU projects that livestock farmers will have lost between 60% and 80% of their income as a result of these reductions. Can the Minister assure us that, during this period, equivalent payments will be accessible to those who are willing to embrace the philosophy of the new schemes? When we will see the details of these schemes, so that farmers can be reassured that it can work for them on their farms? Is it intended for there to be a variety of projects of different lengths and complexities, so that all landowners and tenants will have the opportunity to make the positive difference to which we all aspire? Can the Minister assure us that any money that is not spent in year one, before the schemes are fully implemented, will be rolled over for payments the following year and will not go back to the Treasury?

I also want to ask about the impact of devolution on these measures. This is an England-only proposal, as agriculture is a devolved matter. As we know, the devolved nations are drawing up their own proposals to maintain more financial support for their farming communities. This could have a detrimental effect on the price of English livestock and arable produce compared with their Welsh and Scottish counterparts.

In his response in the Commons, George Eustice said:

“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.”—[Official Report, Commons, 30/11/20; col. 42.]

Does the Minister agree that this sounds far too complacent for an issue that many people fear is an immediate and escalating danger to market access and price stability for English-grown food?

Finally, I want to ask about the ultimate goal of this transition. The Government’s press release states:

“These changes will be designed to ensure that by 2028, farmers in England can sustainably produce healthy food profitably without subsidy”.

Will this mark the end of subsidies for English farming? Is this the future of farming, predicated on a free market principle that you can compete in the market on price or you will not survive? What will this mean for UK farmers competing in a global market where the majority of their competitors, including obviously the EU, continue to receive farm subsidies? Also, what is the strategy for upland farmers, who will struggle ever to make a profit but who represent an iconic part of rural life? What are the implications for our food policy if the race to the bottom on costs becomes the driving principle?

I fear that the consequences of these proposals will be the end of small family farms and the rise of big corporations farming on a grand scale. They may indeed deliver some environmental benefits, but they also risk changing the nature of farming and the rural community for good in ways that I do not think we envisaged when we were debating the Agriculture Bill not so long ago. I hope that the Minister can persuade us that there is a plan for long-term financial support for those delivering environmental outcomes way beyond 2027 and that profit in the long term will not be the only measure of success. I look forward to his response.

My Lords, I welcome the Statement on the agriculture transition plan. There is much to be commended in the document, which sets out some of the detail that was absent from the Agriculture Bill. However, it is clear that many aspects of the plan are still in a state of flux and are being worked out as the implementation begins.

The document covers the period of 2021 to 2024, although the changeover from direct payments is scheduled to run for seven years. Farmers have been heavily dependent on area-based subsidies and it is welcome that these will reduce on a gradual basis. Next year, the reduction in basic payments of £30,000 will be 5%, followed by a further 15% reduction in 2022 and 2023, and 50% by 2024. For those with payments of over £150,000, the reduction will be 70% by 2024. This is a significant reduction and it is unclear whether it will be replaced by the three components of the Environmental Land Management scheme, especially since the landscape recovery component will not commence until 2024.

Can the Minister reassure us that farming incomes, which will become increasingly dependent on environmental measures, will be capable of sustaining both farmers and their families? I welcome the fact that all farmers will be eligible to apply for the first component of the sustainable farming incentive scheme. This is a step in the right direction in order to gradually introduce some farmers to the Government’s environmental agenda. However, there is no detail of how this will reward family farmers financially. The move by the Government to make all farms financially viable by the end of the transition period will need to be monitored very carefully, as some will see it as a leap of faith in the dark.

There is considerable mention of the environmental measures for which the Government will provide payments, including establishing animal health and welfare pathways. However, there is very little in the document that relates to food. Moving farmers from their previous way of working to a new environmental basis will be successful only if they are also able to produce food, whether in the form of animals or horticulture. Does the Minister agree that food production needs to be at the forefront of the reason for agriculture?

I welcome the scheme to help farmers who wish to exit from agriculture. Can the Minister give details of what the payments will be for this section of the scheme? Will it be funded from the £1.8 billion earmarked for agriculture over the next three years? Can he give reassurances that the land and farms thus released will be reserved for new entrants into farming? If the Government’s aim to transform our agriculture is to be realised, it will be vital that new entrants are given first preference for the farms of those who are exiting the sector.

The Government are clearly still at the development stage of their thinking on environmental land management reforms, and they promise to adapt the components as they go along. If some do not work, they will be altered and amended to improve them. This is to be welcomed but it does not provide certainty for farmers. Farming is not a short-term activity; it takes planning ahead and capital investment. The Government are looking to the private sector to help to finance some of their components, but the private sector is unlikely to come forward if it feels that the Government may be likely to move the goal- posts half way through the scheme. Can the Minister give reassurance that the three components of the Government’s agriculture policy will be fully tested before farmers are asked to commit their livelihoods to them?

The Government expect the environmental land management scheme to deliver the benefits of England’s peat strategy by paying for sustainable peatland management and restoration. Can the Minister provide the House with some more detail on exactly how and when that will be achieved?

I turn to the tree health pilot. It is vital that we protect our iconic trees from pests and diseases, which have decimated our hedgerows and forests in the past. There is evidence that huge numbers of saplings have been planted without any real sense of how they will be cared for and nurtured into adult trees. Can the Minister give reassurance that the thousands of trees that the Government quite rightly want to see planted will be the correct indigenous species to the area in which they are planted? As many as possible must survive to become the forests that the country will need to reach its zero-carbon targets.

I welcome this transition plan and look forward to more detail of the schemes to come, and to the Minister’s response.

My Lords, I declare my farming interests, particularly—as the noble Baroness, Lady Jones of Whitchurch, referred to—in a family farm. I therefore understand the importance of more detail. I also understand that change can be daunting, and therefore the importance of advice and guidance on what is a partnership. This will work only if the Government and other bodies working with landowners and farmers of all tenures and sizes, across the country, work together.

Although I am not permitted to repeat the Statement, I will say that my honourable friend the Secretary of State said:

“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.”

In a sense, that is my first response to the point about reallocation. It is very important that that is seamless. The first reduction is 5%, which is in the scheme because, very often, there are currency exchange rate fluctuations. That is precisely why, when it comes in in December 2021, there will be a range of other schemes and so forth, which I will elaborate on.

Among other things, there is more detail to come because it is absolutely essential that we co-design all of these schemes with farmers—the people who are going to have to work through them. That is why, picking up the point of the noble Baroness, Lady Bakewell, on new entrants and retirement, we want to co-design these schemes so that they can enable farmers who wish to retire to do so, but we also want to get it right for new entrants. The new entrants support scheme will therefore be developed as a co-design. We are working with organisations that have the capacity and interest to provide lasting opportunities; we want this to be a success to support the next generation. We will support the development of the detailed eligibility criteria through a consultative co-design process, starting by the end of 2020 and concluding by September 2021, with a view to introducing a scheme in, for instance, 2022.

It is very important to say that this is money within the agriculture budget, and it will be retained as part of the work that we want to do. It is money that we promised through our manifesto pledge and we will retain that amount of money.

The issue of uplands has obviously come up in our consideration of the Agriculture Bill. As I have said before, upland farmers are very well placed to benefit from environmental land management, which is going to be very important. In addition to other policies proposed in the agricultural transition plan, we are proposing a specific and time-limited package to support farmers and land managers so they can work with protected landscapes to deliver environmental outcomes. This scheme will deliver funding through the protected landscape bodies to support farmers—particularly upland farmers, 75% of whom live and work in protected landscapes —to make improvements in the natural environment and cultural heritage.

Clearly, long-term financial support under the productivity schemes, in reference to the farm investment fund, will be very important in incentivising and supporting the purchase of equipment, technology and infrastructure—for example, the farm equipment and technology fund and the farming transformation fund. We will work to help with on-farm water storage infrastructure precision. Agriculture equipment is also going to be so important in reducing chemicals and the impact on the environment.

Again, I emphasise the importance of food production, which will be an absolutely essential part, and will remain so, of this dual purpose. With 70% of land farmed in this country, we need to ask farmers to produce excellent food for us at home, and that will be assisted by the productivity grants that will start to come in next year. Work is under way on that and on ensuring that, in the long term, there is a very strong business profile for the production of food. If we remember, the fair dealings provisions that we worked on together also play their part in ensuring that farmers get a fair price and a fair deal for their products.

I think that the interconnection of the environment is an important feature. There are three components. We want a large proportion of farmers to join the sustainable farming incentive early on, as part of moving to the full rollout of ELM in 2024 and, before that, to national pilots. It is all to engage farmers in that work.

It is absolutely right to also mention the work that we are going to undertake on the tree health pilot. Again, eligibility is still under development. We know that we all benefit from trees, woodland and forestry. Eligible participants will be invited to apply for the pilot based on confirmation by the Forestry Commission of pest and disease issues on their land. If a land manager is eligible for a countryside stewardship tree health grant, they are unlikely to be eligible for a tree health pilot. We want to ensure that this makes a contribution, as all the ELM points are about more tree planting.

A point was made about the internal market. Another important element of the United Kingdom Internal Market Bill is that it will guarantee that companies can trade unhindered in every part of the UK. I have to say again that that Bill will not lower standards. The UK has some of the highest and most robust standards on goods in the world.

We have a strong future for agriculture and horticulture in this country, which have a dual purpose of food production and enhancing the environment. The work and responsibility of Defra is to ensure that farmers have the detail of the schemes. That is why work is already under way on codesigning them. Farming has a strong future, which we must ensure.

My Lords, I welcome the Statement and pay tribute to my noble friend for his patient and painstaking approach during the passage of the Agriculture Bill—now the Agriculture Act. I will focus in particular on how all three strands of support outlined in the Statement and White Paper are more of an environmental charter than perhaps sustainable farming and a move to food production, with potentially less reliance on imports.

I press my noble friend to understand the implications for upland farmers. He said that they would be well placed to benefit from land management systems, but how will that be when they do not own the land? Some 47% of farms in North Yorkshire are tenanted, so I would like to understand how this will be beneficial to them. Many have a bent towards livestock farming, at which they have been very successful, but they do depend on the current stewardship and payment schemes. Going forward, I would like to know that a heavy emphasis on food production will continue, so that farmers who do not own but tenant the land will continue to benefit from the proposals for sustainable farming set out in the Statement today.

I thank my noble friend. We have worked together on these matters, which is why I go back to the importance of codesign in the tests and trials. We have contracted 72 tests and trials involving 5,000 farmers and land managers. We have nine tests and trials in upland areas: three are taking place across multiple regions, two in the south-west, two in the north-west, one in the West Midlands and one in Yorkshire. We are working with a total of 811 farmers and land managers. Our portfolio of tests and trials involves at least 76 tenant farmers, of whom approximately 62% are upland tenant farmers.

Clearly, we want to ensure that there is a vibrant tenanted sector in this country. I am well aware of the importance of the uplands. I might diverge from my noble friend here. If we had more time, we could go through the many schemes that are coming forward, whether for owner occupiers or tenants, where productivity grants and environmental schemes will be extremely valuable, whatever the tenure. We want to ensure that these schemes are of value to farmers across the piece as they seek to produce excellent food and enhance the environment for us.

My Lords, I declare my interest as president of the Rural Coalition and pay tribute to the Minister, who has worked so hard on getting this through. In the ELMS policy discussion document, Her Majesty’s Government recognised the bureaucratic burden that the CAP had placed on farmers and administrators. We were optimistic that the rollout of rural broadband would help a great deal, although the comprehensive spending review seems to have drawn back, and many people in rural areas are deeply concerned about how these new processes will be worked through. Can the Minister outline the plans for the ELMS application process and how it is intended to reduce bureaucratic constraints? Can he assure the agricultural community that there will be adequate helplines staffed by those who have been fully trained in these new processes?

My Lords, broadband and mobile connectivity in the countryside is clearly very important, which is why the Chancellor announced the first £1.2 billion, as I recall, of the £5 billion scheme that we wish to roll out. Clearly, this is a project of huge importance in rural areas. As the Minister for Rural Affairs, I can assure the right reverend Prelate that I am constantly in communication with DCMS about this.

The right reverend Prelate is right in using word “bureaucracy”. That is why we have wanted to simplify the BPS and, as we move forward, remove some of its most complex aspects by removing greening rules and improving arrangements for cross-border farmers, and removing the complicated rule that required farmers to claim payments on their entitlements every two years.

I understand the frustration about whether there should have been more detail but, in our quest for a less bureaucratic ELMS—a less bureaucratic arrangement —I emphasise that we must co-design these schemes with farmers so that the farmer sees it is as their scheme, not the state scheme. We want to make sure that it is not bureaucratic. The advice, support and guidance that will be available to farmers will ensure that, while there will undoubtedly always be worry, they get a helping hand rather than a heavy hand, so that they understand what schemes are available and, I hope, will apply for them and be successful.

My Lords, the Statement refers to a modern approach to regulation. When will a formal timeline for farm regulatory reform be published so that taxpayers can have confidence that this new approach genuinely delivers public goods for public money?

We want to ensure accountability and value for money; we think that the situation has been unduly draconian under previous regimes. This came up with regard to regulatory models in the health and harmony consultation and, indeed, in the Dame Glenys Stacey review. There are key improvements that we can make next year: increasing the use of warning letters instead of resorting always to penalties, introducing a greater range of more proportionate penalties for some breaches, improving inspection experience and simplifying, for instance, the cross-compliance guidance. Of course, all this is predicated on ensuring that there is value for money. We will be consulting on this so that we get the appropriate regulatory regime and can ensure that the taxpayer—and anyone else—realises that not doing the right thing has consequences. However, we think that the previous regime was not proportionate.

My Lords, as before, I declare my agricultural interests as detailed in the register. I have been most interested by the exchange this evening and, as other noble Lords have done, I commend the Minister for his total commitment to this new government policy.

My concern remains, as it always has been, for the small family livestock farm, and I have not yet heard enough to convince me that this matter is being sufficiently taken into account. In particular, I am not sure how these small farms can be sustained in the intervening period between now and the introduction of the environmental land management schemes in 2024. I am not as confident as the Minister that they will find it easy to adhere to either a widened countryside stewardship scheme or the sustainable farming incentive. And, of course, their income will be cut in 2021 by 5%, rising by 2024 to a cut of 50%, and we should never forget that the small livestock farms depend almost wholly on this taxpayer support.

As the Minister mentioned, they will undoubtedly need a great deal of advice on how to transform their businesses. It is, I fear, an uncomfortable fact that these small livestock farms in England will not be as well treated as their counterparts in Scotland and Wales, where the reduction in the basic payment will come later. I therefore ask the Minister to consult his ministerial colleagues as to whether more cannot be done to support small family farms in the next two to three years, as they are such an important part of so many rural communities in this country.

I agree with the noble Duke that the small family farm is an intrinsic part of our landscape and our rural culture. That is why it is important, on taxpayer support, that I should quickly run through the opportunities starting next year. Applications for new countryside stewardship agreements will open from February to March 2021. The farm resilience scheme will open in June 2021. The farming investment fund—equipment, technology and transformation—will open in December 2021. I mention those schemes in particular because obviously, as part of the work we want to do to ensure enhanced productivity, all farmers will be able to apply for them next year. With the countryside stewardship and the sustainable farming incentive, I think that upland farmers and small farmers are well placed to join. Further information is coming out on the sustainable farming incentive national pilot in spring 2021.

It is very important that advice and guidance is given, and I said in an earlier reply that that is part of what we will be doing to ensure that there is a vibrant future for small and livestock farms, not only in producing food but in their custodianship of the land, which I think the pastoral system has been very good at.

My Lords, a lump-sum exit scheme is envisaged, and it is assumed that this will bring in new entrants, because new holdings will become available. I am not sure I share the Minister’s confidence that that on its own will bring new entrants into farming. But one thing is for certain: we will need a skilled workforce. Can the Minister assure the House that he is talking to colleagues in the Department for Education, which is in the process of publishing a White Paper on further education apprenticeships, so that they will take into account the needs of agriculture in the years to come?

I wish that the noble Lord, Lord Curry of Kirkharle, was here because we have been working very closely on the skills leadership group and the imperative, as the noble Baroness has said, of having a skilled workforce as we enhance technology and innovation. Appropriate skills and the skills of countryside management are important. We need a range of educational opportunities at all levels, whether at agricultural college or in apprenticeships; the whole range is very important. This is an area where we in Defra are in touch with the department, because it is very important there is a skilled rural workforce now and in the future.

My Lords, reference has already been made to devolution settlements. I wish to refer to the ability of Northern Ireland to diverge from these ELM arrangements in order to meet the needs of our own localised system of agriculture, in terms of different farm patterns, land-leasing arrangements and now, of course, the operation of the Northern Ireland protocol. What can the Minister advise about his ongoing discussions with the Minister in Northern Ireland regarding the ability to diverge from these arrangements to ensure the proper delivery of good farm management for upland and lowland farmers?

I understand that today the co-chairs of the EU-UK joint committee have announced their agreement in principle on all issues with regard to the protocol on Ireland and Northern Ireland. I think this will have some impact on some of our areas, and further details will be given. I believe that the Chancellor of the Duchy of Lancaster is making a Statement tomorrow. I put that in the context of the recognition that agriculture is devolved. If one remembers, we included provisions in the Agriculture Act respecting the devolved arrangements of all parts of the United Kingdom, the importance of ensuring that Northern Ireland can make its own provisions as a devolved part of the UK and respecting the protocol on Ireland and Northern Ireland. Our manifesto pledge was to maintain the current annual budget to farmers, and that would mean that the total farm support provided to Northern Ireland farmers was £330 million. It is within the scope of the Northern Ireland Administration to ensure that they have the policies that they would wish for Northern Ireland farmers.

My Lords, I must draw attention to my agricultural interests in the register. Like all other speakers, I welcome the publication of the agricultural transition plan, but, like them, I also recognise that it leaves a huge number of questions still unanswered. Can the Minister confirm that all the money taken away from the BPS each year will be transferred to schemes which will pass it on in its entirety to farmers and land managers and will not be used for the government administration of the scheme? Furthermore, can he confirm that the new arrangements will not lead to additional bureaucracy imposed on the payees, which in turn will cost them money?

My Lords, as I said at the outset, and as my right honourable friend the Secretary of State said in his announcement, it is designed so that the reductions in the legacy direct payments will be transferred into a whole range of schemes within the agricultural budget. These might be productivity schemes, environmental land management schemes or slurry schemes, and this will ensure that farmers and land managers have that resource available within the amount of that budget that was promised for every year of this Parliament. The money being transferred from the direct payments will go into the schemes that I have outlined.

Picking up the point about bureaucracy, I assure noble Lords that all Ministers are determined not to replace one sort of bureaucracy with another. Complaints such as “We have not got the detail” are, I believe, precisely allayed by us wanting to ensure that at every turn—whether in simplifying the BPS or in having ways in which we do things differently—the schemes are not bureaucratic, and that their design is straight- forward. This is so that people such as me can understand them, and not have to read them three times or employ someone to help with that.

I assure my noble friend Lord Inglewood that the whole point of what we want from the codesign is for all farmers to feel that these are their schemes, because for so many it may involve retirement, new entry or productivity. It is about environmental land management in all its component forms. All the tests and trials in that area involve working with farmers, precisely to ensure that they are not bureaucratic and that we are not asking for mission impossible. We want farmers to have a sense of achievement not only because they produce public benefits, but because they feel that this is a worthwhile part of their joint endeavour in producing food for the nation.