Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025

Debate between Lord Roborough and Lord Cromwell

Wednesday 30th April 2025 Lords Chamber

[Lord Roborough (Con)]

My Lords, I thank the Minister for a thorough introduction to this SI. I have tabled a regret amendment on behalf of my Benches, but, in reality, it is on behalf of all English farmers. Regret is too gentle a word to describe the mood among the farming community.

Before I address the issues, I first draw the House’s attention to my registered interests as a farmer and landowner. I am directly impacted by this SI, with a 90% reduction in my delinked payments. I am at least sheltered by the SFIs that I have signed up to; that is not the case for the majority of farmers.

When in government, we replaced the basic payments scheme with delinked payments based on historical BPS claims. This was intended to be gradually phased out by 2028 in favour of environmental land management schemes, where farmers and landowners receive payments only for public goods. The reductions we put in place put these delinked payments on a gradual glide path to zero in 2028. This Government have dramatically accelerated that decline. This effectively ends the seven-year transition that English farmers had been led to expect three years early, upending their budgets.

The Government promised that this abrupt reduction would release more funding for sustainable farming incentives, Countryside Stewardship schemes and large-scale landscape recovery schemes—collectively known as environmental land management schemes. Despite a commitment to give up to six weeks’ notice of a planned closure of SFI applications, the Secretary of State abruptly closed applications with 30 minutes notice at 6 pm on 11 March, as the noble Baroness, Lady Grender, has said, apparently breaking two commitments at once.

Only a minority of farmers who were previously receiving BPS had actually signed up to SFIs. Today, I am speaking particularly for two cohorts of farmers who are bearing the brunt of this SI’s excessive reduction. The delinked payments cut is particularly painful for those who were unable to apply for SFIs as they were already in environmental schemes that were less profitable but designed to work alongside this phased reduction in delinked payments. Those farmers were simply abandoned, with no compassion from anyone.

When the SFIs were closed to new applications, this affected another cohort of farmers, who were expecting to replace old environmental schemes and the delinked payments with SFIs but who had not yet completed their SFI applications. These farmers are simply in despair. There is no transparency over the timing of the payments under new SFIs, nor what their nature will be. There is certainly no confidence that they will enable these farmers to continue delivering environmental goods as they had planned, or even, potentially, to remain in business.

The Minister earlier stated that the details of revised SFIs will be released this summer. Many farm businesses are in crisis after delinked payments and the cut of SFI applications. Could the Minister please indicate how much has been identified within the existing farming support budget for these new SFIs?

Our actions in government demonstrated our commitment to paying farmers with public money for the public goods they delivered, as well as allowing them to plan ahead financially with certainty. This Government have acted in a way that allows for no financial planning by farmers and have created incentives for those farmers now so disadvantaged to compromise environmental principles and push for greater output in order to remain in business.

Farming is a competitive industry. Food production is largely commoditised, and our farmers compete not just against their neighbours but also against farmers across our country, our continent and the world. Although many of our farmers are capable of competing effectively, smaller farms, particularly in less-favoured areas, can find this competition too much. When we rightly include our high demands for animal welfare and environmental protection, this competitiveness is further undermined. Is it any great surprise that the average age of farmers is 60, and there appears to be limited interest in the next generation engaging?

Farmers in Wales, Scotland and the rest of Europe continue to enjoy much higher levels of financial support. Even the great prairie farmers of the US enjoy heavily subsidised crop insurance and the massive ethanol blending mandate supporting corn prices. Where are the hedgerows, wild birdseed belts and woodlands on these prairies, protecting and enhancing the environment? How does the Minister expect our farmers to be able to provide competitively priced food, protect and enhance the environment, and provide all the other public goods, as well as supporting their families, when the Government slash support and environmental payments at a moment’s notice?

In answer to my question on Monday in your Lordships’ House, the Minister said that diversification and improvements in the environment are two of the three central pillars of the 25-year road map that the Government are developing for farming. Cutting SFIs at a moment’s notice seems a strange way to demonstrate that commitment. My question was about how nature restoration levies in the Planning and Infrastructure Bill as drafted will go to Natural England, rather than farmers and landowners, and be used for developing its environmental development plans, potentially on land that it will compulsorily purchase. This is a prime opportunity for the Government to help farmers diversify and supplement ELMS. Why does the Minister not want this opportunity to be offered to farmers?

I am pleased to see that the party to my left have followed my regret amendment by tabling a fatal amendment. It is good to see noble Lords from many, if not all, Benches working together to support our farming community. As is the long-standing custom of this House, we on these Benches will not support the fatal amendment. In this case, this would undermine the Government’s power to control their finances and, as the Minister rightly pointed out, undo the previous transition from delinked payments to ELMS. However, I strongly urge the Minister and all members of her Government to understand the terrible position this SI is putting many farmers in, and to act quickly to help those affected. Either moderate the impact of this SI or reinstate the existing SFIs. I intend to test the opinion of the House.

[Lord Cromwell (CB)]

My Lords, I declare an interest in this matter, as I have been involved in UK agriculture for my whole life. Normally, I try to be helpful and even occasionally to inject some humour into my remarks—with varying degrees of success, admittedly. But I am sorry to say that, tonight, I am cross—not with the Minister, for whom I have great respect and indeed affection. But the fatal amendment and regret amendment in the names of the noble Baroness, Lady Grender, and the noble Lord, Lord Roborough—which they have so devastatingly put to us tonight—highlight the frankly chaotic and opaque financial position for UK agriculture. SFI, Defra’s flagship scheme, ran out of money and slammed shut without any warning. The House of Commons Minister called this a “cause for celebration”. I wonder what would happen if DWP ran out of money and tried announcing something like that to the House.

The Minister mentioned the existing higher-level stewardship agreements, of which my family holds one. These were acknowledged by the Defra House of Commons Minister as having punitively low rates, and it was announced weeks ago that these would be updated before now, but nothing has been heard since. I am afraid that the Minister was wrong when she told us earlier that they have been increased. I have just checked the Defra website, which says that we agreement holders will be written to “by April” with increased rates. I ask noble Lords to check their diaries: today is 30 April, and nothing has been received.

The next iteration of the SFI, we are told, will be after the spending review, which probably tells us all we need to know about it. Meanwhile, the accepted tapering down to zero, over time, of payments under the BPS, as UK agriculture exited EU support, has been out of the blue cut by a totally unexpected 76% for smaller farmers—all of this while speechifying about environmental schemes, food security and a grand-sounding 25-year plan for UK agriculture, which no farmers I have spoken to have even heard of.

I am sorry to say this, but Defra’s credibility—and I have been involved in agriculture my whole life—has never been lower in the eyes of the sector it is supposed to support, and what little trust remained has now evaporated. All that said, while these Motions are both accurate and justified, I shall, given my involvement in the industry, with great sadness abstain if they are put to the vote.

Great British Energy Bill

Debate between Lord Roborough and Lord Cromwell

Committee stage
Wednesday 15th January 2025 Grand Committee

[Lord Roborough (Con)]

My Lords, Amendment 88, in the name of my noble friend Lady Noakes, would require more timely publication of GB Energy’s accounts, in line with public rather than private company reporting. I also support Amendment 89, in the name of the noble Lord, Lord Vaux of Harrowden. On earlier groups I have addressed the limitations of private and public company reporting versus that of listed companies. I made that argument, given that taxpayers’ money, raised at great cost through tax increases impacting pensioners, farmers and all businesses in this country, is being invested. All this appears to have fallen on somewhat deaf ears with the Minister, who seems determined to avoid anything but the lowest level of scrutiny, transparency or accountability as to how GB Energy invests this, at least, £8.3 billion.

I also alluded to my comments in the debate on the King’s Gracious Speech and I remind the Committee of exactly what I said:

“it is private capital that has driven the rollout of renewables and infrastructure in our country, and it appears that Great British Energy will be targeting investments that private capital alone will not finance. That does not fill our Benches with confidence that these investments will necessarily be judicious. Please can the Minister assure the House that GB Energy will report on the performance of its investments regularly and in detail and that the Government will be held accountable in this House for the performance of those investments?”.—[Official Report, 18/7/24; col. 36.]

In response to this question, I received the following reply from the Minister, the noble Baroness, Lady Hayman of Ullock:

“The cost to the taxpayer of its set-up and investments will be carefully managed and monitored through Parliament, and investments will be subject to safeguards and risk assessments, similar to established public finance institutions”.—[Official Report, 18/7/24; col. 126.]


That answer may not have been the answer that I was looking for, nor the answer that I may be seeking today, which many amendments tabled to the Bill have also sought, but it does seem to offer at least some scrutiny through Parliament. It does not appear to me that the Minister here today is offering even that level of scrutiny in the Bill. His response in previous groups to amendments seeking this transparency and accountability has been:

“the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts”.—[Official Report, 13/1/25; col. 942.]

It is hard to disagree that the reporting requirements as determined by the Government are set out in the Bill. However, the point that these amendments, and many others already debated, make is that this is simply not adequate. One set of accounts published annually up to nine months after the year end, with the potential for minimal levels of detailed reporting, is effectively writing GB Energy a blank cheque, with next to no external oversight.

As other noble Lords have suggested to the Minister, if the Government were willing to table amendments to allow for greater scrutiny in a timely manner of the financial performance of investments, and the progress in achieving the overall objectives of increasing employment, reducing household electricity bills and reducing carbon emissions, I am sure that the Committee could be satisfied, without taking so much time making similar points. On previous groups the Minister has called this filibustering. That is an unfair characterisation, at least of the groups that I have taken part in. The Government have proven deaf to the Committee’s reasonable requests, but that will not make them go away.

I am particularly taken by Amendment 89 in the name of the noble Lord, Lord Vaux, and not in the least surprised to see that it has so many supporters. It avoids amendments to Clause 6, which the Minister has pointed out is the wrong place in the Bill for such amendments, and to which my noble friend Lady Noakes has given authoritative support, but it addresses key reporting requirements around the receipt of subsidies, reporting on individual investments, achievement of objectives and strategic priorities, and impacts on the wider financial ecosystem. For these reasons, I believe it is an excellent amendment. However, it may still be lacking by relying on the relatively lax Companies House requirements for limited companies, so I also support Amendment 88 in the name of my noble friend Lady Noakes to make reporting in line with that for public companies.

As I have argued in previous groups, in support of my noble friend Lord Petitgas, who is in his place, there is a strong argument that quarterly reporting should also be required, in line with the listing requirements for publicly traded companies. As I have pointed out, if companies worth less than £100 million can comply with this, I do not believe it is a challenge for the £8.3 billion-plus GB Energy. This would also impose more disciplined reporting on GB Energy’s investees.

Why is it that the Government are so resistant to GB Energy showing proper transparency and accountability, even less than the modest commitments that I read in my response to the King’s Speech? What do the Government fear, if they are so convinced that it is worth while taking so much taxpayers’ money and investing it in energy, which in theory will be a good financial deal for the taxpayer? Last year’s business-unfriendly Budget, despite the protestations that it was pro-business and pro-growth, fills us all with concern that this Government do not understand business.

[Lord Cromwell (CB)]

My Lords, I am not sure what the opposite of a filibuster is, but I am going to try. I add my support to Amendments 88 and 92. They are both simple, timely, consistent and robust: elements of good housekeeping, quite frankly.

I also add my support to Amendment 89. We need to draw lessons from the experience with the water industry, whose reporting was opaque. It simply was not transparent enough on key areas of its financial structuring. This amendment would tease out the things that people need to know—people who are not forensic accountants going through the balance sheets reported by companies. Therefore, I thoroughly endorse Amendment 89.

Water (Special Measures) Bill [HL]

Debate between Lord Roborough and Lord Cromwell

Committee stage
Monday 28th October 2024 Lords Chamber

[Lord Cromwell (CB)]

My Lords, I will speak to Amendment 13 in my name. As this is my first contribution on an amendment of my own, I thank the Minister for meeting me, for the fact sheets and the letter, and for the good news that the commission and the review are taking place. We all appreciate that. I support the Bill and welcome the commission review to come.

I turn to the amendment. As touched on by other speakers, including the noble Baroness, Lady Pinnock, in the debates on the second and third groups of amendments, company employees require appropriate remuneration, just as investors need a return. But the financial engineering introduced previously by investors and company directors—for example, debt levels, transfers to parent companies and other practices that were forensically set out earlier by the noble Lord, Lord Sikka —has enabled opaque enrichment, and has subsequently brought some water companies close to bankruptcy. That is not what monopoly water companies are for, and I believe it lies at the very heart of the current problems of the water companies.

The amendment enables the authority to include rules or guidance, as we may decide, with regard to a company’s structuring and its transparent reporting. It is deliberately left as “may” rather than “must” because the authority may want some flexibility here. Nevertheless, the amendment would act as an overt reference to the responsibility of the authority and water company employees to evaluate clearly the company’s financial structures and changes to them, and how those would impact on the distribution of financial benefits across investors, employees, directors and, indeed, consumers.

[Lord Roborough (Con)]

My Lords, I will speak to Amendment 17 in my name. I thank the noble Lord, Lord Sikka, yet again for introducing this group and raising these matters for consideration when the Government are establishing the regulations surrounding performance, pay and bonuses.

Amendment 17 seeks to clarify the definition of what constitutes performance-related pay. There are many ways in which companies can create performance-based incentive schemes. That can include multiyear programmes containing cash bonuses, share awards, restricted stock units, share options and pension contributions. In answer to the noble Lord, Lord Sikka, it rarely includes chauffeur-driven cars, private schooling or any other benefits in kind, which tend to be part of the base package.

Is the intention to capture all forms of performance-based rewards within the powers of the Bill? If so, would it not be better to be exhaustive in defining them in the Bill? It is vital that such a definition be as clear as possible to ensure that the Bill achieves its intent to punish senior executives who are not fulfilling their obligations to us all in cleaning up our rivers, lakes and beaches.

In the Bill as drafted, the rules are not clear enough as to what financial components could make up the bonus of a senior water company employee in a given financial year. The amendment is therefore necessary to prevent water companies redesigning performance-based awards to take them outside the scope of the Bill. This is not to suggest any nefarious activity, but anyone currently captured by the Bill would choose not to be if they were able. It would then become impossible for a water company not to offer schemes outside the scope of the Bill if they wanted to attract the best talent.

I understand the intention of Amendment 5 from the noble Lord, Lord Sikka. It is indeed important that we ensure that water companies have no incentives to continue polluting our rivers. We have looked at this issue in our own amendments. Amendment 27 would ensure that any rules relating to pay and governance will be suitably scrutinised, so I believe the issue could be solved without the inclusion of Amendment 5.

Additionally, I ask the noble Lord, Lord Sikka, whether he has considered the impact that this amendment would have on the hiring process of water companies. I think it unlikely that many people would respond to a job advert indicating that you may have a salary but that there is a chance that by the end of the year it could be taken away from you. If the total remuneration of senior roles is included in the Bill, it is inevitable that water companies will lose people with relevant skills and experience in the sector. That will worsen the leadership and perhaps lead to more serious issues within the sector.

It is also possible that the water companies would be forced to delegate their own management to third-party consultants outside the scope of the Bill entirely, in order to find the necessary expertise to run the companies. Have the Government given thought to how to cope with the possibility of such third-party consultants not captured by the Bill?

On Amendment 6 in the name of the noble Baroness, Lady Bakewell of Hardington Mandeville, I agree that both legal and illegal dumping of sewage lead to undesirable outcomes. As such, I agree with the sentiment of the amendment. In 2022 we published the Storm Overflows Discharge Reduction Plan, which put in place targets to reduce the release of the overflow of sewage and in fact to stop it, except in situations with unusually heavy rainfall, by 2050. So we recognise that the issue is a pressing one and that action must be taken to ensure our rivers are kept clean. However, in order to stop the legal release of sewage, a substantial investment of money and time is necessary, and the amendment does not allow for such provision of time.

Our sewerage systems are a result of Victorian infrastructure design, and the increasing population and heavier, more frequent storms have led to increased pressure on this system. The suggested penalty will make it even less desirable to hold a senior role in a water company. As such, it will further decrease the number of people with skills and expertise at senior levels. This is unlikely to lead to an improvement in the water system for consumers, which is ultimately the aim we share across these Benches. I fail to see how we can support the noble Baroness’s amendment, despite the case put forward by the noble Earl, Lord Russell.

The amendments tabled by the noble Lord, Lord Cromwell, would require executives to take personal liability through their performance-related pay for unspecified structuring or restructuring that may put companies at financial risk. This would appear to us to be too vague to have much bite. It also potentially means that executives’ performance-related pay would be contingent on issues over which they might not have responsibility because they could be overridden by shareholders.

As I mentioned earlier, in response to an amendment put forward by the noble Lord, Lord Sikka, I encourage noble Lords to support Amendment 92 in my name in a later group, which would be a clear-cut prevention of payments to shareholders where there are potential issues of financial distress.

I look forward to the Minister’s response and hope that the Government will tighten up the definition of performance-related pay in line with our amendment.