Direct Payment to Farmers (Reductions) (England) Regulations 2022

Baroness Jones of Whitchurch Excerpts

Monday 21st March 2022 Grand Committee

This suite of SIs work together to give a package of measures across the farming industry which should bring some certainty to the farming community but which I fear are not likely to do so. Together with the existing trade deals and those currently under negotiation, it is no wonder that the British farming industry does not feel that the Government have its back.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the Minister for his introduction to these SIs, which, as he said, follow on from the detailed debates we had during the passage of the Agriculture Act, and indeed previous SIs which began to roll out the detailed proposals.

First, addressing the SI which introduces year 2 of the basic payment scheme reduction, as has been said, this is not a surprise, as the plan for this reduction in 2022 has been set out in previous documents. Nevertheless, even for the lowest category of claimants, a drop from 5% to 20% is significant. Already the farming press is reporting significant cases of hardship, and the noble Lord, Lord Benyon, recently admitted in the Chamber that it was hard to see how many upland farmers could continue to make a living under the new regime. We know, for example, that pig farmers have been particularly badly hit by what Victoria Prentis, the Minister in the other place, has described as an “exceptionally challenging period.” I therefore share the concern that several noble Lords raised about the Secretary of State’s comments last week, in which he said that the reductions in the basic payment scheme for farmers would be more than recouped by their increased income from the sale of produce. I do not think anyone of us felt that that was a reality, and indeed I very much share the comment of Minette Batters, who said

“one of us is … living in a #ParallelUniverse”.

I think she summed up the views of many when she said that. Perhaps the Minister could comment on what seems to be an unrealistic comment of the Secretary of State and say whether he agrees with it.

Of course, the Welsh Government have de-risked the changes by postponing the basic payment cut for a year to allow the farming community to adjust to the new arrangements. Can the Minister say what the impact of this is, with farmers receiving different subsidies throughout the devolved nations, and what is the impact on the internal market from the phasing out happening at different timescales?

I am conscious that this SI is for one year only, as was the previous year’s SI. In the current climate that probably makes sense given the huge traumas that are going on in the sector. As noble Lords have said, we are seeing the impact of unforeseen world events causing massive increases in the cost of fuel and gas, and shortages of feed and fertiliser. The Explanatory Memorandum in paragraph 14 makes it clear that these arrangements will be kept under review, saying that

“Defra and its agencies will monitor and review the impact of this instrument as part of its standard policy-making procedures.”

Can the Minister shed more light on what these monitoring arrangements are? I would have thought that in the current climate that is exactly what such flexibility was designed to address, and presumably at this moment risk analyses are taking place as to the impact of these huge world events. Can the Minister say what tests would have to be met before the Government agreed to deviate from the rollout of the basic payment cuts? If not now, when would they ever agree to do it?

Can the Minister also give more information about the savings being made from the first year of the basic payment cut? Again, as noble Lords and the Minister said, it has been said that no money will be lost from the overall pot of money if it is not reallocated via other ELM schemes, but we know that many of those other ELM schemes are not fully up and running yet. Can the Minister reassure us that none of the unallocated money in that first year has been reclaimed by the Treasury? We know what the Treasury is like, and it is hard to imagine that it has allowed that money to sit in a pot awaiting its allocation for future years—it is very generous if it is thinking like that. I think we would all like to be reassured that the cuts in one pot are there and can be shared and made available for this and future years. Just so that we can have some further reassurance on that, when will we be able to see the accounts to give us some factual information?

The noble Duke, the Duke of Montrose, raised the split in the distribution of the ELM schemes. Can the Minister say whether it is still the intention to split it evenly between the three pillars so that a third will still be available to go to individual farmers rather than the larger projects that were also envisaged under the ELM portfolio?

The second SI tightens up the rules for checking, monitoring and enforcing the applications for financial assistance. I do not have a great deal to say on this, although I agree with the noble Baroness, Lady Bakewell, that the tone is rather unfortunate. Obviously, it is important that schemes are watertight and not open to fraud, but it is also important that we have the right degree of flexibility in terms of the investigations that take place. However, I point out the irony of Defra deciding to go its own way on leaving the EU, only for it to concede in paragraph 7.7 of the Explanatory Memorandum that the changes that it is now introducing

“will bring Defra’s investigative powers closer to those … previously created under Common Agricultural Policy … rules”.

I turn to the third SI on the arrangements for lump sum payments; again, noble Lords have raised a number of concerns about this. My first reaction on reading this SI was: is this it? Is this all we are going to get? I had expected a much more detailed document setting out the criteria, any exemptions and much more detail about how and to whom the land could be transferred. We understand the need for and potential benefits of having a scheme that allows farmers to retire with some dignity if they do not want to participate in managing their land for environmental benefits, but we also need to be confident that these retirement payments will transform the way that the land is subsequently managed and owned. This was very much our ambition during the passage of the Agriculture Act.

The Minister may have seen the briefings that we have been sent by Sustain, which echo many of our concerns about this proposal. A fundamental concern is that there is no priority for the land that becomes available to be offered to new entrants. In the Commons debate, the Minister, Victoria Prentis, said:

“The lump sum exit scheme sits alongside extra support to help new entrants into the industry.”—[Official Report, Commons, Delegated Legislation Committee, 15/3/22; col. 13.]


But these two schemes are not linked up. There is currently no incentive for a retiring farmer to offer the land to a new entrant. It is far more likely that, as we have always feared, the land will be gobbled up by the large landowner next door, who will have an inside track on details of the sale and will use it as an opportunity to expand their landholdings. This was the point made by the noble Lord, Lord Carrington, who also made a good point about these sums of money simply not being sufficient for people who want to move off the land to be able to buy a house away from the farm.

Another alternative is that the land will be bought up by large corporations that have no farming background but are keen to offset their carbon emissions or to use it for biodiversity net gain to offset developments elsewhere. We know that the Government are encouraging this, and in many ways those schemes have merit, but we need to know where the land will go and who will be making use of it.

If we are not careful, both those depressing scenarios —the landowner and large corporations—are very likely unless the provisions in this SI for disposal of the land on retirement are tightened up. The end result is that we will see small family farms squeezed out of the sector, which was the point made by the noble Duke, the Duke of Wellington.

Will the Minister look at this again and provide some reassurance about new entrants and where that land will go? Will he also look again at the very narrow definition of “connected person” in Regulation 7(1) of the Agriculture (Lump Sum Payment) (England) Regulations 2022, because, as it stands, you can transfer the land to any family member as long as it is not your partner or spouse. I ask again whether this been fully thought through, because it seems likely that the payments will be made within a family—maybe to the father—with other members of his family carrying on farming much as before. Again, we are facing a scenario where new entrants will find it very difficult to make headway in coming on to the land.