Direct Payments to Farmers (Reductions and Simplifications) (England) (Amendment) Regulations 2021

Viscount Trenchard Excerpts

Monday 22nd March 2021 Lords Chamber

[Viscount Trenchard (Con) [V]]

My Lords, I thank my noble friend for introducing the debate on these regulations. I declare my interest as a trustee of the Fonthill estate in Wiltshire.

I refer first to the direct payments SI, which contains the words “reductions” and “simplifications” in its title. From the farmer’s point of view, it is all too clear what “reductions” means. What “simplifications” are achieved in these regulations? The Government and Ministers have, rightly, made much of our new freedoms to adopt a more agile, simpler regulatory regime, now that we are no longer bound by the cumbersome, expensive and bureaucratic EU regime, which gives much too much importance to the precautionary principle. Look how that played havoc with the vaccine rollout in EU member states. On 18 March, my honourable friend Victoria Prentis said in another place:

“We published the reductions back in 2018, so that farmers would have time to prepare for the changes. The SI sets the reductions for the 2021 claim year only; we will set out the reductions for later years in future SIs.”—[Official Report, Commons, Delegated Legislation Committee, 18/3/21; col. 3.]


On 7 July last year, in Committee on the Agriculture Bill, and on other occasions, I asked whether my noble friend the Minister could be much more specific in informing your Lordships of how much financial assistance will be made available under the ELM scheme, and whether it will completely compensate for the loss of direct support payments, which will hit farming businesses hard in 2021. I think he said that the total savings from the progressive cuts in dividend payments would be channelled back into payments to farmers, but it is not clear whether the reduction in direct payments will be made good in the same year, or if the Government intend to retain the saved payments for a year or more.

I understand why the Government have decided to hit the larger farming businesses harder. However, although the larger estates are better able to survive the withdrawal of direct payments, it is also true that the larger farming businesses will suffer reductions in income amounting to a large percentage of their profit or, indeed, to an amount greater than their profit, pushing many businesses in to a loss-making situation. The larger farming businesses employ a large majority of agricultural workers and the prospects for future employment in the sector will be negatively affected unless the Government can give much more clarity on how businesses can mitigate the loss of direct payments. Indeed, it should be made possible for those who are particularly innovative and active in introducing new, environmentally friendly practices to receive more than they have been receiving under the present system.

The Agriculture (Financial Assistance) Regulations provided an opportunity for the Government to explain exactly how much farmers will be able to earn from four different schemes. The Explanatory Memorandum describes the environmental land management scheme as

“the cornerstone of our new agricultural policy.”

However, this will not be launched until 2024, so only those few farmers chosen to participate in the national pilot will gain any financial benefit from it. The tree health scheme is also subject to a pilot scheme and will not be launched across England until 2024, although those who benefit from the current countryside stewardship tree health scheme may, as I understand it, continue to do so. It is not clear what criteria will be applied to determining whether applications to the farming investment fund will be successful.

It is not clear when, or how, the money saved from cuts to direct payments will be paid over to farmers. Furthermore, a large farm not selected for the ELM pilot scheme, however well managed from an environment standpoint, will face a substantial shortfall in income for three years. There is not yet enough information for farmers to estimate how much they will be able to earn in mitigation of the cuts to their income, which will take place this year, so it is impossible for them to make sensible plans for the future. The questions asked by my noble friend Lord Lilley in this regard are very pertinent. In particular, does the Minister expect that farming may indeed become more profitable when subsidies are withdrawn, as in New Zealand? Will the Minister commit to making available as much precise information as he can, as early as possible, to help farmers make realisable plans? That should help stabilise employment prospects in the sector. I look forward to his reply.