Direct Payments to Farmers (Legislative Continuity) Bill - Second Reading (and remaining stages)

– in the House of Lords at 3:40 pm on 29th January 2020.

Alert me about debates like this

Lord Gardiner of Kimble:

Moved by Lord Gardiner of Kimble

That the Bill be now read a second time.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

My Lords, I should at this juncture declare my farming interests as set out in the register.

The Bill before your Lordships is concerned with government spending and not changes to policy; it has consequently been certified as a money Bill. I will therefore focus my remarks on discussing the principles and contents of the Bill.

The Direct Payments to Farmers (Legislative Continuity) Bill is of critical importance. Principally, this small technical Bill seeks to provide continuity and stability to farmers by enabling direct payments to be made in all four parts of the United Kingdom for the 2020 scheme year. These payments are currently worth nearly £3 billion per annum to UK farmers.

The need for the Bill arises from the fact that Article 137 of the withdrawal agreement will on exit day—at 11 pm on 31 January 2020—stop the EU legislation on 2020 direct payments from applying in the UK. This is part of removing the UK from the next EU multiannual budget, in which the UK will not be participating and it would not be appropriate for this country to continue to contribute towards.

The Government are ensuring that, before we begin to reform our agricultural system to suit our own domestic circumstances, the interests of UK farmers are protected in the meantime. It is time sensitive, as the Bill and all necessary secondary legislation must be in place on exit day, because after that point the EU direct payments legislation will cease to apply in the UK for the 2020 scheme year.

This gets to the heart of what the Bill is—and, crucially, what it is not. The Bill will lift and incorporate the EU direct payments legislation for the 2020 scheme year on to the domestic statue book. It will allow the Government and devolved Administrations to make operability fixes to that legislation so that it works and can be used to continue to make payments to farmers for the 2020 scheme year. The Bill does not allow for wide and sweeping agricultural policy reforms.

The Government are committed to ambitious and wide-ranging agriculture reform in England. The Agriculture Bill will introduce a new domestic agriculture system based on the principle of paying public money for the delivery of public goods, such as clean air and water and healthy soil. This will be achieved over a seven-year agricultural transition, starting in 2021, during which direct payments will be phased out in England. But this is not the Bill to bring about these changes.

The Bill’s purpose and scope are narrow and sufficient to provide the Government, devolved Administrations and farmers with the legal certainty that payments can be made for 2020. It is important to provide certainty to farmers, and I hope that farmers will be assured by the recent Government commitment to provide £2.852 billion in funding for 2020 direct payments in the United Kingdom. This means that the overall levels of funding available for direct payments for 2020 will be the same as for 2019. The Government have also committed to maintain the current overall annual budget to farmers each year until the end of this Parliament.

This Bill will give Defra and the devolved Administrations the legal basis for paying direct payments for 2020. This Bill legislates and works for the whole of the United Kingdom. The Government have worked closely with the devolved Administrations, which have had a unity of purpose in safeguarding the interests of the United Kingdom’s farmers.

I want to address one further important point. In September 2019, the Government accepted the recommendations of the review of the noble Lord, Lord Bew, concerning the allocation of farm support funding in the United Kingdom. I thank the noble Lord for the essential work he did on this review, which paved the way for the Government agreeing to an increase in the funding allocations for Scotland and Wales. The Bill enables the Government to deliver on their promise to uplift the funding for Scotland and Wales, while maintaining the funding for England and Northern Ireland, for 2020.

Turning to the Bill’s main provisions, Clause 1 incorporates the EU legislation governing the 2020 CAP direct payments scheme into domestic law on exit day. This will ensure that the Government and the devolved Administrations can make payments to farmers for this claim year.

Clause 2 applies Sections 6 and 7 of the European Union (Withdrawal) Act 2018 for the purpose of the legislation being domesticated under this Bill. In applying Section 6 of that Act, it provides certainty to the domestic courts about what can and cannot be considered. In applying Sections 7(2) and (3) of that Act and the Schedules, it makes it clear how the legislation we are domesticating can subsequently be amended.

Clause 3 contains five powers. There are two powers, one conferred on the Secretary of State and the other conferred on the devolved Administrations, to make operability amendments to the law we are domesticating to make sure that it works in a domestic setting. For example, it would be used to replace references to the European Commission with the domestic equivalent. I must say, particularly looking at the Opposition Front Benches, that your Lordships will be familiar with this, not least because it is akin to the power in Section 8 of the European Union (Withdrawal) Act 2018, under which the many EU exit SIs were made. There are another two powers, again one conferred on the Secretary of State and the other conferred on the devolved Administrations, to replicate any changes made by the EU to its equivalent legislation during 2020, should it be considered appropriate to do so. Quite simply, this is a discretionary keeping-pace power. Finally, there is a power conferred on DAERA in Northern Ireland to retain policy flexibility for its Ministers to continue to move entitlements in Northern Ireland towards a uniform unit value, like the rest of the United Kingdom.

Clause 4 makes provision for the domestic publication of EU regulations relating to direct payments. It also enables regulations made under the European Union (Withdrawal) Act 2018 on rules of evidence to apply equally to the body of law we are domesticating under this Bill.

As I said, Clause 5 enables the Government to implement, as far as they relate to 2020, the recommendations of the noble Lord, Lord Bew, detailed in the review bearing his name. It achieves this by making amendments to the direct payment regulation. This clause demonstrates the Government’s commitment to all farmers across the constituent parts of the United Kingdom.

This is a small technical Bill but it is none the less significant. It is about providing continuity and stability to farmers. Where the Agriculture Bill provides for the beginning of a transition in England towards a new system of paying public money for the delivery of public goods, this Bill will enable us to pay direct payments for the 2020 scheme year across the United Kingdom while also delivering on the Government’s promise to provide fair funding allocations. I beg to move.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour 3:49 pm, 29th January 2020

My Lords, I declare my multiple environmental, food and farming interests as listed in the register. I do not know whether noble Lords have noticed, but agriculture Bills are a bit like buses, or indeed men—there is not one around for ages and then two or three come along all at once. We have had approximately one Bill a decade since the 1940s but we have had three in the past two years.

As the Minister said so eloquently, this Bill is about continuing the current system of support for farmers for one more year, and, as it says on the tin, it is simply about legislative continuity. It will continue the current system where direct payments, which make up around 80% of all payments made under the common agricultural policy in the UK, are based on the amount of land that is owned or managed by a farmer and not by any other criterion such as the food they produce, the environmental benefits they manage or any other public benefits they provide.

This of course presents a real opportunity arising from Brexit. I confess that I never thought I would see the day when the words would cross my lips—but it is an opportunity, one of the few coming out of Brexit, because the current support system is not a good way to support farmers, to deliver public benefits or to protect the environment, so we all look forward to the future changes that will not arrive with this Bill but will arrive with the next one. It will deliver on the Government’s commitment to paying public money for public goods; making payments based on environmental and other benefits that we need farmers to provide but which will not readily be delivered by the market.

The Bill before us is very routine, but we did have another agriculture Bill—one of the other three—that was introduced in 2018. That has now been withdrawn and a new version came out on 16 January. It will eventually come to your Lordships’ House and we will then have an opportunity to talk in more detail about how we can reshape support for farmers to ensure that the system is effective in fighting the twin emergencies of climate change and biodiversity decline. As I say, that is one of the few silver linings offered by Brexit.

When it comes, that Bill will need to deliver five things. I should like to take the opportunity of this Bill to remind the Minister about those five things. Just in case he has so far not slid those requirements into the legislation, perhaps he could do so between its Commons stages and it coming to us.

The first thing is the core principle of public money for public goods. How are we going to use the support system to help farmers deliver the things that the market would not necessarily deliver? Land management plays a key role in environmental benefits and animal welfare. The Government have shown a consistent commitment to these, but it would be good to get the Minister’s assurance yet again that public money for public goods will be a core principle of the Bill.

The second issue is that we should not widen the definition of public goods too far because that would dilute it. We will have other opportunities to tackle other issues delivered by agriculture. Work is well under way on the food strategy, and I think that food production should be dealt with in that strategy rather than being part of the public goods debate so that we do not see the public paying twice for a benefit: that is, at the supermarket checkout or at the farm shop for the produce they are buying, as well as paying through their taxes.

The Government have said that they are committed to delivering payments that will enhance agricultural and land management productivity. I will sound a note of caution on that. They should not be in opposition to or separate from measures that deliver environmental benefits or public goods. It would be a real shame if one part of the subsidy system was at odds with another, which was so often the case under the common agricultural policy.

Another issue that we need the future agriculture Bill to deliver is some security in the face of future trade deals. We must not see future trade deals undermine the ability of UK farmers to deliver not only thriving businesses but public goods if the Government cut trade deals that allow access to the UK market for imported food that is produced to lower environmental, welfare and safety standards.

The third thing we need the Bill to do is maintain the level of funding. It is good to get from the Minister a recommitment of the £3 billion or so figure. This is not because a farmer of my acquaintance recently muttered to me that farmers need every penny, but because, if you look at the calculations done by some of the member organisations of Greener UK, it estimated that £2.9 billion was required to deliver the environmental benefits alone, without any of the other public goods. We must not see an erosion of that £3 billion; in fact, it may need to grow. I hope we can get some assurance from the Minister that, once the public benefits have been established in what will become the Agriculture Act, the requisite funding will be there to support whatever is established by that Act.

My fourth requirement of the future agriculture Bill is that we introduce powers for better legislation to regulate for a basic minimum of environmental and other standards that must be adhered to by all farmers and land managers. That is not currently in the Government’s plans, and I would like the Minister to comment on how we can be reassured that there will be a baseline of good performance for all land managers.

The fifth point I will raise is the provision of an independent voice for farmers. We are likely to see a massive change in the way land is managed by farmers in this country. They will need all the help they can get if they are to deliver effectively and use public money effectively in the delivery of these public goods. It is not likely to be delivered entirely by their response to the marketplace or subsidy. There will have to be an upskilling and a degree of help with management of change.

That is really important, because 70% of our land surface is managed by farmers, so I also ask that the Government—independently of these pieces of legislation—think of starting work on a land-use framework. We are not making any more land. The pressures on it are increasing. We need regenerative and agroecological farming methods of the sort outlined in the recent report by the Royal Society of Arts’ Food, Farming and Countryside Commission, which I declare that I sat on. We need land to help us combat climate change; we need more trees—I declare my interest as chair of the Woodland Trust; we need to protect our water resources; we need land to help with natural flood-risk management; and we need heat reduction. We need our countryside to help with health and mental health. We need to stabilise our soils. But we also need land for development, housing and infrastructure—even the dreaded HS2. We need food security; do we want to produce more food in future than the amount we currently produce domestically? Do we want to continue to be a massive net importer of timber, or do we want to become more self-sufficient in our timber production?

All these things need land. They cannot all happen to the maximum without some thought being given, on a strategic basis, to what we want our land to be for and the appropriate balances. So I simply put the Minister and the Government on notice that, for however long it takes, I will bang on about the need for a land-use framework for England. We have them for Scotland, for Northern Ireland and for Wales; we need one for England.

My last request is my only request about the current Bill; I have really been a bit of a cheat in the way I have structured this, but never mind. The Minister quite rightly referred to the provision about statutory instruments and secondary legislation flowing from Bills such as this. There will be quite a raft of secondary legislation coming from consequent legislation following Brexit. The environment Bill, the Agriculture Bill and the fisheries Bill—a huge number of Bills—will have a raft of secondary legislation. It would be greatly welcomed if two things could happen. First, the Government could commit to consulting as widely as possible, providing it did not take an age, on secondary legislation before it is laid, so that there is still an opportunity to make it better before it is set in concrete and can only be prayed against. Secondly, could draft statutory instruments be readily accessible, not only to Members of our House but to the public at large and civil society, so that people know that they are being worked on and can head for the bloke holding the pen? Oh dear; I apologise for that sexist remark. It would help the SI process dramatically.

I look forward to the Minister’s response to all my questions, which he would be entitled to ignore since they are absolutely nothing to do with this Bill. I also very much look forward to the proper Agriculture Bill reaching this House in due course.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs) 4:00 pm, 29th January 2020

My Lords, I thank the Minister for his introduction, and for his time and that of his officials in providing a briefing. I feel certain that the fact this is a money Bill will not prevent your Lordships commenting very fully on it.

While it is important that direct payments legislation for 2020 is entered into the statute book, what will happen in future years? I am grateful for the Minister’s assurance that funding is guaranteed at the same level for the length of this Parliament, but this is somewhat at odds with the funding remaining the same for the first four years and then tapering off as farmers change to the new system of payments. Will this mean a multiannual framework for farming support, or will the decision be made annually? The latter would be very unsettling for farmers, who need to plan ahead.

In agreeing specific sums for payments, what arrangements have the Government made to calculate the rate of exchange of the pound against the euro? Fluctuations in currency can have a damaging effect on farmers. I understand that previous payments have been calculated on the average value of the euro in September. Can the Minister say whether September will continue to be the touchstone for exchange rates?

While the Government are providing £2.852 billion of support for 2020, there is no mention of what support there will be in the following years. Can the Minister provide some assurances that support will not drop off dramatically?

In her speech last Tuesday in the other place, the Secretary of State said in answer to a Question on multiannualised funding:

“We will be providing further information on how the transition to environmental land management will work in due course.”—[Official Report, Commons, 21/1/20; col. 173]

Will the Minister say whether this information has been calculated or whether it is the case that it is not ready to be released as it is still under review?

There has been criticism from across the board of the Rural Payments Agency, which the Government have strongly defended as having improved its performance. However, continuity is everything for farmers. A consistent service is needed from the RPA. Some moorland farmers have waited three years for payments under Pillar 2. This is simply unacceptable.

It is not right for farmers who have looked after their land diligently to be worse off as we move towards the environmental land management scheme. The prospect of losing 80% of their income, with no real certainty about what the replacement income will be, will not incentivise all farmers. It is likely that many small farmers might decide that now is the time for them to leave the land. Farming is not an easy option as a career choice. In my community, we have seen three deaths of farmers in recent years. These have been men who were not at the end of their life expectancy—far from it. We are too painfully aware of the increased rate of suicide among farmers. We must tread carefully to ensure we do not discourage farmers from their vital husbandry role of the land.

There has been mention of the Bew report and of reinstating money to Scottish farmers that they have lost in the past. I look forward to the speech of the noble Lord, Lord Bew. Can the Minister give the House reassurance that this reinstatement will not be at the expense of English farmers? Will this be new money in addition to the money that has already been mentioned? Can the Minister also say what measures will be in place beyond 2021 for the Scottish farmers? Are they to get only two years’ reinstatement? Will this money be added to their base budgets, as we say in local government circles?

Given that the Government have made a commitment that there will be no payment changes for the first four years of the seven-year transition period, this means that in the final three years, as the ELMS begins to come into effect, there will be massive change. All of us—especially the Minister, who has first-hand knowledge—know that farming is not a short-term function. It requires planning a long way in advance in order for farmers to get the best from their land, livestock and crops. I am extremely concerned that farmers will be somewhat in the dark as to exactly what their income is likely to be beyond 2024. I would be grateful for the Minister’s comments.

While Brexit is now inevitable and is welcomed by large numbers of people, including within this Chamber, it brings a degree of uncertainty. For me, some of that uncertainty is about food security, as we have already heard. Currently, around 50% of the food we eat is imported. This has risen from 35% nearly 20 years ago. It is important that, in changing the system of payment from acreage owned or managed to ELMS, we at worst preserve our food production at its current level; at best, we should strive to increase this above 50% and aim much higher.

I am sure I am not alone in wanting to buy and consume produce that has been grown or nurtured in the UK. One area where I have concern is protection for hill farmers and those who rear rare breeds. As we know from frequent questions in this Chamber, many of your Lordships are concerned about the fate of hill farmers. Could the Minister give a reassurance that hill farmers will not disappear from our countryside as a result of the change to environmental land management payment regimes in farming generally?

While there are hill farmers on Exmoor, Somerset is famous for its levels. Farming there is extremely challenging during winter months, as it can be almost guaranteed that the land will be under several inches, if not feet, of water. While this looks beautiful, with swans and other waterfowl gliding on the rhynes and water, it means that the land is not available for either grazing or crop planting. The point is that, even in one county, there will be many different forms of farming. I am sure that the Minister recognises this and will encourage the Government to ensure that their payment schemes for farmers reflect the many different types of farms, that the contribution each makes to agriculture as a whole will be recognised and that each gets a sufficient income from the land which they manage in order to live and bring up their families.

I cannot say that I am looking forward to a number of SIs, but they will not doubt come along in due course.

Photo of The Earl of Devon The Earl of Devon Crossbench 4:07 pm, 29th January 2020

My Lords, it is an honour to follow the noble Baroness, Lady Bakewell. I will echo many of her fine words. I declare an interest as a Devon farmer and a recipient of BPS payments administered by the Rural Payments Agency. I therefore have a direct interest in this Bill and in the Agriculture Bill that will soon follow.

I note that this Bill was introduced as recently as 9 January. It made expedited progress through the other place and is due to complete all Lords stages today, with a view to becoming law by the time we cast adrift from Europe later this week. This appears to be a hurried timetable. Can the Minister explain why such haste was necessary? The Government have been considering the implications for UK agriculture of leaving the EU for at least four years, yet we have little to no time for scrutiny of this Bill. Can the Minister state when Defra first became aware that the EU direct payments legislation will not apply in the UK for 2020, and when he became aware of the need for this Bill? I hope that he can allay the obvious concern that policy is being made up on the hoof.

I note that Clause 1(6) of the Bill purports to have retroactive effect, treating the incorporated EU legislation as having formed part of UK domestic law from 1 January 2020. Yet, confusingly, the guidance notes state:

“In relation to the 2020 claim year, farmers will be governed by EU law for January 2020 and by domestic law thereafter.”

Does that mean that, once this Bill is passed, farmers will be subject to both EU and domestic law at the same time and for the exact same purpose during this month of January 2020? That seems odd and potentially unprecedented.

In announcing this legislation and the confirmation of agricultural funding for 2020, the Government have repeatedly trumpeted the “certainty” that this will provide to farmers,

“allowing them to plan for the future, sow their crops and care for their livestock with confidence.”

With due respect, certainty is the last thing that the Government’s agriculture policy is affording farmers right now. While the common agriculture policy had many weaknesses and imperfections, farmers at least knew what they were dealing with. Since I took over our family farm five years ago, the industry has been wracked by uncertainty as to its future, wholly unclear as to its purpose, its funding and the competition that it will face. That uncertainty seems destined to continue, with this Bill providing only 11 months of clarity, with the Government then proposing an ill-defined transition period between 2021 and 2028. In an industry that runs on an annual cycle and requires long-term strategic investment, these timelines are inadequate.

I expect that the Minister will point to the forthcoming Agriculture Bill as a purveyor of clear skies ahead. However, as he is only too well aware, the devil is in the detail, and we have no detail. The principles of environmental land management and the provision of public funds for public good have been long discussed, but the scheme remains skeletal and little meat has been put upon the bones. While I am pleased that the provision of food has been introduced as a public good, the real detail of how our land is to be managed remains as obscure as the view of Cornwall from the top of Dartmoor on a wet January morning. I would appreciate the Minister providing insight into the progress of the various ELMS pilot schemes being run around the country and when we can expect an update on their progress and their learning. Such detail will be essential when we are debating the Agriculture Bill.

Farmers and our rural economy are nothing if not resilient, but with the ever-increasing impacts of climate change and extreme weather patterns, the last thing that farmers need is further years of legislative uncertainty. Given the glacial progress of the previous Agriculture Bill, can we really expect to have a settled agriculture policy and replacement payment system in place by the end of 2020? Why do not the Government give themselves and our farmers some breathing space by making this BPS extension two or even three years instead of a mere 11 months?

As the Minister is well aware, farming productivity in the UK has been in relative decline for many years, and continued uncertainty, which will continue until 2028 at the earliest, will only hinder further investment. The average age of farmers is increasing, as new entrants to the business decrease. At the same time, we are entering a period when our farming industry will be thrown open to unprecedented global competition. Just as we are shaken by increasingly violent transatlantic weather, so we are bracing ourselves to be inundated by transatlantic farming imports without the ability to compete fairly or the confidence to invest for the challenges ahead.

Illustrative of that uncertainty is last week’s Committee on Climate Change report on land use. The headline recommendation of that report was the reduction by 20% in consumption of meat and dairy products, suggesting an equivalent decrease in livestock farming. This decrease would impact mostly the ecologically fragile pasture-rich farmlands of the western counties. This assault upon our farting ruminants is therefore a direct threat to an ancient, world-leading and highly sustainable farming practice.

Furthermore, to mix land use metaphors, it fails to see the wood for the trees. As the Minister is well aware, the huge growth in middle-class affluence, particularly in Asia, is resulting in a massive shift in diet, particularly the increased consumption of dairy and meat products. Many noble Lords will have seen the Royal Family’s valiant, yet much criticised, efforts to promote the sale of Jersey milk to the Chinese this week. Ministers will be aware of the 2016 Defra report that confirmed that a pint of milk produced on British pasture requires approximately 40% of the carbon of an average pint of milk globally. In other words, our dairy farmers are world leaders in the production of low-carbon dairy products. We also have global dairy brands—think of Devon cream—that are unsurpassed. Rather than seeking to restrict and limit our dairy and meat production, we should surely be looking for all opportunities to expand upon it and dominate the global market for ecologically sustainable, low-carbon meat and dairy.

A final word goes to the hard-working staff of the Rural Payments Agency. Delays in the delivery of rural payments can be debilitating to many farmers who are hugely dependent upon this income, and I recognise the improvements in recent years in the promptness of payments despite the considerable cuts to the RPA budget. Given the appalling conditions facing arable farmers in particular this year, with an almost complete wash-out of the sowing season in many northern and eastern counties, the prompt payment of BPS in winter 2020 will be an essential lifeline. This legislation will obviously introduce administrative changes to the manner in which payments are managed. What certainty can the Government provide that payments will be administered efficiently and made promptly? In particular, what insight can the Minister provide about funding and staffing levels at the RPA? Will civil servants be redeployed from their preparations for a no-deal Brexit to assist in the smooth deployment of rural payments?

Photo of Earl Cathcart Earl Cathcart Conservative 4:15 pm, 29th January 2020

My Lords, before I start, I should say that I farm in Norfolk and that I am in receipt of these payments. As my noble friend Lord Gardiner has already so eloquently explained, when we leave the EU on Friday, the EU rules that allow these payments will no longer apply to Britain. Due to a peculiarity of EU basic payment funding, the 2020 payments are funded out of the EU’s 2021 budget year. As Britain will not be contributing to the EU’s 2021 budget, we must fund our 2020 basic payments ourselves, hence this Bill.

Obviously, I support this Bill. It maintains the status quo for British farmers and brings them some certainty, for one year anyway. I also congratulate the Government on accepting the Bew review, whereby the Government will maintain the payment allocations for 2020 to 2022 for farmers in England and Northern Ireland and give an uplift in funding for farmers in Scotland and Wales. I look forward to hearing the contribution of the noble Lord, Lord Bew, in a minute.

I am sure that noble Lords realise just how important these basic payments are to farmers. They account for about 60% of farm incomes, and more than 40% of farmers would make a loss without their basic payment, so this small Bill should be supported as it gives certainty to farmers, in the short term anyway, until such time as the rules change once the Agriculture Bill is enacted. There has been much criticism, including from farmers, that the EU basic payment scheme rewards farmers according to the size of their holding, rather than for the size of the benefit that farmers bring to the environment. The Agriculture Bill aims to address this.

With the best will in the world, farmers are naturally nervous about what the future will mean to them, as the details are very sketchy, but that debate is for another day.

Photo of Lord Bew Lord Bew Crossbench 4:17 pm, 29th January 2020

My Lords, I support the Bill and thank the Minister for his kind words from the Dispatch Box concerning the independent review of policy for Defra that I led, which drew on all the devolved Administrations. I shall return to that point. It also drew on the wisdom of my noble friend Lord Curry, who gave wonderful advice at various points during the progress of that review.

I am delighted to note that the results of the review have not been attended by any acrimonious controversy. That could not have been predicted at the beginning, but I notice, for example, that in the other place the Labour Front Bench seems to support at least this part of the Bill and the application of the elements in the Bill which apply the review.

Having said all that, I should briefly explain the background. My review was tasked to look at what factors should determine the distribution of so-called convergence funding to farmers between 2020 and 2022. The substance of the financial recommendations was made clear in the Minister’s statement. I want to stress other points that were made in our conclusion which did not have the same weight in dealing with the Government. In other words, the burden of our report was, “We really do think you should follow these financial conclusions, but there are a couple of other points that we wish to make for your consideration.” One has already been echoed in this House: the viability or otherwise of the concept of per hectare payments in the future, about which careful remarks were made. The second point, also echoed in speeches this afternoon, is the importance of farming in the more difficult parts of the country, particularly the upland areas. So there are some additional remarks that go beyond the purely economic recommendations.

I feel a debt of gratitude to the secretariat at Defra, led by Charles Hotham. I also want to say something about interaction with the devolved Assemblies. I am greatly relieved that our review has, in the end, landed rather kindly, without the acrimony that might have occurred. The noble Baroness, Lady Bakewell, raised a very serious point in her speech about the dangers. Essentially, the danger is this. There was a strong feeling among Scottish farmers that the settlement of 2013 discriminated unfairly against them. It was not immediately clear how you could redress that grievance, if well founded, without harming the interests of farmers in other parts of the United Kingdom. There was an intense dialogue about this point, and with Her Majesty’s Government.

It was not an easy thing to do. The Belfast News Letter, which I read on a Saturday, has an excellent farming supplement. I picked it up early on in the review, to discover that my report was likely to lead to disturbances in the streets in Northern Ireland—it quite ruined my weekend. That was on the basis that money would be taken from Northern Irish farmers, who are perceived to have done quite well out of the 2013 settlement, and given to Scottish farmers.

In the end, the dialogue with the devolved Assemblies was extremely detailed. Of course, at that time the Northern Ireland Assembly did not exist, but we did meet its political leadership and all the parties that are now in the Executive many times in Belfast to discuss these matters. We needed flexibility from the Government.

I do think there is a moment when we obviously must acknowledge, as other speakers have, that Brexit raises certain uncertainties in the minds of farmers. It was important to produce a result which reinforced stability across the four nations of the United Kingdom. A model of working emerged of intense collaboration between the devolved Assemblies, involving the exchange of information between Belfast, Cardiff and Edinburgh, and dialogue with London. It was ongoing—regular communication and regular refinement of ideas.

When I was preparing this speech, I found a letter I had written to Fergus Ewing, Scotland’s Agriculture Minister. In it, I said:

“The support that you gave to the panel and the secretariat has been invaluable and we are sincerely grateful”.

I could have written that to any of the other devolved entities. The noble Lord, Lord Gardiner, was quite right to refer to this issue in his speech. This was a model of the devolved Assemblies working together, with flexibility on the part of the Government. It did require some flexibility and a willingness to accept that, financially at least, certain changes might have to be made. The flexibility shown by the Government here allowed things to move ahead, and we now have consensus in this area. We have at least, on this tricky subject, not added to the instability and to the other doubts and concerns that farmers have, of which I am perfectly well aware.

Photo of Baroness Byford Baroness Byford Conservative 4:23 pm, 29th January 2020

My Lords, I am very grateful to my noble friend for introducing the Second Reading of this small but important Bill, which, as has been said, enables the Government to continue paying the basic payment scheme allowances to farmers for 2020 alone. Like others, I declare my farming interests as given in the register: we have a family farm in Suffolk that receives payments under this scheme.

I too would like to pay tribute to the noble Lord, Lord Bew, and his team. I am very glad that he mentioned the contribution of the noble Lord, Lord Curry, to the review. I have read it all the way through and there is a lot of meat in it, but I will not talk about that today as it almost touches on the Agriculture Bill, rather than the little Bill we are debating today. I ask the Minister not to presume from my comments that many of the things in the review will be raised today. Its findings are hugely important but I shall try to comment mainly on this very small and precise Bill.

The Bill brings continuity and legal certainty to farmers, who have been anxious about their payments for 2020. I have also been asked whether the current rules will continue to apply—for example, the three-year cropping rule and many others. My understanding is that they will, but perhaps the Minister will clarify that.

As I understand it, the Bill does not modify policy, so, as I said, I shall keep many of the broader questions on policy for the Agriculture Bill. Can the Minister give us any information on when that Bill will be forthcoming? I hope I am right in thinking that the fisheries Bill will have its First Reading in this House and the Agriculture Bill will start in the House of Commons, with each going to the other House in due course. From the point of view of agriculture, which we are talking about today, is it likely that the Agriculture Bill will come to this House in this Session? The Minister is nodding, so I take it that I am right, in which case it is all the more important that we keep our thoughts today to this Bill.

As I indicated, I particularly thank the noble Lord, Lord Bew, and his colleagues for their review. It has highlighted the challenges that will face food producers and farmers once we leave the EU. One of the recommendations, which has been touched on by others, concerns the position of Scottish farmers, who have been at a disadvantage since the changes were made in 2013. However, looking at the various Hansard reports, I understand that this will be new money that the Government have committed to allocate. Presumably that money will be ring-fenced for Scottish and Welsh farmers, but will it continue to be forthcoming in the seven years thereafter? I have read the reports carefully but am still uncertain.

The Bew report recognises the importance of food security and acknowledges the uncertainties in future policy and market trading conditions. It is important that welfare standards are taken into account in any future trade deals, and I was pleased to see that that was a manifesto commitment of our party. Importantly, the Bew report recognises that future policy must be fair to all farmers across the four countries of the United Kingdom. Maybe that is for the future but how will it be achieved? It is quite a big challenge. It might be outwith this Bill but it is worth raising it now.

As has been said, 2019 was a very difficult year for some farmers, who experienced difficulties with heavy flooding, resulting in crops rotting in the ground. Their land is still waterlogged and decisions have to be taken on whether to plant spring crops or keep the land fallow for the rest of the year. Variations in climate patterns affect other countries around the world, putting greater pressure on food security. The effects of climate change will be a challenge for us all, be it drought—as we have seen, sadly, with the fires in Australia—flooding or the spread of disease, which has not been mentioned. Therefore, as reflected in the Bew report, we must be flexible in formulating our future plans. We must not be constrained by past rigid rules from the EU, some of which are outdated. Technology and other things have moved us forward.

Returning to the Bill before us, how confident is the Minister that the payments will be made promptly? That is key. Can he also update us on payments for countryside stewardship schemes—a matter referred to by the noble Baroness—over the past three years? I understand that there have been delays in those schemes, with in some cases, farmers not having received the payments. I believe that could affect their willingness to participate in future countryside schemes, which would be a retrograde step. Therefore, I also ask the Minister: will the planned ELM scheme pilots use some of the existing demonstration farms, such as LEAF farms, which are already part of environmental schemes, or will they start with a completely blank page? It would seem a shame not to use the experiences that already exist.

I support the Bill and reflect on its importance, as conservation and food production go hand in hand. Both are important for the health and well-being of the countryside, but—no one has touched on it—farmers need to make a profit. You cannot go green if you are in the red. It is hugely important that farmers make a profit. As I said, I support this small Bill. In future, I look to schemes that will allow us greater flexibility, are more focused on outcomes than they have been in the past and, if possible, are tailored to the needs of individual farms, particularly those in upland and less favoured areas.

Photo of The Earl of Caithness The Earl of Caithness Conservative 4:30 pm, 29th January 2020

My Lords, I am delighted to follow my noble friend Lady Byford, with her knowledge, day-to-day livelihood in farming and the expertise that she brings. I thank my noble friend the Minister for bringing in the Bill. The Government promised it, they have delivered, and we have a little bit of stability for the farmers for this year. It is nice to be able to welcome a Bill that has six principal powers in it, five of which have sunset clauses at the end of the year. That is not something that happens very often in legislation in this House and is to be commended; this Bill is an eleven-month wonder.

I will make one comment about farmers. We have talked—as we tend to do in the House—about farmers in generality, all receiving grants. Not all farmers receive grants. I agree that the great majority do, but there are some forms of land management and farming that do not receive grants, and we must not forget that there are such people in this country too.

I turn briefly to the forthcoming Agriculture Bill. I will not follow the noble Baroness, Lady Young, in setting out what I believe should be in that Bill, but I think that the words of the noble Earl, Lord Devon, and of my noble friend Lady Byford are well worth taking on board in Defra. We need that Bill as soon as possible. If we do not get it, the farmers will be severely prejudiced in future. It will obviously suffer the guillotine process in another place, but this House does not have a guillotine, and nor should we. There will be a huge amount of discussion on the Bill; we will need the expertise of people such as the noble Earl, Lord Devon, and my noble friend Lady Byford. Where I do agree with the noble Baroness, Lady Young, is that I too shall be concerned about bringing a land-use plan into that Bill. That was one of the recommendations of the House of Lords committee, and I shall raise it again in two weeks’ time when we come to our forestry debate, because it is relevant to that too.

I have five or six quick questions for my noble friend the Minister. Is he confident that all the farmers in England know exactly what is going to happen in the next year? I got an email from the Scottish NFU today saying that it has emailed all its farmers to tell them exactly what the process is and that they have to abide by the rules to get their payments. We live in the Westminster bubble; we think we know what is going on but, if you are a busy farmer who has been subject to recent weather conditions, you might not know. It would be very sad if some farmers were not kept as up to date as possible.

The Countryside Stewardship Scheme is not as I understand it part of the Bill, but is there any flexibility for increasing payments this year? On DAERA and Northern Ireland, when does the Minister expect the uniform entitlement to come into operation? It is, as he rightly said, operational in England, Wales and Scotland. When can we expect it in Northern Ireland? Also, talking of the devolved Administrations, do we have the legislative consent orders from Scotland and Wales yet? If not, does this pose a problem? We are told that the Bill must be passed by 11 pm on 31 January. If we do not get the legislative consent orders by then, will that mean that the Scots and the Welsh will not be able to claim money this year?

On greening, under Pillar 2, I ask my noble friend to bear in mind the point again mentioned by the noble Earl, Lord Devon, that there are a number of farmers in the upland and West Country who have not ripped out hedges, who farm on small fields and who are not so prone to being able to get greening under Pillar 2. It would be wrong if they were penalised for having been the good guys all along.

It was a delight to hear the noble Lord, Lord Bew, comment on his review. I will not say any more, because my noble friend Lady Byford covered that. So I hope that my noble friend will be able to answer her points and therefore mine.

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green 4:35 pm, 29th January 2020

My Lords, the gestation period of a cow is about 280 days. I make that reference not to remind your Lordships that my first degree was in agricultural science but to reflect on the fact that most of the calves that will be born under the Bill that we are about to pass have already been conceived. As the noble Earl, Lord Devon, said, this is policy-making on the hoof. For a farmer who is deciding whether to plant a tree in a shelterbelt or to plant a new hedge, the timeframe for seeing the returns on that are much greater, well beyond even the planned seven-year phase-out of the basic payment system that we expect to see in the forthcoming Agriculture Bill.

The decision to disapply CAP in the withdrawal agreement was probably unavoidable but it has left our farmers in a state of great uncertainty, as we have heard from many noble Lords who are themselves farmers. Yes, they had promises that it would happen, but those are only words. We have heard many words, some of them referring to your Lordships’ House, but I doubt that anyone has yet consulted their removers on the cost of moving their residence up to York.

If the Government had made progress on the Agriculture Bill—stranded since November 2018—in the previous Parliament, we would not need this one. I remind your Lordships’ House that that is a reflection of the huge problems that we have in the quality of governance, independent of its ideological content, and the way in which our unreformed political system is simply not working.

I make another systemic point, this time about the Rural Payments Agency. A number of noble Lords have referred to the delays in farmers receiving payments. The RPA saw its budget cut from £237 million in 2010 to £95 million in 2018. This is austerity. We hear talk about austerity in lots of other contexts, but let us recognise that this was a decision made across government that has had real consequences right across society.

The Bill is narrow in scope and duration but I want to take this opportunity to focus on the level of uncertainty that our farmers and growers are facing, relating to both policy and climate—that is, the uncertainty of what the climate emergency will bring them. We have of course heard references to the weather this year. I thank the Minister for his response to my Written Question HL541 about independent advice to farmers. In response he referred to

“considering both private and public sector options.”

I am disappointed not to see in that Answer any reference to farmer-led advice and research.

Last year I was at the Oxford Real Farming Conference. I heard a German minimum-till organic vegetable grower talking about how government-funded academics had come to his farm, conducted research to answer the questions that he wanted answered and then provided him with advice based on that research. The farmers and growers in the room gasped. They were gasps of astonishment that government-funded research could work in that way, and perhaps also gasps of envy because they would like to see something similar. We have seen so much advice farmers have had to rely on coming from commercial interests based on commercial research by seed companies and agrochemical companies. Facing this state of uncertainty, how will we ensure that farmers get answers to the questions they need answered in the next seven years and beyond?

I am very aware of the narrow scope of the Bill. We are all of course looking forward to the Agriculture Bill. I will make three brief points with regard to what we have seen of that thus far. I do not believe that we have seen anything like an understanding from the Government of the need for the utter transformation of our agriculture and land use that the climate emergency and our nature crisis demand. We will also get to a social crisis. UKSSD looked at Britain’s ability to meet the sustainable development goals and we are not on track to meet any of them. Farming and land use are an important part of how we reach those goals.

We have heard some reference to the food strategy. That needs to be integrated with the land use strategy. We also need to be thinking about incomes policy, benefits and welfare, with people being able to pay for the food they need so that farmers and growers get a decent return. That is part of agriculture policy. It is all interrelated. Control of the supermarkets is crucial. We need to think about food security and feeding ourselves; that has to be the most basic requirement of government. We also need to think about food quality. I heard an academic being asked what kind of food and farming we need and they said, “I can answer that in one word: vegetables.” Only 18% of children in the UK eat their supposed five a day. That five-a-day recommendation was decided by sociologists, not nutritionists. Nutritionists will tell you that it is 10 a day. That means we need to grow at least eight times as much fruit and vegetables in the UK as we do now to head towards healthy food self-sufficiency.

This may be my most unpopular point—noble Lords might be surprised to hear that. I am sure most noble Lords would agree that we need to tackle food waste. When thinking about our future agricultural policy, I put it to your Lordships that feeding perfectly good food to animals in factory farming is food waste and has to stop.

In concluding, I come back to the point on which I started: the quality of governance. This Bill is fundamental for security and we are racing it through just days before the deadline. That is no way to run a Government. A Member of your Lordships’ House commented that they thought I would come back to democracy in every speech I made—that is probably just about true. I refer your Lordships to an excellent little book called Nation of Devils by Stein Ringen that shows that countries with democratic proportional electoral systems have a better quality of governance, make better decisions and do not end up in an utterly last-minute, on-the-hoof race, as we have today.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 4:43 pm, 29th January 2020

My Lords, it is a pleasure to follow the noble Baroness. I refer to my interests in the register. In particular, I sit on the Rural Affairs Group of the Church of England Synod. I welcome the Bill and congratulate my noble friend the Minister on bringing it forward, particularly on giving a legal basis to allow farm payments to continue and to make the appropriate budget allocations.

I remind my noble friend of my particular interest in the plight of tenant farmers, which relates both to the Bill allowing direct farm payments to farmers to continue and to the wider provisions of the farm reforms that we will come to in the Agriculture Bill. Could my noble friend clarify whether in his introductory remarks he committed to ensure that the funding will be given for the whole of this Parliament? Is that provided for in the Bill? If not, are we to continue on a year-by-year basis? I know that tenant farmers will be particularly pleased if this is the case; in their view, this would have been the ideal place to put into effect our manifesto commitment to ensure that funding to the agricultural industry is retained until the end of this Parliament.

Livestock is central to hill farms and upland farming. The Government must be aware of the potential for damage to livestock farming if they are minded to introduce a ban on live trade in animals. I repeat my plea here that we must not proceed to ban livestock. It is a limited, highly regulated trade but extremely important in maintaining price. In particular, when spring lambs go to France to be fattened and finished, they are not immediately sent to slaughter. I hope my noble friend will take this opportunity to give a commitment that no ban will be imposed on live trade. It would be particularly difficult to do so at that time, being mindful of the fact that tariffs may well be introduced on the Irish border or between this country and Northern Ireland, leading to a disparity between deadweight and live animals.

Does my noble friend also agree that trees have their place, none more so than in flood protection? I am proud of the Pickering pilot scheme, which has been very successful to date, but after planting trees it takes some 30, 40 or 50 years for those trees to mature. In all probability, any support for planting trees will go to landowners. My concern is that tenants will no longer benefit, as they currently do, from stewardship schemes. I hope my noble friend will continue to have sight of that.

Why are the pilot projects under the ELM schemes so secret? A number of your Lordships referred to this. Why can we not have the results of those pilot schemes at this stage, long before we go on to consider the elements of the Agriculture Bill, in which it will be vital that we understand them? The debate on the Agriculture Bill will be substantial; linked to it, of course, is the rather voluminous environmental Bill, and my noble friend moved the First Reading of the Fisheries Bill today. I put down my real concern that we basically wasted two years of the previous Parliament, when those Bills could have been taken, along with the immigration Bill and the two trade Bills—one the rollover Trade Bill and the other the new trade agreement Bill. I hope that the Opposition Front Bench will take the point seriously when I urge the Government that we need proper time to conduct proper scrutiny. In passing this Bill expeditiously today on a very narrow, technical, budgetary issue, we should not lose sight of the wider debate where we will look at changing farm policy for the first time—and the greatest extent—in 50 years. That will take proper consideration and both Houses of Parliament must be given due time for it.

Will my noble friend put my mind at rest that central to the Bill and the wider issue are our food security, food standards and self-sufficiency? I ask this because I recently asked a Question, HL459, on food security and self-sufficiency. In the reply that I received from my noble friend Lord Goldsmith of Richmond Park, I was told that the Government are minded

“to regularly report on food security to Parliament”.

That is all well and good but some concrete measures would be interesting as well. I was very disappointed that that parliamentary reply was completely silent on self-sufficiency. This worries me greatly because I understand that, while it is difficult to get a proper figure, for the first time in a long time it has fallen below 60%.

Like other noble Lords, I echo the concern that we need to end the uncertainty. In particular, I echo what the noble Baroness, Lady Young of Old Scone, asked for: either the statutory instruments that will form part of the next round of farm reform should be published, so that they can be properly considered, or the criteria that farmers will be asked to meet under the ELM scheme should be published sooner rather than later. Clearly, this debate will take some time to come to fruition, but it is important that we do not lose sight of those points.

Are the Government still minded to commit to remapping every three years? Is it really necessary in the context both of the Bill and particularly of future payments? Will the Minister confirm that a balance will be sought between the environmental and productivity aspects of how our farmers are to produce food; that we will focus in the Bill and future Bills on affordable food, allowing farmers to earn a living or—as my noble friend Lady Byford stated—to make a profit; and that we must not take imports from elsewhere in the world which are farmed to much lower standards, whether in food production or in welfare? I obviously welcome the Bill, but I hope my noble friend will do justice to the concerns raised today.

Photo of Lord Inglewood Lord Inglewood Non-affiliated 4:51 pm, 29th January 2020

My Lords, like a number of other contributors to this debate, I must begin by declaring my interests in the register. I farm in Cumbria, both in the uplands and on the lower ground, and I am now and have been for some time in receipt of basic payment scheme payments. I have received those because it was considered that what I was doing was in the public interest and should be supported.

That has been the case for a long time. For decades, not to say centuries, agriculture has been a market regulated in the public interest, but the problem now is that what I am being paid for is not thought a particularly good way of supporting me to do what I am doing, and nor is it necessarily supposed that what I am doing is in the public interest. It is thought more desirable that there should be different outputs that are produced and procured in a different way.

That seems an entirely reasonable proposition. What we are seeing today is a change which began in the 1990s and reversed a tendency that came into being at the end of the Second World War. The view that rural Britain was essentially the location of a single activity—namely, farming—is being replaced by a view that it is a place where there are multiple outputs and not a single one, food production. Let us remember, however, that food production is still important.

The hard part of this transition is the detail of where we go from here. A number of speakers today have detailed some of their concerns. I do not wish to go over that ground again, other than to say that we need also to look at the taxation system for both full-time and part-time farming, which is an equally important part of the rural economy, and at farming businesses from the perspective of sustainability. It is not desirable in the longer run for those businesses not to be able to fund reinvestment in those activities from the profits they generate.

It is also worth remembering—a point I raised in the debate on the Queen’s Speech—that rural England is similar in many ways to the north of England and the Midlands, on which the Government are placing considerable emphasis. As I said, I come from Cumbria, and I am chairman of the Cumbria local enterprise partnership. The economic condition of much of rural England is equivalent to that of the north and the Midlands, which have seen their standards of living and quality of life degraded by failure to keep up with the increased prosperity that we have seen in the south, and in particular in the south-east.

When thinking about the future of farming, it is also terribly important not to forget that we can generalise, but farms are different, random parcels of land. Many of the land uses and other things deemed desirable may well cross boundaries and it may be difficult to get people to agree on how this should be taken forward. Finally, it is very important that whatever emerges runs with the grain of land and water. We have to enlist people’s hearts and minds in the rural communities towards achieving an outcome that is considered in the national interest.

We already see cross-compliance attached to agricultural payments, and the direction of travel implies an extension and wider application of this principle. That does not seem to me remotely undesirable. Clearly, a combination of leaving the CAP and a reconfiguration of the definition of public goods means a new basis for payments. Hence the Agriculture Bill in the last Parliament; hence this Bill, now to be followed by the forthcoming Agriculture Bill just introduced in the other place.

The reality of the current state of affairs is that the Government have little alternative but to introduce the Bill in front of us, and I commend and support it. I also thank the noble Lord, Lord Bew, for his work on various aspects of the payments system, particularly his emphasis on the desirability of solidarity across the United Kingdom as a whole. I would add that those in the north of England, whose agriculture is very similar to that of Wales, Scotland and Northern Ireland, feel when you talk to them that they are getting a raw deal and that they are being discriminated against. It is important that this is both recognised and acted on.

Having said that, and as a number of other speakers have said, the Agriculture Bill introduced in the other place does not really get us a great deal further. By itself, it is very little help to those who are trying to look at the framework and financial implications of a new era and want to work out where to go from here. It is important to appreciate that, looking forward, this is both a science and an art. I feel slightly conscious in saying this that I might be portrayed like one of our 18th-century predecessors, although I would not go as far as the nobleman who is reported to have commented that he was very anxious to die before Capability Brown because he wanted to see heaven before he improved it.

It is clear that, if the new regime depends on an embedded system of public money for public goods, the requirements and terms and conditions attached to it are crucial. Currently, as Professor Julia Aglionby—recently appointed professor in practice at the Centre for National Parks and Protected Areas at the University of Cumbria—has pointed out, many in the uplands are currently staring into an economic black hole because there is no indication of what will happen next. This is a chasm as deep as that which separated Dives and Lazarus, lying between where people are today and a future sketched out by senior political leaders in statements of generalised policy tinged in green, painting a picture of sunny uplands a decade hence. Unless detail is forthcoming, and forthcoming shortly, I believe we shall have to come back to this debate 12 months from now and have a similar Bill to this one.

Photo of Lord Teverson Lord Teverson Chair, EU Energy and Environment Sub-Committee, Chair, EU Energy and Environment Sub-Committee 4:58 pm, 29th January 2020

My Lords, I confess to having a roughly 4 acre field for which I get no subsidy whatever, except for an electricity pole for which I get about £200 a year—maybe less than that. I am also a co-chair of the Cornwall and Isles of Scilly Local Nature Partnership.

I will approach this in a slightly different way. I support this Bill, which is a sort of sticking plaster between now and 12 months’ time. It is quite delicious to me, in a way, to see the Conservative Front Bench going out strongly for state aid for a particular sector—something that normally the Conservative Party would not necessarily associate itself with. I know that this is a money Bill, so we will, quite rightly, not have much influence over it, as it is the other end’s business. We say that perhaps rather glibly as the Bill goes through, but this is big bucks—it is a lot of money. We put state aid into this industry of between £3 billion and £4 billion a year. That is quite a bit of money. In fact, if you look at it per household in the United Kingdom, every household contributes about £120 to the agricultural industry. That is just a little less than the TV licence fee, for instance. I guess that the 1.6 million people who use food banks might find it quite ironic that, on average, as a household they also pay £120 towards the food production sector in this country. That may well be necessary, and I will not argue against it here, but we should be aware of that, because that money can be used for other things as well, and increasingly will be, we are promised, over the next eight years.

I must admit that I am particularly impressed by the noble Lord, Lord Bew, who has somehow managed to persuade the Treasury, almost it seems without any argument, to add about a quarter of a billion pounds to this. That is excellent—perhaps we could find a way to do that with other sectors. I would like to have a masterclass from him afterwards on how he managed to achieve that.

The noble Earl, Lord Devon, in his excellent speech, talked about trying to get more certainty in this area. In fact, he mentioned that one good thing about the common agricultural policy, with all its faults, was that there was predictability. However, I should remind the House that, at the moment, the EU Commission is going through a major reform of the common agricultural policy which is in fact so fundamental that it has had to postpone it for one year. That has two strands: one is semi-renationalisation of agricultural policy, and the other is that some 25% of the EU budget, of which agriculture is a major part, will be dedicated to the climate change challenge. Ironically, therefore, even if we had stayed in the European Union, which clearly we will not, some of these issues regarding our agricultural sector would have come anyway, and maybe the Government could have come up with some of the same solutions that they are coming up with now. However, I am concerned that that uncertainty will be extended over some seven years—in fact you have to add this year on as well, so there will be eight years of transition to the next form of final implementation of the new system regarding payments for public good.

Actually, I want to praise Michael Gove as Secretary of State in Defra for changing the agenda here in a forthright, brave and courageous way to make a radical change in how this works. I regret that he will no longer be the custodian of the 25-year environmental plan, of which this effectively is a key part, because there is public expenditure here on a big scale, and a way to do it.

I was quite surprised that the noble Baroness, Lady Bennett, did not mention that we have a biodiversity crisis in this country at the moment. If you look at the State of Nature 2019 report, which came out at the end of last year, you will see a list of all the species, particularly in rural areas, which are heavily challenged and the numbers of which have decreased since 1970. That is urgent, yet we have an eight-year transition period until we put in a scheme that has some hope of reversing that biodiversity challenge. I say to the Minister that, both on getting more certainty for the sector, as the noble Earl said, and on our environmental challenges, surely we can start to make that transition shorter. We had a debate on the landing obligation for fisheries—the Minister did not answer it, but he was there—and, although that was a European and partly British issue, we know that you tend to wait for deadlines to happen before you get round to doing something about them. I think that eight years is too lazy; it risks leaving those major reforms to the last few years, which to a large degree it already does. So let us bring it forward.

Of course, the real challenge to the sector is not this one. The destabilising factor is not the funding mechanism; it is international trade. Let us be under no misapprehension whatever that, with the United States, with Canada—which has refused to do a rollover deal with the United Kingdom on its EU agreement—with South America and with Australasia, the key asks for those trade deals will be on agricultural entry to the UK market. How that is done is down to how good we are at negotiating as a country with those other nations. I hope and pray that we will be very good at doing that, but the uncertainty about those trade deals, how they will be interpreted and who has power—that power equation—will be unknown for some time.

I want to ask the Minister a couple of questions. As he is probably aware, in the Northern Ireland protocol under the withdrawal agreement, Article 11 states—clearly for once; it is a pretty unclear document otherwise—

“consistent with the arrangements set out in Articles 5 to 10, and in … respect of Union law”— that is, European Union law—

“this Protocol shall be implemented and applied so as to maintain the necessary conditions for continued North-South cooperation, including in the areas of environment, health, agriculture”.

Under the state aid provision in Article 10, it states:

“The provisions of Union law”— that is, again, European law—

“listed in Annex 5 to this Protocol shall apply to the United Kingdom, including with regard to measures supporting the production of and trade in agricultural products in Northern Ireland”.

Will this and future state aid to the agricultural sector be constrained by that Northern Ireland protocol?

My other question is this. Previous speakers have mentioned the Rural Payments Agency. The RPA has done a lot better on Pillar 1 payments. We are never confident about it, given its history, but what concerns me is that, as my noble friend Lady Bakewell pointed out very well, the current delay relates to Pillar 2. Effectively, the future support mechanism will be a Pillar 2-type process. How that is managed, enforced and communicated will be very complex. I wonder whether Defra has taken into account how much of the capacity of the RPA will be needed under the future regime.

My last question is this. A fundamental change that has not been mentioned in this debate is that at the moment, under the CAP, the money comes from Brussels a year later, as we heard, to cover the cost of the CAP paid out by the UK Government. That changes. This will now be an integral part of Defra’s budget. Given the fact that it is quite difficult to predict payments, there will be a difference from what has been budgeted for in government expenditure—Defra expenditure in particular—at the end of the year. If it is 10% of £3.5 billion, that is quite a bit of money. Will that be taken off Defra’s budget if it has under-budgeted or, if it goes over, will it be sent straight back to the Treasury? I know that in the past Defra has often suffered from Treasury cuts, and I am concerned that, if it gets its budgeting wrong, other essential services it provides will be prejudiced by the fact that the Treasury will be very unhelpful at the time.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs) 5:08 pm, 29th January 2020

My Lords, I am grateful to the Minister for setting out the purpose of the Bill so clearly today and for arranging a helpful briefing with officials beforehand. As he said, the Bill has a simple intent, which is to continue the direct payments to farmers scheme for a further year until 2021 to ensure continuity of payments. As this is a money Bill and will provide important guarantees of funding to farmers, we will not oppose it today.

However, I want to comment on how we have ended up here today. This Bill should never have been necessary—a point made by the noble Baronesses, Lady McIntosh and Lady Bennett, among others— because the Government have had more than enough time to prepare for the transition from CAP payments. It is nearly four years since the Brexit referendum, when so many promises were made to farmers about the sunny uplands, post CAP, and it is 14 months since the Government halted consideration of the previous version of the Agriculture Bill, which began to set out the details of a post-CAP regime and which we are having to revisit again today.

Since then, farmers have been left in limbo, uncertain about their entitlement to payments in the short term and desperate for a clear understanding of the payments regime that will apply from 2021. It goes without saying that commitments on the application of funds for individual farmers are crucial for their long-term planning and investment, so it is unsurprising that they are frustrated with and angry about the delays; a number of noble Lords, including the noble Earl, Lord Devon, and the noble Baroness, Lady Bennett, have reflected that frustration this afternoon. It has resulted in a degree of paralysis, which is unhealthy in a sector that thrives on innovation and introducing new farming applications.

By any measure, Defra has not handled this well. This was confirmed in a National Audit Office report last year, which criticised the department’s handling of the replacement of CAP as lacking proper planning, lacking support for farmers to prepare for the change and lacking a proper analysis of the impact of the change on the overall economy. Again, these issues have echoed around the Chamber this afternoon. For example, the noble Earl, Lord Caithness, asked—quite rightly—whether farmers have been properly advised about what is going on, whether they understand the detailed discussion we are having here and whether they understand the legislative process that will follow from that, since they may think that they are dealing with more important issues on a day-to-day basis.

Although we accept that the need for this Bill is now inevitable, we certainly do not accept that it is ideal. It is of course welcome that the Government have agreed to maintain the total pot of £3.2 billion during the transition to 2025. However, questions arise. I was interested in the questions asked by the noble Lord, Lord Teverson: what will happen if all the money is not spent year on year? Will it go back to the Treasury? What is the implication of that? Can the Minister clarify whether that commitment to £3.2 billion, however it is worded, is inflation-proofed? Can he reassure farmers as to what payment pot is envisaged from the end of the five-year Parliament in 2025 to the end of the seven-year transition, because there is a payment gap for the last couple of years? How will that be calculated? Can he also clarify whether the Bill has any impact on the Pillar 2 payments, which are not part of the CAP basic farm payments scheme? Again, a number of noble Lords raised this issue. Will those payments be claimed separately in the usual way until 1 January next year? Can he reassure noble Lords who have struggled with the Rural Payments Agency that the current payments will be made in a timely manner?

In terms of the wording of the Bill, we have another specific concern. As it stands, the Bill allows for the extension of the basic farm payment scheme for one year only, as the Bill includes a sunset clause. So we may be legislating for a new cliff edge on 1 January 2021, after only another 12 months of certainty for farmers, before the new Agriculture Bill is due to come into effect. What certainty can the Minister give that we are not just going to move from one regime to another and that there will be a smooth and proper handover for these two pieces of legislation?

I would say that we are all enthused about the opportunities that the new Agriculture Bill offers in shaping the payments scheme based on public money for public goods, and I agree with the noble Lord, Lord Teverson, that we probably have something to thank Michael Gove for about that. He certainly raised the game on how we might face the challenges ahead. I also agree with my noble friend Lady Young that this is one of the real opportunities post Brexit which we should grasp with both hands. The new Agriculture Bill places a welcome new emphasis on improving the environment, adapting to climate change and protecting the welfare of livestock, but the Minister will know that passing the Bill is only the first step towards a new regime. It is in effect an enabling Bill. The detail is yet to be set out in regulations which will need to be drafted and approved before farmers can be sure about what the payments system will mean for them, so with the best will in the world, as we stand here now in January 2020, it is hard to see that all that work will be completed before the end of this year, particularly if farmers and stakeholders are to be properly consulted along the way. There is also the added frustration that the regulations that we are promised but have not seen will come in the form of secondary legislation which we will be unable to amend. Given that, I agree strongly with my noble friend Lady Young that consultation on these SIs in advance of them being laid would be extremely helpful. I would be grateful if the Minister could explain whether that is being considered.

At the same time, it is unclear how the outcome of the pilot environmental land management schemes, which of course should provide the basis for future payments, can be properly rolled out and evaluated in time to determine the rules for the next seven years, a point that has also been made by the noble Baroness, Lady McIntosh. Again, we would feel more reassured if the Minister could clarify that because, for the pilots to have any merit, they need to roll on for a considerable period of time. How is that going to influence the starting point of the schemes?

All this is intensely frustrating. We support the principle of public money for public goods, with all the environmental advantages that that implies, and we want to move on to the new regime as quickly as possible. However, we want to ensure that the new scheme is robust, properly monitored and measured, and transformative. We need to be somewhat persuaded that the transitional payments as envisaged in the Agriculture Bill will be ready for implementation on 1 January next year. If that is the case, why is the Bill before us today restricted to one-year payments when it could have retained more flexibility? Can the Minister also explain why the Agriculture Bill itself seems to give the Secretary of State the flexibility to extend the basic payments scheme for future years rather than including that option in this Bill?

Finally, the Bill does include some good news. All noble Lords have expressed their gratitude to the noble Lord, Lord Bew, for his report into the allocation of farm support across the UK. He has recommended that a greater share of the direct payments should be allocated to Wales and Scotland, and he is right to note that Labour definitely supports that proposal. I pay tribute to him for his detailed work and the great acts of diplomacy that he has had to carry out in brokering a deal—congratulations on doing that.

We are pleased that the Government are implementing the recommendation of topping up these payments while the allocations to England and Northern Ireland are maintained, but can the Minister clarify how that recommendation will apply in future years? Can he confirm that this will not just be a two-year top-up, but will be a principle that is carried forward into the new payments scheme? Further, as the noble Baroness, Lady Byford, asked, will it be ring-fenced in the future? Again, that is another challenge. I look forward to his response on these issues.

While I am on my feet, I thank the Minister and officials for the careful and considerate way in which this Bill has been stewarded through this House. I am sure it sets a good precedent for the much greater challenges ahead when we come to debate the Agriculture Bill.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 5:19 pm, 29th January 2020

My Lords, in many respects this has been a preliminary to our deliberations on the Agriculture Bill; I fully expected that. I will first address in particular the noble Baroness, Lady Young of Old Scone. I am worried that she is going to be worried, because I can identify in the Agriculture Bill so much of what she said. In my view, every single element that she mentioned—including soils, floods and climate change—is engaged in Clause 1(1)(a) to 1(1)(j). Because this comes up again, I also want to discuss the balance of all that we want to do. If your Lordships will forgive me, as we have had a preliminary on the Agriculture Bill, I think it is important that I set out the Government’s bona fides.

The noble Lord, Lord Teverson, hit on something that I as a farmer have often reflected on. As a farming sector, we will now have to look to the British taxpayer and say, “We would like your support.” The way in which to look at this is very much Michael Gove’s legacy: the public are prepared to support farmers in doing all the many things in Clause 1(1)(a) to 1(1)(j) in the Agriculture Bill to enhance the environment. With over 70% of our land farmed, the farming world can play an invaluable role in restoring biodiversity and nature recovery.

I also want to emphasise Clause 1(4) of the Agriculture Bill, which says:

“In framing any financial assistance scheme, the Secretary of State must have regard to the need to encourage the production of food by producers in England and its production by them in an environmentally sustainable way.”

The Agriculture Bill is not a proposal for us not to produce food. I hope that the noble Baroness, Lady Young of Old Scone, and other noble Lords who have raised so much of this, will take some reassurance in what is before us when we come to consider that Bill. I also say to the noble Baroness and other noble Lords that the food strategy that Henry Dimbleby is undertaking is absolutely about bringing forward by the summer a national food strategy that goes from farm to fork.

I want to say in the preliminaries that the noble Earl, Lord Devon, has hit on something that I think is very important for us as a nation and our pastoral farming. By that, I mean the best traditions of pastoral farming. Moving from British meat products to plants produced in other parts of the world where we have seen environmental degradation —be it in the production of almond milk, avocado or soya—we should be careful of being buffeted by fads and fashion. I think of what pastoral farming does to the landscape and rural environment in so many parts of the world. We should be very cautious about moving towards a system of jettisoning and disregarding the importance of livestock agriculture to very high standards in this country.

I am grateful to the noble Lord, Lord Teverson, for raising the issue of public money. Let us take ourselves back to earlier caps: could we really face the nation and talk about lakes and mountains, as we had to before, if we are to receive public money?

The noble Baronesses, Lady Jones of Whitchurch and Lady Bennett, and the noble Earl, Lord Devon, asked: why are we here now? The Bill is dependent on the terms of, and has no effect without, the withdrawal agreement. Therefore, we could not introduce this Bill any sooner than we did. Royal Assent cannot occur before Royal Assent to the European Union (Withdrawal Agreement) Bill.

The noble Baroness, Lady Jones of Whitchurch, asked why we were not doing more on future support in the Bill. The Bill is, as I have described, a small technical Bill to lift the 2020 payments mechanism for us to deal with 2020. There are many provisions in the Agriculture Bill that will enable us to outline and deal with the mechanism for continuing to support farmers in their essential work and the production of food.

I will reiterate what I said in my opening remarks on funding. The Government are committed to matching the current overall budget available to farmers in every year of this Parliament. I am not in a position to say what a future Government might do after a future general election, but my view is that we are right to match that overall budget. That is a government commitment. As I said, on 30 December the Chancellor of the Exchequer announced funding for direct payments that matches the total funding for direct payments available for 2019. I think that that is an indication of a Government who are not being cavalier but who absolutely understand that farmers need to have an understanding of where they are this year, and as we go through with all the transitional arrangements and the continuance on a tapering scale of direct payments, so that they can work with the new system and we can progressively reduce direct payments. There are powers to do that.

The noble Baroness, Lady Young of Old Scone, mentioned scrutiny, which is important. Defra will consult before making SIs under the Agriculture Bill. We had some very successful results from scrutinising the exit SIs, for instance.

In no particular order, my noble friend Lady McIntosh asked about live exports for the second time this week. I repeat what I said before and it will not change: we are extremely concerned about the long journeys that live animals are undertaking. The veterinary profession is very concerned about this and it is something we will work on.

My noble friend Lady McIntosh also asked about tenant farmers. This Bill is about status quo for the scheme in 2020, but new provisions on tenancies in the Agriculture Bill will ensure what we believe will be a vibrant future for agricultural tenancies, providing tenants of agricultural holdings with agreements that have more flexibility and removing barriers to investment and productivity.

On remapping, in future years we will look to simplify the administration of existing schemes for farmers and the RPA. On the RPA’s payment performance, it was generous of the noble Earl, Lord Devon, to say that the RPA was working very hard. This year I think that we are up to 97% already being paid. We will obviously focus on completing the remaining claims and releasing payments as soon as possible.

On the issues that the noble Baroness, Lady Bakewell of Hardington Mandeville, raised, my colleague the Minister of State, George Eustice, has had meetings with the RPA’s chief executive. There have been considerable improvements over the past 18 months, but I and they are very conscious that we need to improve the position in particular on the environmental schemes and the countryside stewardship schemes. It has been improved, but there is more room on that.

My noble friend Lady Byford asked about timings on the Agriculture Bill. The Second Reading will be in the other place on Monday 3 February, so clearly it will reach your Lordships in the due time of its deliberations in the other place. I look forward to that. As I said, I think that we have had a very good preliminary.

My noble friend Lady Byford and the noble Baroness, Lady Bakewell, asked about trials. We are currently running a programme of tests and trials. It is important to say that these are about co-designing with farmers in all sorts of topographies in the country. This will be so that we have a range of trials, because part of the work of an ELM in certain parts of the country will quite clearly be somewhat different. The focus might well be on elements of paragraphs (a) to (j) of Clause 1(1) of the Agriculture Bill, for instance. We are working closely with a range of environmental and agricultural stakeholders to design collaboratively the new ELM scheme, so that it is fit for purpose. We will provide further information over the coming year, but, following these tests, we want to refine the co-design to ensure that it works on the ground for farmers and other land managers, and that it delivers the environmental outcomes that we and the farmers want.

The noble Baroness, Lady Bakewell, asked about the rates of exchange. The level of funding available for direct payments in 2020 for each part of the UK will be the same as for 2019; the funding is based on the same financial ceiling and exchange rate.

Several noble Lords, including the noble Baroness, Lady Young of Old Scone, raised trade. We should be proud of our British produce for domestic and export consumption, and of its reputation as being of the highest quality. As I have said so many times to your Lordships, any future trade agreements must work for consumers, farmers and businesses. We will not water down our standards on food safety, animal welfare or environmental protection as part of a trade deal.

On the review by the noble Lord, Lord Bew, it is a great privilege to have one of your Lordships undertaking a review that clearly was knotty. Your Lordships were right; the noble Lord’s skills will become legendary. This was a knotty problem for all sorts of reasons. Also important is the noble Lord’s confirmation of the collaborative spirit across the devolved Administrations. It is a feature of life that we are always wanting to find the areas of disagreement rather than agreement. I say to my noble friend Lady Byford, and the noble Baroness, Lady Jones of Whitchurch, that this money will be ring-fenced, to be spent on farmers in Scotland and Wales respectively. I assure your Lordships that this money will not be taken by farmers in England or Northern Ireland. It is additional money, resulting in an overall funding increase of £56.6 million for UK farming over the two-year period.

As I mentioned before, the transition period, raised by the noble Baroness, Lady Jones of Whitchurch, and the noble Earl, Lord Devon, is a seven-year transition. We intend to introduce changes steadily. In 2021 we will start applying reductions to direct payments. Reductions will apply progressively. We will offer land management schemes throughout the transition. Countryside stewardship will remain open to new applicants until 2023-24. Additionally, existing high-quality countryside stewardship and environmental stewardship agreements will be extended, protecting their environmental outcomes and farmers’ incomes. The new environmental land management scheme is being developed, with full ELM rollout across England in late 2024.

Food security was raised by the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh. The Agriculture Bill includes a new requirement to report on food security. I say to my noble friend Lady McIntosh that on self-sufficiency, we are at 75% of UK production for indigenous grown food, but there are many things that the consumer likes that we do not produce here, so self-sufficiency is not the point. It is about food security. Candidly, I know about tea in Cornwall, but not about coffee and citrus fruits. We need to be conscious of food production, but conscious of food security too.

The Government believe that upland farmers play a vital role as stewards of the countryside and our iconic landscapes, and that across the land they are well placed to benefit from new ELM schemes, which will reward farmers for what many in those areas are already doing.

My noble friends Lord Cathcart and Lord Caithness asked about transition. I get the Farmers Weekly and the Farmers Guardian every week and there is no doubt that there is an awareness and considerable discussions, individually and across farmers generally, about this period of change and the co-design. I emphasise again that none of this will work if it is not the farmers’ idea and concept, too. It is vital that we get it right by co-designing these schemes with farmers.

In response to a point raised by my noble friend Lady Byford and the noble Lord, Lord Bew, on the devolved Administrations, the Government are committed to engaging with the devolved Administrations to develop a fair approach to future funding allocations. We agreed to consider the needs of farmers in England, Wales, Scotland and Northern Ireland, recognising that agriculture policy is and will remain devolved.

My noble friend Lord Caithness asked what amendments Defra expects the EU to make to the CAP this year. We are not expecting the EU to make significant changes but the Bill includes a power, but not an obligation, for us to undertake any amendments. He also asked about greening under pillar 2. Under our new ELMS scheme we are considering how best to reward farmers and land managers for the good work they do in managing the countryside.

On the countryside stewardship scheme, a new round of countryside stewardship will be open for applications in February, with the agreement starting in 2021. This will be a stand-alone domestic grants scheme and we have made an SI on that matter. My noble friend Lord Caithness also asked about this in relation to Northern Ireland. It is a matter for DAERA. Since the start of the current scheme, payment entitlements in Northern Ireland have been moving towards, but have not yet reached, a uniform unit value.

The Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly have all granted legislative consent Motions for the Bill, and the NFU has welcomed it.

On the issue of the carry-over of the three-crop rule, raised by my noble friend Lady Byford, the Bill does not introduce new policy. The basic payment scheme, including the greening rules, which include the three-crop rule, will apply for 2020. The Agriculture Bill will allow us to simplify the current scheme from 2021. However, the Rural Payments Agency has recently updated its GOV.UK online guidance on flooding and wet weather so that farmers are clear on rules and possible alternative options which will allow them to remain compliant.

On the Northern Ireland protocol, an issue raised by the noble Lord, Lord Teverson, spending that supports the production of trade in agriculture products in Northern Ireland is exempt from state aid rules when meeting Article 10.2 conditions. I do not have time to say more on this matter but if there was anything further on it I would.

The noble Baroness, Lady Jones of Whitchurch, also raised the issue of pillar 2. Under the withdrawal Act 2020, Defra and the devolved Administrations will continue to deliver rural development programmes under the terms of the EU regulations, which are not the subject of this Bill.

My noble friend Lord Inglewood raised a number of pertinent points but I am afraid that taxation is above my pay grade.

Obviously, there are issues—many of which will come up in the Agriculture Bill—but I want to take the opportunity with this short Bill to put on record my thanks to the Bill team and all noble Lords who have engaged in these deliberations. The Bill is necessary. I hope I have explained why we are doing it now and why we could not have brought it forward before although it was an issue we understood we would need to manage. It has also enabled the Government to address the review of the noble Lord, Lord Bew, dealing with 2020.

These measures have been agreed by the other place and are overwhelmingly supported by the devolved Administrations, stakeholders and farmers across this country. As I have said, this Bill is certified and is therefore a money Bill. I will look at Hansard because there are many questions which go beyond this Bill. If any particular points come up in other deliberations, I will come back. In the meantime, I beg to move.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time, and passed.