Amendment 130

Agriculture Bill - Committee (5th Day) – in the House of Lords at 2:00 pm on 21st July 2020.

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Lord Teverson:

Moved by Lord Teverson

130: Clause 4, page 5, line 15, leave out “seven” and insert “five”

Photo of Lord Teverson Lord Teverson Chair, EU Environment Sub-Committee, Chair, EU Environment Sub-Committee

My Lords, I declare an interest as co-chair of the Cornwall and Isles of Scilly Local Nature Partnership. I shall speak also to Amendment 142. Both these amendments relate to reducing the transition period for the introduction of ELMS from seven years to five years. I suspect that Members are probably not that keen on the idea at the moment, so for the next couple of minutes I intend to try to persuade them otherwise, because it is important that we reduce the transition period.

Members and indeed the country as a whole are aware of COP 26 this year which was supposed to take place in Glasgow concerning the climate change agreement and getting the Paris agreement carried forward in a positive way to meet our planetary carbon emissions targets, but many people are not so aware of a second major conference, COP 15, about the diversity convention. It was supposed to take place this year in Kunming, China but it has also been postponed until next year.

Biodiversity is a global crisis equal to climate change. Biodiversity is not just a problem of equatorial rainforests; it is a problem in Europe and here in the United Kingdom as well. The 2019 State of Nature report states that

“15% of species in the UK are now threatened by extinction,”

41% are in decline and a third remain effectively static, with only a small proportion gaining in number. Biodiversity is not just about bird spotters or twitchers and a comfortable feeling about nature, important though it is for our mental health and the energy of our countryside. It is also about supporting natural systems and allowing them to operate—ecosystem services such as pollination, soil formation, clean water, atmospheric oxygen, disease control and many more. All these are essential not only to the natural world around us but to our economic performance and indeed to our continued existence on this planet.

One of the great things that I have always praised in the Agriculture Bill is the idea not just of public money for public goods but that it should be concentrated on building up and improving biodiversity and nature in our countryside. That is important because about 70% of the land in England and across the UK is used in agriculture. However, I regret to say that it is because of agricultural management that biodiversity in this country has declined so significantly. I do not blame the farming industry and individual farmers for that, but I do blame the financial incentive system within which they have had to operate.

Why am I asking for the transition period to be reduced from seven to five years? It is because the biodiversity issue is a global crisis as well as one here in the United Kingdom. If we take no action and carry on with business as usual, economic systems will fail. At the end of seven years, we will be almost half way through the period of the 25-year environment plan, which I also welcome, although it must be properly financed and delivered.

It may sound trite, but I remind noble Lords that the Second World War lasted for a mere six years and we managed to overcome all the problems and challenges that affected us globally within that time. At the moment we are in a transition period, moving from being a member of the EU to our global position in just 11 months, with all the challenges that that poses, so surely we can manage to implement ELMS over five years rather than seven. I also remind noble Lords that, on nature depletion, the United Kingdom is not in a good position. We ranked 29th from the bottom out of 218 countries. That is why this issue is so important. I beg to move.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I am delighted to follow the noble Lord, Lord Teverson, who is the illustrious chairman of our EU sub-committee. For the record, however, I would like the transition period to remain as it is.

I want to speak to Amendment 143, and I thank the noble Baroness, Lady Jones of Moulsecoomb, my noble friend Lord Caithness and the noble Earl, Lord Devon, for lending their support. It is a simple amendment, which would delay the start of the seven-year transition period away from direct payments coming into effect from 2021 to 2022. I should like to pause here to explain why this is necessary.

In seeking to delay the start of the transition period to the new policy framework to 2022, I accept that there is wide support across the House for the government objectives in the Bill to move towards a new framework of support for agriculture that focuses on public payments for public goods and increasing productivity. Much of the detail will be set out in supporting regulations and in the Environment Bill, of which we in this House have not yet had sight. However, the changes being envisaged will be the biggest in a generation and look set to be in place for many years to come.

I accept that we are leaving the European Union but note with regret that, in the four years since the vote in June 2016 signalled the beginning of a process of change, particularly in leaving the CAP, we have made very little progress in developing the necessary mechanisms, policies and schemes that would be worthy of the major changes that we are expecting in this Bill. I accept that much of this is down to the political impasse leading up to the last general election and, more recently, to the pressing issues around controlling Covid-19, which I am sure have affected Defra as they have many other departments.

It is essential that we take the time to introduce new schemes and measures that will stand the test of time, rather than simply bringing them in quickly for the sake of it. I fear that there is an overarching desire through the Bill to show that things have changed as a result of our departure from the European Union, rather than to ensure that we put in place good, made-for-purpose, fit-for-purpose, resilient schemes. Let us face it: our track record in delivering new schemes and new IT to support them is not that great.

Following the environmental land management scheme tests and trials, which themselves have been impacted by the issues surrounding Covid-19 and are ultimately delayed, the Government intend to conduct a pilot in England of a new ELM scheme in 2021, with a view to it being fully operational by 2024. However, if it is true that the Rural Payments Agency will be in charge of running these pilots—I hope that my noble friend can put my mind at rest on that—we have to question its capacity to run such a pilot when it is already struggling to deliver business as usual. Once again this year, the RPA has had to ask the Treasury for funding to bridge payments to environmental stewardship and countryside stewardship applicants before being penalised for failing to meet the required payment targets by 30 June this year. What reassurance can the Government provide that there is adequate capacity within the RPA to deliver the pilot, or does my noble friend think that another body would be more appropriate?

I also place a question mark on the extent to which the Government would be able to spend any money saved through the reductions in direct payments starting in 2021. I understand that Defra has identified this as a potential problem and is therefore looking to make an announcement in September about enhanced options for countryside stewardship and productivity schemes. However, we have none of the detail available to us today. In my view, the sensible thing is to delay the start of the transition period until 2022. That is not kicking the can down the road but giving the Government and Defra the time and space to deliver the good schemes that we know they are capable of, rather than producing half-baked schemes.

The reasons for this delay are these: we are being asked to take a lot on trust; we have not had sight of the Dimbleby food strategy, which I understand will not reach us before Report; we have not had the results of the trials of the ELM schemes; the OEP has yet to be set up; and we do not know what its relationship to the Environment Agency, Natural England and the RPA will be. We owe it to Defra to give it time, because of the Covid pandemic, to reach a proper conclusion to these schemes. I therefore ask the House to commit to supporting Amendment 143.

Photo of Lord Carrington Lord Carrington Crossbench

My Lords, it is a pleasure to follow the noble Baroness, Lady McIntosh of Pickering, whose analysis I almost completely agree with, although my conclusion is a little different. I declare my interests as a farmer and landowner, as set out in the register, and that I have been a recipient of the basic payment over several years.

I tabled Amendment 144, to which my noble friend Lord Curry of Kirkharle has kindly attached his name, and Amendment 145 in order to address the problem of the likely gap that will affect farmers as direct payments are reduced in 2021, while the revenue from the joining of any new environmental land management schemes will not arrive until 2024—although this will be mitigated for some farmers who have existing countryside stewardship schemes. This is no small issue. As we have heard in the debates on the Bill, the BPS accounts for some 58% of farm business income, varying from sector to sector, and around 25% of farms are unprofitable without it.

Although the industry has been aware for several years that the Bill was coming and that its major feature would be public money for public goods, rather than an area-based subsidy, the details of the replacement scheme have been few and still remain a work in progress. Adjustments to a new world have therefore been understandably slow because options have been limited. Diversification of businesses into non-farming activities has been done by some farmers, but this has to an extent been dependent on the tenure of their farm—owned or tenanted—their location and their ability to access funds. Some have looked at selling their produce directly to local shops to improve on the low margins imposed on farmers by the power of supermarkets. Others have cut costs to the bone, affecting their family and lifestyle. Others have attempted to raise productivity, but, once again, this has often depended on their ability to borrow. Still others have emulated Micawber and are waiting for something to turn up. Furthermore, like everyone, all farmers face the uncertainties of Brexit, the new trade agreements and, of course, Covid-19.

It therefore seems fair and reasonable to address the problem of the gap between the BPS cuts and the introduction of the environmental land management scheme, particularly since a solution is suggested in Amendment 144 that would not hold up the transition period and would come with no additional cost to the Government. Under current plans, the Government intend to introduce a cut to BPS in 2021 of a minimum of 5%, with progressive increases in the cuts to the largest recipients of BPS amounting to 25%. No details are given as to what percentage cuts will be made in succeeding years, which is highly regrettable from a business planning point of view. I would be interested to hear the Minister’s response on this point.

Based on these percentages, it is entirely possible that some farmers, both owner and tenant, will see their BPS cut by more than 50% in 2021 before they have access to the environmental land management scheme, which might address some of the shortfall. The amendment therefore proposes that no farmer should have his BPS payments cut by more than 25% until the environmental land management scheme becomes available. I think that we all wish to see a thriving farming industry in this country. The amendment should help in this respect, particularly because the farming businesses likely to be most affected by the BPS cuts, according to the AHDB, are commodity arable producers and lowland livestock farmers, since these are known to be heavily reliant on direct payments.

Furthermore, this solution to covering the gap between the introduction of the ELMS and the reduction of BPS would bring England more into line with Wales and Scotland. I believe that Wales will make no cuts to BPS until 2022 and Scotland until 2024. The amendment would help to level the competitive playing field.

Finally, I will make one further comment on the environmental land management scheme. The Minister is well aware of my frustration about the lack of detail at this late stage. We all hope for the success of this policy. However, there is an irony in the announced reward formula of covering farmers’ costs as well as profit foregone in that it surely would mean a return to the much-condemned area-based payment, since averages rather than farm specific figures will be used in most cases in tier 1. Furthermore, farmers would also hope that income foregone from BPS will be taken into account in the calculation of income foregone.

Amendment 145 is a technical amendment to ensure that regulations made under Amendment 144 would be subject to the affirmative procedure.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green 2:15 pm, 21st July 2020

My Lords, there are two strands of amendments in this group: those that probe the Government on the agricultural transition period, such as Amendment 143 in the name of the noble Baroness, Lady McIntosh; and others, such as my Amendments 147, 148 and 154, that would prevent secondary legislation that would undermine animal welfare.

As other noble Lords have said, the agricultural transition period needs probing to understand what the Government’s current position is. The Bill has been floating around for a long time, but there is still no real detail in it, which is very frustrating for us who have to comment on it. On the one hand, I am very swayed by the argument from the noble Lord, Lord Teverson. The transition period should probably be as short as possible, simply because we can then move rapidly to a new system of public money for public good. I also do not particularly want to give the Government a lot of time to delay the big, tough decisions they will have to make, but they of course have to give farmers and land managers the time to adapt and improve. Overall, we need the certainty that comes from the Government setting out their plans very clearly. I hope the Minister can set out a timetable for that happening.

The second strand of this group is my amendments which, like so many of my amendments, seek to protect animal welfare. Clauses 9 and 14 grant very broad power to the Secretary of State in what might be termed cost cutting and corner cutting. The clauses should be scrutinised on their own and the Government should make it clear what they plan to use them for to justify their existence. My amendments would prevent the Government cutting these corners for animal welfare so that the Secretary of State cannot simply say, “That’s rather expensive for animals. Let’s see if we can improve on that and cut the cost.” There are probably a dozen other issues that should be added to the list of things that these clauses should not be allowed to tamper with, but for me, animal welfare stands out as a priority.

I hope other noble Lords will join me in their concern about Clauses 9 and 14. We might work together in bringing amendments on Report to curtail these cost-cutting and corner-cutting powers.

Photo of The Duke of Wellington The Duke of Wellington Conservative

My Lords, as before, I declare my agricultural interests as detailed in the register. During the many days of this Committee a considerable number of thoughtful and constructive amendments have been tabled, but in most cases the Government have suggested that they are unnecessary since the matter is already covered in Clause 1 or can be provided for in the new environmental land management scheme. However, the ELMS will not begin until 2024. During the years between now and then, many farms that are currently barely profitable will suffer or disappear.

I will speak to my Amendment 149. I am grateful to the noble Lord, Lord Greaves, for signing it as well. As I said at Second Reading, my real concern is for the very survival of smaller hill farms during the intervening years from now until the new ELM payments begin in 2024. The Government announced in February that farmers in the lowest band of basic direct payments—up to £30,000 per annum—would have their payment cut by 5% in 2021, with further cuts in the following years. However, the Government’s own figures for 2018-19—the latest available—show that the average cattle and sheep farmer in a less-favoured area received a direct basic payment of £24,000 and still made a profit of only £15,500. Figures for 2019-20, when available, will probably show a slightly better position. Nevertheless, these smaller hill farms are only marginally profitable even with the basic payment and would be commercially totally unviable without taxpayer support.

We all accept that we are moving away from the basic payment system to the new environmental land management scheme payments. The purpose of my amendment is to ask the Government to think again about whether it is sensible or fair to reduce those in the lowest band even by 5% before ELMS payments kick in in 2024.

On Tuesday two weeks ago we debated Amendment 78 in the names of the noble Lords, Lord Bruce and Lord Greaves. Their amendment urged the Government to maintain support for hill farms and other marginal land. I support this general principle. My amendment is more specific and asks the Government simply to protect just the lowest band of recipients from the cuts until the new payment systems come into play.

Last Thursday, the noble Baroness, Lady Bloomfield, stated that since small abattoirs operate on a commercial basis they would not fit into the principle of the public good. My contention is that, unfortunately, small hill farms are not in any way commercial on their own, so I believe the public will consider it more than just for taxpayers’ money to be given for the public good of maintaining our small hill farms, which play such an important part in so many rural communities in this country. When the Minister responds to this group of amendments, I hope he will give the Committee an assurance that the Government will look again at the timing and percentage of the reductions in the basic payments for small farmers in the uplands.

Photo of Baroness Rock Baroness Rock Conservative

My Lords, I declare my interest as a director of a tenant farming enterprise as set out in the register. I shall speak to my Amendments 150 to 153. Although there is an understandable desire to demonstrate that we are moving away from the old regime of the CAP, we must do so in a way that is effective rather than just quick. The delay in our exit from the EU and the implications of Covid-19 point to a possible delay in the implementation of this new policy framework. These amendments would allow greater flexibility in pausing or even reversing the phasing out of direct payments should, and only should, circumstances require it. This would be particularly important in a scenario where payments to farmers had been reduced but where the funds freed up had not been spent on alternative programmes and remained unused.

Amendment 150 would allow Ministers to reverse reductions in direct payments if they were found to be having a detrimental impact on the nation’s ability to produce food. The Covid-19 crisis will have long-term implications for our country, so this amendment would allow for welcome flexibility. UK consumers, who have valued the domestic supply of food over recent times like never before, will not welcome any dip in that supply. In the event of a pause or a reversal for these reasons, the Government should be allowed to maintain independent financing for the development of alternative schemes, such as ELMS, so that they are not delayed or interrupted.

My Amendment 152 would enable those who have opted to take delinked payments to return to receiving direct payments if the direct payment scheme is extended. If a delinked payment is introduced, the powers to extend the transition period in accordance with Section 8(3) will be used. The status of the farmer would be uncertain. He may be locked out of the system for longer than envisaged. The status of such a person in this situation should be defined in the regulations to provide legal certainty. Given the current uncertainty about what future schemes will look like, this amendment would provide a safeguard against unintended consequences for farmers if the agricultural transition period is extended.

I turn to Amendments 151 and 153 in my name. As any farmer will tell you, cash flow is the number one consideration. This is particularly true for tenant farmers, who have to pay rent twice a year, irrespective of their cash position. A large proportion of farmers are reliant on BPS payments as part of their farm income and any delay to these can have a serious impact on a farmer’s ability to run their business. Ensuring that those entitled to payments receive them within guaranteed timescales will help ensure certainty of cash flow. That certainty will encourage productivity and investment—two clear ambitions of our Government’s wide-ranging agricultural policy.

Photo of The Earl of Caithness The Earl of Caithness Conservative 2:30 pm, 21st July 2020

My Lords, the Committee has already heard some powerful speeches. The more the Bill is discussed, the more respect I have for farmers who, in a time of uncertainty, have a future that is even more uncertain than the present. We do not know where ELMS is going; we have not discussed the Environment Bill. We are threatened with ELMS being run by the RPA, whose record we cannot respect hugely. Farmers are, therefore, in a difficult position. As the noble Earl, Lord Devon, said last week, the advice he has received is to stop all investment. That is a terrible situation to be in at this time. Our farmers should be investing but, in the uncertain world we are faced with, the right thing for them to do is sit on their hands. That is going to cause huge problems. I agree with noble Lords who have said that small farmers, particularly hill farmers, face the most problems and are most likely to fall by the wayside as the current situation continues.

I have put my name to Amendment 143, which would delay the process of implementing ELMS for another year. Given what has been said, there is nothing for me to add, except that I support the principle of all the amendments that have been spoken to. I hope that the Government will show some flexibility on these, because the current situation is untenable for quite a number of farmers.

Photo of The Earl of Devon The Earl of Devon Crossbench

My Lords, I will speak to Amendment 143, to which I have put my name. I too have very real concerns that Defra will simply not be ready for the transition period to begin in 2021 and that farming will suffer as a result. To provide the Government and farmers with sufficient time to prepare for transition, we should start it in 2022, rather than 2021. This way, we can ameliorate the transition chasm that I have discussed before. The House has spent four long days in Committee, debating many variations of ELMS, and has made its way through Clauses 1 and 2 of the 54-clause Bill. We hope to rush through the bulk of this legislation in another two days, under huge time pressure. Scrutiny cannot be sufficient in these circumstances and major aspects of this crucial legislation will be barely considered.

The Government have suggested that time is of the essence and that this Bill simply has to be passed so that the transition period can begin on 1 January 2021. They say that farmers will not be able to be paid if it does not. This is simply not true. It was easy for Parliament to extend direct payments to farmers for 2020; we can simply repeat that process. Given that the Government have confirmed that they will maintain the level of agricultural funding until the end of this Parliament, this will have no negative impact on the Treasury or on budgets. What it will do is permit Defra to prepare for ELMS in an orderly manner.

Despite the best efforts of its overstretched and underfunded staff, Defra is transparently far behind where it needs to be. The EFRA Committee took evidence on 16 June 2020 from Defra’s two leads: Tamara Finkelstein, its Permanent Secretary, and David Kennedy, the director-general of food, farming and biosecurity. I recommend the transcript of their evidence to all noble Lords, as it provides a valuable insight into its much-delayed progress. They admit to considerable delays in the tests and trials programme caused first by Brexit, which took many staff for emergency no-deal planning, and then by coronavirus, which meant that many key tests and trial programmes have not begun.

Defra is triaging. For example, it has confirmed that it has abandoned plans to build a new computer system to administer ELMS. Instead, it will be delivered using the current SITI Agri system, which is used by the RPA to administer BPS. Reading between the lines, it appears that tier 1 of ELMS is effectively going to be little more than BPS plus greening obligations by a new name, administered by the same team, using the exact same technology. I would appreciate the Minister’s confirmation of this.

On Thursday, the Minister helpfully confirmed that Defra would publish a multiannual financial assistance plan this autumn. Given the incredible delays disclosed by Defra, what details is it really able to provide? Will the Minister confirm whether, but for Brexit meaning Brexit, Defra would prefer to agree to this amendment and give itself longer to prepare for the transition?

I warmly support the amendments proposed by the noble Lord, Lord Carrington, which also relate to the transition chasm. However, I cannot support the amendment in the name of the noble Lord, Lord Teverson. ELMS is optional—the quicker the transition, the less uptake there will be and the worse the outcome for our environment.

Photo of Lord Curry of Kirkharle Lord Curry of Kirkharle Crossbench

My Lords, my interests are as recorded in the register. I fully support Amendment 144, in the name of my noble friend Lord Carrington, to which I was happy to attach my name. I am very concerned about the gap in support as the current basic payment scheme is unwound and access to the new ELM scheme becomes available, as planned, in 2024. As I said at Second Reading, this is fraught with risk. The delays caused by indecision on Brexit and then the impact of coronavirus mean that the ELMS pilots are just under way. Meaningful conclusions will take a couple of years or more to interpret. The design of the schemes, and the value of public goods that we hope will be delivered by this brave new model for supporting the management of the countryside, must be promoted to farmers and land managers with confidence. We need the evidence from the pilots and there is no slack in the timetable to experiment or for systems to fail and be rerun, which is why many of us are deeply concerned about the Government’s reluctance to change the current seven-year transition plan. At Second Reading, I suggested that the Government should be willing to extend the period to eight years.

Under the current plans, there will only be three years by the time the Bill becomes law to draw conclusions from the pilots and then launch the ELM scheme to the entire farming sector. Tens of thousands of family farmers are not prepared for the scale of the change that the Bill will introduce. It is the most fundamental change in support, and the greatest cultural change, that any farmer in Britain today has ever faced. At present, there is no way farmers can prepare for this change because, for obvious reasons, there is no information available on the basis of which they can begin to consider their future plans and make decisions.

This change in policy is a unique opportunity to facilitate restructuring of the sector, but this cannot be rushed. Every farmer needs to consider the impact of the change on their individual business. As a result of the scale of this challenge, it is inevitable that there will be a capacity problem. The quantum of qualified consultants who are trusted and able to provide 30,000 or 40,000 farmers with informed advice in good time to make considered decisions will be an enormous challenge. To ensure that the potential benefits which the ELM scheme can deliver, and which will hopefully be realised, will require careful consideration by each farmer and land manager.

If ELMS is launched in 2024 as planned, there will be a deluge of applications and the capacity of the RPA and Natural England to cope with the volume will be stretched to the limit. The possibility of every farmer who wishes to participate in the ELM scheme being able to do so in 2024 is unrealistic. For all these reasons, the Government need to think very carefully about the timetable. This amendment is designed to help smooth the impact. Limiting the dismantling of support from the BPS to a total reduction of 25% until the ELM scheme is available is a sensible approach.

I restate what I said at Second Reading: I reassure the Minister that I am enthusiastic about this bold change in policy and genuinely believe that we can lead the world in delivering a wide range of crucial outcomes from the management of the countryside, provided that the policy is well designed and land managers are appropriately incentivised. It would be a disaster if such an important change in policy was rushed through and we failed to engage appropriately. I hope that the Minister will be able to reassure the House that the department will adopt the timetable proposed in this amendment. It would be very much appreciated by farmers and land managers and would ensure a greater chance of achieving the desired outcomes.

Very briefly, I have considerable sympathy with the purpose of Amendment 149 tabled by the noble Duke, the Duke of Wellington. Smaller livestock family farms, both in LFAs and in the lowlands, are the most vulnerable to these changes. They manage some of the most precious landscapes in Britain and are a crucial part of rural communities. The choice of taking a hard-nosed commercial approach, resulting in many being forced out of business, or a more sympathetic view that would require some special care and support to help those farming businesses adjust to change is a no-brainer, otherwise the impact could be disastrous. The Minister is aware that I chair the Prince’s Countryside Fund. We have supported over 1,000 such farmers through the Prince’s Farm Resilience Programme, with considerable success. It is essential that these crucial farming families are given appropriate support to ensure that they can adapt their businesses, not just to survive but to prosper in this brave new world.

Photo of Lord Randall of Uxbridge Lord Randall of Uxbridge Conservative

My Lords, I will not detain you long. I have every sympathy with the impatience of the noble Lord, Lord Teverson, to get on with improving our biodiversity. However, I do not think it is feasible to bring this forward from seven to five years, so I am afraid that I cannot support that, however much I am keen for the things that we all hope for to take place.

I agree very much with my noble friend Lord Caithness. The more I have listened to our proceedings, the more respect I have for farmers—I had a great deal of respect for them before—and I can imagine what it is like facing these changes with all the uncertainty that we have just been talking about. Having been not in farming but in retail for most of my working life, I can imagine the concerns about the future. I would also say, however, that we always work to deadlines. If we extended things, we would be in a similar position, so I cannot support any extension as discussed—very eloquently—by many noble Lords.

I have put my name to Amendment 147 in the name of the noble Baroness, Lady Jones of Moulsecoomb, principally to emphasise my concerns over any reduction in animal welfare. I have no doubt at all that British farming has the highest standards of animal welfare in the world and I do not think for one minute that that will be negated by anything in the Bill, but I wanted to underline my concerns on that.

Again, I give my support in as far as upland farms, and to some extent some livestock in the lowlands, are some of our most precious guardians of the countryside and are really threatened by some of these measures. I urge the Government to look at this; I am sure that they will.

Photo of Lord Greaves Lord Greaves Liberal Democrat 2:45 pm, 21st July 2020

My Lords, the last time that I can remember being called to speak by the noble Baroness the Deputy Speaker is when she was chairman of Lancashire County Council and I was a somewhat dissident member on the back benches. The reception and politeness that I have found in your Lordships’ House since I came here a long time ago is of an altogether greater level than the shouting and ranting I got in Lancashire County Council from time to time. Noble Lords can decide whether they ought to be a bit more robust when I speak—I do not know.

I spoke in the debate last Thursday afternoon about what I might have said today on this amendment, so I will not repeat it. I was accused of being gloomy by the Minister and one or two other people; I thought I had perhaps gone a bit over the top—in a Lancashire County Council sort of way—until I read Hansard. Having read Hansard, I thought that what I said was rather good, but Hansard sometimes has that effect on what noble Lords say in this Chamber.

I very much support everything that the noble Baroness, Lady McIntosh of Pickering, said this afternoon. I understand the point that my noble friend Lord Teverson and others are making about the need to get on with transforming agriculture and the countryside in this country for ecological reasons and climate change and so on. Nevertheless, the thought that this new, extremely complex, top-down system of working out what people are paid for, with individual assessments of every farm and three tiers that have to be linked together, will be carried out by the Rural Payments Agency fills me with dread. I say to the Government—in a friendly way, because I do want this to succeed—that, in modern parlance, it is a huge car crash rushing over the horizon. We will see. It requires huge resource, effort and ability to introduce large, complex computer-based schemes, which British Governments—not just this Government—are not terribly good at doing. I say no more about it.

I was very pleased indeed to put my name to the amendment tabled by the noble Duke, the Duke of Wellington. Again, the particularly small hill farms are the main concern here. As I said on another amendment, which now seems a long time ago in this Committee, unless these farmers get a considerable amount of subsidy, which not only allows them to do things that are desirable environmentally and for the landscape but to carry out their basic job of hill farming and make at least some profit from it, they will simply go out of business. I do not believe that the Minister and the Government have, so far, explained how such farmers will survive under the new system and continue to do their farming. We all know how the sheep farming system in particular works in this country: the people who rear sheep in the lowlands require the sheep to come down from the hills; it is all pretty integrated. If the hill farms close down and stop keeping their sheep, it will have an effect right across the industry and the country. The most important thing is that the hill farmers themselves get the support they need for their own benefit and the benefit of their communities and landscapes.

Can the Minister explain how the new system will do this, when it is supposed to provide only for what are known as public goods and is not meant to be a production subsidy? I do not see how hill farms can continue unless a significant part of the money they get from public funds is, in effect, a production subsidy, whether or not the Government disguise it as something else.

Photo of Lord Blencathra Lord Blencathra Chair, Delegated Powers and Regulatory Reform Committee, Chair, Delegated Powers and Regulatory Reform Committee

My Lords, I declare my interests as on the register. It is a pleasure to the follow the noble Lord, Lord Greaves, and in relation to his comments on Hansard, I tell him, and indeed the whole Committee, that I once asked the late Lord Armstrong, who I rate as one of our greatest ever Cabinet Secretaries, “Robert, when you wrote up the Cabinet minutes, did you write what the Minister said or what he thought he had said?” He told me, “Oh, no, David. I wrote what the Minister would have said if he had thought of saying it.” I sometimes wish Hansard would do the same with my speeches.

I oppose the amendments in the name of the noble Lord, Lord Teverson, in that the seven-year period should not be reduced to five. However, he is right to draw attention to the importance of CBD15 next year. It is every bit as important as COP26. Indeed, in a sensible world, there would not be two conventions but one, since they are inextricably linked. Habitat loss leads to more carbon and more zoonotic diseases as animals are forced closer to humans. However, that is not for this Bill. I think Defra has got the seven-year period right, and so has my noble friend Lord Randall; moving the deadline does not necessarily buy us more time.

This is the greatest and most exciting change in British agriculture since 1970. I am old enough to remember those UK White Papers produced by the ministry of ag, fish and food—MAFF, an excellent department, if I may say so—such as Food from Our Own Resources, which exhorted us to “produce, produce, produce”. One of the many excellent things about leaving the EU is that we will once again be able to design plans to produce food from our own resources and protect the environment at the same time. But let us not pretend it will be a simple change. Studies on ELMS are being undertaken, and the three tiers are being designed, but it will be a mega change for UK agriculture.

The EU system of giving every farm money based on acreage is simple, but utterly wrong, yet giving farmers payments for undertaking environmental land management schemes is infinitely more complicated; farmers need time to adjust, and Defra needs time to tweak the schemes. Of course, we want rid of the perverse EU payments system as soon as possible, but I prefer to take seven years and get it right than five years and get it wrong.

Photo of Viscount Trenchard Viscount Trenchard Conservative

My Lords, I declare my interests as stated in the register. The noble Lord, Lord Teverson, suggests in Amendment 130 that the period of the first plan should be five years rather than seven years. In Amendment 142, he seeks to reduce the seven-year transition period, during which the direct payments scheme will be phased out, to five years. Farmers are already anxious about how their business models will have to change, and would not welcome the shortening of the transition period. Particularly because they do not have enough information on the new scheme, the noble Lord’s amendment is unwarranted and would be damaging.

However, there is considerable merit in Amendment 143 in the name of my noble friend Lady McIntosh of Pickering, in that the seven-year transition period should start 18 months from now, rather than six, which would give more time for the Government to work out the details of the scheme, and would be neutral in terms of costs to the Exchequer.

The noble Lord, Lord Carrington, in Amendment 144, is right to seek to ensure that payments under the new schemes compensate for the reduction in and ultimate removal of payments under the direct payments scheme. But I think his intention to limit the reduction in total support to 25% is rather modest. I believe direct payments for larger farms are set to be reduced by 25% in 2021, and the noble Lord’s amendment would still permit this to happen, even if such a farm receives zero under the countryside stewardship scheme and other current schemes. As I said previously, the larger farming businesses employ the majority of agricultural workers.

I would not support Amendment 146 in the name of the noble Lord, Lord Grantchester, except in so far as it equates to Amendment 143 to delay the changes by one year. The seven-year transition period is not too long, given the extent of the changes farmers will need to carry out.

The noble Baroness, Lady Jones of Moulsecoomb, seeks to use this Bill to advance her concerns regarding animal welfare, but I cannot agree with her Amendment 147, which assumes that animal welfare standards are higher or lower, whereas different standards may produce different outcomes, and it is a fine balance. I regret that I do not see the justification for supporting her Amendments 147, 148 or 154.

My noble friend Lady Rock has eloquently explained the reasons behind her Amendments 150 and 151. I can see that where moneys are unspent, the amount provided in a subsequent year might increase if the Government accept carryover procedures. As for her Amendments 152 and 153 on delinked payments, they seem to provide an improvement to the Bill.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, I have christened this group of amendments, “Mind the gap”. We need some sort of rethink from the Government on a safer way forward.

I support Amendment 143. When I first read the Bill in its earliest form, nearly two years ago now, I thought, “That’s good—the seven-year transition from one system to the next. All will be well; farmers can plan ahead with no problems, and while the single farm payment goes down, they can enter into ELM schemes, with profits, under the new regime.” Defra had three years to get ELM schemes in place, then several years to roll them out to farmers on the ground, which, as others have said, is going to be an almost impossible task. I thought, back then, that it could happen at a manageable place, and all would be well. Farmers would be involved in tremendous changes, but they could survive the transition because the way forward would be clear to them.

But now, two years on, the way forward is still as clear as mud. ELMS have only just entered the pilot stage, farmers have no framework by which to plan and they are saying, “What will ELMS look like for me in my area? I have no idea. What training do I need? I have no idea. Do I need to plan for new equipment or facilities? I have no idea.” No one in the farming community has any clear idea of the future. The details of ELMS will not really emerge from the mist until nearly 2025.

In spite of the delays, we still seem to be stuck with a 2021 start to the transition period. This cannot be right. With the rug of the old world being slowly pulled out from under them, and the new rug unlikely to arrive for some time, I worry farmers will fall down the gap. As others have said, the delay is not really Defra’s fault; we had all the shenanigans around Brexit, and so with this Agriculture Bill doing the hokey-cokey—in, out, in, out—then Covid-19 causing genuine paralysis this year, it is not surprising the timetable has slipped. So, the Government have every reason to take this back and think again before we get to Report. I do not care how they do it, but we need something to close the horrible gap that is looming.

Photo of Lord Northbrook Lord Northbrook Conservative 3:00 pm, 21st July 2020

My Lords, I declare my interest as an arable farmer and landowner in receipt of BPS. Before I come to the amendments, I want to defend the RPA after the swipe at it by my noble friend Lord Caithness. What he said might have been true some years ago, but I pay tribute to the Minister for its much improved status over recent years, although it will clearly have its work cut out with the new regime.

The Bill establishes a framework for phasing out direct payments over seven years. It is highly likely that payments under the ELM schemes will result in significant reductions in net income, especially for cattle and sheep farmers, whether in less favoured or lowland areas, and delays in its introduction until 2024 will have a serious effect. Hence, I support Amendment 149, in the names of the noble Duke, the Duke of Wellington, and the noble Lord, Lord Greaves, but would extend it to certain smaller lowland cattle and sheep farmers. I also strongly support Amendment 144, in the name of the noble Lord, Lord Carrington, believing that interim financial assistance measures need to be given to these sectors of farming in particular.

I do not support Amendment 130, in the name of the noble Lord, Lord Teverson, as he did not really mention the effect it would have on farmers, which could be serious—in fact, I do not think he mentioned farmers at all—but I do support Amendment 143, which proposes a delay in the start of the transition period, and appreciate my noble friend Lord Trenchard’s support, even though he is on the Brexiteer side. I also support the concern of the noble Lord, Lord Carrington, about the lack of detail on the progress of the BPS reduction after year one. I also ask, like my noble friend Lady McIntosh of Pickering, whether a new set of countryside stewardship schemes will be forthcoming in the autumn.

Photo of The Earl of Dundee The Earl of Dundee Conservative

My Lords, I declare my interests as detailed in the register. Along with others, I agree with Amendment 143 in the name of my noble friend Lady McIntosh: the transition period should begin in 2022 rather than 2021. Equally, the case for being more realistic about timescales, although in a different context, is addressed by my noble friend Lady Rock’s Amendments 151, 152 and 150 respectively. The first would ensure that those entitled to payments receive them within guaranteed periods to achieve certainty of cash flow. The second would, through regulations, offer legal certainty to farmers, otherwise possibly disadvantaged where delinked payments, if introduced, might lead to extended transition periods. The third, Amendment 150, would enable the Secretary of State to increase payments during the transition period, after phasing out had started, to use up any unspent money and, when necessary, to protect the industry from harm.

Corresponding to the pragmatism of the latter proposal is my noble friend Lord Carrington’s useful Amendment 144, ensuring that any cuts in direct payments do not undermine businesses before the new public goods programmes begin. Then, reflecting the purposes and principles of the Bill themselves, there is Amendment 148 in the name of the noble Baroness, Lady Jones of Moulsecoomb. This emphasises the preservation of animal welfare standards, irrespective of financial consequences, while my noble friend the Duke of Wellington’s Amendment 149 would ensure direct payments to smaller livestock farmers in less favoured areas. Since all these contributions would much improve the Bill, I hope the Minister will accept them.

Photo of Lord Clark of Windermere Lord Clark of Windermere Labour

My Lords, this has been a particularly thoughtful debate, as it should be, because underlying the whole series of amendments being advanced is the recognition that this is, first, a major change in how we approach support for our land and our farming. Coupled with that is concern about how we bring about the change, and concern that the period allowed to bring it about is not flexible enough and may not be of the right length. Various proposals have been argued very eloquently that perhaps it should be a bit shorter—five years instead of seven. I favour a seven-year period, because the challenge is so great that we will not be able to tackle it. There are so many changes, not only in our approach—public money for public goods, instead of just production costs—but against a changing background as it is. I do not think many of us fully appreciate the changes taking place in agriculture at the moment.

I have a particular interest in the uplands and hill farming, but one cannot look at hill farming without looking at the low-level farming that depends on, feeds on and feeds from the upland areas. One has only to drive in the national park, for example, and once one gets on to the low-level farming, there are no longer any cattle, mixed farming or dairy farming: all the sheep are down on the low level 12 months a year, and that is causing problems in itself. So there is the unstable nature of farming to start with, and we then wrestle with the problem of how we make sure that the various aspects of the new legislation are tied together. Is Defra capable of handling such a major change when it is also dealing with Brexit and will face the challenge of pressure from the Treasury, in spite of what the Government may say? Then, from my experience of running the Cabinet Office, I am concerned about the ability of the Government, or any public body, to run major computer programmes. We are not always able to employ the best people, we do not have the experience, yet we take so much for granted when we look at these proposals.

I must admit that when I look at the ideas, I think Amendment 146, in the name of my noble friend Lord Grantchester, has some suggestions of a way forward. It suggests a slightly later start date—2022—coupled with some flexibility if we find that even that is too early. It even goes so far as to say that if we find that the seven-year period is not correct, it can be changed by affirmative resolution. I am not sure that I entirely agree with that, but I could be persuaded in an emergency that it is the way forward.

We are right to spend so much time debating this. Unless we get it right, the whole thing will be a disaster and there will be tears of woe, not only from the farming community but from foresters, environmentalists and a whole range of people who love our countryside.

Photo of Lord Holmes of Richmond Lord Holmes of Richmond Conservative

My Lords, this has been a very interesting, thoughtful debate and I associate myself with many of the comments, not least those of the noble Earl, Lord Devon. In normal circumstances, I would agree wholeheartedly with my noble friend, Lord Blencathra, about not extending a deadline, because projects will simply extend to fill the space provided, but we are in extraordinary times, not just because of Covid but because, for the last four years, Defra and much of Whitehall have been able to focus only on one piece of wildlife, that being Yellowhammer.

Yesterday was Report on the Business and Planning Bill. In our deliberations, it became clear that emergency legislation needs to be passed in various situations and circumstances which will run to September 2021. In light of that, it seems logical and coherent across government policy that a move regarding the start of the transition period, from 2021 to 2022, would dovetail very much with that same legislative logic. Does my noble friend the Minister agree?

I also very much support the amendment in the name of my noble friend the Duke of Wellington. If legislation means anything, it must mean that it touches on those in the greatest need. I believe that my noble friend’s amendment very much goes to the point of covering those who fundamentally understand and deliver on stewardship, guardianship, public good and, indeed, equity. Does my noble friend the Minister agree?

Finally, will my noble friend the Minister comment on the current situation with the IT system within Defra? What is proposed for the new scheme, and is this set in stone or are discussions still afoot as to exactly how to structure the scheme from an IT perspective?

Photo of Lord Campbell of Pittenweem Lord Campbell of Pittenweem Liberal Democrat Lords Spokesperson (Defence)

My Lords, it is always a pleasure to follow the noble Lord, Lord Holmes of Richmond, in particular because I too support Amendment 149. In these proceedings we are encouraged and even exhorted to be brief, and I hope I can meet that expectation, first by adopting all the observations made by the noble Duke, the Duke of Wellington, and my noble friend Lord Greaves.

Some of your Lordships may remember that at an earlier stage in these proceedings I sought to make a case for the recognition of support for small farms in less favoured areas. I do so again today unequivocally because in my judgment, such support is not only desirable but necessary. It is necessary to ensure the survival of viable businesses, it helps avoid the risk of land abandonment, and it ensures that land continues to be put to good agricultural use, in addition to which it combats depopulation. I would describe all these as public goods. However, they are public goods which have benevolent consequences, because support of that kind and the continuation of agricultural activity in such areas helps preserve communities and support social infrastructure, such as schools, post offices and medical services. I hope therefore that when the Minister comes to address us he will provide an explanation as to why these desirable objectives and outcomes do not find favour with the Government.

Photo of Lord Naseby Lord Naseby Conservative

My Lords, I support Amendment 130. In my years in business I have run a few businesses in the rural area: principally some forestry in Herefordshire, a little horticulture—down to a very small amount now—a small amount of viticulture, and just 40 acres of woodland registered with the Forestry Commission. I have led a number of large businesses, in India, Sri Lanka and the UK. One of the key determinants of a successful business is not to have a review too long after you start out on a big project such as this one. In my judgment, seven years is far too long when there are quite so many variables.

We have only to listen to noble Lords as we debate the Bill. We hear of variables that were anticipated and of those that nobody ever expected to happen. In addition, there are new problems due to the fact that we will be an independent nation. There are variables caused by climate change—how many of those have we had in the last seven years? There are variables due to Brexit, and due to the Environment Bill, which we have yet to debate. There are variables that will come from the penetration of 5G across the rural parts of the United Kingdom. Broadband is absolutely vital to rural communities.

Finally, one of the key problems at the moment is that a significant number of the staff who serve us as civil servants, and do it so well, are still working from home—is it 90% of them? Can my noble friend tell me how many or what percentage of Defra staff are currently back in the office?

Photo of The Bishop of St Albans The Bishop of St Albans Bishop 3:15 pm, 21st July 2020

My Lords, I will say a few words about the transition period and, in particular, in support of Amendments 150 to 154 in the name of the noble Baroness, Lady Rock, which have the support of the National Farmers Union and the noble Earl, Lord Dundee, among others.

These amendments focus on funding during the transition period and touch on the vital importance of maintaining food security during the period when we are moving over to the new payment scheme. Cash flow is a major problem for many organisations, and in some cases it has been a factor in businesses, and indeed farms, going bankrupt. It has become a huge problem during the Covid-19 lockdown, and it threatens many people’s livelihoods. It has also been an ongoing problem for farmers, who have sometimes had to wait long periods before receiving payments. We know that any new systems need time to bed in, so these amendments make allowance for any problems in the implementation of the new scheme, and I support them.

I am also supportive of Amendment 149 in the name of the noble Duke, the Duke of Wellington, and the noble Lord, Lord Greaves, as are number of your Lordships. I look forward to hearing the Minister’s response on the need to take special care of small farmers and less favoured areas where farming is extremely vulnerable, which need our support during this time.

Photo of Lord Inglewood Lord Inglewood Conservative

My Lords, I declare my interests as in the register. I will speak briefly to Amendment 146 but will refer in passing to quite a number of other amendments.

Before the CAP was even a glimmer in the eye of the founder of the European Union, the agricultural sector was operating in a regulated marketplace, which makes it quite different from almost all other kinds of business and commerce. In such a marketplace there is a need for all those involved to have a degree of certainty, which is as important from the Government’s perspective as it is from the agricultural sector’s. The parties need to know what the lie of the land might be, if I may put it thus. That is why Clause 4 is so important, because it sets the framework of the way the land lies for the transitional period and points to the world beyond it.

It seems that the problem surrounding Clause 4 is essentially twofold. First, the process of Brexit has been so drawn out that the length of time to effect a seamless move to the new era is too curtailed for it to be achieved as originally envisaged. Secondly, the coming into being of the ELMS—the environmental land management scheme—which was intended to replace the basic payment scheme, has been so delayed, as a number of noble Lords have said, that it is no longer available for farmers and land managers to transition into it and into the new economic and agricultural environment, which is the heart of the new era. As well is it seeming inherently unjust, it is not part of the basic political and policy proposition that was put to the British people as to how we left the CAP.

Moreover, there is a real risk that it may end up causing a muddle in terms of public policy outputs. If you oversimplify it, under the basic payments scheme, the public goods which the state paid for were farming, and everything else was a kind of bolt-on extra. We are now moving into a brave new world where everything else is public goods and food production is a bolt-on extra. That is quite a turnaround.

Against that background, there is, as several noble Lords have said, a chasm—or what might be described as the valley of the shadow of death—that lies between the two eras and into which a significant amount of both farm businesses and land may fall. This will get in the way of implementing the policies we are discussing; indeed, it may put certain parts of them into reverse.

Although, as the noble Lord, Lord Lucas, said on a previous occasion when discussing the Bill, we must not be frightened of failure, surely the underlying intended purpose is to effect a successful transition from the old to the new. That is why the amendment of the noble Lords, Lord Carrington and Lord Curry, is important, as is that of the noble Baroness, Lady Rock, because they recognise, as was recognised by the noble Lord, Lord Clark of Windermere, that things may not actually turn out as planned and intended. You need to build into your system a way of modifying your arrangements, and an escape route.

It is clear from our discussion of this clause that the present transitional process is flawed, and those flaws need ironing out, because if we are to make a successful journey from the old world to the new, we have to get to the destination in one piece and not have a car crash.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs)

My Lords, my noble friend Lord Teverson has tabled Amendments 130 and 142, which would reduce the transition period between farmers receiving direct payments under the CAP and moving on to the ELM scheme. He is concerned about the length of time that will elapse before the farming community has become fully environmentally aware and responds to the Bill’s ethos of public money for public goods. Both COPs 26 and 15 have been postponed. The number of species facing extinction is growing, and biodiversity, which includes pollination and soil quality, is very important. The current financial systems work against biodiversity. This is not satisfactory.

Most Peers are concerned that the period before ELMS becomes fully operational should be further away, giving farmers more time to adjust to the change. The noble Baronesses, Lady McIntosh of Pickering and Lady Jones of Moulsecoomb, and the noble Earls, Lord Devon and Lord Caithness, support this view. The noble Lord, Lord Carrington, spoke about the gap between phasing out direct payments and introducing ELMS, and said that no farmer should have more than a 25% cut in their direct payments until ELMS is introduced.

The funding of less favoured areas has again been raised by the noble Duke, the Duke of Wellington, and I fully support him in in his concerns. I ask the Minister to give a categoric undertaking that the so-called less favoured areas will receive funding. Unless he does, noble Lords on all sides of the House will continue to raise this important subject.

The noble Baroness, Lady Rock, has tabled a number of important amendments related to timescales, cash flows and delinked payments—all extremely important in reassuring the farming community of just how and when they will receive financial assistance—which the right reverend Prelate the Bishop of St Albans has supported. The noble Baroness, Lady Jones of Moulsecoomb, again raises the issue of animal welfare, supported by the noble Lord, Lord Randall of Uxbridge. We have debated animal welfare on previous amendments, and it is essential that that theme be a thread that runs through the Bill and thus be included in a number of clauses.

The noble Earl, Lord Devon, believes that Defra will not be ready in 2021 to move to ELMS, and so wishes to put this off until 2022, and he is supported by other Peers. I share his concern about Defra’s preparedness. However, giving it more time is unlikely to assist. Moving deadlines does not always produce results, as the noble Lord, Lord Naseby, said. The noble Lord, Lord Cameron, lets Defra off the hook for not having met the deadlines; I am afraid I am not quite so generous.

Finally, farmers are left in the dark on what is approaching, despite its being trailed well in advance. I fully support the move to ELMS, but I am very concerned that insufficient information is available to give your Lordships and farmers confidence that their future will be secured. The Minister needs to provide reassurance that Defra and the RPA can cope, because from what I have heard this afternoon, I do not believe they can.

Photo of Lord Grantchester Lord Grantchester Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy)

This is an interesting group of amendments, the various areas of focus being multiannual plans and the transition period. As is customary, I declare my agricultural interests as recorded on the register.

The first cluster of amendments concerns the start date and duration of the multiannual plans. Amendment 130 and, consequentially, Amendment 142, tabled by the noble Lord, Lord Teverson, would reduce the initial multiannual plan to five years starting from 2021. Moving from a previous group to this group, Amendment 131, in the name of the noble Earl, Lord Devon, and the noble Lord, Lord Cameron, would extend the subsequent multiannual plans to seven years, in the opposite direction, but leave the start date at 2021. Amendment 143, in the name of the noble Baroness, Lady McIntosh of Pickering, and others, delays the start of the transition phase of seven years until 2022, but technically, this seems to leave hanging the oddity under Clause 4(3) that the first planned period of seven years—the transition phase—starts in 2021 and will give rise to two competing seven-year periods.

Amendment 146, in my name, appears to involve a similar anomaly to the amendment of the noble Baroness, Lady McIntosh, regarding Clause 4(3), by delaying the start of the transition phase to 2022. However, under proposed new subsection (4) in our Amendment 146, flexibility is provided to shorten the transition phase if this becomes necessary. The whole amendment, drafted to replace Clause 8, is designed to provide flexibility. Proposed new subsection (2) would provide that flexibility by accommodating the disruption caused by the coronavirus pandemic this year through a one-year delay. It would also accommodate the possibility of a subsequent further disruption should a second spike strike, as further misfortune, it has recently been argued, may well be a possibility or even a likelihood.

Is there Minister confident about the readiness to implement the first planned period as soon as 2021? Last year, the National Audit Office was concerned that the Treasury and Defra had not built in enough time to implement the new funding system. Certainly, there are doubts that farmers and land managers would be able to accommodate the change to the support system in order to start next year. However, it could be argued that it may not be necessary to require a further full seven-year period for the first planned period, having had a delay to the start. The planned period could be shortened by the flexibility provided by proposed new subsection (4).

I merely comment to the noble Lord, Lord Teverson, and the noble Earl, Lord Devon, that the first planned period being longer than subsequent planned periods would appear to make sense in order to allow the trials, pilots and designs of the new ELM scheme to be properly understood, responded to and taken up, in time for any reassessments to be thought through for subsequent planned periods.

I do not know whether we really need to be concerned about election cycles, debated last week, should the plans to change the five-year Parliament Act be taken up. Clause 4(4) of the Bill merely stipulates that subsequent planned periods must not be less than five years.

The Minister will be aware from the UK’s membership of the EU that one multiannual plan is often barely in operation before plans come forward to improve it to ignite responses in the member states.

I appreciate the intent behind Amendment 144 in the name of the noble Lords, Lord Carrington and Lord Curry, that the viability of farm businesses could be jeopardised by making deductions before measures are introduced, to which participants could make up that shortfall, as I have commented previously.

Amendment 149 in the name of the noble Duke, the Duke of Wellington, and the noble Lord, Lord Greaves, would require the Secretary of State to have regard to the impact of these payments on the viability of less favoured areas specifically.

The concern expressed by the noble Baroness, Lady Jones of Moulsecoomb, is well understood. I reflect only that animal welfare standards are enshrined in farm assurance schemes and underpinned by good husbandry, and that regulations are a cumbersome tool in this regard. Welfare standards are not “burdens”, as expressed in this Bill; they are fundamental to good practice.

Amendment 150 in the name of the noble Baroness, Lady Rock, also calls for flexibility around payments. Although counterintuitive to the phasing out of direct payments, it is similar to effect to our Amendment 142, in an earlier group, which would allow the carrying forward of unspent sums as schemes under ELM may need time to be developed and taken up. The noble Baroness is right to signal in Amendments 151 and 153 that late payments suffered under the RPA’s management, especially at times of adjustment to new systems and developments, must be avoided.

I thank her for her Amendment 152 on the delinking payment provisions. It allows me to ask the Minister to clarify his department’s plans for the introduction of delinking payments from land. The Bill states that this cannot be before 2022, which is understood. As this will be the break from the past land-based payment systems, it would be helpful to have on the record what considerations his department has in mind regarding its introduction. How much notice will be given, especially if it is decided to activate the provision before the end of the transition phase? Can the Minister say that it will not be before the various trials and pilots throughout the country have been completed and the full array of new ELM schemes is available for uptake?

The Minister’s department has not published any further thinking beyond what was published in February this year. I hope and expect that the department has taken forward many aspects of all the measures that make up this framework. As we come to the Summer Recess, can the Minister give the House a clear commitment that there will be far more details against which to judge this stage’s amendments in good time for Report stage, which is expected in mid-September? Last week, the noble Baroness the Minister spoke of more information perhaps coming forward by mid-October. She will be aware that this will be too late. Details of other enhancements are promised to be forthcoming in September. Can the Minister map out the scheduling of information that will be necessary for our considerations on Report?

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 3:30 pm, 21st July 2020

My Lords, I am grateful to all noble Lords who have spoken in this debate. It is always challenging when one noble Lord decides on one timeframe and another noble Lord chooses another. Sometimes the Government must make decisions on their position. Our position has been undertaken through a lot of consideration. I declare my farming interests as set out in the register. I thank the noble Lord, Lord Teverson, for his Amendment 130, which seeks to reduce the length of the first multiannual financial assistance plan.

We are all agreed that the nature of farming is a long-term affair. For that reason, we felt that having clarity of funding across multiple years was of paramount importance. As drafted, Clause 4 requires that the first planned period will run for seven years. This is designed to match the length of the agricultural transition period, which is a key time for the development of government policy. Schemes will be tested and piloted. As my noble friend Lord Inglewood said—I was not in a position to reply to my noble friend Lord Lucas—the purpose of tests, pilots and trials is to iron out what has not worked particularly well and find those schemes that come forward as the most dynamic and the best value for money for the taxpayer. The findings from these experiences will inform the development of future schemes and strategic objectives. We believe that shortening the period covered by the first plan would hinder our ability to assess schemes and take a considered view of what works and what does not.

The majority of the amendments in this group address the length of the agricultural transition period. I will address Amendments 142 to 146, on the subject of direct payment reductions. The planned agricultural transition period allows a gradual transition from the existing area-based payments to the future system, where public money will be paid for public goods. We deliberately made this time to avoid a cliff edge for farm businesses. Following an extensive consultation, we believe that seven years strikes the right balance between signalling the end of area-based payments and giving farmers time to adjust. Shortening the transition period would mean steeper rates of payment reductions, which we believe would put undue pressure on farmers who are currently reliant on direct payments at a time when they are adapting to a future without them.

I think that most of us agree that direct payments offer poor value for money. Appropriate reductions to these payments will free up funds that can be used to fund new countryside stewardship agreements, introduce the Environmental Land Management national pilot in 2021 and introduce schemes to boost industry productivity, through which grants will be available so that farmers can invest in equipment, technology and infrastructure. The reductions for 2021 will be modest. As I was reminded, there are within the margin of what would often be currency rate changes in previous regimes. They will be no more than 5% for around 80% of farmers, based on the 2018 scheme data. I will look at Hansard because I think that the noble Lord, Lord Carrington, spoke about a minimum; my understanding is that it will be no more than 5% but I would like to clarify that point.

A seven-year transition period gives enough time to ensure that ELM is fully up and running before direct payments end. The Government are undertaking a large stakeholder-led programme of tests and trials for certain elements of the scheme design. We plan to pilot our approach in 2021 ahead of the rollout of ELM in 2024. In their election manifesto, the Government guaranteed the current annual budget in every year of this Parliament. We have also published the maximum reductions that we intend to apply in the first year of transition. These were first announced in September 2018 to give farmers sufficient notice. The Government will set out further information on funding for the early years of the agricultural transition period, including direct payments, in the autumn.

Having declared my interests, I should say that I well understand that many of my neighbouring farmers—indeed, all the farmers I know—are very keen to know more on this. I appreciate that. I assure noble Lords that the point is hoisted and that I know why it is important. I look forward to that information coming forward in the autumn.

While direct payments currently form an important contribution to income on many farms in England, we believe that they can hamper productivity growth in the agricultural sector. That is why, within the sum that will be released, that money will be diverted into countryside stewardship and productivity grants so that farmers can start, through their business interests, to take advantage of the money that will move from direct payments into these other areas of support.

While I have been at the Dispatch Box, there have been varying years relating to the RPA. It is interesting, and I think my noble friend Lord Northbrook is correct. The payment profile of the RPA has very much improved since my first exercises on this in 2015. We have seen considerable advance in rates of payment; indeed, this has been a very strong priority of the ministerial team.

Defra’s ELM programme will lead and be accountable for the delivery of the national pilot, working with our delivery partners: the Environment Agency, the Forestry Commission, Natural England, the Joint Nature Conservation Committee and the Rural Payments Agency. We are working with the RPA to ensure that it has capacity to deliver the pilot, and we are confident that it will be able to do so. This is on the relationship in this first stage of the pilot.

Another concern which the noble Lord, Lord Clark of Windermere, and my noble friend Lord Holmes of Richmond raised was computer programmes. Again, we have all been scarred by computer programme issues. Defra digital, data and technology specialists are currently working to ensure that the IT needs of the national pilot and ELM will be in place on time, and they are focusing on the ability to make accurate payments on time, on which I place enormous importance. We are confident in our ability to deliver these IT schemes.

The noble Duke, the Duke of Wellington, tabled Amendment 149 relating to upland farmers, and I am struck by what my noble friend Lord Randall said about lowland farmers as well. The Government recognise that upland farmers play a vital role in looking after the countryside. We believe that they already provide many environmental benefits, and so will be very well placed to deliver environmental outcomes—and incomes—which will be rewarded under the ELMS.

Therefore, I say in particular to the noble Baroness, Lady Bakewell of Hardington Mandeville, that we are fully seized of the importance of small upland and lowland farmers who have contributed so much, not only to communities but to the landscape more widely. It is really important that they are part of the ELMS, and I believe that what they will provide for the nation will be very considerable. The Government will apply reductions to the payments in a fair way, and smaller farmers will initially experience lower reductions than larger farmers.

Turning to Amendments 150 to 152, we recognise in Part 2 of the Bill that in exceptional market conditions it is right for the Government to be able to intervene. Clause 8 allows for the extension of the agricultural transition period, should it be necessary. The Government believe that seven years is enough time for an agricultural transition, however we may need to act swiftly and robustly in unforeseen circumstances that warrant an extension.

I say particularly to the noble Lord, Lord Grantchester, but also to my noble friend Lady Rock, that, regarding how delinked payments will work, the Government have made clear that they intend to delink direct payments during the transition period. When that happens, the recipient of delinked payments would not need to remain a farmer to receive them. When delinked payments are introduced, they will replace the current basic payment scheme entirely and for all farmers. The basic payment scheme and delinked payments cannot and will not coexist.

Eligibility for delinked payments will be based on a reference period. For example, it may be necessary to have claimed, or been eligible, under the direct payment scheme in a particular year or years. This is also important: we will consult with farmers before setting this reference period in regulations, and it will be subject to affirmative resolution procedure. I say particularly to my noble friend Lady Rock that timescales for basic payment scheme payments are already set out within the retained EU regulations.

With regard to Amendment 153, when we introduce delinked payments, we may wish to move away from the current approach of making a single payment per year and issue payments more frequently instead; Clause 12 gives this flexibility. We believe that more frequent payments would help farmers’ cash flow, and this has been mentioned by your Lordships.

We will publish details of how and when delinked payments will be paid, following a consultation with farmers on the design of the scheme. Specifying payment timescales and regulations could hinder our ability to adapt the arrangements, in light of experience, in the future. We want to move away from the rigidity of the CAP, so that we can offer a better, more responsive service to farmers.

Turning to Amendments 147, 148 and 154, I say to the noble Baroness, Lady Jones of Moulsecoomb, that the Government are committed to maintaining the UK’s position as a world leader in animal welfare. What I say now is because of the way that regulations and legislation are drafted, so it may seem a bit technical.

Clauses 9 and 14 provide the Secretary of State with powers to modify retained EU legislation governing the basic payment scheme and the common agricultural policy, known as the horizontal regulations for specified purposes. Those purposes aim to make the scheme simpler and improve it for farmers. The underlying animal welfare standards, to which all farmers must adhere, are not found in this basic payment scheme legislation or in the horizontal regulations; they are found instead in underlying domestic and retained EU law, which Clauses 9 and 14 do not allow us to change. I hope that helps the noble Baroness to understand why her very legitimate issues are not placed within these clauses.

It has been a very interesting debate, and I am fully seized of the points made about what has been described as “the gap”. I hope I have set out what we intend to do with the fairly modest sums—I think it is a maximum of £150 million out of £1.8 billion—that would be spent on these new schemes, which are about moving us forward, both with the ELMS and pilots and in productivity. I am fully seized of the importance of that, and the autumn announcement will therefore be very important, not only for your Lordships but, in particular, for farmers and how they work through these changes.

I repeat to the noble Lord, Lord Teverson: the Government felt that seven years was a responsible length of time for the multiannual financial plan and for an agricultural transition. We want this to be a success for farmers, because they provide us with so much; the noble Lord, Lord Carrington, spoke about this in one of our debates, which now seems a little while ago. We ask the farmer to do a lot, and that is why I think, and the Government feel, that seven years is an appropriate period.

With those points, I hope that the noble Lord will feel able to withdraw his amendment.

Photo of Lord Adonis Lord Adonis Labour 3:45 pm, 21st July 2020

My Lords, in that full reply from the Minister I heard him justify the seven-year period and explain Clause 8 giving the Government power to extend the transition if necessary. However, I did not hear his response to Amendment 143 in the name of the noble Baroness, Lady McIntosh of Pickering, on why the transition is to start next year and not in 2022.

Some of us, going back to the last Labour Government, have a lot of experience with the problems of the RPA and getting new systems up and running. The Minister spoke with great confidence about these systems being viable and how the IT was going to work. All I can say to him is: good luck with that. I hope he is correct.

In the event that the RPA runs into problems, under the Bill as currently drafted—irrespective of the amendments from the noble Baroness, Lady McIntosh —do the Government have the power to delay the start of the transition and the pilots? Despite the noble Lord’s confidence that everything will be okay, many of us will feel much more assured if we know that the legal powers are there and will prevent a headlong rush in the event of teething and administrative problems.

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

There are a number of points there. I think I said that under Clause 8 the Government allow for an extension of the agricultural transition period, should that be necessary, so there is an important safeguard there; we can extend the agricultural transition period.

I think I did reply to my noble friend; it may not be satisfactory to the noble Lord or my noble friend. We believe that direct payments offer poor value for money, and that is why we want to start in 2021 with, as I say, a modest reduction. I have deliberately said that this will be no more than 5% for around 80% of farmers, so that we can redirect that money into an ELM national pilot, Countryside Stewardship agreements and productivity grants.

Yes, we are all scarred by computer systems. I am the first to say that I am not a computer expert; that is why we have people who are. I repeat that everyone working on these matters is experienced in them, because clearly—as I have said—we want payments on time and a successful outcome for farmers. We also want to make sure that the ELM and all we do hereon in is value for money for the taxpayer. In the end, it is the taxpayer who will reward the farmer for doing the things that we as a society know the farmer can do very well.

Photo of The Earl of Caithness The Earl of Caithness Conservative

My Lords, I am grateful to my noble friend the Minister for his response. I have two questions. He said the RPA would do the trial next year, then he came to a full stop. Does that mean his mind is open and that another body could be responsible for implementing the ELMS in future? Secondly, he referred to the autumn announcement. Can he be more specific on the timing of the autumn announcement and whether we will get that before Report?

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

I cannot give my noble friend the precise date. I know noble Lords would like that announcement to be as soon as possible—I will take that away—but I am afraid I cannot give your Lordships a precise date. In fact, I do not know the precise date, but it will be in autumn. I am fully seized of the importance of that.

As to whether the delivery body is the RPA in the long term, I believe it is well placed. I cannot give a direct answer as to whether the RPA will in fact do all the ELM. I suspect it may, but that is obviously a matter we will consider.

Photo of The Earl of Devon The Earl of Devon Crossbench

My Lords, the noble Earl, Lord Caithness, beat me to it. I was going to ask for the date of the Autumn Statement and request that it occur before Report. I reiterate that there really is no point in us coming back to all these issues if the Government are about to issue a Statement that will add considerable clarity and amount to a multiannual financial assistance plan. Anything the Minister can do to get that Statement before Report would be appreciated.

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

I can say to the noble Earl and other noble Lords that I have the matter strongly in my mind.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

I was not going to pursue this, but my noble friend’s answer has perplexed me. He said the Government wish to phase out direct payments as they provide poor value for money. The whole thrust of the debate on Amendment 143 this afternoon is that if whatever will replace direct payments is not in position, is it wise to start phasing out direct payments at that time? Can my noble friend not permit himself a degree of flexibility in this regard?

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

My Lords, the Government have sought that flexibility in how we reduce the payments, as I say. Although we will make announcements on funding for the early years of agricultural transition, we have also provided that flexibility for unforeseen circumstances in which, for instance, we would need to extend the agricultural transition period.

We want to start in 2021 because this is a journey—to pick up some of the points at the beginning—about how we work with health and harmony. How do we ensure, working with farmers, that we produce very good food and enhance the environment? Of course, I take the point that we must get the system working well, but the prize in all this—public money going to support farmers in enhancing the environment—is a very desirable thing.

Photo of Lord Teverson Lord Teverson Chair, EU Environment Sub-Committee, Chair, EU Environment Sub-Committee

My Lords, I first thank the noble Lord, Lord Naseby, for his support. We are not often on the same side of things and I very much appreciate his remarks and the considered remarks of the noble Lord, Lord Randall of Uxbridge, and even the noble Lord, Lord Blencathra, who understand the biodiversity dimensions of this, even if they do not—[Inaudible.]

There is a real issue here. Funnily enough, I do not disagree with the view of the noble Baroness, Lady McIntosh, about pushing back the start one year, just to make sure we get this incredibly important issue for the nation right before we start. But I cannot believe it can take seven years for a nation such as ours to implement a new system; five years is far more acceptable for what we have to do. In fact, it seems the seven years that many advocate is going back to the mentality of the common agricultural policy and the European Union—that slo-mo mindset that we are trying to escape with this new scheme. However, I beg leave to withdraw the amendment.

Amendment 130 withdrawn.

Amendments 131 to 134 not moved.

Clause 4 agreed.

Amendment 135 not moved.

Clause 5: Annual and other reports on amount of financial assistance given

Amendments 136 to 138 not moved.

Clause 5 agreed.

Clause 6: Monitoring impact of financial assistance etc

Amendment 139 not moved.

Clause 6 agreed.

Photo of Lord McNicol of West Kilbride Lord McNicol of West Kilbride Deputy Chairman of Committees

We now come to the group beginning with Amendment 140. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or the other amendment in this group to a Division should make that clear in the debate.