Amendment 36

Agriculture Bill - Report (1st Day) – in the House of Lords at 9:20 pm on 15th September 2020.

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Baroness McIntosh of Pickering:

Moved by Baroness McIntosh of Pickering

36: Clause 8, page 7, line 40, leave out “2021” and insert “2022”Member’s explanatory statementThis amendment will move the start of the seven-year transition away from direct payments from 2021 to 2022.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, it gives me great pleasure to move and speak to Amendment 36. This group of amendments covers a range of activities relating to the transition period. I am grateful to the noble Baroness, Lady Ritchie of Downpatrick, the right reverend Prelate the Bishop of St Albans, and the noble Earl, Lord Devon, for their support in co-signing the amendment. The attraction of Amendment 36 is its clarity and straightforwardness: it calls for a simple deferral of commencement, moving the start of the seven-year transition period away from direct payments from 2021 to 2022.

Why is this necessary, given that the House has just agreed to government Amendment 35? I listened carefully to what the Minister said. He was clear that he could not give a precise date when the Environment Bill will reach this House—that is obviously not within his control, so I am grateful to him for that—and the department is keen to make progress. However, we owe farmers and other land managers a degree of certainty as they prepare for the biggest change in nigh on 50 years in farm support and agricultural policy.

I was disappointed that the Minister was unable to give a specific date, much as he would wish to, for the business plan setting out spending for the initial five-year period. We heard only that it will be published in the autumn. The autumn finishes on 30 November but potentially could run until 21 December. That could be after both Houses have risen—if we do rise—for the Christmas recess. That is very disappointing, although I know the Minister couched his remarks by saying he would like to see the spending and financial plan in place as soon as possible.

The difficulty I—and, I think, other signatories to this amendment—have is that I do not see any logic at all in why, for subsequent plans, a period of at least 12 months before the beginning of the plan period should take effect. My humble submission to the House this evening is that it is even more important for the Government to set out in their initial spending plan what the consequences for farmers will be. We are asking farmers, land managers, growers and others—I know my noble friend Lord Naseby takes great interest in horticulture—to take decisions for the forthcoming year without any of us knowing in any great detail what the terms of this financial assistance plan under Clause 4 will be. My noble friend helpfully points out in the explanatory statement to government Amendment 35 that

“the first multiannual financial assistance plan under Clause 4 must be published as soon as practicable before the beginning of the applicable plan period”, but, as I have said, only subsequent plans would need 12 months’ notice.

I humbly submit that it is incumbent on the Government to bring forward this first plan, which—if my understanding is correct—will last for the whole transition period. I am not asking for the transition period to be reduced, as others have done. That would be quite wrong. We owe it to farmers, growers and others to have seven years to prepare, but for the life of me I simply cannot understand why we are not having a 12-month period and a delay. I therefore urge the House to look favourably on this simple delay of one year so that we all benefit from the results of the pilot schemes and the ELMS projects. I see newspaper reports that the Chancellor of the Exchequer, for example, has been to visit local farms in his constituency in North Yorkshire, but other than the farmers themselves—and Defra, presumably—none of us has any detail whatever.

I shall listen carefully to what support there is for this amendment in the course of the debate on this group. I seek greater clarification from my noble friend the Minister. I would like to know why there is not a 12-month lead-in to this crucial first business plan and why we are not seeing the results of the trials. I express my concern at how little knowledge there is at grass-roots level about how any plan will affect decisions that, frankly, are being made as we speak. I beg to move.

Photo of Lord Carrington Lord Carrington Crossbench

My Lords, I declare my interests as set out in the register as farmer, landowner and a recipient of BPS payments and their predecessors for many years. I will speak to Amendment 37, to which the noble Lord, Lord Curry of Kirkharle, has kindly attached his name, and Amendment 40, to address the problem of the likely payment gap that will affect farmers as the direct payments are reduced in 2021, while the revenues from joining any new environmental land management scheme will not arrive until 2024.

I covered this in some detail in Committee and will not repeat that speech. However, the subsequent response from the Minister, the noble Lord, Lord Gardiner, and his office, together with the progress made on issues I identified at that time, has not made me rest any easier—indeed, the reverse, which is the reason this amendment has been tabled on Report.

First, we have no information on the cuts to BPS after 2021. Although promised for the autumn—which has arrived, of course—it might well be delayed until after the Bill comes into effect.

Secondly, we still have no real details on ELMS that would enable even elementary planning. Instead, during July Defra organised webinars for farmers to introduce ELMS. These were excellent and slick presentations of the concept but, when it came to the Q&A session with farmers afterwards, there were no answers to be had.

Thirdly, there is the ongoing issue of Brexit and whether we have a trade deal with Europe. The consequences of no deal for certain important agricultural sectors such as sheep and cereals are simply too awful to contemplate. Duties of 40% on lamb exports, which account for a huge element of production, would devastate the industry.

Fourthly, we have few other trade agreements in place, and those we have account for some 12% of our trade, which drills down to a fraction of our agricultural exports.

Fifthly, there is the effect of Covid-19, which is consuming large amounts of government time and resources.

Given this situation, farmers cannot plan for the future and should not just exist on the warm words of future government announcements of support. Some of the warm words I have received are that farmers can still access old countryside stewardship schemes and take advantage of productivity grants. Some will certainly benefit from these, but they are not appropriate for all and certainly will not compensate for the income lost. Farmers surely deserve better than this.

This amendment enables the Government to proceed with the implementation of the new agricultural policy on its existing timescale, unlike Amendments 36 and 41, which also have substantial merit. However, it provides an all-important safety net of limiting reductions of BPS to individual farmers until ELMS are introduced. I understand that, in 2021, most farmers will receive 5% cuts, while the larger farmers would be cut by up to 25%. In circumstances where we do not know the cuts in succeeding years, for some farmers in less favoured areas, as the noble Duke, the Duke of Wellington, will point out, even a 5% cut can devastate their livelihood. Based on these percentages, in 2021 it is entirely possible that some farmers, both owners and tenants, will see their BPS cut by 40% to 50% before they have access to ELM schemes which might address some of the shortfall. This is both too uncertain and too severe for most businesses to plan around.

All noble Lords wish to see a thriving farming industry in this country and this 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, as these are known to be heavily reliant on direct payments. It would not, therefore, just benefit the large farmers. This enormous uncertainty should surely not be addressed by warm words or new schemes brought in at the last minute which add to the complexity of the industry. The Bill should incorporate this provision, which would help underpin the finances of farmers while all these uncertainties are resolved. I may therefore wish to press the amendment to the vote, to test the feeling of the House. However, this will very much depend on the Minister’s response to these concerns.

Photo of Baroness Ritchie of Downpatrick Baroness Ritchie of Downpatrick Non-affiliated 9:30 pm, 15th September 2020

My Lords, I support Amendment 36 in the name of the noble Baroness, Lady McIntosh of Pickering, to which I am also a signatory. I also support Amendment 41, in the name of the noble Lord, Lord Grantchester. The noble Baroness, Lady McIntosh of Pickering, has clearly articulated the purpose of Amendment 36. It is important that the Government provide a degree of certainty for farmers in relation to the new environmental land management schemes. We are simply asking for a deferral of the commencement date from 2021 to 2022.

As we all know, there is not a lot of detail yet on the ELMS pilots. It is generally felt that it is too soon to switch to this new scheme in 2021, without that background and concrete detail. While we wish to keep the seven years, we are asking for a deferral of one year for the commencement.

I feel that government Amendment 35, moved formally by the Minister, does not go far enough. We do not have enough information on how it will operate, or what the plan is for the next year. Therefore, I am very happy to support Amendment 36, because it provides that necessary deferral for a year to allow the plans to be worked up, to collect the statistical evidence from the ELMS pilots and to provide that much-needed certainty to farmers who are faced with a whole new funding framework after some 50 years. There is a whole new generation of farmers who never knew anything but the European framework that has been with us for such a long time.

Photo of The Bishop of St Albans The Bishop of St Albans Bishop

My Lords, I can be brief. Amendment 36 in the name of the noble Baroness, Lady McIntosh of Pickering, may appear very minor, but when you consider that we are in the last third of this year and that this is first day of the Report stage of the Bill, there is very little time left before the seven-year transition period is due to begin.

The noble Baroness, Lady McIntosh, and the noble Lord, Lord Carrington, both laid out the uncertainties facing landowners and farmers, not least until greater details of ELMS are clear. The Bill is going to make a huge change to both farmers and landowners, and it is much better that we take them with us. Indeed, I think it is only fair that we give them time to make the necessary adjustments, as there are still so many details to be worked out and the implications of the Bill are so significant. I hope the Minister will find a way that we can adopt this proposal.

Photo of The Earl of Devon The Earl of Devon Crossbench

My Lords, I am concerned that the mistreatment of and disrespect for farmers under the Bill is continuing. I speak to Amendment 36 and to support Amendment 37 in the name of the noble Lord, Lord Carrington, and Amendment 41.

The 2022 harvest season has begun. Crops are being sown right now that are due to be harvested next year, and farmers just do not know what rules they will be harvested under. With respect to Amendment 29, the Government accepted that expert advice and guidance is a priority for these farmers, but there is nothing to advise and guide them on—they simply do not know what the rules are going to be. Similarly, in proposing Amendment 35, the Government have accepted that the minimum reasonable period is 12 months, but they are not giving the farmer those 12 months.

There were very reasonable objections raised, I think by the noble Lord, Lord Teverson, that we do not want to delay the environmental achievements due to be delivered by ELMS. I agree; we do not want undue delay. However, it would be an environmental disaster to proceed with the transition period that will be stillborn at birth.

No farmers are going to adopt this if they do not know what it is or how it is going to work, so it will be useless from the outset. We need to take time; the Government need to get responses to their tests and trials and work out what they are going to do. Rushing this legislation and rushing the transition period into being is not going to deliver any benefit to farmers, the environment or the public.

Photo of Lord Curry of Kirkharle Lord Curry of Kirkharle Crossbench

My Lords, my interests are as recorded in the register. I fully support and I am very happy to attach my name to Amendment 37 in the name of my noble friend Lord Carrington. I am delighted to support him in this debate.

I am very concerned indeed 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 chat to farming friends, it is very clear that they remain completely in the dark and unclear on what lies ahead, as has been stated many times in this debate—and just now by the noble Earl, Lord Devon.

Smooth transition should be a priority to ensure that we unlock the huge benefits that the new policy is capable of delivering. Farmers have been supported by the CAP, with all its weaknesses, for decades, and are familiar with the systems involved, as the noble Baroness, Lady Ritchie of Downpatrick, just mentioned. As we know, many, particularly those in livestock areas in the uplands, are currently very dependent on that support. To move at pace from where we are today to a satisfactory destination at the end of the transitional period when we have no information on the steps that are being considered by government is not only very worrying to farmers but a massive risk. Time is not on our side, as I stated in Committee. ELMS pilots are just under way and meaningful conclusions will take a couple of years or more to interpret. There will be only three years from the time the Bill becomes law to draw conclusions from the pilots and then launch the ELM scheme to the entire farming sector. There is at present no way that farmers can prepare for this change, because no information is available.

This change in policy is a unique opportunity to facilitate restructuring of the agricultural sector, but it cannot be rushed. It is reassuring that the Minister recognises that there is a gap and in an earlier debate outlined the various options that will be available to farmers from next year: new stewardship schemes, productivity grants, et cetera, to help with the transition. However, if he will forgive me, it all sounds rather last minute, a bit hasty, and an attempt to plug the gap to be seen to be doing something. I do not want to appear cynical but I am concerned that this will suck out capacity from the department and its agencies—capacity that should be devoted to developing the ELM scheme and assisting farmers with transition. It is regrettable that so far we have information only on the deduction from the BPS for the first year of transition. This amendment is important in that it is designed to smooth the process; to limit the dismantling of support from the BPS to a reduction in total of 25% until the ELM scheme is available is a sensible approach.

I restate what I said in Committee—that I

“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” have access to the advice recommended in an earlier debate and time to adapt. It would

“be a disaster if such an important change in policy was rushed through and we failed to engage appropriately”.—[Official Report, 21/7/20; col. 2070.]

In response to the eloquent comments of the noble Lord, Lord Teverson, I say that the outcomes that he and we all desire will best be delivered through a well- managed transitional process. I hope that the Minister will be able to reassure the House that the department will adopt the timetable proposed in this amendment.

Photo of The Duke of Wellington The Duke of Wellington Crossbench

My Lords, I declare my agricultural interests as detailed in the register. I am speaking to two amendments in my name, both of which received support from across the House in Committee, and both of which relate to the period before the introduction of the environmental land management schemes.

The first is Amendment 38. I have never been a particular proponent of organic farming, but we should all be worried that the area of land farmed organically in the United Kingdom is down by over one-third in the last 10 years. In this same period, it is up by two-thirds or more in most other European countries. Our performance in this respect puts us in the same league as countries such as Bangladesh, Mali, Saudi Arabia and Syria, to mention just a few. Only 2.7% of our land is farmed organically. Surely a Government who are committed to improving the environment should be prepared to expend taxpayers’ money to encourage farmers to convert to organic systems.

The Minister kindly wrote to me a few weeks ago about this matter, but he said that only £6 million in total has been paid to farmers over the four years since 2016 to convert to organic systems. This is a very small amount in the context of the total support payments to agriculture. We know that the new environmental land management schemes will not begin until 2024. We also know that about £150 million will be saved in 2021 out of the current basic payment system. Would it not be an eye-catching move if this Minister and this department doubled the conversion payments to organic farming just for the years until the introduction of the ELMS? To double a payment of only £2 million a year does not seem unreasonable.

Ministers well understand that during the conversion period of three years a farm’s income is reduced and the costs increase. Yet, the farmer is not paid the premium price for organic product until the end of the conversion period. The policy of conversion payments already exists. It requires the Treasury only to increase temporarily the payments. I believe that reducing the use of pesticides, herbicides and other agrichemicals would be an enormous public good. Surely anyone who watched David Attenborough’s film on Sunday would agree that increasing the land in England farmed organically would be another small step towards helping biodiversity in this country.

My second amendment, Amendment 39, seeks to protect our small hill farms by exempting those in less-favoured areas from the automatic 5% cut in their basic payment next year. These small upland farms are already more than 100% dependent on the basic payment to earn a modest living. The Secretary of State for Food and Rural Affairs declared last week on Radio 4 that no deal with the EU and a 40% tariff on beef and lamb exports to Europe would be a good outcome. Let us hope that a deal can be reached.

Nevertheless, it is proposed to cut the incomes of these small livestock farmers, many of whom will not be able to join other support schemes in the years between now and the introduction of the ELMS in 2024. The Government’s own figures show that livestock farmers in the uplands have a net income considerably less than the basic payment they receive, so a cut of 5% in the basic payment may well be a cut of nearer 10% in their net income.

I very much hope that the Minister will be able to accept my first amendment to help to improve the environment and my second to help to preserve our increasingly marginal small hill farms. I may wish to press these amendments to a vote, depending on the Minister’s response.

Photo of Baroness Rock Baroness Rock Conservative 9:45 pm, 15th September 2020

My Lords, I declare my interest as a director of Wrackleford Farms Ltd, a tenant farming enterprise. I shall speak to Amendment 42. The amendment, supported by the NFU, would ensure that farmers entitled to payments receive those payments within guaranteed timescales to help ensure certainty of cash flow. I thank my noble friend Lord Caithness for his support.

I said in Committee that any farmer will tell you that cash flow is their number one consideration. As a farmer, it is one thing to know that financial support will be reduced, but quite a different thing to know when that financial support will be received. Regulations relating to the phasing out of BPS therefore need to include clarity on when a farmer will receive payments.

While it is true that the existing payment windows will come over under retained EU legislation, Clause 9 gives the Secretary of State the right to modify the BPS legislation, including potentially by removing the payment window in place at present. We cannot have a situation where no payment window is set.

Furthermore, it is arguably the case that the current payment window under the CAP rules provides little recourse to farmers if the RPA fails to meet its payment obligations. This leaves farmers waiting an unsatisfactory length of time and in great uncertainty as to when payments will be made. The impact of these delayed payments cannot be overestimated. There is the financial impact: greater borrowing costs, lost business opportunities and less attractive prices for farm produce or inputs. But it also has a substantial impact on the well-being of farmers, their families and their relationships with their farm suppliers, which—importantly—filter down through the wider rural economy.

The payment window for direct payments is seven months: 1 December to 30 June of the following calendar year. Current rules state that payments have to be made only to the value of 95.24% of funds by that time. We all know that farming revenue and costs are both volatile; nothing remains the same month to month or year to year. The overwhelming message from farmers is that they need certainty over the timing of payments.

There need to be payment windows—or dates that Defra has to meet—either fixed in schemes or set out in individual agreements. This will allow holders of agri-environmental schemes to plan with great certainty and to manage their cash flow. It is not acceptable to ask farmers to undertake work at their own cost and to comply with associated strict time limits but then provide them with no certainty on payments associated with those works.

The government department BEIS has a prompt-payment policy that requires payments within a certain number of days: 30. I would welcome a similarly prompt-payment policy approach for agricultural schemes with guaranteed timescales. I hope the Minister will provide reassurance on this matter.

Photo of The Earl of Caithness The Earl of Caithness Conservative

My Lords, while I thoroughly support the aims of this Bill and the direction in which the Government are taking us, I have to say that I get more and more concerned as we delve into the detail of the Bill and the experts who are farmers—such as the noble Lords, Lord Curry and Lord Carrington, my noble friend Lady Rock and others—expose the concerns that farmers face. It is for that reason that I support many of these amendments.

I tried to put my name to Amendment 36 in the name of my noble friend Lady McIntosh of Pickering, but there was already a full house of supporters. However, I supported this amendment in Committee and would do so again now. The argument is very compelling that the pilot schemes have only just started and it is going to take a long time for them to report and for the department to go through them, gestate them and work out what the future is. There would be very little time for the farmers to implement the results. Therefore, putting the whole thing back by a year would be a sensible, pragmatic and welcome solution to one of the many problems that the farmers face.

The noble Lord, Lord Carrington, made some very good points when he moved Amendment 37, which also deserves support. On the points made by the noble Duke, the Duke of Wellington, on Amendment 38, I reiterate that you do not have to be an organic farmer to protect the environment. You can farm in a perfectly normal way and bolster it. My main concern is Amendment 42, to which I have put my name and which has just been so well introduced by my noble friend Lady Rock.

The noble Lord, Lord Curry of Kirkhale, put it very succinctly when he spoke of sucking out the good of the department—I think those were his words. My concern is that as we move to ELMS, inevitably the department will move the good people into the new scheme and the less good people will remain with the old scheme. I hate to categorise the department in that way because all the members of Defra are good, but inevitably the really bright ones will be with the more attractive new scheme, and as the old scheme runs out, there will be an inevitable tendency for it not to receive the same attention that it gets now.

My noble friend Lady Rock was absolutely right to say that the one thing farmers need is certainty. As that support is reduced, so it is imperative that the payments are made promptly and on time. What recourse does a farmer have if he or she is made bankrupt because the Government, using taxpayers’ money, do not pay as they should? The area of financial support is hugely concerning and we must get it right. As the Bill stands, I am not convinced that we have got it right, which is why I support Amendments 36 and 42.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, I call this group of amendments “Mind the Gap”, as I did in Committee—although I note that others have called it “The Valley of Death”.

The Minister has shown some flexibility over Clause 4, on the multiannual plans. He has listened well to the views of this House and adapted the Government’s position on Clause 17, on reports to Parliament on food security, but it seems strange that here, where there is every excuse in the world for delay, there has been no shift in the Government’s position—as yet. I am always hopeful.

It is a good two years since this Bill was first published, and since then there have been numerous delays in the implementation of what I have already called the “brave new world” of ELMS. The long, drawn-out shenanigans over Brexit froze everything in its tracks for a good 18 months, with this Bill being withdrawn from its parliamentary passage more than once during that time. Then of course there was this year’s lockdown, which paralysed the system and slowed everything up even more.

Above all, since my first meeting with the ELMS team at Defra early last year, there has been a gradual realisation that the introduction of ELMS is not going to be quite so simple as was first thought. We now know that it will take several years to get ELM schemes up and running across all the country, yet in the Government’s transitional timings there appears to be no allowance for the fact that the brave new world will not be a firm reality until 2024 at the earliest.

All the farmers that I have spoken to are very worried about their future. How are they going to survive, when no one really knows how things are going to work in future? Even the Government do not yet know, and yet, in spite of all the delays—mostly not the fault of Defra, as I said—we still seem to be stuck with the 2021 start of the transition period. This cannot be right. With the rug of the old world being pulled out from under them, and the new rug unlikely to arrive for some time, more farmers than necessary are going to fall down that gap.

So Defra has every reason to take this one back and think again. I do not care how it does it, but we need something to close the horrible gap that is looming. Amendment 37 in the names of the noble Lords, Lord Carrington and Lord Curry, gives everyone the best chance of survival, while giving the Government the greatest room for manoeuvre. A 25% cut in the single farm payment will be enough of a shock to force farmers to throw themselves into the new training for the brave new world that we are assured will be available, but it will not be so much of a shock that they drown before they get there.

Photo of Baroness Chisholm of Owlpen Baroness Chisholm of Owlpen Conservative 10:00 pm, 15th September 2020

My Lords, I shall speak briefly on why I cannot support Amendment 36 in the name of my noble friend Lady McIntosh of Pickering. Leaving the EU, and now dealing with the pandemic, has led to farmers feeling that they are in a more uncertain place than ever before. They are under pressure to feed the nation now more than ever. Therefore, support to them is vitally important, and introducing new schemes that reward farmers for producing that which they do best should not be delayed.

The present system will be simplified. It was in Committee that we heard that Defra is on track and organised for implementation for 2021, and, even more importantly, that the money is in the piggy bank and oven-ready to go to those who will benefit most from the payments. New and existing countryside stewardship agreements can still be applied for up to 2023. Delay appears unnecessary and possibly harmful, and instead of bringing certainty, allows for another year of possible uncertainty. The farmers where I live appear content with the 2021 start.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

My Lords, I hope that the Minister will resist Amendment 36, which would delay the start of the agricultural transition. Climate change and the biodiversity challenge are urgent, and we need to provide the financial support and the advice and guidance as soon as possible to equip farmers and land managers to tackle these challenges.

On Amendment 38, in his name, the noble Duke, the Duke of Wellington, admitted that he was not a great fan of organic farming in the past. I have not exactly waved a flag for it either—but he, like me, is concerned about the decline in the area of land farmed organically in the UK compared with most other developed countries. Organic production accounts for only about 2.5% of agricultural land in the UK; the EU average is 7.5%, and Austria has a whacking great 24%. Yet the UK organic market is growing like a mushroom—far faster—and we are sucking in imports as a result. UK farmers are basically missing out on the growth in the organic market.

The public benefits of organic production are well attested in things like biodiversity, environmental performance and animal welfare, so growth in the organic acreage would be a good thing. What is needed is not only support for the organic transition to be enhanced into the future; it needs to be coupled with the provision of advice. It is a big step change for farmers and to do the transition well they need support. There used to be something called the Organic Conversion Information Service, but support for peer-to-peer learning would be a help.

We also need to see help with ongoing market development, as other countries have done. Using public procurement to increase the amount of organic food consumed in public settings would be an excellent thing. Copenhagen, for example, can now boast of over 80% of food consumed in public settings being organic. What support can the Minister give to organic growth?

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green

I support Amendment 38 in the name of the noble Duke, the Duke of Wellington. There is really no doubt that UK performance in the area of organic conversion has been astonishingly poor, and we have not seen a will or determination from the Government to make the progress that we might have hoped for in the past but can now hope for in the future. This amendment is a very modest step in that direction.

We can only look with envy at what is happening across the channel. The EU’s farm to fork strategy aims to see a 50% reduction in the use of pesticides by 2030 and a 50% reduction in the use of antimicrobials for farmed animals and aquaculture, as well as 25% of farmland being used for organic farming—roughly 10 times as much as we have now—by 2030. We are being horribly left behind. We look at countries around the EU and see that Austria is already at 24% and Italy at 15%.

As the noble Baroness, Lady Young of Old Scone, said, one of the things our failure to support this conversion means is that we are seeing more imported food. It is often food of higher value and it is being denied to our farmers—that is, farmers do not have access to that market because they are not growing organic food.

The noble Earl, Lord Caithness, said that other forms of farming can be environmentally friendly and sensitive. I would certainly say that of course you do not have to be organically certified to be environmentally sensitive, but this is the only system of registration, recognition and guidance that we have for agroecology. Organic systems by definition are agroecological. Anything else is just making a claim or suggesting that it is happening. Many of us probably feel we know it when we see it when we walk into a field, but that is not the same as something that immediately pushes in that direction.

I encourage the noble Duke, the Duke of Wellington, to consider pushing this issue forward if we do not hear a satisfactory answer from the Minister. We need to take at least this modest step forward.

I also want briefly to express support for Amendment 42. We know that farmers, like many other small and medium-sized enterprises, can have huge problems with payments from the large companies they supply, such as multinational manufacturers and supermarkets, but they really should not be waiting for payment from the Government; they should be able to rely on that.

Photo of Lord Judd Lord Judd Labour

My Lords, the proposed legislation will inevitably cause a great deal of extra work for not only Whitehall but many farmers on the front line. They have a lot of burden and a lot of challenges; their time is scarce.

In recent years, but particularly in the context of Covid-19, we have seen the consequences of ill planning, of the rushed implementation of new measures and of promises unfulfilled, including the consequent maximum disruption. Rationalisations after the event are no substitute for all the promises at the beginning. For those reasons, there must be time for civil servants and others, and particularly farmers themselves, to prepare properly. In that context, the amendment moved by the noble Baroness, Lady McIntosh of Pickering, has insight and sensitivity and realises the practicalities of what is involved.

When it comes to Amendment 41, in the name of my noble friend, the same arguments that I have just applied are highly relevant. What is important about this amendment is that it sets out in detail the things that must be in place and tested. That means not just uttering words off the back of an envelope or making a press statement from No. 10 Downing Street, but ensuring that these things are tested and proven. At stake is the success of the new arrangements. That will be very important, as we do not want disruption of agriculture and total chaos for farmers. From that standpoint, I believe that Parliament has an overriding duty to make sure that it is convinced about what is proposed and that we are able to vet it and give, or withhold, our approval. This is an important amendment and I am glad to be able to support it.

Photo of Lord Northbrook Lord Northbrook Conservative

My Lords, I declare an interest as a landowner, an arable farmer and a recipient of payments from the BPS and its predecessor schemes. I will be brief, as the arguments have been well rehearsed on most of the amendments, which I support.

I support the reasons given by my noble friend Lady McIntosh for seeking to delay the start of the seven-year transition rule, having heard her concerns about farmers not knowing about the first plan, mentioned in Amendment 35, until after the Bill has become law.

I also support Amendment 37, in the name of the noble Lord, Lord Carrington, and his well-judged comments on the countryside stewardship and production grants. This amendment seems entirely sensible, in that it would stop any further reduction beyond 25% until the ELMS was available.

I also back Amendment 39, tabled by my noble friend the Duke of Wellington, the aim of which is to support small hill farmers. I wonder whether he might consider extending it to small lowland livestock farmers.

I am also sympathetic to Amendment 42, tabled by my noble friend Lady Rock. I would just like to say how good the RPA’s performance has been in recent years, and I am sure that that will be extended to the new regime.

Photo of Lord Addington Lord Addington Liberal Democrat

My Lords, listening to this debate, it is quite clear that the one thing not available here is any degree of certainty or confidence regarding the future. My name appears on Amendment 41, tabled by the noble Lord, Lord Grantchester. I do not know whether he saw it, as I added it at the last moment, but it is there. For me, this amendment offers the preferred option in providing a degree of certainty. A year’s trial is probably the option that I like best. However, I am not a farmer and am not in the system.

I hope that when the Minister responds he will try to address some of the many concerns that have been expressed. The central theme running through them is that people are worried about the change and the transition. When there is that degree of concern running through a system and people feel that they cannot buy into it because they are uncertain, I suggest that something has gone fundamentally wrong. Without a degree of buy-in, it will not work.

I have already said today that the Minister is facing a challenge, but I believe that he is facing a slightly bigger one here. People in and around this industry really need to know what is going on. We have also heard people say that they do not want delays because of other schemes coming in, but if the fundamental group—the farmers—are concerned, we need something that gives them a solid basis for confidence. At the moment, it just is not there.

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

My Lords, a transition period of seven years is quite a long period in which to phase out old policies under the CAP and bring in new policies under the Agriculture Bill. The transition is currently planned to begin in 2021, and it will be vital for Defra to put in place the necessary support to enable a stable and just transition for the farming community. There is currently much unease in this community about just how it will be affected in the future—a point made by many noble Lords.

Farming is not something that can be changed overnight. Time is needed to adjust farming plans and to secure the necessary capital investment to make some of the changes required. A key part will be support for business advice and skills training, time-limited support for capital investment to improve productivity sustainably, and wider improvements to connectivity in rural areas, such as rural broadband.

On the other side of this equation is the environment and climate change. It is undoubtedly true that our current farming practices have damaged the environment and are contributing to climate change. We are engaged in a delicate balance between the two opposing views but I do not believe this is an insurmountable problem. Given the pressing nature of the climate and nature emergencies, and the need to bring forward financial assistance under the Bill to support farmers to tackle these, it is imperative that the current timescales are retained. The Government should focus on what can be done during this seven-year period to support farmers to adapt, and benefit from the public money for public goods scheme that will be available in the future. Moving the start time of the transition period from 2021 to 2022 is not the answer. As I said on earlier amendments, the environment and the climate need action now, not later. While farmers are fearful of change, many of them are up for this change and looking forward to it.

Amendment 37, tabled by the noble Lords, Lord Carrington and Lord Curry of Kirkharle, is a more pragmatic approach to this problem and one which I support. Similarly, I support the noble Duke, the Duke of Wellington, on Amendment 38. The number of organic farms in this country is extremely small compared to other countries; only 2.7 % of our land is farmed organically at the moment. It is important that this sector is increased and more choice is made available to consumers of organically produced food. It should not necessarily come in from other countries—we need to produce our own.

Amendment 39 is welcomed as an amendment to Amendment 37. My colleague in the other place, the honourable Tim Farron MP, has long championed the cause of hill farmers. They struggle to make a living out of their land in less favoured areas. I fully support this amendment to secure a specified amount of income for three years, until 2023.

The noble Lord, Lord Grantchester, who knows far more about farming than I ever will, has tabled Amendment 41. Little is currently known about the outcomes of the ELMS pilots—what is successful and what is not. It is therefore sensible to ensure that schemes are successful and viable moving forward. I look forward to his comments.

Lastly, I support the noble Baroness, Lady Rock, and the noble Earl, Lord Caithness, in their efforts to ensure that payments to those entitled arrive in a timely manner. She laid out her case extremely well. It is completely unacceptable for those entitled to payments to have to wait months to receive them. I cannot imagine what would happen if those working in this House had to wait months before receiving their salaries for the work that they do in ensuring the House can operate effectively. Farmers should not have to wait for their payments. Everyone will have had periods in their lives when their cash flow was problematic. As we say, they have had too much month—or week—left at the end of their salary.

We really must do better for our farmers, who are ensuring that the land is looked after and healthy food is produced. Given the extreme importance of this group of amendments, I hope that the Minister will have some encouragement for us.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy) 10:15 pm, 15th September 2020

My Lords, the lead amendment in this group, Amendment 36, in the name of the noble Baroness, Lady McIntosh, and others was subject to much debate in Committee. There were many alternative proposals for the transition period between the present system and the full implementation of ELMS being separated from landholdings. This amendment would delay its start for one year. I thank her for her amendment, as she has foreshadowed many of my remarks.

I will speak to my Amendment 41 in this group. However, before I do so I thank the noble Lords, Lord Carrington and Lord Curry of Kirkharle, for their Amendment 37. Further amendments to it have been tabled, in Amendments 38 and 39 by the noble Duke, the Duke of Wellington, and Amendment 40 by the noble Lord, Lord Carrington.

I understand the approach of the noble Lord, Lord Carrington, and his anxieties concerning cuts in direct payments. I appreciate the emphasis given by the noble Duke, the Duke of Wellington, to the organic sector by doubling conversion payments, and to the hill-farming sector in the less favoured areas by freezing their reductions below £30,000 per hill farm.

Amendment 40 specifies that the regulations in this amended clause are subject to the affirmative procedure. However, we could not consider supporting these amendments without extensive further information being available to apprise us of their merits.

I would also like to thank the noble Baroness, Lady Rock, for her amendment concerning the importance of cash flow and grants to the viability of farming businesses in today’s increasingly volatile business circumstances.

However, I propose an alternative approach to these amendments. Amendment 41 disapplies Clause 8. In Committee, amendments around a transition period and the multiannual plans were spread between groupings. This has been reflected today with the consideration of Amendment 32 from the noble Lord, Lord Teverson, and Amendment 33 from the noble Earl, Lord Devon, being in a previous group. This has meant that the debate has been at cross-purposes with Amendment 41, as these other amendments concern the length of multiannual plans only. However, I recognise that multiannual plans were subject to extensive consultation in the 2018 Bill and set for seven years in conclusion then. This has possibly overshadowed the merits of my Amendment 41. I thank the noble Lord, Lord Addington, for adding his name to this amendment and for his recent remarks. I also thank my noble friend Lord Judd for his remarks in support.

How the changes to the ELM system and the nature of each seven-year period between plans and a transition period interact can indeed be very confusing. This is why I have tabled my Committee amendment with a few changes. Having reflected on the debate, as well as on evidence both formal and anecdotal from recent trials and pilot schemes, we have revised our approach in a fair, common-sense way that is also flexible to circumstances. This is because so much is unknown and the results of any trials have yet to be considered. This appears to be recognised to some extent by the Government’s own Amendment 35.

Amendment 41 removes from the Bill the previous start date of the transition period and gives the Government a degree of flexibility by having a start date set in regulations. There is no need for the Government to define a start date in primary legislation which they could later regret, and which would set the legislation off into a period of uncertainty should ELMS not be adequately ready for implementation—as their Amendment 35 partially recognises. The amendment states that the start date would be set once the Government have confirmed that any scheme to operate in the first year of the transition was fully operable.

Everyone can agree that it is important to get started on the transition phase, but so much preparatory work is yet to be done. There is anxiety already that countryside stewardship schemes starting in 2021 can be withdrawn, yet schemes started this year, in 2020, cannot be withdrawn without penalty. There are also very considerable concerns being highlighted and heightened in relation to Covid-19 and the potential onset of any phase 2 consequences this winter.

I highlight that Defra’s plans are themselves being reconsidered in relation to the transition period. I understand that the department is now planning a new interim or stepping-stone scheme to bridge the gap that may appear between the BPS and the ELM scheme. The sustainable farming incentive, or SFI, will bring in limited elements of ELM tier 1, while avoiding the funding gap that will arise from the Government’s ill-considered cutbacks before full schemes are available. This is some- thing we drew attention to as early as Second Reading.

I understand that claimants are expected by Defra to have lost half of their payments by 2024, when full pilot schemes are expected to be rolled out. Can the Minister be transparent on this new scheme and the amount of cutbacks being envisaged? It is important to the credibility of the Government’s plans, so forcibly expressed by the Minister.

Is this SFI scheme under serious consideration, and where will the funding come from if funding cuts to BPS are to finance ELMS, as repeatedly expressed? Will the Countryside Stewardship entrants be excluded once again, as already mentioned? Surely Amendment 41 is preferable to the uncertainty, complexity and confusion that will arise if these reports are confirmed. I understand that the announcement is held up with the Treasury’s comprehensive spending review. It would be more than unfortunate if the Minister could not be forthcoming tonight when the House is considering this Bill.

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

My Lords, I thank all noble Lords who have contributed to this debate. I will be the first to say, coming from a farming background and being a farmer myself, that I know that change can present these great concerns, and that is why the Government are clear that they want to work with farmers to ensure we get the schemes right. I think we are doing that properly, and I would like to explain why.

On Amendment 36, with which I will also address Amendments 37, 39, 40 and 41, the Government are committed to introducing new schemes that will reward farmers for producing goods that are valued by the public. Our planned reductions for 2021 are intended to send a clear signal of reform. It is important that farmers have certainty about when the agricultural transition will begin. There may be some in this House who do not agree with this. But many people, including those in the farming community, will feel that direct payments are poorly targeted and offer poor value for money. This is something that I have been very seized of, as have many of us farmers who seek to farm well and look after our land. This is a conclusion we all have to draw from the current regime. Therefore, applying appropriate progressive reductions to these payments will free up money that can be used to support farmers better—I repeat, “to support farmers better”—and deliver public goods.

We believe it is important that this process is not delayed. The Government are on track to introduce new schemes from 2021 while continuing to fund new and existing Countryside Stewardship agreements which farmers can apply for until 2023. Signing a Countryside Stewardship agreement gives a viable, long-term source of income for providing environmental benefits. I assure the noble Lord, Lord Grantchester, and other noble Lords that no one in a Countryside Stewardship agreement will be unfairly disadvantaged when they move to new arrangements under ELM. I should also say to the noble Duke, the Duke of Wellington, that the Countryside Stewardship scheme includes a specific uplands wildlife offer.

We will also provide productivity grants to farmers for investments in equipment, technology and infrastructure, which will help their businesses to prosper while improving their productivity and enhancing the environment. These grants will be available from 2021. In addition, the national pilot of the future ELM scheme will also begin in 2021 and will be funded from the reductions in direct payments. The national pilot will be informed by the engagement with farmers, land managers and other stakeholders which is already well under way, including tests and trials.

I have to say again that I think we may sometimes be attending different webinars or whatever, because the impression I have been given is that many farmers have found it stimulating, particularly the younger ones, who have found talking about such matters, and the innovation of the new way forward, refreshing. As I have said before, they will be able to look the taxpayer in the eye and show that we are producing better for the public and better for farmers.

We have already published the maximum reductions that we intend to apply in the first year of the transition. The maximum reductions for 2021 are at no more than 5% for around 80% of farmers. This is within the margin of the currency rate changes often experienced in previous regimes. We first published these reductions in 2018. We have also provided important commitments on future funding. The Government, in their manifesto, guaranteed the current annual budget in every year of the new Parliament, plus a seven-year transition period. Coming from a farming background, I know that many farmers have actually expressed surprise that this should have been so explicitly generous, and that seven years was the transition period.

As I noted in Committee, we are working across government to develop schemes under Clause 1 and, recognising the need to give farmers certainty, will set out further information on funding for the early years of the agricultural transition period, including direct payments, later in the autumn. I absolutely understand and respect noble Lords’ frustration—but this will happen in the autumn. If noble Lords will believe me, I can add that I am pushing this very strongly—and of course I would have liked to have it with me tonight.

I should note that Clause 11 provides for the phasing out of direct payments under the basic payment scheme. Regulations laid under that clause, including the rates at which direct payments will be reduced, are subject to the affirmative resolution procedure. This will allow for debate on the reductions, the impact of which was set out in the evidence compendium published in September 2018, alongside the previous version of the Bill. By the time the SIs are debated, we will have published further information about funding for the early years of the agricultural transition.

In relation to Amendment 38, while payment for organic conversion is not currently a feature of the basic payment scheme, our existing countryside stewardship schemes will continue to include several options rewarding farmers where they convert farmland to organic condition. I can also say—this is further information—that since 2016 the Government have spent £25.8 million on organic conversion and maintenance. That is £20 million on top of the £6 million for conversion.

As I have set out, during the transition we will offer financial assistance to enable organic farmers to invest in the equipment, technology, and infrastructure that they need to improve their productivity, manage the environment sustainably, and deliver other public goods. Farmers who adopt organic farming methods will be well placed to benefit from our future ELM schemes.

With reference to Amendment 42, I am fully seized of the importance of timely payments. I agree with my noble friends Lady Rock and Lord Caithness that this is a very important issue for farmers. The amendment concerns payments under the basic payment scheme. The Rural Payments Agency has worked hard to improve payment performance across all its schemes. This is reaping rightful benefits for farmers, land managers and the rural economy. For the 2019 BPS scheme payment window, over 99.9% of 2019 claims have been paid. We intend to simplify the basic payment scheme to make it easier for the RPA to process applications efficiently and to benefit farmers. For example, we are working with the devolved Administrations to try to make improvements in the way we deal with cross-border farms, to speed up payments to these applicants.

Timescales for basic payment scheme payments are already set out in the retained EU regulations. We have no plans to change the payment windows in retained EU law. We do not therefore consider it necessary to set further rules in regulations about the timing of BPS payments.

This has been a very interesting debate. I have sympathy with much of what has been said, but some of the unduly negative words about the Government’s assurances on funding are not apposite. The Government have been clear about our intentions. I hope that noble Lords, particularly my noble friend Lady McIntosh, will reflect on this. I think we should start this reform with a seven-year transition period and that the moneys from these reductions will start to bear fruit in all the things we aspire to do, such as having strong food production and an ever-enhanced environment. I hope my noble friend feels able to withdraw her amendment.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 10:30 pm, 15th September 2020

My Lords, I am disappointed, unless I have misunderstood, that my noble friend did not reply to the basic question of why we cannot have a 12-month notification of the first plan. I am no farmer myself—the closest I got was having two fields on which we claimed a tiny amount, which I have now left my brother to get on with.

I understand that, according to the Companion, I can take this opportunity to put another question to the Minister. The Government have spoken about easing access: how do they imagine easing access to the existing countryside stewardship scheme and new measures to assist improvements in productivity through the transition period? That would go some way to allaying the fears. I have to say that this is a key concern of both the Tenant Farmers Association and the NFU in the briefings I have had from them. Obviously, they represent the lion’s share of farmers.

The Government have talked about a new interim scheme, called the sustainable farming initiative, but surely this would just add to the complexity of an already busy policy space, particularly when existing schemes are available and just need to be improved. Might not such a sustainable farming initiative take Defra’s eye off the ball in properly developing what we all want to see—a good ELM scheme? Will my noble friend reply to that and to my original question as to why we are not having 12 months’ notice of the original business plan?

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

My Lords, I think I have been very clear that we will be announcing the funding for the early years of the agricultural transition period, including direct payments, later in the autumn—I hope as soon as possible. I cannot say any more than that. As I said, that announcement will provide much of the reassurance that I suspect noble Lords and farmers are looking for about those early years. I have set out the maximum reductions for 2021. Those are all designed, as I said, to enable the Government, at the beginning of the transition and the reforms, to provide extra countryside stewardship agreements and productivity grants to farmers, which I think will be very desirable to start next year, and the national pilot for the future ELM schemes.

All this is designed to combine all that we want to do in enhancing food production and the environment. It is sensible to start these schemes next year, and the resources, through the reductions, will be there to work on this. It is a seven-year transition and the Government are very mindful of the manifesto pledges about the resources that will be available to this agricultural budget. We intend to support and work with farmers to make a better scheme, with a public return for it. I do not think there is much more I can say to my noble friend, other than that this Government have shown by our commitments to funding that we are four-square behind the farmer, but I say candidly that the current system is poor value for money.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

I understand that the noble Lord, Lord Grantchester, wishes to ask a short question for elucidation.

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

My Lords, I apologise to the House for asking the Minister a follow-up question. I listened carefully to his remarks but, by the time the communication channels had reached the Deputy Speaker, she had already intimated to the noble Baroness, Lady McIntosh, that she could have her consideration of the amendments. I had not heard any reference in the Minister’s remarks to the sustainable farming incentive, but the noble Baroness, Lady McIntosh, repeated that question to him. I understand now and am very grateful to him for the fullness of the reply that he can give tonight.

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

My Lords, I have been very clear that the Government are bringing forward schemes of a countryside and environmental aspect, which will be funded through reductions in the direct payments. This is what we want: to start sustainable environmental and countryside stewardship schemes. This is all about what we want to do with farmers, as part of a major plank of this legislation. I am beginning to wonder whether it is me or whether noble Lords do not want to press the receive button for what I am seeking to say.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I have to express disappointment that I have not received the assurances I sought, but I do not wish to test the opinion of the House. I wish to withdraw my amendment.

Amendment 36 withdrawn.