The agricultural transition period for England

Agriculture Bill – in a Public Bill Committee at 2:30 pm on 1st November 2018.

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Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs) 2:30 pm, 1st November 2018

I beg to move amendment 102, in clause 5, page 4, line 41, at end insert—

“(5) The power under subsection (2) includes the power to vary and increase direct payments during the agricultural transition period.”.

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss amendment 104, in clause 7, page 5, line 18, at end insert—

“(c) increasing or varying direct payments in relation to England over the whole or part of the agricultural transition period for England.”.

This amendment would ensure that the Secretary of State is empowered to increase payments during the transition period if that is necessary in the circumstances, for example to utilise any unspent monies or to protect the industry from harm.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

Again, I do not intend to delay the Committee for long. There are some concerns—dare I say, on both sides—about whether this is the appropriate way to look at the powers. Greener UK feels that there are some issues with what the provision might mean for the direct payment system. The amendment in effect looks at the ability of the Minister to pause or delay the scheme, as operated. The question is, what happens after the agricultural transition period, because it relates to the end of one scheme—the direct payment one—and the introduction of another, the environmental payment?

Amendment 104 is about how to manage the agricultural transition. If things are not working as we want them to, what do the Government do? Do they pause, extend or even reverse the reduction in the direct payments? We know what the Government intend, which is, come 2021, the percentage reduction in the direct payment. That sounds straightforward, but such things are never as straightforward as they sound. Will the Minister tell us exactly how the scheme will come into operation? It needs to be about certainty and fairness.

The danger of uncertainty for, or the potential removal of important sums of money from, farms that are already struggling could have a very deleterious effect on their ability to continue. That matters because we are, potentially, changing the landscape dramatically. If certain small farms go out of business, tenant farms in particular, that will have a major impact on what our landscape looks like.

I accept that the amendment is probing, but were it adopted some people might worry that we could say, “Okay, let’s just go back to direct payments, delay it a few more years.” On the one hand, we need to know for those who are losing payments what happens if the system does not quite work out, and, on the other hand, we need to see for those who are very inclined to see the changes what confidence they can have in the Government that those changes will happen as they should. There is concern on both sides: one wants the certainty that some payment system will be in place while the other believes that this is the wrong system, which is the reason for supporting the move towards environmental payments. I am interested to hear the Minister’s thoughts.

We are discussing everything to do with delinking the payments, moving from a system in which, in effect, we pay farmers to do what they have done to a system in which we pay farmers and others to do things that we want them to do. It is important for the Minister to identify how that is going to work.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

I oppose this probing amendment for reasons that I shall set out. The shadow Minister made the good point that people want certainty. In the Bill, we have tried to give a clear direction of travel—that is to say, we believe that the end state should be a system in which we reward farmers based on the delivery of public goods, be that animal welfare or higher environmental outcomes, and in which we tackle the causes of low profitability in farming by improving transparency and fairness in the supply chain and making grant support available to farmers to invest in the future.

The difficulty I have with this amendment is that it would largely undermine the purpose of a transition, if the idea is that we would increase direct payments during the transition. If there were a particular problem that meant that a future Government decided they had to pause the transition, it would be open to them under clause 5(2) to extend the transition period. Provided that they brought those regulations in during the transition period, they could extend it for as many years as they liked, and if a future Government so decided, they would have the ability to say that they would not pursue what we have outlined, which is a phasing down of direct payments. It would be open to a future Government, if they deemed it the right thing, to pause that process, extend the transition and slow or halt the rate of decline. That option and that power are already in the Bill.

The issue I have with saying that a future Government could also increase direct payments during that time is that that would effectively undermine the direction of travel we have set out. It would mean that there was less money—potentially no money—to do the pilots we talked about earlier for the new environmental land management scheme that we want to roll out. It would mean that there could be less money, or no money, to make available to support new entrants to the industry or to help farm enterprises to invest for the future.

Of course, in addition to having the power already to pause and slow the taper on the single farm payment and to extend the transition period, later parts of the Bill, which we will come to at a future date, also contain intervention powers. Those are powers, in a severe market disruption, for the Secretary of State to declare exceptional circumstances in the market and intervene directly at that point to provide income support or market stabilisation measures. I believe the Bill strikes the right balance and sets a clear direction of travel, and my objection to this amendment is that it would largely undermine the purpose of the transition period.

If people want certainty, they need the certainty of a seven-year transition, but also an understanding that in all normal circumstances it is the Government’s intention to reach an end state at the end of those seven years. If we introduced the uncertainty that it might all be changed and that we might pay even more via direct payments, people frankly would not know where they stood, and I think that would send a mixed message. I hope that, on that basis, the hon. Member for Stroud will withdraw amendment 102 and not press amendment 104.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I am happy to do so. Again, these amendments are just teasing out how the process will work in practice. It will be a difficult process; we are, in effect, asking people to change their business orientation completely in a relatively short time. They will have to learn to do very different things. That is why it is important to know, if those things do not work out, what the Government’s response will be. I think the Minister has said what the Government’s intention is. Only time will tell whether it works in practice. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6