Agriculture

I beg to move,

That the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2024, which were laid before this House on 16 April, be approved.

I declare my farming interests, as set out in the Register of Members’ Financial Interests. The instrument continues the important agricultural reforms that we are making in England—reforms that support the long-term prosperity of the sector. It applies progressive reductions to delinked payments for 2024. Delinked payments were introduced on 1 January 2024 in place of payments to farmers under the basic payment scheme in England. The reductions in the instrument were first announced in our agricultural transition plan in November 2020. They continue the progress of gradually phasing out untargeted subsidy payments over our seven-year agricultural transition period in England. We are now in the fourth year of that seven-year transition.

We remain committed to moving away from untargeted payments, which have served our industry so poorly. Most of the money has been paid to the largest landowners, and the payments have done little to improve food production or the environment over that time. I reiterate that the overall annual farming budget is being maintained at an average of £2.4 billion per year across this Parliament —money that is no longer being spent on untargeted subsidy payments and is not lost to farmers. Instead, it funds the sustainable farming incentive and other farming support.

As was the case under the basic payment scheme, we are applying the reductions to delinked payments in a fair way. Higher percentage reductions are applied to amounts in higher payment bands. We plan to make delinked payments in two instalments each year, which will of course assist with farmers’ cash flow. By continuing to gradually reduce the subsidy payments, we are freeing up money so that farmers can access a range of environmental land management schemes and grants to suit all farm types. We planned for the agricultural transition, and we are delivering on it.

I am pleased that the Minister and the Prime Minister are keen on promoting more home-grown food. As the transition occurs, what proportion of total subsidies paid will be for promoting food? It still seems to be too small.

My right hon. Friend will understand that the basic payment scheme did not motivate food production at all, as it was not linked to it. As we move to the new regime, we are promoting better productivity through grants for better equipment. We are investing in new technology. Alongside that, we are pushing to improve gene editing and gene technology, to try to make agriculture more sustainable and more productive at the same time. As we go through this transition, we are certainly keen to increase the productivity of our agricultural sector.

I thank the Minister as always for his positivity about the farming sector. The farmers’ union has asked me a specific, technical question that I would like to have on record. Does the Minister agree that since the transfer window for delinked payments closed on 10 May, clarity is needed that that will not apply to cases of inheritance, with the ability to transfer ownership not affecting payments that can be made when a business is passed on through a death in a family? Should that not be reiterated to those who may believe that they would lose necessary payments? The Minister may not be able to answer that right away, but could he let me know?

The hon. Member will be familiar with how matters of inheritance tax are for the Treasury rather than this Department, but we want to see that fair transition between generations so that family farms can be passed from one generation to the other to continue to maintain our landscapes and produce top-quality food, as we have for a long time. I will ensure that he gets the right answer to his question as soon as possible.

Our new schemes are investing in the foundations of food security and profitable farm businesses, from healthy soils to clean water. This year, we have increased payment rates for our environmental land management schemes by an average of 10%. Some payment rates went up by significantly more: species-rich grassland rose from £182 to £646 per hectare.

The frustration that farmers in the Cheshire part of my constituency have raised with me is about the speed at which money gets out the door and into farms. The Minister will also be familiar with the unprecedented weather patterns that we have had. What extra provision will be put in place to deal with some of the consequences of climate change and, in particular, flooding that we have seen recently?

I am grateful to the hon. Member for raising that important topic. We have listened to those farmers and improved the speed at which we pay for new SFI agreements, moving those payments forward to help farmers with cash flow. That is why we changed the basic payment scheme to ensure that we made payments not in one chunk in December but in two payments, with one in July and one around December.

The hon. Member also mentioned the unprecedented season that we are in the middle of and the pressure that will put on farmers in the autumn. That is why we introduced the support fund that is now trying to help affected farmers in the east of England in particular—I know that does not apply to Cheshire. We have committed to extending that scheme to try to help people. We are still in conversations with the National Farmers Union and farmer groups to try to look at what more we can do to mitigate the impact that the season will have.

Many of those farmers will not feel the effect of that weather in their cash flow until this autumn. Many of those who have not been able to plant arable crops have had the benefit of not having to pay out for fertiliser and agricultural sprays during this season—ironically, that will help their cash flow—but they will have an empty shed at the end of that process, which will put huge pressure on cash flows in the autumn when they would have had crops to sell.

I am pleased with the Minister’s last remarks: he is recognising the problems that farmers have. This morning, I received an email from the NFU referring to its recent survey and stating that short and mid-term confidence among farmers is at its lowest level since records began, and that production is expected to decrease over the next year. Given all the problems that farmers are facing, is he absolutely sure that now is the right time to make these reductions?

I should be clear and gently push back when my hon. Friend mentions reductions. The budget for the basic payment regime was £2.4 billion, and £2.4 billion is still the budget. So the size of the cake is completely the same, but the way in which the cake is being cut is different. Those are the changes we are making. The way in which we are dividing that cake is different, which is causing some challenge to some farmers.

My hon. Friend mentioned farmer confidence and the fact that some farmers are saying that productivity rates will be lower this year than they have been in the past. I think there is some truth in that: many farmers—I again draw attention to my entry in the register—have experienced unprecedented weather events and have been unable to plant crops, so they will see lower productivity this season. We are very much aware of that, and we continue to talk to farming representatives about how we can help to mitigate some of the impact later this year.

The Minister is gracious in giving way, which I appreciate very much. If farmers cannot plant their crops, they cannot produce the food, as he knows. If they cannot produce the food, prices increase. The Government are committed to reducing inflation, as they should be, and we welcome the fact that it is coming down. However, if we do not help the farmers with food production, inflation has the potential to rise. What can the Government do to alleviate those problems?

The hon. Gentleman highlights a long-term challenge that we face: if we are going to be impacted by climate change and increasingly difficult weather patterns in future, we need to ensure that farmers have the resilience needed to manage those. That means investing in gene technology to make sure that we have varieties that can deal with different swings in climate, new machinery, new technology and new farm equipment. We were able to take money from the basic payment scheme and invest it in grant schemes, in order to help farmers invest in the new machinery and technology to mitigate some of those impacts. There is a lot that we can and are doing to help them along on that journey.

I will give way one more time, but I am conscious that other Members want to speak.

I thank the Minister for giving way; he is being generous with his time. Has any impact assessment of ELM been done? Has it been published? I feel that we are operating blind here.

We have consistently and regularly engaged with farmers and stakeholders to listen to their concerns. The hon. Gentleman will be aware that in January we announced increases in many of those sustainable farming incentive opportunities, because we listened to farmers telling us that some of those payments were not right and were not high enough. We listened and we increased those payments. We are constantly scanning and listening to the sector and working hand in hand with farmers to ensure that the schemes we devise and introduce are farmer friendly and are understood by the farming sector.

This year we have increased payment rates in our environmental land management schemes by an average of 10%, although some payments went up by significantly more. We have also doubled the management payment for the sustainable farming incentive, which is now worth £2,000 for the first year of an agreement. That will encourage even more smaller farms to join the scheme, on top of the many that have already done so.

From the summer we will launch up to 50 new actions that will allow farmers to access the scheme funding for things such as precision farming and, for the first time, agroforestry. The new actions give even more choice to farmers in what they can do, especially those on moorlands and grasslands. Nearly half of all farmers are now in one of our schemes. So far there have been almost 22,000 applications to the sustainable farming incentive under our 2023 offer, and there are now more than 35,000 live countryside stewardship agreements in place.

Farmers taking part in the sustainable farming incentive are typically more than making up their lost basic payments. The value per hectare of applications to date is £148. That, alongside delinked payments for small farms this year of equivalent to £117 per hectare, adds up to more than the value per hectare of the basic payment scheme before we started our reforms: £233 per hectare under the old basic payment scheme versus a total of £263 under delinked payments and the SFI.

I thank the Minister for clarifying the details of today’s announcement. Farmers in my constituency are delighted about being able to apply for the slurry grant, but the works imposed alongside it by Natural England mean that it is not viable for them to continue with their herds.

Of course, we continue to engage with Natural England and the Environment Agency, which have an interest in ensuring that we get slurry infrastructure in the right place. If my hon. Friend has specific examples of the system not working, I would be delighted to take those cases up for her. We want to see investment in the south-west, and in other constituencies, to ensure that we manage on-farm nutrients and slurries in the best environmental way. Not only does that benefit the environment and those farms; it also helps the farm business, in that farms are managing their own nutrients and do not have to spend money on costly artificial fertilisers because they can replace some of that with organic manures.

We are providing a range of other support for farmers and land managers, including a third round of our landscape recovery scheme later this year. The farming resilience fund continues to provide free business support to help farmers to plan and adapt their business. To date, over 20,000 farmers have received that support. Our schemes and grants help to support viable businesses, to maintain or increase food production, and to achieve better outcomes for animals, plants and the environment. All that is possible only because of the regulations, which I commend to the House.