Agriculture Bill

Committee (5th Day)

My Lords, a limited number of Members are here in the Chamber, respecting social distancing. If the capacity of the Chamber is exceeded, I will immediately adjourn the House. Other Members will participate remotely, but all Members will be treated equally wherever they are. For Members participating remotely, microphones will unmute shortly before they are to speak. Please accept any on-screen prompt to unmute. Microphones will be muted after each speech. I ask noble Lords to be patient if there are any short delays as we switch between physical and remote participants. I should remind the House that our normal courtesies in debate still very much apply in this new hybrid way of working.

A participants’ list for today’s proceedings has been published and is in my brief, which Members should have received. I also have lists of Members who have put their names to amendments in, or expressed an interest in speaking on, each group. I will call Members to speak in the order listed. Members’ microphones will be muted by the broadcasters except when I call a Member to speak. Interventions during speeches or before the noble Lord sits down are not permitted and uncalled speakers will not be heard.

During the debate on each group I will invite Members, including Members in the Chamber, to email the clerk if they wish to speak after the Minister. I will call Members to speak in order of request and will call the Minister to reply each time. The groupings are binding and it will not be possible to degroup an amendment for separate debate. A Member intending to press an amendment already debated to a Division should have given notice in the debate. Leave should be given to withdraw amendments. When putting the Question, I will collect voices in the Chamber only. If a Member taking part remotely intends to trigger a Division, they should make this clear when speaking on the group.

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 any other amendment in this group to a Division should make that clear in debate.

Clause 4: Multi-annual financial assistance plans

Amendment 130

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

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.

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.

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.

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.

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.

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.