Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025

Motion to Approve

That the draft Regulations laid before the House on 13 February be approved.

My Lords, I declare an interest as I am in receipt of delinked payments. This instrument sets the reductions that will apply to delinked payments in England in 2025. These reductions are a vital part of the transition to more targeted public investment supporting farmers to boost nature and sustainable food production.

A fatal amendment has been tabled that, if approved, would mean the agricultural transition would effectively go into reverse, as no reductions at all would be applied. I want to be clear that voting against this SI would not keep payments at the level they were for 2024. Instead, it would mean that delinked payments would go back to the 2020 subsidy levels. The fatal amendment also calls for the reinstatement of applications to SFI, but, without the reductions set by this instrument, we cannot fund SFI. Indeed, payments under many of our farming schemes would need to stop completely.

The regret amendment that has been tabled expresses concern about the impact of the reductions on farm viability. This Government recognise that farmers run businesses that need to make a profit, and we understand the valuable role that these businesses play in the wider rural community. We want to support farm businesses to be more profitable and address the underlying problems so that they can thrive.

Delinked payments do not achieve that. Delinked payments do not offer and never have offered good value for money for farmers or the taxpayer. They are part of the move away from the basic payment scheme that saw 50% of money go to the top 10% of farms while doing little for food production or nature. We are now in the fifth year of the seven-year transition away from these subsidies. The reductions to delinked payments set out in this instrument were announced last October. These reductions accelerate the end of the era of payments to large and wealthy landowners simply for owning land.

However, the Government recognise the impact that these changes may have on some farmers, which is why we are trying to make them in the fairest way possible. We are applying the reductions in payment in bands, like income tax bands, meaning that those with the broadest shoulders will see the highest reductions.

I assure noble Lords that every penny released from delinked payments is staying within the sector. The planned reductions are necessary to help fund investment in the environmental land management schemes and our other grants for farmers. So our support for farmers remains steadfast. We have committed £5 billion to the farming budget over a two-year period, with £2.4 billion of this for 2025-26. That includes the largest ever budget directed at sustainable food production and nature recovery in our country’s history. We have allocated £1.8 billion in 2025-26 for environmental land management schemes. This will boost Britain’s food security and accelerate the transition to the more resilient and sustainable farming sector that we want to see. Importantly, we are on track to spend the farming budget in full.

Leave out from “that” and insert “this House declines to approve the draft Regulations as they accelerate the reduction of delinked payments made to British farmers; regrets the failure to establish alternative funding schemes; and calls on the Government to reinstate applications to the Sustainable Farming Incentive scheme.”

My Lords, I thank the Minister for her explanation of these regulations and I recognise her strong commitment to solving this vexed issue. Sadly, the instrument proposes deeply damaging and cruel cuts to the payments expected by our farmers. That is why, on behalf of these Benches, I am asking that this House decline the regulations. This is a fatal amendment because the proposals represent a potentially fatal blow to the livelihoods of countless family farmers and small agricultural businesses across England.

This dramatic acceleration of the reduction of delinked payments for 2025 was always intended to be phased out gradually as part of the agricultural transition period from 2021 to 2027. However, these regulations propose a staggering 76% reduction on the first £30,000 of a farmer’s payment and a total reduction on any amount above that threshold. For the vast majority of recipients—some 80% of the 82,000 farmers who receive these payments and whose entitlement is £30,000 or less—their direct payment will be slashed by 76%. If we compare this cut to 2024, when the reduction for this group was half, we find that this is a significantly steeper cut, applied in one brutal blow.

The Government claim that these accelerated reductions are necessary to fund the environmental land management schemes, which are meant to reward farmers for delivering environmental benefits. This principle of public money for public goods is one that Liberal Democrats have supported, in line with many environmental organisations, but the Government’s handling of this transition has been nothing short of a disaster, with a breathtaking overnight change ditching an original promise of six weeks’ notice.

Just last month, in that overnight change, the sustainable farming incentive, or SFI, was scrapped for new applications with just 30 minutes’ notice. The timing was particularly jarring as these regulations propose cuts based on the assumption of increased demand for ELM schemes. The NFU—I thank it for its briefing—is clear that it is unacceptable for the Government to remove both the old payments and the new schemes. It rightly asks that the SFI be reopened or, failing that, that these regulations to slash delinked payments be withdrawn.

The failure to ensure that these alternative schemes are accessible leaves thousands of farmers in limbo. As my honourable friend Tim Farron MP pointed out in the Commons debate on this regulation, entry to the new schemes has favoured larger landowners and corporates who have the resources to navigate the system. Meanwhile, the typical farmer outside the scheme is isolated, struggling with the sheer workload and unable to afford that kind of professional help. The figures bear this out. Before the SFI closure, a mere 40 entrants out of the 6,100 recorded were from moorland areas. This is not a mere transition; this is forcing families who have farmed for generations off their land.

The impact on farmer viability is devastating. A family from the Lake District has four members working full time on their tenanted farm and will lose £42,000 this year if this regulation is passed. To quote one of them:

“We cannot stand this loss, we were preparing an SFI agreement but that door has now been closed. I am having sleepless nights”.

This is having a huge impact on farmers’ well-being and mental health.

Delinked payments, even as they are being reduced, remain a crucial income stream for farmers in an industry with notoriously low returns, especially for tenant farmers, for whom this money may well have been paying the rent this year. Both this Government and the last one accepted the recommendations of the review by the noble Baroness, Lady Rock, which were intended to protect tenants, yet neither have implemented them. To impose such severe cuts right now, before new protections are in place, is surely doing things the wrong way round.

Farmer confidence is at an all-time low, exacerbated by these cuts and other pressures such as extreme weather and proposed inheritance tax changes—the list goes on. Our farmers are suffering from sky-high energy bills and botched overseas trade deals. Even before this cut, farm income last year was lower for all but one type of farm.

Perhaps most shocking is the revelation from Defra itself that 7% to 8% of farms will not survive this process. This is extraordinary. We know exactly where the farms that are most at risk are: in the uplands, in severely disadvantaged areas, and in places such as the lakes and dales, where farmers are already struggling. Currently, farm business income equates to 74% of the minimum wage. Modelling as a result of this change predicts that this is likely, in two years’ time, to plummet to a jaw-dropping 55%. These cuts will force farmers to sell up, often to corporates which are acquiring land for tax-efficient purposes, with no desire to produce food or foster our natural environment.

At a time of international instability, it is extraordinary to undermine our food security in this way. The UK produces only 55% of the food that we eat, which is far too low. The Government’s actions are causing a loss of trust, leading farmers to consider opting out of environmental schemes altogether, potentially undoing decades of good work.

We are not being asked to approve a minor technical change; we are being asked to accept something that is causing huge damage to the sector, with nothing to replace it. We recognise that, in the Commons Select Committee chaired by my honourable friend Alistair Carmichael MP, the Minister, Daniel Zeichner MP, committed to announce a new scheme in July 2025, but I wonder whether, somehow, the date of that event—1 April—is significant. If we now look at the Defra website, we find it says that the new SFI will open for applications only in 2026. The Minister at that committee was unable to answer for the uncertainty of budget shortfalls of thousands of pounds for small farms—small farms that we think might have to wait from March until July, but the Defra website says something else at the moment.

Approving these regulations would betray the farmers who feed our nation and steward our precious landscapes. We must halt them, reopen the SFI, conduct a proper impact assessment, and develop a transition that truly supports farmers, ensures our food security and delivers genuine environmental improvements. I urge noble Lords to support my amendment to decline approval of these deeply damaging regulations. I ask the Minister to think again and to withdraw these regulations until the new scheme is in place. I beg to move.

My Lords, I should inform the House that, if this amendment is agreed to, I will be unable to call the amendment in the name of the noble Lord, Lord Roborough, by reason of pre-emption.

My Lords, I thank the Minister for a thorough introduction to this SI. I have tabled a regret amendment on behalf of my Benches, but, in reality, it is on behalf of all English farmers. Regret is too gentle a word to describe the mood among the farming community.

Before I address the issues, I first draw the House’s attention to my registered interests as a farmer and landowner. I am directly impacted by this SI, with a 90% reduction in my delinked payments. I am at least sheltered by the SFIs that I have signed up to; that is not the case for the majority of farmers.

When in government, we replaced the basic payments scheme with delinked payments based on historical BPS claims. This was intended to be gradually phased out by 2028 in favour of environmental land management schemes, where farmers and landowners receive payments only for public goods. The reductions we put in place put these delinked payments on a gradual glide path to zero in 2028. This Government have dramatically accelerated that decline. This effectively ends the seven-year transition that English farmers had been led to expect three years early, upending their budgets.

The Government promised that this abrupt reduction would release more funding for sustainable farming incentives, Countryside Stewardship schemes and large-scale landscape recovery schemes—collectively known as environmental land management schemes. Despite a commitment to give up to six weeks’ notice of a planned closure of SFI applications, the Secretary of State abruptly closed applications with 30 minutes notice at 6 pm on 11 March, as the noble Baroness, Lady Grender, has said, apparently breaking two commitments at once.

Only a minority of farmers who were previously receiving BPS had actually signed up to SFIs. Today, I am speaking particularly for two cohorts of farmers who are bearing the brunt of this SI’s excessive reduction. The delinked payments cut is particularly painful for those who were unable to apply for SFIs as they were already in environmental schemes that were less profitable but designed to work alongside this phased reduction in delinked payments. Those farmers were simply abandoned, with no compassion from anyone.