Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026

Motion to Approve

That the draft Regulations laid before the House on 10 March 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 for the years 2026 and 2027. In doing so, it delivers our commitment to phase out these subsidies by the end of the seven-year agricultural transition period, as we redirect funding to our other schemes for farmers; 2027 will be the last year of delinked payments.

A regret amendment has been tabled expressing concern about the impact on farmers. The Government are committed to supporting our farmers and the vital role that they play. We will continue to invest in our farmers and land managers to make their businesses, food production and our country more sustainable and resilient for the years ahead. Reducing delinked payments is essential so that we can fund our other schemes which help us to achieve this.

Delinked payments do not address the underlying challenges affecting farm profitability. They do not support the healthy soils, abundant pollinators and clean water that is needed to produce good food. They do not promote innovation and do not provide good value for money.

The reductions to delinked payments will complete the move away from the previous scheme, which rewarded land ownership, with 50% of payments going to the largest 10% of farms. We are applying the reductions fairly, with higher reductions to amounts in the higher payment band. We announced the reductions last June to help farmers to plan.

The money released from delinked payments is being reinvested in the sector. Farmers and land managers will benefit from an average of £2.3 billion a year over the period 2026-27 to 2028-29 through the farming and countryside programme, and up to £400 million from additional nature schemes, including those for tree planting and peatlands. This includes increasing annual funding for the environmental land management schemes, from £1.8 billion in 2025-26 to more than £2 billion by 2028-29. This means that we are backing farmers with the largest nature-friendly budget in history to support them to help restore nature and boost farm productivity. Some 50,000 farm businesses and half of all farmed land are now managed under our environmental land management schemes.

Earlier this year, we announced plans for our new sustainable farming incentive offer, which will ensure that more farmers can access funding. A range of improvements will be introduced to make SFI26 simpler, more streamlined and easier to navigate. The new offer will continue to support sustainable farming by strengthening the environmental foundations of farm profitability and our long-term food security.

Last September, the new Countryside Stewardship higher tier opened for applications to those who have been invited to apply, have received pre-application advice and have completed any preparatory work. Landscape recovery projects that were awarded development funding in rounds 1 and 2 are continuing to progress towards the delivery phase. Plans for a third round will be confirmed in due course.

Moved by

At end insert “, but this House regrets that the draft Regulations will likely result in further financial difficulties for farmers, who have not had enough time to plan for them in advance; and that it remains unclear how the savings from the reductions to delinked payments will be reallocated to support farmers.”

My Lords, I first draw the House’s attention to my registered interests as a farmer and landowner who is also in receipt of delinked and other government payments. I am very grateful to the Government Chief Whip for moving this debate to a civilised time this evening; I think that is much appreciated by all noble Lords. I thank the Minister for outlining this SI, although we regret its introduction. Indeed, it is now at the end of this Session that we are about to lose significant agricultural expertise from this House, which keenly understands the impact of legislation such as this on the ground and in our close-knit communities.

When in government, we replaced the basic payment scheme with delinked payments based on historic BPS claims. We intended this to be gradually phased out by 2028 in favour of environmental land management schemes, where farmers and landowners receive payments only for public goods, as outlined by the Minister. The reductions we put in place put these delinked payments on a gradual glide path to zero in 2028. This Government dramatically accelerated that decline last year and have continued at a similar rate this year. This, in effect, ends the seven-year transition well before the 2028 deadline that farmers had been led to expect, undermining their budgeting.

We support the long-term transition, but not at this accelerated pace. Conflict in the Middle East has caused uncertainty over fuel prices and fertiliser and a shortage of industrial CO₂. Grain prices remain at low levels, undermining profitability for our arable farmers. However, it is not just external factors that are adding pressure to farmers. Deliberate choices made by this Government have left farmers more vulnerable. The early closure of the SFI application window last year, the family farm and business tax, increased employer national insurance, and the Government’s refusal to consider our cheap power plan to lower energy costs all have a cumulative impact.

My Lords, I would like to support my noble friend and challenge the Government on how they are going to spend the money they are going to allocate. While I can understand the wish to have a transition, it is right that it has to be done at a sensible pace. The really big disappointment of the farming community is that the alternative schemes the Government are bringing in are not the kind of schemes that are particularly attractive to many farmers or that promote the production of more domestic food.

I would hope that the Government will have a rethink now. Do the Government not understand there is currently a crisis in world trade and the supply of food in the months ahead because of the difficulties of getting fertiliser out of the Gulf area, the damage being done to chemical and fertiliser plants by more than one war and by the very acute trade disruption with no immediate signs of being resolved? Those I have heard from in the farming industry tell me that not only are fertiliser prices extremely high but there is no visibility as to when they will be able to buy serious quantities of fertiliser again at sensible prices. As we know, without proper fertiliser applications, yields will plunge and there will be a further shortage in food provision.

It is a tragedy that this century there has been a big decline in the amount of home-produced food that farms have been able to make because of the grant choices of the EU and successive United Kingdom Governments. I would have thought that now is a wonderful opportunity for a rethink to place at the very centre of agricultural subsidy policy, in line with many other countries around the world, the need for more domestic, reliable supply and production.

The Minister reminded us that some small pots are available for those important topics of innovation and new technology. I agree that there can be a new agrarian revolution; it was this country that launched the original one. There is now huge scope for mechanisation with robotics and drones and all the other things that can come in. However, the amount of money being offered in these small grant schemes is very small and unambitious. We have some great farms and some great farmers. Many of them would like to have access to serious money for that big investment and that pioneering technology that could start to make the difference.

My Lords, my maiden speech in 2019 was on the impact of Brexit on food and agricultural produce, with a focus consistent with my interests as a Devon farmer on the Devon cream tea. It is fitting that my final words are on matters agricultural and the delinked payments regulations—the final decoupling of our agricultural subsidy regime from the common agricultural policy.

When I joined the House, one of the silver linings of the Brexit storm clouds was the promise of autonomy over agricultural policy, which we sought to deliver through the Agriculture Act—scrutinised largely online during those dark days of the pandemic. The birth of environmental land management and the sustainable farming incentive promised a brave new world of public money for public goods, under which the blunt instrument of CAP area payments would be replaced by the agile deployment of Defra’s budget to allow British farming to increase productivity and sustainability in equal measure.

During the passage of that Bill, this House reiterated multiple times the long-term nature of agricultural business and the need for certainty and continuity in government policy to enable farmers to adjust their business models at an appropriate pace, consistent with the annual harvest cycle, their very narrow margins and their necessarily long-term investment strategies. Despite the hard work of many at Defra and the Rural Payments Agency, that continuity has not materialised. Farm and food businesses have been battered not only by the pandemic and by wars in Ukraine and Iran, but by extreme climatic events, drought, flooding and government policy that has become even less clement than the weather.

The IHT fiasco, coupled with the abrupt closure of the SFI 2025 applications window, has forced farmers’ trust in government to an all-time low—mistrust that is not helped by the criminalisation of traditional rural pursuits while an epidemic of rural crime rages unabated. It is against this backdrop that this regrettable and precipitous reductions in delinked payments must be considered. They are, in my view, regrettable and should be delayed, as they will only further push already stressed farming businesses into the red at the worst possible time.

On top of this, the Government’s manifesto commitment to abolish hereditary Peers has the regrettable impact of removing from Parliament a cohort of rural Britain’s most supportive voices. From Caithness and Dundee to Devon and Leicester, there will be a deafening silence. Who can replace the noble Lord, Lord Carrington, on farm productivity or the noble Duke, the Duke of Wellington, on water? Add to that the well-earned retirement of the noble Lord, Lord Curry, Northumberland’s tireless agricultural champion, and our Parliament will be hugely diminished in the expertise necessary to scrutinise and support rural and agricultural policy of the long term, just as a 25-year farming strategy is being launched. There can be no other policy sector so damagingly impacted by the loss of hereditary Peers, and I urge the Government to do all they can to remedy this sad imbalance.

That is not to say that rural champions will not remain. I hope that the noble Lord, Lord Roborough, will find a reprieve. I thank him and the usual channels for securing this debate. The noble Baroness, Lady Batters, and the noble Lord, Lord Cameron, on our Cross Benches are as experts as they come. Of course, the Minister, the noble Baroness, Lady Hayman, from Cumbria, will champion rural interests. I hope that they can find the support they need to fight on behalf of rural Britain against the ever-spreading strain of urbanisation.

Given that I will not speak again, I will just take a moment to thank all the clerks, the doorkeepers, Black Rod and his security team, the Convenor of the Cross Benches’ office and the myriad remarkable public servants, from the Libraries to the finance team to the kitchens, who allow us so seamlessly to do what we do with grace, dedication and bravery. I also thank my family, colleagues and teams at Michelmores and Powderham for supporting me in my years of service while I profess to run a business and maintain a career in private practice.

To finish where the Earl of Devon started, I remind the House that Ordwulf, my Saxon predecessor, farmed in Devon and first served cream teas to the rebuilders of Tavistock Abbey after the Viking invasion of 997 AD. I look forward, therefore, to returning to Devon and purveying cream teas while helping to rebuild our rural economy of our dear county once more.

My Lords, as somebody who lives in Devon, I look forward to a long period of the cream teas of the noble Earl, Lord Devon, for which he will regrettably have more time to produce as a result of the delinking of the hereditary peerage and the legislative process of this country.

I listened carefully to the Minister’s statement, and several things strike me. The first is that this assault on the rural community and the farming community is not a perception but a reality. We have seen farm incomes shrinking year on year, rapid increases in costs—not least, as we heard from my noble friend Lord Redwood, the problems we now confront with fertiliser, which are very serious indeed—as well as the tremendous growth in bureaucracy, the chopping and changing of government policies, and the bringing forward of this latest government policy, which creates huge amounts of paperwork for farmers who should be out there farming.

The missed opportunity presented by this rethink on farming in this country concerns me. At a time when we should be looking long term at food security and food production, we seem to be thinking in the short term. Can the Minister say what the Government are doing to encourage younger people to come into the industry just at a time when we are seeing it getting older, with more and more people giving up—or wanting to give up—their farms? What hope can she hold out to a younger generation that there is a career and a life in farming for them as well? What more can she do to encourage the land-based colleges up and down the country, which have often suffered from very poor financial support, to get younger people into the industry? Only in that way will we preserve the landscape in the way that she envisages.

We can divert every kind of subsidy into all these initiatives—I have no problem with some of those at all—but, at the end of the day, it is a manmade landscape that we enjoy. It is made and preserved by the land managers and the farmers. Without them, it will not continue to exist, and nor will the food on which we have come to depend.

My Lords, like the noble Earl, Lord Devon, this is my final speech in the Chamber, so it is a rather poignant moment. It feels rather odd speaking on this topic today—as if, after 24 years, I have come full circle. I found this rather interesting report when I cleared my desk last week, which was written by a chap called Curry in 2002. Let me read a sentence from page 23:

“The guiding principle must be that public money should be used to pay for public goods that the public wants and needs: remaining price supports and associated production controls must go; direct payments should be phased out as quickly as possible”.

Here we are, 24 years later, completing that process.

The journey to this point has been anything but straightforward. I must say that, 10 years after leaving the European Union and 10 Secretaries of State in Defra later, successive Governments have failed to provide the leadership that the farming industry deserves. We had a unique opportunity, whether or not one agreed with Brexit, to write a new script and to design a plan to deliver all the public goods that

“the public wants and needs”,

to use the phrase in the report. What we have had is 10 years of dithering, indecision and procrastination. Of course we had Covid to disrupt the process, but here we are, still with no plan, vision or clarity on our future ambitions for this crucial industry of ours. To give the current Government some credit, we now have a land-use framework after five years of gestation, and the promise of a farming road map, which the Minister mentioned. Meanwhile, farmers are left in limbo, unclear of what is expected of them. The transition journey is ending with this debate, but the train does not have a destination.

What, therefore, are the public goods that the public need and want, which farmers and land managers can deliver? We have wrestled with this definition of public goods, and with which public goods require government intervention because there is no functioning market for them. Carbon markets are still immature, and natural capital is still a great idea, but most environmental outcomes still require government intervention: restoring and maintaining habitats, cleaning up and managing water, carbon sequestration and so on. We need clean air, clean water and healthy soils. One outcome that farmers can deliver, and are delivering, successfully is renewable energy. We certainly do not need any further financial inducements to deliver that, particularly solar. I hope that the Secretary of State for Energy and Climate Change has read the land-use framework document and begins to think about it before completely ignoring local opinion when he blindly signs off every large solar application to cross his desk.

My Lords, I would like to pay a personal tribute to the noble Lord, Lord Curry of Kirkharle. Along with my sponsor, the late Lord Plumb, of Coleshill, he has long stood out as being so knowledgeable about farming and the countryside. He has given immense and dedicated service to this House over so many years, and he is a local lad who has done his county proud. We shall all miss him greatly, and we thank him for his great service.

I also pay tribute to the outgoing hereditary Peers and their knowledge, which passes through generations, as we have heard from the noble Earl, Lord Devon. I am probably the first and last member of my family who will enter Parliament or politics, so I am in awe of those who have served with such longevity. They have all made a massive contribution and will be greatly missed.

I echo the thoughts of the noble Lord, Lord Curry of Kirkharle, on the impact that the clean energy proposals will have on farming and the countryside, taking probably about 10% of land each year out of food production. As we heard from my noble friend Lord Redwood, farming is essential. We are only 60% self-sufficient in this country, and in certain fruit and vegetable cases we are only 55% self-sufficient, so it is a diminishing asset if we lose the land to clean energy proposals.

Last week the Minister responded to a Question from me on the SFI and whether farmers would benefit. I am not entirely convinced that she grasped the point—just made by the noble Lord, Lord Curry of Kirkharle—about recognising this as a public good and rewarding farmers for temporarily storing floodwater on farmland. We cannot expect them to do it; they are not operating as a charity. They are trying to make money in very difficult circumstances—we are potentially facing another drought this year, given the rainfall this month—so we need to have a defined understanding of how their contribution will be recognised through the SFI.

My Lords, I cannot compete with the noble Earl, Lord Devon. First of all, I declare my farming interests in Buckinghamshire and Lincolnshire, and my receipt of delinked payments.

The first Lord Carrington, the third Lord Carrington and the sixth Lord Carrington were all Ministers of agriculture. The most famous of them was the third Lord Carrington, a Liberal, who introduced a policy of smallholdings for farmers during the Boer War and the First World War. That policy seems to be the guiding light for what the Government are currently doing on the SFI payments—concentrating on the small farmers with 50 hectares or less, rather than the larger farmers, who will be capped, if they get money at all, at £100,000.

I am speaking very much as a working, hands-on farmer, and I must say that I have never seen anything quite like it in all the 50 or more years that I have been involved in farming. I want to just bring to the attention of the House some of the real horror stories that are going on, even as we speak. They are based on what we are doing on our farm. We have decided for the first time ever not to plant spring crops, because we cannot risk the weather remaining as dry as it is, and therefore the crops not germinating. We are having tremendous trouble not so much in getting fertiliser, as the noble Lord, Lord Redwood, mentioned, but in getting red diesel. The price of red diesel is the real crucifier of most farmers in this country at the moment. Then, of course, we have the prices for the commodities that we are producing, all of which make leaving the land fallow the best option for us.

In East Anglia, in Norfolk, I gather, crops of wheat are currently being irrigated. That is a very expensive exercise for a crop that is not going to produce a great deal of money. We grow potatoes, and we have reduced our potato acreage considerably due to prices. We had a very good harvest last year, but prices worldwide are terrible. Now we have the potential problem of the SPS agreement. Under the SPS agreement, certain chemicals are going to be banned. If you buy a packet of crisps, that crisp will actually have been taken from a potato three years ago, and the chemicals that will have been used will be banned under the new SPS agreement, unless the Government get a waiver. That means, of course, that those potatoes will go straight into an anaerobic digester, if they cannot be sold.