Direct Payments to Farmers (Reductions and Simplifications) (England) (Amendment) Regulations 2021

The Agriculture (Financial Assistance) Regulations 2021 put in place financial data publication and enforcement and monitoring requirements for four financial assistance schemes: Countryside Stewardship, the Farming Investment Fund, the environmental land management national pilot scheme, and the tree health pilot. All these schemes are established under the Agriculture Act 2020. The environmental land management pilot scheme will comprise three schemes, the first being the sustainable farming incentive.

This instrument will provide a critical opportunity to test, refine and develop environmental land management and tree health schemes in pilot form, ahead of their full launch. Countryside Stewardship will be a simplified version of the EU countryside stewardship and environmental stewardship schemes, and a further iteration of the domestic scheme, which opened for applications in 2020 and 2021. I say for the sake of clarity that this instrument provides for rules applying to schemes opened under domestic legislation, while earlier countryside stewardship and environmental stewardship agreements remain subject to enforcement and monitoring under CAP rules. The Farming Investment Fund will provide grants to farmers, foresters and growers so they can invest in equipment, technology and infrastructure to help their businesses prosper while improving resource efficiency and enhancing the environment.

This instrument will require information about financial assistance given under these schemes to be published, consistent with the Government’s commitment to transparency in the use of public funds. Information published will include the total or aggregated payment received by a beneficiary for each scheme they are in and a description of activities financed by the payment, and could enable public analysis; for example, university research. Publication of personal data will not be required for payments below a de minimis level or in respect of payments made under the tree health pilot, where, instead, aggregated data will be published.

In terms of checks, enforcement and monitoring, this instrument provides for a flexible and proportionate framework ensuring that the purposes of schemes are delivered. Provisions include checking eligibility criteria at application stage and monitoring compliance with individual grant agreements and scheme conditions. A range of enforcement options are available under the instrument in the event of a breach, including withholding of payments, recovering payments previously awarded and prohibiting a person from receiving payments under any scheme for up to two years, thereby ensuring that public funds are properly expended, suitably protected against fraud and provide value for money.

The instrument provides powers of entry and inspection to enforce compliance with scheme agreements; for example, to check or inspect land, livestock, crops, plants or machinery and to verify compliance of conditions and review any activities carried out under the schemes. A formal complaints and appeals process is available if agreement holders are aggrieved by certain decisions taken by the department.

These instruments implement provisions in the Agriculture Act 2020. They begin the move from the inefficient direct payments model of the CAP and provide an important framework allowing new financial assistance schemes to operate effectively in line with the agricultural transition plan. I beg to move.

I want to talk about a couple of wider issues, because I do not want to take too long. I know that the delinked payments and the lump sum payments are not intrinsically tied up with these regulations, but they are connected. Will those payments be directly linked to assist new entrants into farming rather than enabling existing companies to get bigger? It is a golden opportunity and it should not be missed.

How will hill farmers be treated and protected? They simply do not have the flexibility that other farmers have, not just with the environment but with the land and everything else. It is all self-evident and we understand the reasons, but they must not be forgotten.

As today is the 22 March, can the Minister say whether phase 2 of the farm resilience scheme will be provided as promised this month, with a start date in May? It is getting pretty close to the start of May. Can he assure us that the Rural Payments Agency has the trained staff and resources to deal with the claims? Will the claims be less onerous than under the EU system? The Explanatory Memorandum says that they will be “not … significantly more onerous”, but the point is that they will be more onerous. Why on earth are they not less onerous than under the EU system now that we are in control of designing the system?

Finally on this regulation, what are the Government’s plans for future reductions beyond 2021? I agree with the noble Lord, Lord Rooker; farmers are already planning for 2022, and necessary investment will not be made if they do not have a clear idea of their future funding streams. Without a clear road map, productivity and the environment will suffer.

I welcome the launch of the sustainable farming incentive pilot. Is it correct that the SFI pilot is unavailable to any farmer already part of the Countryside Stewardship scheme, and thus is available only to those who have chosen not to enter such schemes or whose schemes have recently expired? If so, it seems unlikely to be an effective pilot, if those being asked to trial SFI are sceptics and non-adopters.

Turning to the Agriculture (Financial Assistance) Regulations, the mechanics of monitoring compliance are essential, but the extent to which inspection burdens farmers, and particularly farmers’ families, will directly impact their popularity. In this regard, there are a number of serious concerns. The regulations suggest that inspections may occur at a “reasonable hour”, but nowhere is that term defined. Given the working hours and seasonality of farm work, this may be particularly challenging. Inspection mid-harvest or mid-lambing could be an unreasonable hour, at any time of day.

Inspections may take place anywhere other than a private dwelling, and yet, as the Minister knows, a typical farmhouse kitchen is often the administrative heart of farming operation, and sometimes also a creche for newborn lambs. How will inspectors gain access to the records they need if they cannot access private dwellings? Equally, how will the privacy of farming families be preserved under such an inspection regime?

There are notice provisions before a virtual inspection by live video link, but there are no such notice provisions required before inspection by remote sensing, thus inspection by drone is permitted without notice at any reasonable hour of the day. This raises major concerns for privacy and security, particularly as drones are now popular with criminals scouting rural targets. For those living on isolated farms, the presence of a drone overhead can be very disconcerting. Furthermore, many farmers have diversified into tourism, particularly here in the south-west. As drafted, these regulations may permit drone inspections of campsites and holiday lets, irrespective of the privacy concerns for guests.

It is not apparent either who the “authorised person” will be, and who such “other persons” as the authorised persons think necessary are. These individuals have considerable powers of inspection and enforcement, including the ability to take documents, inspect computers, and take a photograph or a record in digital form of anything on or associated with the land or premises. This is a remarkably wide power. Indeed, it suggests that taking a digital copy of the family computer, if used in the farm office, would be permissible, and I see no safeguards around how these powers may be exercised.

Finally, the right of appeal under Regulation 31 is to a person or persons appointed by the Secretary of State, with no specificity on independence or qualification. Given that it is the Secretary of State’s own determination that is being appealed, it seems contrary to the interests of justice to permit him or her to appoint the appellate tribunal.

This is by no means an exhaustive list of concerns, but they are extensive. Unless they can be resolved, there must be major concerns about the attractiveness of the entire regime. I look forward to hearing the Minister’s reply.

While I am on wildlife, I turn to the problem of access, which I raised during discussions on the then Agriculture Bill. It is clear that, during Covid, people’s attitudes and behaviours in the countryside are fairly reprehensible at times. The leaving open of gates, the amount of litter and the wilful misconduct in the countryside are alarming, given that the Agriculture Act of last year actually encourages people to go to the countryside. There is a Countryside Code; I do not have that much experience of it in England, but I certainly do in Scotland. At the entry gate of a property belonging to a charity which I run, and which is a heritage project, I have on a board the equivalent of the English Countryside Code. I am amazed by the number of tourists and visitors who do not read it, and, if they do read it, they wilfully ignore it. We have had fires, destruction and the removal of historic stones by people. That property is there for people to come and enjoy—not come and destroy.

What is my noble friend doing to make certain that visitors to the countryside, whom we welcome, are better educated and have more respect for the countryside than appears at present? Is he concerned that the alarming increase in the ownership of pets, particularly dogs, will cause a problem for farmers? When people get access to the countryside, they will take their dogs there and, unless the dogs are well trained and managed and kept on a lead, there is every chance that they will harass wildlife and cause distress for farmers. I hope my noble friend can assure me that Defra is looking at these important issues.

As I said several times during the passage of the Bill, that underlines the need to concentrate on whole-farm schemes for ELMS and other provisions. It is right to decrease direct payments to those who are the most vulnerable in this sense more slowly, but it is also important to develop whole-farm schemes for such farms more quickly and not simply go slowly in that direction—although these regulations do move a little in that direction. There needs to be differentiation and a full understanding of the impact on what are largely small farms, or at least small businesses even if, in geographical terms, they are relatively large farms in the uplands.

My second point on this issue is rather different. I ask the Minister: is it the objective of policy to shift English farming away from livestock towards horticulture and vegetable production? I do so because, like the noble Earl, Lord Caithness, last year I was a member of the Food, Poverty, Health and Environment Committee, chaired by the noble Lord, Lord Krebs. One of our conclusions—only one—was that UK diets, particularly those of low-income groups and children, need to move more strongly towards fresh fruit and vegetables. Part of providing that would be having more home-produced fresh vegetables and to otherwise subsidise and incentivise more horticulture in this country.

The problem is that, in many instances, the land now used for livestock is often—though not always—unsuitable for horticulture. Is it the Government’s aim to achieve such a shift in production and diet? Is that part of this transitional period? If so, can they achieve that while avoiding a dangerous escalation in the overly heavy use of fertilisers to make less fertile soil more fertile? That goes for pesticides, too, with the concomitant damage to watercourses, air quality, soil, human and animal health, and biodiversity. Should the approach, particularly in upland areas, be to focus on rewilding some of the land rather than shifting production away from raising livestock and towards producing fruit and vegetables? That is a long-term aim but I would like the Government’s comments on it.

Since this House last discussed these issues, we have heard initial announcements about the sustainable farming incentive, but I note the words of a Tenant Farmers Association policy adviser to Farmers Weekly that this is

“just the start of a long journey moving away from area-based payments.”

She said:

“There is still a lot of work to be done to ensure SFI becomes a robust and tangible scheme that can be practically implemented for any farming system.”

As the noble Lord, Lord Rooker, said, this is uncharted territory.

We are talking about eight standards to allow farmers to build their own farm agreements for greener landscapes, cleaner air and water, and to guard against the climate emergency and flooding—at three different levels. The complexity of this and the potential difficulty of monitoring delivery look daunting; also, as the noble Earl, Lord Devon, said, farms are often homes too, so there are privacy implications. Indeed, the Minister outlined this in his explanation of the inspection access rules in his introduction to the debate. I appreciate that he may not have time today to talk in detail about the plans for delivery, but we—farmers and communities —need to see the rapid delivery of clarity and hear assurance that this will deliver real progress for our horrendously nature-depleted land, with its poisoned waters and trashed soils.

Another key issue that has been very much at the forefront today is the non-progress of the Environment Bill. I understand the need to hold it in the other place for Prorogation—whether that is really the most efficient way for a constitution to operate is a question for another day—but I heard a concerning comment this morning from a Member of the Government’s party in the other place suggesting that the need to get the Environment Bill in place by COP to avoid international embarrassment meant that your Lordships’ House would have to rush it through and not try to do too much to it. Given the close links between these payment regulations and the operation of the Bill, I hope that the Minister can give me an assurance today that the Government intend that this House, with its large number of expert voices with a strong interest in the issues in the Environment Bill, has proper time to scrutinise it. The Domestic Abuse Bill has demonstrated how much Bills can be improved through such scrutiny. The Environment Bill is even larger in scope and equally crucial in impact.

However, by and large, I welcome the Government’s thrust here towards a more ecological way of farming and look forward to hearing the Minister’s comments in due course.

However, farmers and most noble Lords who have spoken assume that these environmental payments will replace the lost direct subsidy or a significant part of it. They in effect assume that they will be paid for environmental goods above the cost to them of providing those goods, and probably that they will be paid for providing environmental goods and services which they would have provided anyway as a by-product of farming. We should doubtless be grateful for that, but we should not necessarily expect to pay for it.

I hope that in this and the other House we will look at the long-term costs of subsidies to farming and see whether they can perhaps be phased out. I happened to become a good friend of the late and sadly lamented Michael Moore, the former Labour Prime Minister of New Zealand, who phased out, very dramatically, all subsidies for agriculture in New Zealand. We should learn some lessons from that experience. The first lesson he told me was not to do it as dramatically and overnight as New Zealand had to in the crisis that it faced—any phasing out of subsidies should be sensible and over a period of time.

However, we should recognise from New Zealand’s experience that the taxpayer’s interests and agricultural interests are not always as diametrically opposed as they might seem ex ante. Although the abrupt removal of subsidies in New Zealand dramatically reduced average farm incomes, within five years they had reached and exceeded the average incomes before the subsidies were removed. It seems that a lot of the subsidy that was previously given to the agricultural industry in New Zealand—it may be the same here—ended up not in the incomes of farmers but in the margins of suppliers of fertiliser and other agricultural products. In the long run, when farming not for subsidies but for the value of the products produced, the productivity growth of agriculture was greater and the opportunities for increasing productivity were much greater than people had supposed.