My Lords, the new sustainable farming incentive offer for 2026 builds on the 2024 scheme but is simpler and more streamlined. When applications open in June this year, priority will be given to small farms and those without an existing environmental land management revenue agreement. Small farms are defined as having at least three hectares and no more than 50 hectares of agricultural land.
I thank the Minister for her reply. Given that farm units of the size that she has mentioned are generally viewed as uneconomic and unviable in purely agricultural terms, I ask, if I may, two questions. First, given that the Government used 140 hectares as the size of the average family farm when making calculations for the new inheritance taxes for farms and small businesses, why are they now penalising family farms by allowing only one-third of them by size to qualify for this funding tranche? Secondly, in the context of the Batters report, how does this small SFI tranche help with the two fundamentals that the report highlights—namely, to facilitate increased productivity and the need for greater security for domestic food production?
We believe that it is important to encourage smaller farms and those without existing agreements to come forward to access the grants that are available to make their farms more sustainable. It is a little sweeping to say that they are not economic. All farms are different, and it often depends on how they are managed. As the noble Lord said, there is a second window opening in September to which all farms will be able to apply. We are looking to support all farms in increasing food production. Food productivity is an important part of the Batters review. Much of what we are doing in the new offer and in the farming road map is in response to the Batters review’s recommendations.
My Lords, how will the Government ensure that the definition of a small farm within the SFI recognises the contribution of smaller, diversified family farms to nature recovery and local food production? How will the Government avoid favouring larger land holdings that may find it easier to access the 71 requirements—admittedly down from over 100—of the still complex scheme?
We have tried to reduce the complexity of the scheme. We want to make it more straightforward for more farms and different types of farms to access. There are opportunities for horticultural growers, which are often smaller farms as well. We are looking to better support tenant farmers and, importantly, are doing more to support people who farm on moorland and in upland areas. If we are to support sustainable farming, we need to encourage all farms to feel that they are part of what the Government are trying to achieve.
My Lords, is it not about time that we means-tested farmers? We seem to be giving taxpayers’ money to billionaires. Is it not time that we stopped doing that?
One of the recommendations in the Batters review is about active farming and ensuring that the payments that we make from government go to people who are farming and supporting the food production that our country so badly needs if we are to have food security. That is what we are trying to do.
My Lords, I declare my farming interests in Buckinghamshire and Lincolnshire. I very much welcome the announcement on SFI support for smaller farms, although I have many of the same reservations as the noble Lord, Lord Colgrain. However, does the Minister recognise that the proposed 62% rise in electricity standing charges in April, which already accounts for 60% of energy bills, will drive food inflation and dramatically affect the competitiveness of intensive farming and horticulture, which are already facing imports of products grown to lower standards overseas? Do these sectors remain a priority for the Secretary of State for Defra?
The noble Lord raises a really important point. There are a number of challenges for farming around things such as electricity prices, and oil is now being affected by the ongoing war. We are critically aware of that. It is not just farming; there are a number of industries where these kinds of pressures are going to be challenging. One thing that we are doing in Defra is trying to work these issues through. My colleague, Angela Eagle MP, who is the Farming Minister, is talking regularly to farmers about these issues. We have to look at how we can support and manage these kinds of challenges.
The new SFIs offer some reduced payment rates per acre and remove management payments—winter bird food falls by 24% and herbal leys by 41%. SFIs require substantial expenditure by the recipients in order to claim these payments, and reducing payment rates dramatically reduces the potential for profit and the incentive element of the SFIs. To the point from the noble Lord, Lord Carrington, costs are going up for farmers. Could the Minister tell us what work has been done by the Government to ensure that these are adequate payment rates? Will they commit that, if take-up of these schemes falls below budget, the full farming budget will be used elsewhere to support the farming sector directly? I refer the House to my interest as a farmer in receipt of SFI payments.
The Farming Minister has spent a long time looking at the different options to try to target the types of farm and types of productivity that she wants to increase. The noble Lord is absolutely correct that the management payment has been removed. That was done to increase the amount of budget that would be available for new agreements. We want as many farmers as possible to be able to benefit from SFI funding this year, which is why that payment was taken out. A number of actions have come out but, in some areas, agreements have seen the payments increase for certain activities—for example, on moorlands. Some areas have gained and some have not, but it is about getting the balance towards where the Government want to see things changing.
I keep hearing from farmers, particularly from small farms, about the impact of the fiasco of the changes in inheritance tax. Would the Minister give some reassurance that future policy changes will truly be rural-proofed? I declare an interest as this year’s president of the Royal Norfolk Show.
I am beginning to wish I lived in Norfolk so that I could come—it is a long way from Cumbria. I reassure the right reverend Prelate that one of the things we have been working much harder on in Defra, as we develop policies and then manage and oversee them, is working with other departments where there is also an impact. It is really important to have that oversight. The noble Lord was just talking about energy prices, and we work with DESNZ on how best we can approach that. It will be the same for rural-proofing more broadly. It is certainly very much on our agenda.