Sustainable Farming Initiative

I beg to move,

That this House has considered the matter of transitioning to the Sustainable Farming Initiative.

It is an ongoing pleasure to continue serving under your guidance this morning, Dame Maria. I welcome hon. Members to their seats and the Minister to his. I start by wishing everyone merry Christmas, in the spirit of the debate we have just had.

The sustainable farming incentive is a cornerstone of the Government’s environmental land management schemes. The hallmark of SFI in particular, and ELMS in general, is that public money should support our farmers for delivering public goods. The principles underlying that transition are supported by farmers across the country, by environmental groups and, for what it is worth, by me. The point of this debate is to issue a plea to the Minister, the Secretary of State and the Prime Minister that they start listening to farmers and acknowledge the damage they are doing to farmers, food production and our environment by the way they are managing the transition from the old scheme to the new.

The Conservative manifesto promised £2.4 billion to English farming, yet in the past year the Government spent only £2.23 billion on various schemes and, crucially, only £1.956 billion of that went into farming. The Government have, therefore, broken their promise to farmers to the tune of £444 million last year and, with the phasing out of the basic payment scheme stepping up, they are set to break their promise to farmers to an even greater degree next year.

I congratulate my hon. Friend on securing this important debate. Recent figures show a remarkably low uptake of the sustainable farming incentive. Does my hon. Friend agree that it simply does not have enough incentive for farmers to join?

My hon. Friend makes an excellent point; I will come to that in a little while, because I think that does explain a lot of why that underspend has happened. It is easy to see how it has happened; it is not a mystery. It is down to two things: first, the Conservative Government have been very good at phasing out the old BPS, and secondly, they have been relentlessly incompetent at bringing in the new schemes, including for the reason that my hon. Friend set out.

Department for Environment, Food and Rural Affairs figures show that around £460 million has been removed from farmers’ pockets in the form of the BPS phase-out, which eclipses the increase in environmental payments of around £155 million. Much of that has not even gone to farmers. It has instead found its way into the very deep pockets of large landowners, including new entrant corporate landowners, looking to do a bit of greenwashing at the taxpayer’s expense.

In the spring of 2021, the Government promised to spend £275 million on SFI schemes in the 2022-23 financial year. Yet, in reality, excluding the pilots, they spent literally nothing—zero pounds, zero pence. This year, the Government plan to spend just shy of £290 million on SFIs. One question for the Minister is: how much of that money will actually go to farmers in this current financial year?

I understand clearly what the hon. Gentleman is saying but I would respectfully like to put forward a suggestion. There are examples where the schemes have done good. For instance, there are some wonderful farm shops in my constituency, such as Corries butcher’s, a good scheme set up some years ago, and McKee’s farm shop. For those farmers who can afford additional farm shops, this is a wonderful way to diversify in an effort to boost income and ensure functioning sustainability. Does the hon. Gentleman agree—I think he does—that small financial incentives could be a way to support our local farmers to diversify, and that could be introduced through the sustainable farming incentive? In other words, we can all gain.

I go back to what I said at the beginning. The hon. Gentleman is right to say that there are clear advantages in the scheme, and we support its principle. The problem is that they are outweighed across the piece by the negatives.

What does the botching of the transition mean for individual farmers? Last week, I met a group of farmers in north Westmorland at Ormside near Appleby. One told me that SFI would replace just 7% or 8% of what he is losing in basic payment. Another explained that if he maximised everything in his mid-tier stewardship scheme and got into all the available SFI options, he would replace only 60% of what he received through BPS. The others in the room looked at him with some envy: he was the least badly affected.

Last month, I met a group of farmers in South Westmorland, in Old Hutton near Kendal. One told me that the loss of farm income meant that he had to increase the size of his flock to make ends meet. He knew that in making that choice he was undoing the good environmental work that he and his family had been doing for years, but he could see no other way to keep afloat. That is a reminder that the Government’s handling of these payments means that they are often delivering precisely the opposite of what they intended.

One issue that farmers in my constituency have raised is that existing schemes to help the environment are not eligible under the sustainable farm incentive, so farmers are incentivised to rip those schemes out, undoing good work that they have done and damaging the environment. Does my hon. Friend agree that a tweak to the payments to recognise good work that has already been done would be welcome?

My hon. Friend makes a really good point, and that also happens in my constituency. Accidentally, the Government are acting in a counterproductive way when it comes to the environment.

Others at that meeting in South Westmorland near Kendal told me that they are putting off investing in capital equipment because the loss of BPS and the lack of replacement income means that they do not have the cash flow to invest in a long-overdue new dairy parlour, a covered slurry tank or other things that would increase productivity and improve environmental outcomes. The Minister will say that many grants are available to farmers to help them in that respect, and in some cases they absolutely can, but not if contractors need to be paid up front as DEFRA expects farmers to demonstrate that they have the money in the bank to do that before releasing those grants.

DEFRA’s own figures show that upland livestock farmers have lost 41% of their income during this Parliament, and that lowland livestock farmers have lost 44%. One famer near Keswick told me, tongue in cheek, that he had calculated that the fines he would receive for committing a string of pretty terrible crimes would not amount to what he lost in farm income thanks to this Government.

My hon. Friend is making a very good point. Does he agree that financially aware farms help make financially secure farms, which build food security for the country?

Absolutely. If we do not give people stability of income and certainty, how can we expect them to provide the food and the environmental gains that we need?

I challenge the Minister to come up with any industry that has been penalised as badly by the Government over the past four years as our farmers. To be fair, I do not think the Government actually intended to do so much harm to farming and farmers. I do not believe they sat down and decided to break their promise to farmers and make a net cut of more than a sixth in farm spending, but those cuts have happened all the same because of flaws built into the system either by accident or by design, which have led to predictable and ever-increasing sums of money being taken out of farming, while smaller and less predictable amounts have been introduced.

Let me set out some of the flaws, in the hope that the Minister will address them. First, the system has built-in perverse incentives, as my hon. Friend the Member for North Shropshire (Helen Morgan) said, which mean that farmers at the forefront of environmental work are penalised. Farmers who are in an existing higher level stewardship or uplands entry level stewardship scheme lose their BPS—by the end of this month, they will have lost between 35% and 50%—yet they cannot fully access SFI. In other words, farmers already doing good environmental work can only lose income from this process. That is especially so in the Lake district, the Cartmel peninsula, the dales and the Eden valley—some of our most treasured and picturesque landscapes. In upland areas, basic payments typically make up 60% of financial support. Farmers in those beautiful places, which are so essential to our heritage, our environment and our tourism economy are stuck. They are already in stewardship schemes, but their BPS is being removed and they cannot meaningfully access SFI.

The Lake district is a world heritage site. If the landscape changes dramatically for the worse in the next few years because of the Government’s failure to understand the impact of their error, that world heritage site status is at risk, and its loss would cause huge damage to our vital hospitality and tourism economy in Cumbria, which serves 20 million visitors a year and sustains 60,000 jobs.

I am not sure whether things are just different in North Devon, but my farmers seem to be able to stack their schemes. I was asked to come here today by a lovely lady called Debbs Harding, who is part of the Nature Friendly Farming Network, to fully endorse this programme. Yes, there is more to be done—there is always more to be done. However, I am delighted to hear that the Liberal Democrats welcome the schemes and are not just going back to Brexit, which has been their previous position.

On the point that SFI can add value, the reality is that, with the exception of moorland options, there is no reason for anybody in a stewardship scheme to add to what they currently lose. My colleague from Appleby, who said he can only replace 7% of what he loses from BPS, is typical of many people. There are exceptions, of course, and I could name people who have done well out of it. Yet when we have taken out the best part of half a billion and put in £155 million to replace it, it stands to reason that the average farmer in North Devon and everywhere else is worse off.

I try to give the Government some credit by saying that this is incompetence and not malice. They did not mean to break their promise; they have just botched the transition and broken it by accident. However, if the Minister will not address the flaw that prevents farmers in stewardship schemes from meaningfully accessing SFI, we can only conclude that the betrayal of England’s farmers is not accidental after all, but deliberate. Will he look at the matter urgently, so that we do not lose farmers pushed to the brink due to the Government’s obvious failure?

Another flaw in the Government’s approach to the new scheme is that they keep chopping and changing. The Rural Payments Agency cannot keep up with the constant flux, as the Government reinvent SFI every few months. The platform for delivery is struggling to keep pace. For example, the Government’s latest edict is that everyone who began an SFI application in September must have completed it by 31 December. If they have not completed and submitted it by then, all their details will be wiped and they will have to go back to square one and start again. To add to that, the Government’s insistence on drip-feeding SFI options to farmers means that many have not applied because they are worried that if they do, a better new option may be revealed soon after.

My hon. Friend talks about SFI options. One thing I have picked up from the farmers in mid and east Devon I represent is that they are concerned about how the options are profligate. At the beginning of this year, more than 100 options for both schemes were new or were being reviewed. I am hearing from farmers in my corner of Devon that they want greater simplicity in the SFI.

My hon. Friend makes a good point, which I hear across Westmorland and beyond. All that puts people off applying for new schemes because under DEFRA’s rules, farmers can only change or upgrade options once a year, on the anniversary of their entry into the scheme. As a result, hundreds of farms in Westmorland are hanging on. They are unwilling to apply for the latest option because they cannot be sure that it will not be superseded a month later, leaving them locked into an inferior scheme.

I mentioned earlier the concerns expressed to me by farmers in Westmorland about capital schemes. That is a typical concern in landscapes with sites of special scientific interest, especially in the lakes and the dales. SFI moorland payments are higher than others, which is welcome, but farmers cannot get into that option without significant capital spending. For instance, farmers —or more likely a group of farmers—who farm on a common might typically need to spend a quarter of a million pounds on peatland restoration, sorting out leaky dams and slowing the flow of rivers and becks before they can qualify. Yet farmers—many of whose incomes in reality amount to less than half the national minimum wage—do not have a quarter of a million pounds sitting in the bank to pay up front for that work.

The Minister will say that those farmers could get the money back through the grant schemes, but if they do not have the money up front to defray the costs, they are effectively barred from entering. What are the answers here? We could start with the Government revising their payment rates. If we value these public goods—biodiversity, access, carbon sequestration, flood prevention, and so on—we should pay for them accordingly. That is why the Liberal Democrats have committed an extra £1 billion in UK agricultural payments to protect our environment and support farmers. Increasing the payment rates for SFI would draw more people in, and increasing payment rates for stewardship schemes would help too. The payment rates for HLS and UELS are £60 per hectare for commons and £50 per hectare for non-commons. Those rates have not been changed since 2010, so will the Minister address that?

Order. Will the hon. Member wind up, please?

I will. I was a bit too generous—I apologise.

That farmer is working 90 hours a week, with no headspace to deal with the flip-flopping and chopping and changing of the new schemes. They see their BPS disappearing, with nothing to fill its place. There they are, on the farm that their great-great-grandparents farmed before them, and all they can see is that they look increasingly like being the one who will lose the family farm. It will all end with them. Can we imagine what that does to someone, to their state of mind, and to their business and personal choices? What a burden we place on the farmers who feed us and care for our landscape and our environment, all because the Government will not face up to the reality that the transition is bleeding a torrent of cash from our farms, while injecting merely a trickle.

My final word is this. A farmer from near Kirkby, Stephen, who works with farmers on common land, said this the other day:

“I spoke with all the graziers over the weekend. Desperate and broken would probably describe the mood. A few years ago, I scanned a customer’s sheep, and six days later he killed himself. His friend and neighbour to this day cannot forgive himself for missing the signs, as did I”.

I am proud of our farmers and of the work they do to feed us, care for our environment, tackle climate change and maintain our breathtaking landscapes. I plead with the Minister to take note and to urgently make changes to SFI and to the whole transition, so that we do not irreparably damage people, businesses and our land, just because we did not listen to our farmers.

It is a pleasure to serve under your chairmanship, Dame Maria. I pay tribute to the hon. Member for Westmorland and Lonsdale (Tim Farron) for calling this important debate. I must confess, I am slightly confused by his request. He spent nearly 20 minutes flip-flopping between telling us not to constantly keep changing, and telling us to change the system to make it more acceptable to farmers. I am not quite sure which he wants us to do.

Let me start by saying that this whole debate around the current transition is thought-provoking. The discussion around the sustainable farming incentive has been interesting. It is a scheme that will pave the way for both the production of food and the preservation of nature—that is what we want to try to achieve.

British farmers are the life and soul of our rural communities. They have continued to put food on our tables despite unprecedented challenges, such as the rising costs of production following Russia’s invasion of Ukraine. If we couple that with the impact of the covid pandemic and the looming impact of climate change, the industry has shown resilience and adaptability in responding to all those challenges and continuing to keep us fed as a nation.

The Government’s aim with SFI is to make things fairer and better for our farmers, whether that be through our new approach to regulation, finding areas where we can make the system itself work better for our producers, or the policies that we introduce. The SFI scheme does just that. It aims to support the environment and food production, and it rewards farmers for practices that will help to produce food sustainably and protect the environment at the same time, while also providing them a reliable income for doing so. That is because we know that food production and nature preservation go hand in hand. Those practices will help to look after farms in the short and long term by improving soil health or mitigating the impact of extreme weather.