I thank the noble Lord, Lord Grantchester, for tabling Amendment 105, with which I will also address Amendments 107 and 104, tabled by the noble Lord, Lord Addington, and Amendment 127, tabled by my noble friend Lady McIntosh. The Government’s 2019 manifesto guarantees the current annual budget in every year of the new Parliament, which gives significant certainty on funding for the coming years. We demonstrated our commitment to this further when, in December 2019, the Chancellor announced £2.852 billion of funding for direct payments in the UK for 2020.
The noble Lord, Lord Grantchester, mentioned the cut in financial support. The maximum reduction of £150 million will immediately be ploughed back into the new countryside stewardship scheme and the productivity grant, which will be brought in next year. I hope that this also reassures the noble Baronesses, Lady Bennett of Manor Castle, Lady Ritchie of Downpatrick and Lady Northover.
The Government have reflected carefully on the scrutiny by the other place during the passage of the previous Agriculture Bill, and we introduced Clause 4 to address the concerns raised about funding. The clause requires the Government to publish a multi-annual financial assistance plan before the start of the agricultural transition. This will set out the strategic priorities for the transition and describe the financial assistance schemes expected to be in operation during the transition. As part of our commitment under Clause 4, and to ensure that we keep stakeholders aware of the latest developments, I can confirm that the Government intend to set out our plans for financial assistance during the first years of the transition in the early autumn.
Clause 4(2)(b) already places a duty on the Secretary of State to have regard to the strategic priorities established when making any decisions regarding what financial assistance schemes are to be supported under Clause 1. The noble Lord, Lord Addington, asked about the Government’s requirements to report. This is covered in detail in Clause 6. In addition, Clause 5 commits the Government to publish annual reports on the total amount spent on financial assistance, as well as the total spent on each financial assistance scheme. Clause 6 requires periodic reports on the impact and effectiveness of spending on financial assistance schemes.
There are existing processes for determining funding arrangements. These will apply to domestic spending when we leave the EU. Parliament has the opportunity to vote on Defra’s budget each year through the estimates process, and of course the EFRA Committee takes a close interest in scrutinising Defra’s accounts.
The noble Baroness, Lady Scott, also asked about the link between public access and the Government’s strategic priorities. I believe that Clause 1(1)(b) embodies this link. Clause 1(1) also covers access. The multiannual financial assistance plan will require the Government to publish information about their strategic priorities and how the financial assistance powers in Clause 1 will be used in future years. The Government make decisions through a structured and comprehensive process, which allows us to assess spending in the round.
On Amendment 123, in the name of the noble Lord, Lord Grantchester, the running costs for Defra and the Defra group are considered separately from the payments being made to beneficiaries. As the Government continue to develop their future schemes, they may find that they need to include some administration costs for third parties, such as those potentially incurred to run farm clusters or other groups that bring multiple farmers and land managers together to work in partnership. There may be very valid reasons why administration or consultancy costs may be higher than 5%. For example, investing in the early years of a scheme, when development and testing are critical, could lead to greater efficiencies and refinements later.
On Amendment 112, in the name of the noble Lord, Lord Grantchester, and Amendment 128, in the name of my noble friend Lady Rock, the Government are determined that farming in the UK should not see a reduction in government support at this very important time. That is why they have pledged to guarantee the current annual budget in every year of the new Parliament. The Government recognise that even with the best financial planning, underspends can happen. The concept the amendments raise would, in principle, be beneficial. However, legislation is not the best route to pursue this. Instead, it is more appropriate that the Government first discuss such an arrangement as part of the spending review process, when they will look at spending priorities across government. We should not legislate now for such flexibility without going through the proper process to ensure that spending can be considered in the round.
I will address Amendments 131 and 133, in the name of the noble Earl, Lord Devon, alongside Amendment 132, in the name of my noble friend Lord Lucas. Clause 4 replicates existing multiyear funding cycles, but provides for some flexibility as necessary around the length of individual plans. As the clause stands, it states that future plans must be for at least five years. The Secretary of State has discretion to design a longer plan, which I hope will reassure the noble Lords, Lord Cameron and Lord Wigley. The first plan was designed to cover the whole seven-year transition, to provide certainty to farmers while they adapt to the significant changes that the transition will bring. Although plans must run for at least five years, the Secretary of State has discretion to design a longer plan. The first plan will span the length of the agricultural transition and run for the seven years. This is an example of the Government’s commitment to designing plans appropriately with regard to farmers’ needs.
I was asked by the noble Earl, Lord Devon, why we could not confirm the budget for the length of the agricultural transition. Future funding allocations will
be determined through future fiscal events, as is right and proper, to ensure that government spending is considered in the round. The regular cycle of spending reviews, single departmental plans and supply estimates at departmental level is well established. Parliament can vote on Defra’s budget each year through the estimates process.
The clause also states that the first plan period will run for the seven years. It will expire at the end of 2027 and the next plan must be in place by 1 January 2028. Therefore, it is likely that the renewal of plans will happen at a different time from elections, although of course that cannot be guaranteed. I assure noble Lords that there will always be a multiannual financial assistance plan in place, with no gaps.
The agriculture transition will be a key time for the development of government policy. Schemes will be tested and piloted, and the findings from those experiences will inform the development of future schemes and strategic objectives. Accelerating the production of future plans during the agriculture transition period would be counterproductive to our aim of assessing schemes and taking a considered view of what works and what does not.
Clause 4 requires that a multiannual plan be updated and put before Parliament as soon as it is practicable to do so. This requirement will ensure that the plan is a live document that can respond to any necessary changes to financial assistance schemes or strategic objectives.
On Amendment 126, tabled by my noble friend Lord Northbrook, Clause 4 already places a requirement on the Secretary of State to consider in as much detail as considered appropriate each financial assistance scheme that is in or will be in operation during the plan period. If deemed appropriate, this could include how the scheme is to give regard to the production of food in an environmentally sustainable way.
Amendment 138 concerns reports on financial assistance and is in the name of the noble Lord, Lord Addington. Clause 5 as drafted already commits to providing an appropriate level of detail and clarity on the delivery of public goods through each scheme. Furthermore, it is important to note that many of the schemes that the Government are developing, and the individual actions within those schemes, cover multiple purposes. For instance, under ELM we might pay for hedge planting to protect or improve the environment while also restoring cultural or natural heritage and at the same time protecting from or reducing environmental hazards. It would not always be possible to unpick these relationships.
I turn now to Amendment 139 on monitoring the impacts of financial assistance in the name of the noble Lord, Lord Krebs. Clause 6 already requires the Secretary of State to monitor the impact of each financial assistance scheme and make one or more reports on the impact and effectiveness of the scheme, having had regard to the monitoring effects that have taken place.
On Amendment 129 in the name of my noble friend Lady Rock and Amendments 134 and 137 tabled by my noble friend Lady McIntosh of Pickering, the Government are committed to achieving their aim of leaving the environment in a better state than they
found it. That is why they seek to legislate for environment improvement plans in the Environment Bill. Environment improvement plans will have the objective of delivering significant improvement to the natural environment. Plans must set out the specific steps that the Government intend to take to improve the natural environment.
My noble friend Lady McIntosh and the noble Baroness, Lady Bakewell, also asked about the Office for Environmental Protection. Under the Environment Bill, the OEP is required to monitor progress on improving the natural environment. It must produce an annual report on its findings and could, for example, recommend that additional funding be provided to deliver the purposes set out in Clause 1 of this Bill. Where issues are identified, the OEP may engage in constructive dialogue with the Government and advise on necessary remedial measures. The OEP can also investigate alleged serious breaches of environmental law by public authorities and take legal action where necessary. The reports of the OEP must be published and laid before Parliament and the Government are specifically required to address any recommendations made. Therefore, when the Secretary of State determines the funding for the strategic priorities set out in the Government’s multiannual financial assistance plans, they will be able to consider any advice provided by the OEP under its duties as set out in the Environment Bill. The Secretary of State will also have had to respond to any advice. Both the OEP’s reports and the Secretary of State’s responses will be published and laid before Parliament.
The Government are actively engaging with many public bodies about the proposed future financial assistance schemes, for example, 17 environmental land management schemes and tests and trials projects are working with public bodies including national park authorities, Historic England, Natural England, the Environment Agency, the Forestry Commission and the National Association for Areas of Outstanding Natural Beauty to provide expert insight and input into the development of policy.
I turn now to Amendment 232 in the name of the noble Baroness, Lady Bennett of Manor Castle. The Government already produce reports that cover a number of these points. For example, Defra publishes a set of England biodiversity indicators to assist in the evaluation of progress on the outcomes and commitments of Biodiversity 2020, our strategy for England’s wildlife and ecosystems. In addition, the Government produce the Agriculture in the UK report annually, which contains a range of data including farm incomes, land use, livestock numbers, prices, the production of key commodities, overseas trade, organic farming and the environment. A new requirement to report on the state of agricultural land would replicate what is already available.
The noble Lord, Lord Greaves, asked a number of rather gloomy questions, which I will endeavour to address. There are a lot of different schemes, and a lot of advice will be provided. The environmental land management scheme is running live tests and trials to test how elements of the scheme will work ahead of the national pilot. Advice and guidance is one of the priority areas, and 34 tests and trials are feeding into
that theme. Evidence shows that for advice to be effective, it must be trusted, consistent, credible and cost effective. The Government are considering how these principles can be embedded into advice for all schemes and are working with farmers and other land managers to do so.
8.45 pm
On how people will get advice, the Government are clear that accessible advice and guidance are critical to the success of the schemes, which is why we are working hard to ensure that there are robust mechanisms in place to achieve that. As outlined in the policy update of February, the Government are considering carefully the role of advice and guidance and have already committed to having in place a future system of agricultural regulation which understands and implements better ways to provide advice and guidance.
The noble Lord, Lord Greaves, also asked about details of tier 3 of the ELMS provisions. Tier 3 could focus on delivering landscape-scale land use change projects that can make substantial contributions to our environmental commitments, such as nature recovery and net-zero targets. It would likely require collaboration from farmers and other land managers. We are exploring how we could incentivise land managers to collaborate with each other and other relevant stakeholders.
The noble Baroness, Lady Bennett, asked about new entrants to farming, and county farms in particular. We will be offering funding to councils with county farm estates, landowners and other organisations which want to invest in creating new opportunities for new-entrant farmers. We will invite applicants to set out how they would use the funding to meet our ambitions for new entrants. Funding could be used to undertake estate planning and reorganisation activities or as part of other investments that might be needed to make more holdings available to new entrants.
The noble Baroness, Lady Ritchie of Downpatrick, asked about the devolution settlements and how the Government will engage with the devolved Administrations. The UK Government are committed to working closely with the devolved Administrations to implement a UK agricultural support framework. The aim of this is to ensure effective co-ordination and dialogue between the Administrations on agriculture subsidy and a range of other issues.
With those reassurances, I ask the noble Lord, Lord Grantchester, to withdraw his amendment.