My Lords, I declare my interest as a director of Wrackleford Farms Ltd, a tenant farming enterprise. I shall speak to Amendment 42. The amendment, supported by the NFU, would ensure that farmers entitled to payments receive those payments within guaranteed timescales to help ensure certainty of cash flow. I thank my noble friend Lord Caithness for his support.
I said in Committee that any farmer will tell you that cash flow is their number one consideration. As a farmer, it is one thing to know that financial support will be reduced, but quite a different thing to know when that financial support will be received. Regulations relating to the phasing out of BPS therefore need to include clarity on when a farmer will receive payments.
While it is true that the existing payment windows will come over under retained EU legislation, Clause 9 gives the Secretary of State the right to modify the BPS legislation, including potentially by removing the payment window in place at present. We cannot have a situation where no payment window is set.
Furthermore, it is arguably the case that the current payment window under the CAP rules provides little recourse to farmers if the RPA fails to meet its payment obligations. This leaves farmers waiting an unsatisfactory length of time and in great uncertainty as to when payments will be made. The impact of these delayed payments cannot be overestimated. There is the financial impact: greater borrowing costs, lost business opportunities and less attractive prices for farm produce or inputs. But it also has a substantial impact on the well-being of farmers, their families and their relationships with their farm suppliers, which—importantly—filter down through the wider rural economy.
The payment window for direct payments is seven months: 1 December to 30 June of the following calendar year. Current rules state that payments have to be made only to the value of 95.24% of funds by that time. We all know that farming revenue and costs are both volatile; nothing remains the same month to month or year to year. The overwhelming message from farmers is that they need certainty over the timing of payments.
There need to be payment windows—or dates that Defra has to meet—either fixed in schemes or set out in individual agreements. This will allow holders of agri-environmental schemes to plan with great certainty and to manage their cash flow. It is not acceptable to ask farmers to undertake work at their own cost and to comply with associated strict time limits but then provide them with no certainty on payments associated with those works.
The government department BEIS has a prompt-payment policy that requires payments within a certain number of days: 30. I would welcome a similarly prompt-payment policy approach for agricultural schemes with guaranteed timescales. I hope the Minister will provide reassurance on this matter.