My Lords, the Minister has explained clearly in his introduction that the draft regulations propose to introduce the delinked payments to replace direct payments, so I will not go into the detail of that. They also propose to revoke the law relating to the basic payment scheme, including the associated cross-compliance requirements, which is what much of our discussion will be about. The delinking of agricultural payments was clearly advertised in the agricultural transition plan, so this is no surprise to anybody. We also believe that it is a necessary step to move to a new, fairer system of payments based on the principle of public money for public good, so we will not oppose this instrument.
However, I have brought forward the regret amendment because I am concerned, as is the Secondary Legislation Scrutiny Committee, about whether all relevant cross-compliance requirements that will be revoked by this instrument are replicated fully in domestic legislation, and whether there will be any regulatory gaps. Existing cross-compliance policy is being removed prior to the complete establishment of the new regulatory framework, yet some elements of the new compliance regime are still work in progress, and other cross-compliance requirements will be set out in guidance, codes of practice or, indeed, incentive schemes. To us, this raises questions as to whether they can be enforced as effectively as the current statutory requirements. Is the Minister confident that this will be the case?
Regarding concerns about the regulatory gap related to the legacy payments element of the changes, Defra has stated, as the Minister has just assured the House, that the majority of rules under cross-compliance are already in domestic law. We suggest that this still means that, with the removal from 1 January, there will be regulatory gaps across hedgerows, soil cover and watercourse buffer strips that will not be covered by the farming rules for water. We are also concerned that it risks enforcement gaps on compliance with regulations, such as the domestic public rights of way, that benefit from the conditionality for payments. Again, that falls away from 1 January.
I acknowledge that Defra has made some really good progress on hedgerows. There was a consultation on new protective requirements in summer 2023, but this has not been undertaken in sufficient time to prevent the regulatory gaps between 1 January next year and the enactment of additional protections. We also do not believe that the consultation on hedgerows was expansive enough to cover other gaps in cross-compliance such as soil and watercourses protection. In its August response to the SLSC, Defra notes that
there are existing measures to provide ongoing protections, but there have been continued delays, lack of clarity and uncertainty, and we believe that these undermine the potential effectiveness of these measures.
I will briefly look at the impacts if these gaps are not dealt with. From January, agriculture hedgerows will be left unprotected from inappropriate management, removing the obligation to leave a buffer between hedgerows and cultivated areas and to cut only outside bird nesting season. Our concern is that this could endanger threatened hedgerow-reliant farmland species—the corn bunting springs to mind—and risk carbon release through hedgerow damage.
I am aware, as I said, that Defra has consulted on the gaps relating to hedgerow protection, but it has not yet introduced the provisions to avoid any potential damage next year, including during the bird breeding season. Defra has said that there are no other gaps, but this has been disputed by a number of groups, including in a report produced by the Institute for European Environmental Policy, which also points out:
“It is notable that many of the identified gaps (i.e. in relation to soil management) have implications for water pollution”.
I am sure that the Minister would not want to see further water pollution.
That brings me on to rivers. There will no longer be a requirement to create buffers that protect rivers and streams from agricultural pollution or to keep a farm map that marks water sources, apart from in the nitrate-vulnerable zones. We are concerned that this could expose already overloaded watercourses to increased nutrient and chemical pollution and, again, further have the impact of degrading habitats and wildlife.
Finally, most requirements to prevent soil erosion could also be lost, with only minimal protection afforded by the farming rules for water. Removing the obligation to keep green cover such as crops and grass on soils over winter risks increasing the amount of soil lost through wind erosion and leading to degrading overall soil health, on which our farmers depend. Many of these domestic standards are guidance and voluntary frameworks that do not apply to all farmers, so we do not consider them to be appropriate replacements for enforceable rules under regulatory conditionality. We are also concerned that an unlevel playing field will be created between farmers, with a risk that those who comply with voluntary standards are then disadvantaged commercially.
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The absence of a formal impact assessment for the removal of cross-compliance and regulatory conditionality is also a problem. I ask the Minister whether he thinks that an impact assessment should have been carried out, alongside a habitats regulations assessment and a strategic environmental assessment, to look at those particular issues.
The NFU, which I know has been working very closely with the Government on this and has made some good progress in areas of concern, has also raised concerns about supporting farming businesses with the need for a form of stability payment, for example. But it is also very concerned about how
farmers will be inspected, how sanctions will be applied and how inspections will be co-ordinated after the end of this year when cross-compliance ends. We could end up with a range of different Defra farm bodies going out on to the farms on an unco-ordinated basis using their own selection criteria for what they are looking at. It is important for the Minister to outline how Defra sees inspections being co-ordinated going forward, as this will be of concern to a number of farmers.
My final concern is on enforcement. While it is true, of course, that some standards under cross-compliance will continue to apply to farm activities through various bits of independent domestic legislation, the way in which this is monitored and enforced in the future is likely to be undermined by this SI and others that are linked to it. Under cross-compliance, the Government have a legal obligation to establish an effective monitoring and enforcement scheme to ensure that these standards are adhered to by payment recipients. Current RPA-led inspections and enforcement penalties that result from cross-compliance breaches arguably act as the primary deterrent to breaching environmental regulatory standards on farms. By their very nature, they protect important environmental features from harm over much of England. I would be interested to hear what the Minister thinks about this, but our concern is that the effect of the SI could well be to remove this important RPA-monitoring enforcement role in ensuring compliance with environmental regulatory standards on farms. It would be good to understand better how the department sees that going forward. When Defra responded to the SLSC’s concerns on this, it said that
“Existing regulators will continue to be responsible for monitoring, inspection and enforcing”.
The concern, however, is that there is no further detail. What is the ongoing role going to be of the RPA, for example? Is the role going to be passed on or added to other regulators—the Environment Agency, for example? We want to get a better understanding in order to allay people’s concerns in this area.
One of the biggest changes will be the move away from penalties being applied for non-compliance. For example, due to cross-compliance ending, there will be no more penalties applied to direct payments or agri-environmental payments for farmers. How will enforcement be conducted? Presumably, that will be through education and support in the early instances, which makes sense, with penalties being reserved for more serious or unco-operative individuals—presumably, criminal prosecution will still remain for the most severe violations of domestic rules. It would be interesting if the Minister could provide more clarity about how the management of, for example, hedges and animal health and welfare matters are going to be enforced through the new system.
Any new system of farm regulation needs to support farmers, while also protecting the rural environment by reducing our agricultural pressures on soil, water, air, landscape features, hedgerows and stone banks—the Minister is very aware of this and I know he believes that this is very important. But one other thing that has come up is the lack of general awareness within the farming community about the transition from BPS to delinked payments. Again, it would be interesting
to know, as we move into the new system, how the Government are looking to raise awareness of farmers’ obligations under the new system. Farmers need clarity, and they need to know how to plan for the future, so I am looking to the Minister for further assurance that the instrument will neither lead to a reduction of proper enforcement nor introduce regulatory gaps that could result in undermining our existing environmental protections. I beg to move.