I thank all noble Lords who have contributed to this debate and I welcome the strong level of support across the House, largely, for these measures.
I start by addressing one or two of the issues raised by the noble Baroness, Lady Hayman. She touches on a common theme that comes up when I am out and about. I was at the Chelsea Flower Show this morning and there were a few farmers there—not many, but a few. The issues are about what is going on and where the money is going. The same amount of money is available today as there was yesterday and will be tomorrow. It is £2.4 billion each year over the course of the Parliament, so there is not less money available.
To anyone who has been in receipt of the basic payment scheme as—full disclosure—I have been for probably 40 years, it is a pretty blunt instrument. You get your cheque. There is a little bit of cross-compliance. I received mine in Scotland. It came in two tranches: one at the year end and one about six months after the year end. For anybody who feels that transitioning away from the BPS is somehow bad for cash flow or bad because there is less money in the pot, they have misunderstood what is going on .
The issue of confidence is critical. For sixty-something years—I cannot remember the exact number—if you have been a farmer, you have been used to one system. You farm, you get your BPS payment. If you were interested in other stuff, you could get into an agri-environment scheme, but they were pretty challenging to get into and pretty expensive to join; they really only suited the larger landholdings.
This is a significant shift away from that, but I get that any shift is challenging. Looking at my own farm arrangements, I find myself wondering how we are going to make all this work. Instead of just getting the money, you have to think about what you are going to do. It is public money for public good, so it is a proper shift in mindset. When you get that big shift, it does knock confidence. I am acutely aware of that. It means that people have to think totally differently about their farming operation.
If I am absolutely blunt, that is exactly what ELMS is designed to do and should do. The way that we have been farming has not been overly helpful to productivity or to innovation and—as I think all of us in this Room would collectively agree—it has been deeply unhelpful for the environment. To me, this change is absolutely
welcome and necessary but I know that it causes a bit of stress and strain. That is one reason why it has been spread out over a seven-year period.
Farmers are amazing; they are incredibly resilient, but they are also incredibly resilient to listening. It is not as if this has come as a shock to anyone. We have been advertising it on the front page for a number of years now but, of course, this year is the year when it starts to really bite. If you have not been paying attention, you are going to feel some financial pain. We cannot hold everybody’s hand in this space. A huge amount of effort and energy has gone into consultations and into all the prototypes for the SFI modules. A huge amount of consultation has been done with the industry. Defra teams and Ministers have gone to agricultural shows; they have gone around the block telling everybody, “You have to pay attention; there is change coming”. But, as with all things in life, sometimes you start to pay attention only when it starts to hurt the wallet.
I know that there is a degree of concern and a degree of change but, as I think everybody recognises, this transition is long overdue. We really need to get on with it, so I am grateful for the overwhelming support. This is something that we should plug on with.
I will try to answer a few specific questions now. I was asked about financial support for farmers in the event of a crisis or financial emergency. In the event of an exceptional market disruption, the Government have powers to act to support farmers by making a declaration under Section 20 of the Agriculture Act 2020. These powers are intended to deal with unforeseen short-term shocks to agricultural markets where there is an adverse effect on the price achievable for one or more agricultural products. We have seen some pretty big shocks over the past few years, some caused by the weather and some caused by world events. The Government continue to keep this measure as a backdrop. I know that we look at it and think about it, but we have not got round to using it yet. I hope that it is a rainy day one that never has to come out.
Quite a lot of questions were asked about the rationale for delinking. I hope that I covered a lot of this in my opening comments but, broadly speaking, it is vital that we continue gradually to move away from untargeted subsidies as planned because these payments have inhibited productivity improvements and are, I believe, fundamentally unjust. The scheme that we have now delivers a much better outcome and will deliver a much better outcome in the long term.
The noble Earl, Lord Russell, and my noble friend Lady McIntosh asked whether this is the right time to go through a reduction in the BPS, given the weather and other activities. The Government recognise that many farmers are facing challenging conditions—not least the extreme wet weather, which was referenced several times during the debate and has affected enormous parts of the country—but cancelling the planned reductions to delinked payments is not an effective way of addressing these challenges or setting businesses up for a successful future. The longer we hang on to this, the longer we hold everybody back. These payments are untargeted, so increasing them does not direct support to those who most need them. In fact, you do
not have to be a farmer to be in receipt of delinked payments now; if you have retired from farming, you will still get what you were due. Perpetuating that is not a helpful way of addressing either today’s issues or the issues that will undoubtedly come in future.
The noble Baroness, Lady Hayman, and my noble friend Lady McIntosh asked a couple of questions about tenant farmers and small farms. This is a challenging area but, on the basis that the basic payment scheme paid you for the chunk of land that you owned, the smaller the chunk of land, the less money you get. This transition allows you to earn more money on a smaller farm, by picking up the delinked payments and engaging with the SFI options. Again, I appreciate that this is challenging because you have to think about what you are doing and you will probably have to make some adjustments to your farming model but, as I have said, this has been signalled to the farming community—small farmers, tenant farmers and large farmers—for a long time. It will take a little time for it to bed in. The money is available; you just have to work out how to go and get it. The money is there. Noble Lords look as though they do not believe me, but it is. The options and choices are there. You have to go out and engage with that.
The noble Earl, Lord Russell, asked what had been done about an impact assessment. One has not been prepared for this instrument because it is not a regulatory provision. However, the Government have already published evidence providing in-depth assessments of the impact of removing direct payments. This includes the 2018 and 2019 farming evidence compendiums, our 2018 assessment of the impact of removing direct payments, and the 2021 and 2022 Agriculture in the United Kingdom evidence packs. If the noble Earl wants more information on that that I can supply, I would again be delighted to do so.