Select committee inquiry
Environmental Land Management Scheme
Closed
What the inquiry looked at
“The UK was part of the EU’s Common Agriculture Policy (CAP) framework for financial support to farmers and rural development funding for more than 40 years before Brexit. In 2019-20 farmers in England received over £1.8 billion in direct payment subsidies, based mainly on the amount of land farmed. In late 2021, Defra is introducing the Environmental Land Management scheme (ELM) to replace CAP. It will focus on improving the environment by paying farmers for certain environmental benefits, instead of offering payments based on the amount of land farmed. This means the ELM scheme will interact with government’s achieving wider environmental and climate change objectives. This inquiry builds on the Committee’s growing programme of work on public spending and the environment. Over two evidence sessions, the Committee will question representatives of farming and conservation groups, and senior officials at Defra and the Rural Payments Agency on whether the ELM is being well designed and managed to meet its objectives . If you have evidence on these questions please submit it here by 6pm on Wednesday 13 October 2021.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of Thirty-First Report - Environmental Land Management Scheme ↗
The Environmental Land Management scheme is an opportunity to reset the approach to land management in England and deliver benefits for the environment whilst also promoting a sustainable and productive farming sector, but the Scheme appears beset with many of the same issues that have undermined ambitious Government programmes in recent years.
The Scheme’s success depends on increases in farming productivity alongside changes in land use that will bring environmental benefits, but the Department has given no detail about how either the necessary productivity increases or environmental benefits will be brought about, nor how these will offset the Scheme’s dramatic effect on English farmers, who will see their income from direct payments reduce by more than half by 2024–25. The Department concedes its confidence in the scheme looks like blind optimism without the details of what it has planned, and the lack of information from the Department early enough to allow farmers to plan their businesses and take full advantage of the new opportunities the Department is causing anxiety in the sector, exacerbated by a historic lack of trust caused by the Department’s past failures in managing farm payments. The Department’s engagement with the farming sector is improving, but there is still a long way to go. The Department has also not explained how the Scheme’s changes in land use will not simply result in more food being imported, with the environmental impacts of food production being “exported” to countries with lower environmental standards.
The Department has not established robust baseline of metrics or clear objectives which would allow it to measure the success of the scheme. and assess whether the £2.4 billion it plans to spend on agricultural schemes during each year of this Parliament is providing value for money and contributing to government’s wider environmental goals, such as net-zero. We expect the Department to explain how it will ensure that it balances domestic food production and food imports as a result of the scheme and manages the risks of price rises and food imports from countries with lower environmental standards.
What the government said
The government responded on 1 March 2022. The deadline was 9 March 2022.
Summary written by Accountability Index from the government's response.
The government states that it agrees with the Committee's recommendations on the Environmental Land Management scheme, while saying it does "not accept that the plans are overly optimistic".
- On deliverability, the government will write to the Committee by 31 March 2022 with further details of Sustainable Farming Incentive plans, and will provide information on plans, progress and deliverability assessments annually from March 2022.
- On metrics, it agrees that clear metrics are important. It will report annually on delivery of targets within its statutory Environmental Improvement Plan, which "will include metrics about the performance and contribution of Environmental Land schemes".
- On the impact on food and farming, it is updating its analysis of the effects of removing direct payments and will publish the update by 31 March 2022.
- On complexity, it states it wrote to the Committee on 27 January as requested, and that it has updated Sustainable Farming Incentive standards and scheme rules following the pilot, including to make the scheme "more accessible to tenant farmers".
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 6 September 2021 to 9 March 2022. The dashed mark is the deadline Parliament records for the government's response.
- Oral evidence 2 sessions
- Report 9 Jan 2022
- Government response 1 Mar 2022
- Correspondence 4 letters
What it recommended 13 recommendations · 18 conclusions
2The Department has not established the metrics that it will need to determine whether ELM...
Recommended (the committee's words)
The Department has not established the metrics that it will need to determine whether ELM is contributing towards the government’s environmental goals. The Department has set out its high-level vision for ELM, which is to secure a range of positive environmental benefits and to help tackle some of the environmental challenges associated with agriculture. But it does not yet have detailed objectives for achieving this vision. The Department has committed to publishing these before Christmas, alongside details of the initial roll-out of SFI. However, the objectives will only apply to the current Parliament and will not include ELM’s contributions to long-term objectives, such as to net-zero. The Department is unable to explain how it intends to assess progress against environmental baselines, or even whether these baseline measures exist. In the early stages of ELM, the Department will award payments based on the amount of land on which specified environmental actions are being carried out, not on measuring the environmental benefits delivered through these actions. The Department expects that, for later elements, such as peatland restoration, it will be in a position to make greater use of baseline data. Recommendation: The Department should develop clear metrics, and establish robust baseline measures, to allow it to assess the operational effectiveness of ELM and ensure these are published before the start of roll-out in 2022. It should report against these metrics annually to enable Parliament and the public to determine what progress it is making towards meeting the objectives set out in the Government’s 25 Year Environment Plan.
3We are not convinced that the Department sufficiently understands how its environmental and productivity ambitions...
Recommended (the committee's words)
We are not convinced that the Department sufficiently understands how its environmental and productivity ambitions will impact the food and farming sector over the next decade. Farmers will be required to free up land currently used for food production to produce environmental benefits, for example converting farmland to forestry. This may result in an increase in food imports and possibly the 6 Environmental Land Management Scheme price of food into the UK, potentially exporting the UK’s environmental impacts through food being produced in other countries where environmental standards are lower. The Department asserts that environmental benefits can be delivered alongside improvements in farm productivity, and that these improvements will mean that, despite taking land out of production to deliver environmental benefits, farmers can produce more food from the remaining land. The Department also points to productivity improvements as helping to offset farmers’ loss of direct payments but has not presented evidence to support this. Smaller farms and tenant farmers are particularly exposed as they are more reliant on direct payments, which may lead to some going out of business resulting in larger agricultural holding sizes. Recommendation: The Department should urgently explain to the Committee, showing its forecasts both for changes in land use and resulting changes in payments to farmers, how it expects its farming programmes to affect food production and farm productivity in England and report annually to Parliament on the level of food price inflation together with any changes to the proportion of the food we consume that is produced in the UK, which was 53% in 2018.1
4Despite committing to delaying the early stages of SFI if either the Department or farmers...
Recommended (the committee's words)
Despite committing to delaying the early stages of SFI if either the Department or farmers were not ready, the Department has not specified what would trigger such a delay. Opinion within the farming sector is divided over whether the Department’s timetable is realistic or whether delaying the start of roll-out of the programme from 2022 is desirable. Some believe a delay is necessary to ensure that the scheme delivers for farmers and the environment and that farmers have the time they need to plan their businesses. The Tenant Farmers Association reminded us that farming requires long-term business planning, with crop rotations and breeding programmes put together over many years. But others highlight that progress to date has already been too slow, and that the right time to delay was 12 months ago. The Department acknowledges that there are delivery risks in the early stages and that it has yet to develop detailed delivery plans beyond March 2022. The Department has committed to making the first payments by Christmas 2022, and to not implementing any system changes that may put this timetable at risk. It asserts that, while there are risks to the delivery timetable that it needs to manage, it is on track and there is currently no need to delay. It told us it carries out reviews to identify any ‘red flags’ that may indicate the need for a delay due to the Department not being in a position to deliver the system, or farmers not being ready, but has not specified what these red flags are or the circumstances that would lead to a delay. Announcing a delay at short notice could be very damaging to farmers’ confidence in the scheme. Recommendation: In line with its Treasury Minute response, the Department should write to us by the end of February 2022 to confirm how it is assuring its own and farmers’ readiness at each stage of the Programme, and specify what would trigger a delay and when, allowing sufficient lead time to allow farmers to plan for a delayed launch. In
5The Department has not yet done enough to gain farmers’ trust in its ability to...
Recommended (the committee's words)
The Department has not yet done enough to gain farmers’ trust in its ability to successfully deliver the programme. Farmers’ confidence in the Department was severely damaged by a poor history of delivery under previous agricultural subsidy schemes, and the situation has not been helped by the very slow release of information relating to the new schemes: In December 2021, since our evidence session, the Department has published further information on how the Sustainable Farming Incentive will work in 2022, including payment rates for the first phase. However, farmers still lack detailed information on what Defra has planned for 2023 and 2024. The Department’s last-minute approach to providing information to farmers severely undermines their ability to plan for the long term to make sure their businesses are sustainable. Arrangements for the upcoming pilot were originally planned to be released a month and a half ahead of inviting expressions of interest, but were released with just two weeks’ notice. We are particularly concerned that the lack of information on what would be available to encourage young farmers into the industry means that young farmers will be less able to enter the industry. The Department admits its confidence in the scheme looks like blind optimism without the details of what it has planned, and has committed to providing, in Spring 2022, this detail for the Scheme’s roll-out in 2023 and 2024. In October 2020, the Department reported that only 30% of farmers had all or most of the information they needed to inform business planning and, although this figure had improved to 40% by April 2021, it is still alarmingly low. A separate survey carried out by the RPA from January to March 2021 found that only 4% of respondents were ‘very prepared’ for upcoming changes in farming and 37% ‘not at all prepared’. Worryingly, 41% of respondents to that survey said they did not know what SFI was. The Department released additional information in June 2021 whi
6The Department is not doing enough to support farmers through the transition to the new...
Recommended (the committee's words)
The Department is not doing enough to support farmers through the transition to the new schemes and alleviate any anxiety its plans are causing. The removal of direct payments would have reduced the average net profit of farms in England by 53% over the last three years to only £22,800. Without direct payments, over a third of farms would have made a loss and so be unsustainable as businesses if nothing else changed, such as income from new schemes or rent reductions. The Department asserts that farmers will be able to offset the loss of income from direct payments through improvements in productivity, alternative income streams and support from its schemes. The Department recognises that the changes it is introducing is causing farmers anxiety. The mental health of farmers is one of the biggest challenges currently facing the sector. While the Department works with farming charities and is introducing the Farming Resilience Fund, the focus of this is on providing business support and advice to handle changes, rather than directly 8 Environmental Land Management Scheme supporting the mental health of farmers. The Rural Payments Agency, which is responsible for administering payments to farmers, has committed to developing a ‘here to help’ relationship with farmers, but this could be hindered by ongoing trust issues. Recommendation: The Department should identify what further support is needed to help farmers during the transition, including where farmers will face significant business challenges in the short term. The Department should particularly set out what it will do to support farmer’s well-being through the transition.
7We are concerned that ELM will be too complex and bureaucratic, and will not cater...
Recommended (the committee's words)
We are concerned that ELM will be too complex and bureaucratic, and will not cater for the full range of farm types and circumstances. The Department has used a process of ‘co-design’ to develop the scheme, working closely with both stakeholders and a panel of farmers. Stakeholders describe feeling very engaged, but are concerned that the Department is confusing activity for progress in the scheme’s design. Even though the scheme is due to launch soon, organisations are struggling to support their members in understanding how they will be able to access the scheme and what provisions are being made for specific groups, such as tenant farmers. But farmers participating in the pilot report a lack of flexibility in the design of ELM, that they find the guidance very confusing, and that it is still not clear what they need to do to receive payment. There is a risk that small farmers will find any excessive bureaucracy especially challenging, so it is a particular concern that they are under-represented in the pilot. Only 30% of farms participating in the pilot are under 50 hectares compared to 61% of English farm businesses as a whole. Recommendation: The Department should urgently write to the Committee by the end of January 2022 to explain how it is using the current pilot of SFI to get feedback on the complexity of ELM, especially for smaller farm businesses and tenant farmers, and what changes it will make to alleviate any perceived complexity. Environmental Land Management Scheme 9 1 Progress in designing and introducing the scheme
1On the basis of a report by the Comptroller and Auditor General, we took evidence...
Concluded (the committee's words)
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Environment, Food & Rural Affairs (the Department) and the Rural Payments Agency.2 We also took evidence from the National Farmers’ Union, the Tenant Farmers Association, the Royal Society for the Protection of Birds, the Confederation of Forest Industries, and the University of Kent.
8The ELM scheme consists of three components: • The Sustainable Farming Incentive (SFI), which will...
Concluded (the committee's words)
The ELM scheme consists of three components: • The Sustainable Farming Incentive (SFI), which will pay farmers for actions to manage their land in an environmentally sustainable way; 2 C&AG’s Report, The Environmental Land Management scheme, Session 2021–22, HC 664, 15 September 2021 3 C&AG’s Report, para 1 - 3 4 Committee of Public Accounts, Progress on the Common Agricultural Policy Delivery Programme, Fortieth Report of Session 2016–17, HC 766,10 February 2017 5 Q 43; C&AG’s Report, para 1 – 3; Department for Environment, Food & Rural Affairs, A Green Future: Our 25 Year Plan to Improve the Environment, January 2018 6 C&AG’s Report, para 1.10 10 Environmental Land Management Scheme • Local Nature Recovery, which will pay farmers for more complex actions that deliver benefits at a local level and encourage collaboration between farmers; • Landscape Recovery, which will support large-scale projects to deliver landscape and ecosystem recovery through long-term land-use change projects.
9The Department has committed to making the first payments under SFI22 by Christmas 2022.
Concluded (the committee's words)
The Department has committed to making the first payments under SFI22 by Christmas 2022. Despite the tight timescales and continuing uncertainty around the launch of SFI22 next year, the stakeholders we heard from were divided on whether a delay to the roll-out and to the reduction in direct payments was necessary. The National Farmers’ Union recommended a delay to ensure that the scheme is ready to work for both farmers and the environment. In its written evidence it said: “The NFU does not believe that Defra should press ahead with its current timetable to transition when its new agriculture support schemes simply aren’t ready. Direct payments should only be phased out when there are fully funded accessible new schemes ready for farmers to apply for.”20 The Confederation of Forest Industries similarly told us that a slight delay would be helpful in ensuring that necessary consultations about change and transformation in the way land is used in the UK were complete.21
10In contrast, the RSPB told us that there had already been a lot of unnecessary...
Concluded (the committee's words)
In contrast, the RSPB told us that there had already been a lot of unnecessary delay to the roll-out of the scheme so far, which added to the urgency of getting the scheme right quickly. It explained that the roll-out of SFI22 needed to make sure it was sending a clear signal as to the direction of travel. The Tenant Farmers Association highlighted that it asked for a delay 12 months ago but no longer thought that now was the right time for it. It instead said it was important that the scheme moved forward and that the Department ensured that there was communication over scheme details, payment rates and how the Department and the Rural Payments Agency, which is responsible for administering payments, are going to deliver the scheme for farmers.22 The Wildlife and Countryside Link, in its written evidence, also told us that, “despite challenges, there must not be a delay in the design, communication and roll-out of Environmental Land Management”. It explained that this was important to minimise the risk that Government will fail to meet its environmental objectives, and also to lessen the risk of disenfranchisement from farmers and land managers that could result from delaying.23
11Given the serious problems the Committee has reported on previous agricultural payment schemes, and the...
Concluded (the committee's words)
Given the serious problems the Committee has reported on previous agricultural payment schemes, and the impacts of COVID-19, we asked the Department whether it had considered a delay, and whether its timetable for delivering SFI22 included any contingency to allow this as some stakeholders had asked. The Department assured us that it would “make sure there is not a problem” and it would not launch a scheme that was going to be a “delivery car crash”.24 It told us that its main contingency was to ensure that it was delivering things that worked was through its testing process and that it undertook “continuous and regular reviews” which had been “really helpful in moving us along to make us most likely to be successful”.25 The Department confirmed that it would not introduce something that it had not tested and that it was managing the scheme to ensure that elements such as IT changes were only implemented if they did not put the Christmas 2022 deadline at risk. It confirmed that it could push back the deadline if its reviews raised a red flag for delivery of the scheme, but that this had not yet been the case. Its current view of the risks to delivery was that a delay was not necessary as, while there were risks 20 Q 26; EMS0004 – Environmental Land Management Scheme, The National Farmers Union, 22 October 2021 21 Q 27 22 Qq 27–28 23 EMS0009 – Environmental Land Management Scheme, Wildlife and Countryside Link, 22 October 2021 24 Qq 57, 95, 127 25 Qq 57, 127 Environmental Land Management Scheme 13 for it to manage, it was on track. It recognised, however, that if its reviews showed that either it was not in a position to deliver SFI22 as planned, or to make payments ahead of Christmas, or if it was clear that farmers, having seen the final details of the scheme, were not ready “to engage with the scheme”, this would “raise a question about what the contingency is”.26
12The NAO found that Department does not have detailed delivery plans for the programme beyond...
Recommended (the committee's words)
The NAO found that Department does not have detailed delivery plans for the programme beyond March 2022, and has not carried out an overall assessment to demonstrate that SFI22 is deliverable.27 The Department told us that its current assessment was that it would be able to deliver to the timeframes it had set out and that farmers would be ready to join the scheme and deliver what was required of them. It accepted that, if either of those were to change it would have to think again, and that it was “pragmatic in that respect”, but that there was nothing in its current assessment that suggested it could not proceed with the timetable as planned.28 We urged the Department to be cautious and to undertake any contingency planning that it could in order to avoid the scheme negatively impacting on farmers as they transition into it, and asked it to let us know as soon as it was aware of any issues.29 26 Qq 56–57, 95, 127 27 C&AG’s Report paras 13, 18 28 Q 95 29 Q 127 14 Environmental Land Management Scheme 2 Engagement with stakeholders
13The Department for Environment, Food & Rural Affairs has a history of failure when developing...
Concluded (the committee's words)
The Department for Environment, Food & Rural Affairs has a history of failure when developing systems to support subsidy payments for farmers, and this history means that it is starting with a low level of trust from the sector.30 In 2016, the previous Committee examined the Department’s delivery of new systems and processes to support the implementation of the Common Agricultural Policy, which was itself intended to address past failures. It found that this has been unsuccessful in many respects, and that repeated failures in the delivery of the CAP meant that payments to farmers had been delayed at a time when their cashflow was already stretched.31 The previous Committee examined the programme again in 2017 and found that the extent of the Rural Payments Agency’s (the RPA’s) failure to pay farmers in England on time and in full was clear. The RPA paid only 38% of farmers on 1 December 2015, the first day when payments could be made, compared to 90% in previous years. By the end of March 2016, 16% of farmers still had not received any payment. It concluded that in addition to the RPA being unable to pay farmers the money they were due on time, the Department had not assessed the impact of this on farmers and the rural community.32 The Department recognised that the trust of farmers would be critical to the success of its new schemes.33 Designing the scheme with farmers
14The Department is developing the ELM scheme through a system of ‘co-design’, which they have...
Concluded (the committee's words)
The Department is developing the ELM scheme through a system of ‘co-design’, which they have now started to refer to as “co-creation”. This is working collaboratively with farmers and others to obtain continuous feedback and input as they iterate the design of the programme.34 Both the National Farmers’ Union and the Tenant Farmers Association told us that they felt very engaged in the process, but both also raised concerns about the effectiveness of the Department’s approach. The National Farmers’ Union highlighted the importance of ensuring that farmers’ first engagement with the scheme in 2022 is a positive one, to keep them engaged into the future. It told us that it did not feel that there was a co-ordinated approach to the scheme’s development and that co-design process was creating “a little bit of chaos”, explaining that “everyone is chipping in, and nobody really knows exactly where scheme design is getting to”.35 It described Defra’s approach to co- design as “scatter-gun” and asserted that co-design cannot replace consultation, and that the Department’s plans were lacking in detail, particularly around the later components of the scheme, Local Nature Recovery and Landscape Recovery.36 The Tenant Farmers Association felt that it was inputting heavily into the design but, as it was not seeing specific details from the Department, it could not support its members in understanding what is planned. It also told us that, due to the focus on the co-design strategy, the Department was mistaking activity for progress in the scheme design.37 In addition to engaging with farming organisations on co-designing the scheme, the Department told us that it was 30 Q 12; Committee of Public Accounts, Progress on the Common Agricultural Policy Delivery Programme, Fortieth Report of Session 2016–17, HC 766,10 February 2017 31 Committee of Public Accounts, The Common Agricultural Policy Delivery Programme, Twenty-sixth Report of Session 2015–16, HC 643, 2 March 2016 32 Committ
15An important test of whether the Department’s approach will be successful is the pilot for...
Concluded (the committee's words)
An important test of whether the Department’s approach will be successful is the pilot for SFI, for which applications opened in July 2021. The SFI pilot will test how farmers respond to the scheme’s design and systems, the approach to farm inspections and compliance, and ease of use of current systems and technical guidance.40 The Department told us that 938 farmers had applied to join the pilot, in line with its target of around 1,000 participants out of 218,000 farm holdings,41 and that this included good representation of different types, sizes and location of farms.42 It also told us that these participation rates were a sign that the SFI offer was attractive to small farmers and tenant farmers.43 The Department wrote to us after our evidence session to explain that, of those taking part in the pilot, 22% were tenant farmers. This is in line with the proportion of the farming sector they represent at 26%.44 However the data also showed that 30% (283) of pilot participants were on farms under 50 hectares.45 In comparison, published data show that more than double this (61%) of English farm businesses as a whole are below 50 hectares.46 The Department committed to providing us with a breakdown of the pilot participants, including the different geographies represented, but its letter did not include this analysis so we do not yet know how representative the pilot is in terms of farm location.47
16The Tenant Farmers Association told us that its members participating in the pilot were finding...
Recommended (the committee's words)
The Tenant Farmers Association told us that its members participating in the pilot were finding the scheme guidance confusing, with an onus on farmers to decide what they think is best to enable the delivery of public goods.48 The National Farmers’ Union told us that it had received similar feedback from farmers that the scheme felt complicated and very prescriptive, and that it expected farmers to find delivering the scheme very challenging. It also highlighted that some pilot participants were taking part to learn what the scheme looked like, rather than because of the incentives to participate. The National Farmers’ Union also told us that the current incentives will not be seen favourably by farm businesses that use intensive practices, and that it will not make sense for these farms to go into the scheme.49 We noted that some of the Department’s past schemes have been complicated and asked what it was doing to ensure that ELM is user-friendly. The Department told us that it was taking on board feedback about what works and does not work to try to ensure that the scheme is “as accessible as possible”.50 The Department and 38 Qq 62–63, 110 39 EMS0010 – Environmental Land Management Scheme, Royal Society for the Protection of Birds (RSPB), 1 November 2021 40 C&AG’s Report, para 2.3 41 Department for Environment, Food and Rural Affairs, The Future Farming and Environment Evidence Compendium, September 2019 42 Q 123 43 Q 60 44 Update on the Sustainable Farming Incentive pilot - Future Farming (blog.gov.uk) 45 Letter from Tamara Finkelstein CB, Department for Environment, Food & Rural Affairs, to Dame Meg Hillier MP, Chair, Public Accounts Committee, 5 November 2021 46 Department for Environment, Food & Rural Affairs, Agriculture in the United Kingdom 2020, July 2021 47 Q 123 48 Q 12 49 Q 30 50 Q 53 16 Environmental Land Management Scheme RPA told us that they were working on the system for SFI22 including a new front end to make it more accessible and user friendly,
17As part of the new scheme, direct payments to farmers will reduce by 55% by...
Concluded (the committee's words)
As part of the new scheme, direct payments to farmers will reduce by 55% by 2024– 25 before being phased out completely. The NAO found that the Department expects the reduction in direct payments and introduction of its replacement arrangements to have a significant impact on profits for many farmers. Analysis of the Farm Business Survey shows that many farmers are reliant on direct payments to support their business. Without direct payments, and with no other changes (such as income from new schemes or rent reductions), the average farm in England would have an annual net profit to the farmer of only £22,800, a fall of 53% compared to their average profit for previous years. Over a third (38%) of farmers would make a loss without direct payments.52 The Department asserted that farmers can manage the impact of these reductions through a range of business improvements. It expected that this would include both increasing income, such as through participation in schemes and other approaches such as diversification or exports, and reducing costs through improving productivity and reducing waste.53
18We asked the Department what farmers were feeling about the new scheme and the reduction...
Concluded (the committee's words)
We asked the Department what farmers were feeling about the new scheme and the reduction in direct payments. The Department recognised that while some saw the scheme as a “welcome opportunity to embrace a new future”, some feel very threatened by it and were anxious about the future.54 The RPA accepted that both it and the Department had a role to help assuage that anxiety and “encourage people to embrace the fact that by changing farming practice there might be a different way forward”.55 The Department stressed that the schemes it is introducing are intended to be widely available to all types of farms. We highlighted, however, that being available is not the same as these schemes providing sufficient support for farms to stay in business.56
19The mental health of farmers is one of the biggest challenges currently facing the sector.
Recommended (the committee's words)
The mental health of farmers is one of the biggest challenges currently facing the sector. In October 2021, the Royal Agricultural Benevolent Institution reported that almost half of the farming community (47%) were experiencing some form of anxiety, and 36% were probably or possibly depressed.57 In light of the Department’s response, we asked about the mental health of farmers and the support the Department planned to provide to the farming sector during the transition to the new scheme. The Department pointed to the Farming Resilience Fund as a key source of support. This is a scheme to offer advice to farmers so they can understand best farming practice, how they can improve their business planning and boost productivity. However, the Department’s description indicated that the fund does not offer direct support to struggling farmers, only direct them towards other schemes. The Department also highlighted its work with farming charities, and the 51 Q 130 52 C&AG’s report paras 6, 1.4, 1.13, Figure 4 53 Q 105 54 Qq 92–94, 116 55 Q 94 56 Qq 59–60 57 Royal Agricultural Benevolent Institution, The Big Farming Survey 2021, 15 October 2021 Environmental Land Management Scheme 17 RPA emphasised that, instead of its past focus on IT systems, performance and payments, it saw its role as ‘here to help’. It wanted to have a closer relationship with the farmers themselves and made a commitment to do whatever it could to help farmers.58 Supporting farmers through the transition
20The Department views 2021 as year one of seven in its efforts to regain farmers’...
Concluded (the committee's words)
The Department views 2021 as year one of seven in its efforts to regain farmers’ trust, but the NAO highlighted that it had had over three years since the first publication of its plans in February 2018 to start regaining the confidence of the farming industry. Farmers have been looking for increased clarity and detail on the Department’s proposals since then. The NAO found that where information has been released, it has been with very limited lead time: arrangements for the SFI pilot were released over three months later than planned, leaving farmers just two weeks to decide whether to take part.59 We highlighted concerns from members’ farming constituents that they did not yet have details of next year’s schemes, and that they were facing very condensed planning. As the Tenant Farmers Association told us, farming requires long-term business planning, with crop rotations and breeding programmes put together over many years. It explained that the lack of detail on schemes has had a particularly significant effect on tenant farmers, leaving them unable to develop business plans or prepare tenancy applications.
21The Tenant Farmers Association also told us that young farmers had been promised that there...
Recommended (the committee's words)
The Tenant Farmers Association also told us that young farmers had been promised that there would be a scheme specifically to support them to enter the farming industry, but that it had not seen this come forward. It asserted that the information that had been made available so far was “so lacking in detail that there is no way they can plan their businesses and put together a tenancy application”.60 We therefore asked witnesses about the risk that young farmers would leave the industry because they were unable to wait to see what would happen to the sector in the longer term. The National Farmers’ Union recognised this concern and told us about young farmers who were considering moving to Scotland, where there is greater certainty over the support on offer. The Confederation of Forest Industries also highlighted that a lack of clarity for the long term and how plans fit into wider net-zero targets makes it very difficult for farmers and other land managers to make sure their businesses are sustainable. It told us that this was “really worrying [as] … we desperately need the next generation to come through” and being able to deliver a sustainable farming industry for the future relied on it being profitable as well.61 The Department recognised that “providing more detail as soon as we can with good and wide communication is critical” and that it was seeking to do this.62
22The Department acknowledged that without the detail of plans, its confidence in the scheme could...
Concluded (the committee's words)
The Department acknowledged that without the detail of plans, its confidence in the scheme could appear to be “just blind optimism as far as farmers are concerned”.63 Since then, the Department has published further information on how the Sustainable Farming Incentive will work in 2022, including payment rates for the first phase.64 The Department also explained that, while it thought the confidence of the sector will increase as more detail is released, the greatest impact will occur when farmers see schemes working and 58 Qq 61, 118 59 C&AG’s report para 3.10 60 Qq 9–10 61 Qq 11, 16 62 Q 87 63 Q 62 64 Department for Environment, Food & Rural Affairs, Sustainable Farming Incentive: how the scheme will work in 2022, 2 December 2021 18 Environmental Land Management Scheme payments happening on time. The Department also told us that it will publish additional information about SFI22 in November, and that information on the standards being offered in SFI for 2023 and 2024 will be published early next year, which is late in the day to give farmers sufficient lead-in time to change their systems.65
23The Department asserted that farmer confidence and trust in its plans is improving.
Recommended (the committee's words)
The Department asserted that farmer confidence and trust in its plans is improving. The Farmer Opinion Tracker survey carried out in October 2020 found that only 30% of farmers said they had all or most of the information they needed to plan their business. The Department told us that its more recent survey, carried out in April 2021, showed this figure had improved to 40%. It expected the results to have further improved since then due to the release of detailed information about the SFI pilot over the summer. However, it did not have any data on farmer opinions after this information was released. A separate survey carried out by the RPA from January to March 2021 found that only 4% of respondents were ‘very prepared’ for upcoming changes in farming and 37% ‘not at all prepared’. In addition, 41% of respondents to that survey said they did not know what SFI was.66 In view of these dire statistics the Department needs to radically review their communication strategy to inform the whole of the agricultural industry of the benefits and impacts of these changes proposed under ELM. 65 Qq 46–47, 63, 89 66 Qq 99–101; C&AG’s report para 3.16, Figure 7 Environmental Land Management Scheme 19 3 The long-term impact of the scheme Measuring the success of the scheme
24Although the Department has set out its high-level vision for ELM through six ‘outcomes’ set...
Concluded (the committee's words)
Although the Department has set out its high-level vision for ELM through six ‘outcomes’ set out in the 25-Year Environment Plan, it has not yet defined the specific objectives that it will be using to measure ELM’s success against this vision. HM Treasury’s Green Book highlights the importance of having up to five or six SMART (specific, measurable, achievable, realistic and time-limited) objectives for all programmes. The Department’s outline business case for the Programme sets out 24 SMART objectives, but that these are described as provisional and indicative, and the estimated cost of delivering them in full is significantly above the annual budget for ELM. Clear objectives are needed for effective appraisal, planning, monitoring and evaluation.67 The National Farmers’ Union similarly highlighted the importance of having clear objectives in designing the scheme. It explained that they were necessary to set the parameters for scheme design and that it had seen various standards within SFI being reworked multiple times due to key decisions not having been made.68
25The NAO recommended that the Department should urgently agree a clear, realistic and logical set...
Concluded (the committee's words)
The NAO recommended that the Department should urgently agree a clear, realistic and logical set of strategic objectives for ELM. We asked when we could expect these to be in place. The Department also acknowledged the importance of setting these objectives. It told us that it had developed a draft set of measurable outcomes, and it was currently discussing with Ministers how to prioritise these with a view to publishing them by Christmas 2021. The Department told us that this work was progressing and that there was more that it would publish in the coming months. However, these outcomes cover the current Parliament, rather than setting out how they will contribute to longer-term government initiatives such as net zero. It told us, however, that questions about its detailed plans for spending and investment in the next Parliament, and in 2024 and beyond, were still open and while it planned to answer these, it did not consider them as urgent.69
26We told the Department that we were concerned about the lack of baseline data, and...
Concluded (the committee's words)
We told the Department that we were concerned about the lack of baseline data, and asked what data it will use to measure environmental improvements.70 In its written evidence, the Green Alliance emphasised the importance of being able to measure outcomes in order to demonstrate value for money. It recommended that the Department should “develop standardised approaches for measuring outcomes and progress towards achieving overall objectives, and make sure they are adequately monitored to prevent potential environmental damage due to mistakes in execution.”71 We observed that in previous schemes payments were based on field sizes, which are easily measured, whereas in the new system it was difficult to tell what is going to be measured and what baseline it will be measured from, without accurate baseline data. The Department asserted that it had a very good understanding of the baseline data with respect to land. It explained that, for the soil standard, the first component of the scheme to be rolled out as part of SFI22, payments will be per hectare of land on which specified actions are carried out. The Department told us that this was because it believes it already had a detailed 67 C&AG’s report para 1.17 – 1.18 68 Q 3 69 Qq 43–44 70 Q 76 71 EMS0003 – Environmental Land Management Scheme, Green Alliance, 22 October 2021 20 Environmental Land Management Scheme understanding of the activity necessary to deliver the environmental benefits intended, and therefore a baseline was not necessary to assess whether a required outcome has been achieved. It explained that later scheme components, such as peatland restoration, will benefit from a more detailed assessment of the current condition of the land in order to measure progress and the impact of the scheme. The Department told us that it had a good understanding of the environmental quality of different areas of land, and that it planned to use this to identify actions that can be taken on specific farms through the L
27ELM and other agricultural policies are expected to contribute to government’s environmental objectives, such as...
Concluded (the committee's words)
ELM and other agricultural policies are expected to contribute to government’s environmental objectives, such as species abundance and the 25-Year Environment Plan. However, the RSPB highlighted that there is no overarching vision for agriculture in England or for how ELM will contribute to these wider objectives.73 The recently published net-zero strategy highlighted ELM as a key driver of net-zero,74 but the National Farmers’ Union told us that it had not yet seen this reflected in the development of the scheme. It suggested that the ambition may be too great and questioned whether the ELM budget was sufficient to deliver on all of the environmental objectives attributed to it.75 The Confederation of Forest Industries agreed that there was a lack of clarity about how ELM fits in with other schemes and with Government commitments around net zero and tree-planting targets.76 The expected impact of the scheme on the farming sector
28In addition to the six environmental goals set out in the 25-Year Environment Plan, the...
Recommended (the committee's words)
In addition to the six environmental goals set out in the 25-Year Environment Plan, the Department expects the Future Farming and Countryside Programme to help improve farm productivity. It explained that its work to improve productivity would focus on the resilience of the sector and enabling “the least productive farmers to prosper”.77 However the RSPB told us that the detail presented by the Department so far only related to SFI, which was only one of three components of the planned scheme, and that it lacked information on the rest of the scheme or the expected wider impact on farming in the UK. It explained that other factors were also fundamentally important to the viability of farming including market supply chains, equity, fairness, advice and trade agreements.78
29We asked whether the design of ELM meant that land would be taken out of...
Recommended (the committee's words)
We asked whether the design of ELM meant that land would be taken out of production and the UK would therefore either need to import more food or food prices would rise as a result. Professor Rob Fraser told us that the UK was a large net importer of food, importing around £18 billion of food each year and exporting less than £5 billion. He explained that, while the UK could import food and energy, it could not import environmental benefits. He explained that as a result of ELM’s ambition to “maximise the value to society of the landscape in this country”, the UK was likely to become increasingly reliant on food imports.79 The National Farmers’ Union told us it was important for the UK to consider its self-sufficiency in food production to avoid having to import food from countries with 72 Qq 76–78, 82 73 Q 3 74 Department for Business, Energy & Industrial Strategy, Net Zero Strategy: Build Back Greener, October 2021, https://www.gov.uk/government/publications/net-zero-strategy 75 Q 18 76 Q 15 77 Q 60 78 Q 13 79 Qq 21–22 Environmental Land Management Scheme 21 lower environmental standards and the risk of there being no net improvement for the environment.80 Our recent report on net zero highlighted a risk in the short term that policies to reduce emissions transfers them abroad instead,81 and the National Farmers’ Union emphasised that “we cannot simply export our environmental conscience”.82
30The Department told us that it did not think that ELM’s focus on environmental management...
Concluded (the committee's words)
The Department told us that it did not think that ELM’s focus on environmental management would result in the UK importing more food. It explained that the scheme was also designed to boost productivity so that, despite taking land out of production to deliver environmental benefits, farmers can produce more food from the remaining land. It said that this would potentially free up some land to convert to forestry without the need to import any more food. This was echoed by the RSPB, which told us that delivering environmental benefits could also support long-term viable farming and directly improve farm businesses through increased yield. The Department said that there was nothing in its approach or programme that suggested that in 10 years’ time the UK would be importing more food.83
31The Tenant Farmers Association told us that the introduction of the new scheme was a...
Concluded (the committee's words)
The Tenant Farmers Association told us that the introduction of the new scheme was a major concern for its members, and that it would be important that the scheme contained options to meet the specific needs of both tenant farmers and of small farms. It emphasised that these were not the same, as there are some large tenant farms, and not all small farms are tenanted.84 We asked the Department what the likely impact of the scheme would be for smaller farms or tenanted farms and whether taking land out of food production would mean these farms would go out of business. The Department told us that the size of the farm “does not of itself inform the efficiency of the farm”.85 David Kennedy, Director-General for Food, Farming and Biodiversity, expanded on this by stating that the Department’s objective was “that every farm can now be viable in the future through the farming transition”,86 and that the Department’s evidence and analysis showed that this was possible. The Department also explained that, although small farms and tenant farmers were more reliant, on average, on direct payments, the scheme would not just take direct payments away, but the focus on improving productivity and resilience would mean that every farm would have an opportunity to prosper in the future. It similarly told us that the uptake of the pilot suggested that the scheme would be attractive to small farms and to tenant farmers.87 80 Q 23 81 Committee of Public Accounts, Achieving Net Zero, Forty-Sixth Report of Session 2019–21, HC 935, 5 March 2021 82 Q 23 83 Qq 23, 61, 134 84 Qq 4–5 85 Qq 59–60 86 Q60 87 Qq 60, 111 22 Environmental Land Management Scheme
Evidence
Oral evidence sessions 2
- 21 Oct 2021Environmental Land Management Scheme5 witnesses: Caroline Ayre, Jenna Hegarty, Lynette Steel, Professor Rob Fraser, Tom Bradshawparliament.uk ↗
- 21 Oct 2021Environmental Land Management Scheme8 witnesses: David Kennedy, Jenna Hegarty, Lynette Steel, Maria Bellissimo, Paul Caldwell, Professor Rob Fraser, Tamara Finkelstein, Tom Bradshawparliament.uk ↗
Who gave evidence 9 witnesses
- Jenna HegartyDeputy-Director for Policy and Advocacy, Royal Society for Protection of Birds (RSPB)2 sessions
- Lynette SteelFarm Policy Adviser, Tenants Farmers Association2 sessions
- Professor Rob FraserEmeritus Professor of Agricultural Economics, University of Kent2 sessions
- Tom BradshawPresident, National Farmers' Union (NFU)2 sessions
- Caroline AyreEngland National Manager, Confederation of Forest Industries
- David KennedyDirector General for Food, Biosecurity and Trade, Department for Environment, Food and Rural Affairs
- Maria BellissimoPolicy lead, Confederation of Forest Industries
- Paul CaldwellChief Executive Officer, Rural Payments Agency
- Tamara FinkelsteinPermanent Secretary, Department for Environment, Food and Rural Affairs
Correspondence 4 letters
- 9 Mar 2022Correspondence from Tamara Finkelstein, Permanent Secretary, Department for Environment, Food and Rural Affairs, re Response to Recommendation 4 of ELM PAC report, dated 1 March 2022
- 8 Feb 2022Correspondence from Tamara Finkelstein, Permanent Secretary, Department for Environment, Food and Rural Affairs, re Update on long-term environment objectives, dated 9 December 2021
- 31 Jan 2022Correspondence from Tamara Finkelstein, Permanent Secretary, Department for Environment, Food and Rural Affairs, re Response to Recommendation 7 of ELM PAC report, dated 27 January 2022
- 16 Nov 2021Correspondence from Tamara Finkelstein, Permanent Secretary, Department for Environment, Food and Rural Affairs, re PAC: Follow-Up Response, dated 5 November 2021