MPs slam Defra’s handling of new farming subsidy schemes, call for urgent clarity on environmental benefits

The report urges Defra to ensure the new schemes don't repeat the past mistakes of the EU's CAP. Pictured: A sheep farm in Yorkshire

A new report from MPs on the Public Accounts Committee (PAC), out today (9 January), is scrutinising the UK Government’s plans for replacing the EU’s Common Agricultural Policy (CAP) subsidy schemes after Brexit.

In January 2020, the UK’s post-Brexit Agriculture Bill was introduced, including measures to prevent farmers from being financially incentivized to over-produce at the expense of the environment. Instead, new subsidies were promised for farmers providing “public goods” such as healthy soil and improvements to biodiversity.

Defra has subsequently provided more information, in recent weeks, about the Basic Payment Scheme under the new Environmental Land Management (ELM) package, as well as the Local Nature Recovery scheme and Landscape Recovery scheme. These announcements were met with criticism, with trade groups, individual farmers and green groups all calling for more detailed information on the schemes’ operations and predicted outcomes, a faster rollout and higher payments.

The PAC’s new report compounds these calls to action, Building on consultations with the industry, the report warns that the Department for Food, the Environment and Rural Affairs (Defra) is “blindly optimistic” about the potential environmental outcomes of the new schemes and is overestimating farmers’ trust in the Government.

On the environmental side of things, the PAC states that Defra has not provided information about the metrics it will use to track environmental improvements, such as biodiversity gain or improved soil quality.

According to recent research from London’s Natural History Museum, the UK has an average of just 53% of its native wildlife intact, putting it in the bottom 10% of the world’s countries. Additionally, the UK’s soil organic matter is estimated to have fallen by 50% within the past 60 years, according to Future Food Solutions.

The report also accuses Defra of failing to deliver a proper forecast showing how the new schemes will help land use in the UK, which accounts for around 12% of national emissions, align with the long-term net-zero climate target. The PAC is calling for detailed information to be released this year.

Additionally, the report raises concerns that the schemes may simply lead to more food being imported to the UK – potentially from countries with lower eco-standards for food such as Australia, Brazil and the US. This is because farmers are being encouraged to free up land currently used for food production for other uses, like forest or hedgerow creation, and to switch to less intensive methods of food production. In 2020, the UK imported 47% of its food.

Defra has told the PAC, the report notes, 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”. However, MPs and the industry still want more detailed information on Defra’s plans for making this vision a reality. The PAC is calling for an explanation as a matter of urgency.

Social sustainability in the spotlight

As well as the environmental implications of the new schemes, the report calls into question the likely ramifications for the economy and for farmer welfare. It states that the average English farmer will see a 50% reduction in income from direct government payments by the 2024-5 financial year, which will weaken farmers’ trust in Defra and may be a death sentence for some businesses.

“As the report makes clear, without subsidies the average farm in England makes a net profit of just £22,800 a year including all labour and investment in businesses,” said the PAC’s deputy chair Sir Geoffrey Clifton-Brown. “The fear, therefore, for small and tenant farms who are operating on wafer-thin margins is that many will go out of business and the average size of farms will increase and some of the environmental benefits of ELMs will be lost.”

Moreover, the report argues that Defra will need to do more to convince farmers that it will deliver the schemes efficiently, thus safeguarding their incomes. It points to previous delays with payments and issues with “confusing” advice on eligibility and claims processes, warning that, at present, Defra’s approach could be “beset with many of the same issues that have undermined ambitious Government programmes in recent years”.

Environment Secretary George Eustice said Defra disagrees with many of the report’s points and would like the PAC to take better account of “recent developments”. 

Eustice said: “Farm incomes have improved significantly since the UK voted to leave the EU in 2016 and there will never be a better time to improve the way we reward farmers.

“In December, I set out comprehensive details of the Sustainable Farming Incentive including full payment rates and we published an in-depth analysis of UK food security and agricultural output.

“In the past week, we’ve shared further details of the Local Nature Recovery and Landscape Recovery schemes and announced a major increase in payment rates for those farmers involved in existing agri-environment schemes.”  

Defra has since published a blog listing its full responses to the report.

Sarah George

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