Plans for the scheme to replace the EU’s Common Agricultural Policy depend on changes in land use that bring both increased farm productivity and environmental benefits, but a new report from the House of Commons Public Accounts Committee says Defra itself concedes “its confidence in the scheme looks like blind optimism”.

According to the MPs who sit on the Committee, Defra has given no detail about how either the necessary productivity increases or environmental benefits will be brought about, nor how these will offset the new Environmental Land Management Scheme’s (ELM) dramatic effect on English farmers, who will see their income from direct payments reduce by more than half by 2024-25.

The EU’s CAP provided 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.

The report says the Scheme appears “beset with many of the same issues that have undermined ambitious Government programmes in recent years.” In addition, the lack of information from Defra early enough to allow farmers to plan their businesses and take advantage of the new opportunities “is causing anxiety in the sector, exacerbated by a historic lack of trust caused by the Department’s past failures in managing farm payments”. 

Defra 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 Committee says Defra has not established the metrics or objectives to enable it to demonstrate that the £2.4 billion a year it plans to spend on agricultural schemes is providing value for money, or contributing to government’s wider environmental goals including the statutory commitment to reach net-zero carbon economy by 2050.

Still "no clear plans, objectives or communications with those at the sharp end - farmers"

Sir Geoffrey Clifton-Brown, Deputy Chair of the Public Accounts Committee, said:

“We have known we were replacing the CAP since 2016 and still we see no clear plans, objectives or communications with those at the sharp end - farmers - in this multi-billion pound, radical overhaul of the way land is used and, more crucially, food is produced in this country.

“Farmers, especially the next generation of farmers who we will depend on to achieve our combined food production and environmental goals, have been left in the dark and it is simply wrong that Defra’s own failures of business planning should knock on to undermine the certainty crucial to a critical national sector.

“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. 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.  

“The UK is also already a large net importer of food and we heard in evidence that the ELMS’ vague ambition to ‘maximise the value to society of the landscape’ may in reality mean that increases further. The recent energy price crisis should be a salutary warning of the potential risks to the availability and affordability of food if the UK becomes even more reliant on food imports.”

Key conclusions and recommendations in the PAC report include:

Delays in delivery timetable

The Department is over-optimistic about what it will be able to achieve by when, resulting in repeated delays and uncertainty over the delivery timetable for ELM. 

The release of further information on what this entails has been very slow, with internal milestones subject to repeated delay.  The Department has no detailed plans beyond March 2022 and has not carried out a full assessment of whether it will be ready in time to launch the initial Sustainable Farming Initiative roll-out as planned.  

The PAC is calling for the Department to report to the Committee early in 2022, and annually thereafter, with an assessment of the deliverability of its plans for farming. This should include both the elements to be rolled out in the short term, and longer-term plans for the overall approach to land management in England. 

Lack of metrics and baseline data to assess progress

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.  

The Committee says Defra 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 also be required to 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. 

Insufficient understanding of how plans will impact farming and food production

The Report says the PAC is “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 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 Committee is calling on the Department to explain to the Committee as a matter of urgency to: show its forecasts both for changes in land use and resulting changes in payments to farmers, together with how it expects its farming programmes to affect food production and farm productivity in England.

The PAC wants Defra to 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.          

Failure to gain farmers’ trust in Defra's ability to successfully deliver the programme

The report says that Defra  has not yet done enough to gain farmers’ trust in its ability to successfully deliver the programme and that farmers’ confidence in the Department was severely damaged by a poor history of delivery under previous agricultural subsidy schemes. This situation has not been helped by the very slow release of information relating to the new schemes and 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,” the report says.

According to the MPs, 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.

In addition, a separate survey carried out by the Rural Payments Agency (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 Committee is also concerned that although the Department is seeking to improve its engagement with farmers, it was unable to provide details on how it will measure the success of its engagement.  The report is calling on Defra to review its entire communications strategy and report to the Committee by the end of March 2022 on the improvements it is making. 

Committee concerned that ELM will be too complex and bureaucratic

The Committee is 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. However, “stakeholders describe feeling very engaged, but are concerned that the Department is confusing activity for progress in the scheme’s design.”

The report warns that 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.

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, according to the Committee.

“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” the report states. 

The PAC wants the Department to "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

Click here to download the full report House of Commons Committee of Public Accounts Environmental Land Management Scheme