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Defra are falling into the CAP trap with ELM

Tom Lancaster, Head of Farming and Land Management Policy at RSPB, reflects on the policy announcements at Oxford Farming Conference and looks ahead at what’s to come

January 2023

‘Public money for public goods’ is the defining principle of Defra’s farm payment reforms. Or at least it was.

Those who pay closer attention than most, will have noticed the absence of that phrase from Defra statements of late. ‘And so what?’ you might ask. It’s just jargon anyway, and what matters is what Defra do, not the branding they use.

A quick look at recent announcements would suggest though that the move away from public goods is more than just semantic. The introduction of a ‘management fee’ by the Farming Minister at Oxford earlier this month is a material breach of this guiding principle. Rather than money for something it is, in reality, money for nothing (or not much if we’re being kind). As a farmer applying for the Sustainable Farming Incentive, you will now get up to £1000 in the first year, and then up to £1000 each year in the second and third year of your agreement - £20 per ha on the first 50ha.

The genesis of this payment was to try and compensate small farms for the higher costs they face, which could be justified. But this management fee will be received by all, and as yet there’s no facility in place to limit it to one payment per holding. Expect canny land agents to be submitting lots of ~50ha applications this year. The SFI has been designed as an easy scheme to apply for, and Defra are (rightly) proud of how quick the process is. The idea then that it costs £1000 to do so is ludicrous, and based on evidence from much more complex schemes such as Higher Level Stewardship.

More to the point, what this betrays is a degree of panic in Defra that the SFI isn’t achieving the uptake they need to meet the political driver to give farmers public money. In this regard they are falling into the same trap that the Common Agricultural Policy (CAP) is stuck in - that getting money to farmers is the main purpose, and uptake for its own sake the main measure of success.

What is getting lost in all this is what the money is actually paying for. The ELM schemes will need to do much of the heavy lifting to meet Climate and Environment Act targets. They’ll need to drive progress against the Paris Agreement, Glasgow Climate Pact and recently agreed Kunming-Montreal Global Biodiversity Framework, in which the UK government played a positive and leading role.

Yet there’s no clear plan from Defra as to what contribution they will make, or how scheme design changes announced at Oxford (and more expected at the end of this month) will help make much needed progress. In this regard, we are again at risk of following the CAP, given the persistent failure of the EU to structurally or transparently align their agriculture policy with their environmental targets.

Defra have suggested this quantification of ELMs contribution could come in the Environmental Improvement Plan (A.K.A the 25 year environment plan) update expected at the end of January, but we’re not holding our breath. Partly because this would box Ministers into an ambitious scheme design that would cut across the political need to give farmers easy money. At the moment that is their overriding priority, not getting value for that money or setting out a clear and joined up plan for what ELM will achieve by 2030.

Some might accuse me of hyperbole. ‘It’s only a £1000 a year, what’s the big deal’, you might say (although with a target of 70% uptake, that’s still up to £56m a year, more than the entire budget for the oversubscribed Landscape Recovery scheme). But as with previous schemes, we’ve always got to be wary of precedent. At the moment, this ‘management fee’ only applies to the SFI, but you can guarantee that the farming unions will be asking, if you can justify £1000 per year for the SFI, surely those in CS (a more complicated, ambitious scheme) should get more? And with the management fee based on a very generous interpretation of transaction costs, Defra will also be learning from the CAP in the EU’s liberal approach to applying World Trade Organisation rules about what qualifies as a green box compliant farm payment, under the WTO Agreement on Agriculture.

Losing this discipline, and the guiding light that the public money for public goods principle affords, alongside a poorly defined connection with Defra’s wider environmental objectives, suggests that Defra are losing sight of what these reforms are for. Or at least that they don’t – and perhaps have never had – a clear plan of how to get to the end point of a set of schemes that are both popular and effective.

Instead, they are stuck in a cycle of announcements designed to shore up the popularity of the schemes in the short term, at the risk of undermining their long-term effectiveness, setting precedents in the process that will be hard for them to row back from.

With so many competing demands on public expenditure, this risks undermining the investment case for the schemes, and ultimately the public and political support for spending public money on farming and environmental land management at all.

Tom Lancaster is Head of Farming and Land Management Policy at RSPB

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The opinions expressed in this blog are the authors' and not necessarily those of the wider Link membership.