In a report released today, the state auditor said that the department has “not yet established objectives to support its high-level vision” for the English successor to the EU-derived Common Agricultural Policy payment system. This vision is, broadly, to secure environmental benefits and reduce the environmental impacts of agriculture.
However, Treasury guidance requires “another level of more specific strategic policy objectives to turn the vision into an implementable programme”, the report notes. While the outline business case for ELM has 24 such objectives, “these are described as provisional and indicative” it adds – and will remain so until legally binding targets set under the Environment Bill are finalised and after key decisions are made decarbonisation policy, according to DEFRA.
It describes ELM as a “crucial part” of DEFRA’s plans to fulfil the aims of the 25-Year Environment Plan and makes its contribution to achieving net zero emissions by 2050. It is expected to be launched in full in 2024, with direct payments to be phased out entirely by 2027. This is expected to have a “significant impact” on farm profits: two in five would have made a loss over 2017-20 without them, says the report.
The new funding will be split across three streams:
The Sustainable Farming Incentive (SFI) will pay for basic sustainable land management at individual farms.
Local Nature Recovery will pay for more complex actions, encouraging collaboration between farms.
Landscape Recovery will work at a larger scale, supporting long-term projects such as peatland restoration.
But detailed plans to deliver the scheme beyond March 2022 are incomplete. “The need for improvement in DEFRA’s forward planning has been a recurrent issue,” says the NAO.
There are already concerns about the SFI pilots that will begin next month. DEFRA had expected between 5,000 and 10,000 farms to express an interest in participating, out of 44,000 that were eligible. But only 2,178 came forward, a response rate of 5% that “threatens DEFRA’s ability to achieve its environmental ambitions”, partly due to the limited range of holdings that have taken the leap.
“DEFRA is confident that the level of interest provides a “healthy pipeline” to test the many aspects of the scheme but has not shown us any analysis to underpin this confidence,” the NAO notes. “if it does not go smoothly, the longer-term reputational damage to ELM and its full launch in 2024 could be substantial, especially given the current low level of farmers’ trust in DEFRA (discussed in Part Three). A mismanaged launch could therefore reduce longer-term-participation in ELM and the environmental benefits it produces,” the report warns.
Staffing comes in for further criticism. Although the situation has since improved, late last year DEFRA reported that it has only half of the staff it needs to deliver the scheme, a situation that had been exacerbated by Brexit and the pandemic. Vacancies fell to only 12% in July, though the department “remains concerned about resources”, according to the report – staffing needs for the later phases of piloting ELM have not yet been established.
The NAO is also unimpressed with the way that DEFRA has managed the work it is conducting with its delivery partners, namely the Environment Agency, the Forestry Commission, Natural England, the Joint Nature Conservation Committee and the Rural Payments Agency (RPA). Other than the RPA, it says all are “frustrated about the lack of clarity over their expected involvement” in designing ELM, with uncertainty about what exactly they are expected to do, how many staff are needed and what funding they will receive for the job. The situation was exacerbated by Natural England being informed of its budget only a few days before the start of the new financial year, the report adds.
All said that DEFRA had “not fully used their expertise”, though there have been recent improvements in DEFRA’s engagement with them, according to the NAO.
Among the report’s recommendations are to:
“Urgently agree” strategic objectives for ELM
Closely monitor the feasibility of delivering the pilot schemes and consider what could trigger delays.
Establish why interest in joining the pilots was worse than expected and learn from that.
Draw up a clear plan to achieve administrative savings.
Develop detailed measures to combat fraud and error.
“The success of the Environmental Land Management scheme depends on securing participation from farmers. DEFRA has not yet set detailed objectives for the scheme and has been slow to provide information on what farmers can expect from it. DEFRA must now develop detailed plans for the scheme’s delivery if it is to achieve its intended environmental goals,” said NAO head Gareth Davies.
“As the NAO points out, the environment department is designing these schemes without a clear set of objectives. As other sectors make progress, it’s unsurprising that agriculture and land use is the furthest away from being on track to meet our climate targets. The public deserve to know that their money is being spent wisely to sequester carbon, improve habitats and help restore wildlife,” said Green Alliance senior policy adviser Jim Elliott.
Environment secretary George Eustice said: “Our future agricultural policy will move away from the arbitrary land subsidies and top down bureaucracy that epitomised the EU era. We will incentivise sustainable farming practices and reward farmers for the environmental assets on their land. The NAO recognises that we have made good progress but we will be addressing some areas where there have been misunderstandings in our full response to the report.”