House of Commons - Public Accounts

Select Committee on Public Accounts Thirty-Ninth Report

IMPACT OF THE SCHEME

(a) Take-up

5. The Environmentally Sensitive Areas Scheme was introduced in 1987. By the end of March 1996, total take up under the Scheme covered 46 per cent of the eligible land across all 22 designated areas. However there were wide variations in take-up between different Environmentally Sensitive Areas, ranging from 10 per cent on the Essex Coast to 94 per cent in West Penwith in Cornwall. Twelve of the Environmentally Sensitive Areas had take-up rates below 50 per cent, including four of the first ten areas launched in 1987 and 1988.[2]

6. The Committee asked the Ministry why there had been such a low rate of take up in some Areas and whether the impact of the Scheme had been less than intended. The Ministry said it was probably true that take up had been less than they would have wished. They identified three constraints: participation in the Scheme is wholly voluntary for farmers; European Union regulations require that compensation for income foregone should not be greater than a given level; and the environmental benefits gained should give reasonable good value for money.[3]

7. The Ministry's evidence shows that the take-up of agreements was much slower than predicted by the Ministry, particularly in the Environmentally Sensitive Areas launched in 1993 and 1994. This was partly due to the unprecedented profitability of farming in the early 1990s. Six Environmentally Sensitive Areas were to have been launched in 1992 (Stage III) and a further six in 1993 (Stage IV); in the event both were launched a year later than planned. For Stage IV, Ministers decided that the timing should be arranged so that initial payments were made in April 1995.[4]

8. When asked about the lack of provision to maintain or enhance the conditions of marshes, ponds and woods, the Ministry said they were introducing specific measures for the management of such features. This involved more explicit guidance than was given in the past.[5] On low take up in river valley, coastal and wetland areas and the threat to habitats there, the Ministry again cited the constraints of value for money, limitation by income foregone and the voluntary nature of the scheme. They did agree that it might be worth greater concentration to see if they could encourage take-up in those areas.[6] They confirmed that habitat loss within an Environmentally Sensitive Area occurred where there was low take-up.[7]

(b) Farmer motivation

9. There is a large spread of Scheme payment rates varying from more than 20 per cent higher than the income foregone level, down to more than 20 per cent lower. The Ministry said they apply a complete range of considerations in setting payment levels; they took a view on income foregone and environmental benefits, as well as the ease with which farmers were attracted to the Scheme.[8] Variations between calculations of income foregone and payment levels changed in line with farming incomes. Revisions to the level of payments took place every two years.[9] The Ministry assured the Committee that calculations of income foregone are based on the most obvious alternative to environmentally friendly practice in the area examined.[10]

10. The Committee were surprised by the number of farmers who were willing to participate in the Scheme and to receive levels of payments which were below that which the Ministry calculated as the income foregone.[11] The Ministry thought this might be due to farmers taking a long term view of the benefits of the Scheme. While a survey had identified the level of payments as the main consideration, it was not the only factor.[12] In their experience, the best incentive was where neighbours had taken up the Scheme; as a result other farmers in that area were also likely to participate.[13]

11. In the light of these factors, the Committee asked about the steps taken by the Ministry to research the motivation of farmers,[14] to build up experience in how to create incentives and to carry out sensitivity analysis.[15] The Ministry's evidence from a survey in 1996 was that farmers were motivated by both monetary and non-monetary considerations.[16] The Ministry would want to look again at the non financial incentives in due course, but would not want to repeat their socio-economic survey too readily. The change in farm incomes meant that significant reductions in payment levels might be required over the coming years and might swamp the impact of other factors.[17] However the Ministry said that, with reductions in farm incomes, if farmers were motivated solely by financial matters, the rate of take up might be expected to increase significantly; but this would be counteracted by the reductions in levels of payment.[18]

12. Performance measures for the Scheme were not introduced until seven years after it began and some of them can be measured only partially because the criteria are too imprecise, for example by referring to a target of "no increase in the risk of damage" or to percentages rather than actual numbers. The Comptroller and Auditor General recommended that each indicator should include the criteria for evaluating success, should be capable of measurement, and should clearly reflect what is needed to achieve defined levels of environmental benefit.[19]

13. The Committee asked why there had been delay in setting performance measures and what was being done to determine the impact of the Scheme more precisely. The Ministry said that environmental monitoring had been in place since the beginning. However, as this was a completely new scheme, in some cases the information was limited and it was very difficult to draw up meaningful indicators until the Ministry considered they had sufficient experience and knowledge. The performance indicators when first set were pioneering and ambitious. In the event some of them were very difficult to measure properly. The Ministry were now developing new performance indicators in line with the recommendations in the Comptroller and Auditor General's report.[20] When pressed on specific examples, the Ministry said that they would be monitoring chalk grassland measures; and on dry stone walls would be setting clearer numerical targets in terms of length as opposed to a percentage.[21]

(d) Arable farming

14. The Committee asked the Ministry why there were certain omissions in the Scheme, such as little or no provision to encourage environmentally friendly arable farming, for example by reducing the use of fertilisers and pesticides.[22] The Ministry did not see encouraging the reduced use of fertilisers and pesticides within the Scheme as a particularly useful contribution, given that there was already an organic scheme. However, the Ministry had created special arable agreements in two Environmentally Sensitive Areas to encourage the provision of stubble over winter which attracted birds. They had also just launched an Arable Stewardship Scheme.[23]

15. The level of payments under the Arable Area Payments Scheme dwarfs that available for Environmentally Sensitive Areas.[24] In light of this, the Committee asked the Ministry if the Scheme had in fact had a dramatic effect on environmental protection and conservation. The Ministry said that it was widely regarded as a landmark, a view shared by environmental organisations, and that it had contributed substantially towards protecting areas under threat from intensive farming methods. However, it had been very much more successful in livestock areas than in arable farming areas. The Scheme would be a very expensive one if it were to achieve a lot in the latter area.[25]

16. When pressed further on progress since 1987, the Ministry agreed that it was very difficult for the Environmentally Sensitive Areas Scheme to compete against what had been unprecedented prospects for arable farming. The Comptroller and Auditor General's report came at the end of three years of unprecedented prosperity for British farming, probably since the Napoleonic Wars. The situation now might very well be different. The Committee asked the Ministry if there were any way to reduce arable payments during good times and increase them in bad ones. The Ministry told us that the Government's position is that arable area payments should be cut significantly and ultimately abolished.[26]

(e) Conclusions

17. The Committee are concerned that the impact of the Scheme has not been as great as it might have been as measured by levels of take-up. We recognise the voluntary nature of the Scheme and of course public money should never be spent unnecessarily. However, it seemed to the Committee that the Ministry might have been more proactive in marketing the Scheme to farmers where take up has been low, for example in river valley, coastal and wetland areas.

18. It is surprising that the Ministry did not have plans to update their research about what motivates farmers to participate in the Scheme and why take up remains poor. Given the continuing emphasis on environmentally friendly practices in agriculture, a better understanding on these issues is important to the Ministry. We note that they have undertaken opinion surveys; but they need to consolidate this work by identifying those incentives shown to be successful in encouraging farmers to join in the Scheme while at the same time representing good value for money.

19. We are dismayed that, ten years after the start of the Scheme, the Ministry have still not developed an adequate set of measurable targets for judging the success of the Scheme. Environmental monitoring has been in place but this is no substitute for performance criteria of the kind being introduced for chalk grassland and dry stone walls to produce evidence of the maintenance or enhancement of these features. We urge the Ministry to give greater concentration to developing similar ways of measuring the achievement of targets and impact of the Scheme.

20. We note that the Ministry have made provision for environmentally friendly arable farming in two Environmentally Sensitive Areas. The Committee look to the Ministry to review the results of these provisions with a view to extending them into other Scheme Areas where there is arable farming, in order to increase take-up and environmental benefits.

2 C&AG's report (HC 120 of Session 1997-98), para 2.11 Back

3 Qs 1, 44, 47-48 Back

4 Evidence, Appendix 1, p20, paras 23-28 Back

5 Q 2 Back

6 Qs 4-5 Back

7 Q 53 Back

8 Q 89 Back

9 Qs 91, 124 Back

10 Q 125 Back

11 C&AG's report (HC 120 of Session 1997-98), paras 97-98, Figure 26 Back

12 Qs 62, 64 Back

13 Q 93 Back