Agriculture Bill

Written evidence submitted by Paul Gingell (AB74)

Summary

1. I work as a self-employed dry stone waller in the Eden Valley, Cumbria. I am concerned that the Agriculture Bill - and the debates that I have read - fail to adequately address the importance of dry stone walls in the landscape, the costs of maintaining these valued features, and the financial viability of those who work in this specialist sector.

2. Moreover, the bill fails to redress the fundamental inequalities in farming subsidies, and thereby risks reducing the very diversity and innovation needed to increase the economic output of our rural areas.

3. My experience is limited to predominantly upland grazing areas.

The value of dry stone walls

4. Here in Cumbria, as in many other parts, we are blessed with a rich and visible heritage of field walls. They are features of international repute and, to this day, remain the biggest change agriculture in this country has ever witnessed. It would be difficult to overstate the value of these features in terms of tourism alone, to say nothing of their cultural importance.

Quality and retaining skills

5. Dry stone walls are not permanent structures. Well built walls constructed with suitable stone can survive in serviceable condition for several hundred years. A poorly constructed wall might not last 20 years. With many existing walls being very old or in poor condition, poor quality repairs made now will have serious implications for maintenance of these important landscapes in the relatively near future.

6. As part of the Government’s consultation on the future of agriculture, Defra has held up the Hedgerows & Boundaries Grant scheme as a potential example of future environmental land management funding. That scheme currently sets a flat rate of £25/m. Typical prices in this area are £30-35/m. Both figures are a poor reflection of the skill, effort and time required to build a sound wall (see appendix two).

7. Faced with untenable rates of pay in farming, a substantial proportion of wallers are diversifying into construction work (stone-facing, paving, etc.). Unlike farmers, who receive subsidies to persevere with unprofitable work, for dry stone wallers, this is one-way traffic. Several organisations have made efforts to encourage more newcomers to learn the craft of dry stone walling, yet without a fair income these efforts are in vein.

8. Historically, particularly during the enclosures, farmers repaid the cost of wall building in tithes or rent and therefore there was a natural incentive for walls to be soundly constructed. The effect of walling by grants, as with all forms of farming subsidies, is to insulate farmers from the consequences of the quality of work they undertake or commission. There is no obvious mechanism in the Agriculture Bill to ensure a move away from payments made regardless of quality or outcome, and towards a system where both farmers and the state have vested interest, ownership and responsibilities.

The Agriculture Bill

9. The Bill makes provisions for the withdrawal of direct payments to farmers and instating a system whereby farmers are supported financially to deliver public goods. In taking such a course of action the following points would seem relevant:

9.1 On many farms, income from agriculture is negligible - particularly in upland grazing settings. High levels of investment in machinery and buildings play a significant role in this.

9.2 Parliament will have to consider how to set a fair value for the delivery of public goods, and in the likely event that there is a discrepancy between that fair price and the level of support that farmers have become accustomed to, parliament or the relevant minister would then have to consider the merits paying above a fair price.

9.3 Not all current recipients of subsidies are the same. Clearly there is a different set of moral considerations around supporting well managed farm businesses (of any size) compared with the necessity of supporting poorly run farms, lifestyle farmers or those investing in land for its subsidy income or tax opportunities.

9.4 In the case of support for walling repairs, at present, grants are available help with the cost of wall repairs as a capital expense, with the farmer normally making up the shortfall out their wider income. Currently, there is no direct financial gain for the farmer.

9.5 With that wider income removed, future support would need to either:

9.5a cover the full cost of the work, with the expectation that the farmers own income must come from some other public goods, or

9.5b cover the cost of the work, plus provide a fair income for the farmer.

9.6 Given that it is unlikely many farmers would be willing or able to do more than the most rudimentary wall repairs themselves, any future subsidy system as a whole would need to provide an appropriate income for both the farmer and the waller.

10. This approach also has implications for land values. Land prices are strongly influenced by their potential as a source of public subsidies. Clearly there would be little value in paying a farmer ongoing support to maintain a well built wall (since, if well built, it should give many decades of trouble free service). Therefore, logically, once a wall has been repaired, that land would loose that element of its earnings potential for many years, and consequently see a reduction in value.

Equality and fairness in agricultural subsidies

11. Currently, the best mechanism we have for ensuring public investment is well spent is the number and diversity of farms - with sufficient diversity the motives of good farmers offsets the worst practices on other farms.

12. Many farms in our area have benefited from a range of extraordinary public financing. This includes annual payments often in excess of £50,000 (see appendix one), boosted area payments for rough grazing, and substantial unplanned payments such as from foot and mouth or the restructuring of grazing rights on MoD land.

13. All of these have allowed farmers to make investments in machinery, buildings and land purchases, at a cost which would normally be well-beyond the means of new entrants, smaller farm enterprises or indeed any self-sustaining business. My concern is that any future state funding will, for administrative purposes, be based on units of land area-thus further benefiting existing larger farms. This would undermining the intended purposes of removing the existing basic payment scheme and result in continued contraction of farm numbers.

Innovation in Farming

14. For many years farm ownership has become an attractive, stable occupation, compared to wider forms of employment where job uncertainty and variable wage growth has increased. Increasing mechanization, reduced labour inputs and high levels of subsidized income have significantly offset the traditional drawbacks of farming - namely, the need to be continually present on the farm, and the high impact of natural conditions.

15. This level of security, combined with the high asset values accrued in farm ownership, has favoured incumbents over the benefits of competition and innovation.

16. It has long been said that farmers need support and encouragement to develop and disseminate best practices and innovation. I would argue that - financial speaking - no such impediment exists. Properly conducted, the removal of production targets should have facilitated significant reorganizations in farming as well as increasing profitability. The reasons it didn’t owes more to demographic and social factors than the financial ability to do so.

17. The UK has a varied and renowned array of academic and research organisations with the capabilities to delivery affordable improvements in farming. Tackling the root causes of the lack of innovation in farming is vital, if money is to be freed up to fund public goods.

Protecting public funding

18. I would suggest that the public investment in farming made to date, and going forward, could be better safeguarded by the following measures:

18.1 Removing inheritance tax relief on agricultural land. Given the low natural profitability of many farm businesses, the majority of recent farm expansions have very likely been made possible by state funding. This situation increases land prices and leads to the spending of substantial public funds without any realistic form of vetting or competitive tender. In turn, this absence of open competition is probably the single biggest cause of lack of innovation that farming faces.

18.2 I can see no reason why land purchased primarily with public funds should be exempt from tax when the value of that land is determined in large part by the fact of its exemption and its value as a source of subsidies.

18.3 Altering capital expenditure allowances rules, to ensure tax relief can only be reclaimed once that expenditure has been shown to generate a positive return on investment. Significant amounts of farm capital expenditure are currently made with a view to reducing tax bills and this leads to ad-hoc investment in high-input farming practices, which often result in farms becoming more reliant on subsidies.

18.4 Investment in new technology is, of course, important, and carries an element of risk. Exceptions could be made where investments are made through research-led business development schemes or trails, and this Bill could be a vehicle for that.

18.5 Ensuring that, where possible, subsidies for public goods are based on an equivalent of work undertaken, rather than as area-based compensation for a notional income lost. Many current subsidy schemes over estimate the amount farmers could earn if they were farming that land commercially, or the amount of work required to implement the schemes. This results in unnecessary spending of tax payers money, and has little relevance to the wider public who are generally more accustomed to working on an effort-equals-reward basis.

Appendix One: Farm incomes

A1.1. During the recent house of commons debate (10th October) several members expressed views on what they saw as the low income of many farmers. I am concerned that farm income data is being misinterpreted. As an example, here in Appleby (postcode area CA16, year 2017), there were 183 recipients of CAP payments, ranging from £220 to £228,000. The total subsidy paid was £4,428,920 and the average therefore £24,201.

A1.2. It would be self-evident that there are not 183 farms in the Appleby area. Instead there are four types of subsidy recipients:

A1.2a Conventional medium to large farm businesses;

A1.2b Investment landholders (i.e. those purchasing land with a view to gaining from subsidy income or inheritance tax opportunities);

A1.2c Part-time small-holders (either using alternative earnings to supplement their farming enterprises or lifestyle, or using net subsidy profit to subsidize non-farming income)

A1.2d Very small land parcel holders.

A1.3. If one discounts groups B and D (on the grounds of merely being a by-product of the subsidy regime) and account for group C on a pro rata basis, then the average payment (and consequently income) rises considerably and matches the affluence in farming that many see on the ground. In fact, around 75% of the total payments goes to 60 or so farms, with an average subsidy of £53,500.

Appendix Two: Common quality issues in dry stone wall repairs

A2.1 Several factors affect the quality and durability of dry stone wall repairs, of which the principle ones are listed below:

A2.2 In almost all case the foundation stones need to be dug out and reset to horizontal (walls rarely fail with their footings still in good condition). The reason foundation stones fail (even in well built walls) is weight distribution. Walls are heaviest on their external faces, because the faces are built of large, dense stone, whereas the centre of the wall is filled with smaller infill, which inevitably contains more void spaces.

A2.3 This extra weight forces the front edge of the foundations to sink into the ground more quickly and causes the stones above to slip off over time.

A2.4 Digging out and resetting the foundations typically takes between a quarter and a third of the total build time, which is why many people omit the task. Building on poor foundations generally results in premature failure.

A2.5 Stones used in wall building should be placed with their long axis running into the wall. Running stones into the wall diverts the weight of the wall face into the centre of the wall, allowing more even pressure to be exerted on the foundations. Much of the modern farm walling that I see, involves running stones with their long axis along the wall (a practice known as ‘trace walling’). This is done purely to save time; trace-walling one stone and roughly back-filling the void behind is significantly quicker than finding two walling stones and running their long axis’ into the wall.

A2.6 Trace-walling severely reduces the strength of a wall, and usually results in the wall collapsing rather than slowly settling over time.

November 2018

 

Prepared 20th November 2018