4Public money for public goods
59.The Government’s paper proposes that the new agricultural policy will be underpinned by the payment of public money for the provision of public goods. It suggests that environmental public goods could include improved soil health, improved water quality, better air quality, increased biodiversity, climate change mitigation and enhanced beauty, heritage and engagement. It also asks whether other matters in the public good should be supported such as animal welfare, promoting agricultural productivity, public access and supporting rural and upland resilience.121
60.Many organisations supported the premise of the consultation paper’s proposal that public money should be used to pay for public goods.122 However, as with many of the proposals in the paper, we heard complaints at the Government’s lack of detail. In particular there were questions about which goods will be funded and how much money will be available to deliver them. Phil Stocker from Dairy UK questioned the level of compensation that farmers would receive:
There are plenty of things that dairy farmers could do to provide public goods. The question is what the nature of compensation that farmers would receive to undertake these measures would be. The Defra consultation document is very largely silent on this.123
61.The CLA told us it is vital the new agricultural system reflects “the commercial reality” of decisions on land management and warned that some farmers may not wish to participate.124 Among agricultural witnesses, there was agreement that “active farmers” should benefit,125 though we also heard that this should not be to the detriment of those that are managing land for public goods. The National Trust told us: “Public money should be paid to those who can best provide such public goods, and should avoid an unhelpful restriction of funding to ‘active farmers’”.126
62.Many organisations criticised the lack of discussion of food security and food production in the consultation.127 Subsidising food production is strictly constrained by World Trade Organization rules, yet decoupled payments and agri-environment schemes would be allowed providing specific criteria are met.128 A number of organisations highlighted the importance of integrated approaches that deliver sustainably produced food, rather than bolt-on conservation projects.129 Professor Dwyer told us:
We should not be seeing this as a situation where there is a trade-off between public support for keeping people managing the land and food production and profitable food production. The two things have to work together. They have to be synergistic.130
What public goods should be supported?
63.The consultation paper asks respondents to rate public goods in order of preference which we heard could risk over-simplifying the complexity of the natural world. The Institution of Environmental Sciences described it as a misunderstanding of “the multi-faceted nature of the natural and human systems involved”131 and Ellie Brodie from The Wildlife Trusts told us it was “a little dangerous” and projects should seek instead to deliver multiple benefits in the public good.132
64.Most witnesses supported the model to include wider outcomes (those that are “in the public good”) such as improved animal health and welfare, public health and healthy food production.133
Animal health and welfare
65.During our inquiry, many organisations supported the idea that improved animal welfare should be funded by the new policy as it is in the public good.134 Guy Smith from the NFU told us that high animal welfare standards should be supported by the Government’s policy:
I would argue that food produced to relatively high standards, in terms of animal welfare, environmental responsibility and traceability and safety, is a public good. Any sensible Government should look to secure an element of that in its policy”.135
66.Compassion in World Farming agreed that animal welfare should be supported and suggested the consultation paper was too cautious: “We are concerned that Defra’s paper cautiously states that subsidies “could” be used to support improved animal welfare rather than making a clear commitment to so doing”.136 Which? noted in its evidence the high public support for animal welfare and suggested that it could be trialled during the transition period:
As well as piloting environmental land management schemes during this transition period, there is also a need to understand and test how issues that matter to consumers, such as higher food safety, quality and welfare standards can also be incentivised and achieved.137
67.Animal health was also suggested to be a public good. The National Pig Association noted that “protecting and improving animal health is a vitally important public good and that Government should place equal value on this as it does on environmental protection”.138 Healthy animals tend to require fewer antimicrobial treatments. Anglian Water Services supported the inclusion of animal health standards and welfare, noting “these often have direct links to pollution from animal wastes and, levels of chemicals including antibiotics in raw waters”.139
Public health and healthy food
68.We heard from many organisations that the consultation was a missed opportunity to include improvements to wider issues of public health.140 Professor Lang from the Centre for Food Policy at City, University of London told us: “It is the total failure of this paper”.141 The UK is increasingly suffering from diet-related diseases such as diabetes, some cancers and heart disease. The most recent Government eating guidelines recommend seven portions of fruit and vegetables per day, which is almost double current consumption.142 Defra figures show the UK produces just 17 per cent of the fruit consumed domestically and 55 per cent of vegetables, with the rest made up from imports totalling £5.9 billion per annum.143 Some of these imports could not be grown in the UK (e.g. pineapples, avocados), yet others which could be home grown (e.g. brassicas, mushrooms, lettuce) have seen large drops in domestic production.144
69.Some witnesses suggested that public health145 or the provision of healthy, safe and affordable food is a public good and should be funded as such.146 Sustain told us: “recognition of public health as a public good could help pave the way for beneficial improvements to farming standards, investment of public money and publicly supported research and development”.147
70.Others considered that improved public health could be achieved through an expansion of UK horticulture.148 Professor Lang argued: “We are not producing apples and pears and horticulture that we could and should. We need it for public health reasons”.149 He continued that this could be achieved through funding for research and education: “We need to have a huge investment of time and energy, colleges, infrastructural support and research into encouraging a completely new and revitalised British horticulture industry”.150
71.Vicki Hird from Sustain suggested that outside of the CAP there is more scope to diversify production in horticulture:
We can repair that harm that the CAP did by investing and helping farmers to convert to top fruits, to other types of field vegetables, etc. That would diversify production and provide what I think is the 30 million new portions of fruit and veg that we need to deliver the seven a day that we actually need to be eating.151
72.Others pointed out that another way to improve public health would be for the consultation to include a commitment to healthy food in public procurement.152 The Food Foundation suggested that local authorities and other public bodies should be supported to increase the proportion of fruit and vegetables as well as the volume they procure from local growers.153 Vicki Hird from Sustain explained:
We need to make procurement work, which is entirely absent from this paper. I find it absolutely extraordinary that we [the Government] did not grasp the opportunity that public procurement could provide for championing an integrated healthy welfare market for our producers in the UK and the local market potentially. There are lots of gaps but there is potential.154
73.The Government’s view on support for food production is that farmers already receive a return for producing food, so they should be better rewarded through the market, not through public funding.155 When we asked the Minister whether the new policy would support food production, he explained that this was not a role for public money:
I think the right thing to do is to reward farmers from the public purse for the public goods they deliver, and to expect the market to pay a fair price for food, which reflects the cost of production, rather than tax the consumers, give a subsidy to farmers and then have food at an undervalue. We have to try to be clear about what we are trying to achieve with public money.156
74.We were concerned that the paper’s apparent emphasis on “public goods” made little mention of integrating food production alongside environmental protection. We questioned the Minister on this matter. He responded:
We want to support and incentivise a different approach to farm husbandry, in particular soil husbandry but also livestock husbandry. It is not about saying that there is farming and there is the environment, and they are in a perpetual antagonism to one other; it is about saying that we want to support a different approach to farm husbandry that delivers for the environment but also delivers highly profitable farm businesses and nutritious food.157
75.We heard widespread support for the inclusion of animal health and welfare within the new policy of public money for public goods. We recommend that Defra commits to exploring how the funding of animal health and welfare as public goods could be achieved through trials during the agricultural transition period.
76.The consultation paper lacks discussion of wider food policy and has failed to link agricultural policy to wider public health goals and reducing diet-related diseases. Healthy food makes a wider contribution to public health, which is in the public good and we recommend it should be supported as such under the new model of awarding payments to farmers.
77.Defra should work to bring forward changes to Government Buying Standards to ensure greater use of healthy, affordable, British food in Government procurement. Defra should report back to us on progress in this area in six months’ time.
Coordination of the new environmental land management system
78.In order to deliver the new public money for public goods model, a new environmental land management system will be created. The consultation paper does not make clear how this will be coordinated and delivered. It does not indicate whether existing organisations such as the Environment Agency, Natural England or the Rural Payments Agency will have a role, individually or working together, or whether an altogether new organisation will need to be created. It merely suggests a number of possible mechanisms: “new environmental land management schemes, funding for collaborative projects, capital grants, a ‘user friendly’ design and innovative mechanisms”.158
79.During our inquiry we heard a range of ideas for how the new system could be coordinated:
- A single agency “could lead a national framework for delivering environmental policy outcomes”;159
- delivery may be most appropriate at the ecosystem level, connecting agri-environment schemes on a larger spatial scale;160
- a ‘buyers’ and a ‘sellers’ network could be established which would echo the direction of the Catchment Based Approach and 25 year plan with strategic supra-catchment oversight;161
- a contractual basis for delivering public goods, on a multi-annual basis to provide certainty;162
- “an agreed national framework should inform local delivery”. “The lead agency should also have a role in funding pilots and novel approaches, such as reverse auctions and direct commissioning of specific outcomes, in some instances devolving delivery to local partnerships”;163and
- “at the local level a joint ‘committee’ could be made up of local community reps, farmers and landowners, park authorities, conservation bodies, private sector and planners, in facilitated meetings, who would devise a management plan for the area to be signed off by the Secretary of State”.164
80.Generally, witnesses suggested the system should be on a contractual basis where environmental outcomes are bought by the Government or public-sector organisation from farmers and land owners. Richard Hebditch from the National Trust told us about a pilot project in North Yorkshire using a ‘payments for outcomes’ approach: “that is a good pilot for the kind of approach Defra seem to be moving towards”.165 We heard that payment for outcomes is supported by both farming and environmental organisations.166
81.Others noted that the new scheme must be simple and not overly bureaucratic.167 Guy Smith from the NFU pointed out: “It is absolutely imperative that the agri-environment schemes going forward are attractive to farmers, not just financially but also in terms of faff, paperwork, clarity or confidence in them”.168 Wildlife and Countryside Link suggested the Government must learn lessons from the delivery of past agri-environment schemes: “Unwieldy IT systems, mapping issues, poor or inconsistent guidance, disproportionate evidence requirements and a lack of administrative and advisory staff have all impacted delivery”.169 It recommended “a future policy [with] clear and consistent guidance, an appropriately resourced and expert delivery body, excellent advice, an effective IT system and proportionate evidence requirements”.170 The NFU also stressed the need for “fit for purpose, well tested, IT systems”.171
Piloting the new system
82.The consultation paper outlined that the Government will pilot new delivery mechanisms during the agricultural transition to inform the environment land management scheme:
Piloting will continue during the ‘agricultural transition’ period, alongside further testing to roll out results-based payments for additional environmental land management options. The results of the first pilots will inform the design and approach for a new environmental land management system to be introduced from 2022.172
83.Some organisations suggested that the pilot projects should consider how to deliver wider Government targets. For example, The Wildlife Trusts suggested that pilots of public goods should deliver commitments under the 25 year environment plan. Ellie Brodie said: “I would make a pitch for [the funding] to be used to really explore how our new environmental landmanagement system could deliver nature’s recovery through a nature recovery network”.173
84.Tom Lancaster from RSPB warned that that there is a risk that in piloting new approaches, Defra overlooks the agri-environment schemes that have already been successful in England:
We know a lot of what works. There could be temptation to invest too much time in some fairly bluesky pilots and thus neglect the need to actually build that environmental land management system now, if it is going to come on stream in 2022.174
85.Arlin Rickard from The Rivers Trust told us about the wealth of existing schemes being undertaken in this area:
… there is some very good practice taking place already. For instance, many of the rivers trusts and certainly catchment partnerships are working in many cases with water companies acting as the kind of ethical broker, working with a wide range of farmers.175
86.The TFA, Sustain and CPRE suggested using Natural England’s National Character Areas profiles as a starting point for the new system.176 These identify opportunities for environmental improvement and provide an established spatial framework for targeting spending to support environmental outcomes. George Dunn outlined that they could be developed into a contractual system: “It is not beyond the wit of policymakers to use those frameworks that already exist to develop the types of contractual arrangement”.177 The Soil Association highlighted that existing certification schemes could be built upon:
A key advantage for government from a delivery point of view is that organic is already defined, regulated, and has credible inspection and certification bodies in place. LEAF and RSPCA Assured have these advantages too, though not regulated/codified in the way that organic is. Building on existing certification schemes makes sense in many ways for government.178
87.Given the consultation did not specify a delivery body, we asked the Minister for some clarity on who he envisaged coordinating and delivering schemes. He told us:
Fundamentally, the basis of this is that the landowner or the person in control of the land, the tenant perhaps, has to be responsible for delivering these schemes. […] Could we have a bigger role for some of these other organisations [NGOs]? One idea that we have floated and are looking at is whether you could have, for instance, UKAS-accredited schemes, run by bodies such as the Rivers Trust. We have the LEAF scheme, which exists already. We have a track record with the Soil Association schemes, which we recognise and use as a basis for payment in some instances. You might even have local schemes run by the wildlife trusts, which farmers might be rewarded for participating in. There could be a role for some of those bodies to help in designing local schemes that deliver for local objectives.179
88.We also pressed the Minister on how lessons might be learnt from implementation of CAP. He told us that the new scheme will be much less complex in its approach:
These things are all part of the EU design. They, as I said, are hopelessly bureaucratic and very dysfunctional. We need to make clear that, as we design a new scheme, we are going to move away from that type of approach, and focus on outcomes and the delivery of outcomes …
We have a long track record of these types of schemes. We know what certain things deliver, and we will obviously be looking closely at that data as we design the new scheme.180
89.We welcome the Minister’s assurance that the new environmental land management scheme will look to extend the success of existing schemes, such as those accredited by UKAS, and involve a wide range of organisations with experience of delivering environmental stewardship. We are further pleased to hear that the new land management system will be delivery-focused and non-bureaucratic. However, Defra has a huge task to ensure a lead agency and national framework are in place to start delivering its policy based on public goods.
90.In response to this Report, Defra must assess which current public bodies are suitable to provide the coordination of its new environmental land management system. Given past performance of delivering rural payments and stewardship schemes, this must include an assessment of what additional skills and resources this body will require.
The role of regulation
91.The consultation paper notes that outside of the Common Agricultural Policy the Government will be able to set its own regulation and enforcement mechanisms. It proposes moving away from disproportionate enforcement that can heavily penalise some farmers for minor errors: “We can design an integrated inspection and enforcement regime that is more targeted and proportionate”.181 Defra is already piloting approaches that are “outcome-focussed, risk-based and proportionate”.182
92.Witnesses described to us the impact of withdrawing subsidies without having adequate regulations in place to prevent a ‘race to the bottom’, drawing on the experience in New Zealand in the 1980s. Angela Francis told us that light-handed regulation caused “devastating” environmental damage:183
[Intensified farming] led to a 30% increase in nitrates in the rivers. It led to e-coli in some water courses in the farming areas that had previously been swimmable and part of recreational use in New Zealand.184
93.Witnesses also stressed that it is vital to uphold a minimum regulatory baseline185 as not all farmers will participate in the new environmental land management scheme.186 Arlin Rickard from The Rivers Trust told us that the threat of enforcement can be enough to force action, but capital grants would also be needed to generate real improvements: “To be blunt, you need the threat, if you like, of enforcement to back up the voluntary measures. If those voluntary measures can be bought along with some supporting grant, either a capital grant or a revenue grant, then you can make progress very quickly”.187
94.Witnesses also stressed that there needs to be adequate resourcing for regulators, Tom Lancaster from RSPB told us: “If you do not enforce a regulation, you may as well not have it. […] the Environment Agency does not have any resources at all to even advise on these rules, let alone enforce them”.188 Arlin Rickard added that: “There is an element of self-regulation, but it still needs to be underpinned by an independent regulatory authority, like the Environment Agency, who currently do not have the resources or the political will to make them drive that forward”.189
95.We heard that civil sanction penalties could be utilised as another means to provide funding to deliver public goods. Arlin Rickard told us: “I would like to see those civil sanctions hypothecated into a catchment fund to do more work, to provide more advice and more support”.190
96.Defra proposes to maintain a strong regulatory baseline of standards that reflects the ‘polluter pays’ principle. Many witnesses supported this principle as without it the new system based on public goods will not work. Tom Lancaster told us: “If you do not have the ‘polluter pays’ aspect, […] you will have pollution of water courses, loss of soils [etc.]. It will make the job of restoration through the provision of public goods all the harder”.191 The CLA cautioned that the ‘polluter pays’ principle can be “extremely difficult to actually apply in the countryside when it comes to something like diffuse pollution”.192 Others suggested that it must be adopted across all industries for fairness.193
97.Ensuring an effective minimum baseline of regulation will be vital to delivering the Government’s proposals to use public money to support public goods. Moves towards self-regulation and potential de-regulation following EU exit must not allow a ‘race to the bottom’.
98.Without adequate funding to police an independent inspection regime, any system of ‘public money for public goods’ is flawed from the start. Separate from any increased funding made available to farmers and land owners to deliver public goods, the Environment Agency or equivalent public body must also receive a commensurate increase in funding to ensure public money is being legitimately spent under the new scheme; if needs be, a proportion of that increase could be funded through civil sanctions and fines to support a hypothecated catchment fund.
121 Defra, Health and Harmony, February 2018, p32–35
122 Q2 [Tim Breitmeyer]; Q59 [Ellie Brodie, Tom Lancaster]; Q89 [Michael Taylor]; Q251 [Helen Browning]; Anglian Water Services (HAH0016), para 3; British Ecological Society (HAH0032), para 6; British Veterinary Association (HAH0007), para 16; Institution of Environmental Sciences (HAH0025), para 2.4; National Pig Association (HAH0021), para 3; The Campaign to Protect Rural England (HAH0026), para 3; Which? (HAH0020), para 18; Wildlife and Countryside Link (HAH0012), para 3.1; Woodland Trust (HAH0015), para 3.1
127 Q250 [Professor Lang]; NFU (HAH0022), para 1.5; Agricultural Biotechnology Council (HAH0028); Cardiff School of Law and Politics (HAH0014), para 19; National Pig Association (HAH0021), para 2
128 Defra, Health and Harmony, February 2018, p62
129 Q125 [Angela Francis]; The Campaign to Protect Rural England (HAH0026), para 4; Woodland Trust (HAH0015), para 9.4–10; Soil Association (HAH0019), para 31–36
133 Qq242–243 [Professor Dwyer]; Anglian Water Services (HAH0016), para 3; Friends of the Earth England Wales and Northern Ireland (HAH0027), paras 3.1–3.9; Sustain: the alliance for better food and farming (HAH0004), paras 11–12; National Pig Association (HAH0021), paras 15–18; First Steps Nutrition Trust (HAH0039), para 2
143 Q255 [Peter Stevenson]; Defra et al. Agriculture in the United Kingdom 2016, November 2017, p93
144 Lang, T., Schoen, V. Horticulture in the UK: potential for meeting dietary guideline demands. Food Research Collaboration, 2016
145 Sustain: the alliance for better food and farming (HAH0004), para 12; Friends of the Earth England Wales and Northern Ireland (HAH0027), para 3.4
152 Qq251–252 [Vicki Hird] [Peter Stevenson]; Q257 [Helen Browning]; British Poultry Council (HAH0008) para 29; Food Foundation (HAH0018), para 8
158 Defra, Health and Harmony, February 2018, p37
166 Q52 [George Dunn]; Q71 [Arlin Rickard]; The National Trust (HAH0005), para 17; National Pig Association (HAH0021), para 4; Woodland Trust (HAH0015), para 4.7; The Campaign to Protect Rural England (HAH0026), para 4
172 Defra, Health and Harmony, February 2018, p41
176 Q52 [George Dunn]; The Campaign to Protect Rural England (HAH0026), para 3; Sustain: the alliance for better food and farming (HAH0004), para 20
181 Defra, Health and Harmony, February 2018, p49
182 Defra, Health and Harmony, February 2018, p49
Published: 6 June 2018