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I now turn to the organisation of Defra itself. None of the following comments is meant to be critical of the generally hard-working staff in the organisation. Farmers do not look to Defra to shield them from the realities of the market place or from their legal and moral duties to manage their land. However, they do look to Defra to work towards three clear goals. First, Defra needs to understand the

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important role that agriculture and horticulture play in national life. Secondly, it needs to realise that there should be a firm commitment to act, in a positive partnership with the industry, to meet the public policy objectives. Thirdly, farmers look to Defra to help to ensure that there is a level playing field in competitive conditions across the EU single market. However, the seemingly endless change in Defra has had damaging effects on staff moral. That makes it more difficult for farmers to develop good working relations with them and, because of the increasingly large remit of Defra’s scope, puts farmers at the bottom of the list of priorities.

Finally, I want to cover the implementation of regulation. For a collection of relatively small businesses, agriculture and horticulture are disproportionately heavily regulated, as my noble friend Lord Willoughby de Broke has discussed. Some progress has been made on the deregulation agenda; for example, the reduction of inspections for food hygiene for farmers in assurance schemes. On the other hand, there has been serious gold plating. Does the Minister agree that that has happened, first, in relation to the EU environmental liability directive, which has been extended to national sites and species, not just the European ones required by the directive? Secondly, there is the nitrates directive, which has been unnecessarily extended to include requirements for cover crops. Dairy farms, already under pressure, will be burdened with costs for slurry storage works that will cost the industry hundreds of millions of pounds for, I understand, a minimal reduction in nitrate leaching. Another case of gold plating involves the implementation of the IPCC regulations, which have huge registration fees and ongoing annual fees, which at £3,000 far outstrip those applied in the EU and even in Scotland and Wales. Does the Minister agree about all this gold plating?

I have huge confidence that the Minister will, with his industry experience— unfortunately unusual these days—do his best to address farmers’ and horticulturalists’ concerns and will, in the same way that he has helped to clear up the RPA fiasco, address in his usual forthright manner the concerns mentioned by me and many others.

1.52 pm

Earl Cathcart: My Lords, I declare an interest as a farmer in Norfolk. When winding up the debate on Second Reading of the Climate Change Bill last week, the Minister said:

At the time I thought, “More’s the pity”, because that is exactly what Defra needs. Defra’s incompetence was highlighted by the new single farm payment scheme in 2005, as others have mentioned. Farmers were assured by the Secretary of State that it would greatly simplify payments and reduce the burden of bureaucracy. Oddly, the Secretary of State then implemented an overly complex scheme against all the advice given by experts across the industry. The fiasco that followed led to extreme financial hardship and was devastating for farmers, a third of whom already live in poverty.

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Was the Secretary of State held responsible for this foul-up? No. She was promoted to Foreign Secretary. “Good for farming”, I thought, “but heaven help our foreign policy”. It is typical of the Government: livelihoods ruined but the perpetrator rewarded. Farmers have already suspected that the Government did not care where the food came from, as long as it was cheap. Until my noble friend Lady Shephard mentioned it, I had not realised that Mrs Beckett was so insensitive and stupid as to say it in public. We have had three Secretaries of State in the past three years. David Miliband was also promoted to Foreign Secretary. There seems to be a theme: do a stint at Defra, then you get to be Foreign Secretary. Is it not time that we had a Secretary of State who knew something about farming or at least business management?

One of the problems with Defra is the lack of a command structure, which leads to a lack of co-ordination. Like all farmers in Norfolk, and no doubt up and down the country, I have to deal with at least 12 different Defra offices. The mapping is done in Bristol. I correspond with the headquarters at Reading. Northallerton administers the single farm payment but the Newcastle office pays it. Environment schemes are agreed in Norwich but administered in Cambridge, and another office in Newcastle makes the payments. Livestock matters are administered in Bury St Edmunds. One has to inform Cumbria of movements but Worcester of long-distance movements, although to get the movement licence one has to apply to the Norwich trading standards office. There is another office for farm waste.

That is absurd. As things stand, there is total confusion, not just for farmers but for Defra staff. It is high time that Defra was reorganised so that every farmer had just one point of contact to answer on all aspects of his farm. My noble friend the Duke of Montrose tells me that all his Defra affairs are dealt with by the Perth office. If it can happen in Scotland, why on earth can it not happen in England? The Minister is already aware of all these offices and I am hoping that he will come back with a cunning plan.

Defra staff must be so demoralised with the present system—farmers certainly are—because they do not know what is going on, which leads to them giving conflicting advice. For example, with the recent outbreak of bluetongue in East Anglia, the Bury office would say one thing one day, while the next day the Reading office would write saying another. Farmers do not know where they stand, which makes Defra look idiotic and incompetent. The fragmented structure of Defra leads to confusion within it. No one seems to be able to make decisions, because they do not know the whole picture. I am not criticising those working in Defra. The animal health officials dealing with FMD, bluetongue and avian flu have done an admirable job. All Defra staff whom I have come across have been polite and diligent in doing the work that they have been paid to do. It is the system that is too rigid and inflexible, obsessed with form-filling and box-ticking.

I have a stubble field with a 6-metre margin around it. I wanted to put it down to grass, so I asked the Norwich office whether I could add it to my existing countryside stewardship scheme. It advised me that I

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should ring the Cambridge office, which administers the scheme. “No”, said Cambridge, “Defra has no more money”. I said, “Okay, but if I put it down to grass, where do I put the fence?”. I was hoping that the office would reply, “Up against the hedge”, but no—because livestock must not graze the 6-metre margin, I must put the fence inside the 6-metre margin, 6 metres away from the hedge. I said that that would look absurd. I then suggested taking the field’s 6-metre margin out of the scheme and reducing my payment accordingly. “No, you mustn’t do that”, I was told. A contract is a contract and cannot be changed and, if I put the fence up against the hedge, I might jeopardise my entire payment. So, the field is down to grass, but unfenced. That is completely absurd and inflexible and it lacks logic, but the command structure does not allow for common sense and flexibility.

Agriculture and horticulture are disproportionately heavily regulated and the cumulative impact is crippling. Since 2001, there have been nearly 1,000 new Defra regulations. No one in Defra knows what they all are, but farmers must know. Heaven help them if they do not. Last year, my farm was inspected five times. All the boxes were ticked, but when I asked the fifth inspector, who came to Norfolk from Dorset, why I could not have one inspection looking at all aspects on the farm, I was told, “No, that would mean us inspectors would have to go on endless courses to learn all the rules and then go on frequent refresher courses because the rules are constantly changing”. That says it all.

While farmers are screwed down by Defra bureaucracy, Defra fails to do its job when it really matters. Here, I am talking about the foot and mouth outbreak at Pirbright. The Institute for Animal Health said that the drains were known to be dilapidated and due for replacement as far back as 2002. As my noble friend Lady Byford pointed out, Defra is the laboratory’s regulator. Yet this report, which said that there was an accident waiting to happen, was ignored by Defra. Defra failed to regulate. This shocked and infuriated farmers and destroyed the livelihood of some, which led to a further loss of credibility and trust. The one time Defra should have regulated, it failed. I keep asking myself whose side Defra is on. Defra, or the old MAFF, used to be farmer-friendly. Now Defra controls and overregulates and it is strangling the farming community. Rife with mismanagement, Defra must get its own house in order.

At Second Reading of the Climate Change Bill, I asked the Minister why Defra, not the Prime Minister, was in charge of climate change. The Minister replied:

He may have convinced himself, but many would say that he is in denial. All I can say is that he should try convincing the farmers that Defra is fit and proper.

2.01 pm

Lord Redesdale: My Lords, I, too, thank the noble Baroness, Lady Shephard, for initiating the debate and I welcome the maiden speech of the right reverend Prelate the Bishop of Carlisle. I was

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reminded of the dark days of the foot and mouth outbreak, because I am a Northumbrian and we suffered just as badly, and of how the churches and the clergy of the area were such a rock for local farmers and brought the local community together in a time of such crisis. Unfortunately, although the scale of the problem was quite obvious then—the fires were visible from such a distance—the equally hard financial implications of the present crisis are going unseen. I declare an interest as a landowner with two hill farms. I know that the financial pressure of keeping young lambs on the fell without being able to sell them, and then suffering from the feed cost, is a major burden with very little return.

The debate has featured a cornucopia of issues, which I am sure the Minister will address in great detail. I shall focus on a small number because, as the noble Earl, Lord Cathcart, pointed out, we had better use the Minister now before he becomes Foreign Secretary. My first question, which is rhetorical, is: why is Defra being hammered so hard by the Treasury? I was reminded of the event that marked the formation of Natural England. I am sorry; I almost lost my bearings, because it was in the Locarno room of the Foreign Office. In a rather long speech, David Miliband said that the Treasury had just informed him that large cuts were being made and that this was obviously very difficult to deal with. He added that he was not going to fight the cuts but that in his next year of office he would seek to reverse them and bring more money into Defra. Unfortunately, he never had a second year in office to do that and now we have a new Secretary of State, Hilary Benn, and further cuts are being announced. This is obviously an issue, because Defra’s role is to act as a lead on farming.

I know, as the Minister does all too well, that farmers are wont to paint a bleak picture, but I was particularly taken by a joke that I was told recently in the local pub. One farmer said to the other, “What would you do if you won the lottery?”. The other farmer turned to him quite happily and said, “I’d carry on farming till it was all gone”. This is the issue: further costs and further bureaucracy. It has been pointed out that many of those costs come from Europe and not from Defra, but it does seem that insult was slightly added to injury after the outbreak at Pirbright. I commend Defra’s role in controlling that outbreak, as I do its speedy action over the avian flu outbreak. Thankfully, that outbreak has not turned into the major episode that it could have turned into, which, just before Christmas, would have destroyed the poultry industry.

As the noble Lord, Lord Northbrook, mentioned, Hilary Benn announced on 19 November that there was talk of a levy being imposed on the farming industry to deal with disease outbreaks. This is not a new issue; the industry and the department have discussed it for many years. The timing seems to be rather unfortunate, given that many farmers are still suffering under the cosh of financial hardship. I have a number of questions about how that levy is to be introduced. First, when will it be introduced? Obviously there will be consultation if the levy is to be introduced at all, but will it be introduced under the new amalgamated

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Levy Board? The order went through the other day. The board is a welcome development. It will do a great deal to slim down and reduce waste, and I am hopeful that it will be a great success. The issue, however, is who will pay this levy and at what point it will be paid. At the moment, if it is paid at the point of slaughter, some members of the industry who rear livestock but sell them on will not be affected by the levy, which might fall disproportionately on one side of the industry. The Minister might say that he will not be able to answer those questions before any consultation, but I very much hope that the consultation will consider that major issue.

The agricultural buildings allowance, which has come directly from the Treasury, is also causing some worry, as the Minister will no doubt be aware. Phasing out the allowance at a time when the industry has to upgrade its premises for animal welfare, which is an excellent reason, and as a result of the nitrates directive, which protects the environment, will cause a great number of problems in the industry. However, what concerns me the most is the retrospective nature of that cut. Can the Minister say whether farms that have taken on the grant will have to pay back money that was claimed under it? Perhaps I have got that wrong, but I am not aware of another tax that has been imposed retrospectively.

There have been many cuts in Defra, which has badly affected morale in the department. It is very unfortunate that the problems with the Rural Payments Agency led to a switch of energy in Defra’s work to deal with that crisis, especially as many people who were assessing the entry-level stewardship and higher-level stewardship programmes were moved away to deal with the crisis. I understand the reasons for that, but it is very unfortunate. I declare an interest, as both my tenant farmers are looking at the stewardship scheme. However, it is vital that many farmers in the upland area are considered for the scheme, and putting it off indefinitely is a real issue.

My noble friend Lord Livsey made the very real point that, although there has been a crash in the cost of lamb, the supermarkets do not seem to have paid the same amount of money to the farmers as they could have. My noble friend mentioned Waitrose, which is an excellent example. I very much hope that the Minister will consider taking a stronger line with the supermarkets, because this is not the first time that this has happened. It happened during the last foot and mouth crisis; for it to happen again during this one, even though it will probably be a short-term event, shows that the supermarkets are taking a very short-term view. Does the Minister think that the Competition Commission should take a further look at this issue?

Defra is concerned not only with farming, but with climate change and rural affairs. I will run out of time if I go into those issues, which are for another debate. However, I hope that the Minister will look, through the role of Defra in fighting climate change, at the skewing of the marketplace as a result of the rush towards biofuels. The case for using corn in ethanol does not stack up on economic and environmental grounds. It has had massive effects in America, where

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it has had an upward pressure on feed prices. There have even been riots in Mexico because of the cost of food. The impact in this country is that the cost of other feedstuffs for animals has risen substantially. Can the Minister tell us whether any work is being done with pig farmers, who have found that the rise in feed prices has made their industry very uneconomical? While looking at biofuels is, for reasons of fighting climate change, a good thing, there is a massive resource in the country: the large areas of soft woodland in the north-east, Wales and Scotland. When those are felled, the by-product of that waste will be incredibly useful. Defra could take a lead in that. Using wood waste instead of corn to form ethanol would be a much better solution.

2.11 pm

Lord Taylor of Holbeach: My Lords, I am grateful to my noble friend Lady Shephard of Northwold for tabling this Motion. Her speech and the subsequent debate have drawn attention to yet another area of government weakness and dysfunction. I know the Minister will resent this attack on his department. Both inside and outside this House, he is a highly regarded and respected Minister, who clearly understands the problems faced by UK farmers. Our purpose is less to criticise the Minister than to reinforce his role within Defra. Nor is our criticism of the staff, who work diligently for the department. Our concern on these Benches, and expressed elsewhere in this debate, is the failure of the department and the Government to establish a proper working relationship with UK agriculture and horticulture. As my noble friend Lord Jopling said, this has caused considerable damage, both to the Government’s reputation and to all those who live and work in the countryside.

The perception outside Westminster, particularly in the farming community, is of a Government totally disengaged from the concerns of UK farmers. I declare an interest. I am one of many Members of your Lordships’ House who will go home this evening to the real world of 21st century farming in the UK. I farm in England, where Defra has direct responsibility, and our position contrasts acutely with those working with devolved Administrations elsewhere within the United Kingdom. I regret to say that among my neighbours, friends and colleagues this Government are not seen as an ally, but as a hindrance. “Defra than ever”, they say. There is a lack of trust and a loss of that sense of partnership which should be the basis of a successful farming industry.

I know the Minister will agree that farming is over-regulated and burdened with bureaucracy. My noble friend Lord Cathcart has shown how Defra’s bureaucracy results in a multiplicity of offices and service points. Many noble Lords will know how much time we spend filling in the boxes. Farming should not be like this. Those engaged in farming do so to grow and produce food and to cultivate and care for the countryside. No Government should impose such a costly and time-consuming regime on an industry where so many of the active participants have to do it all themselves. My noble friend Lord Cathcart posed a very pertinent question: why are so

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many different inspections and inspectors necessary? The notion is that the regulations are so complex that no government official could be expected to understand them all. But what about the farmer, who has to comply with them all, at the risk of financial and legal penalty?

Not surprisingly, farmers see regulation and bureaucracy as a largely irrelevant imposition on their businesses, a tax that they have to pay to be in business and make a living. Why are English farmers subjected to a nightmare single payment system? My noble friend Lady Byford has been like a terrier in exposing its shortcomings. My Scottish friends received their payments on 3 December and the intention in Wales was the same, but English farmers will be waiting until spring. This year it will cost them £30 million in interest alone, let alone the loss of working capital and facilities for investment. As we asked at Question Time today, what is the advantage of the dynamic hybrid model to them? What, I might add, is the advantage to Defra? It must cost a fortune to run. We discussed this at Question Time today but I still find it hard to see why the simpler scheme adopted in Scotland and Wales cannot be used in England.

Many noble Lords have talked this year of disease and disaster. We have already had much debate about this in your Lordships’ House. Noble Lords have graphically described the costs and losses visited on farming communities. I will not elaborate, except to say that the unexpected is part of farming, so it should be part of government planning. What has become of the Government’s contingency funds? How much has Defra been able to draw on this? Meanwhile, how is farming supposed to make up its losses? Cost-sharing proposals simply show how inadequate is Defra’s response. As my noble friend Lady Shephard said in her opening speech, the truth is that the dead hand of the Treasury looms large.

Defra’s responsibilities grow, and yet it faces acute budget costs. My noble friend Lord Soulsby talked of the consequences of this for the industry. A demoralised staff face redundancy. My noble friends Lord Jopling and Lord Caithness pointed to the dangers of this. It is often the case that the best go first. This is a department that prided itself on its expertise. How can it get to grips with its problems and responsibilities in such a situation? One fears that the British farmer will pay the price. It may seem a harsh judgment, but as I said in the debate on the Loyal Address, if Defra were a school it would be in special measures and, I might now add, earmarked for closure.

I hope I have made it clear that my concern is the failure of the Minister to achieve his ambitions for agriculture. He listens and makes it plain that he aspires to deliver, but his lack of influence over outcomes is evident. I take, as one example, food procurement by Government and public bodies. We all know that the Minister believes in a policy of sourcing from British farmers. Indeed, where possible, British farmers should be supplying all government agencies. All we see, however, is that this campaign, which was supposed to apply across all departments of government, has been a total failure. Can we

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imagine a French Minister of Agriculture tolerating a situation where the military were not fed French-produced food? What do we expect people to eat in French hospitals, French schools and French government catering departments?

I know that the Minister gets up early and I am sure he will have heard the item on the “Today” programme two or three weeks ago about the meat supply company which, among other public sector customers, supplied Her Majesty's Treasury. It is now out of business and it was revealed that rather than making doorstep deliveries, its drivers were dropping produce in the street or throwing it over the fence. It produced in my mind a vivid image, an apt metaphor. I had a picture of the Defra delivery van driving along Great George Street chucking the carcass of British agriculture over the Treasury fence.

The biggest tragedy is that we are now at the start of a new era in which the challenges to farmers and growers will be very different from those of the immediate past. My noble friend Lady Shephard mentioned a number of these. She dramatically illustrated ways in which our understanding of these changes will be considerable. Access to food has become a real issue. In a powerful maiden speech, the right reverend Prelate the Bishop of Carlisle also spoke of the ways in which this will impact on farming. Finding ways to preserve our countryside and yet provide British people with the stuff of life will be a major challenge, not just for British farmers but for Defra too.

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