Report

Detail on environmental land management scheme (ELMS) revealed at last

14.2.23 2 minute read

Combine farm

It turns out that announcements on farm and environmental policy are like London buses - you wait for ages and then three come along at once.

Bidwells’ Ian Ashbridge welcomes revelations on DEFRA’s Environmental Land Management scheme.

After months of growing frustration, farmers, landowners and land managers now have some clarity on the future of environmental support and what it will mean for their businesses. And yet the emergence of this information has been far from the orderly roll-out promised in DEFRA’s Agricultural Transition Plan.

In December 2022, DEFRA’s secretary of state, Therese Coffey, admitted her department had abandoned plans for a ‘Local Nature Recovery’ scheme that would form the middle tier of its ELMS strategy. Instead, the existing Countryside Stewardship scheme would be enhanced and improved to become ‘CS Plus’. This made sense given that the scheme is available, known and understood by farmers and professionals. However, CS is not without its faults, and there will be some reforms needed to make it truly fit for purpose.

The second surprise announcement came in early January when farming minister Mark Spencer revealed an additional ‘management’ payment of £1,000 (£20/ha on the first 50ha) for the Sustainable Farming Incentive (SFI), followed by a surprise increase in CS payment rates.

And the dam truly burst in early February 2023 with the publication of the government’s ELMS Update: How Government will pay for Land-based Environment and Climate Goods and Services, a 101-page tome revealing, at last, new elements of the SFI and more about CS Plus. It also gave indications, crucially, on how the two might interact.

Following this – although attracting less attention that it should have done – was the Environmental Improvement Plan 2023. This has great significance as it replaces the government’s 25-year Environment Plan and will be updated every five years. It is, in effect, the roadmap to how government will deliver its legally binding targets under the 2021 Environment Act and is worth the study of anyone involved in the management of land or other natural resources.

Sustainable Farming Incentive

We can now have six new standards for the SFI - broadening, if not quite completing, the picture since its partial ’launch’ in August 2022.

The new Standards will be available in ‘summer 2023’ alongside the originalthree, and the ’ambition levels’ seem to have been dropped. More will follow, with the final set rolled out by January 2025.

There is still time for at least one part of ELMS to deliver on its ambitions – and if it represents an opportunity for farmers and land managers, they will embrace it.

The £20/ha (or up to £1,000) ‘management payment’ appears to be a result of DEFRA responding to feedback that payments did not cover the administrative costs of entering the scheme. This reflects the concept of ‘co design’, whereby the pilot participants, and others, test and feedback information on how Standards are working – rather than having unworkable rules foisted on them.

An important feature of SFI is that farmers will now be able to ’stack’ Standards on the same area of land. This is something we have been anticipating since our involvement in the pilot scheme has allowed us to see much more of the ‘system architecture’ and experiment with far more standards. On the farm in question, this has allowed our client to earn a payment equal to almost 65% of pre- Brexit BPS. That is significant in terms of helping to manage business risk.

These schemes need to provide adequate incentive for farmers and landowners to engage

Countryside Stewardship Plus (CS+)

Less was revealed on CS+, although there will be 30 more options for farmers to choose from than the 250 currently available. The overhaul of the scheme, expected by the end of 2024, will be more ‘outcome focussed’ and less prescriptive – something to be welcomed – while DEFRA’s hint of ‘greater flexibility on when [farmers] can apply’ would be hugely beneficial if it freed applicants from an annual application window.

 

Trajectory

It is known that farmers will be able to enter both SFI and CSS, but that government will not ‘double up’ on payments – it won’t be possible to be paid twice for the same action on the same parcel under SFI and CSS. DEFRA says it wants SFI and CSS to available in ‘a single integrated online service’. This is a worthy aspiration but will depend on the development of efficient online systems, and we retain a degree of scepticism here due to the track record of Rural Payments Agency through Single Payment and Basic Payment Scheme days.

There will be a further pilot round of Landscape Nature Recovery (LNR), the final tier of the ELMS strategy, with 25 projects funded in 2023 and plans for the same number in 2024. This scheme seeks ‘ambitious’, large-scale nature-recovery projects focussed on net-zero, protected sites and habitat creation.

 

Analysis & Viewpoint

This is welcome progress but SFI and CSS will be complex and tricky to implement and operate – frankly far more so than Direct Payments. Early ambitions of less bureaucratic and complicated schemes seem to have faded.

DEFRA looks to be in an increasingly difficult position. If the take-up of these new schemes remains modest, government will struggle to deliver its binding environmental targets and ultimately, its climate change goals. On the other hand, it must demonstrate value for taxpayer money, and we understand there has been significant pressure to ensure the content of SFI, particularly, is challenging for farmers to deliver.

But these schemes have to compete with the realities of commercial farming; this means a significant increase in ELMS payments is essential.

The programme of ‘de-linking’ remaining Direct Payments and issuing diminishing payments to farmers based on their receipts in the 2020-23 reference years should be scrapped. This is a poor idea intended as a soft landing, but there is far too little accountability in these payments. Instead, the funds should be diverted into significantly increased payments under SFI and CS+ to encourage meaningful uptake.

There is still time for ELMS to deliver on its ambitions – and if it represents an opportunity for farmers and land managers, they will embrace it.

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Ian Ashbridge

Partner, Head of Agriculture & Environment

Ian combines fundamental technical farming knowledge with wider investment and real estate experience when advising his clients.

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