Environmental land management: Recent changes to the sustainable farming incentive and countryside stewardship schemes

On 25 January 2024, the House of Lords will debate the following motion:

The Earl of Caithness (Conservative) to move that this House takes note of changes to the Sustainable Farming Incentive announced by the Secretary of State for Environment, Food and Rural Affairs on 4 January, and the case for including species management within the environmental land management scheme to support populations of endangered species and biodiversity in general.

Agricultural policy is devolved. This briefing focuses on the financial support provided by the UK government to farmers, landowners, and other land managers in England. Further information on financial support in other parts of the UK is provided in the House of Commons Library briefing ‘Farm funding: Implementing new approaches’ (15 March 2023).

1. Environmental land management scheme

The environmental land management (ELM) scheme is the main new vehicle for providing financial support to farmers in England following the UK’s exit from the European Union. The scheme is being introduced gradually to replace the system of direct payments established under the EU common agricultural policy (CAP), including the basic payments scheme. The government has said the purpose of the new ELM system is to reward farmers, tenants, landowners, land managers, growers and foresters for delivering “public goods” and making “a significant contribution to the environment”.^[1]

1.1 Agricultural transition period

England is currently part-way through a seven-year process of transition between these two systems. This agricultural transition period, beginning in 2021 and continuing until 2027, was established by the Agriculture Act 2020.^[2] The process by which this transition would take place was set out in the government’s agricultural transition plan, published in November 2020.^[3] As part of this plan, the government said that ELM-related schemes would be piloted between 2021 and 2024. The government said the full ELM scheme would be available from 2024 onwards.^[4]

At the time of its introduction, the government contended that the new system of farm payments would “improve the environment, improve animal health and welfare, and reduce carbon emissions”.^[5] The government’s 2020 agricultural transition plan outlined the following three main strands to the ELM scheme:

• Sustainable farming incentive: providing payments to farmers and others who manage their land in an environmentally sustainable way. The 2020 agricultural transition plan said the types of action supported would include (but not be limited to) livestock management and improving biodiversity.^[6] The government said the scheme would also support actions including those that improved soil health and supported water recovery.

• Local nature recovery (subsequently incorporated within countryside stewardship and countryside stewardship plus): providing payments for farmers to support local nature recovery and local environmental priorities. The non-exhaustive list of the types of actions that would be supported through this scheme included species management and actions which restored habitats.^[7] The 2020 agricultural transition plan stated this scheme was intended to replace the existing countryside stewardship scheme established during the UK’s participation in the CAP. It also said the scheme would encourage collaboration between farmers to support their local environment.

• Landscape recovery: supporting projects that make long-term changes to land use that improve the ecosystem. The government said this would include projects such as large-scale tree planting, ecosystem and peatland restoration projects and the creation and restoration of coastal habitats.

The government confirmed the sustainable farming incentive would be a ‘universal scheme’, available to all farmers and others responsible for managing land.^[8] It also said the countryside stewardship and the landscape recovery component of the ELM scheme would include competitive elements, with higher-scoring applications more likely to receive funding.^[9]

The government also said the ELM scheme would include three different tiers of entry. In an article published prior to the agricultural transition plan, the government said these tiers would operate as follows:

Tier one would encourage farmers to adopt environmentally sustainable farming and forestry practices, while farmers, foresters and other land managers in tier two would focus on delivering locally-targeted environmental outcomes. The third tier would pay for larger-scale, transformational projects—such as restoring peatland.^[10]

In addition to the ELM scheme, the government has announced several other schemes to support farmers. In 2020, the government said it would provide funding to support productivity and innovation on farms.^[11]. In 2021, the government launched the first round of the farming productivity grant.^[12] In November 2023, the government announced it would be providing a second round of improving farming productivity grant funding.^[13] It said an initial amount of £30mn was being made available as part of that round.

In January 2023, the government published an update on the implementation of the ELM scheme.^[14] As part of this announcement, the government said it would no longer be introducing a new local nature recovery scheme and would instead “evolve” the existing countryside stewardship scheme.^[15] It said the renewed countryside stewardship scheme would incorporate the elements originally planned for the local nature recovery scheme. The government also said it would provide extra incentives for farmers and others to collaborate through a scheme called countryside stewardship plus.

1.2 Reaction to rollout of the environmental land management scheme

The government’s rollout of the ELM scheme has been criticised for creating complexity and uncertainty amongst farmers and other land managers. In January 2022, the House of Commons Public Accounts Committee published a report on the ELM scheme which concluded the government had not provided enough detail on how the scheme would work.^[16] It argued this meant farmers and others had been unable to plan their businesses in order to take advantage of the scheme. The committee also argued the government had not been clear enough on how the scheme would support increased farm productivity or environmental benefits. The government said in its response to the report that, following the committee’s inquiry, it had provided further information on how the three component parts of the ELM scheme would operate.^[17] However, in December 2023, the House of Commons Environmental Audit Committee published a report finding that uncertainty remained concerning how the scheme would operate.^[18] The committee found that:

The overall feedback that the committee received on [the ELM scheme] which has been under development throughout our inquiry, is that it is a step in the right direction but more clarity and certainty is required in relation to what farmers need to do, the amount of funding available, and how [the scheme] will support the government’s goals for food security and environmental protection.^[19]

A further criticism of the ELM scheme during its rollout has been its complexity. In February 2022, the Department for Environment, Food and Rural Affairs (Defra) commissioned Baroness Rock (Conservative) to conduct an independent review of the agricultural tenanted sector.^[20] As part of this review, Baroness Rock was asked to consider how the government could ensure its new financial support schemes were “accessible, open, and flexible to tenant farmers”.^[21] The review reached several conclusions including that Defra should reduce the complexity of the ELM scheme as this was presenting a barrier for tenant farmers looking to access support.^[22] Responding to the Rock review, the government said it would seek to reduce the complexity of the ELM scheme, including bringing together various schemes that support tree and woodland planting into a single location with a single application portal.^[23] As noted above, the government subsequently implemented another of the Rock review’s recommendations by delivering the objectives of the local nature recovery scheme through a revised countryside stewardship scheme.^[24]

In its December 2022 report ‘Making the most out of England’s land’, the House of Lords Land Use in England Committee concluded that uncertainty about how the ELM scheme would work had created a “significant barrier” to achieving a high take-up.^[25] The committee agreed with the conclusions of the Rock review that tenant farmers were experiencing a particularly high level of uncertainty regarding how the ELM scheme would operate. It recommended the government should provide more information on how the schemes would work. The government published its response to the committee on 3 April 2023.^[26] It said that since the committee’s report had been published the government had set out the next steps for the rollout of the ELM scheme, including how farmers would be rewarded for enhancing biodiversity and reducing emissions.^[27]

On 15 November 2022, the House of Commons Environment, Food and Rural Affairs Committee held an one-off oral evidence session on the government’s progress on implementing the ELM scheme.^[28] During this evidence session, the minister of state at Defra, Mark Spencer, told the committee one of the main lessons learned by the department during the pilots of the ELM scheme had been the need to simplify the application process.^[29]

The government has also been accused of not providing adequate levels of support to farmers during the rollout of the scheme. The National Farmers Union (NFU) has criticised the speed of the transition, arguing in October 2021 the government needed to review the decision to phase out support received by farmers through the basic payment scheme.^[30] The NFU argued this was necessary to mitigate economic difficulties faced by farmers, including the disruption to trade flows after the Covid-19 pandemic. More recently, the NFU has argued upland farmers faced a loss of income as a result of the transition to the ELM scheme.^[31] It said the average upland farm business would lose 37 percent of their support payments under the sustainable farming incentive and countryside stewardship schemes.

The Game and Wildlife Conservation Trust (GWCT) has also questioned whether the funding commitments made by the government would adequately reward farmers for delivering public good such as maintaining and improving biodiversity.^[32]

The government has also been criticised for underspending its farming budget. As part of the rollout, the government said it would maintain the annual farming budget for England at £2.4bn per year.^[33] However, the Guardian has reported that figures from Defra indicate there has been an underspend in the government’s environment farming schemes of £110mn in 2021/22 and £117mn in 2022/23.^[34] The government has said these claims are “untrue” and that it was on track to maintain the annual farming budget for England at £2.4bn per year with a higher level of spending planned in the final year of this parliament.^[35]

On 18 January 2024 the statutory body that holds the government to account on environmental standard, the Office for Environmental Protection (OEP), published its report on the progress of the government’s policies for improving the natural environment in England. The OEP argued that while some progress had been made on the implementation of the ELM scheme, its rollout needed to be accelerated. It said:

Investment in the foundations for ELM schemes along with other nature-friendly farming approaches has been considerable and uptake is increasing but from a low baseline. However, roll-out has been slow and the programme is marked by uncertainty and concern from farmers. For enough farmers to choose to participate and commit long-term to managing their land in support of net zero, environmental improvement and food security, things must improve, and improve quickly.^[36]

2. Updates to agricultural transition plan

On 4 January 2024, the government announced a series of updates concerning its agricultural transition plan.^[37]. According to ministers, these will include:

• Increased payment rates for the sustainable farming incentive and countryside stewardship schemes, amounting to a 10% increase in the average value of agreements. The government said this would apply automatically to existing agreements.

• Establishing a single application process to enable farmers to apply for the sustainable farming incentive and the mid tier of the countryside stewardship scheme at the same time. The government has said this new system would be available from the summer of 2024 onwards.^[38]

• Providing more support for actions for farmers who maintain existing environmental assets, in addition to those actions which create new assets. This would include actions maintaining grasslands, wetlands and scrub.^[39]

• Introducing new premium payments for certain high priority actions, including “£765 per hectare for nesting plots for lapwing, and £1,242 per hectare for connecting river and floodplain habitats”.^[40]

The government also said around 50 new environmental actions would be supported through the ELM scheme from 2024, including on the following areas:

• agroforestry
• precision farming
• supporting recovery of priority habitats and threatened native species
• enhancing and restoring waterbodies and watercourses
• protecting lowland peat^[41]

Speaking at the 2024 Oxford Farming Conference, Secretary of State for Environment, Food and Rural Affairs Steve Barclay said the changes to the ELM schemes had been introduced following feedback Defra had received so far during the agricultural transition period.^[42] He also said the government was encouraging “farmers of every farm type and size” to participate in the scheme.

The government published an updated version of its agricultural transition plan on the day after this speech.^[43] This included a technical annex listing all the types of actions that will be supported through the ELM scheme from 2024.^[44] As discussed below, the technical annex included additional information on the support that would be provided for species management under the ELM scheme.

The changes to the sustainable farming incentive and countryside stewardships schemes have been broadly welcomed by organisations representing the farming industry. For example, the Agricultural Industries Confederation (AIC) welcomed the changes to the sustainable farming incentive and countryside stewardship schemes, including the streamlining of the process for applying to these schemes.^[45] However, the Country Land and Business Association has criticised the government for not opening the applications for the updated scheme until the summer of 2024, arguing farm businesses urgently needed more financial support.^[46]

The National Farmers Union (NFU) welcomed the decision to increase some payments and provide support for a greater number of actions.^[47] However, it argued the government still needed to provide further details about how the objectives of the agricultural transition plan would be delivered.^[48] During the Oxford Farming Conference, the NFU vice-president, David Exwood, also questioned whether the updated ELM scheme would provide enough of a financial incentive to compensate farmers for supporting environmental ends.^[49] In his comments, reported in Farmers Weekly, Mr Exwood questioned whether the scheme and its options will be “compatible or competitive with productive farming”, adding:

The NFU had always supported sustainable food production alongside environmental work, provided that domestic food production levels are at least maintained. [But] it’s not clear what the impact of this [updated sustainable farming incentive] is. For arable farmers, some of the best paying options are where you take land out of production.^[50]

3. Support for species management

The government has said the ELM scheme will support species recovery and management actions by farmers, landowners and other land managers.^[51] For the purposes of the ELM scheme, the government defined species recovery and management as covering those actions which:

[…] increase the abundance of particular species, including by managing other species (invasive non-natives and predators) that present a threat, and supporting rare native breeds.^[52]

Species management may include several different types of actions, depending on the type of animal being controlled. For example, the government currently provides support for controlling and managing deer as part of its countryside stewardship scheme.^[53] The Forestry Commission argues that, although wild deer contribute to the UK’s biodiversity, they can have a negative impact on forestry because they browse on the seedlings and regrowth of certain tree and plant species.^[54] The Forestry Commission also stated a lack of predators has resulted in unsustainable population densities of deer in some areas. Support for managing the deer population is currently available through the countryside stewardship scheme in areas where deer have been identified as a threat to woodlands.^[55] In order to receive this support, farmers must take actions including monitoring deer populations, agreeing levels of culling activity with the Forestry Commission and providing evidence of culling activities.

The control and management of other species is also supported through the countryside stewardship scheme, including the management of grey squirrels.^[56] The aim of this support is to limit the damage to trees caused by grey squirrels and help increase the population of native red squirrels. In order to receive this support, farmers, landowners and other land managers must carry out culling activities agreed with the Forestry Commission. Further information on controlling grey squirrel populations is provided in the House of Lords Library briefing ‘Woodland cover and grey squirrels’ (22 May 2023).

3.1 Support for species management in the agricultural transition plan

The 2020 agricultural transition plan said general wildlife and biodiversity related actions would also be supported through the sustainable farming incentive.^[57] This included actions to create and maintain habitats but did not include species management specifically. Instead, species management was listed as an example of the type of action that would be supported through the then local nature recovery scheme.^[58]

In its January 2023 update on the implementation of the ELM scheme, the government confirmed the ELM scheme would support actions to help minimize the harm caused by invasive species and promote the recovery of threatened native species.^[59] It said the following actions were already supported under the existing countryside stewardship scheme:

• control and management of native and non-native deer and the non-native grey squirrel
• control and management of invasive plant species in general which are harmful to the environment
• control of the spread of bracken and the control and management of rhododendron

3.2 Calls for more support for species management

The case for supporting species management as part of the ELM scheme referred to in the motion for the Earl of Caithness’s debate has been advocated by the GWCT.^[60] The GWCT has argued there has not been enough focus given to species management during the rollout of the ELM scheme.^[61] Writing in July 2023, the GWCT said that, while it supported the way in which the ELM scheme has been structured, the government’s initial focus of the rollout had been the sustainable farming incentive.^[62] This was the first part of the ELM scheme to be piloted. The GWCT argued, if the ELM scheme was going to deliver on the government’s biodiversity aims, the government needed to focus on the roll-out of the countryside stewardship and countryside stewardship plus schemes. The GWCT also criticised Defra for not providing sufficient information about how countryside stewardship plus would operate. In a submission to the government in January 2022, the GWCT also argued the species management actions supported through the countryside stewardship scheme should be expanded to include the management of predators in general.^[63]

3.3 Support for species management in the updated countryside stewardship scheme

As referred to above, in January 2024 the government published an updated technical annex listing the types of species recovery and management actions that would be supported through the countryside stewardship scheme.^[64] This list included actions to control and manage two invasive non-native species: mink and edible dormouse. It also included new supplementary support for actions for the control and management of rhododendrons. The government also said it would expand the types of actions for managing deer and grey squirrel populations that would be eligible for support.

4. Government strategies for controlling invasive species

In addition to support provided to farmers, landowners and land managers though the ELM scheme, the government has published the following strategies for controlling invasive species.

In January 2023, Defra published its ‘Environmental improvement plan 2023’ This included a commitment to reduce the rates of introduction and establishment of invasive non-native species by at least half by 2030.^[65] This commitment was repeated in the UK, Welsh and Scottish governments’ Great Britain invasive non-native species strategy, published in February 2023.^[66]

The ‘Environmental improvement plan 2023’ also included a commitment by the government to implement a national deer management strategy for England by the end of the year (in other words 2023).^[67] The government had previously consulted on proposals for a national deer management strategy.^[68] This consultation ran from August 2022 to September 2022. The government has yet to publish this strategy. In November 2023, the parliamentary undersecretary for environment, food and rural affairs, Rebecca Pow, said in response to a parliamentary question the strategy would be published in “due course”.^[69]

In addition, in 2021 the government committed to publishing an updated version of its grey squirrel action plan.^[70] This action plan has also yet to be published. During a House of Commons debate on grey squirrels on 28 November 2023, Ms Pow said the plan would be published “shortly”.^[71]

5. Read more

• House of Lords Library, ‘King’s Speech 2023: Agriculture, natural environment and animal welfare’, 1 November 2023
• House of Lords Library, ‘Rising cost of agricultural fertiliser and feed: Causes, impacts and government policy’, 22 June 2022
• Parliamentary Office of Science and Technology, ‘Sustainable land management: Managing land better for environmental benefits’, 28 September 2021

Cover image by Tom from Pixabay.

This briefing has been updated to include the Office for Environmental Protection’s comments on the roll out of the environmental land management schemes in its report ‘Progress in improving the natural environment in England 2022/2023’, published on 18 January 2024.