Defra has now released the information businesses in England need to develop a strategy for success in a rural sector where environmental services sit alongside food production as a priority and valued outcome. These new schemes will help agriculture make its contribution towards the national net zero greenhouse gas emissions target. The recent Spending Review increased funding available for tacking climate change and, to help cut emissions from housing, the government has doubled the Green Homes Grant budget and extended it to March 2022.

FOOD & FARMING

Clarity on BPS cuts for England’s farmers
On Monday 30 November the Secretary of State George Eustice launched The Path to Sustainable Farming, the government’s agricultural transition plan for the period up until 2024. Coming over two years since the Agricultural Transition period was first announced, the detail in this announcement is a significant step forward and will allow agricultural businesses to plan towards their future with greater certainty. The government has now set out by how much BPS Direct Payments will be cut each year between 2021 and 2024, and how this money will be used through new grants and schemes to help agriculture become more productive and prepare for there being no direct subsidies from 2028. These schemes include a Farming Equipment Technology Fund, Farming Transformation Fund, Farm Resilience Support and a Slurry Investment Scheme.

Defra will reduce its total spend on Direct Payments by around 10% in 2021 and 15% in both 2022 and 2023, and the banded structure it is using to cut payments means that larger payments will be cut more heavily. Savills modelling, based on historic payment receipts, suggests that 80% of farmers fall in the bottom band as their payments are currently less than £30,000. These farmers, will have payment cuts of 5% in 2021, 20% in 2020, 35% in 2023 and 50% in 2024. The average payment reduction for businesses in 2021 will be 5.8%, but nearly 1 in 10 businesses will experience a cut of 10% or greater. Payments to the largest claimants will be cut by almost 25%. If you would like to model the impact on your BPS payment a copy of our Subsidy Reduction Calculator can be requested here.

A farmers’ exit scheme will be available in 2022 to help farmers who wish to retire to do so with dignity. The exit scheme will allow them to receive a lump sum payment rather than the diminishing series of annual direct payments. A consultation will be conducted early in the new year. To be eligible farmers are likely to need to surrender, let or sell their land. Synchronising these actions with an application to the scheme will need careful planning, which means that its success will be dependent on the design of the scheme to ensure that there are not too many administrative barriers and that applicants know where they stand. Alongside this, the government will be offering additional support to help new entrants into the industry.

In addition to the productivity funding, environmental funding will be increased using the budget released, and will become the focus of future funding for rural land management. Countryside Stewardship will be expanded in 2022 and 2023. In 2022 some core elements of Environmental Land Management (ELM) will launch. This will include the Sustainable Farming Incentive (SFI) which is intended to be relevant to all landowners and act as a stepping stone to ELMs for those not currently in an environmental scheme. The SFI will support sustainable approaches to farm husbandry to deliver for the environment, such as actions to improve soil health, enhance hedgerows and promote integrated pest management. There will also be some new, stand-alone programmes to support tree planting, peatland restoration and nature recovery. ELM will launch fully in 2024 and comprise the SFI, Local Nature Recovery and Landscape Recovery components (previously Defra called these tiers). The Local Nature Recovery component will include actions familiar to agri-environment scheme members and collaboration will be encouraged. In comparison the Landscape Recovery component will focus on large-scale projects involving forest, peatland, wetland and salt marsh. Overall, the transition plan contained key details of use to farmers and land managers in England, but with most of the detail still to follow after a consultation. You can read our briefing note on the key announcements and the significance that they may have here.

Scotland: Farmers should keep direct payments
Scotland’s farmers can currently expect to receive simplified direct payments until at least 2024. However, following Rural Economy Secretary Fergus Ewing’s speech at the virtual AgriScot conference, it seems that could be extended. Mr Ewing said it would be ‘unsustainable’ to cut all direct support, which he described as ‘earned income’. He said, “You produce food, you look after the countryside and you support rural communities.” and added “there should continue to be direct income payments, as opposed to ad hoc payments”.

Despite this announcement, Mr Ewing was not immune from criticism. NFU Scotland President Andrew McCornick argued that ministers had failed to set out a broader vision for Scottish Agriculture post-2024, saying cash “should not be used as an excuse” for not delivering policy. He called on Mr Ewing to use the additional £50 million granted to Scotland by the Bew review to set up pilots schemes; “please, stop dithering and start delivering” he said.

National prevention zone declared
An Avian Influenza Prevention Zone has been declared across England to mitigate the risk of the disease spreading. This means it is a legal requirement for all bird keepers to follow strict biosecurity measures. Keepers with more than 500 birds will need to restrict access for non-essential people on their sites, workers will need to change clothing and footwear before entering bird enclosures, and site vehicles will need to be cleaned and disinfected regularly. Backyard owners with smaller numbers should also strengthen their biosecurity measures in order to prevent further outbreaks of avian influenza in the UK. There are also Avian Influenza Prevention Zones covering Scotland and Wales. The latest information is available here.

Coalition to scrutinise food standards
Changes to the way trade deals are managed are too weak to ensure robust scrutiny of their impacts. That is according to the newly formed Future British Standards Coalition (FBSC), which represents farmers, food producers, and animal welfare campaigners. The role and duration of the Trade and Agriculture Commission was extended by the Agriculture Act as a concession to pressure seeking equivalence or protection of British standards within free trade agreements. However, the FBSC found that ministers could still change the rules on food imports without parliamentary votes or robust scrutiny. Standards around antibiotics have already been reduced and could affect a large number of food products according to Kath Dalmeny of the FBSC. She said, “I think the government does not want its hands tied in any way” and that the various reassurances and advisory groups “give the impression that something robust is happening, but none of this holds anyone to account.”

New general licences for England
Defra has published new general licences for the control of wild birds. They come into force on 1 January 2021. Following a review, the licences more clearly define the birds that can be controlled for certain purposes. For example jackdaws and rooks will no longer be able to be controlled for conservation purposes because “the evidence does not demonstrate that predation has a population-level effect on wild birds”. Glynn Evans, BASC head of game and gundogs, said “on first analysis, it’s clear that Defra has tried to produce general licences that are watertight and will bear the scrutiny of a legal challenge”. But he added that the “terms and conditions are more complex” and the BASC would continue to appeal to Defra to produce guidance and advice to aid interpretation.

Check waste management processes
Agricultural businesses are being encouraged to check that their waste management processes meet legal requirements or face enforcement action. This guide explains farmers’ duty of care. The Environment Agency has issued the warning as more contaminated agricultural plastic waste is being intercepted at shipping ports, bound for illegal export. To ensure correct handling of waste, farmers are being advised to: 

• Check waste firms have the necessary authorisations

• Ensure the waste is accurately described on transfer documentation

• Ask where the waste is going.

Covid-19

Venison: Eat to help out
People are being encouraged to eat more venison due to concern that reduced management of deer herds in Scotland because of Covid-19 could have negative consequences for deer and nature. There are around one million deer in Scotland, including 400,000 red deer. Around a quarter of the deer population is culled each year and enters the food chain as venison and is often served as a premium cut of meat. But closure of catering businesses, cancellation of events and other factors resulting from the Covid-19 pandemic are damaging sales. In addition to lost sales, storage freezers will soon reach capacity. This could result in larger populations than normal and herds facing food shortages. Ross Ewing, Scottish political officer for BASC, said “it would be inconceivable for stalkers to be expected to manage deer in the knowledge that the venison could not enter the human food chain”. He added “cull targets would not be met; damage to trees and vegetation would proliferate; the health of herds would become compromised”.

POLICY

Spending Review 2020
The latest government spending review (SR20) “did little to show the government’s mantra of ‘building back better’ will apply to the rural economy”. Those are the words of Mark Bridgeman, president of the CLA, who added “this week’s spending review will do nothing to boost economic growth in the countryside”. The NFU was not as scathing in its analysis of the review, concluding it “presents a mixed picture for our farmers and grower members”. So, what did the Spending Review give to, or take away from, the rural economy?

For 2021-22 Defra received a £400 million cash increase in its core resource funding, taking its overall budget to £5.8 billion. That includes £2.4 billion to meet the government’s commitment to maintain the current annual farm support budget for the duration of this parliament. To tackle climate change, £92 million will be assigned to the Nature for Climate Fund to finance the restoration of peatland and planting of trees, and £75 million will be made available to National Parks and Areas of Outstanding Natural Beauty, an increase of £7 million. Whilst an additional £40 million investment will be made in nature recovery through an extended Green Recovery Challenge Fund.

Particular attention was paid to the state of the Union. Funding for the UK Shared Prosperity Fund (UKSPF) will at least match receipts from EU structural funds, on average reaching around £1.5 billion per year. To help local areas prepare over 2021-22 for the introduction of the UKSPF, the government will provide additional funding to support pilot programmes and new approaches. Despite this, the Farmers’ Union of Wales has branded the decision to cut Wales’ agricultural budget by £95 million as a ‘Brexit betrayal’. Wales’ agricultural and rural development budget was expected to have been £337 million. SR20 puts the budget at £242 million, around 28% lower. The UK government disputes this and says that Wales will receive the same level of funding as in 2019. The balancing amount will come from the EU as Pillar 2 payments are continuing for another three years.

Over £260 million has been allocated to digital infrastructure programmes including the Shared Rural Network for 4G coverage. A further £1.2 billion has been allocated to subsidising the rollout of gigabit-capable broadband, as part of a wider £5 billion commitment to support rollout to the hardest to reach areas of the UK. However, the recently published national infrastructure review suggests the government will miss its target to bring full-fibre broadband to all the UK. Instead, it says “the government is working with industry to target a minimum of 85% gigabit capable coverage by 2025, but will seek to accelerate the rollout to get as close to 100% as possible”. Industry sources believe the watering down of the pledge is “quite surprising” with four years still left to run. Matthew Howett, principal analyst at Assembly Research, said it suggests “that mountains can’t be moved after all, and the remaining barriers are permanent ones”.

10 Point Plan for a green industrial revolution
Boris Johnson has announced a 10-point plan to bring about a green industrial revolution and create 250,000 jobs. The programme is billed as costing £12 billion, with Downing Street saying £8 billion of this is newly announced funding. But Labour called the plan “deeply, deeply disappointing” in ambition, saying only £4 billion was new spending and that it would neither properly tackle the climate emergency nor the jobs crisis caused by Covid-19. Indeed, most points had already been announced, including the quadrupling of offshore wind power, 30,000 hectares of trees planted every year and £1 billion next year for funds to insulate homes and public buildings.

As part of the plan, Mr Johnson did announce a doubling of the Green Recovery Challenge Fund, designed to create and retain thousands of green jobs across England. He also announced plans for new national parks and greater protections for England’s landscapes “to improve access to nature and better protect the country’s rich wildlife and biodiversity”. The measures are intended to help kick-start a green recovery from the impact of Covid-19. As part of the plan to establish new National Parks and Areas of Outstanding Natural Beauty, the government has included an ambition to protect 30% of England’s countryside by 2030 and to help ensure soils are healthy so that they retain and eventually capture carbon.

Subsidy support for onshore wind returns
New subsidies could support up to 12GW of renewable energy, or enough clean electricity to run up to 20 million electric vehicles per year. Energy companies will compete for the subsidy contracts in an auction at the end of 2021. The auction is expected to be close to double the size of its predecessor, held in September 2019, where 5.8GW was auctioned and the cost of offshore wind plummeted by a third. The next round will involve three separate pots: one for offshore wind, another for onshore wind and solar farms, and a final pot for less established technology such as floating offshore windfarms, energy from waste plants and tidal stream projects. Despite support for emerging technologies, it is the pot that allows onshore wind and solar farms to compete that is subject to the most interest. It will be the first time in six years that the government has offered new financial support for onshore wind.

Capital Gains Tax review
The Office for Tax Simplification (OTS) has calculated that an additional £14 billion could be raised through Capital Gains Tax (CGT) if rates were brought into line with Income Tax. Chancellor Rishi Sunak commissioned the OTS to review the tax, and it has now concluded the first part on simplification. The main issues considered are the alignment of tax rates, exemptions, business reliefs and the interaction with lifetime gifts and Inheritance Tax. Currently, CGT is levied at 10% for basic rate taxpayers and 20% for higher rate taxpayers. The first £12,300 of capital gains are exempt and around 50,000 taxpayers reported profits narrowly under that threshold last year, leading the OTS to suggest that the exempt amount could be reduced if it is intended to operate as an administrative de minimis. It observes that the current rules are "counter-intuitive" and create "an incentive for taxpayers to arrange their affairs in ways that effectively re-characterise income as capital gains". The independent tax adviser also suggested scrapping the rule which allows capital gains to be wiped on inherited assets, and removing relief for investors selling shares in unlisted companies who have held them for a minimum of three years. A spokesperson for the Treasury said, "the government's priority right now is supporting jobs and the economy” and added that the report would be “considered in due course".

Response to Werritty report on grouse moor management
The Scottish government’s recent response to the Werritty report confirms that it will introduce a licencing regime for grouse shooting businesses in Scotland. Muirburn will also only be permitted under license and there will be a statutory ban on burning on peatland, except under licence for strictly limited purposes, such as approved habitat restoration projects. Minister for Rural Affairs and the Natural Environment Mairi Gougeon said “I have concluded that greater oversight of the practices associated with grouse moor management is necessary”. She also attempted to reassure stakeholders; “The changes that I have announced today strike what I believe is the right balance. They are not designed to bring an end to grouse shooting”.

Scottish Land and Estates responded to the news by saying “the people who live and work in rural Scotland have been let down badly by this announcement”. The statement went on to say that the industry has “already taken on a huge amount of legislation, regulation and guidance and this includes estates adopting many of the recommendations contained within the Werritty report”. Indeed, many of those involved in grouse moor management question the introduction of licences as it seems to contravene what was recommended in the Werritty report”. Due to weaknesses in the evidence base, the Werritty report concluded that a licensing scheme should only be introduced if the ecological sustainability of grouse moor management had not improved markedly in five years’ time. The Scottish government has decided that licencing should be implemented sooner. This makes adherence to the Code of Good Practice vital and is likely to completely shift the burden of proof to the grouse moor for fear of a suspended or lost licence.

ENVIRONMENT & NATURAL CAPITAL

ESG credentials and habitat restoration
As part of the Cambridge University Law Society ESG webinar series, we are pleased to release a recording of our second webinar: ESG and Rewilding - Private investment is needed to help address the UK’s biodiversity decline, but are Environmental, Social, and Corporate Governance credentials compatible with landscape-scale habitat restoration schemes? The webinar was chaired by Emily Norton, Head of Rural Research at Savills, and featured a panel debate involving leading experts in the sector:

• Professor Alastair Driver: Director, Rewilding Britain

• Kerry ten Kate: Board Member, Natural England, member of International Union for Conservation of Nature’s Commission on Ecosystems Management and Conservation Fellow at the Zoological Society of London

• Charlie Burrell: Owner, Knepp Castle Estate

You can view the webinar here. For more information, please contact Sara Gough.

Scotland: Farmers to tackle climate change
The independent Farming for 1.5°C inquiry has concluded that farming faces an historic shift in focus to cut greenhouse gas emissions. It looked at practical ways that industry could help tackle climate change, leading to 15 key principles for transformation. These include:

• Better nitrogen management

• Integration of renewable energy

• To prioritise re-building biodiversity

• Land use change and sequestration

• An immediate ceiling on methane emissions

• Creation of a Transformation Steering Group.

Agriculture accounted for 15% of Scotland's total emissions in 2018 but the amount of greenhouse gases removed from the atmosphere through land use and forestry is equal to 72% of agricultural emissions. Acknowledging this contribution, the inquiry says that “without the engagement of the agricultural community it will be impossible for Scotland to deliver against its targets”. It goes on to say, “this engagement must have political and financial recognition”, implying that farmers will need financial assistance in order to make the transformation.

A second farmer-led group is to be established in Scotland to provide information, advice and proposals to cut emissions and tackle climate change. The launch of the government’s Arable Sector Climate group builds on the work of the Suckler Beef Climate group that published its recommendations in October.

Reliance on climate-vulnerable nations
The UK's fruit and vegetable supply is increasingly dependent on imports from climate-vulnerable nations. According to recent research published in Nature Food, the proportion of fruit and vegetables supplied to the UK market from climate-vulnerable countries increased from 20% in 1987 to 32% in 2013. Tropical fruits now account for a larger share of UK fruit and vegetable imports as more traditional vegetables, such as cabbages and carrots, have declined. The research states that increased reliance on fruit and vegetable imports from climate-vulnerable countries could negatively affect the availability, price and consumption of fruit and vegetables in the UK, affecting dietary intake and health, particularly of older people and low-income households.

PROPERTY & DEVELOPMENT

Green Homes Grant extended
The Green Homes Grant will continue until the end of March 2022. Homeowners can apply for grants to cover up to two thirds of the cost of green home improvements up to £5,000, or 100% of the cost for homeowners on low incomes, with the support capped at £10,000. The £2 billion scheme will help 600,000 homes save up to £600 on their energy bills and support up to 100,000 jobs across the UK.

Scotland: Renewable heat scheme
A new £4.5 million cashback incentive to help people install renewable and energy efficiency measures in their homes has been announced by the Scottish government. Homeowners will be able to apply for 75% cashback up to the value of £7,500 towards the cost of a renewable heating system and a further 40% cashback up to £6,000 for energy efficiency measures. Scotland’s Energy Minister, Paul Wheelhouse, said “through this new cashback incentive, homeowners could receive up to £13,500 of Scottish government support”. Both incentives operate on a first come-first-served basis until the end of the 2020/21 financial year.

Effectiveness of flood management spending
A report by the National Audit Office (NAO) has concluded that Defra’s narrow focus on the ‘homes better protected’ target has not necessarily produced the best return on investment for flood management, as it does not indicate what has happened to flood risk for non-residential buildings, agricultural land and other infrastructure. The NAO concluded that the government does not have a comprehensive measure to demonstrate whether the overall level of flood risk in England has changed since the programme started. Unless it develops full details of the aims and measures of the programme, Defra will not be able to demonstrate convincingly to Parliament that future investment is achieving value for money. However, the Environment Agency is on track to better protect 300,000 homes. It also expects to achieve a benefit-cost ratio of around 8:1.

OTHER RURAL NEWS

Half a million trees to be felled
Close to half a million trees will be felled on the Isle of Arran to prevent the spread of Phytophthora ramorum. The fungus-like pathogen was first found in Scotland in 2002 and spreads via airborne spores. There is no known cure. A total of 453 acres of larch trees will be felled and substantially change some well-loved landscapes. The timber can still be processed for uses such as wood chips.

And finally…
Sorry, you’re too young
When Laurence Brophy cycled 874 miles in 25 days at the age of 87, you might imagine he was quite pleased with himself. Alas, no. When he returned home, he realised that another cyclist had completed the Land’s End to John o’ Groats ride at a slightly older age in August 2018 - four months older, to be precise. So Mr Brophy decided to repeat the ride again at the age of 88 and in doing so, claimed the title of the oldest person to cycle the route. But even then, when asked if he was proud of doing so, he simply replied “Not really. I’m just lucky to have lived that long. I don’t fuss about it”. Mr Brophy is no stranger to such feats of senior endurance, having trekked across the Atacama desert in Chile aged 77. He says next year he plans to climb Snowdon, Scafell Pike and Ben Nevis, all while cycling between the mountains. When asked why, he said “I like to do things, one every summer. It will give me an incentive to keep fit. Normally I’m pretty lazy”.