Draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026
1/2The Committee consisted of the following Members:
Chair: Sir Desmond Swayne
† Akehurst, Luke (North Durham) (Lab)
† Baker, Richard (Glenrothes and Mid Fife) (Lab)
† Billington, Ms Polly (East Thanet) (Lab)
† Brandreth, Aphra (Chester South and Eddisbury) (Con)
Burke, Maureen (Glasgow North East) (Lab)
† Chambers, Dr Danny (Winchester) (LD)
† Eagle, Dame Angela (Minister for Food Security and Rural Affairs)
Farron, Tim (Westmorland and Lonsdale) (LD)
† Hack, Amanda (North West Leicestershire) (Lab)
† Jermy, Terry (South West Norfolk) (Lab)
† McKenna, Kevin (Sittingbourne and Sheppey) (Lab)
† Moore, Robbie (Keighley and Ilkley) (Con)
Owatemi, Taiwo (Lord Commissioner of His Majesty's Treasury)
† Pakes, Andrew (Peterborough) (Lab/Co-op)
† Reed, David (Exmouth and Exeter East) (Con)
† Stewart, Elaine (Ayr, Carrick and Cumnock) (Lab)
† Williamson, Sir Gavin (Stone, Great Wyrley and Penkridge) (Con)
Kay Gammie and Zac Mead, Committee Clerks
† attended the Committee
The following also attended, pursuant to Standing Order No. 118(2):
Walker, Imogen (Hamilton and Clyde Valley) (Lab)
First Delegated Legislation Committee
Monday 1 June 2026
[Sir Desmond Swayne in the Chair]
Draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026
I beg to move, That the Committee has considered the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026. It is a pleasure to serve under your chairmanship, Sir Desmond. This is the first time that you and I have been in the same room in this context. The draft regulations, which were laid before the House on 10 March, will set the reductions applying to delinked payments for England for the years 2026 and 2027. In doing so, they will deliver on our commitment to phase out those subsidies by the end of the seven-year agricultural transition period, as we redirect funding to our other schemes for farmers. The last year of delinked payments will be 2027. The Government are committed to supporting our farmers and the vital role they play. We will continue to invest in our farmers and land managers, to make their businesses, food production and our country more sustainable and resilient in the years ahead. Reducing delinked payments is essential if we are to fund the other schemes that will help us to achieve that. Delinked payments do not address the underlying challenges affecting farm profitability; they do not support the healthy soils, abundant pollinators and clean water needed to produce good food, or promote innovation and provide good value for money. The reductions to delinked payments will complete the move away from the previous scheme, which rewarded land ownership, with 50% of payments going to the largest 10% of firms. We are applying the reductions fairly, with larger reductions to amounts of the higher payment band. We announced the reductions last June to help farmers to plan ahead. The money released from delinked payments is being reinvested in the sector. Farmers and land managers will benefit from an average of £2.3 billion a year over the period 2026-27 and 2028-29 through the farming and countryside programme, and get up to £400 million extra from additional nature schemes, including those for tree planting and restoring peatlands. The investment includes increasing annual funding to the environmental land management schemes from £1.8 billion in 2025-26 to more than £2 billion by 2028-29. That means we are backing farmers with the largest nature-friendly budget in history to support them to restore nature and boost farm productivity. There are now 50,000 farm businesses, and half of all farmland is managed under our environmental land management schemes. Earlier this year, we announced plans for a new sustainable farming incentive offer, and the first application window will open later this month. The new offer will ensure that more farmers can access funding. A range of improvements are being introduced to make the sustainable farming incentive 2026 simpler, more streamlined and easier to navigate. The new offer will continue to support sustainable farming by strengthening the environmental foundations of farm profitability and our long-term food security. Last September, the new countryside stewardship higher tier opened for applications for those who have been invited to apply. They have received pre-application advice and completed any preparatory work. Landscape recovery projects that were awarded funding in rounds 1 and 2 are continuing to progress towards the delivery phase. Plans for a third round will be confirmed in due course. The latest round of the environmental land management capital grant offer will open in July, backed by £225 million in funding—a 50% increase from the last financial year. We have also announced plans for £120 million in innovation and productivity grants in 2026-27. Such grants can help the sector to access cutting edge technology and techniques, such as robotic weeders, which reduce chemical use in our countryside and help farmers to grow more food. This funding forms part of the Government’s commitment to invest at least £200 million in agricultural innovation by 2030 to improve productivity and to trial new technology as part of the UK’s modern industrial strategy. We will spend up to £30 million over three years on a new approach to farm collaboration and advice, and we are working with Dr Hilary Cottam to develop a place-based approach for upland communities. We have also extended the farming in protected landscapes programme for another three years, until March 2029. We want to continue to work in partnership with the sector. We have established a farming and food partnership board, which brings together voices from farming, food, retail and finance to drive profitability, building on the recommendations made in Baroness Batters’s farming profitability review. We have also engaged with farmers and stakeholders on the 25-year farming road map, which will set out the Government’s long-term vision for farming, giving farmers the clarity they need to plan ahead. We want farm businesses that are productive, profitable and resilient, while contributing to food security and nature recovery. The reductions to delinked payments are essential to enable us to make the planned investments in the future of farming and the countryside. I commend the draft regulations to the Committee.
It is a pleasure to serve under your chairmanship, Sir Desmond. It is perhaps not surprising that we are here talking about yet another piece of legislation that will impose further harm and unnecessary burdens on our farmers. We have already had the family farm tax, which has now regrettably come into force, the added financial costs of the increase in employer national insurance contributions, and, of course, uncertainty and mixed messages on things such as fuel duty and the rising costs of fertiliser. After leaving the EU, the previous Conservative Government committed to transitioning farmers in England away from direct payments to domestic environmental land management schemes, or ELMS, as they became known, which pay for the direct delivery of public goods. To fund the new schemes, direct payments, now called delinked payments, were scheduled to be reduced gradually from 2021 to the end of 2028. This Labour Government, however, are accelerating that transition. The draft regulations propose a staggering 98% reduction on the first £30,000 tranche that a farmer would previously have received under direct payments, in effect limiting payments to a maximum of £600 per year in 2026 and 2027. When the previous Conservative Administration brought forward delinked payments, we intended a gradual phase-out by 2028 in favour of environmental land management schemes, where farmers and landowners receive payments only for public goods. However, this Government accelerated that decline dramatically last year and have continued at a similar rate this year, which in effect has ended the seven-year transition well before the 2028 deadline that farmers had been led to expect. That was not announced before the last general election, so farmers were under a false illusion when the Labour Government came to power, which undermined their budgets at a time of already unprecedented worry and uncertainty. This is not a party political point that I make here, but one that reflects the concerns of the whole sector. When the percentage reductions for 2025 and 2027 were announced in June last year, the vice-president of the National Farmers Union said: “Having had significant reductions to delinked payments announced only last autumn in the Budget, to have further big reductions starting next year will be yet another financial blow to many farmers who haven’t had the time to effectively plan for them.” The then president of the Country Land and Business Association said that “the sharp fall in BPS payments was expected but is nonetheless unwelcome. It will hit especially hard those whose profit margins are now cut to the bone…While there might be a consolation that the new SFI 2026 scheme could be ready for applications in spring 2026, there is as yet no clarity on what that will look like and who will have access to it”. This Labour Government promised that farmers would be able to access new income streams as direct payments were phased out, but that has not happened. The SFI closed to applications in March 2025 and it remains closed. While I accept that the Government have committed to opening SFI 2026 this month, it is not open yet, and it will only be open for smallholdings of up to 50 hectares. Currently, farmers lack access to replacement support during this period of high cost inflation and market volatility, much of which has been brought on by policy decisions made by this Government. Many SFI 2023 agreements and countryside stewardship mid-tier agreements are due to expire at the end of this year and in early 2027. With no clarity on when farmers can expect to see an SFI 2027, or a further replacement from SFI 2026 opening to all from September, they face being locked out of funding schemes until early 2028 through no fault of their own, by which point, under these draft regulations, the delinked payments will in effect have ceased. Additionally, due to the first-come, first-served nature of the new SFI approach for 2026 and the long period of inaccessibility, demand for SFI 2026 in September is expected to be high. The NFU and the CLA have also expressed concerns about the capacity issues that the Rural Payments Agency is expected to experience. Farmers approaching the end of their environmental agreements face being unable to apply unrestricted for a new agreement until the window has already closed, due to the budget being allocated. Given the well-documented cash-flow crisis in the farming sector, what assessment has been made of the volatility impact on farming businesses that have had their basic payments reduced by at least 98% and are unable to apply for SFI, capital grants or countryside stewardship higher-tier schemes? I also note that no impact assessment is associated with these draft regulations. Why has no full impact assessment been undertaken by the Government, despite the policy change that we are debating having huge financial implications for many—in fact, probably all—farming businesses in England? We support the long-term fair transition of delinked payments, but we cannot do so at this accelerated pace. Conflict in the middle east has caused uncertainty about fuel and fertiliser prices and grain prices remain low, undermining arable farmers’ profitability, but it is not just external factors that add pressure on farmers. Deliberate choices made by this Labour Government have left many farmers more vulnerable. The early closure of the SFI window applications last year, the family farm and family business taxes, increased employer national insurance contributions and the Government’s refusal to consider the Conservatives’ cheap power plan to lower energy costs have had a cumulative impact. Ultimately, these draft regulations do not help farmers precisely at a time when global events and this Government’s choices threaten their viability, let alone their profitability. That is why the Conservatives will vote against the passage of the regulations. I urge the Government to rethink their plans.
It is a pleasure to serve under your chairmanship, Sir Desmond. I do not wish to detain hon. Members for any longer than necessary, but I am keen to speak about this issue. I am proud to represent South West Norfolk and its 500-plus farmers—it is a real privilege to visit farms in my constituency, where, since the election, I have met more than 100 different farmers—and to serve as co-chair of the all-party parliamentary group on farming. I also sit on the Select Committee on Environment, Food and Rural Affairs. It is fair to say that I am concerned about the future of farming and the numerous challenges facing the industry. Arable farming, which makes up the vast majority of farming in my constituency, is particularly at risk, especially from climate change. Water availability is already a major problem in our part of the country, and it will worsen. Other input costs are rising, too. We have seen the impact of red diesel price rises recently— I welcome the Government’s action on that. More widely, profit margins are decreasing, and, more frequently than not, they are non-existent for many years in a cycle. Financial resilience is low, as is emotional resilience after years of struggle, particularly over the past decade. The current legislation, the principle of which is a hangover from the previous Conservative Government, was developed during a period in which decades-long structural challenges facing the industry collided with the unexpected withdrawal from the European Union. That withdrawal removed the safety net of the common agricultural policy, which masked so many of the challenges facing the farming industry. In supporting the draft regulations, we should be clear that, if we are to achieve food security, we must ensure that there is a future for farming in this country and that the underlying profitability challenges are addressed. I support public money for public good, and the sustainable farming incentive and other schemes, but the sustainability of food production must be of great concern. I know that the Minister is passionate about addressing that profitability challenge, and she has made great progress during her time in this role. Baroness Batters’s profitability review has laid a great foundation, with the farming road map to follow. For farmers in my constituency, this work is crucial, and I look forward to supporting the Minister with it.
It is an honour to serve under your chairship, Sir Desmond. I thank the Minister for her speech. Liberal Democrats will also support the long-term move towards a fairer farming system that rewards sustainable food production, nature recovery and climate resilience rather than relying solely on an outdated subsidy model. However, we are deeply concerned that the Government are accelerating the withdrawal of support before replacement schemes are fully available, adequately funded and trusted by farmers. We are particularly concerned that England is now the only country in the UK and Europe that does not financially support farmers in the production of food. Farmers are being asked to absorb rising costs, including increased fuel and fertiliser costs caused by war. They face uncertainty in environmental land management schemes and in the closure of the sustainable farming incentive, while facing the prospect of losing almost all remaining delinked payments in 2026 and 2027. That risks creating yet another cliff edge for the farming sector after years of Conservative mismanagement and continuing Labour uncertainty. We are also concerned that the Government continue to characterise these payments simply as “delinked subsidies” despite the fact that farmers still had to demonstrate cross-compliance with environmental standards to get the basic payment. The Liberal Democrats believe that the Government must ensure a fair transition by properly funding ELMS, restoring confidence in environmental schemes, providing long-term certainty for farmers and recognising the vital role that farmers play in producing food, restoring nature and supporting rural economies. That is why we are calling for an additional investment of £1 billion in the farming budget to support that transition. We will therefore vote against the draft regulations.
I thank all those who have contributed to this short but perfectly formed debate. The draft regulations were announced last June as part of a process that commenced under the previous Government following Brexit, when they announced a seven-year programme to transition away from the common agricultural policy, which makes delinked payments, to a much more focused environmental policy. The previous Government created that policy and the then Labour Opposition supported it, because we both accepted that farming has to be done on a more sustainable basis. We must see nature recovery, we must invest in healthy soils and in recreating healthy pollinator populations, and we must ensure reasonable food production rather than degrading our natural assets and resources to maximise food production at any cost. We are shifting to a much more sustainable model, and although the Opposition indicated that they will vote against the draft regulations, I hope that everybody can support that shift in principle. The hon. Member for Keighley and Ilkley said that we are going too fast, but the farming transition was a seven-year transition. All the ELM schemes and support for farmers will be involved in protecting nature and increasing sustainability, rather than going towards delinked payments. He seems to object not to the end point, but to the speed of the transition over the next two years. I understand what he is saying, but I think that he is dancing on the head of a pin.
If the Minister were speaking to a farmer, would she say that this is dancing on the head of a pin? We are talking about reducing an annual delinked payment to a farming business from a potential £30,000 to about £600. Given all the additional overheads placed on farming businesses that produce food, the Opposition believe that that is too quick a drop, and it comes without sufficient notification.
Sufficient notification has been given, since the transition began seven years ago—everybody has been expecting it. It is important that we get the transition done. I can assure the hon. Gentleman that the money being taken away from delinked payments is going straight back into the system and will be available for the transition. The Government remain convinced that delinked payments are not an effective way of supporting our farmers, protecting food security or restoring nature. Former Secretary of State Lord Gove certainly agreed with that when he began the transition after Brexit. We continue to invest in our environmental land management schemes and our range of grants and other support for farmers to deliver public goods, reward sustainable farming and boost productivity. Without the reductions contained in the draft regulations, spend on delinked payments in each of the years 2026-27 and 2027-28 would increase to £1.8 billion, leaving a shortfall in the remaining farming budget for each of those years that then could not be spent on financing the transition. Those who believe in the principle of the transition need also to believe in the means. My hon. Friend the Member for South West Norfolk spoke extremely well about his farmers, and I welcome his support. I understand that the transition can be difficult and worrisome, but it is crucial for the future of our farming profitability and resilience that we manage to get this done. The Government are determined to assist farmers all we possibly can in achieving the transition. The vast majority of them know that it has to happen, and we will see what we can do to ensure that it does. The money released by reducing delinked payments is not being lost to the sector; it is being reinvested through our other schemes for farmers and managers. We are being transparent about how the money is used. Each year, we publish a farming and countryside partnership annual report, which shows how the farming budget has been spent. The report for the financial year 2024-25 was published last September. We will publish our next report later this year. That will be transparent about where the money has gone and how it has been spent. We have provided a breakdown of how we plan to spend an average of £2.3 billion a year through the farming and countryside programme, showing planned spend for each of the years between 2026-27 and 2028-29. That was set out in a farming blog, which is available on the Government website. It is clear that we cannot achieve our environmental goals or have food security unless farm businesses are profitable. By increasing investment in our environmental land management schemes, we are helping farmers to protect the environment and the business foundations of farming—our soils, our water and our pollinators—which will help to reduce their input costs and boost productivity. We know that there is high demand from farmers for our ELM schemes, so I am pleased that SFI26 will be opening to small farms later this month. The hon. Member for Keighley and Ilkley said that it was for small farms only, but the first window is also open to those without an existing agreement, so it is a slightly wider opening than he hinted at in his speech. As was announced at the NFU conference, in 2026-27 we will invest £120 million in new productivity grants, which can help businesses to cut costs, improve efficiency and protect profits. Farmers can also boost their businesses through the animal health and welfare pathway, a programme designed to strengthen biosecurity, manage disease risks and improve animal health and welfare outcomes, which, in turn, boost farm productivity and profitability. We are also continuing our work to ensure fair competition across the supply chain, and have announced planning reform to unlock food and farming infrastructure development. The Government’s new farming and food partnership board has set out how it will work to drive growth in all sectors, improving productivity and profitability. It is beginning its work with two sectors—horticulture and poultry—but it will get on to work in others. Our vision is to help farmers to improve their productivity and profitability, and to collaborate with them on delivering positive environmental change. Continuing to phase out delinked payments will enable us to invest in the long-term future of farming, by ensuring that funding is targeted where it can have the greatest impact. I commend the regulations to the Committee. Question put.
Resolved,
That the Committee has considered the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2026.
Committee rose.