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England’s Farming and Countryside Programme: What does the National Audit Office's new assessment tell us?

England
Policy & Views
Agriculture Transition Plan
Sustainable Farming Incentive
Environmental Land Management scheme
policy
Government

Last week (23 July), the National Audit Office (NAO), the UK Government’s independent public spending watchdog, published a report on Defra’s Farming and Countryside Programme. 

This opinion piece, from the NFFN’s new Head of Policy Jenna Hegarty, considers the report’s findings, what it tells us about the Programme’s performance to date (especially its land management schemes) and where renewed political leadership is most needed to drive the essential transition to an environmentally-positive and economically-thriving farming sector.

Where to start…?

The report is neither brief nor light reading, but nor should it be. The Programme is designed to shape how 70% of land in England is managed, and centres, at least in headline terms, the intertwined relationship between environmental protection and improvement, domestic food production and climate mitigation and adaptation.

Farmers, as the people in charge of most of this 70%, are uniquely placed to respond to the food-nature-climate challenge, and I’m fortunate, in my new role as Head of Policy, to work with a veritable army of farmers who are responding in creative ways to reduce trade-offs and maximise win-wins. But how far and how effectively is the Programme supporting these leaders in their [farm] fields, as well as those who are earlier in the transition to nature-friendly, climate smart and food-abundant systems of production?

Show me the money

The Farming and Countryside Programme doesn’t come cheap - it’ll cost £12bn between 2020-2025. But is this enough and is it buying the right things? 

£12bn (or roughly £2.4bn a year) is a lot, right? To most people, absolutely, but for what the Programme is trying to achieve it’s very little. On the same day the NAO report was published, a study from RSPB, National Trust and The Wildlife Trusts set out the financial envelope required to deliver the necessary land management for biodiversity, climate change, landscape, the historic environment, water quality, and soil protection. This reflects the objectives set by the four UK governments themselves, not those of eNGOs. 

For England, the investment in land management needs to increase by almost 30%, to at least £3.1bn a year, and for at least 10 years. Given this only speaks to land management costs (and associated advice provision), and doesn't account for wider investment such as farm productivity support, there is a clear mismatch between need and the current levels of expenditure.  

Defra cannot set its own budget, but what it can do, and what the NAO clearly states that it should do, is “present a comprehensive and realistic assessment of the funding needed to meet all the Programme’s objectives.” 

Worryingly, there is no funding commitment in place for the Programme after 2025, and pre-election, Labour made no promises about future funding levels. Without a robust assessment of full Programme needs, Steve Reed, the new Defra Secretary of State, will have a tough job justifying any price tag for farming support, let alone an uplift.

So we know we need more, but is the current investment working as hard as it should?

Delinked payments, which replaced BPS (direct payments), are reducing over time and will end in 2027 - being gradually replaced with targeted payments to support specific objectives. By 24/25, objective-led payments will reflect £1.7bn for ELM and £348m for productivity.

For farmers who are seeing delinked payments reduce fairly dramatically, having well designed and appropriately resourced schemes available is particularly critical for farm business viability for the next few years. 

What can farmers access? 

The Programme has been designed to include three land management schemes: the Sustainable Farm Incentive (SFI), open to all farmers and which provides payment for a range of options, from winter cover crops to management plan creation; Countryside Stewardship Higher Tier, a competitive scheme, which pays for more complex habitat creation and/or management; and Landscape Recovery, also competitive, which pays for large-scale (i.e more than 500 connected hectares), long-term land management actions. A fourth scheme - Countryside Stewardship Mid Tier - has effectively been absorbed into the SFI from July 2024 and is no longer separately on offer.

At the start of the Programme, Defra signalled there would be a roughly even funding split between the three schemes, recognising that more complex schemes, whilst covering less land compared to SFI, would need significant investment to secure the land management required and, importantly, that these more ambitious schemes were as important as SFI. However, as the NAO reports makes clear, Defra has now moved away from this commitment, prioritising SFI uptake and providing no indication of the relative balance across the schemes or evidence to justify this approach. Here, and entirely rightly, NAO states: “without some limits, high demand for SFI could crowd out funding for more complex schemes…resulting in more limited environmental outcomes overall”.

Offering free choice over what options to choose does not deliver coherent, high-quality agreements at scale because it generally makes the options that have the least impact on day-to-day farming practice the most attractive

SFI - the favourite child?

This decision has stark consequences, and for several reasons. Firstly, and in a depressing Groundhog Day style, SFI has failed to apply one of the most important lessons from its ‘broad and shallow’ predecessor, Entry-Level Stewardship (ELS). Namely, offering free choice over what options to choose does not deliver coherent, high-quality agreements at scale because it generally makes the options that have the least impact on day-to-day farming practice the most attractive. This not only represents poor value for money at a time when Treasury officials will be eyeing up every opportunity for cost savings, it also means SFI will fail to pull the weight it needs to for the Programme’s environmental objectives. As an example, in SFI2023, Defra has committed over £30m on plan creation but “does not monitor their quality or check that they are implemented.” 

SFI has also exemplified Defra’s ‘iterative’ approach to scheme design, which has produced an incredibly confusing landscape for farmers. This makes it extremely difficult to plan properly and undermines confidence in a system that should be flying by now. 

Countryside Stewardship (Higher Tier) - the neglected child?

The Higher Tier scheme is a key tool for positive, land-based nature and climate change action and, due to the range of semi-natural habitats and land types that are often found on upland farms, is disproportionately important to farm businesses in these areas as an income stream.

However, the scheme has been neglected in the current Programme, despite significant demand from farmers to participate. In 2024/5, the forecasted expenditure for the Higher Tier scheme is just 12% of the overall budget - woefully behind what is needed. In 2023 Defra, through Natural England, could only take forward 500 Higher Tier applications, despite receiving over 1000 expressions of interest. Following a concerted campaign led by the NFFN, Defra has committed to doubling agreement numbers each year by 2026, but this won’t match the 3000-4000 agreements needed per year to deliver the required environmental outcomes. Without this scale of roll-out, there is little scope for meeting statutory nature and climate targets by the end of the decade, and thousands of upland farmers will have a vital income stream denied to them.

Landscape Recovery - the forgotten child?

In 2024/25, Landscape Recovery is set to receive just 2% of the overall budget (around £18m). This is largely because the scheme isn’t up and running yet. The 22 projects selected in round one are still in development, with the further 34 selected in round two unsurprisingly even further behind. 

What about legacy agreements?

One area that was neglected in the NAO’s analysis is the relationship between the Programme and legacy schemes, particularly HLS. These 10-year, competitive land management schemes have been very successful in targeting high-quality options and yet there has been little care taken to ensure the benefits secured through them are continued and built upon via the Programme. In addition to the access problems many HLS farmers have faced getting into CS Higher Tier, they are seeing some payment rates in new schemes exceeding those in HLS for the same options. This is effectively penalising them for entering a high-ambition scheme earlier. This lack of care means that many of the farmers who have been at the vanguard of delivery have to continue on an unfair payment-rate basis until their HLS scheme expires and then face either being locked out of continuing that delivery or joining the SFI scheme with lower ambitions.

Many of the farmers who have been at the vanguard of delivery have to continue on an unfair payment-rate basis until their HLS scheme expires

Are the new schemes working?

In order to measure progress, you have to know where you're headed, identify key milestones on the way, and gather and assess the right data. Of the 16 environmental objectives contained within the Programme, 11 don’t have interim objectives at all, indicating a lack of a clear plan for getting from where we are now to where we need to be. 

The Programme, and ELM in particular, needs to do some pretty heavy lifting to help meet important and legally binding Government targets, including the headline one in the Environment Act to halt species decline by 2030. Despite this, the report highlights that there is no single, quantified objective for species abundance and will not be one until March 2025. Defra’s ability to properly track the Programme’s environmental progress has also been found wanting because it is not collecting all the required data. Leaving aside the failure to plan for these obvious data needs in good time, the ability to track progress is imperative to demonstrate the success of Programme interventions and inform improvements. The UK has 40 years of agri-environment experience and we can design schemes that work well.

Advice provision for farmers

NAO rightly acknowledges the importance of high-quality advice to farmers, particularly for more complex land management schemes. However, the report finds the current model lacking as it is delivered through multiple mechanisms with a less-than-joined-up approach to supporting the Programme’s three objectives of environmental protection, food production, and ensuring farm business viability. This speaks to a sometimes-siloed approach to the Programme’s objectives which can, for example, unhelpfully mask just how important ‘environmental improvements’ are for productivity and farm business improvements.  Supported by many stakeholders, the NAO advises a much more unified, whole-farm approach to advice provision that would be much better equipped to advise across the three objectives, maximising synergies and reducing the risk of unintended consequences. 

The prizes on offer, if the Programme reaches its potential, are considerable: a sector that is positively contributing to climate mitigation and adaptation, halting and reversing species’ declines, and becoming more resilient to environmental shock and significantly increasing its economic health.

So what next?

This blog hasn’t discussed everything the report identifies—the alarming state of the IT systems underpinning agreements and payments is one example—but it has highlighted some key areas where rapid improvements are urgently needed.

NAO’s list of recommendations, essentially to the new Government in Westminster, are solid. It includes an assessment of the Programme’s funding needs, a clear direction of travel, (including the funding balance between schemes), more robust environmental objectives and a comprehensive and unified advice package for farmers.

Ultimately though, the single biggest recommendation for the new Westminster Government is for renewed and ambitious leadership. The prizes on offer, if the Programme reaches its potential, are considerable: a sector that is positively contributing to climate mitigation and adaptation, halting and reversing species’ declines, and becoming more resilient to environmental shock and significantly increasing its economic health.

Investing in the farming transition is essential: in just the last couple of weeks we’ve had the latest assessment of progress from the Climate Change Committee (too little, too slow), the Met Office State of the Climate report (with 2023 the hottest year on record so far) and the ‘Scale of Need’ assessment for land management.

While the Programme has clear areas for improvement and cannot do everything (a renewed regulatory and standards baseline is an important part of the wider picture, and we urgently need to see the long-awaited Land Use Framework), it can and must form the heart of positive change. The scope for world-leading delivery is immense, but it needs the political will and leadership to get us there—and fast.