Lack of ELMS payment strategy risks poor outcomes for nature and farmers

RSPB Senior Policy Officer Alice Groom considers some serious issues around Environmental Land Management Scheme (ELMS) payments ... 

The founding principle of the ELMS in England was always ‘public money for public goods’. Yet as the years have passed, and Defra has become increasingly panicky about the short-term political challenges of securing high uptake and getting money out the door that clear focus is being lost. And with that loss of focus, a reduction in the potential contribution these schemes can make to meeting vital environment targets. In the longer term this will undermine the value these schemes will deliver for the public money invested.

Defra is set on achieving high uptake of the SFI but done little to ensure an offer for those farmers doing the most to tackle the nature and climate crisis, whilst producing good food. Defra has dropped the development of the Local Nature Recovery scheme, failed to invest in the Higher Tier of Countryside Stewardship, and instead is relying on the roll over of legacy Higher Level Stewardship agreements to patch up a gaping hole in their policy. And as we have seen in Dartmoor this strategy is looking increasingly problematic. It is important to remember that government used to be able to process up to 2500 new Higher Level Stewardship agreements a year, in comparison, the Higher Tier is only available to c300-500 Higher Tier farmers or landowners a year. This is leaving many wondering where the ELM offer is for them.

A further example of the short-term focus on uptake over outcomes is the introduction of the SFI management fee announced in January this year. This payment enables applicants to the SFI to secure £20/ hectare for the first 50 hectares (or a total of £1000 per agreement) for just applying to the scheme. Whilst in the short term this could help Defra drive uptake, in the medium to long term it will embed significant deadweight into ELM. But without the awaited long-term payment strategy Defra is unable to assess the implication of such decisions properly and transparently.

A further example of this short-term panic and lack of long-term vision and strategy is rumours that Defra is the announcemnet about the equalisation of some of the upland payment rates to reflect lowland rates for similar actions. Payment rates should properly reward the delivery of environmental outcomes across lowland and upland farmers, and there are numerous robust approaches Defra could take to achieving this that don’t risk leaving them in hot water with Treasury and the World Trade Organisation in years to come.

Countryside Stewardship currently funds 280 options there are 7 upland (or severely disadvantaged) only options and 5 actions where there are separate upland and lowland options and payment rates.  Defra is now equalising these five actions. 

Firstly, this decision only affects a small number of options so will do little to ensure that there is a robust and ambitious offer for upland farmer.

Secondly, the payment rates for the similar lowland and options differ because they reflect significant differences in expected management, significant cost differences and value-for-money benefits. E.g., GS2 requires a more significant reduction in stocking levels with a bigger impact on income than GS5. Wood pasture restoration and creation options in the lowland also require significant land use changes such as arable conversion, whereas the upland options require alterations in stocking rates, as such the costs associated with these are very different.

Thirdly, going for straight payment equalisation, as opposed to a more robust alternative could contravene WTO Green box rules (this is pretty nerdy but could have implications for trade and international relations), it could create the perception of income support and also distract away from ensuring that payment rates truly reward the most impactful actions.

And finally, there are better alternatives that could ensure payment rates for a broader range of options are pitched at the level necessary to drive the delivery of governments vital environmental objectives. For example, in 2019, the RSPB, National Trust and The Wildlife Trusts commissioned an independent economist to look at options for ensuring that ELM payment rates could secure high nature value farming systems. This study interrogated the inherent flexibilities of the current payment methodology of income foregone + costs and set out a robust case for paying the full cost of environmental public goods, where deemed necessary to meet environmental objectives. The research suggests that it may be justifiable to contribute to unpaid labour (estimated to be circa £26,000/ year) for many high nature value farm businesses where they are vital for securing the management of farmed habitats such as hay meadows, wood pastures and heathland. Adopting this approach could increase the annual per hectare costs of maintaining upland habitats (such as upland heathland, upland hay meadows and upland calcareous grassland) as well as the costs of low intensity management of upland rough grassland by £131 in England. This would provide a sound means of reflecting the high public goods potential in the uplands, which would reward those delivering the most public goods, secure excellent value for money and be WTO Green Box compatible.  

So, publishing the long-promised payment strategy would enable Defra to make payment decisions within the context of the longer-term implications, and avoid setting unhelpful precedents, politicising the payments setting process, or impacting value for money or on environmental targets delivery.

Yet, in the absence of a vision or payment strategy, Defra is at risk of making it up as they go along. In the long term this is likely to lead to poor outcomes for farmers, nature, and the taxpayer.