Environmental Land Management Schemes (ELMS)

Background

The new Agriculture Act received royal assent on the 11th November 2020. Prior to becoming law, the Act was described as “an “enabling” Bill containing 25 delegated powers with five of these allowing Ministers to modify Primary legislation[1]. The aim is to create the legislative framework necessary for the UK government to set its own agricultural policy following leaving the EU.  The Act therefore lays the framework for DEFRA’s future Environmental Land Management scheme. This is a new agricultural support system compared to the existing BPS subsidy scheme, said to focus wholly on environmental benefit rather than area of land farmed. The UK Government believes “… Common Agricultural Policy Payments have failed to reward some public goods adequately, such as measures to improve water quality and soil health. While agri-environmental schemes (Pillar 2) have produced evidenced benefits, government considers that overall, CAP has not been effective enough at reversing environmental damage caused by agriculture”.[2]

Timescale for introduction of ELMS

The replacement support mechanism is being introduced during a seven-year transition period which began in 2019. The Government is currently running a series of trials on the new scheme, which will continue until 2022, with pilot schemes then running from 2021 to 2024: the Sustainable Farming Incentive pilot scheme opened for expressions of interest from the 15th March to the 11th April. From 2025 the Government proposes that new Environmental Land Management (ELM) schemes will be fully up and running in England and Wales (see DEFRA’s Health & Harmony consultation timeline 2018). (Scotland & Northern Ireland’s devolved governments have their own proposals for how to support their farmers/land managers following the Brexit transition period ending in 2021).

Current scheme proposals

The Government stated in their Environmental Land Management Policy discussion document, issued in February 2020, that the ELM scheme will be split into three tiers. These are

Tier 1: Sustainable Farming Incentive This will pay for management changes directed at improving environmental performance of farming operations. The Government aim for this tier to be accessible and “straightforward,” with an uptake by most farms in the country. Documentation in relation to the Pilot Scheme suggests it will be a series of area and length-based payments made according to land use. Each land use will be further split into a number of different levels, with arable land and improved grassland having a separate additional payment for managing soil health. These are detailed in the table below. [3]

Land use Introductory Level Payment Intermediate Level
Payment
Advanced Level
Payment
Arable £28/ha £54/ha £74/ha
Arable (soils) £30/ha £47/ha £59/ha
Arable (total) £58/ha £101/ha £133/ha
Improved grassland £27/ha £62/ha £97/ha
Improved Grassland (soils) £6/ha £6/ha £8/ha
Improved Grassland Total £33/ha £68/ha £105/ha
Unimproved Grassland £22/ha £89/ha £110/ha
Hedgerows £16/100m £21/100m £24/100m
Woodland Management £49/ha (not available) (not available)
Waterbody Buffering £16/100m £29/100m £34/100m
       

 

 

 

 

 

 

 

 

Each level requires a progressively higher number of different actions to be undertaken. For example, for the hedgerow payment, the introductory level of £16/100m requires you to leave a proportion of your hedges uncut each year and maintaining a number of hedgerow trees. The intermediate-level £21/100m requires more hedgerow trees, some hedgerow buffer strips to be in place and also either a higher cutting height or more uncut areas each year relative to the introductory payment. The advanced £24/100m payment requires more trees and buffer strips in addition to all of the introductory and intermediate level requirements.

Tier 2: Local Nature Recovery This will pay for management of land specifically for environmental purposes, rather than environmental improvements for other purposes. It may be more closely targeted than Tier 1, with paid activities being tailored towards particular objectives for the land. The Government hopes these schemes will be delivered collaboratively between multiple farmers. Paid activities might include tree and hedgerow planting, habitat creation, control of invasive species and educational events.

Tier 3: Landscape Recovery This will be for large-scale environmental change such as aforestation and creation of new wetlands. DEFRA states funding for this may combine public finance with private money, which suggests that commerciality is not a priority. Although the Government hopes this Tier could be achieved through co-operation between large numbers of landowners, it may in practice be more relevant to landowning environmental charities, corporate concerns keen to improve their “green” image and environmentally-driven high net worth individuals.

How practically will ELMS work?

Some detail has now emerged regarding the function of the Sustainable Farming Incentive in particular, due to the pilot scheme. In particular, the Incentive’s proposed function as effectively an area-based payment may be something of a relief, even if its requirements are clearly significantly involved than GAECs under BPS Cross Compliance. However, we must remember that this remains subject to consultation and the pilot’s results. Information about the other tiers remains sparse.

There was also for a while the suggestion of widely implementing payments “by results”, so for visible improvements to, for example, numbers of target species or soil organic matter. These proposals appear to since have been shelved.

While the Agriculture Act will enable the creation of statutory instruments to provide further clarity, for now there are many questions which remain unanswered.

Will ELMS offer appropriate financial reward for environmental and other “public goods”?

The Government states it intends to offer “fair rewards and strong incentives for participation [in an ELMS]”, however at this stage the requirements for entry and the formulas for calculating the level of payments to be made are also still to be debated and agreed. The funding has currently only been guaranteed until 2022 2024, the end of the current government, but there are calls from various stakeholder groups for the government to commit to a long-term budget to allow for clear business planning and investment by farmers/land managers. Whatever support schemes are eventually made available, they will need enough prior notice for farm business plans to be adapted.to fit in with farm and land management business plans, and as they cannot be compulsory (unless there are penalties for environmental failures), The Government will want to ensure the new schemes make financial sense for farmers to take part. The costs of joining and implementing an agreement should be significantly less than the benefits to be received – farmers/land managers. Otherwise participation will be minimal.

While the released payment rates for Tier 1 may appear to provide some information, DEFRA has been clear that these may be subject to considerable revision based on the pilot’s results.

ELMS Testing & Trials Advisory Group

DEFRA now has an ELMS Testing & Trials Advisory Group made up of approx. 25 different stakeholder groups (e.g. CAAV, NFU, CLA, Farming Wildlife Advisory Group etc.) who have had experience of the current CS and other agri-environment schemes, and who can speak for their respective members. They are currently meeting at least once a month to discuss various approaches to delivering the support.

Other agricultural support

In addition to the ELM scheme, the Government has also proposed the Farming Investment Fund to provide capital payments for improving productivity and animal welfare. This is to be split into two payment schemes.

The first of these, the Farming Equipment Technology Fund, will “offer small grants to contribute towards the purchase of a list of specified items”. This may sound familiar in principle to claimants of the outgoing Countryside Productivity Small Grants scheme. However, there are still many unknowns under the new scheme, such as the items to be funded and the funding available for them, and also whether there will still be a cap on the maximum annual claim under the scheme and, if so, what this cap will be.

The second funding scheme, the Farming Transformation Scheme, is perhaps less familiar. This is proposed to offer larger grants for more substantial investments to “transform business performance”. Potential funding areas include automated technology, water infrastructure such as reservoirs, and storage equipment.

Summary

ELMS will most likely be the cornerstone of agricultural payments in England and Wales post-Brexit. It is clear that after the UK transition period farmers/land managers in England or Wales will need to apply for an ELM agreement to receive the bulk of available Government funded financial support. It is likely that an application to whichever body eventually administers and regulates the scheme will require some kind of environmental audit of their land, whether done by the farmer, or with the support of a land agent/environmental consultant. How the application is submitted, and how much detail will be needed, is yet to be confirmed.

In short, while some detail about the new scheme has been released, there remain significant gaps even as BPS reductions are set to begin in 2021. Any farming business needs to know as much and as soon as possible about this new scheme, especially when the enabling powers are used to create new statutory instruments.


[1] Page 4 – Commons Library Briefing Paper no. CPB 8405, 9 October 2018: The Agriculture Bill (2017-19)

[2] Page 19 – Dame Glenys Stacey’s Farm Inspection and Regulation Review (July 2018)

[3] Sustainable Farming Incentive: Defra’s plans for piloting and launching the scheme 16.3.2021

[4] The Farming Investment Fund: an overview 30.3.2021


  • This page will be updated as more information becomes available. (09.04.2021)
Mark Burton

Mark Burton
BA(Hons). MSc

01392 823935
mburton@townsendcharteredsurveyors.co.uk