General Committees

The Committee consisted of the following Members:

Chair: † Wera Hobhouse

† Baxter, Johanna (Paisley and Renfrewshire South) (Lab)

† Cocking, Lewis (Broxbourne) (Con)

† Dodds, Anneliese (Oxford East) (Lab/Co op)

† Fox, Sir Ashley (Bridgwater) (Con)

† Kitchen, Gen (Wellingborough and Rushden) (Lab)

† McMahon, Jim (Minister for Local Government and English Devolution)

† Mishra, Navendu (Stockport) (Lab)

† Mullane, Margaret (Dagenham and Rainham) (Lab)

† Murray, Chris (Edinburgh East and Musselburgh) (Lab)

† Niblett, Samantha (South Derbyshire) (Lab)

† Onn, Melanie (Great Grimsby and Cleethorpes) (Lab)

† Simmonds, David (Ruislip, Northwood and Pinner) (Con)

† Slade, Vikki (Mid Dorset and North Poole) (LD)

† Stuart, Graham (Beverley and Holderness) (Con)

† Tapp, Mike (Dover and Deal) (Lab)

† Thomas, Fred (Plymouth Moor View) (Lab)

† Wrigley, Martin (Newton Abbot) (LD)

Jack Edwards, Committee Clerk

† attended the Committee

Fifth Delegated Legislation Committee

Wednesday 26 March 2025

[Wera Hobhouse in the Chair]

Local Authorities (Changes to Years of Ordinary Elections) (England) Order 2025

I beg to move, That the Committee has considered the Local Authorities (Changes to Years of Ordinary Elections) (England) Order 2025 (S.I. 2025, No.137).

It is a pleasure to serve with you in the Chair, Ms Hobhouse. The postponement or cancellation of local elections in pursuit of local government reorganisation is a subject that has been much debated on the Floor of the House, and indeed, is a debate that has played out in the media. The Opposition have some concerns about the decision being made, and I will briefly summarise the reasons for that.

As Ministers have said repeatedly, the practice has been to postpone and cancel local elections where doing so is necessary to facilitate the reorganisation of local government. The practice has applied since the Local Government Act 2000, and it has been followed by Governments of all parties. We have concerns, however, about the messages that have gone out suggesting that these elections are merely to be postponed, and indeed, that is the substance of the Government’s proposals.

We know that the intention, as has clearly been set out—this was certainly our intention in government when dealing with this matter—is not merely a postponement for a 12-month period but that these elections will be cancelled, so that new local authority structures can come into being. We would not elect a council that is about to be abolished in 12 months’ time, but we might hold elections for the new local authorities that would come into being, and the new elected mayors who would serve those local government areas.

Clearly, that process is one in which there needs to be a degree of input, perhaps from the boundary commissioners or the Ministry of Housing, Communities and Local Government, in order to ensure that effective democratic representation is in place before those elections occur. That practice was followed, for example, with the reorganisation of the Buckinghamshire and Northamptonshire councils during the previous Parliament.

At present, there is a lack of a clear timetable for local authorities. Members of Parliament and local residents in those areas have expressed concern that, while they understand the rationale for reorganisation, they want to know confidently when they will have the opportunity to cast a ballot to shape the political direction of their new local government representation.

The Opposition have set out a degree of concern that, contrary to previous practice—where local authorities were invited, if they felt it appropriate, to bring forward proposals—in this case, the drive for the proposals comes from Whitehall and the Ministry, and it is to a template that has been set out by Government on the likely size and population of the local authorities.

We are concerned that there is not a clear plan for how the reorganisation of local government will interact with other legislation that either has been passed or is making its way through Parliament, including the Planning and Infrastructure Bill, which began its passage last week, and the Children’s Wellbeing and Schools Bill. All of that will have a significant impact on the organisational role of local authorities. Other legislation, particularly the envisaged wholesale reorganisation of planning in England, will also require significant input from local authorities if it is to work effectively. That lack of clarity is a significant concern to us.

Finally, I have two questions that I am sure the Minister will be able to answer, the first of which is about the treatment of vacancies that arise. The order sets out a process whereby elections that have already arisen, but which would have normally been postponed until the occurrence of the regular cycle of elections, will be required to be held between the order coming into force and a date in May. However, given that the postponement is part of an undoubtedly longer period, one issue that clearly arises is that it is likely to lead in due course to the cancellation of those elections, so how will vacancies be treated beyond that period? I am sure that the Minister has an answer, but it would be helpful to know what will happen if local authority by elections cannot go ahead outside the period that is specified in the statutory instrument.

The second issue is the specific decision that the statutory instrument envisages for Thurrock, where elections are postponed until 2030. Clearly, that is a long time, and it would be helpful if the Minister set out the thinking behind that particular decision. What are the benefits to the residents of Thurrock of having those elections postponed until 2030?

Thank you for calling me to speak, Ms Hobhouse. As the Committee knows, the Lib Dems are unhappy with the decision to cancel local elections in May. We think it is a denial of democracy. I have concerns about two specific things.

The first relates to the examples that have been given of other places where elections have been postponed: Somerset, Cumbria and places like that. In such places, that was discussed and decided at a local level over quite a long period. A number of options were discussed with local people, consultations took place, a lot of data went around and there was to ing and fro ing between local areas and Government about which option would go forward. At the end of that, the Government took a decision that some people liked and some people did not. Decisions about who to vote for were made on that basis.

In this case, the voices of local people have not been heard at all. Neither at the general election last year, nor on the last occasion that those people had the chance to vote, was this even a twinkle in the Minister’s eye. We knew that mayors were coming, but we did not know that local government reorganisation was. Therefore, those people have not had their chance to express a preference for this type of reorganisation. This case is therefore different. That is the main reason I have concerns.

On my other concern, I have a question that I hope the Minister can answer. I am aware that some wobbling is going on already in at least one of these areas. If there are any wobbles, or concerns that these reorganisations are not ready to go for an election in May 2026, what will happen? If this is indeed a delay of a year and the new authority is not in place for elections in any of these places, so an election takes place in May 2026 on what is currently there, the Government will have undermined their values, because people will be electing something that they are about to abolish. I am not convinced, given that there has been no consultation, that there is a guarantee that every single one of these reorganisations will happen and every one of these councils will be ready to go by May next year.

For those reasons, we will oppose the statutory instrument, but I would be grateful for the Minister’s comments.

It is a pleasure to serve under your chairmanship, Ms Hobhouse. This Government have been clear on their manifesto commitment to widen and deepen devolution across England. We have moved at pace to realise the benefits of devolution for more people in more places. However, a lot of change is being undertaken at the same time. That requires focus and capacity. We have been clear on our vision for simpler, more sustainable local government structures and the transfer of power out of Westminster through the devolution revolution. Taken with the work being undertaken to fix the broken audit system, introduce a new standards regime and rewrite the local government funding formula so that it truly takes into account needs and resources, we are doing the hard work of rebuilding—not simply returning to what was there before, but using a new approach that is both efficient and more effective.

I note that, in his helpful statement released two days ago, my hon. Friend made it very clear that core to the Government’s approach is ensuring that there is a starting point, which is “to support and empower local leaders and to respect their knowledge, expertise and insight.”—[Official Report, 24 March 2025; Vol. 764, c. 25WS.] That listening approach was also in evidence in the comments that he made to the District Councils’ Network conference, where he stated clearly that the 500,000 figure was potentially an “average”. Does he agree that the clarity that bids of significantly below 500,000 are acceptable is useful for smaller cities that are engines of economic and housing growth but which have populations significantly below the 500,000 mark?

We have tried to strike a balance between answering the demand—the fact that all 21 counties have submitted to the interim phase is testament to the support in the system for this—and finding enough of a framework at a national level so that areas know what to report to, while building enough flexibility to take into account that England is very different in its construct and make up. There are huge variations between urban centres, rural communities and coastal communities. In forming local authorities that have a clear anchor that can be understood and respected by the local community, we have to allow for flexibility in that system.

The statutory invitation that went out was clear that that means population sizes of 500,000 as a starting point, but we have been clear with the County Councils Network, the Local Government Association and the District Councils’ Network, and in trade press interviews, that we will see a range. Some will say that the mid-300,000s is right for them, and we are seeing some city districts looking at moving their boundaries outwards. But others will say, “Actually, our county does not have that characteristic—we haven’t got that city anchor or coastal issue that might be present elsewhere—and we think the best option for our place is maybe 600,000 or 700,000”.

We want to be flexible enough to take into account local representations as we receive them. Our working assumption is that when all that balances out, we will end up with an average of 500,000, but who knows? We need to see the submissions that come in, but flexibility is important, and it challenges the idea that this is a top down, mandatory system of uniform councils that all look the same, regardless of local circumstances. It is not that. It is very important nationally that we give the framework and direction—and we have done that—but this is about co operation and partnership. I appreciate that that point has been picked up on.

We have been clear about our willingness to drive forward to deliver this vision, and to work with local councils to support communities to fix the foundation of local government in delivering that ambition. Alongside the English devolution White Paper, I wrote to all places in the 21 areas inviting them to express a clear commitment to delivering to the most ambitious timeframe, and to flag any requests for a delay in elections to take place.

Where authorities made such a request, we have judged it to meet a very high bar that was rightly set, and we have kept our commitment that clear leadership locally would have to be met with an active partner at a national level. We have taken the necessary decisions to postpone local elections where it will help to smooth the transition process and deliver the benefits of mayoral devolution, supported by strong and stable local government reorganisation as quickly as possible. We are now working with those areas to prioritise in parallel the necessary steps to explore the establishment of new mayoral authorities in time for the May 2026 mayoral elections, and to deliver plans for new unitary local government.

On devolution, public consultations are already under way, running from 17 February to 13 April in these areas. More than 12,500 responses have already been received in that process. We are getting on with delivering reorganisation as well. All district and county councillors in the two tier areas, and their neighbouring smaller unitary authorities, were invited, and I am pleased to say that every area—comprising of councils of all political stripes—has responded to the invitation to reorganise. They shared with Government an interim plan containing updates on their thinking about options for creating new unitary councils. The response demonstrates without doubt the groundswell consensus from communities that change is overdue and needed. Earlier this week, I made a written statement setting out the details of this, providing parliamentary transparency and supporting the commitment we made to ensure there was active reporting during the course of the process.

Local engagement with Members of Parliament, public sector providers, residents and other key local partners will now be led by the councils as they develop detailed proposals to establish strong, stable unitary councils that are fit for the future. This order is essential to allow the first wave of this ambitious programme to be delivered. It grants postponements for 12 months only, and only for the nine councils whose requests met the high bar we set.

We are extremely clear that these decisions were made on the basis of local requests to free up capacity and enable the practical steps needed, which would not be feasible so quickly if the 2025 local elections went ahead in those areas, for reasons that are self evident. These areas have demonstrated the clear and strong local leadership and the necessary ambition to drive forward the programmes to the timelines that the Government have set out to deliver for those areas, including taking the difficult decisions that are needed.

Let me address the points that have been made. I sense that a lot of the debate today has picked this process out as being unusual in English local government, but it is not. Members will know that between 2019 and 2022, 30 sets of elections were cancelled: 17 to allow preparatory work for local government reorganisation, which is what we are talking about here, and 13 as part of legislation to allow the unitarisation process to take place after the proposals had been submitted. So this is not unusual; it is a natural part of the cycle to free up capacity and enable those proposals to be developed— I can go through the list, and provide the details in writing.

But I do think we need to be careful here. First of all, we absolutely believe that this is the right thing to do, and that is not because we have an ideological view about how local government should sit. All the Members in this room are here because we care about local government and local communities, and we cannot have a hand to mouth funding regime where local government is just not sustainable. We have to find a solution that really fixes the foundations, and this is one small part of that—there is a lot more we need to do—but it is important. If we did everything else but not this, it would just not hold together. I think that it would devalue—I will be honest and direct about this—the work that local leaders have put into this at a local level to build consensus and show leadership. I am not talking about exclusively Labour leaders; in many areas, they are Conservative, Liberal Democrat or independent. We have a collective responsibility to at least mirror the leadership that they have shown across political parties in the interests of their communities, and to reflect that here in the national Parliament. I do not think that is too much to ask.

For clarification, I do not think we would object to the process or intent of reorganisation— I have been through it as a local leader, but the process was quite different. I am thinking about the suddenness and the shortness, and my concern is about consultation in advance of the decision to take this particular route. When Bournemouth, Christchurch and Poole and Dorset were merged in 2019, I think the process started in 2016, and then went through a local referendum in one place, which actually said, “No, thank you.” That went ahead anyway, but the decision was taken after a period of consultation. I ask the Minister to reflect on whether local consultation in advance of a decision to cancel an election would have been a better option, had time allowed.

To be clear, there is not time to do that. In the finance settlement this year, I think we have done a good job in building a bridge to the multi year settlement, but it is only a bridge. That does not answer the fundamental, underlying questions that are leading to the financial vulnerabilities of local councils.

We have had a cash injection—£5 billion of new money is not insignificant—and it has made a significant difference. Introducing £600 million for a recovery grant gets the money to areas that need it most. That is reflected in the fact that we have not had a single section 114 notice issued as a result of financial distress. But let us be clear: 30 local authorities needed exceptional financial support through the budget process, so a lot of work is required here.

As we move to the multi year settlement, we have to reconcile reorganisation within the lifetime of the three year multi year settlement, so that at the end of the settlement, the transition has been completed, the funding has been settled and all councils in England are on a firm footing for the future. Had we waited, we would not have achieved that, and we would have allowed the reorganisation to go beyond the multi year settlement. I think that would have provided more uncertainty for a system that is quite fragile at the moment, when actually, it needs certainty and direction. We are not doing this because we are gung ho, but because we believe that these structural reforms are needed and necessary.

I absolutely believe not just in consultation, but in collaboration and co operation. That is about how ideas and proposals can be co produced. It is for local areas to do that. There will be a statutory consultation on the proposal, and that will happen as a matter of course. But in the end, it is for local areas to make sure that they are having those local conversations and are coming forward to the Government with proposals that mirror what the local desire is, within the art of the possible. I have confidence that local leaders have that shared commitment, too.

This order, which was laid on the 11 February, is essential to delivering the Government’s commitment on devolution and reorganisation to the fastest possible timescale, for the reasons that I have set out. The order was made using delegated powers, which have been given in primary legislation granted here, and have been previously used in the same way. All the appropriate steps were taken, and both process and precedent were carefully followed. Nothing is being imposed on local areas—the Government are committed to the devolution priority programmes, and the emerging proposals for the new unitary councils are, by their nature and result, bottom up. All requests for election delays to deliver reorganisation and devolution to the fastest possible timeframe follow direct requests from local leaders of the affected councils.

Devolution and strong councils with the right powers will mean that hard working councillors and mayors can focus on delivering for their residents on a stable financial footing. It will strengthen the democratic accountability of local government to local residents. A final point that I have not covered is the ordering of by elections that will take place. The guidance will set out that by elections will be dealt with in the usual way; they will not be affected by this order.

It is a pleasure to serve under your chairmanship today, Ms Hobhouse. I draw Members’ attention to my entry in the Register of Members’ Financial Interests as a local councillor.

I have just a few comments. The delay in elections for these local authorities was not really a choice for them; it was a mandate from Government. The Government’s White Paper set out their expectation for all two tier areas, regardless of their personal views, to move to unitary structures. The Minister said that 21 areas have replied to the Government’s letter in support of that move, but the Government’s letter was intended to make them come forward with proposals. The Government have quite clearly said, “If you do not come forward with proposals for your area, we are going to do this to you.” They will introduce a managerial direction within the White Paper.

I think it is important that the record reflects the actual situation. First, there was no mandating, because this is about postponing elections to allow reorganisation; it is not about the reorganisation process itself. To be clear, 18 councils applied to have their elections postponed and we agreed to nine, because not all met the high bar that we have set. Also, to be clear, 24 of the 33 elections that were due to take place in May 2025 are going ahead as normal.

I thank the Minister for his intervention. However, if the Government’s White Paper sets out their expectation for two tier areas to reorganise, those two tier areas do not have a choice. They either get on that train and do what the Government are telling them, or they wait by the sidelines and get forced to do it by the Government. This is definitely a top down approach, not bottom up.

The decision to delay elections should not be taken lightly. Other Members have touched on this, but nine councils have asked for delays in elections because the Government are making them reorganise. What happens if they are delayed for longer than 12 months? When we were last in government, three areas were done over three years, so the Government are very ambitious in doing nine.

If we are to believe what is in the news about a 15% reduction in the civil service, how will the MHCLG cope and get those nine councils done within a year? As has been alluded to already, how will the MHCLG get consensus within the local area, and how will it take those councils through that process of reorganisation? The process should be thought about over a longer period of time, rather than rushed through over 12 months. I have concerns that some of these elections, which we may agree today should happen in a year, will actually need longer.

I also have concerns about what the Boundary Commission will do with these delayed elections, and its capacity to draw up new boundaries for whatever authorities come forward. We have touched on the half a million population figure; but I have seen very little evidence to show that that is an appropriate figure for a new authority. The Minister’s own authority is well below half a million people, so I do not understand where the Government have got that number from—I think they have just plucked it out of thin air.

Lastly, it has been suggested that, when we go through this process, there will be loads of money for local government, as local government will save millions of pounds. I ask the Minister to comment on this: Somerset council has gone through reorganisation to a unitary structure; it has asked the Government to increase council tax bills by 7.5%, which was accepted, yet it is still in financial difficulty. So if reorganisation is the answer to all of local government’s problems, why do we have a council that has just gone through the process still asking for extra money, and still in financial difficulty?

I think my hon. Friend will find that the problem, of course, is that Somerset is run by the Liberal Democrats, and run very badly.

I fully agree with my hon. Friend.

Actually, the Liberal Democrats took over after a long time when the whole area had been run by the Conservatives, and so picked up a complete car crash.

The area is under Liberal Democrat control now, and they have gone for a massive council tax increase of 7.5%, even though when the Prime Minister launched his local election campaign he said everyone’s council tax would be frozen. I will leave that there.

When we talk about the millions of pounds to be saved through local government reorganisation, we need to be very careful about the figures we use, because that is not the answer to all the local government questions. We need to look at population size again, and really I want the Minister to comment on capacity in the civil service. If we managed three areas over three years with strong local support, how will the Government be able to do nine within 12 months—having elections and making sure all the structures are in place—and what happens to people’s right to vote in those areas, if it goes on for longer than 12 months?

It is a pleasure to serve under your chairship, Ms Hobhouse.

I would be delighted to invite the Lib Dem leader of Somerset council to elaborate on the condition in which he found the council when he took over, if I thought that the hon. Member for Broxbourne wished to read it; I suspect he would not.

I thank the Minister and the Government for some things, such as for including the districts in the final invitation to participate in this process. I thank them for not allowing Devon county council in its outrageous attempt to stop the elections in Devon, knowing that 66% of the existing Conservative councillors now intend not to re stand. I wonder why they wanted to stop the elections. They put forward a proposal that had no consensus across Devon whatever. I also thank the Minister for the multi year settlements that are in sight, stopping the hand to mouth and “Hunger Games”-type funding that has been the scourge of local councils across the country.

I am, however, very worried about the timescales, the volume of work and the cost of the work required of local councils. I am particularly worried about what might happen with the projected 2027 elections if the timescales are not met. Will the Minister clarify the dates that we are looking at in this process? Which are fixed and which flexible? How will the process be managed as we go through, and should we not meet the fixed dates that are set out so far? What will happen with multi year settlements for councils that are not involved in this first phase of reorganisation? Can we expect to see those coming through sooner rather than later, please?

All those are fair questions. On the timetable, there are in effect three tranches. The first tranche is Surrey, which is being brought forward because there cannot be devolution as a single county unless we do the reorganisation and create a combined authority after that. This is fairly well covered, but it has quite significant issues of debt that need to be reconciled as part of that process. Surrey has 9 May as the deadline for its final proposals.

Areas that have had their elections postponed are in the devolution priority programme. They have until 26 September to submit their final proposals. All other areas have until 28 November to submit their final proposals. I will just say that there is sufficient time. Surrey is clearly the exception, and that is an accelerated timetable by agreement with the local authorities in that area—we will ensure that adequate resources are provided to meet that challenge. For all other areas, however, we believe that there is sufficient time. I should also say that the difference between September and November as the end date takes into account the election period, recognising that the preparatory work that would take place otherwise would not take place then.

The issue with most such situations in the past has been not only a short period of time for councils to respond, which they typically have managed to do, but the prolonged period of radio silence once those responses have been sent to Government. Can the Minister assure us that the Government will respond quickly to the proposals, so that councils can get on with them?

We absolutely understand that that gap of silence can be undermining to the process. Even conflicting advice or information allows people to fill in the gaps or exploit the situation. Clarity is needed. I think we have done that. Whenever we have brought a statement to the House, it has been extremely well attended. I think that the two on this issue have run for more than an hour, in terms of parliamentary interest.

On the interim proposals, the deadline was on Friday and we submitted the written statement to Parliament on the Monday; we submitted that the minute that Parliament reconvened. So we do want to ensure that that communication is there.

We will marshal departmental capacity. We are speaking to the LGA, to the County Councils Network and to the District Councils’ Network, and we appreciate the leadership that they have shown. They have been quite challenging in their representations at points, but I think they have done an excellent job in reflecting the on the ground reality back to us, and we have appreciated that.

On the areas in scope, we have provided an additional £7.6 million to enable proposals to be developed, so it is not a financial pressure entirely on local government to do that. We want and expect, in some areas, that they will have a unified proposal that they can rally around and for which there is broad support, as that would make everyone’s lives easier. We also live in the real world and understand that there may be different views on what a good outcome is. I think that is legitimate, and it should be allowed for in the process. The Government’s role at that point will be to take a view on the proposal that best meets the criteria set out in terms of efficiency, sustainability and, importantly, identity, as having that local anchor is a very important part of that too. With that within the process, we can take into account the range of different views.

I have covered the population size issue, in terms of that being a starting point. That does not mean that it is the end point for every area; but we do not want to reset that number. I can guarantee that if we were to say, “Right, it is not 500,000 any more; it is the mid-300,000s, and that is the new starting point,” I would get a queue of councils asking, “Can we have a conversation about the mid-100,000s?” That completely undermines the principle for doing local government reorganisation and takes us back to square one. Having a starting point that can be flexed, with some give—I think going to the mid-300,000s is give, but let us see, given that the other way is give too—is where we need to be.

Even though this SI of course deals with the election postponement in these county areas, district council elections will follow, and with a fair wind—I accept there is a way to go yet, and we are still in the consultation phase, which is important—they will also have mayoral elections in those areas for the first time. For the first time, they will actually be able to receive further powers and further budgets from central Government in a way they have not before. So, this should be welcomed. For democrats in the room, this is additional democracy, accountability, freedoms and flexibility, which is genuinely rewiring the way that we govern England. It is long overdue.

I will not detain the Committee for long. There has been quite a rich debate—unusually so for a Delegated Legislation Committee—a lot of which has focused on some of the politics and the structures around local government reorganisation. I think the intervention from the right hon. Member for Oxford East was a good illustration of that. The proposed footprint for the new local authorities has been a key subject of debate, and we know that the Treasury clearly has one view about that, and I suspect that the Ministry has a slightly different one.

Certainly, historically, 300,000 was seen as about a reasonable minimum, broadly reflecting the size of London boroughs, for example, which are unitary authorities; but clearly a move to a larger footprint is an opportunity to spread the overheads over a greater population area. However, it remains a significant challenge for authorities that are coming forward, where they may be happy to consider a footprint of 300,000 but 500,000 does not work for them, and the Government and the Minister will have some significant challenges taking that forward, with his task of unitising local government in England by the end of the Parliament.

Turning to the specifics of the instrument before us and how we got here, again I have some sympathy with the Minister’s point that the invitation was sent out, and it was very clear from the outset that the first step was an invitation for those who were willing; but for those who were not initially willing there would be a statutory invitation—an invitation you can’t refuse—to come forward with proposals for local government. I think that justifies the concern expressed by a number of Members that there is a significant top down element to this.

However, in order to deliver that process, the key thing that we are—and remain—concerned about is that, in this case, the Minister is a little bit boxed in by the legislation that says that this instrument will postpone these elections. He took us through a list of actions by previous Governments such circumstances, and described, in all of those examples, that those were about the cancellation of those elections—those elections would not take place any longer. This instrument merely postpones these elections. I think it is the clear understanding of all the local authorities on this list that they will not hold elections to their local authorities ever again because they are about to be abolished through the process of local government reorganisation. Exactly as the Minister has described, cancellation is about those elections never being held again because some new local government structure will come into being at some point.

However, the instrument says to all those local authorities that their local elections are expected to go ahead on the due date in 2026—that the election is merely postponed in Essex and the other local authorities listed. While I absolutely support colleagues in local government who have said, “We accept that this is going to be done to us whether we like it or not—we need to make the best of this opportunity,” and there is logic in coming forward in the first tranche, the legal implication of what we are being asked to decide is that those elections will take place, but at a point when the abolition of those local authorities is even closer than it is today. That does not seem to be a good choice for us to make.

There should be a clear and structured plan, so that residents understand not just that they are losing the right to vote that they had hoped to have in Essex, or wherever it may be, this year, but that elections will take place to those new structures; so that they can see that they will have the opportunity both to exercise the democratic right that they enjoy and to shape the new structures as they come into being. Those are the reasons that we find ourselves here today.

Question put.

1|0|11|6|The Committee divided:|Question accordingly agreed to.||0|0

Resolved,

That the Committee has considered the Local Authorities (Changes to Years of Ordinary Elections) (England) Order 2025 (S.I. 2025, No.137).

Committee rose.

The Committee consisted of the following Members:

Chair: Derek Twigg

† Barclay, Steve (North East Cambridgeshire) (Con)

† Beales, Danny (Uxbridge and South Ruislip) (Lab)

† Brandreth, Aphra (Chester South and Eddisbury) (Con)

† Campbell, Irene (North Ayrshire and Arran) (Lab)

Dyke, Sarah (Glastonbury and Somerton) (LD)

† Farron, Tim (Westmorland and Lonsdale) (LD)

† Hinder, Jonathan (Pendle and Clitheroe) (Lab)

† Jameson, Sally (Doncaster Central) (Lab/Co op)

† Juss, Warinder (Wolverhampton West) (Lab)

† Kyrke Smith, Laura (Aylesbury) (Lab)

† Mayhew, Jerome (Broadland and Fakenham) (Con)

† Moon, Perran (Camborne and Redruth) (Lab)

† Moore, Robbie (Keighley and Ilkley) (Con)

† Murray, Katrina (Cumbernauld and Kirkintilloch) (Lab)

† Smith, Jeff (Lord Commissioner of His Majesty's Treasury)

† Stevenson, Kenneth (Airdrie and Shotts) (Lab)

† Zeichner, Daniel (Minister for Food Security and Rural Affairs)

Susie Smith, Committee Clerk

† attended the Committee

The following also attended, pursuant to Standing Order No. 118(2):

Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

Sixth Delegated Legislation Committee

Wednesday 26 March 2025

[Derek Twigg in the Chair]

Draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025

I beg to move, That the Committee has considered the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025.

It is a pleasure to serve with you in the Chair, Mr Twigg.

The draft regulations were laid before the House on 13 February. They set out the reductions that will apply to delinked payments in England in 2025. The reductions are part of the transition to more targeted public investment, supporting farmers to boost nature and sustainable food production. The Government will support businesses to be more profitable, addressing the underlying problems. Delinked payments do not achieve that.

Delinked payments do not offer and have never offered good value for money for farmers or the taxpayer. They are part of the move away from the basic payment scheme that saw 50% of the money go to the top 10% of farms, while doing little for food production or nature. We are now in the fifth year of the seven year transition away from those subsidies, and some of us have been involved in these same discussions year on year over those five years. The reductions to delinked payments set out in this draft instrument were announced last October. They accelerate the end of the era of payouts to large and wealthy landowners simply for owning land.

According to Knight Frank data, the average English less favoured area livestock farm will, as a consequence of these changes and assuming no other income streams change, see its profit fall by almost half. I am slightly concerned that, according to the explanatory notes, no financial impact assessment has been done. Will the Minister explain why no financial impact study has been done?

I am grateful to the hon. Gentleman for making that point. I will come to broader arguments about what we are putting in place in a moment, but the reason why it appears that no impact statement was done is that impact statements were done earlier in the process, when this was all looked at as a consequence of the Agriculture Act 2020 being passed. I am happy to point him back to all the charts and figures that were available at the time and have been available throughout.

The rate of decrease has been increased substantially. Does the Minister not agree that that will have a negative impact on financial viability? The change in the pace of the decrease of the delinked payments makes an old impact assessment unreliable.

The hon. Gentleman is right up to a point, but he is missing the point of the agricultural transition, which is a move to environmental land management payments. The economic impact is a secondary consequence. All those figures were there, however, and still hold good.

I should have referred to my entry in the Register of Members’ Financial Interests. I personally benefit from these payments, and I am the director of a farming company that benefits indirectly from the payments. I want to make that absolutely clear , Mr Twigg.

On a point of order, Mr Twigg. I seek your guidance. The Minister has just said that no economic impact assessment has been carried out on the draft legislation that we are considering. He noted that previous impact assessments were done under the Agriculture Act passed in a previous Parliament, but that was a significant time ago. I therefore seek your guidance on how we can robustly scrutinise this piece of legislation when the very crux of it is to have a negative impact on our many farming businesses. Without an economic impact assessment undertaken with due regard to that, how can we continue this debate without the information before us?

I thank the hon. Gentleman for making his point, but that is not a matter for the Chair.

Further to that point of order, Mr Twigg. Can utilisation of the rules of this House bring a closure motion before the Committee. If we do not have before us the information needed to consider properly this legislation’s impact on many farming businesses, is a mechanism available to me to move a closure motion, so that we can reconsider the legislation when an impact assessment has been undertaken?

I believe that once the Minister has finished moving the motion, you can put your motion, Mr Moore. He has to move the motion first. You can do that after he has finished. I will tell you when you can put yours.

A technical reason why an impact assessment was not produced is that this is not a regulatory provision; however, we publish regular statistics on farm incomes and other data related to farm businesses. That includes the farm business income statistics published on 14 November 2024, and the plethora of farming evidence packs, which I refer Conservative Members to. I am sure they will find plenty of information available, including the recent figures, which suggest that farm incomes last year were rather better than previously.

I hope we can proceed on the basis that we are moving to a different system, which is about environmental land management. I recognise the impact that the changes will have on some farmers, which is why we are trying to introduce them in the fairest way possible. We are applying the reductions in payment bands in the same way as the income tax bands work, which means that those with the broadest shoulders will see the highest reductions. I assure the Committee that every penny of the reductions in delinked payments stay within the sector. The planned reductions will help to fund investment in environmental land management schemes and our other grants for farmers.

Our support for farmers remains absolutely steadfast. We have committed £5 billion to the farming budget over a two year period, with £2.4 billion of that for 2025-26. That includes the largest ever budget directed at sustainable food production and nature recovery in our country’s history.

The Minister has mentioned the £5 billion over two years on a number of occasions—not just in this debate, but in previous ones—but does he accept that if we take the £2.4 billion per year that started in 2019, at the start of the previous Parliament, and simply update that for inflation, the figure of £5 billion over two years actually represents a real terms cut in support for our farmers of several hundred million pounds? My second question, which I would love him to answer, is what happens afterward? The Red Book suggests a £600 million reduction in support thereafter.

A figure is a figure—£5 billion. Many thought that that would not be achieved in the spending review, and I am very proud of it. We are happy to be able to provide that amount of money, which is actually going out to farmers, rather than being held back as it was under the previous Government, who failed to spend the money.

rose—

I am delighted to give way to the former Secretary of State who was responsible for that.

The Minister said a moment ago that all the money will stay in the sector. I assume he means the farming sector, but is that correct if some of the money goes to nature schemes or well respected nature charities, which by nature are not part of the farming sector? Will he confirm that he is assuring the Committee that all that money will remain within the farming sector?

We will find ourselves arguing over definitions. Many farmers will now be environmental land managers and will be able to get money for schemes that protect nature.

We have allocated £1.8 billion in 2025-26 for the environmental land management schemes. That will boost Britain’s food security and accelerate the transition to a more resilient and sustainable farming sector. We are on track to spend the budget in full. Furthermore, record numbers of farmers—50,000 farm businesses—are in our environmental land management schemes, and more than half of all farmed land in England, more than 4 million hectares, is now managed under such schemes. That includes about 38,000 live multi year sustainable farming incentive agreements. We expect to publish more information about our revamped SFI offer following the spending review.

The new countryside stewardship higher tier offer will open for applications from invited farmers and land managers this summer. The stand alone capital grants will also reopen this summer after a short pause. We are investing in about 50 landscape recovery projects, which were awarded funding through rounds 1 and 2. We recently announced increased payment rates for higher level stewardship across a range of options from this year. We are also extending the farming in protected landscapes programme until March 2026. That extension will support farmers in protected landscapes in transitioning towards profitable food production at the same time as delivering nature recovery and mitigating the impacts of climate change.

We are continuing to invest in farmers through our other grant offers, with up to £110 million available in new grant competitions starting this spring. That includes up to £47 million for farming equipment and technology fund grants, as well as up to £63 million available for farming innovation programme grants. Those will help to improve productivity, trial new technologies and drive innovation in the sector. We are also expanding the animal health and welfare pathway, with more funded vet visits now available to farmers. Also, I am pleased that more than 26,000 farmers have made use of free one to one business support through the farming resilience fund to help them through the agricultural transition.

By investing in healthy soils, abundant pollinators and clean water, the Government are investing in the foundations that farm businesses rely on to produce high crop yields and turn a profit. Adopting the sustainable farming practices rewarded under our schemes will also help farmers to reduce their input costs. Reducing delinked payments as planned enables us to make those investments through our other schemes. That will serve the best long term interests of farming. We are also developing a 25-year farming road map to make the sector more profitable in the decades to come. As we set out in our “Plan for Change”, we are focused on supporting farmers, supporting rural economic growth and boosting Britain’s food security.

On a point of order, Mr Twigg. Before I start my speech, I would like to go back to the comments that I made earlier. With the motion now having been moved, I seek your guidance on how we can consider these regulations without any financial impact assessment having been undertaken.

That is a matter for the Minister to debate with you, not a matter for the Chair.

Further to that point of order, Mr Twigg. I seek clarity on whether I can move a closure motion. I am seeking your guidance on that.

I have considered what the hon. Member has said and what the Minister has said. The Member has made his point, and I am not persuaded that the question should be put before the Committee, so we will proceed with the scheduled business.

Okay, thank you, Mr Twigg.

As the Committee debates this delegated legislation, I would like to take us back to why we are where we are, in the sense of being in year 5 of a seven year transition period. This direction was positively set out by the previous Administration as we moved from the common agricultural policy to a transition away from the basic payment to the environmental land management scheme, which enabled farmers to enter the sustainable farming incentive, the countryside stewardship schemes and landscape recovery schemes, all of which aimed at inviting farmers to make applications so that they could make up any financial loss from not receiving the equivalent amount of basic payment scheme moneys. They were to be paid for delivering public goods.

As the Minister rightly said, we are in year 5 of a seven year transition period; but the direction rightly set under the Conservative Administration had to do with a steady tapering down of payments that could be made through what was previously called the basic payment scheme—in other words, the move to the revised delinked payment scheme. However, without any warning or suggestion before the general election, in November, in a sneaked out blog on the Department for Environment, Food and Rural Affairs’ farming website, there was an indication that dramatic reductions would be taking place through delinked payments. Our wider farming community was given no warning of the change, which will have a dramatic impact on cash flow in all of our farming community.

Under this instrument, farmers will receive significantly less through their area based payment schemes than they originally expected—the anticipated reduction is 76% The reduction climbs even higher or larger farms as payments for farmers receiving over £30,000 will be ended. No matter what payment they were anticipating, how big their farming business is or how much land they are farming, it will be capped at £7,200.

For a farm, short term planning is for longer periods than in any other sector. Improving fields, livestock herds and farm infrastructure takes many years, and delinked payments alongside being able to get into the sustainable farming incentive were the key guaranteed income that allowed farmers to invest with the assurance that the moneys would be coming in..

My hon. Friend is making an excellent speech. I just want to highlight the briefing from the National Farmers Union, which I think all Members received, expressing real concerns about what the Government are proposing. The NFU is strongly opposed to the way the Government are approaching this. It has highlighted that this measure, together with the changes to inheritance tax, will threaten investment in the future of UK food production. Does my hon. Friend share my concerns, first, about the Labour Government’s disregard of the NFU and farmers, and secondly, about investment in farming and our ability as a nation to produce our own food?

I thank my hon. Friend for his intervention. That is why an impact assessment is so important if we are to consider this piece of legislation.

Not only are farmers facing the collective economic impact of a dramatic reduction in delinked payments, but they are now faced with being unable to receive sustainable farming incentive payments, the increase in employer’s national insurance and the rise in the minimum wage going up. All of those increase the overheads of farming businesses.

The delinked payments whereby farmers were looking to progress their plans to increase the productivity of their holding or indeed their own investments over the seven year transition period, were dramatically reduced through a sneaked out announcement in November last year.

We all enjoyed the emergency Budget earlier today. One of the core elements that the Chancellor of the Exchequer planted her flag on was economic stability. How does my hon. Friend the shadow Minister think farmers can have economic stability when schemes such as the SFI are removed without any notice, while at the same time they suffer a 76% reduction in the first £30,000 of the delinked payments and nothing above? How do we get economic stability with that approach?

The reality is that we cannot, because of the Government’s announcement of dramatic reductions to the delinked payments that many farming businesses relied on. The explanatory note itself states that the reductions for 2025 will result in “increased demand from farmers for the Environmental Land Management schemes”, but the Government have closed the entry for any applications that were live and stopped any new applicant coming in. So where is the money going to? How will it be utilised by the farming sector?

Slashing the payments without warning ahead of the expected timeframe has thrown thousands of farming businesses across the country into disarray and forced to reconsider their financial position and many of the ongoing projects and investments on the farm. I can use an example in my own constituency. Just this week I spoke to a farming family in Stanbury in the Worth Valley who have experienced a dramatic reduction, with this being the fifth year of the delinked payments going down dramatically to £7,200 from an annual payment of about £20,000. They have been locked into a higher level stewardship scheme for a five year period, but because the Government have announced that the SFI application window has closed, they do not now have the ability to enter a new SFI opportunity that has a higher financial payment rate than the higher level stewardship that they have been locked into. That is just one example of many farming businesses across the country that are being negatively impacted.

My hon. Friend is, as ever, making an excellent speech. One of the uncertainties is that there is no sense of when the scheme will open and what the budget will be. Briefings from Government insiders—particularly in the Treasury—say that non protected Departments will be subject to significant cuts in the forthcoming spending review. Does he share my concern that it is very difficult for farmers to plan when the Government’s approach gives them 30 minutes’ notice and no clear information on these issues?

That is absolutely the point: it causes huge concern to many farming businesses because they are not able to forecast what financial investment will go into the business, whether from delinked payments or any sustainable farming incentive scheme that they were hoping to enter.

Is the problem not worse than that? Farmers can no longer rely on the schemes that seem to be applicable to them because the SFI can be paused or cancelled without notice. What confidence can they have that any scheme to which they seem able to apply will be there when they need it most?

It comes back to both points that have been made, and perhaps the Minister will pick them up in his response. There is no absolute clarity about the deadlines or timelines for new announcements that will come forward to replace the sustainable farming incentive extended offer, which opened to all applicants only in November 2024. Cutting that option is therefore causing huge concern. We do not know—perhaps the Minister can pick this up when he responds—whether, as has been indicated, the design of whatever may replace the SFI will be based on the land use framework consultation. I would like to understand from the Minister when that consultation will conclude and when the Government will make a positive announcement to reassure our wider farming community.

Just yesterday, the Government revealed in answer to a written question that more than 6,600 applications from farmers trying to do the right thing and transition to SFI—the replacement scheme that covers the dramatic reduction in the delinked payments that we are considering today—have been frozen out of the system. That means that about 20% or 25% of the 37,500 live applications are still in in flight mode, sitting on the Rural Payments Agency’s database and locked out of consideration. What does the farming Minister say to those 6,600 applicants, who have spent months working up a replacement scheme? How will he provide financial reassurance to the businesses that will not be able to benefit?

What is my hon. Friend’s view on the fact that this dramatic reduction in delinked payments does not seem to align with the Government’s claim that food security is national security? How can that be, when farmers in this country do not have any certainty?

My hon. Friend makes an excellent point. The Government’s narrative is that food security is national security, but those are just warm words because they are not followed up at all by any policy setting an attractive agenda for our farming community. Indeed, every Government announcement seems to negatively impact it.

I am grateful to my hon. Friend for allowing multiple interventions. We have heard about food security, but the Government have a number of other legal obligations, one of which is to halt biodiversity net loss by 2030. If SFI—the key measure to help farmers in the fight against biodiversity loss—is effectively cancelled, how on earth will they hit their legal obligations?

That is the crux of the issue. I am sure that all Members have been contacted by many of those in the environmental lobby who are deeply concerned that closing the SFI applications is having a detrimental impact not only on our many farming businesses, but on the environmental benefit for which the SFI schemes are designed to set the right direction.

The idea of SFI, and public services for public goods, is the right one. The changes we are discussing today would be understandable had they been announced alongside a massive increase in the SFI offering to make up the difference in the shortfall. The question that not only I but my colleagues who shadow the Department for Environment, Food and Rural Affairs have been constantly asking the Government is: where is the money from the dramatic delinked payment drop going? It does not seem to be going to any of the other measurables.

The Government will say that they have reached the cap, but they have given no explanation as to what the cap is for SFI nor, indeed, where it has been reached and where the applications in the pipeline would have got to. Much more is clarity needed, which is why, Mr Twigg, I felt pushed to raise my point of order. We feel that there should have been a proper economic impact assessment of this piece of delegated legislation. We needed to be more informed before we could discuss it. Will the Minister confirm what date he expects the SFI to open?

At the same time that the Government have cut the two primary sources of support for farmers, budgetary changes have also had a huge impact on the wider cash flow position of farm businesses. The introduction of the double cab pick up tax punishes family farmers for using one vehicle for both personal and business use; perhaps the Minister would prefer that they owned two. The fertiliser carbon tax is likely to come down the line, and wider sources indicate that it is likely to push the price of a tonne of fertiliser up by £50. That is a clear political choice to push net zero no matter the cost to farming businesses and food prices. The changes to employers’ national insurance have hiked up the average cost of a worker by £900. Far from reducing energy prices by £300, the Government are about to oversee a hike in the energy price cap of about 6.4%.

The reason why I go through all those other budgetary changes is because they are highly relevant to this piece of delegated legislation. The Government are making a choice today to vote on dramatically reducing delinked payments in the fifth year of a seven year transition period, despite the certainty that was provided to the wider farming community. That is why the NFU, the Country Land and Business Association, the Tenant Farmers Association and the Central Association of Agricultural Valuers do not support the direction of this legislation.

Then, of course, there is the family farm tax, which will force a family farm to anticipate an inheritance tax bill of hundreds of thousands of pounds. That will be an additional burden on our many family farming businesses, which in many cases are already struggling to make a profit. We know that the return on an average family farming business is about 1%, and many of those businesses are highly geared. To then have a huge change in the amount of positive cash coming into those businesses through the dramatic reduction in delinked payments does not give them any clarity or certainty.

An additional point is that the change will affect not only farm businesses but the wider rural economy. All the other businesses within communities that depend on the farm businesses spending money in the local economy will also be impacted, not just by this measure but by the inheritance tax change and all the other terrible things this Government are doing to the rural economy.

My hon. Friend is absolutely right. I was at the Yorkshire agricultural machinery show just a month or so ago, and I spoke to many farming businesses and many people associated with them, including machinery dealers and feed merchants. Many of them are saying to me that already their order books have dramatically reduced as a result of the collective impacts of the budgetary changes that were announced in October and November. The wider rural economy is being impacted by the legislation before us.

I drove a tractor to Fakenham racecourse about five or six weeks ago, to take part in a demonstration that not only involved farmers but encompassed the wider rural community, including farming industry suppliers. Does my hon. Friend agree that the mood in relation to the Government is sulphurous?

I absolutely agree. That takes me back to a point I made to the farming Minister at DEFRA questions just last week. I told him that many farming businesses are deeply concerned about the collective impacts of the wider budgetary changes, and he said that I need to get out more and speak to more farming businesses. Just last week I was in Nottinghamshire, Lincolnshire, Shropshire, Warwickshire and Staffordshire —and that was just three days of last week. Not one of the farming businesses I spoke to agreed with the approach the Government are taking. [Interruption.]

Order. Can we not have exchanges between Members when one is speaking, please?

It sounds like in one week my hon. Friend has seen more farms than the Secretary of State has since the general election. I draw his attention to the story in the Farmers Guardian that suggests the Secretary of State has been to only four farms since the general election. On a more serious point, that story also draws attention to the 84% of farmers who feel that their mental health has been affected by the autumn Budget. My hon. Friend is correctly setting out the financial implications of the changes, but does he share my concern about the mental health issues as well?

My right hon. Friend makes a very serious point, and I will develop my thinking on that later in my speech. If the Secretary of State has visited very few farms—just a handful—since the general election, how could he and the Government have come to the conclusion that there is no need for a financial impact assessment? That is why we want to challenge the Government on the fact that there has been no impact assessment at all of the collective negative impact of the Budget on our many family farming businesses.

I highlight all these points because of the collective impact on our farming businesses of this piece of legislation, as well as the reduction in the SFI, the dramatic cuts in the capital grants and all the other budgetary challenges I have mentioned. As I indicated, I have had so many conversations at kitchen tables around the country—believe me, I have sat at many of them—in which the concerns I have outlined have been specifically raised. The point put to me consistently is that the Government keep coming out with warm words—“We will support our farmers”—but do nothing at all to support our many family farming businesses.

Does my hon. Friend accept that farmers right across the country are currently seeing a cash flow crisis? A business may be profitable in one, two, three or five years’ time, but if it cannot pay the bills now, it will go bust. Does my hon. Friend accept that the Government’s cumulative actions are putting farmers at risk?

That is why this debate is so important. I come back to the point that a financial assessment is crucial, because farming is like no other industry. An arable farmer relies on the cash coming into the business when they sell their crop. They are able to sell that crop only once it has been harvested. They may sell it on futures, or retain the grain in store and sell it at the appropriate time throughout the year, but the reality is that they do not have guaranteed cash coming into their business regularly, as people do in many other sectors. It is the same for a hill farmer selling lambs for meat and for a lowland arable farmer. These businesses are highly geared financially, given the level of debt they carry, and an irregular level of income is coming into their business. The Government have taken away or dramatically reduced the one certainty of financial gain that these businesses would have through the delinked payments or, indeed, the SFI.

The impact on mental health has also quite rightly been raised. The Government are actively making choices that negatively impact farmers’ cash flow. They have made decisions on the family farm tax. Their decisions are affecting tenant farmers’ ability to pay their rent and farmers’ ability to service their debts. The Government’s collective decisions are negatively impacting on the health and wellbeing of our many farming businesses. I therefore urge the Government and the farming Minister to get out and speak to as many farming businesses as possible. The Minister needs to pick that issue up and engage with it.

We have asked time and again from the Dispatch Box about what data the Government are collecting on the negative impact on the health and wellbeing of our farming community. Those who farm work in an incredibly lonely environment. People who are lambing sheep, as many are right now in the moorlands of the Worth valley in my constituency, are working on their own, and it is incredibly lonely. They then have all the financial pressures that the Government are actively choosing to put on them. That is not a healthy state of affairs for farmers, which is why I urge the Government to reconsider this legislation.

The explanatory memorandum does not refer to the United Kingdom Internal Market Act 2020. Has the Minister —he is the farming Minister—considered the dramatic impact of the delinked payments and the choice to remove the sustainable farming incentive? English farmers are now very much at a disadvantage compared with farmers in Scotland and Wales, because the amount of public money they will be able to receive is significantly different. Have the implications for that Act been considered?

My hon. Friend makes an important point. When the House considered the 2020 Act, we were expecting that different Governments in the UK might give extra subsidy to different businesses, but the converse can also happen: taking subsidies away can affect the competitiveness of different industries. I am a Scottish MP and will always stand up for Scottish farming, but the severe reduction in the cash flow of English farmers will arguably put them at a competitive disadvantage.

That is my point. This weekend I will visit farmers in Northumberland, who have contacted me to make the point that some of our cross border farming operations will have access to very different subsidy schemes and environmental payment schemes north of the border and south of the border. Has the Minister has considered the impact of that in relation to the need to put everybody, no matter where they farm, on the same level playing field?

Hon. Members will by now be tired of my asking the Minister and the Department for impact assessments, not just of the Government’s farming measures in isolation but of the collective impact. The explanatory memorandum suggests that taking away 76%-plus of principal payments to farmers, shortly after announcing that the scheme designed to replace them is being frozen, will have no significant impact. Of course it will.

How has the Minister’s explanatory memorandum come to the conclusion that there will be no impact whatsoever? That does not seem to ring true. Paragraph 9.2, on the impact on businesses, charities and voluntary bodies, states: “There is no, or no significant, impact on business”.

I do not understand how that conclusion has been reached. It goes on: “However, the reductions to delinked payments will be used to help fund other schemes, including Environmental Land Management schemes, which offer funding streams for farmers and land managers.”

When the SFI has been closed, how can the Minister conclude that there has been no impact whatsoever? I would like to understand that.

One question remains, and I hope the Minister will be able to address it directly. Where will the money go that has supposedly been saved by the instrument? The NFU estimates that the total saving to the Department next year will be £400 million. In answer to my recent written question, the Minister declined to provide a spending breakdown of the farming budget for this year and next year. Instead, he provided those figures across the two year period, neatly hiding where the £400 million will go. I would greatly appreciate it if he could explain where that £400 million is going.

Can the Minister assure farmers across the country and those watching that the funds will not be going back to the Treasury and the Chancellor, and that they will at least find their way, through some mechanism, back into farmers’ pockets, including the 6,600 who have applied for SFI but have had their applications blocked by the Government? At the very least, farmers need certainty, and since last July they have been blindsided time and again by this Government, including by this legislation. Perhaps the Minister could provide that small piece of reassurance in his remarks.

To conclude, it will come as no surprise that we will not support this legislation. At the end of the debate we will push for a vote, so we can at least demonstrate that the Opposition are on the side of our farming community.

It is an absolute pleasure to serve under your guidance, Mr Twigg.

For what it is worth, had we gone for a closure motion I would have voted with my Opposition colleagues. There should have been an impact assessment. However, it is worth bearing in mind that many times during the last Parliament—I could comb through Hansard to check the exact number, but it is in double figures— I asked the previous Farming Minister for an impact assessment of, for example, the reduction of the basic payment scheme and the failure to introduce the transitional changes in a timely fashion, and answer came there none.

I can inform the Committee that livestock farmers were 44% worse off in terms of income at the end of 2024 compared with 2019. The Conservative spokesman, the hon. Member for Keighley and Ilkley, can visit as many farmers as he likes, and I hope the Minister also visits many farmers, but every last one of them will be poorer because of the actions of the last Conservative Government. It is important to have that on the record.

The reality is that all parties in this place, certainly the ones represented on the Committee today, signed up to ELMS and the principle of public money for public goods. That is a good principle, but the transition has been marked by two clear things: imprecise timing of the reduction of the old scheme and the old money, and the failure to get people into the new schemes. Of course that is also the case under this Government, but we had the same conversations with the former Farming Minister, Mark Spencer, and he said the exact opposite of what the Conservative spokesman has said today.

The failure of the transition between 2019 and 2024 led to a £200 million underspend. The Government are always talking about £5 billion over two years. My maths is not brilliant, but I reckon that is £2.5 billion a year, which is £100 million more than before. That is a good thing, because we worried ahead of the Budget last autumn that the new Labour Government would bake in the consequences of the underspend and the Tories’ incompetence, but they did not do that. However, it is right that Opposition Members have mentioned on more than one occasion that freezing the budget at £2.4 billion, which is what it was at the point we left the EU in early 2020, is hardly a great achievement.

Of course, there was inflation through all the years of the Conservative Government. If they were serious about the transition being funded properly, the budget would have been more than £2.4 billion when the Labour Government came into power. Inflation has been huge over those five years, especially in the farming industry when it comes to feed costs, fertiliser, fuel, energy and so many other things. The industry barely washes its face, so we are left in this situation.

I do not buy the Conservative party’s references, either before or since, to today's financial statement being an emergency Budget. If it had been an emergency Budget, it would have said something. The Chancellor could have had the day off, bless her, because it contained very little. One of the few things in the statement of any potential impact was the day to day budget savings for various departments, including DEFRA. I reckon it is about £200 million from a budget of which ELM makes up 40% or 45%. A pro rata cut in day to day spending means we would potentially see the £2.5 billion shaved. It would be good to hear from the Minister whether that will be the case.

One of the real problems with the transition, and the reason I am angry about the situation in which we find ourselves—on behalf of the farmers I represent in Westmorland and Lonsdale, and across the United Kingdom, and especially the farmers in England who are specifically affected—is that entry to the new schemes has been crudely marked by larger landowners, corporates and those with the wherewithal either to have land agents or to allow farmers time off to negotiate with Natural England, the Rural Payments Agency and DEFRA. Those people are inside the schemes; the typical farmer outside the scheme is, for example, a hill farmer in Westmorland, working 90 hours a week, either on their own or with no family members working on the farm. They cannot afford a land agent and are utterly isolated, feeling beleaguered. They are the ones outside the various environmental schemes, particularly SFI.

When the drawbridge was pulled up, for the time being, on SFI, we worked out that there were 6,100 entrants to the scheme. Of those, a grand total of 40 were from severely disadvantaged areas, particularly the uplands. That gives a snapshot of who is in and who is not. When the Minister defended the Government’s decision on the SFI closure a few weeks ago, he made some points that were right, but with the wrong conclusions. He said, of course, that SFI was “first come, first served”. The big landowners were therefore typically on the inside and the smaller businesses were on the outside, but that is not a good reason to pull up the drawbridge, just at the point that these smaller farmers were about to cross the moat and enter the castle, so to speak.

According to DEFRA’s own figures, the consequence of all this is that, as things stand, by the end of the transition in two years’ time, the average farmer in a severely disadvantaged area will be on 55% of the minimum wage. That is an absolute outrage. By the way, owner occupiers in my neck of the woods could also be sitting on an asset that is technically worth £2 million or £3 million, so they will be clobbered by the family farm tax as well. Those people on half the minimum wage, earning £12,000 or £13,000, will have to pay 20 grand a year in inheritance tax. Come off it! That is not fair.

The consequence is that those people will have to sell up. Where will that farm go? Will the neighbouring family buy it? No, of course not, because they are in the same pickle. Instead, it will be sold to a corporate that probably does not produce any food whatsoever. That ought to make Labour Members feel deeply uncomfortable. What a lack of social justice that implies.

My concern is that we are now being asked to vote for the hastening of something that is already doing huge damage to the sector. A 76% cut to the basic payment in one fell swoop will be crippling for many farmers, particularly those who are not yet inside the other agri environment schemes, particularly SFI. I worry about tenant farmers in my constituency and around the country. That money was probably paying the rent this year.

Both this Government and the previous Government accepted the recommendations of Baroness Rock’s excellent review, yet neither implemented them. To do all of this and put tenants, in particular, in a moment of extreme fragility and vulnerability before the Rock review could protect them was doing it the wrong way around. That is why the reduction to the BPS should have been parked until the Rock review’s recommendations were in practice, so that tenant farmers could be protected. In parts of my community, I am seeing something akin to a lakeland clearance. People who have farmed the valleys, the lakes and the dales for generations are being forced off because of both Governments’ failure to plan ahead.

I agree with the NFU, which clearly has the same sources as me, that there will be a £400 million shortfall and underspend based on what we know about the 76% cut to the BPS and the failure to roll out the agri environmental schemes more comprehensively. All that builds a deeply troubling picture.

A few weeks ago DEFRA officials appeared before the EFRA Committee, chaired by my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael). On behalf of the Department, they proudly said that they reckon 92% to 93% of farms will survive this process—I beg your pardon? That means DEFRA appears to be counting on 7% to 8% of farms not surviving. I know the kinds of places where they will not survive: places like the lakes and the dales, which is outrageous.

This all boils down to a deep injustice, but it is foolish as well. At a time when the UK is in a very dicey situation internationally, for us to do anything that undermines our food security is incredibly stupid, as well as unjust. The consequences of this move will cause, and are causing, huge hardship. It is worth saying that people who will suffer the most are the people of the uplands and SDAs. It seems to me that Britain’s poorest farmers, in Britain’s prettiest places, are the ones who will take the hit.

That will have consequences for our ability to feed ourselves. We produce only 55% of the food we eat in this country, which is nowhere near enough, and it needs to be at least 20 percentage points higher. Farmers care for our environment and our landscape. The Lake district’s world heritage site status could be at risk if we do not care for it properly.

I am also seeing the consequences of a lack of trust in the Government’s transition—both this Government and the previous Government—which is leading farmers to take the exact opposite decision to the one the Government want. Just a week and a half ago, when I spoke to a group of farmers from Penrith and elsewhere in Cumbria, the overwhelming sense was of anger and, more than that, disillusionment with the whole system.

What will those farmers do? They will opt out of environmental schemes altogether. They will think, “Do you know what? Perhaps I will pay the rent more easily if I quadruple my livestock, even if I undo all the good work that my mum and dad, and their parents before them, did on environmental issues for decades.” That is all because they have lost trust in the system.

As other Members have rightly mentioned, all of this has a huge impact on the wellbeing and mental health of these folks. Typically, and certainly in my area, farmers are one person bands farming in isolated scenarios, and they are the fifth, sixth or seventh generation to have farmed that valley and that community. They find themselves staring down the barrel of being the one who loses the family farm. It is not their fault, but they will believe it is. Do you know what that will do to people in those extreme circumstances?

I will also vote against the motion for all the reasons that have been set out. There is a way forward for farmers, if this Government take food security seriously and seek to deliver public money for public goods, as was promised at the beginning of this process.

I rise to speak on yet another attack by this Government on our farming community. The decision to punish and penalise farmers by reducing the delinked payments they receive from April 2025 will have a hugely detrimental impact on the farming community in my Chester South and Eddisbury constituency, and indeed across the country.

Delinked payments are an important transitional mechanism to new schemes, and an important income stream in themselves. The accelerated reduction in delinked payment rates, along with the other measures we have already heard about—the changes to agricultural property relief, the unreasonably abrupt halting of all future SFI applications with immediate effect, rather than the six weeks’ notice that farmers were led to believe that they would be given, and the ever increasing cost of running a farming operation, from equipment to supplies—means we must ask the Government this: when will they give farmers a break?

That is the message I hear when I speak to farmers in Cheshire. They have no confidence in this Government or in their management of the economic conditions to farm. There is a genuine, deep concern among farmers that their livelihoods are unsustainable under the current Government.

My hon. Friend is making a first class speech, standing up for her constituents in Cheshire. Is she aware that the Confederation of British Industry forecast has said that Labour’s rural and farming policies are set to cut turnover, jobs and investment across Britain. Further, according to the CBI forecast, family farms will shrink by 9% and cut staff by nearly 9%. Does she agree that that is a real concern?

I thank my hon. Friend for that excellent intervention. It is an attack on family farmers, rural communities and all the businesses that rely on those farmers to keep our rural communities going. As I said, it is unsustainable. That should stop us all in our tracks and make us think of the impact of having a country without farming.

The cash flow challenges that face farmers are well known. If we remove another layer of the support provided to them, as we are debating today, the negative consequences will continue to grow. The Government will be putting our food security at further risk and causing detriment to the stewardship of our countryside. The personal impact on farmers will be significant—and ultimately, that is what it comes down to. It is not just about figures; it is about people. This measure is another economic burden that will be felt by farmers, and I can assure the Minister that the stress and uncertainty that they have been put under by this Government are taking their toll.

I conclude my remarks with the same message that I have asked the Government to heed on numerous occasions in the main Chamber, in Westminster Hall debates and in meetings: “Please consider the real impact of the relentless attack on the people who provide our food, care for our countryside and maintain our rural economies.” There is so much to do to reverse the damage done to our farming communities since July, but we can start with the measure we are debating here.

I praise you for your forbearance, Mr Twigg; at one point, I thought you might move a closure motion yourself, because we have strayed a long way from delinked payments. In fact, we seem to be back in the general farming debate from a couple of weeks ago. I am astonished at Opposition Members’ complete lack of understanding of their own policies. I remember sitting in the shadow Minister’s seat five years ago, discussing the Agriculture Act 2020. Indeed, I raised some of the same points that the shadow Minister raised today. However, we are in a transition from the previous scheme, which paid out to everybody—the common agricultural policy and the £80,000 scheme—to a different scheme. It was always the case that some people would not get the money.

I just want to make it clear that we did not indicate dropping the delinked payments at the speed at which the Government are doing it—in the fifth year of the seven years of transition. That is the clear difference and the reason why we are debating this piece of legislation today.

Of course, the hon. Gentleman will know that there was never clarity on the pace of that transition. I can also tell him that, despite his assertions earlier, the announcement on the changing level of delinked payments was actually made back in October—but I will make some progress now.

It is astonishing that, listening to the Opposition, a person would not understand that the amount of money going into the system is exactly the same as before—in fact, it is more. The question is how it is distributed. There are legitimate grounds for a discussion on that, but that was never done by the previous Government. We inherited schemes and we have had to work with them. We will try to improve them, because I have many criticisms of them myself, but these are the previous Government’s policies that we are implementing. In fact, the previous Government should be proud of some successes because we now have 37,900—maybe 38,000—people in SFI. We initially inherited a situation which was under subscribed; it is now oversubscribed. That is a success. The question for the future is how we can find ways to bring more people in to it.

The Opposition need to understand that once the budget has been spent, it is spent. We cannot keep spending time after time. That is a basic principle that they did not seem to understand in general when they were in government, and they are illustrating that again today. I am interested to know whether they understand the consequences of voting against the legislation today, because I can tell them what those are.

On the Minister’s point about the SFI—“When it’s spent, it’s spent”—when did he know that the SFI budget had been spent in full? How long did he know it before he made the announcement to farmers, without giving them the minimum six weeks’ notice that had been promised?

I said in the Chamber the other day that it was perfectly obvious that this would happen from the moment we introduced these new schemes. I knew five years ago that this would happen at some point. We monitor the schemes on a regular basis and the closure was decided a few weeks ago when it reached the limit—[Interruption.] I will not take any further interventions.

Hon. Members present need to understand the consequences of voting against this statutory instrument. Without it, the agricultural transition effectively goes into reverse. No reductions at all will be applied to the payments. The subsidy levels would go back to what they were not in 2024, but in 2020. Hon. Members must think carefully about what they are voting for. Without this instrument, the spend on delinked payments in ’25-’26 would increase to £1.8 billion, leaving a £1.5 billion shortfall in the farming budget. They need to think carefully: they can vote against the instrument, demonstrating their complete financial irresponsibility and tying them back into the kind of approach they took in the previous Parliament, or they can be grown up and understand the consequences of their actions—but I can guess what they are going to do.

The Minister can write to me later if he cannot answer now, but what is the saving to DEFRA of the 76% cut in basic payment? The idea that this is financially literate would add up only if he had not created a saving, but he clearly has. By closing SFI when he did, he is clearly not spending that saving—so how much is it? Is the NFU right to say that it is £400 million?

The overall amount of money is, as we said, £5 billion over the two years. I had a decision to make back in October whether I could maintain the delinked payments at a higher level or put the money into SFI. I am unashamedly following the path that the previous Government set out for an agricultural transition to a better farming system. Opposition Members appear to be harking back to a system that most of us thought was completely discredited.

I was asked about the impact assessments and what assessments we have made. Average farm business income is forecast to have risen for all farm types in ’24-’25, with the exception of cereal farms, as I referred to a few minutes ago. The projected contribution of delinked payments and agri environment payments to farm incomes in 2024-25 is included in that average farm business income forecast. Not only is all the information the hon. Member for Keighley and Ilkley wants, but it has been published, had he chosen to look at it.

Alongside that, the recently updated farming evidence packs set out an extensive range of data to provide an overview of agriculture in the UK and the contribution of farm payments to farm incomes, including analyses by sector, location and type of land tenure. My sense is that all this information is available—it is just that Opposition Members do not want to hear it.

Will the Minister give way?

No—I am going to conclude now.

Delinked payments are not the answer to the long term challenges farmers face, despite the Opposition’s hankering after them. This Government will not shy away from making the right and tough decisions to build a profitable and sustainable farming sector and to deliver Britain’s food security. Reductions in the 2025 delinked payments are necessary so that we can fund our committed and planned spend under our other farming schemes, which support sustainable food production, exactly as I have laid out, including meeting the unprecedented demand for capital grants, which will reopen in a few months’ time. The money released from the reductions to delinked payments is being fully reinvested through our other schemes. I reiterate that every penny is staying within the sector.

This instrument is the essential next step as we continue to move away from the failed, untargeted payments of the past. It enables us to invest in the long term future of farming while delivering for nature. I commend the regulations to the Committee.

Question put.

1|0|11|5|The Committee divided:|Question accordingly agreed to.||0|0

Resolved,

That the Committee has considered the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025.

Committee rose.