Natural England

Good afternoon.

In the next few minutes I want to set out why I believe we need to forge a new contract between society and farmers - where you see one of your primary roles as managing the environment, including its landscape, biodiversity and natural resources, and where the public sees you as guardians of the environment and are happy to pay you for these 'public goods' through taxation.

I recognize that you are facing significant challenges - an increasingly competitive global market for agricultural products, demanding expectations from consumers for high quality and low price, changing regulatory and tariff regimes and, on top of all this, the uncertainties of climate change. Your future, the future of farming and the future of the natural environment are inextricably linked. The conservation of the natural environment in rural England depends on the continuation and expansion of many good agricultural practices, which in turn depend on the long-term financial viability of agriculture.

Many of these issues are addressed by the UK's vision for CAP. However, Natural England believes that the UK vision does not go far enough in describing the mechanisms by which competitive market orientated agriculture can be combined with the effective stewardship and conservation of the natural environment. The purpose of the CAP should be to ensure that taxpayers' funds secure public benefits and, by doing so, provide you with the incentives to embrace the role of suppliers of public goods and services from the natural environment as part of your core business.

We disagree with the assumption that the environment can be safeguarded through a combination of the free market, regulation and the current very modest levels of funding on Pillar 2. We believe that there is a requirement for the strengthening of Pillar 2 alongside the reduction of Pillar 1 payments to ensure that the environment is protected whilst you are adapting your farm enterprises.

Your role will increasingly be to deliver a range of environmental services and goods - balancing our need for food, energy and water whilst allowing natural systems such as floodplains to function and maintaining landscapes rich in wildlife for us all to enjoy. A modified and better-funded Pillar 2 of the CAP will be critical to your ability to do this.

In the future, Pillar 2 will need to recognise what you provide in terms of the infrastructure, labour and expertise needed for the management of the natural environment. The market alone will not deliver these benefits for the foreseeable future, and the CAP will be essential to conserving, enhancing and managing the natural environment for the public good.

Recent reforms have done much to eliminate the damage caused to the environment by Pillar 1 but it is still producing relatively little benefit. Good agricultural and environmental condition in reality goes little above and beyond the requirements of regulation. Cross compliance is something we can agree on - from your perspective, it's costly and bureaucratic, from our point of view, it is not fit for purpose in delivering for the natural environment. Don't misunderstand me. We would expect you to meet the requirements of cross compliance as part of minimum operating standards but without the excessive overhead of a cumbersome inspection regime.

By 2020, we expect Pillar 1 to have disappeared in its current form but it is absolutely critical that there is a significant transfer of funds from Pillar 1 to Pillar 2 along the way. There are already excellent examples of both agri-environment and forestry schemes, which are demonstrating how effective these schemes can be in delivering a range of tangible benefits.

For example, in the last week or so the area of land entered into agri-environment schemes has topped 4.7 million hectares - that is more than 50% of all farmland in England. In terms of benefits, that equates to over 100,000 kilometres of hedgerow under management, 53000 hectares of over-wintered stubbles, 13,000 skylark plots and low-input management of 53000 hectares of permanent grassland, to mention just a few. With that success of course comes increasing pressure on what is a limited budget, with more than £50 million having been paid out through Environmental Stewardship alone. I share your frustration at the continuing uncertainty around the immediate funding prospects for the scheme and can assure you that we are working very closely with Defra to secure as favourable an outcome on this from the current European negotiations as possible.

However, I am also clear that a new approach to the way we distribute and target Pillar 2 funding is urgently required to maximize the environmental and other public outcomes delivered. This should be based on the principles that:

• Public funds should primarily be used to support land managers who are contributing to the positive improvement of the natural environment
• Public funds should not in general be used to pay land managers to stop polluting or damaging the natural environment
• Public funds should not be used to subsidise or substitute for proper environmental regulation.

In this context, I believe there is a case for raising the bar on securing entry into the Entry Level Stewardship, to ensure that public money secures real, large-scale environmental gains.

We also need to target more of the funding at those of you who can best help meet the most pressing environmental challenges we face. In this context, I believe there is potential for Higher Level Stewardship to be an invitation only scheme - directed at those areas where there is the greatest need to support environmental benefits. This will be particularly critical in ensuring the scheme is able to help you manage the adaptation of the natural environment to the climate change effects that are already locked in. We will need to manage this at a landscape-scale - to accommodate rising sea levels and increased flooding, to reduce the fragmentation of habitats and connect them across wider areas. This will give our wildlife most at risk from climate change a better chance of survival and maintain our biodiversity. A modified and better-funded Higher Level scheme will be critical to our ability to do this.

We will be working with Defra to review the targeting approach for the Higher Level scheme and there will be opportunities for the NFU to be involved in this process.

Notwithstanding these improvements, we do need to secure a significant increase in funding through Pillar 2 to ensure that we can meet the scale of future need in respect of managing the natural environment. Our estimate is that in England we need to at least double the current level of funding flowing through Pillar 2, by 2013. However, there is more work needed to refine this estimate.

I do believe we have common cause with you in arguing the case that a revised and expanded Pillar 2 should be a very high priority for future CAP reform.

Whilst this is in the long-term interest of Europe as a whole, we need to accept that other member states will need to make the same journey at different speeds. That is why our ability to apply voluntary modulation at national level is so crucial in the short to medium term, ensuring that the effectiveness of the new rural development programme isn't seriously compromised. In the longer term we support moving towards a progressively higher common rate of compulsory modulation.

It's now time to get real about timescales. We want to start talking to you about an actual timetable over which this transfer is going to occur. Government needs to start to set out a timescale for this process so that we can start to plan more confidently with you.

I recognise that the gradual withdrawal of direct income support subsidies alongside the opening up of European markets to free trade in agricultural products is already proving challenging for many of your farm businesses.

Many of you are already responding to this by combining income from high quality food and other products, with income from a diverse range of other enterprises and income from the taxpayer for delivering a range of public benefits through schemes such as Environmental Stewardship.

The market will continue to be a key driver of how you as businesses respond to these changing circumstances. I foresee further market led opportunities linked to the increasing need for you to provide a range of services from the land.

Across the UK as a whole, peat and organic soils represent the single largest terrestrial carbon store accounting for around 3 billion tonnes - more carbon than stored in the forests of Britain and France combined. Scientists at the University of Durham have estimated that if all of the upland peatlands were restored to good condition, they could become a valuable sink for up to 40,000 tonnes of carbon a year. Natural England believes farmers should be rewarded for management practices that deliver this solution. We will be looking at how we can work with you to make the most of existing and new market opportunities. For example we want to explore how the proposed carbon-trading scheme might reward you for the carbon management services you can provide to help tackle climate change.

We will also be looking at ways in which we can support and facilitate the marketing of agricultural products that are underpinned by high environmental standards, and that help to secure the management of the natural environment.

In this challenging business climate you should rightly know what to expect as valued customers of Natural England. You have to run efficient and effective businesses and you should expect nothing less from us.

I'm restless in pursuit of excellence for Natural England, which means being passionate about the natural environment, but also being passionate about the need to have an efficient organisation.

We will ruthlessly eliminate bureaucracy and focus on how we manage our relationship with you at a farm enterprise level. We need to deliver the obvious benefit to you of not having a procession of people at your gate.

My aim by the end of this year is to essentially have in place a 'first-stop shop' for you. This means you will have a regular, dedicated person from Natural England to deal with. They will be able to provide you with general advice on all of our products and services and help you access more specialised advice if necessary. They will have ownership of your issue and will be your champion on the inside. We will be working closely with other key delivery partners to develop a shared model based on this approach.

We will also continue to strive to improve the efficiency of our service to you and thereby the effectiveness of our service to the natural environment.

There is always room for improvement but I hope you will acknowledge the efforts we have already made. For example, just prior to Christmas, Natural England had delivered 21,000 payments due on Countryside Stewardship and Environmentally Sensitive Area schemes, well ahead of the end of January deadline.

Let me also give you an example of a simplification that we are already making. That is in respect of the requirement for a Farm Environment Plan on entry to the Higher Level Stewardship Scheme. Obviously we want sufficient baseline information to know that the payments we make are going to deliver the right outcomes. But that doesn't mean we want an inventory of every last buttercup in England. FEPs are a costly requirement for you - and don't provide sufficiently targeted information for us. As you're all aware, Higher Level Stewardship is a highly competitive scheme and we therefore don't want to waste your time and money on applications that have little chance of success. As a result, from 1 April, we will tell you whether or not we are minded to grant your application in advance of requiring a FEP. This will be based on a transparent assessment of the likely contribution of your agreement to improve the natural environment.

I'd like to conclude by reiterating my absolute commitment to working in partnership with you in order to achieve the vision I believe we share for the future of farming and the future of the natural environment.

That vision is one that embraces your role as suppliers of public goods and services from the natural environment as part of your core business.

It recognizes the importance of public funding through a reformed CAP to secure those public benefits from you that cannot be delivered, in sufficient quantity or quality, through the market or secured through advice and regulation.

It also recognises the importance of your ability to adapt to economic drivers and respond to new market opportunities and our role in helping you to develop those opportunities where substantial public benefits - as in the case of carbon management - could result.

In the face of both global and local consequences of climate change, it is founded on our need to use the land wisely, flexibly and sustainably so that it can supply the wide range of services that we will all require - reconciling the need for food, energy and water with allowing natural systems such as floodplains to function and maintaining landscapes rich in wildlife for people to enjoy.

It can - I believe - be delivered through a new social contract between society and farmers.

Thank you.

ENDS

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