Environmental Land Management Schemes: where are we now?

Tractor in a field with wind turbines in the background

The Agriculture Act in 2020 confirmed that Environmental Land Management schemes (ELMs) were to be put in place across the United Kingdom, replacing the EU Common Agricultural Policy (CAP) in the wake of the UK’s exit from the European Union. This was welcomed at the time by many in the farming community. The EUP CAP Basic Payment Scheme (BPS) paid farmers based on how much land they owned, and so was criticised for typically benefitting wealthier farmers and not taking into account good land management practices.

The schemes collectively pay farmers and land managers to deliver, alongside food production, significant and important outcomes for the climate and environment. These include:

creating and restoring a broad range of wildlife-rich habitat, as well as continuing to protect habitat already managed under our existing agri-environment schemes
improving water quality, by reducing nitrogen, phosphorus and sediment pollution from agricultural activities, building on the existing Catchment Sensitive Farming approach
increasing resilience to flooding and drought through nature-based solutions such as natural flood management
creating more new woodlands and treescapes to increase tree and woodland cover, and encouraging management of existing woodlands, including to increase their resilience to pests and diseases
reducing carbon emissions, storing carbon and increasing resilience to climate change, for example through management of soils, water, peatland and trees

There are three funding types:

Entry-level Tier – eligible to all farmers previously eligible for BPS

Sustainable Farming Initiative (SFIs)

Six standards have been established, including for hedgerows, integrated pest management, nutrient management, arable and horticultural land, improved grassland, and low input grassland. Actions can be selected and acted upon as appropriate to each different farm.
Pilot schemes took place across 850 farms in 2022. Key takeaways from the pilot schemes include the need for increased flexibility and simplification, so that ELMs works for different farm types, sizes and locations.

Mid and High level Tier – eligible to farmers, foresters, and land managers

Countryside Stewardship (CS)

Countryside Stewardship schemes protect and enhance the natural environment by increasing biodiversity; improving habitats; expanding woodland areas; improving water quality, air quality, and natural flood management. Actions can be selected and acted upon as appropriate to each different farm. There are different grant options, which include capital grants and revenue agreements, know as higher tier and mid-tier agreements.

There are currently 40,000 CS agreements, covering 34% of UK agricultural land. The aim is to increase agreements to 70,000 by 2028, covering 70% of agricultural land and farms.

Note: CS has replaced the original Local Nature Recovery scheme.

Note: SFI and CS funding can be claimed together with an online interactive tool, therefore payment can be provided for selected actions together.

Highest level Tier – eligible to all types of land, land owners, and land managers

Nature Recovery (NR)

Nature Recovery schemes will provide public and private funding to landowners and manager to support large scale projects though bespoke long term agreements that extend beyond 20 years.

The new ELMs are expected to:

Contribute at least 50% of the target to bring protected sites into favourable condition by 2042.
Contribute 80%-100% of the target to restore or create more than 500,000 hectares of wildlife-rich habitat outside of protected areas by 2042.

Agricultural Property Relief

In the Conservative Government’s last budget in March 2024, prior to the general election in July 2024, it was confirmed that Inheritance Tax Act 1984 will be amended so that the environmental value of land managed under an environmental land management agreement will be eligible. This would mean that Agricultural Property Relief (APR) would be applicable to ELMs from April 2025, removing the tax barrier.

Note: APR is a type of inheritance tax relief that reduces the amount of tax that farmers and landowners pay when passing farmland to the next generation. APR can help keep farms in the family, which allows them to continue to produce food and care for the countryside.

Labour Government Autumn Budget 2024

In Labour Government’s 2024 autumn budget, it was confirmed that the budget for farming in 2024/2025 was £2.4 billion, with £1.8 billion of that budget earmarked for ELMs. It was also announced that the APR change would be applicable from April 2026, instead of April 2025, delaying the relief by a year. This has raised concerns as it is forecasted that this will reduce land value and may force farmers to sell land to pay for inheritance tax until the change comes into force.

Overall, ELMs have been welcomed as they provide funding based on impact-based environmental actions, rather than land size. Further tools and actions have been provided to support the roll-out of ELMs, and environmental experts have requested that targets for nature recovery, carbon sequestration, and natural flood management be put in place prior to agreements being commenced, without delaying ELMs any further.

It has been confirmed that the Office for Environmental Protection will be the watchdog for the monitoring of outcomes of ELMs. The Department for Environment, Food, and Rural Affairs have confirmed that, to date, there are over 34,900 CS agreements, 13,900 SFI 2023 agreements, and over 20,000 applications to the SFI have been received.

However, it has been noted that certain challenges have raised some doubt in meeting the environmental outcomes in practice. These challenges include demographic change, soil erosion, loss of labour, biodiversity loss and climate change.

Bibliography

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