Transparency data

13 September 2021: Future Farming and Countryside Programme Phase 2 business case: accounting officer assessment

Updated 5 October 2023

Background and context

The accounting officer test has been completed to support the Phase 2 Future Farming and Countryside Programme (FFCP) business case which was submitted to HM Treasury in September 2021. The focus of this is to secure funding at Comprehensive Spending Review 2021 for the next three years, from financial year 2022 and 2023 to financial year 2024 and 2025, and covers:

• direct payments
• environmental and animal welfare outcomes
• improving farm prosperity
• programme support

This case seeks funding of £8.25 billion for Phase 2 (financial year 2022 and 2023 to financial year 2024 and 2025) of the Future Farming and Countryside Programme, along with approval of the updated outline programme strategy and plans for Phase 3.

The programme will deliver the most significant changes in agriculture since the 1940s, phasing out the Common Agricultural Policy and designing and implementing a new set of domestic arrangements to:

• contribute to increased sustainable productivity in the agricultural industry
• significantly contribute to meeting the goals set out in the 25 Year Environmental Plan
• contribute to meeting net zero
• protect and improve livestock health and welfare: support livestock farmers to shift to higher welfare systems by co-funding investment in equipment, technology and infrastructure and incentivising higher welfare practices to improve health and welfare outcomes

Programme investment over the agricultural transition (financial year 2021 and 2022 to financial year 2028 to 2029) will deliver a net present social value of £28.7 billion, with an overall estimated benefit-cost ratio of 2.5. The schemes and services being introduced through the programme will be the main way Defra will meet it’s goals set out in the 25 Year Environment Plan, plans for net zero in the agriculture sector and the biodiversity outcomes outlined in the Dasgupta Review.

This assessment was done in July 2021 by Tamara Finkelstein, Permanent Secretary of the Department for Environment, Food and Rural Affairs.

Regularity

The Future Farming and Countryside Programme has specific legislation in place to meet the needs of the programme now and has plans for future statutory instruments as the programme develops.

Section 1 of the Agriculture Act 2020 (“the Act”) provides the power for the Secretary of State to give financial assistance for and in connection with certain purposes which includes giving financial assistance under the environmental land management schemes. The act also includes the power to make regulations which relate to the monitoring, checking and enforcement of the financial assistance being given. These powers have been used to make the Agriculture (Financial Assistance) Regulations 2021 (S.I. 2021/405) and further statutory instruments are likely to be required in the future.

Powers in the act also provide for regulations to address the continuity and reduction of direct payments, the introduction of delinked payments and lump sum payments and to simplify cross compliance and rural development, in England, in line with the Agricultural Transition Plan. Statutory Instruments have been made using these powers and more are expected.

Additional powers under the Science and Technology Act 1965 will enable the Secretary of State to provide financial support under new innovation, research and development schemes.

Overall assessment - Met

Propriety

Procurement activity is conducted under the Public Contracts Regulations (PCR) 2015 and as outlined within the Government Commercial Function Sourcing Playbooks.

Contract management is deployed in accordance with Defra and government contract management standards.

Overall assessment - Met

Value for money

The Future Farming Programme will end the existing poor value for money subsidy regime and re-direct this public money towards a gradual structural change that will achieve environmental, climate change and economic outcomes over a seven-year transition period and beyond.

Programme investment over the transition period (financial year 2021 and 2022 to financial year 2028 to 2029) is estimated to provide an overall benefit to cost ratio (BCR) of 2.5, with a range of 1.6 to 3.5. The overall BCR is reduced because of poor value for money direct payments (which we are phasing out) and animal welfare (AW) a large scheme for which we have been unable to monetise benefits. The cost benefit analysis conducted for the Future Farming Programme suggests that it represents good value for money for the exchequer and UK society as a whole against other alternative courses of action. It is recognised that given the early stage of the programme there are uncertainties around some of the figures in the quantitative assessment but, even taking these into account, the analysis indicates the programme is a sound use of public funds.

Overall assessment - Met

Feasibility

This programme sits on the Government Major Projects Portfolio (GMPP) and operates as a major programme in line with the best practice standards outlined by the Infrastructure and Project Authority (IPA) and their gateway processes.

The programme has its feasibility for delivery assessed and assured by an established governance model, including an internal Programme Board and Defra’s Investment Committee.

In addition to these internal measures, the programme is reviewed for its feasibility and control by the Infrastructure and Projects Authority (IPA) and the Government Internal Audit Agency (GIAA).

Delivery confidence at the last gateway review, led by the IPA, in August 2021, remained at amber, with recognition for the advancements made within the programme during the last 12 months. All the IPA recommendations are being taken forward.

The programme has achieved its critical path milestones in phase 1 and is moving into phase 2 which is a period of testing, piloting, monitoring, evaluating, learning, and co-design with end users, to ensure that policy proposals are feasible and achievable. The programme is transitioning to an agile way of working to manage uncertainty. Whilst there are inevitably, with a programme developing and testing innovative new ways of supporting the farming industry and improving the environment, implementation and transition issues which will require close and continued attention, successful delivery by 2024 of phase 2 is considered to be achievable.

A key risk is business readiness and the willingness of farmers and landowners to participate in the programme. We plan to mitigate this risk by monitoring the financial health of the sector, engagement with farmers and responding in an agile way to adapt the pace and design of schemes as needed.

Overall assessment - Met

Affordability

I have undertaken an assessment of the affordability with specific reference to the two cost components; scheme costs and administrative costs.

Scheme costs relate to the payments made to beneficiaries, such as farmers and land managers. These are covered by the manifesto commitment to guarantee the current annual budget to farmers in every year of this Parliament and amount to £2.4 billion each year across the period financial year 2022 and 2023 to financial year 2024 and 2025.

Administrative costs relate to the delivery of our schemes and the implementation of our new policies and systems. Whilst there is no committed funding for administrative costs in the same way as there is for scheme costs, the purpose of this business case is to secure approval for the costs across the period financial year 2022 and 2023 to financial year 2024 and 2025.

Overall assessment - Met

Conclusion

As the accounting officer for all money spent across the Defra group. I considered this assessment of the Future Farming and Countryside Programme and approved it on 13 September 2021.

I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This summary will be published on GOV.UK. Copies will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Tamara Finkelstein

13 September 2021