Policy paper

Government response to the Rock Review: by recommendation

Updated 25 May 2023

Applies to England

Note to the reader

The Rock Review, published on 13 October 2022, formally lists 74 recommendations to the Department for Environment, Food and Rural Affairs (Defra) regarding tenant farming in England.

Upon analysing the report, we have found one additional headline recommendation – bringing the total to 75. Of these, 18 are listed as headline recommendations (immediate and long-term actions). 

This is a line-by-line response to each recommendation, in chapter order.

Firstly, we have set out our response to the headline recommendations (pages 9 to 11 in the Review). 

These headline recommendations are duplicated by the Review in the detailed list of recommendations (summarised at the end of each chapter, between pages 21 to 52).

Where applicable, we have cross-referenced these overlaps to make it clear to the reader. For example, immediate headline recommendation 1 relates to detailed recommendations 12 and 14. In these instances, our policy responses are the same. 

We have also set out the headline recommendations as they are presented in the Review – in terms of immediate actions versus longer term actions.

Secondly, we have set out our policy responses as they appear in the full detailed list of recommendations in the Review, in chapter order (pages 21 to 52 in the Review).

Headline recommendations

Recommendations for immediate action

These can be found on pages 9 to 11 in the Review.

Recommendation 1

This immediate headline recommendation 1 relates to detailed recommendations 12 and 14.

Defra must design all environmental land management (ELM) schemes and productivity schemes to be accessible and open to tenant farmers. This should be done by starting from the basic principle that tenants should not need landlord consent to enter tenanted land into schemes and landlords should not be allowed to enter tenanted land into schemes unilaterally. Building from this, the necessary details are:

• where there is alignment between scheme length and the length and terms of the tenancy agreement, the tenant can unilaterally enter tenanted land into schemes without landlord consent
• where schemes require actions to deliver outcomes that are longer than the tenancy agreement, tenants who have had more than one historic renewal or who are on a rolling annual tenancy and self-assess that they will have sufficient management control to enter schemes, should be able to unilaterally enter tenanted land into schemes
• landlords can only enter tenanted land into scheme options that require permanent land use change jointly with the tenant and then only with consent of the tenant. The consent of the tenant should be entered into separately and subsequently to a signed tenancy agreement
• this must be met with adequate protections to stop land being taken back in hand and subsequently entered into schemes by landlords where tenants could have carried out the action, unless the tenant has not objected
• tenants with Agricultural Holdings Act (AHA) agreements should be considered to have sufficient security of tenure and management control to enter multi-annual schemes

Response to recommendation 1

We agree that if we are to meet our ambitions for a thriving agricultural sector and restored natural environment, farming schemes must be designed appropriately to ensure tenant farmers can access them.

We are designing our farming offers to be simple, flexible, and accessible to as many types of farmers and land managers as possible, including tenant farmers.

We are aiming to remove barriers to tenants entering ELM schemes so that they are as accessible to tenants as possible. We have already done so in the Sustainable Farming Incentive (SFI) and Landscape Recovery (LR).

We agree to adopt a principle of not requiring landlord consent where it is appropriate to do so. However, it is likely there will be many scenarios, particularly in Countryside Stewardship (CS), where it is still required. This is due to the nature of the options, such as those requiring permanent land-use change.

Explicit landlord consent and landlord countersignatures are not required in the SFI, although it is the agreement holder’s responsibility to check that their tenancy agreement allows them to complete the actions in the standards they have selected.

Currently, tenants in CS must seek their landlord’s consent to enter an agreement, and if they do not have security of tenure for the duration of the agreement, their landlord must countersign the agreement. This means the landlord will become responsible for delivering the agreement if the tenant leaves the land before the agreement’s completion.

We agree to explore how to use landlord consent and countersignatures in CS in the future. We will share further information on this in due course.

In the SFI, we already allow tenants with tenancies on a ‘rolling’ year-by-year basis to enter that land if they expect to have ‘management control’ of it for the 3-year duration of their agreement.

This approach is made possible due to the shorter duration and relatively simpler nature of the actions within the SFI standards. This makes it easier for a tenant to check that their tenancy agreement allows them to complete the actions in the standards they select.

We understand that some tenants have difficulty committing to the longer-term or more complex actions usually found in CS or LR. Some tenants may require some form of land use change, due to the length and limitations of their tenancy agreements. These types of actions need to be delivered over a longer period than the SFI actions to deliver the environmental outcomes we are committed to achieving.

Some longer-term actions, such as tree planting, could ultimately lead to a change in land value or otherwise significantly change the foundational characteristics of the land. This is why any changes must be done in accordance with the landlord’s legal rights to the land.

Landlords are currently eligible for CS where they have retained management control of the land. LR applicants will need to show that they have management control or the consent of those with management control for the duration of the project development or long-term implementation agreements (or both). This means it is likely that landlords will be involved in the projects. Landlords are not eligible for the SFI when they are not actively farming the land.

We do not think it would be right to limit the range of scheme options available to landlords or to require them to always enter into agreements jointly with their tenants.

Restrictions like these would cut across the landlord’s legitimate interests and could create perverse incentives. For instance, limiting landlords to permanent land use change options only could mean landlords creating environmental features on their land that they cannot access funding to maintain or improve. It could also put pressure on tenants to pick up the management of those features, even when that might not be of interest to the tenant or within the scope of their tenancy agreement.

Equally, limiting landlords to only being able to enter schemes jointly with their tenant could discourage landlords from tenanting land at all – they may explore contract or share farming instead to maintain the freedom to enter schemes on their own.

For those reasons, we propose to focus on supporting greater collaboration between tenants and landlords, and adapt scheme design to make that more likely.

Regarding the risk of unreasonable land resumption (taking land back) from a tenant farmer, we have over twenty years’ experience of agri-environmental schemes in England and there is limited evidence that any such practices are routinely happening. The area of rented land has remained stable over the last 5 years and the area of land rented for a year or more under Farm Business Tenancies (FBTs) is higher now than it was in 2020.

However, the government supports the tenanted sector, and therefore we agree with the importance of identifying and mitigating any risk in this area.

We think there is value in considering including a condition in our eligibility guidance for ELM schemes that, where tenants or landlords are applying to enter land into a scheme, the land must not be in an active, unresolved, dispute between the landlord and tenant. We will work through this as we evolve CS.

We will continue to monitor trends in this area and will ask the new Farm Tenancy Forum to explore this alongside other land availability issues highlighted in the Review.

We agree that tenants with AHA agreements should be considered to have sufficient security of tenure and management control to enter multi-annual schemes and have already embedded this into our schemes. This will be the case if the tenant:

• has not been served a notice to quit by their landlord
• has not given notice to quit their AHA agreement to their landlord

Recommendation 2

This immediate headline recommendation 2 relates to detailed recommendation 28.

Defra needs to allow joint applications to productivity schemes and joint applications from both landlord and tenant for fixed equipment.

Response to recommendation 2

We agree and indeed already allow some forms of joint applications. For example, we accept applications from tenants and landlords applying jointly for grants as a single legal entity or where one business agrees to become the lead applicant. However, following the Review, we recognise that the system may not be widely understood.

We have reviewed how we communicate this through scheme guidance, and we will work with the new Farm Tenancy Forum to explore whether we need further specific guidance on how to undertake collaborative grant applications between tenant and landlord.

Recommendation 3

This immediate headline recommendation 3 relates to detailed recommendation 38.

Defra should enable joint applications to woodland schemes that incentivise landlords to discuss woodland planting with their tenants so that both can benefit from any agreement.

Response to recommendation 3

We agree that joint agreements between landlords and tenants could be beneficial to both parties.

This would enable tenants to undertake options which require permanent land use change and for landlords and tenants to formally share the work and rewards from scheme agreements. By doing this, we are giving tenants the flexibility and agency to take more decisions on how they use their land in a way that makes the most sense for their business and fits alongside their primary role producing food. We propose to take this recommendation forward by testing this approach initially through EWCO in 2023. Any future policy will be decided in consideration of the impacts on food production and security.

Defra and the Forestry Commission commissioned a sub-group of the Tenancy Reform Industry Group (TRIG) to develop the TRIG Guidance on Tree Planting and Woodland Creation on Agricultural Tenancies (December 2022). This offers guidance on issues where both landlord and tenant are willing for the tenant to plant trees on tenanted land.

Recommendation 4

This immediate headline recommendation 4 relates to detailed recommendation 27.

Defra needs to examine ways to incentivise investment into renewing and upgrading infrastructure. Defra and HM Treasury (HMT) should create appropriate incentives throughout the agricultural transition period to bring tenanted holdings into an improved state.

Response to recommendation 4

We agree to continue investing in farm infrastructure, including for tenanted farms. The Farming Investment Fund (FIF) provides grants to farmers, foresters, and growers (including contractors to these sectors and tenants) so that they can invest in the equipment, technology and infrastructure. This is an innovative way of supporting farm infrastructure.

Grants are offered towards a proportion of the total cost of the investment. There are also opportunities to apply for grants for smaller investments – The Farming Equipment and Technology Fund (FETF) – and larger investments – The Farming Transformation Fund (FTF).

Eligible investments include:

• slurry storage
• on-farm reservoirs
• efficient irrigation systems
• robotic equipment

In future, this will include upgrades or new calf housing to improve health and welfare.

Recommendation 5

This immediate headline recommendation 5 relates to detailed recommendation 34.

Developers of government schemes such as EWCO, natural capital markets, and the forthcoming land use framework need to consider how they work together to mitigate land being removed from tenancies and provide adequate protection to tenants who could manage woodland.

Response to recommendation 5

We agree to consider this risk through ongoing policy development and analysis, including as part of the development of the Land Use Framework.

Recommendation 6

This immediate headline recommendation 6 relates to detailed recommendation 39.

Defra needs to develop a comprehensive and long-term new entrant policy that has clarity of vision with success criteria. It should consider ways that it can best use public funds to incentivise and support private landlords to play their part in safeguarding the future of the tenanted sector and progression of new entrants.

Response to recommendation 6

We agree that attracting bright new talent into land-based business is vital for a sustainable and productive agriculture sector. The tenanted sector is equally vital to this and we will continue to design our schemes to be as accessible to new entrants as possible.

We are already helping to address this by funding the New Entrants Support Scheme pilot, which is trialling approaches to building entrepreneurial capacity in selected new entrants and increasing their opportunities to access land and finance.

Recommendation 7

This immediate headline recommendation 7 relates to detailed recommendation 46.

Government needs to outline what it sees as its role, a roadmap, and broad guidelines for the development of private ecosystem markets alongside basic expectations for how demand and supply side actors should behave. This includes:

• setting out clear guidelines to ensure that tenants are rewarded and not disadvantaged for their work in maintaining and improving the natural capital asset
• managing the associated flow of ecosystem services

Response to recommendation 7

We agree that a clear roadmap is needed to support the orderly development of private ecosystem markets.

We also agree that tenants, along with other farmers and land managers, should be rewarded and not disadvantaged for their work in maintaining and improving natural capital assets and managing the associated flow of ecosystem services.

Private nature markets are relatively new and developing rapidly, with emerging operators using different methods to measure and verify outcomes and applying different rules.

As custodians of over 70% of land in England, farmers will need to be key participants in nature markets and are well-placed to benefit from this emerging opportunity. Defra is committed to supporting farmers in accessing green finance opportunities. For example through the design of our ELM schemes and access to capacity-building support through schemes such as Natural Environment Investment Readiness Fund (NEIRF).

As part of the update on the government’s Green Finance Strategy, we have published the nature markets framework, which provides greater clarity on the principles that will guide the development of UK market mechanisms for carbon and other ecosystem services. It also sets out next steps including arrangements to develop a suite of investment standards for nature markets.

We agree that Defra should support the development of private market codes and associated payments for soil and other forms of on-farm carbon and biodiversity gain to ensure they are accessible to tenant farmers. The UK pioneered the development of private investment mechanisms for woodland creation and peatland restoration through the UK Peatland Code and UK Woodland Carbon Code.

We recognise the need to build a more comprehensive suite of standards to support investment in the full range of ecosystem services that farmers and natural resource managers want to provide. We are currently supporting projects to develop and prototype new investment models through the NEIRF.

To further support the sector to engage in nature markets, Defra asked the Green Finance Institute to work with the finance and farming sectors to explore how private sector sources of finance can be more swiftly unlocked at scale to support the farming transition, including how to resolve the specific barriers faced by tenants.

The recently published report Financing a Farming Transition is the result of a collaboration between farming groups – including the Tenant Farmers Association (TFA) – banks, supermarkets, and service providers.

It identifies barriers and corresponding enablers under the themes of:

• data access and availability
• priority environmental outcomes metrics
• environmental markets framework and principles
• aggregation models

This report picks up the specific recommendations set out in the Review and recommends the government take a balanced approach to the rights of tenants and landlords in supporting these new markets.

Defra is progressing work in each of these areas and will carefully consider the Review’s recommendations to inform future work.

Defra will work with the British Standards Institute (BSI) to take forward a fully consultative business-led process to co-design and develop an investment standards framework for ecosystem service markets, with a roadmap for implementation.

This is likely to include:

• an overarching standard outlining principles and rules that all ecosystem markets should adhere to
• additional detail on how these will be applied in individual markets
• up to 9 individual standards which provide detailed methodologies for quantifying ecosystem services to meet identified gaps within the framework

We will ensure that the standard specifically accounts for the different land tenure of land managers, as part of that development.

Recommendation 8

This immediate headline recommendation 8 relates to detailed recommendation 70.

Defra needs a consistent process and protocol that requires testing of all schemes and options within the schemes with tenant farmers to ensure they are compatible with the constraints facing tenants, and are tenant-proof.

Response to recommendation 8

We agree and will continue to ensure that tenant farmers are a key part of our ongoing engagement on scheme design.

As the Tenancy Working Group (TWG) was conducting the Review, we reviewed all our planned engagement and ensured tenant interests were appropriately represented.

The TFA is part of the Farming Senior Stakeholder Group. It meets regularly with the Minister for Farming and the Director of the Farming Programme. Through co-design work or piloting schemes, we will ensure that we are engaging a representative group of farmers on topics including land tenure.

We have a consistent process in place for testing all schemes with farmers through test and trials. Test and trials help us to work with a range of farmers and land managers to co-design new schemes. We can understand how the schemes work in a real-life environment and what issues we need to consider.

We have 15 test and trials working with tenant farmers – 9 of these are providing evidence on issues concerning landlords and tenants and 10 are working with landlords and tenants more generally.

As part of the TWG, some of our test and trial participants submitted written evidence on the barriers they are experiencing with tenant farmers accessing schemes or any other issues. This supported the development of some of the Review’s recommendations.

Recommendation 9

This immediate headline recommendation 9 relates to detailed recommendation 75.

To support the ability of Defra to enforce and deliver the scheme recommendations Defra should immediately begin to develop a data layer on the management of land in England through applications to grants. This should be complemented by a policy position that does not penalise a change in tenancy circumstances as this does not mean a change in intent to deliver an agreement.

Response to recommendation 9

We agree on the importance of having a clear understanding of different farm business characteristics that are part of our schemes.

Defra uses data from our own surveys and statistics, alongside data from other industry sources to inform policy development. This includes the long-standing Annual Agricultural Land Occupation Surveys for Great Britain produced by the Central Association of Agricultural Valuers (CAAV).

We will consider how to gather more data through our ELM schemes without adding undue costs and administrative burdens in the process.

Recommendation 10

This immediate headline recommendation 10 relates to detailed recommendation 72.

Defra should confirm that it will maintain tenancy in the portfolio of the farming minister and explicitly include land occupation as a strategic portfolio item for a Defra Director to ensure that government takes account of land occupation issues in development of policy, procedures, and practice.

Response to recommendation 10

We agree the need for representation of tenancy issues at ministerial and director level. The Minister for Food, Farming and Fisheries specifically includes tenants as part of his portfolio.

We can confirm that the Director for Agri-Food Chain has strategic responsibility for tenants, while the Director for the Farming and Countryside Programme is responsible for making sure the policies and schemes within the farming reform programme work for tenants.

We will ensure that all other relevant directors account for tenancy and tenants in scheme design and wider policy across Defra.

Recommendations that require action over a longer timeframe

These can be found on page 11 in the Review.

Recommendation 1

This long-term headline recommendation 1 relates to detailed recommendation 1.

Defra should examine how it can incentivise and provide advice on how landlords and tenants can collaborate to develop and enter mutually beneficial agreements that cover public and private schemes.

Response to recommendation 1

We agree to this recommendation. We are in favour of exploring initiatives that will help to encourage more collaboration between landlords and tenants.

We propose to do this in part through a new Farm Tenancy Forum to build on the valuable work that the TRIG has delivered for many years. We will invite industry representatives of tenant farmers, agricultural landlords and professional advisors who work in the sector to be part of this group. The Farm Tenancy Forum will:

• support implementation of the government response to the Rock Review, feeding back real-world experience and insight on progress
• meet quarterly with the Farming Minister in attendance
• provide Defra with regular updates on how the sector is progressing and adapting throughout the agricultural transition
• feed in evidence and insights to Defra’s scheme and policy development
• consider how new schemes are impacting the tenanted sector
• develop and disseminate codes of practice and standards of conduct to monitor and report on their uptake by the sector

This will ensure Defra has ongoing and regular feedback on tenant farming issues. It will deliver more oversight of the sector by both industry and government working together.

Recommendation 2

This long-term headline recommendation 2 relates to detailed recommendation 6.

Defra should consult on legislative changes to open up the ability for tenants to diversify their businesses without the landlord unreasonably refusing consent. In defining the tests for unreasonableness, consideration will need to be given for how the diversification impacts the landlord’s tax status, land value and estate management plans. They should also consider legislation to extend existing AHA protections such as ‘no unreasonable refusal of scheme entry’ and ‘access to arbitration’ to Farm Business Tenancy (FBT) tenants.

Recommendation 3

This long-term headline recommendation 3 relates to detailed recommendation 65.

To support this, Defra ministers should actively engage the services of the Law Commission to update legislation pertaining to agriculture, tenancies and land use in England to bring it into the 21st century and make it fit for the multiple demands being made on land.

Recommendation 4

This long-term headline recommendation 4 relates to detailed recommendation 7.

The government should address the state of tenancy agreements head on with a broad consultation on tenancy reform in 2023. Part of the consultation should address why FBT agreements are using such a narrow band of the flexibility available within the Agricultural Tenancies Act (ATA) 1995 and ways to update the definition of agriculture and the rules of good husbandry to encompass actions for environmental benefits.

Response to recommendations 2 to 4

We agree to further explore the recommendations on legislative changes with the new Farm Tenancy Forum. We will discuss how we can better support landlords and tenants in working together to agree diversifications to mutual benefit.

We will ask the new Farm Tenancy Forum to explore how we can encourage the full use of the flexibilities that FBTs offer and whether restrictions in FBT agreements are creating unreasonable barriers for tenants. This could include the development of new guidance and other support tools, as needed.

We want all farmers to be able to access opportunities to invest in their farm business and the natural environment. There must be fair and balanced protection for both parties so that:

• tenants have access to those opportunities
• landlords have confidence in letting land to ensure there are opportunities for tenants and new entrants to rent land in future

We have already designed the SFI to align with tenancy agreements. This includes not requiring tenants to have landlord consent to apply for the SFI, though it is the agreement holder’s responsibility to check their tenancy agreement allows them to complete the actions in the standards they have selected.

We undertook a consultation on tenancy reform in 2019. Subsequently, we delivered legislative changes through the Agriculture Act 2020. At that time, many stakeholders felt that reform of FBTs was not necessary as they are modern commercial agreements with sufficient flexibilities within the existing FBT legislative framework.

We do recognise that the context has changed since that consultation and that these issues may need further examination.

As we move through the agricultural transition, it will be important to keep the discussion and analysis of these issues active. As evidence emerges throughout the transition period of how the tenanted sector is responding to change, we will be in a better and more informed position to consider what future reforms might be necessary.

We will continue to work with the new Farm Tenancy Forum to explore the legislative and non-legislative solutions identified by the Farm Tenancy Forum. We will keep the need to consult or legislate, or both under review.

We would be open to underpinning any future consultation or legislation change with a Law Commission review of agricultural tenancy legislation if appropriate and beneficial.

Recommendation 5

This long-term headline recommendation 5 relates to detailed recommendation 3.

Defra must examine ways to improve the licensing of land agents so their performance and behaviour can be appropriately scrutinised and held to account.

Response to recommendation 5

To monitor land agent performance and behaviour, we will:

• work with industry to develop a new code of practice, setting out expected standards of behaviour of land agents, other professionals and landlords and tenants working in the sector
• work with professional bodies and tenant farming organisations to raise awareness of how tenants can use current complaints procedures through professional sector trade bodies to raise concerns about a land agent’s behaviour or bad practice
• discuss ways of highlighting and discouraging bad practice, where that exists, with the new Farm Tenancy Forum

Recommendation 6

This long-term headline recommendation 6 relates to detailed recommendation 5.

Defra should examine the appointment of a Tenant Farmer Commissioner to ensure government policy is tenant-proof and to ensure fairness within the tenanted sector. They should also have the remit to examine and strengthen dispute resolution processes.

Response to recommendation 6

We welcome the Review’s proposal that we should examine the potential role of a Tenant Farming Commissioner in England.

Since the Review’s publication, we have received feedback from industry organisations with differing views on the proposal for a Tenant Farming Commissioner in England.

We will therefore launch a call for evidence this summer to explore the details of this proposal further. This will examine the benefits and impacts of how a Tenant Farming Commissioner might work in practice and fit within existing procedures and regulations.

Recommendation 7

This long-term headline recommendation 7 relates to detailed recommendation 53.

Defra and HMT should carry out a robust analysis on a strategic package of proposed recommendations made in the tax chapter to incentivise landlords to let more land for longer.

Response to recommendation 7

We agree and Defra and HMT have worked closely to consider the recommendations. This analysis is picked up through the more detailed tax recommendations (recommendations 54 to 59).

Recommendation 8

This long-term headline recommendation 8 relates to detailed recommendation 74.

Defra must publish an update on their progress against these recommendations every year of the Agricultural Transition Plan (ATP). This should be tied to the annual progress update on the ATP. There should be a specific section on how the recommendations of this review are being implemented.

Response to recommendation 8

We agree that it is important to provide a regular update of progress against the commitments made in this response.

We will reference the Review as appropriate in announcements and maintain an ongoing dialogue with industry through our discussions with the new Farm Tenancy Forum.

Detailed recommendations

Full list of recommendations 1 to 75. This includes the headline recommendations mentioned above.

These can be found on pages 21 to 52 in the Review.

Chapter 1. Landlord-Tenant Collaboration

Recommendation 1

This detailed recommendation relates to long-term headline recommendation 1.

Defra should examine how it can incentivise and provide advice on how landlords and tenants can collaborate to develop and enter mutually beneficial agreements that cover public and private schemes.

Response to recommendation 1

We agree to this recommendation, and we are in favour of exploring initiatives that will help to encourage more collaboration between landlords and tenants.

We propose to do this in part through a new formal Farm Tenancy Forum to build on the valuable work that the TRIG has delivered for many years.

We will invite industry representatives of tenant farmers, agricultural landlords and professional advisors who work in the sector to be members of this group.

The Farm Tenancy Forum will:

• support implementation of the government response to the Rock Review, feeding back real-world experience and insight
• meet quarterly with the Farming Minister in attendance
• provide Defra with regular updates on how the sector is progressing and adapting throughout the agricultural transition
• feed in evidence and insights to Defra’s scheme and policy development
• consider how new schemes are impacting the tenanted sector
• develop and disseminate codes of practice and standards of conduct to monitor and report on their uptake by the sector

This will ensure Defra has ongoing and regular feedback on tenant farming issues. It will deliver more oversight of the sector by both industry and government working together.

Recommendation 2

Defra should commission a piece of work to produce a code of practice on how landlords, occupiers, and agents can be expected to behave in a way that is socially responsible.

Response to recommendation 2

We agree with this recommendation and are pleased that the Royal Institution of Chartered Surveyors (RICS) has come forward to lead the development of this important code of practice, within its public interest remit.

RICS will develop the new code collaboratively, working with industry bodies including the TFA, the Country Land and Business Association (CLA), the National Farmers’ Union (NFU), the CAAV and the Agricultural Law Association (ALA).

This new code of practice will build on existing industry guidance such as:

• the CLA and TFA joint guidance on environmental schemes (March 2022)
• the TRIG Code of Good Practice for projects, schemes, or works requiring landlord consent in agricultural tenancies (2021)

Recommendation 3

This detailed recommendation relates to long-term headline recommendation 5.

Defra must examine ways to improve the oversight and potentially regulate land agents so their performance and behaviour can then be appropriately scrutinised and held to account.

Response to recommendation 3

To monitor land agent behaviour, we will:

• work with industry to develop a new code of practice setting out expected standards of behaviour of land agents, other professionals and landlords and tenants working in the sector
• work with professional bodies and tenant farming organisations to raise awareness of how tenants can use current complaints procedures through professional sector trade bodies to raise concerns about a land agent’s behaviour and bad practice
• discuss with the new Farm Tenancy Forum ways of highlighting and discouraging bad practice where that exists

Recommendation 4

Defra should take an active role in working with the Department for Levelling Up, Housing, and Communities (DLUHC) on the reform of RICS including the review of its Royal Charter to better ensure that the organisation is providing public benefit. Central to this must be demonstrable improvement in the performance of land agents.

Response to recommendation 4

We agree and are engaged with the DLUHC on the reform of RICS and the relevant clauses in the Levelling Up and Regeneration Bill.

RICS has accepted the Lord Bichard’s recommendations on its purpose, governance and strategy. It is in the process of implementing the changes including:

• improvements to their governance structures
• delivering greater independence of their regulatory functions
• re-focusing on their public interest remit

These changes are important to ensure that the institution’s role in setting professional standards for agricultural dispute resolution are independent, fair, and robust.

Recommendation 5

This detailed recommendation relates to long-term headline recommendation 6.

Defra should examine the appointment of a Tenant Farmer Commissioner or central ombudsman for the agricultural tenanted sector. The position should have the responsibility of ensuring government policy is tenant proof and to ensure fairness within the tenanted sector. They should also have the remit to examine and strengthen the dispute resolution processes.

Response to recommendation 5

We welcome the Review’s proposal that we should examine the potential role for a Tenant Farming Commissioner in England.

Since the Review’s publication, we have received feedback from industry organisations with differing views on the proposal.

We will therefore launch a call for evidence this summer to explore the details of this proposal further. This will examine the benefits and impacts of how a Tenant Farming Commissioner might work in practice and fit within existing procedures and regulations.

Chapter 2. Landlord – Tenant Agreements

Recommendation 6

This detailed recommendation relates to long-term headline recommendation 2.

Defra should examine legislative changes to open up the ability for tenants to diversify their businesses without the landlord unreasonably refusing consent. In defining the tests for unreasonableness, consideration will need to be given for how the diversification impacts the landlords tax status, land value, and estate management plans.

Recommendation 7

This detailed recommendation relates to long-term headline recommendation 4.

The government should address the state of tenancy agreements head on with a broad consultation on tenancy reform in 2023. Part of the consultation should address why FBT agreements are not making use of the flexibility available within the Agricultural Tenancies Act (ATA) 1995.

Recommendation 8

Some of the existing AHA protections such as ‘no unreasonable refusal of scheme entry’ and ‘access to arbitration’ should be extended to FBT tenants.

Recommendation 9

Defra must look at the legal paths to ensure that arbitration outcomes for AHA tenants, and FBT tenants when extended, can be scrutinised by an appointed Tenant Farmer Commissioner as nominated by the Defra Secretary of State.

Response to recommendation 6 to 9

We agree to further exploring these grouped recommendations with a new Farm Tenancy Forum. We will discuss how we can better support landlords and tenants in working together to agree diversifications to mutual benefit.

We will ask the new Farm Tenancy Forum to explore how we can encourage the full use of the flexibilities that FBTs offer and whether restrictions in FBT agreements are creating unreasonable barriers for tenants. This could include the development of new guidance and other support tools, as needed.

We want all farmers to be able to access opportunities to invest in their farm business and the natural environment. There must be fair and balanced protection for both parties so that:

• tenants have access to those opportunities
• landlords have confidence in letting land to ensure there are opportunities for tenants and new entrants to rent land in future

We have already designed the SFI to align with tenancy agreements. This includes not requiring tenants to have landlord consent to apply for the SFI, though it is the agreement holder’s responsibility to check their tenancy agreement allows them to complete the actions in the standards they have selected.

We undertook a consultation on tenancy reform in 2019. Subsequently, we delivered legislative changes through the Agriculture Act 2020. At that time, many stakeholders felt that reform of FBTs was not necessary as they are modern commercial agreements with sufficient flexibilities within the existing FBT legislative framework.

We do recognise that the context has changed since that consultation and that these issues may need further examination.

As we move through the agricultural transition, it will be important to keep the discussion and analysis of these issues active. As evidence emerges throughout the transition period as to how the tenanted sector is responding to change, we will be in a better and more informed position to consider what future reforms might be necessary.

We will continue to work with the new Farm Tenancy Forum to explore the legislative and non-legislative solutions identified by the Farm Tenancy Forum. We will keep the need to consult and legislate under review.

We would be open to underpinning any future consultation or legislation change with a Law Commission review of agricultural tenancy legislation, if appropriate and beneficial.

Recommendation 10

Defra should maintain a close watch on how tenants are being treated with regards to rent and should examine options for what rent protections should be extended to FBT agreements and how to best do that.

Response to recommendation 10

We agree and indeed Defra already monitors and reports on AHA and FBT rent levels.

However, introducing rent protections to FBTs could carry a significant risk of undermining landlord confidence in letting out land which could reduce tenant farming opportunities in future.

Chapter 3. Schemes – ELM

Recommendation 11

Defra should define food security as a public good alongside other environmental objectives such as clean air, clean water, lower carbon emissions and improving biodiversity.

Response to recommendation 11

Our farming reforms aim to support a highly productive food producing sector, meeting our commitment to broadly maintain food production, alongside environmental improvements that benefit us all, such as improving water quality and species abundance.

The government committed to broadly maintain the current level of food we produce domestically in the Government food strategy published in June 2022. This includes sustainably boosting production in sectors where there are post-Brexit opportunities, including horticulture and seafood. The Agriculture Act imposes a duty on the Secretary of State to have regard to the need to encourage environmentally sustainable food production.

Sustainable food production and caring for the environment not only can, but must, go hand in hand. For instance, creating more space for wildlife margins can mean better yields as insects eat pests. Our schemes will ensure our long-term food security by investing in the foundations of food production – healthy soil, water, and biodiverse ecosystems.

We need farmers and other land managers to improve the natural environment, alongside food production, with environmental goods and services playing a key role in all farm businesses.

Recommendation 12

This detailed recommendation relates to immediate headline recommendation 1.

Defra must make sure that all ELM and productivity schemes are accessible and open to tenant farmers.

Response to recommendation 12

We agree that if we are to meet our ambitions for a thriving agricultural sector and restored natural environment, farming schemes must be designed appropriately to ensure tenant farmers can access them.

We are designing our farming offers to be simple, flexible and accessible to as many types of farmers and land managers as possible, including tenant farmers.

We are aiming to remove barriers to tenants entering ELM schemes so that they are as accessible to tenants as possible. We have already done so in the SFI and LR.

Recommendation 13

Schemes and agreements need to be simple to understand, transferrable and flexible.

Response to recommendation 13

We agree to this recommendation. Making our schemes simple and flexible are 2 of our guiding scheme design principles.

In the SFI, we are offering flexibility by giving agreement holders an annual opportunity to upgrade their agreement. This means they can add more land or standards into their existing SFI agreement. The SFI also has a rolling application window. We can accept applications all year round – so farmers can apply at a time that is convenient to them and their business.

Tenants can enter the SFI without their landlord’s explicit consent. However, it is the agreement holder’s responsibility to check their tenancy agreement allows them to complete the actions in the standards they have selected. Tenants with annually renewing tenancy agreements can enter if they expect to have management control for the duration of their 3-year agreement.

While agreements are not technically transferrable in the SFI, if a tenant unexpectedly loses management control of the land, such as when their tenancy agreement is terminated, they do not need to pay a penalty to Defra for ending their SFI agreement early.

We are looking at how we can simplify and bring more flexibility into CS. We will provide further information on this as we evolve the scheme.

We will work with tenant farmers and landlords through the new Farm Tenancy Forum and ELM co-design, to look at what works best for them in practice. If they assess that introducing transferable agreements is a feasible and preferred solution, we will reflect that in scheme rules.

Recommendation 14

This detailed recommendation relates to immediate headline recommendation 1.

As a basic scheme principle:

• tenants should not need landlord consent to enter tenanted land into schemes
• landlords should not be allowed to enter tenanted land into schemes unilaterally

Where there is alignment between scheme length and the length and terms of the tenancy agreement, the tenant can unilaterally enter tenanted land into schemes without landlord consent.

Where schemes require actions to deliver outcomes that are longer than the tenancy agreement, tenants who have had more than one historic renewal or who are on a rolling annual tenancy, and self-assess that they will have sufficient management control to enter schemes, should be able to unilaterally enter tenanted land into schemes.

Landlords can only enter tenanted land into scheme options that require permanent land use change jointly with the tenant and then only with consent of the tenant. The consent of the tenant should be entered into separately and subsequently to a signed tenancy agreement.

This must be met with adequate protections to stop land being taken back in hand and subsequently entered into schemes by landlords where tenants could have carried out the action unless the tenant has not objected.

Tenants with AHA agreements should be considered to have sufficient security of tenure and management control to enter multi-annual schemes.

Response to recommendation 14

We agree and will adopt a principle of not requiring landlord consent where it is appropriate to do so.

Explicit landlord consent and landlord countersignatures are not required in the SFI, although it is the agreement holder’s responsibility to check that their tenancy agreement allows them to complete the actions in the standards they have selected.

However, it is likely there will be many scenarios where it is still required. This is due to the nature of the options, such as those requiring permanent land-use change.

Currently, tenants in CS must seek their landlord’s consent to enter an agreement and if they do not have security of tenure for the duration of the agreement, their landlord must countersign their agreement. This means the landlord will become responsible for delivering the agreement if the tenant leaves the land before the agreement’s completion.

We are exploring how to use landlord consent and countersignatures in CS in the future. We will share further information on this in due course.

In the SFI, we already allow tenants with tenancies on a rolling year-by-year basis to enter that land if they expect to have management control of it for the 3-year duration of their agreement.

This approach is made possible due to the shorter duration and relatively simpler nature of the actions within the SFI standards. This makes it easier for a tenant to check that their tenancy agreement allows them to complete the actions in the standards they select.

We understand that some tenants have difficultly committing to the longer-term or more complex actions usually found in CS or LR. Some tenants may require some form of land use change, due to the length and limitations of their tenancy agreements.

These types of actions need to be delivered over a longer period than the SFI actions to deliver the environmental outcomes we are committed to achieving.

Some longer-term actions, such as tree planting, could ultimately lead to a change in land value or otherwise significantly change the foundational characteristics of the land. This is why any changes must be done in accordance with the landlord’s legal rights to the land.

We agree that it should be as simple as possible for tenants to sign up for schemes, so we may need to continue using landlord countersignatures in CS, or an alternative mechanism. This is to ensure that these types of options are completed if a tenant’s rolling tenancy agreement is not renewed as expected.

We will keep this recommendation under review as part of evolving CS and developing LR.

Landlords are currently eligible for CS where they have retained management control of the land. LR applicants will need to show that they have management control or the consent of those with management control for the duration of the project development or long-term implementation agreements (or both). This means it is likely that landlords will be involved in the projects.

Landlords are not eligible for the SFI when they are not actively farming the land.

We do not think it would be right to limit the range of scheme options available to landlords or to require them to always enter into agreements jointly with their tenants.

Restrictions like these would cut across the landlord’s legitimate interests and could create perverse incentives. For instance, limiting landlords to permanent land use change options only could mean landlords creating environmental features on their land that they cannot access funding to maintain or improve. It could also put pressure on tenants to pick up the management of those features, even when that might not be of interest to the tenant or in scope of their tenancy agreement.

Equally, limiting landlords to only being able to enter schemes jointly with their tenants could discourage landlords from tenanting land at all – they may explore contract or share farming instead to maintain the freedom to enter schemes on their own.

For those reasons, we propose to focus on supporting greater collaboration between tenants and landlords, and look to adapt scheme design to make that more likely.

We have over twenty years’ experience of agri-environmental schemes in England. There is limited evidence that any such practices are routinely happening. The area of rented land has remained stable over the last 5 years and the area of land rented for a year or more under FBT is higher now than it was in 2020.

However, the government supports the tenanted sector, and therefore we agree with the importance of identifying and mitigating any risk in this area.

We think there is value in considering including a condition in our eligibility guidance for ELM schemes where tenants or landlords are applying to enter land into a scheme, the land must not be in an active, unresolved dispute between the landlord and tenant. We will work through this as we evolve CS.

We will continue to monitor trends in this area and will ask the new Farm Tenancy Forum to explore this alongside other land availability issues highlighted in the Review.

We agree and have already embedded this into our schemes. Tenants with AHA agreements will be considered to have sufficient security of tenure and management control to enter multi-annual schemes if they have not:

• been served a notice to quit by their landlord
• given notice to quit their AHA agreement to their landlord

Recommendation 15

Tenant farmers who have multiple occupation agreements should be able to enter part of the farm business into ELM schemes.

Response to recommendation 15

We agree and currently farmers in the SFI can choose which eligible land parcels to enter into their SFI agreement. They do not have to include their whole farm.

We expect to apply the same rule in evolved CS in the future.

Recommendation 16

The schemes need flexibility to add or remove land so that tenants can carry out the right activity on the right parcels of land to deliver the desired outcome, flexible start dates to allow for tenancies with different start and end dates to enter agreements when it works for them, and flexibility to transition from existing and legacy scheme agreements into new schemes without penalty.

Response to recommendation 16

We agree and in the SFI, we are offering flexibility by giving agreement holders an annual opportunity to upgrade their agreement. We are doing this by adding more land or standards into their existing SFI agreement. The SFI also has a rolling application window. We can accept applications all-year round so farmers can apply at a time that is convenient to them and their business.

To remove land or standards from an agreement, the agreement holder must follow the change of circumstances process. Depending on the reason for removing the land or standard, the agreement holder may have to make some repayments to Defra. This is because whilst we want to offer agreement holders flexibility, we must ensure that public money is spent wisely and is not wasted.

We will commit to embedding flexibility into CS agreements as we develop our evolved CS offer.

Recommendation 17

Improved communications around scheme details such as how SFI and Local Nature Recovery (LNR) can be stacked on top of each other, how LNR relates to Local Nature Recovery Strategies (LNRS) and adjusting the scheme name of LNR.

Response to recommendation 17

We agree and have actioned this recommendation.

On 1 December 2022, the Environment Secretary Thérèse Coffey announced that Defra will be evolving our existing CS scheme to deliver the same ambitions planned for LNR. This is instead of building a new LNR scheme from scratch and rolling it out alongside existing schemes.

On 26 January 2023, we published more information on the growth and rollout of our ELM schemes. The ELM update: how government will pay for land-based environment and climate goods and services includes the full range of actions, payment rates and when they will be available. Within this document, there is a specific section on tenants and how they can best interact with schemes.

You can be in the SFI and CS at the same time, so long as we are not paying you for the same actions twice and the actions are compatible. Our guidance includes information on how the scheme interacts with others and the system will automatically show people the areas of their land that are eligible for the SFI.

Recommendation 18

Where the 3 described conditions are met, the scheme agreement should be transferrable or assignable to an incoming tenant or the landlord and incoming tenant jointly to take on responsibility for delivering the scheme.

Response to recommendation 18

We agree the need for flexible agreements and we currently offer agreement transfers in CS. We are considering the best way to accommodate the continuation of CS agreements when there is a change of land manager or landowner as we evolve the CS scheme.

We do not currently offer agreement transfers in the SFI.

However, we do allow tenants who unexpectedly lose management control of the land to exit an SFI agreement without penalty. Due to the SFI’s rolling application window and simple application process, it is easy for an incoming tenant to apply for their own SFI agreement on the land.

In some circumstances, it may be simpler and more workable for farmers to create new scheme agreements rather than transferring existing ones between different land managers when there is a change in management control of the land.

We will work with tenant farmers and landlords to look at what works best for them in practice to address this issue. If they assess transferable agreements are feasible and preferable, we will reflect that in scheme rules.

Recommendation 19

In line with the recommendation on agreements being transferrable, where the landlord takes on the scheme agreement from the outgoing tenant, they should be allowed to receive the payment for up to one year with the requirement to comply with the terms before having to re-let the land or the payments stop.

Recommendation 20

Where landlords have achieved possession by means other than natural causes, scheme rules should impose a quarantine period with former rented land not being eligible for entry into public agreements for a minimum of 12 months.

Recommendation 21

New ELM schemes should look at how this quarantine period, or something similar, can be integrated into the scheme eligibility to stop landlords taking land back in hand outside of natural causes, and to collaborate with their tenants to enter schemes.

Response to recommendations 19 to 21

We agree with the importance of identifying and mitigating any risk in this area.

We are exploring the feasibility of including a condition in our eligibility guidance for ELM schemes that for where tenants or landlords are applying to enter land into a scheme, the land must not be subject to an active, unresolved dispute between the landlord and tenant.

This is to address the concerns of tenants that landlords will take back land in hand to enter it into schemes.

We will continue to monitor trends in this area and will ask the new Farm Tenancy Forum to explore this alongside other land availability issues highlighted in the Review.

However, we have some concerns with the solutions recommended. Once land is out of a tenancy agreement, the landlord becomes an owner-occupier if they do not re-let the land. We must treat them like any other owner occupier from that point. It would be unfair to a landlord to prevent them from earning income from a tenant and income from a scheme during the 12-month quarantine period.

Also, the land may be neglected in this time as a result. It could lead the landlord to exploring contract or share farming on that land. They may find this preferable to tenancies in future and for other land that they own, which would have a negative effect on the tenanted sector.

Due to the nature of some casual tenancy agreements, it would be difficult for us to confirm with certainty:

• when a tenancy agreement was ended
• when the 12-month quarantine period would run until

Noting our commitment to making the schemes as simple as possible, we think this quarantine period would introduce an unnecessary level of complexity and unlikely to achieve its intention which is to keep land in the tenanted sector.

Recommendation 22

Where a landlord applies to enter a scheme or an option on land that is occupied by a tenant or where there is a proposed change in land use on tenanted land, the eligibility criteria and the application must require demonstration of how the landlord is working in partnership with the tenant and that the landlord has secured consent from tenants whose interests in the holdings are impacted by the agreement. The tenant cannot unreasonably refuse consent. Acceptable reasons for withholding consent would need to be developed.

Response to recommendation 22

We agree that requiring landlords to engage with their tenants before applying for CS and to get their tenant’s support on their application is reasonable. We will consider how we can introduce this to CS as we evolve the scheme.

Recommendation 23

LNR must be specific about which options are annual, can be carried out in the short term (less than 5 years) and are not classed as permanent land use change.

Response to recommendation 23

We agree and where it is possible to do so in the option guidance, Defra will specify the duration of each evolved CS option, as well as which option requires which level of land use change from current agricultural land uses.

Examples of land-use change from agriculture include:

• changes in land management (for example, planting cover crops to reduce soil loss, reducing fertiliser use to prevent water pollution)
• changes in land cover (for example, creation of hedgerows)
• changes in agricultural use (for example, to agroforestry)
• changes away from agricultural use (for example, to woodland or restored peat)

Recommendation 24

In LNR, ‘create’ options for permanent land-use change should be structured as a short up-front create agreement followed by maintenance agreements that are either annually renewing unless otherwise instructed or long-term with no-penalty exit clauses.

Response to recommendation 24

We agree in principle and, where appropriate, will offer standalone capital items separately to longer-term revenue options.

Evolved CS will include options that will only provide value for money and help us meet our environmental targets if they are established and maintained over several years. We will have to structure some options as longer-term creation options to ensure they achieve the intended benefits.

Recommendation 25

Where a tenant has entered a scheme agreement under the assumption that they will retain occupation of the land they are farming either under an existing or subsequent tenancy and where that tenancy is ended due to no fault of the tenant, such as notices to quit for development or end of tenancy agreements where a continuing agreement was expected, then no penalties should be levied against the agreement holder.

Response to recommendation 25

If a tenant unexpectedly loses management control of the land, we do not require the tenant to pay a penalty to Defra for ending their SFI agreement early. For example, when their tenancy agreement is terminated.

We will work to embed a similar principle into an evolved CS, where possible.

Recommendation 26

LR must have an explicit policy objective to deliver landscape scale change while minimising the risk that tenants are adversely affected. The presumption must be that land will not be allowed into LR if it has been previously tenanted in the last 12 months.

Response to recommendation 26

We agree the need to remove barriers to tenants entering all our ELM schemes, including LR, so that they are as accessible as possible.

In the first and second rounds of LR, applicants have been asked to demonstrate management control of the land, or the consent of those with management control for the duration of the project development and implementation agreements.

This means that tenants without security of tenure for the duration of the project would need their landlord’s consent to be involved in a project. Applicants to LR round one and two have been asked to confirm that any tenants within the project area had been engaged before the application and were supportive of the project moving into project development.

Around half of the projects selected for round one involve tenants working with farmers and land managers. The projects are in the early stages of the development phase. We are closely monitoring how the scheme is working for tenants so we can identify any changes or improvements that we need to make.

The details of the long-term LR implementation agreements will be negotiated between Defra and the project partners during the development phase, including governance and legal arrangements.

As set out in our response to recommendations 19, 20 and 21, we do not think that restricting land previously tenanted in the last 12 months from applying for LR would be appropriate.

Recommendation 75

This detailed recommendation relates to immediate headline recommendation 9.

To support the ability of Defra to enforce and deliver the scheme recommendations Defra should immediately begin to develop a data layer on the management of land in England through applications to grants. This should be complemented by a policy position that does not penalise a change in tenancy circumstances as this does not mean a change in intent to deliver an agreement.

Response to recommendation 75

We agree on the importance of having a clear understanding of different farm business characteristics that are part of our schemes.

Defra uses data from our own surveys and statistics, alongside data from other industry sources to inform policy development. This includes the long-standing Annual Agricultural Land Occupation Surveys for Great Britain produced by the CAAV.

We will consider how to gather more data through our ELM schemes without adding undue costs and administrative burdens in the process.

Chapter 4. Schemes – Productivity and Investment

Recommendation 27

This detailed recommendation relates to immediate headline recommendation 4.

Defra needs to examine ways to incentivise investment into renewing and upgrading foundational farm infrastructure. Defra and HMT should create appropriate incentives throughout the agricultural transition period to bring tenanted holdings into an improved state.

Response to recommendation 27

We agree to continue investing in farm infrastructure, including for tenanted farms.

The FIF provides grants to farmers, foresters, and growers (including contractors to these sectors and tenants) so that they can invest in the equipment, technology and infrastructure. This is an innovative way of supporting farm infrastructure.

Grants are offered towards a proportion of the total cost of the investment. There are also opportunities to apply for grants for smaller investments – The Farming Equipment and Technology Fund (FETF) and larger investments – The Farming Transformation Fund (FTF). Eligible investments include:

• slurry storage
• on-farm reservoirs
• efficient irrigation systems
• robotic equipment

In future this will include upgrades or new calf housing to improve health and welfare.

Recommendation 28

This detailed recommendation relates to immediate headline recommendation 2.

Defra needs to allow joint applications to productivity schemes from both landlord and tenant for fixed equipment.

Response to recommendation 28

We agree and we already allow some forms of joint applications. For example, from tenants and landlords applying jointly for grants as a single legal entity or where one business agrees to become the lead applicant. However, following the Review, we recognise that the system may not be widely understood.

We have reviewed how we communicate this through scheme guidance, and we will work with the new Farm Tenancy Forum to explore whether we need further specific guidance on how to undertake collaborative grant applications between tenant and landlord.

Recommendation 29

It should be made possible for a public landlord, such as county councils, to make an application for an investment jointly with their tenants.

Response to recommendation 29

We agree with this recommendation and so have made changes to the FETF (small grants) scheme to allow all local authorities and councils to be the applicant. For FTF (large grants), local authorities are not currently eligible to apply for the scheme, but we agree, where possible, to amend policy for future grant rounds to allow a more collaborative approach with local authorities. We will provide further detail in line with any new rounds of grant announcements.

Chapter 5. Schemes – Tree Planting and Net Zero

Recommendation 30

Defra should bring together all schemes that support tree and woodland planting into a central location under one government body with one application portal.

Response to recommendation 30

We agree there is a need to bring together all schemes that support tree and woodland into a central location.

Our shared ambition and vision is to deliver a unified service which provides a joined-up experience for users. This will have consistent design principles and standards so that all applicants can access a simple and cohesive set of offers.

This is why we have committed to making the England Woodland Creation Offer (EWCO) part of the enhanced version of CS by 2025. We are looking at how other tree planting schemes and environmental offers outside of ELM, such as Farming in Protected Landscapes (FiPL), can be offered so that there is a clear, consistent and reliable way for people to find and apply for funding.

Recommendation 31

Scheme options must be designed and framed to support tree planting options as ancillary to agriculture.

Recommendation 32

Woodland options in Defra schemes need to be framed in a way that allows tenants to plant small numbers of trees or shrubs on areas of land less than 0.5 hectare (ha), for example hedges, verges, for screening and shelter belts.

Response to recommendations 31 and 32

We agree with the need for scheme options that allow for tree planting to work alongside agriculture.

We agree with the need to have both small- and large-scale a tree planting offers and that is why we reduced the minimum scale of woodland creation in EWCO.

We see the inclusion of agroforestry, where trees are integrated into agricultural management, as one way that tenants can support and benefit from government commitments to plant more trees.

We are testing a farm woodland standard through the SFI pilot and we confirmed we allow for a range of planting densities including smaller-scale agroforestry within the SFI. We are also looking at developing more offers in evolved CS for higher-density tree planting, for example 100 trees per ha and above.

We are committed to designing our agroforestry offer in a way that is responsive to the needs of tenants and make them accessible for all. Tenancy stakeholders, tenants and landowners are involved in the scheme design process ahead of finalising scheme details for 2024.

Recommendation 33

The EWCO grants should have a screening criterion that prevents high-grade agricultural land receiving planting grants.

Response to recommendation 33

Our farming reforms aim to support a highly productive food producing sector, meeting our commitment to broadly maintain food production, alongside environmental improvements that benefit us all, such as improving water quality and species abundance.

The government committed to broadly maintain the current level of food we produce domestically in the Government food strategy published in June 2022. This includes sustainably boosting production in sectors where there are post-Brexit opportunities, including horticulture and seafood. The Agriculture Act also imposes a duty on the Secretary of State to have regard to the need to encourage environmentally sustainable food production.

Sustainable food production and caring for the environment not only can, but must, go hand in hand. For example, creating more space for wildlife margins can mean better yields as insects eat pests. Our schemes will ensure our long-term food security by investing in the foundations of food production: healthy soil, water, and biodiverse ecosystems.

A degree of land use change is needed to meet our targets. For example, on tree planting and peatland restoration which in turn will contribute to the restoration of nature and addressing climate change. However, there is not a direct correlation between the area of land farmed and total output of food. For example, 57% of the agricultural output is produced using 33% of the total farmed land area.

However, we do also have processes in place so that woodlands are created where most appropriate, including accounting for the impact on food production. Woodland creation applications are assessed under Environmental Impact Assessment (EIA) (Forestry) (England and Wales) Regulations, 1999. Screening under this process includes consideration of woodland creation’s implications for high-grade agricultural land, but conversion to woodland is not ruled out.

This provides flexibility for farmers, including tenants, to undertake land use change where there will not be a significant impact on food production and will help us to deliver our environmental targets.

The processes that may help decisions at the local scale will include opportunity mapping and consensus processes of LNRS as well as through EWCO and EIA processes.

To further enable a strategic approach to using our land across England, we committed to publish a Land Use Framework in 2023 in the Government food strategy. We also expect the drafting of LNRS will support local discussions regarding the most appropriate sites for nature recovery.

We need farmers and other land managers to improve the natural environment, alongside food production, with environmental goods and services playing a key role in all farm businesses.

Recommendation 34

This detailed recommendation relates to immediate headline recommendation 5.

Developers of government schemes such as EWCO, natural capital markets and the forthcoming land-use framework need to consider how they work together to mitigate land being removed from tenancies and provide adequate protection to tenants who could manage woodland.

Response to recommendation 34

We agree to consider this risk through ongoing policy development and analysis, including as part of the development of the land use framework.

Recommendation 35

Defra should consider ways to prevent landlords entering schemes where they have resumed land from a tenant farmer for the purpose of tree planting.

Recommendation 36

Landlords entering tenanted land into woodland schemes such as EWCO should be required to demonstrate tenant consent and how they are working with the tenant. A tenant should have the ability to not unreasonably refuse the landlord’s entry to a woodland scheme on tenanted land in the same way that they should be able to do so for ELM schemes.

Response to recommendations 35 and 36

We agree and have actioned these recommendations as part of updates to our EWCO application process.

In January 2022, the eligibility for EWCO was revised. Land that is or has been subject to a resumption in the last 12 months is not eligible.

The Forestry Commission is also tracking the impact EWCO is having on land resumptions. A survey of EWCO applicants in January 2022 showed almost 20% of EWCO applicants at that time were tenants. When compared to 30% of total agricultural land that is tenanted land, this is a good distribution.

We will continue to monitor trends in this area and will ask the new Farm Tenancy Forum to explore this alongside other land availability issues highlighted in the Review.

Recommendation 37

Defra should also class agroforestry planting as non-permanent land use change so that the tenant is not forced to seek landlord consent to begin practicing this new way of farming.

Response to recommendation 37

We are in the early stages of exploring how agroforestry could be recognised as an ‘agricultural activity’ and identified under the appropriate land use classification. This would need to be done in accordance with the landlord’s legal rights to their land.

We consulted on a proposal to adjust forestry permanency requirements in the Nature Recovery Green Paper (March to May 2022). We followed this up recently with in-depth discussions with stakeholders.

We have since commissioned our Trees and Woodland Science Advisory Group to conduct an evidence review over the next few months to assess the viability of this proposal.

If there is a case for removing the permanency requirement for certain kinds of tree-planting, we will ensure that this is done in accordance with the landlord’s legal rights to their land.

To safeguard the landlord’s legal rights to the land, tenants must still have management control of any land entered into EWCO. These applications also need to be countersigned by the landlord.

Recommendation 38

This detailed recommendation relates to immediate headline recommendation 3.

Defra should examine how joint applications to woodland schemes can be used to incentivise landlords to discuss woodland planting with their tenants so that both can benefit from any agreement.

Response to recommendation 38

We agree that joint agreements between landlords and tenants could be beneficial to both parties.

This would enable tenants to undertake options which require permanent land use change and for landlords and tenants to formally share the work and rewards from scheme agreements. By doing this, we are giving tenants the flexibility and agency to take more decisions on how they use their land in a way that makes the most sense for their business and fits alongside their primary role producing food. We propose to take this recommendation forward by testing this approach initially through EWCO in 2023. Any future policy will be decided in consideration of the impacts on food production and security.

Defra and the Forestry Commission commissioned a sub-group of TRIG to develop the TRIG Guidance Tree Planting and Woodland Creation on Agricultural Tenancies (December 2022). This offers guidance on issues where both landlord and tenant are willing for the tenant to plant trees on tenanted land.

Chapter 6. New Entrants

Recommendation 39

This detailed recommendation relates to headline recommendation 6.

Defra needs to develop a comprehensive and long-term new entrant policy that has clarity of vision with success criteria and should consider ways in which it can best use public funds to incentivise and support private landlords to play their part in safeguarding the future of the tenanted sector and progression of new entrants.

Response to recommendation 39

We agree that attracting bright new talent into land-based business is vital for a sustainable and productive agriculture sector. The tenanted sector is equally vital to this and we will continue to design our schemes to be as accessible to new entrants as possible.

We are already helping to address this by funding the New Entrants Support Scheme pilot, which is trialling approaches to building entrepreneurial capacity in selected new entrants and increasing their opportunities to access land and finance.

Recommendation 40

The government must do more to support county councils to maintain their land assets for new entrants and the long-term security of the tenanted sector.

Recommendation 41

Defra should consider ways in which it can best use public funds to incentivise and support private and institutional landlords to play their part in safeguarding the future of the tenanted sector and progression of new entrants.

Recommendation 42

The loan facility should be replicated for new entrant farmers and could come with conditions such as the tenant has to remain on the farm that the loan is being used on for at least 8 years and must have a business plan. It could also be tied to the incubators to increase uptake of this initiative.

Recommendation 43

Defra should look at incentives for how they can ensure that retiring farm businesses are accessible to new entrants.

Recommendation 44

Defra needs to consider how it can best de-risk arrangements where an existing tenant takes on a new entrant to ensure new entrants can access the experience needed to create new agricultural tenanted businesses.

Response to recommendations 40 to 44

We agree the importance of the tenanted sector in the New Entrants Support Scheme. As a result of the Review, we will commit to:

• assess specific benefits for tenants as part of scheme development involving tenancy industry bodies such as the TFA to be part of the co-design steering process in supporting New Entrants policy design
• share data on the number of tenant farmers that sign up to New Entrant Support Scheme pilots
• use feedback from tenant farmers to embed into policy design
• look at the extent to which the New Entrant Support Scheme pilots support people to gain new tenancies
• present findings from the pilots to the new Farm Tenancy Forum, for feedback on how we can improve the scheme

We will continue to explore the Review’s more specific recommendations as we develop our New Entrants policy.

Recommendation 45

Defra should look at legislative options to ensure that where there is no next of kin even by the newer expanded definition, and the AHA has one or more generation of succession left, the outgoing tenant should be able to nominate a new entrant farmer to be in receipt of a long-term FBT with some of the AHA protections subject to the landlord’s approval and being able to buy out the life interest of the retiring tenant.

Response to recommendation 45

We consulted on this issue in 2019 and 2020. Responses showed that this proposal was unlikely to be effective, as a new entrant would be unable to afford market rent and a capital sum to buy out the current tenant.

Additionally, it would interfere with the landowner’s property rights to either farm the land themselves or rent the land out on an FBT through open competition to a new tenant (who could still be a new entrant) who they feel has the best skills to farm the land in accordance with their objectives for the future of the land.

However, we will keep this under review as we progress through the transition.

Chapter 7. Private Markets and Natural Capital

Recommendation 46

This detailed recommendation relates to immediate headline recommendation 7.

Government needs to outline what it sees as its role, a roadmap, and broad guidelines for the development of private ecosystem markets alongside basic expectations for how demand and supply side actors should behave. This includes setting out clear guidelines to ensure that tenants are rewarded and not disadvantaged for their work in maintaining and improving the natural capital asset and managing the associated flow of ecosystem services.

Recommendation 47

Defra should examine the various ways to enable tenants to be rewarded for their improvements to the natural capital on the holding.

Recommendation 48

A critical change will be to expand the definition of a tenant’s improvement to include an improvement in natural capital on a holding.

Recommendation 49

Defra to lead on providing tenants and landlords with a consistent way to measure the environmental state of a holding as well as access to that data so that improvements or otherwise can be assessed.

Recommendation 50

Defra needs to set out clear guidelines to ensure that tenants are rewarded and not disadvantaged for their work in maintaining and improving the natural capital asset and managing the associated flow of ecosystem services. We recommend that the natural capital is owned by the landlord which aligns to their ownership of the land, however the trade and income that come from that land via the management of the land, specifically ecosystem services, should belong to the tenants.

Recommendation 51

Defra should focus, as a policy priority, on supporting the development of private market codes and associated payments for soil and other forms of on-farm carbon and biodiversity gain to ensure they are accessible to tenant farmers.

Response to recommendations 46 to 51

We agree that a clear roadmap is needed to support the orderly development of private ecosystem markets.

We also agree that tenants, along with other farmers and land managers, should be rewarded and not disadvantaged for their work in maintaining and improving natural capital assets and managing the associated flow of ecosystem services.

Private nature markets are relatively new and developing rapidly, with emerging operators using different methods to measure and verify outcomes, and applying different rules.

As custodians of over 70% of land in England, farmers will need to be key participants in nature markets and are well-placed to benefit from this emerging opportunity. Defra is committed to supporting farmers in accessing green finance opportunities, for example through the design of our ELM schemes and access to capacity-building support through schemes such as NEIRF.

As part of the update on the government’s Green Finance Strategy, we have published the nature markets framework, which provides greater clarity on the principles that will guide the development of UK market mechanisms for carbon and other ecosystem services. It also sets out next steps including arrangements to develop a suite of investment standards for nature markets.

We agree that Defra should support the development of private market codes and associated payments for soil and other forms of on-farm carbon and biodiversity gain to ensure they are accessible to tenant farmers. The UK pioneered the development of private investment mechanisms for woodland creation and peatland restoration through the UK Peatland Code and UK Woodland Carbon Code.

We recognise the need to build a more comprehensive suite of standards to support investment in the full range of ecosystem services that farmers and natural resource managers want to provide. We are currently supporting projects to develop and prototype new investment models through the NEIRF.

To further support the sector to engage in nature markets, Defra asked the Green Finance Institute to work with the finance and farming sectors to explore how private sector sources of finance can be more swiftly unlocked at scale to support the farming transition. This included how to resolve the specific barriers faced by tenants.

The recently published report Financing a Farming Transition is the result of a collaboration between farming groups – including the TFA – banks, supermarkets, and service providers. It identifies barriers and corresponding enablers under the themes of data access and availability, priority environmental outcomes metrics, environmental markets framework and principles, and aggregation models. This report picks up the specific recommendations set out in the Review and recommends the government take a balanced approach to the rights of tenants and landlords in supporting these new markets.

Defra is progressing work in each of these areas and will carefully consider the Review’s recommendations to inform future work.

Defra will work with the BSI to take forward a fully consultative business-led process to co-design and develop an investment standards framework for ecosystem service markets, with a roadmap for implementation.

This is likely to include:

• an overarching standard outlining principles and rules that all ecosystem markets should adhere to
• additional detail on how these will be applied in individual markets
• up to 9 individual standards which provide detailed methodologies for quantifying ecosystem services to meet identified gaps within the framework

We will ensure that the standard specifically accounts for the different land tenure of land managers, as part of that development.

Recommendation 52

Defra needs to work with HMT to clearly define how it sees the production and trade of ecosystem service units with regards to taxation.

Response to recommendation 52

We agree and as announced at Budget 2023, the government is exploring elements of the tax treatment of ecosystem service markets and a call to evidence was published on 15 March 2023. The aim is to understand the commercial operations and the areas of uncertainty in respect of taxation.

Chapter 8. Tax

Recommendation 54

When landlords have gained an upfront investment and where they have had to take land back from a tenant to do this, Defra and HMT should incentivise landlords to reinvest that income back into other areas of their estate, specifically into holdings that are already let.

Recommendation 60

Productivity allowances to be granted for investments made to improve the agricultural or environmental productivity (natural capital) of farms.

Recommendation 61

Reform capital gains rollover relief to cover investments made to fixed equipment on tenanted holdings.

Response to recommendations 54, 60 and 61

We agree that it is important to encourage investment and productivity. This is why there are several existing general tax incentives, such as the Annual Investment Allowance, and the suite of existing productivity and innovation funds.

The government needs to consider any evidence that the recommended tax incentives will achieve the desired outcomes in the most effective way. Consideration must also be balanced against the commitment to sustainable public finances and tax simplification.

Rather than introducing new allowances and expanding existing reliefs to give favourable treatment to agricultural landlords, the government believes the available productivity and innovation funds are the most appropriate and targeted use of the public finances to encourage investment.

As a result, there are no existing plans to introduce new allowances or expand existing reliefs in this area at present, but the government will continue to keep the suggestions under review.

Recommendation 55

The compensation framework for an AHA tenant when a notice to quit has been given for development needs to be re-examined to provide a fair outgoing payment to the tenant based on their real loss.

Response to recommendation 55

We agree the compensation framework for land lost to development in AHA legislation may need reviewing. However, we need to explore this further with industry through the new Farm Tenancy Forum to look in more detail at the current provisions and if and how they might need updating, and identify what the benefits, risks and impacts of that might be.

Recommendation 56

Restrict 100% Inheritance Tax (IHT) Agricultural Property Relief (APR) to FBTs under the ATA 1995 for at least 8 or more years and secure agreements under the Agricultural Holdings Act 1986.

Recommendation 57

Allow FBTs granted for more than 8 years to claim Business Property Relief (BPR) on land value that falls outside of APR.

Recommendation 58

Allow landlords who let for at least 8 years or more to declare income as trading income.

Recommendation 62

Reform Stamp Duty Land Tax to end discrimination against longer tenancies.

Response to recommendations 56 to 58 and 62

The government agrees to use the consultation announced at Budget 2023 on agricultural property relief and ELM as an opportunity to explore the potential to restrict the application of 100% agricultural property relief to longer tenancies of 8 years or more.

We are designing the new schemes to be accessible to as many farmers and land managers as possible, including tenant farmers. There will be more certainty and encouragement for both landlords and tenants to enter into longer-term tenancy agreements where necessary as the transition to new farming schemes takes place.

We will continue to work with the new Farm Tenancy Forum on solutions identified by the TWG to support longer-term tenancies.

As a result, there are no plans to make other changes to the tax rules that might support longer tenancies at present, but the government will continue to keep the suggestions under review.

Recommendation 59

Deeming ELM as a trade.

Response to recommendation 59

We agree to explore the scope of agricultural property relief from IHT and a consultation on the taxation of ELM and ecosystem service markets was published on 15 March 2023.

The aim is to explore the extent to which the current scope of agricultural property relief may represent a barrier and, if necessary, potentially update the scope of the existing land habitat provisions in the relief. The government is not considering changes to business property relief.

Chapter 9. Legislation

Recommendation 63

Defra should launch a consultation on agricultural tenancy reform in 2023.

Recommendation 64

Defra should look at ways to update the definition of agriculture and rules of good husbandry to encompass actions for environmental benefit.

Recommendation 65

This detailed recommendation relates to long-term headline recommendation 3.

Defra ministers should actively engage the services of the Law Commission to update legislation pertaining to agriculture, tenancies and land use in England to bring it into the 21st century and make it fit for the multiple demands being made on land. Where a consultation on significant agricultural tenancy reform is held, this should follow the outcomes of that process.

Response to recommendations 63 to 65

Defra recognised these concerns and undertook a consultation on tenancy reform in 2019. We subsequently delivered legislative changes through the Agriculture Act 2020 which mainly focused on modernising the older (life-time secure) AHA tenancies.

At that time, many stakeholders felt that reform of FBTs was not necessary on the basis that they are modern commercial agreements and that there are sufficient flexibilities within the existing FBT legislative framework.

We recognise the context has changed since 2019 and these issues may need further examination.

As we move through the agricultural transition it will be important to keep the discussion and analysis of these issues alive and active so that, as evidence emerges on how the sector responds, we are in a better and more informed position to consider what reforms are necessary.

We will continue to work with the new Farm Tenancy Forum on legislative and non-legislative solutions identified by the TWG. We will keep the need to consult or legislate, or both, under review.

We would be open to underpinning future consultation or legislation changes with a Law Commission review of agricultural tenancy legislation, if appropriate and beneficial to do so.

Chapter 10. Embedding the Tenanted Sector in Defra

Recommendation 66

Defra needs to facilitate the development of a streamlined process for applicants to understand what schemes are available, how they interact and a simple means to check eligibility.

Response to recommendation 66

We agree with this recommendation and are working to deliver a unified service that provides a joined-up experience for users, within a single service. This will have consistent design principles and standards so that all applicants can access a simple and joined up set of offers.

We have committed to making the EWCO part of the enhanced version of CS by 2025 and are looking at how other tree planting schemes and environmental offers outside of ELM, such as FiPL, can be offered so that there is a clear, consistent and reliable way for people to find and apply for funding.

Recommendation 67

Defra should update the economic impact assessment of all new schemes with both the short-term transition impacts and the longer-term impacts when the sector is more stable after the transition. This should include impact scenarios on landlords, tenants, and owner occupier businesses. It should be published on an annual basis throughout the ATP.

Response to recommendation 67

We recognise the importance of impact assessments. We will consider how we can improve this in future.

Recommendation 68

Defra needs to systematise the measurement, monitoring and collection of data on tenants and their involvement in schemes.

Response to recommendation 68

We agree the importance of having a clear understanding of how our policies, schemes, and services work for tenants. Data allows us to have better insight into how we can adapt our service design and delivery to best suit all customers’ requirements, including tenant farms.

The Review recommends collecting more specific data on tenants and how they interact with our schemes, to further embed tenancy considerations into Defra policy development

We believe that the best and most cost-effective way to do this is to collect and use relevant data from existing surveys and statistics, alongside data from other industry sources, such as the long-standing Annual Agricultural Land Occupation Surveys for Great Britain produced by the CAAV to inform policy development.

We collect data on different groups across farming, including farm holdings with tenancies, as part of our Farming Opinion Tracker. This tracker measures how farmers are responding to new schemes and policies. Data is broken down into owned, tenanted and mixed land, so we can observe trends and embed any learning back into policy development.

We will keep this question under review as part of our monitoring, evaluation and learning work, to ensure we have all the necessary evidence to inform ongoing policy review and development.

Recommendation 69

Defra must have a mandatory learning and development module on the tenanted sector for policy and other teams to refer to and use to develop their base knowledge around the constraints and nuances of the tenanted sector.

Response to recommendation 69

We agree that as part of their induction into relevant parts of Defra, officials should be made aware of land tenancy issues.

As part of upskilling and training, we will develop a series of teach-ins from industry experts on agricultural tenancy issues for Defra staff.

We agree that as part of their induction into relevant parts of Defra, officials should be upskilled on land tenancy issues.

We will ensure the Farming and Countryside Programme induction includes that.

Recommendation 70

This detailed recommendation relates to immediate headline recommendation 8.

Defra needs a consistent process and protocol that requires development and testing of all schemes and options within schemes with tenant farmers.

Response to recommendation 70

We agree and will continue to ensure that tenant farmers are a key part of our ongoing engagement on scheme design.

As the TWG was conducting the Review, we reviewed all our planned engagement and ensured tenant interests were appropriately represented.

The TFA is part of the Farming Senior Stakeholder Group. It meets regularly with the Minister for Farming and the Director of the Farming Programme. Through co-design work or piloting schemes, we will ensure that we are engaging a representative group of farmers, on topics including land tenure.

We have a consistent process in place for testing all schemes with farmers through test and trials. Test and trials helps us to work with a range of farmers and land managers to co-design new schemes. We can understand how the schemes work in a real-life environment and what issues we need to consider.

We have 15 test and trials working with tenant farmers – 9 of these are providing evidence on issues concerning landlords and tenants and 10 are working with landlords and tenants more generally. As part of the TWG, some of our test and trial participants submitted written evidence on the barriers they are experiencing with tenant farmers accessing schemes or any other issues. This supported the development of some of the Review’s recommendations.

Recommendation 71

Defra to establish a departmental programme and sub-programme level Key Performance Indicators (KPIs) on tenants.

Response to recommendation 71

We recognise the importance of monitoring tenants as a specific farming group in terms of their businesses and uptake of schemes. We will continue to monitor data on tenants within our surveys. We are committed to understanding issues such as uptake of schemes and outcomes experienced by tenants.

Recommendation 72

This detailed recommendation relates to immediate headline recommendation 10.

Defra should confirm that it will maintain tenancy in the portfolio of the farming minister and explicitly include land occupation as a strategic portfolio item for a Defra director to ensure that government takes account of land occupation issues in development of policy, procedures and practice.

Response to recommendation 72

We agree the need for representation of tenancy issues at ministerial and director level. The Minister for Food, Farming and Fisheries specifically includes tenants as part of his portfolio.

We can confirm that the Director for Agri-Food Chain has strategic responsibility for tenants, while the Director for the Farming and Countryside Programme is responsible for making sure the policies and schemes within the farming reform programme work for tenants.

We will ensure that all other relevant directors account for tenancy and tenants in scheme design, and wider policy across Defra.

Recommendation 73

Defra to carry out and publish an analysis of how the land use framework impacts tenant farmers and their ability to deliver the outcomes in the framework.

Response to recommendation 73

We agree to analyse the impact of the framework on tenant farmers and commit to integrate tenancy considerations throughout the process.

Recommendation 74

This detailed recommendation relates to long-term headline recommendation 8.

Defra must publish an update on their progress against these recommendations every year of the ATP. This should be tied to the annual progress update on the ATP that is published each year with a specific section on how schemes support tenants, access to schemes and initiatives that support the sector for the long term.

Response to recommendation 74

We agree that it is important to provide a regular update of progress against the commitments made in this response.

We will reference the Review as appropriate in announcements and maintain an ongoing dialogue with industry through our discussions with the new Farm Tenancy Forum.

You can also read the full report of the government’s response to the Rock Review.