Defra knew SFI budget wouldn’t meet demand, MPs told

Defra knew the budget for the second Sustainable Farming Incentive (SFI) window was unlikely to meet farmer demand, but pressed ahead with a first-come, first-served application process, MPs have been told.

Defra farming director Mike Rowe told a cross-party Environment, Food and Rural Affairs (Efra) Committee hearing into the future of farming at Westminster on Tuesday (27 October) that the department knew the SFI26 budget was “finite and was unlikely to meet all the demand”.

The second window opened at 10am on 22 September and closed less than six hours later after the £253m budget was allocated.

See also: Sustainable Farming Incentive 2026: The haves and have-nots

Farming minister Stephen Morgan said the 10am opening time was not publicised because the Rural Payments Agency (RPA) needed to complete final tests before the scheme went live.

Conservative MP and Efra committee member Sarah Bool pressed him on why ministers did not pause and redesign the scheme once the scale of demand was clear.

“You were briefed, you knew that there was a problem coming down the track and you decided to carry on with it nevertheless,” she said.

Mr Morgan said the scheme had been designed under the previous government and that key rules were already in place when Labour took office.

He pledged to move away from first come, first served for SFI27, but said options for next year were still being worked through with the NFU and others.

‘What’s another week?’

Ms Bool said farmers would have preferred a delay to the chaos of a scramble for money. “What’s another week at this point?” she asked, warning that those who missed out may have to return land to production, diversify or intensify.

She cited an Efra committee survey in which 60% of respondents said they could not get an application in on time, and one farmer reported  leaving a funeral to submit theirs. She said she had “no faith” it would not happen again.

Mr Morgan acknowledged he had “heard heartbreaking stories” but reminded the committee the scheme was inherited from the previous government, which had “no budget control”.

Demand and the funding gap

Defra farming director Mike Rowe said more than 20,000 existing ELM and agri-environment agreements, such as Countryside Stewardship, were expiring.

Defra secured 12,200 SFI26 applications in Window 2, and officials estimated that more than 10,000 additional potential applicants may have wanted to enter the scheme.

Ms Bool also noted that a first window had seen a quarter of funding allocated on day one, which she said should have warned officials what was coming.

The budget for Window 2 was increased by 40% from £180m to £253m, including £50m announced by the prime minister in August.

Mr Rowe said Defra “knew the budget was going to be heavily oversubscribed”, but the experience showed this still wasn’t enough to meet farmer demand.

Across both windows, £310m has been allocated for SFI26, equating to £930m over the three-year life of the agreements.

Ms Bool put it to officials that the NFU had valued expiring agri-environment agreements at more than £520m, leaving a £210m gap.

Mr Rowe said the figure was “in the ballpark” of Defra’s expectations, but assumed every farmer would move into SFI rather than higher-tier schemes.

He rejected the idea of “missing money”, pointing to a £2.3bn annual farming budget for England. He said more cash would shift to higher tier and Landscape Recovery over time.

Defra estimates it will spend around £851m this year on the SFI, including existing agreements.

Asked whether the budget needed to rise, Mr Morgan said: “We’re always keen to have more”, but Defra must work within the Treasury settlement.

Admin costs

Mr Rowe could not say what SFI or the Basic Payment Scheme cost to administer, though he promised to release the figures to the committee.

He said the SFI delivers benefit-to-cost ratios of up to five to one, while Basic Payments were “poor value for taxpayers’ money”.

Labour MP and committee member Josh Newbury said that was comparing “apples and pears”.

Less than £5m would probably be needed to cover farmers who reported SFI26 technical problems, Mr Rowe said, with the RPA reviewing every case.