RADICAL post-Brexit changes to farming subsidies must be rolled out carefully or farmers will not be able to prepare for the new scheme, a report has warned.

The National Audit Office (NAO) has published an early review of the planned shift away from the EU-wide system of paying farmers mostly for the amount of land they farm towards payments for delivering environmental benefits.

It warns the move will be a “significant change” for farmers in England, who received 2.4 billion euro (£2.1 billion) in 2017 – mostly in payments linked to amounts of land farmed.

The report said the UK farming industry provides more than half of the food eaten here, employs 474,000 people and uses almost three-quarters (72 per cent) of the land across the country.

Farmers in England will have little time to prepare to take part in the three-year national pilot of the new “environmental land management system” (Elms) which will pay them for delivering benefits such as habitat for wildlife, flood reduction and carbon storage.

The pilot will begin in 2021 but the Department for Environment, Food and Rural Affairs (Defra) is not planning to set out what environmental outcomes it will pay for or how much farmers will receive for them until April 2020, the spending watchdog said.

Farmers also face their direct payments for the amount of land farmed – without which around two-fifths of producers are not profitable – being phased out over a seven-year period starting in 2021.

The NAO warns that Defra has not provided the necessary guidance on the new programme which farmers need to plan how to adapt their businesses or work collaboratively with other farmers to deliver environmental benefits.

Plans for the first year of the pilot have been scaled back from signing up 5,000 farmers to 1,250, but it is still expected that 15,000 will be trialling the system by 2024 – leaving just two years to assess the scheme at scale. Defra estimates 85,000 farmers will be signed up to Elms by 2028.

But the NAO said if take-up is low, the Government will need to find other ways to secure environmental benefits, while farmers who do not take part could quit the industry or adopt more intensive, damaging agricultural methods.

Gareth Davies, head of the NAO, said: “Defra is moving forward with a policy which is a radical departure from the CAP (Common Agricultural Policy) farm payment regime we have known for 40 years.

“Because it is such a big change, from acreage-based direct payments to an environmental stewardship scheme, we have looked at Defra’s approach to implementing its policy at an early stage.

“We urge Defra to give itself time and space to fully test and evaluate the policy, and for comprehensive planning, to avoid any unintended consequences for the farming community, our environment or ability to feed ourselves.”

Meg Hillier, chairwoman of the Parliamentary Public Accounts Committee, said the new policy marked the most dramatic change to agriculture in 40 years.

“The committee has seen the woeful consequences for the farming industry of previous Government failures. Defra must urgently review its plans, to make sure they are realistic and that farmers are not let down again.”

Farming Minister Robert Goodwill said: “After years of inefficient, unfair and outdated policy under the CAP, our ambitious plans for a new land management system will unlock the potential for farmers and land managers to deliver environmental benefits that go hand in hand with a profitable, productive business.

“We do not under-estimate the scale of the task in implementing the new environmental land management (Elm) scheme, which is why we are involving such a wide range of stakeholders in its development.

“We will be running a national pilot over three years to test the policy and make sure we get it right, implementing the lessons learnt into the final scheme.

“We will also set out more specific detail on what the Elm scheme will pay for well in advance of the pilot being rolled out.”