The UK Government’s “Agriculture Bill to deliver a Green Brexit” is to be introduced to Parliament today (12th September). The House of Commons has released a 91 page briefing paper summarising the consultations that have taken place, and setting out how it envisages farmers and land managers in England (and to some extent Scotland, Wales & Northern Ireland) will in future be paid grants/subsidies in return for supplying “public goods”.
Ultimately the Government is not yet in a position to give any firm commitments until negotiations with the EU are completed for the method of our exit, or the negotiations with the devolved governments is complete over the funding shares to be made available to each UK region. We do know that the UK Government has already pledged to maintain the same cash funds as currently for CAP (for the whole of the UK) until the end of the current Parliament in 2022 although there is still much detail to be supplied on the practicalities.
However there are some points upon which the Government is clear (based on us leaving the EU on the 29th March 2019), as set out in the briefing paper dated 11th September, and Michael Gove’s press release issued today:
2019: Farmers/land owners will claim and be paid BPS funded from the CAP in the same way as 2018, although most likely with some simplifications (to reduce the administrative burden on civil servants and farmers alike).
2020: Farmers/land owners will receive Direct Payments “in much the same way”, despite the fact that the 29 March 2019 deadline will be passed, but again with some simplifications. The main difference is the subsidy from 2020 onwards will be funded by the UK, as we will no longer be part of the CAP.
2021 – 2027: The Government’s intention thereafter, subject to the agreements to be made with the EU as part of the Withdrawal Bill and arrangements set up during the 2-year transition period after 29 March 2019, and agreements with the devolved nations, is that there will then be a Agriculture Transition Period from 2021 onwards (maybe 5-7 years) where a Direct Payment will continue to be made, but that it will be reduced over the transition period down to zero by the end. There are three options being proposed on how to reduce the payments, as follows:
- Apply progressive reductions to farmers’ payments, with higher percentage reductions to amounts in the higher payment bands;
- Apply a cap to the largest payments, such as a cap of £100,000 for the first year of transition;
- Apply a different cap or reduction to a higher or lower number of payments using different thresholds and reduction percentages.
There are also various options on how the payments could be made with proposals being considered such as:
- continuing as they are now, albeit simplified (no cross compliance or greening required)
- continuing to pay current recipients irrespective of the area farmed with no requirement to remain a farmer, (“de-linking”), based on the value of Direct Payments made to the claimant in a historic reference period.
The Government will use the money saved by reducing the direct payments during this transition period to fund the piloting of the new Environment Land Management Schemes (ELMS) which will replace greening and CSS, whereby landowners will be paid public money in return for public goods (e.g. environmental enhancement), and subsequently after the Agricultural Transition Period replacing current Direct Payments to farmers in England. Trials for ELMS will start in 2019.
In summary, the implication is that it will be impractical to change anything about how farm subsidies are claimed and paid for in the 2019 & 2020 claim years, and reducing Direct Payments could continue to be made to farmers/landowners up to 2027.
The effective confirmation of another year of “business as usual” for BPS after 2019, and the option of “de-linking” is expected to increase demand for entitlements with offers already received at a level of £140/hectare (Non-SDA plus VAT). We expect this may quickly rise to £150/hectare, following these announcements. Current Euro exchange rates suggest a payment of around £227 per Non-SDA entitlement (after FDM) in 2019.
Impact on Commons
These proposals could cause a problem for Commons BPS claimants who do not own the land they claim on, but rather have a right to graze certain livestock. If the area payments are tapered off and eventually removed, how easily and practically will environmental enhancement be implemented under ELMS on commons land?
There are a number of questions around how this could be implemented, including:
- Will claims be limited to only applicants with grazing rights or will other common rights qualify?
- Will only grassland be included, or will commons which cover other land uses also be included?
- How would the payment be fairly distributed with regards to rights (i.e. number of livestock), number of applicants, and the area of the common?
There are plenty of current Environmental Schemes on commons, but an ELMS would be a combination effectively of Direct Payments and CSS. On large commons with many claimants, how will the problems created by the Minchinhampton Case be avoided so that current claimants feel they have not been left worse off.
P.S. The Bill is now available online here, but this note has been prepared based on the House of Common briefing note only. For our analysis of the Bill itself see here.