Post Brexit uncertainty for farmers despite government pledges

Farmers face an uncertain future in spite of government pledges designed to reassure them, both before Article 50 is invoked and once the United Kingdom leaves the EU two years later. The Rural Payments Agency (RPA), the government department charged with distributing EU subsidies to farmers set out in their Common Agricultural Policy (CAP), has stuttered in its service delivery, failing to make over half of the CAP payments in December 2015, leaving many farmers affected struggling to make ends meet.

The opening lines of the Environment, Food and Rural Affairs Select Committee report into the “Common Agricultural Policy: Payments to farmers”[1] inquiry, published on 10th May 2016, delivered a stern criticism of the RPA’s performance as they stated;

“The farming community relies on EU subsidies for financial stability. Defra administers payments of EU funds to farmers through the Rural Payments Agency.

“The Rural Payments Agency (RPA) failed to deliver its expected delivery standards for 2015 payments, leading to significant disruption and distress for farmers.” [2]

The hard-hitting 20-page report states that the RPA successfully paid 97% of its Single Payment Scheme (SPS)[3] payments, the RPA’s mechanism for distributing the CAP subsidy, before the end of December 2014, but following changes to the eligibility criteria for the funding the SPS became the BPS (Basic Payment Scheme) and due to the increased complexity of the new eligibility, a new IT system was implemented at the RPA. It quickly became clear there was big problems and on 1st December 2015 the RPA only managed to make 38% of the BPS payments and 51% by 4th January 2016.[4]

Many farmers now find themselves in the unfortunate position of applying for their December 2016 payment before their 2015 payment has even arrived. With payments varying widely from between thousands to tens of thousands of pounds, this is more than a thorn in the side for the affected farmers. The RPA’s Chief Executive Mark Grimshaw has been told by the select committee that his organisations performance must improve and he has pledged to do so. The RPA successfully paid 88% of farmers by mid-April 2016, but missed their own target of 92% by 4%, or around 3,500 farmers.[5]

The electorates decision to back Brexit came as a shock to the farming community. The Common Agricultural Policy represents 40% of the €58bn EU budget, supporting 12 million farmers across Europe each year. It was unthinkable that the UK government would have ever refused to cover the payments, but then it was unthinkable to many farmers the UK would vote to leave Europe in the first place. In a macabre way the delay in receiving their CAP could be seen as a dark trial run to what life might be like for farmers if the subsidy was lost to Brexit and DEFRA did not pick up the full tab.

County Durham farmer John Terry sums up the concern felt by many farmers who have to deal with the prospect of Brexit as well as their experience of the RPA and DEFRA as he said:

“DEFRA are already overwhelmed and it is clear that the RPA is currently not fit for purpose. There need to be change in the way DEFRA operates for farmers such as myself to have confidence they can independently cope with the rigours of managing the industry once EU involvement ceases.”[6]

The Government is more optimistic. New Secretary of State for DEFRA, Andrea Leadsom, moved quickly to reassure farmers that the future was bright for them. In a statement to the Farmer’s Weekly in July 2016 shortly after she joined Theresa May’s cabinet she said[7];

“The current arrangements for food, farming and the environment remain in place. Farmers will continue to receive their support payments.”

This warm rhetoric is welcome news for farmers and was further reinforced by a specific pledge to cover the equivalent CAP funding until 2020, when Chancellor Philip Hammond said;

“The government will also match the current level of agricultural funding until 2020, providing certainty to our agricultural community, which play a vital role in our country.[8]

Farmers will have noted the short-term commitment to funding the equivalent CAP subsidies post-Brexit. The requirements of farmers to be subsidised as they do the vital work that goes into their huge contribution to our UK economy and food industry will not diminish after the next General Election of 2020. The government might have made a longer term pledge and perhaps it is significant they chose not to make such a long-term pledge.

The governments reassuring words are also made before Article 50 is invoked and before any EU negotiation has taken place. ‘Brexit Secretary’ David Davis said of the announcement to cover subsidies;

“This announcement shows that the government is ensuring that those people and organisations currently supported by EU funding can continue to benefit from a measure of continuity. This will offer reassurance to them, and help ease the transition to our new relationship with the EU.”[9]

That ‘new relationship’ that Mr Davis describes, remains completely unknown at this point, so these pledges are made in the most uncertain circumstances possible. I welcome the commitments made to maintaining the current levels of funding for farmers but I fear that the government’s own austerity agenda, which has resulted in little growth and coupled with the financial turmoil of Brexit and pressure on the pound, will eventually result in a cut to agricultural funding and post 2020 we may see the government gradually reduce the financial support given to one of our oldest and most valued industries.

This all comes after polls suggested that despite the huge upheaval farmers would face by Brexit, a majority voted to leave the EU. Whilst undoubtedly swayed by the powerful and populist leave arguments farmers will have noted that in the short term at least, they would benefit from a better export market as the weakened pound means a real terms increase in EU subsidy, with this short-term boost coming after farmer’s subsidy had fallen to its lowest level in eight years. Scratch beneath the surface, however, and things remain tenuous and uncertain for agriculture in the longer term.

The Government must be held to account to lobby for these cuts to be avoided and if this occurs, especially when farming minister George Eustice said during the referendum campaign that £18bn a year would represent a “Brexit dividend which would be used to continue payments to farmers under an improved scheme”[10], this must be highlighted to show up this duplicity.

An opportunity exists for Labour to pledge to fund the farming industry well-beyond 2020, but there are more operational practicalities to consider. Domestic government departments like the RPA must function effectively. Leaving the EU is a cause for celebration for many people who simply wanted out to metaphorically bloody the nose of the political establishment, but when we leave we are really on our own. If our government departments fail, there is no longer any EU safety net and it may be the farming industry that feels the aftershocks of such failures, which has a significant ripple effect far wider than that for all of us.

[1] https://www.parliament.uk/business/committees/committees-a-z/commons-select/environment-food-and-rural-affairs-committee/inquiries/parliament-2015/cap/

[2] Common Agricultural Policy Select Committee Report – Page 3

[3] Common Agricultural Policy Select Committee Report – Page 6

[4] Common Agricultural Policy Select Committee Report – Page 7

[5] Common Agricultural Policy Select Committee Report – Page 7

[6] Quotation obtained directly from Mr Terry

[7] http://www.fwi.co.uk/news/andrea-leadsom-sets-out-her-brexit-vision-for-farming.htm

[8] https://www.gov.uk/government/news/chancellor-philip-hammond-guarantees-eu-funding-beyond-date-uk-leaves-the-eu

[9] See reference 5

[10] http://www.theguardian.com/politics/2016/may/30/brexit-spirit-crushing-green-directives-minister-george-eustice

 

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