Monday, August 15, 2016

Farm subsidies to run until 2020

Philip Hammond as Chancellor has undertaken to maintain current farm subsidies until 2020 when the current EU multi-year programme ends. According to some reports, that may not be that long after Brexit takes place.

Not only does enable farmers to make business plans for the next four years, it allows full time for a debate about the future support regime for farming.

When Brexit does take place it will be necessary to fix farm subsidies with a sterling value.

There is still some uncertainty about exactly what is on offer. Chief secretary to the Treasury David Gaulke has stated that 'the agricultural sector will receive the same level of funding it would have received under Pillar 1 of CAP until the Multiannual Financial Framework in 2020.' Will this be inflation adjusted? Inflation looks likely to rise to a higher level over the next year or two.

Farm business consultants Andersons have pointed out that the final year of the MFF actually pays the 2019 Basic Payment. It is thus possible that the guarantee lasts only until 2019.

It is clear that agri-environmental agreements already under way will be honoured, but there are questions over Countryside Stewardship agreements due to start this autumn. Applications to other rural development projects, including Leader projects that help rural businesses to grow, are guaranteed only if they are agreed before this year's Autumn Statement.

The Government statement says, 'The Chief Secretary to the Treasury, David Gauke, has also written to each devolved administration to confirm the same level of assurances offered to UK government departments in relation to programmes they administer but for which they are expected to rely on EU funding. The Treasury will work closely with the devolved administrations on subsequent funding arrangements to allow them to prioritise projects within their devolved responsibilities.'

This was well received in Northern Ireland where it was seen as removing uncertainty, but declared to be not good enough by the Scottish Government finance minister.

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