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Direct Payments To Farmers (Legislative Continuity) Act 2020

Contents

Policy background

Exiting the EU

  1. On 1 January 1973 the UK joined the European Economic Community, which has since evolved to become today’s European Union. As part of its membership, the UK became part of the Common Agricultural Policy (CAP), which has underpinned UK agricultural policy since.
  2. On 17 December 2015 the European Union Referendum Act 2015 received Royal Assent. The Act made provision for holding a referendum in the UK and Gibraltar on whether the UK should remain a member of the EU. The referendum was then held on 23 June 2016 and resulted in a 52% vote to leave the European Union.
  3. The European Union (Notification of Withdrawal) Act 2017 received Royal Assent on 16 March 2017. On 29 March 2017, the Prime Minister gave notification of withdrawal of the United Kingdom from the European Union under Article 50(2) of the Treaty on European Union.
  4. In October 2019 the UK and European Council concluded negotiations on the WA. Article 137 of that WA (as was also the case in the November 2018 WA) stipulates that Regulation (EU) No 1307/2013, which is the basic act governing Direct Payments to farmers, does not apply in the UK for claim year 2020 (save for Article 13).

Direct Payments

  1. UK agriculture receives around £3.2 billion in support from the EU every year via the CAP. CAP consists of two pillars. Pillar 1 mainly provides Direct Payments, accounting for ~88% of total payments. Pillar 2 accounts for the remaining ~12%, supporting environmental outcomes, farming productivity, socio-economic outcomes and rural growth.
  2. The following direct payment schemes operate in each part of the UK:

    3. a) the basic payment scheme (BPS), which is the main scheme of Direct Payments to farmers that offers a basic layer of income support;

    b) the greening payment, which is a top-up payment for agricultural practices beneficial for the climate and the environment; and

    c) the young farmer scheme, which is also a top-up payment for young farmers.

  3. In addition, in Wales some of the Welsh Direct Payments budget is used to operate a redistributive payment, in which higher payments are allocated to smaller farms. In Scotland, some of the Scottish Direct Payments budget is used to fund voluntary coupled support, which provides support per head of suckler beef and sheep.
  4. Between 2015/16 and 2017/18 the average profit for all farms in England was £43,400, with Direct Payments equivalent to the largest share of this (58%).
  5. The WA disapplies the CAP Direct Payments legislation in the UK for the 2020 claim year. This is because CAP Direct Payments for the 2020 claim year will be funded from the EU’s new 2021 multi-annual budget (because CAP Direct Payments are paid in arrears).
  6. This means that without new legislation, HM Government and the devolved administrations (DAs) cannot continue to make Direct Payments to farmers for the 2020 claim year. The scheme will have no basis in law.
  7. The principal purpose of the Act is to enable the government and the DAs to continue the Direct Payments scheme, thereby providing financial support for farmers, via Direct Payments, for the 2020 claim year.
  8. In September 2019 the Government accepted the recommendations of the Bew Review concerning the allocation of farm support funding in the UK. It agreed that a greater share of the so-called ‘convergence funding’, an uplift of the financial ceiling for Direct Payments given by the EU to the UK, should in 2020-22 be allocated to Scotland and Wales, while the corresponding allocations for England and Northern Ireland should be maintained. The Act enables the Government to implement this decision.

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