UK Government to increase farm budget to cover €60 million payout for Scottish farmers

Scotland’s farmers should be allocated an extra €60 million over the next two years – a hike of 47% – according to an independent review panel.

However, farmers in other parts of the UK will not need to fear their payments being reduced as the UK Government has also agreed to increase the farm budget to cover the increase.

Lord Bew issued the recommendation after finding agriculture funding in the UK was based on historic values and did not reflect Scotland’s circumstances.

In addition to calling for an increase in the CAP convergence funding share, Bew also highlighted the importance of continued support to the industry and its capacity to deliver sustainable food production and environmental public goods.

Welcoming the recommendations, Rural Economy Secretary Fergus Ewing said: “For five years, we have resolutely been arguing for the rights of Scotland’s farmers, cajoling and urging the UK Government to rectify this historic injustice, which has seen Scottish farmers miss out on up to £160 million of financial support over the last six years.

While it is important that the past monies are now being repatriated, we also needed to stop the unfairness continuing into the future. I, therefore, welcome the findings of Lord Bew and his review panel, which call on the UK Government to increase future funding by up to €60 million over two years.

“We now need the UK Government to accept the findings in full and to move swiftly to deliver to Scotland all the funding that we are entitled to.

“With agriculture being fully devolved, I expect the UK Government to return this money to Scotland as soon as possible and without any strings attached. I am clear, that should we receive what has now been recommended, that it is only right and proper, given its origins, that this €60 million be ring-fenced in Scotland for agriculture.

“I know how much time and effort Lord Bew, and Jim Walker, Scotland’s representative on the panel, gave to this work and want to thank them for their diligence and for listening to Scotland’s case.”

Lord Bew review

Under the last CAP reform, the EU set out to redistribute direct payments more equally based on average euros per hectare.

The intention being that so member states receiving less than 90% of the EU average rate per hectare would close the gap by one third by 2019, achieving a minimum rate of at least €196 per hectare.

The UK qualified for such an uplift of £190 million because of Scotland’s extremely low average rate per hectare.

National Farmers’ Union Scotland, warned that without Scotland, the UK would not have qualified or received the extra money from Europe.

However, when the Government distributed the money across the UK, Scotland only received £30 million of it.

In 2018, the Scottish Government, with cross-party and stakeholder support, successfully campaigned for the UK Government to hold a review into CAP convergence funding. However, the remit was limited by the UK Government to look only at future intra-UK funding allocations – a position the Scottish Government disagreed with.

The review ran a written and oral consultation during which government ministers, political and industry representatives, and agricultural economists were invited to submit their views on the following areas:

  • Whether the existing proportion of support for each country of the UK should be maintained at current levels until 2022;
  • Whether any issues specific to one part of the UK should be considered in the allocation of convergence funding;
  • Factors or principles stakeholders consider to be important in the allocation of convergence funding;
  • Factors or principles relating to the future allocation of convergence funding that should be ruled out by the review.

Government response

Welsh farmers could also see a “modest uplift” in payments.

However, the Bew report recommends that the UK Government increases its farm support budget by €66.54 million over the two-year period to cover the additional payments, rather than reducing the amount paid to farmers in England and Northern Ireland.

The report stated: “We are not going to be able to fulfil the instruction to recommend a fair solution and to remain within the condition in our terms of reference for our recommendations to be fiscally neutral, because we cannot tolerate a reduction of funding to farmers in any part of the UK.

“Our recommendation addresses the long-standing concern of those in Scotland that an injustice had been done and, according to the analysis we commissioned, would see a modest increase for Welsh farmers, recognising that they also have not been major beneficiaries from the convergence windfall since 2014.”

In its official response, the Government said it agreed with this, despite, highlighting that the terms of the Bew Review were for recommendations to be “fiscally neutral”.

It added that should the ‘Bew formula’ be applied to the current convergence funding budget, England would set to lose €65.91 million in farm support funding and Northern Ireland would lose €0.63 million.

It stated:

Although the terms of reference of the review state that it would be fiscally neutral, the Government agrees to increase the farm support budget by €66.54 million over the two year period 2020-2022 so that no farmer in the UK receives less than they were expecting.

“Defra and the Northern Ireland administration will, therefore, see no change in their budget. The Government has agreed to provide an additional £160 million to Scottish farmers as a one-off increase to address the perception of unfairness with historical allocations of the Common Agricultural Policy.”