CAP Budget

Mike Weir Excerpts

Tuesday 26th November 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I thank the hon. Member for Banff and Buchan (Dr Whiteford) for securing the debate, which is important to all parts of the UK, but particularly her constituents in Scotland, because as she says, she has a very rural constituency.

As hon. Members are aware, the Government have recently announced the allocation of €27.6 billion in funding from the common agricultural policy between England, Wales, Scotland and Northern Ireland for the period 2014 to 2020. The vast majority of those funds will come to the UK as direct payments under pillar one of the CAP. In total, between 2014 and 2020, the UK will receive €25.1 billion in the form of direct payments and €2.6 billion in funding for our rural development programmes under pillar two. Although these are significant sums, the UK will receive less CAP funding in the next seven-year EU budget than it did from the current EU budget. The fact that the UK will receive less funding from the CAP in the future is in line with the reduction in the EU budget that the Prime Minister secured at the February European Council. That position was overwhelmingly supported earlier this year by the House of Commons and will be to the benefit of all UK taxpayers.

[Mr Mike Weir (Angus) (SNP)]

The Minister says that there is a reduction in overall funding, but he does not address the fact that the convergence uplift was specifically due to the difference between Scotland and other parts of the EU. The money was given in the budget for a specific purpose. Should it not be used for that purpose?

[George Eustice]

I thank the hon. Gentleman for that intervention, but I am one minute and 50 seconds into my speech and I have another 12 or so minutes in which I might get to those issues.

Across the EU, most member states will see reductions in their CAP budget and receipts, and it is only appropriate that the UK shoulders its share of the cut. It is worth noting that we have done better than many other member states. With a shrinking pot of money, how we allocate the funds between Wales, England, Scotland and Northern Ireland was always going to be a difficult decision for the Government. In reaching that decision however, the Government consulted extensively with the devolved Administrations. We have had to be fair to all parts of the UK; I shall explain why I think we have been. Through a collaborative process, the Government decided on the most appropriate way to allocate the funds. There was an equal and proportionate reduction in funding to each Administration. That is fair.

[George Eustice]

I was going to move on to the uplift, which is the main topic of the debate. I have heard the views of hon. Members who say that the additional funds should have been made available to Scotland, but quite simply the UK’s direct payments will fall over the next seven years and there are no additional funds to allocate. Compared with 2013, the UK will receive around €500 million less in direct payments over 2014 to 2020. It is important to note that the convergence uplift does not mean that there is an additional pot of money to allocate. It simply slows the rate at which we have to make reductions for everyone across the UK. To give more funding to Scotland—or any one region, for that matter—would have required deeper cuts to the other parts of the UK.

[Mr Weir]

Will the Minister give way?

[George Eustice]

I want to make progress; I will get to the point that I think the hon. Gentleman will address in a moment.

The point has also been made that Scotland has the lowest per-hectare payment in the UK and that, by virtue of that, Scotland should have received additional funding. There are a number of points to make about that argument. First, the so-called convergence uplift was calculated based on a UK average payment. Secondly, the lower per-hectare payment in Scotland is due to Scotland’s extensive moorland, which has yielded lower levels of production and, therefore, has historically attracted lower subsidy payments than other parts of the UK. Thirdly, it is important to note that Scotland still makes payments based on historic subsidies received by farm holdings in 2001, which means that those areas of land that had been most actively farmed, and generally still are most actively farmed, receive more money than the unfarmed moorlands.

Scotland’s low per-hectare payment also needs to be viewed alongside the fact that Scotland has the highest average per-farm payment in the UK, at about £26,000, compared with just £17,000 in England, £16,000 in Wales and £7,000 in Northern Ireland. I know that the hon. Member for Banff and Buchan said that she has no respect for that argument, but it is legitimate. Scotland has bigger farms, and the land there has historically been less intensively farmed. I think that the public will realise that if Scottish farmers are getting payments of almost £26,000 a year, they are getting far higher payments than the UK average, which is currently only about £16,000.

--- Later in debate ---

[George Eustice]

A number of other things must happen at about the same time as the review, not least, particularly in Scotland’s case, moving from the current approach, which is based on historical payments in reference to 2001, to an area-based approach. Scotland will have to think about that carefully in order to get it right. One would not necessarily want a single, flat rate for all land areas; there will be a difference between lowland rates and moorland or upland rates.

It will be a big exercise for Scotland to get the rates right for different types of landscape. Only after we have seen how the transition from historical payments to land area-based payments will work can we make decisions about it. There may also be legal issues about whether things can be changed before the next financial perspective, post 2020.

I know that Nigel Miller, the president of the NFUS, has made a strong case and wants us to consider the issue. The Secretary of State has already discussed it with him, and I am keen to discuss it with the NFUS when I go to Scotland, to ensure that we engage fully with the Scottish farming industry on this important issue. The review, concluding in 2017, will be an opportunity for us to consider domestic CAP allocations and reflect on wider developments across the EU and UK as a result of CAP implementation. We might also be able to see how the different approaches taken by various devolved Assemblies are working in practice.

Throughout the CAP negotiations, which have only just concluded, the UK fought hard to ensure that Scotland and the other home nations could deliver the CAP in a manner that suited their needs and those of their farming industries. The UK has used its size and influence to deliver a series of wins for Scotland and Scottish farmers, including securing greater regionalisation of the CAP, ensuring that the national reserve is flexible enough to provide continuing support to new farmers, clarifying that farmed heather is a form of permanent grassland and extending to 2016 the designation of areas of natural constraint, which are particularly numerous in Scotland. Finally, although the hon. Member for Banff and Buchan was sceptical about the value of this, we have also secured for Scotland the ability to increase the use of coupled payments—I know that there is a strong view in the Scottish industry that that is particularly important for beef production.

Now that we have negotiated all those outcomes for Scotland, it is up to the Scottish Government to decide how they want to proceed in implementing the CAP. The UK Government have ensured that Scotland and other devolved Administrations have the ability to implement the CAP as they see fit. I know that consultations are under way in all the constituent parts of the UK. The agreement that we secured includes significant flexibility for Scotland to direct funding to those parts of the rural economy and environment that it deems appropriate. With the budget settlement recently announced by the Government on the CAP across the UK, all the devolved Administrations now have the certainty they need to start making those important decisions.

[Mr Weir]

The Minister has not addressed the point I raised earlier. He said that there was less money in the budget from Europe, which may be true, but the UK Government argued for a lower budget. The budget coming to the UK has been increased by the convergence uplift specifically because of the Scottish situation. That money was given because Scotland had a particular problem, and it is not coming to Scotland. Surely that is not right.

[George Eustice]

I think I did address that point. I made it clear that the calculation for the convergence uplift was UK-wide, not Scottish, that there are historical reasons why Scotland has had less and that Scottish farmers receive more on average per farm unit than farmers anywhere else in the UK. I do not accept that I did not address that point. We are taking a consistent approach by sticking with the historical approach, as we did on structural funds. We have achieved a lot for Scotland and other devolved parts of the UK, in terms of giving them flexibility to implement the CAP as they see fit.