Category: Policy & Business

The date of the spring Budget has been set for Wednesday 8^th March.  Following the Chancellor’s announcement in the Autumn Statement, this will be the last ever spring Budget with the main ‘fiscal event’ moving to an autumn date.

The UK will not seek to remain within the EU Single Market after Brexit.  This was the clear message delivered by Theresa May in a speech, setting out for the first time, the UK’s negotiating position.  Mrs May stated that staying in the Single Market would mean ‘not leaving the EU at all’ as theUK would still be subject to rulings of the European Court of Justice and would have to accept free movement of labour (aka EU migration).  Therefore, in the range of Brexit options, the Government is clearly aiming for the ‘harder’ end of the spectrum.  This could have significant consequences for agriculture.

Within the speech, twelve objectives for the negotiations were outlined;

1. Provide certainty wherever possible – although Mrs May stated there would not be a ‘blow-by-blow’ account of negotiations.
2. Have control over setting laws – it could be argued that the ability to decide laws in Westminster, Edinburgh, Cardiff and Belfast is the whole essence of Brexit.  However, the Great Repeal Act is going to mostly transpose existing EU rules into UK law with them only being amended over time (perhaps an extended period).  Therefore, the imprint of the EU will remain in UK law for many years.
3. Strengthen the United Kingdom – there was a clear move to try and bind all the parts of the UK into the Brexit process and head-off the prospect of a second Scottish Independence referendum.  Perhaps as an olive-branch Mrs May stated that ‘no decisions currently taken by the devolved administrations will be removed from them’.  This would suggest agricultural policy will continue to be set at the devolved level.  However, leaving the Single Market clearly goes against the declared wishes of the Scottish Government.   
4. Keep a Common Travel Area with Ireland – the CTA predates the EU and it is seen as vital for the peace process in Northern Ireland that there is not a hard border between the North and the Republic of Ireland.
5. Control migration – the Government has interpreted the Brexit vote as being, to a large extent, about immigration.  Certainly, Mrs May seems prepared to trade-off some economic pain in order to ‘control’ the number of people coming to the UK from Europe – hence leaving the Single Market and abandoning free movement of goods along with people.  There were warm words in the speech about immigration filling skills shortages and that the UK would continue to be open to ‘international talent’.  There was little on the problems that would be faced by sectors such as agriculture, hospitality, caring etc. if EU migration is halted.
6. Guarantee rights of EU citizens living in Britain & rights of British nationals in other Member States – the UK government is looking to do this as soon as possible to provide reassurance to the individuals involved.  Whilst some in the EU would favour agreeing this now, others are not keen.
7. Protect workers’ rights – this appears to be a move to reassure those at home and abroad that there will not be a ‘race to the bottom’ on labour standards with the UK becoming an offshore sweatshop for the EU. 
8. Construct a solid trade deal with the EU – the clear long-term aim is to have a comprehensive Free-Trade Agreement (FTA) with the EU (the so-called Canadian model).  This would provide access to the Single Market, but would not be membership of the Single Market (with all that entails).  The possibility of paying something into the EU Budget for Single Market access was raised, but it was made clear this would not be at the level of current contributions. 
9. Create trade deals with other countries – this would rule out the UK entering into a Customs Union with the EU as it would have to adopt the EU’s Common External Tariff.  However, Mrs May stated that she wanted a bespoke ‘customs agreement’ to smooth trade between the UK and the EU.  The ability of the UK to set its own tariffs needs to be watched carefully by the UK farming sector.  We could see cuts on agricultural tariffs imposed, either as part of a ‘cheap food’ policy, or within deals with other countries such as the US, Australia or Brazil.  This could see a big drop in UK prices.
10. Be a leader in science and innovation – this is a proposal to continue to collaborate with European partners on major science, research and technology initiatives.  It is also likely to link back into the migration issue with continued access to the UK for foreign students and researchers.
11. Continue to cooperate on crime, terrorism, and foreign and defence policy – the UK’s well-regarded intelligence and armed services may be a positive aspect for the rest of the EU within the negotiations.
12. Ensure a phased implementation process – Mrs May outlined she is keen to avoid a ‘cliff edge’ upon Brexit.  However, nor does she want an ‘unlimited transitional status’.  The aim is to have the future status between the UK and EU clarified within the two-year article 50 process.  There could then be a ‘phased process of implementation’.  All this is rather vague, but potentially could mean continued Single Market or Customs Union membership for a period after Brexit, with perhaps the Customs Union option being more likely.

Where this all leaves agricultural trade is not clear. Firstly, setting out a series of objectives is a long way from securing a deal.  The ‘wish list’ above still has to meet the hard realities of the negotiating process.  Even if a Free Trade Agreement is the final outcome, some FTAs partially or wholly exclude agricultural products.  And, even if farm goods are included in an eventual FTA, then tradeis unlikely to be as ‘frictionless’ as it is under the current membership of the Single Market – with increased trade costs leading to lower prices.  Then there is the question of how we get there from here.  The terms of any transitional arrangement are also key. 

The speech made positive noises about the UK continue being a ‘reliable partner, willing ally and close friend’ to the EU.  Mrs May stated that ‘we do not want to undermine the Single Market, and we do not want to undermine the European Union. We want the EU to be a success’.  However, there was also a threat within the speech for those in Europe who wish to see the UK punished.  The Government would walk away from a bad deal.  There was an implied threat that, denied access to the Single Market, the UK would look to become a low-tax, low regulation economy on the doorstep of Europe.

One final point contained within the speech was that any deal concluded between the UK and the EU would be put before both Houses of Parliament before it comes into force.

The Environment Agency (EA) has released details of the proposed Nitrate Vulnerable Zones (NVZs) for 2017.  These are updated every four years along with the rules which need to be followed.  Under the proposals there are some new designations as well as some areas that have been removed.  Approximately 58% of England is designated as being in an NVZ and this has remained pretty static.  DEFRA has been writing to farmers and in some cases their Agents, officially notifying them that their land falls within a Nitrate Vulnerable Zone (NVZs).  Farmers only have 28 days from notification to appeal the decision.

There are only two grounds for appeal, firstly that the land does not drain into polluted water or secondly that it drains into water that shouldn’t be identified as polluted.  More details on how to appeal can be found on the DEFRA website at https://www.gov.uk/guidance/nitrate-vulnerable-zones-appeal-a-decision-notice.  Designated areas can be found on the Environment Agency’s website at <ahref=”http://maps.environment-agency.gov.uk/wiyby/wiybyController?x=357683&y=355134&scale=1&layerGroups=default&ep=map&textonly=off&lang=_e&topic=nvz#x=357683&y=356457&lg=1,10&scale=4″>http://maps.environment-agency.gov.uk/wiyby/wiybyController?x=357683&y=355134&scale=1&layerGroups=default&ep=map&textonly=off&lang=_e&topic=nvz#x=357683&y=356457&lg=1,10&scale=4

Letters are being sent out  to all those in existing NVZs and those in the newly proposed zones.  These are being sent in tranches depending on which river basin district your land is in:

• 3^rd January – North West, Dee, Severn and Solway Tweed
• 23^rd January – South West, Anglian, Thames and South East
• 20^th February – Northumbria and Humber

Letters are sent using the contact details on the Rural Payments Agency farm register and the June Survey of Agriculture.  Where farmers are registered with the RPA via an Agent, letters may be sent to the Agent.  This is causing a problem as they do not contain details of the specific holding they are referring to.  In these cases it may be worth contacting the Environment Agency, telephone: 03708 506 506 (Monday to Friday, 8am to 6pm) or [email protected]

DEFRA has also amended its guidance on restrictions of applications outside the closed period of manures with readily available nitrogen content (poultry manure and liquid manures which includes cattle and pig slurries).  Farmers must not spread more than 30m³ per Ha of slurry or 8 tonnes per Ha of poultry manure in a single application from the end of the closed period until the end of February. You must allow at least 3 weeks between each individual application.  The poultry manure limit remains the same but the slurry limit has been reduced from 50 m³ to the 30 m³.  More guidance on using nitrogen fertiliser in NVZs can be found on the DEFRA website at https://www.gov.uk/guidance/using-nitrogen-fertilisers-in-nitrate-vulnerable-zones

 

The Welsh Environment and Rural Affairs Secretary, Lesley Griffiths, has announced £40m for a new Small Grants scheme in Wales.  The capital grants scheme is expected to open for the first round of applications from April 2017.  The aim of the scheme is to help farmers make their businesses more competitive and more environmentally friendly and to achieve a ‘step-change’ in business performance.  Support of up to 40% of eligible costs will be available up to a maximum of £12,000 over a four year period.  Grants will be available to invest in about 80 items which relate to one of the following themes:

• Animal health, genetics and performance
• Crop management
• Energy efficiency
• Resource efficiency
• ICT

The Small Grants Scheme was part of the Welsh Government’s commitment in ‘Taking Wales Forward’.  The Welsh Government is investing £20m in the scheme which is being co-financed by the Rural Development Programme.  It is hoped that the ‘smaller’ scheme will compliment the Sustainable Production Grant scheme which with a minimum threshold of £16,000, targets larger projects.  More information and guidance on how to apply will be available in due course on the Welsh Government website.

Four ‘Agriculture Champions’ have been appointed by the Scottish Government.  Their task is to develop an Agriculture Strategy to ‘guide the long-term sustainable future for Scottish Agriculture’.  This will be by increasing profitability and boosting innovation, production and sustainability.  Each Champion has been given their own particular theme:

• Henry Graham, Scottish Chair of Lantra will be the Education and Training Champion
• Archie Gibson, Chair of Scottish Food and Drink Federations will be the Food and Drink Champion
• John Kinnaird, farmer and former President of NFUS will be the Sustainability Champion
• Marion MacCormick, Buying Director for Aldi will be the Public Value Champion.

Letters to Claimants

All Agents should have received an ‘e-Bulletin’ outlining payment progress so far and what the situation is where clients have not yet been paid.  As from this week (w/c 16^th January) those claimants who have not received their 2016 Basic Payment should receive a letter.  Claimants will receive one of three types of letter depending on why they have not been paid:

1. More checks are required to complete the claim
2. The claim is a cross-border farm
3. The claimant has had either a remote or physical inspection and the data captured from this is still being updated

Common Land claimants will receive a separate letter altogether.  All letters will explain that the RPA is aiming to pay all claimants by the end of March, although it acknowledges there will still be some outstanding payments after this date.  These claimants will be contacted again to be given a further update.  It appears that the letters will be pretty generic and won’t actually give claimants much of an ideawhen they can expect their payment.  This is one area where the NFU have been pressing the RPA, saying it is too late telling claimants in January that they won’t be paid in December.  Similarly it is too late contacting claimants in April to say they will not be paid by the end of March.  This communication needs to be made earlier to allow farmers and land managers to plan for this and contact their banks if necessary.

Just a reminder to Agents and claimants that it is possible to track a claim via Rural Payments online.  Go to the ‘Basic Payment Scheme Applications’ on the Business Overview page, then click on ‘Apply for BPS’; it is possible to see the status of the application.  This progresses from ‘Claim Validation’ to ‘Final Checking’ and then ‘Preparing for Payment’.  There is no ‘Paid’ status, claimants will receive a Remittance Advice once payment has been made.

Agent Relationship Managers

The process of Agents being assigned an Agent Relationship Managers (ARMs) is supposed to recommence from 16^th January.  Some Agents will have received a call from their ARM back in November/December, for others it has been frustrating as this processed was halted whilst all ‘hands’ were put on meeting the first payment target.  Agents have to wait for ARMs to contactthem; Agents cannot request an ARM when they contact the RPA.  Priority will be first for ARMs to make contact with Agents who have 5 or more SBIs and who have clients who have not received their 2016 payment.  After this ARMs will make contact with remaining Agents.  It is perhaps important to note that ARMs are only a point of contact and won’t actually be working on the claim, the RPA has different mapping, entitlement and common land teams which work on claims.  But the ARM will be able to ensure that outstanding issues are being looked into and will be able to update Agents on the progress of claims.  It is unclear how long this process will take, to date it is probably safe to say it has not been hugely successful so far.

Claim Statements

Claim Statements will be sent in hard copy to the the registered business address from early February, so Agents may well have to contact clients to get a copy of these.  However, once again, they will have limited information on them as they will be in a similar format to 2015 with no parcel-by-parcel breakdown.  Where claimants think their payment is wrong they need to e-mail the RPA putting ‘BPS 2016 Payment Query’ in the subject title, including the SBI.  The more detail, explaining why the payment is wrong should help speed up the process

The Environment Secretary, Andrea Ledsom, has announced a further £120m will be made available under the Growth Programme.  This is the strand of the RDPE that aims to create jobs and grow the rural economy.  Grants are available for such things as food processing, tourism, farm diversification and support for small businesses.  Local Enterprise Partnerships (LEPs) have identified local priorities for funding in their areas.  The applications are then handled by the RPA.  The system is rather complex, but more information can be found at – https://www.gov.uk/government/collections/growth-programme-grants-for-the-rural-economy.   The funding announced is not new – it was already allocated under the RDPE.  It is merely being released now as a result of the Treasury confirming that RDPE schemes will remain open and fully-funded until the date of Brexit (see October article).  Applications are expected to open ‘soon’.

The RPA has confirmed it has hit its first target of paying 90% of eligible claimants by the end of December.  According to the latest announcement from the agency, 91% of claimants in England received their 2016 Basic Payment by the end of the year.  Thisrepresents 78,000 claimants.  Total payments received is said to be just over £1.4 billion, about 82% of the BPS fund, meaning some of the larger payments are yet to be processed.

The next target is to pay 93% of eligible claimants by the end of March.  The RPA has said it will contact farmers who have not been paid yet to help them plan.  It is not clear when or in what format this communication will be in but claimants should ensure their contact details on the Rural Payments Service are up to date.

The 2017 edition of the Guide to Cross Compliance in England has been published.  It is not being sent to farmers in hard copy this year and will only be available online.  It can be found at – https://www.gov.uk/guidance/cross-compliance-2017.  There is only one rule change for the 2017 year; the requirement for 2m buffer strips next to watercourses now applies to all fields, not just those above 2 hectares.

The Scottish First Minister, Nicola Sturgeon, has set out the Scottish Government’s thoughts on Brexit.  Whilst the publication called ‘Scotland’s Place in Europe’ (see http://www.gov.scot/Resource/0051/00512073.pdf) is billed as an attempt to help find common ground and achieve the best outcome for the UK as a whole, it contains a number of veiled (and not-so-veiled) threats of what might happen if Scotland’s interests are not protected.  A second Independence referendum clearly remains an option.

Mrs Sturgeon believes the best outcome for Scotland would be to remain part of the EU as an independent country.  Perhaps recognising the difficulties of achieving this, in terms of timing, practicalities, and, not least, winning a second referendum when the polls currently suggest no majority for it, other options are suggested.  The first is that the UK should remain part of the Single Market and Customs Union even if it leaves the EU (the so-called ‘soft-Brexit option).  If the Westminster Government does not follow this route, then it is proposed that Scotland alone stays within the Single Market by becoming a member of the European Economic Area.  This ‘solution’ seems to throw-up a large number of practical difficulties around the movement of people and goods between Scotland, the EU and the rest of the UK.  However, the report points out that the UK Government has stated that a ‘soft border’ can be maintained between Northern and Southern Ireland after Brexit, so the same principle could be followed for Scotland.

The report is also clear that devolution should not be reversed in any way as a result of Brexit.  For example, when policy over agriculture, fisheries or the environment is repatriated from Brussels, responsibility should remain with the devolved Governments, not sit with the UK Government.  Indeed, Scotland’s Ministers are asking for additional powers over areas such as employment law, health and safety legislation, company law, and even immigration controls.  All this simply demonstrates the many-layered complexity of the Brexit process.  Whilst not wishing to be pessimistic, the scope for getting things wrong seems to far outweigh the chances of a satisfactory outcome for all concerned.  We hope 2017 and subsequent years prove us wrong.