Category: Policy & Business

Agriculture Act 2020

The Agriculture Act 2020 received Royal Assent on 11th November.  The Act enshrines into law the phasing out of the BPS over the seven year ‘Agricultural Transition’ in England.  There had been strong lobbying for the Act to also include minimum standards for food imports to the UK.  This resulted in the House of Lords and the House of Commons going through the ‘ping-pong’ process over amendments (see earlier article on Foods Standards https://abcbooks.co.uk/food-standards/).

On the 9th November, the Lords agreed to the final Commons amendments, with Lord Grantchester, shadow Defra Spokesperson withdrawing his amendment to the Bill saying the ‘Opposition would not be pressing their amendment to a division’.  However he did call on the Government to ensure that amendments to the separate Trade Bill address three issues:

  • Ministers must ensure Parliament and devolved Administrations are aware in a ‘timely manner’ if future trade deals are likely to contain measures that change primary or subordinate legislation relating to current standards,
  • both Houses, Select Committees and devolved Administrations are provided with draft objectives, progress reports and the final text of any future trade agreements; and
  • sufficient time is provided by Government for Parliamentary committees and devolved Administrations to consider all matters relevant to future trade agreements and that Parliament itself has time to debate and vote on all such treaties.

To this end, some lobbyist groups are already turning their efforts to try and get amendments into the Trade Bill.

 

Farm Business Grant Wales

The first round of the new ‘Farm Business Grant – Yard Coverings’ scheme opens in Wales for Expressions of Interest (EOI) on 9th November.  A General Rules Booklet with a list of the eligible items can be found at https://gov.wales/sites/default/files/publications/2020-11/farm-business-grant-yard-coverings-rules-booklet_0.pdf.  All applications have to be made via RPW Online and guidance on how to do this can be found via https://gov.wales/farm-business-grant-yard-coverings-using-rpw-online-apply

The minimum grant threshold is £3,000 per application.  The maximum overall grant threshold is £12,000.  It is possible to submit EOIs in more than one window as long as the thresholds are adhered to.  This FBG – Yard Coverings Scheme is separate to the main Farm Business Grant Scheme, meaning any funds received under the main scheme do not affect the Yard Covering scheme thresholds and vice-versa.

The grant provides a maximum 40% contribution towards standard costed capital investments in equipment which have been pre-identified.  The closing date for this first round of EOIs is 18th December.  A further round is expected to run from 18th May to 25th June 2021.  Contracts will be offered to successful applicants via RPW Online, these have to be accepted within 21 days.

LFASS Payments

The Scottish Government has announced that payments under the Less Favoured Areas Support Scheme (LFASS) will continue in 2021 and will be increased back to the levels paid in 2018.  For the last two year’s, under EU rules, the LFASS has had to be paid at a reduced rate of 80% and 40% respectively of the 2018 value.

Following the Agriculture (Retained EU Law and Data (Scotland) Bill passing stage 3 on 26th August, the Common Agricultural Policy (Less Favoured Area Support) (Scotland) Amendment Regulations have been laid for approval by the Scottish Parliament and will come into force on 1st January 2021.  This means the Scottish Government can introduce its own policy.  However, it is not absolutely clear if this funding is definitely guaranteed yet as the announcement says ‘we continue to push for assurances that the UK Government will fully replace all lost EU funding so that we can provide assurance to the rural economies of Scotland’.  But if it is the case, then it will be a big boost to farmers and crofters working in the Less Favoured Areas of Scotland.

Also being laid before the Scottish Parliament, to come into force on 1st January 2021, is the Common Agricultural Policy (Simplifications and Improvements) (Miscellaneous Amendments) (Scotland) Regulations 2020 which will allow the Scottish Government to make changes to the previous CAP schemes.  This will mean for inspections of former CAP schemes in 2021 the focus will be on improving compliance through ‘support, enhanced guidance and better targeting’.  The number of routine visits should also reduce.  The Scottish Government has already announced the Crop-Diversification rule will be abolished from the 2021 scheme year under these new regulations.  Ecological Focus Areas (EFAs) are to be retained for 2021, but will be part of a short-term ‘wider farmer-led review’ for the period post 2021.

Further Furlough Extension

The Chancellor, Rishi Sunak, has announced a further extension to the Furlough scheme.  The programme (officially titled the Coronavirus Job Retention Scheme) had already been extended to run until the 2nd December to cover the second ‘lockdown’ in England.  It will now operate until the end of March 2021.  It covers the whole of the UK.  The Government will pay 80% of employees wages (up from 55%) with employers having to fund just NI and pension contributions.  Those that were on the payroll on the 23rd September, but have subsequently been made redundant because the original Furlough scheme was due to end, can be re-employed and placed on the scheme.  With the extension of Furlough, the Job Retention Bonus will no longer be paid.  The next Self-Employed Income Support Scheme (SEISS) grant which covers the period November to January will be increased to 80% (from 55%) – up to a maximum of £7,500.  Another SEISS grant to cover the period Feb to April 2021 is promised.  There will also be the ability to top-up Bounce Back Loans and there will be cash grants of £3,000 per month for businesses in the hospitality sector.

Food Standards

A Government U-turn looks set to provide more protection for UK agriculture under future trade deals.  But the fight to ensure all food imports adhere to UK production standards is still ongoing.

As reported last month, the House of Commons removed the amendments to the Agriculture Bill proposed in the House of Lords, that would have enshrined protection of UK food standards in law.  The Bill subsequently returned to the Lords.  It was expected, as their amendments had been rejected once, that the current version would be accepted by the Lords.  This was not the case and the Lords put forward a (similar) amendment (16B), which sought to ensure ‘equivalence of standards’ for imported agri-food products under any future trade deals.   However, this was also been rejected by the House of Commons; this time by 331 to 272.  In this vote six Conservative MPs voted against their Government and a further 24 abstained, notably Prime Minister, Boris Johnson, and Chancellor of the Exchequer, Rishi Sunak.

In the meantime, MPs have voted in favour of a separate amendment which had been announced by Liz Truss, International Trade Secretary.  This means the newly formed Trade & Agricultural Commission would be put on a statutory footing, with its reports on future trade deals put before Parliament.  Previously, the Commission was only to operate for a limited period and would just advise Government.  

The new proposal doesn’t exactly incorporate the Lords’ amendment, but the Government is probably hoping it’s enough of a concession that they stop trying to amend the Agriculture Bill.  But many fear this doesn’t go far enough; MPs would still not have the right to vote on such deals.  Intense lobbying of MPs to try and get them to support the Lord’s amendment continues.  Amendment 16B could ‘ping-pong’ back and forth between the House of Lords and the Commons for some time yet.

BPS 2020 Payments Rise

English farmers will see a slight increase in their BPS payment rates this year.  This is largely because there will be no Financial Discipline deduction from 2020 payments.  This was previously used to fund the EU crisis fund.  2020 lowland payments will be just over 1% higher than last year.

The calculation of entitlement values is undertaken from scratch each year and the rate can vary depending on how many entitlements are claimed in each region.  However, this year the Standard payments in Euros are exactly the same as last year, with the Greening amount up just a few pence, meaning there has been little change in the number of entitlements claimed.

BPS payments for England are still set in Euros, for 2020 the exchange rate has been locked at the  2019 level; €1=0.89092.  The table below shows the published rates in Euros, our estimates and the actual payment that farmers will receive in Sterling and a comparison with last year.

 

English Agricultural Policy

We have been reporting on English future agricultural support as it has been announced.  We appreciate this has been rather piecemeal and have therefore prepared a two-page summary so readers do not have to go back through a year’s worth of Bulletins.  The summary can be found under the ‘Bulletins’ tab at the top of the page, titled Agricultural Policy Summary.  We expect this to be a ‘living’ document i.e it will be unpdated when the consultation comes out (expected November).

Brexit Update

Despite most of the month being dominated by discord, it appears that the Brexit talks are at last getting down to the real detail.  After the October European Council, the EU instructed its Chief Negotiator to ‘continue’ with the Brexit negotiations.  However, the UK’s desire was for an ‘intensification’.  As a result, it temporarily withdrew its invitation to Michel Barnier to come to London for further talks with his counterpart David Frost.  Whilst this increased the chances of a No Deal, in tense talks such as this, there always comes a point where a big ‘fall-out’ occurs.  Arguably, it is not until this happens, that the real negotiations start.

Landing Zone Visible

There are signs that substantive negotiations are now underway.  The ‘landing zone’ between the UK’s and the EU’s position is also getting clearer.  However, there are still some difficult trade-offs around the Level Playing Field and Fisheries which have hampered progress throughout 2020.  Whilst the EU, and particularly coastal Member States such as France, are talking tough on Fisheries in a bid to get access to the UK’s waters as close as possible to the status-quo, it is clear that the EU will have to concede on this issue.  It is also apparent that the EU is standing firm on its requirements around the Level Playing Field, particularly with respect to State Aid.  Arguably here, the UK’s intent to break international law as outlined in its Internal Market Bill, has made the EU more insistent on ensuring that the UK will not be able to have good access to the EU Single Market on the one hand, and be able to undercut it on the other.  That said, there are signs of movement from the EU side on this as well.  The focus is now on key principles that both sides should adhere to, ensuring that the UK has a strong independent regulator which can uphold what is agreed during the Brexit negotiations.

Despite these signs of progress, the time available is very short.  The EU side now believes that it will be into November before an agreement might be reached, leaving very little time for the ratification process.  Given the importance of issues such as Fisheries in some regions, this could result in some difficulties in getting the vote through the European Parliament.  With the Transition Period ending on 31st December, it is last minute glitches such as this, which could also result in a No Deal situation on 1st January.

Business Preparation

All the while, agri-food businesses are left scratching their heads as to what precisely will be expected from them when trading with the EU from January.  In recent weeks, Defra has held a number of webinars which have sought to shed light on the process.  This includes information on Defra’s Export Health Certification (EHC) online facility which allows exporters to apply for, manage and keep up to date on the progress of their EHC applications.  What is clear is that irrespective of whether there is a Deal or not, change is coming and businesses must prepare for this, even if time is limited.  In recent weeks, Andersons has been involved in examining the key regulatory processes the British businesses will need to adhere to when exporting to the EU.  These are outlined, in general terms, below as specific steps can vary depending on the products/species involved.

Regulatory Steps on Agri-Food Exports from GB to France Post-Transition

Sources: Customs Clearance Consortium / Andersons

On 8th October, the UK Government published its updated Border Operating Model, following the initial publication in July.  Much of what was previously announced remains in place (see July article).  This version focused on additional inland border infrastructure to be constructed to manage delays at the border as well as details of a new Kent Access Permit which HGV drivers will need before being able to travel onwards to Dover for instance.

Whilst additional information is emerging in some areas on what is required post-Transition, there is very little detail on how trade with Northern Ireland will be managed.  This is being discussed at the Joint Committee between the UK and the EU.  Further information is expected soon.  However, this is becoming increasingly urgent as the Protocol, and associated checks on GB to NI trade will need to be operational from January.  Based on information to hand at the time of writing, below is an overview of documentation that will be needed for trade with NI whether transiting directly or via the Republic of Ireland.  For those that trade with Northern Ireland, it is worth checking the Trader Support Service to see what support that might be available in addressing the regulatory requirements.

Overview of Documentation Needed for NI Agri-Food Trade Post-Transition

Sources: Customs Clearance Consortium / Andersons

Whether formally or informally, it is clear that an implementation period of at least six months is needed so that businesses can put in place the measures required to manage trade between the UK and the EU.  With such limited time available, even if a Deal is agreed, there will be plenty of follow-up negotiations needed on numerous technical points arising from Brexit which simply cannot be addressed in the time available.  In this respect, Brexit has become more of a process than a one-time event.  So, Brexit-related wrangling will continue for some time yet!

 

Covid Support Changes

The Chancellor, Rishi Sunak has been forced to amend his plans for Covid-19 employment support.  As local lockdowns proliferate across the UK, and the whole of Wales goes into a ‘firebreak’, there were increasing concerns that the existing measures were not going to prevent a big rise in joblessness.  The main change is to the Jobs Support Scheme (JSS) announced just last month (see last month’s article).  Originally, employers where to have paid 33% of the cost of any time not worked by staff put on short hours.  Staff would have to work a minimum of a third of their normal hours.  It became clear that it was still going to be more cost-effective for many employers to lay staff off, rather than contribute to short-time working.  Therefore, the Government has announced that employers contributions will fall to 5% and the minimum hours worked will only be 20% of normal.  The JSS starts on the 1st November when the Furlough scheme ends.

In addition the Chancellor announced that the rate of grant under the Self Employed Income Support Scheme will be increased from 20% of average monthly profits to 40%.  The maximum grant is now £3,750.   Finally, there will be cash grants for businesses in the leisure and hospitality sector of up to £2,100 per month.  These will be targeted at businesses that have not been forced to close (as there is separate support for these) but have seen trade affected by tighter restrictions (e.g. areas in ‘tier 2’ in England).

 

NI BPS Payments

Most farmers in Northern Ireland have received their 2020 BPS payments.  Payments began on the 16th October and it has  been announced that 97% of claimants have now had their money.  This amounts to £275m.