Category: Policy & Business

Covid Business Support

The Government has added to the suite of schemes available to help businesses cope with the effects of the Coronavirus outbreak.

Following criticism of the Coronavirus Business Interruption Loan Scheme (CBILS) a new ‘Bounce Back Loan Scheme‘ (BBLS) opened on the 4th May.  Unlike CBILS, the Government will guarantee 100% of the loan under BBLS, as opposed to 80%.  This means that the banks providing the loans have a much lower requirement to undertake due-diligence on the application.  CBILS had been criticised due to the time it was taking to process applications.  Under BBLS it is envisaged that funds should be in a business’s bank account ‘within a day or two’ of application.

Loans under BBLS can be between £2,000 and £50,000, with the Government paying all the interest for the first 12 months.  The amount of the loan must be no more than a quarter of annual turnover and the business must not have been an ‘undertaking in difficulty’ on the 31st December 2019.  Firms that have already taken a loan under CBILS are not eligible.

There has also been some streamlining of the original CBILS scheme.  This has a higher lending threshold of £5m.  Firms will now be assessed on their viability before the Covid-19 outbreak and there will be no requirement for forward-looking business plans and budgets.

Of interest to the many self-employed people working in agriculture and the allied trades will be the progress of the Self-Employed Income Support Scheme (SEISS).  This is opening earlier than expected.  The online portal through which claims can be made will be available from 13th May.  It is expected payments will commence from the 25th May (ahead of the end-June deadline originally outlined).  HMRC are contacting self-employed people through e-mail, texts and post outlining what they need to do.  Applications will open in tranches based on the Unique Taxpayer Reference (UTR) number.  There is an online eligibility checker at – https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

Welsh Future Farm Support

The Welsh Government has published the responses to its consultation on future farm support undertaken last year.  There were over 3,000 submissions to the ‘Sustainable Farming and our Land’ consultation.  The summary of these can be found at – https://gov.wales/written-statement-sustainable-farming-and-our-land-summary-responses.  The Government concludes that there is ‘broad support for the Sustainable Land Management (SLM) framework’.  As previously written, the administration is taking forward the design of its scheme through a ‘co-design’ process with the farming sector.

Rates Revaluation Postponed

The revaluation of properties in England for Business Rates, due to occur in 2021, has been postponed.  The Government had originally brought the revaluation process forward a year from its proposed 2022 date in order to base Business Rates on a more up-to-date set of property values.   Due to Covid-19 the exercise has been postponed indefinitely.  For details see – https://www.gov.uk/government/news/business-rates-revaluation-postponed

CAP Roll-Over

The EU has agreed to roll-over the current Common Agricultural Policy until a new system is agreed.  Negotiations on CAP reform and the linked issue of the entire EU budget have been both delayed and complicated by the Covid-19 outbreak.  The new legislation states that the existing rules (e.g. BPS) will continue for the 2021 year if an agreement on reform has not been reached by 30th October 2020.  There is also provision for the current regime to be extended into 2022 if required as well.

US / UK Trade Deals

Talks on a Free Trade Agreement (FTA) between the US and the UK began on the 5th May.  It is planned to have a number of ’rounds’ of talks, every six weeks, covering specific areas.  The first round will encompass trade in goods and services, digital trade, two-way investment and support for small and medium-sized businesses.  Both sides are looking for a quick deal, but there are likely to be sticking-points in the negotiations – not least over standards and especially so in the area of agri-food trade (e.g. the infamous chlorinated chicken).  The UK Government hopes that progress in talks with the US will put pressure on the EU to agree a comprehensive FTA with the UK.  

Renewable Heat

The Government has confirmed that the domestic Renewable Heat Incentive (RHI) scheme will remain open until 31st March 2022.  The non-domestic element will close on the 31st March 2021.  The Government has issued a consultation (with a closing date of 7th July) on future support for low-carbon heating.  This can be found at https://www.gov.uk/government/consultations/future-support-for-low-carbon-heat .

Agri-Environment Payments

The RPA has confirmed bridging payments will be made for outstanding 2019 agri-environment claims.  Those who have not yet received their 2019 Countryside Stewardship or Entry Level Stewardship payment will be paid 75% of the estimated value of their claim.  Bridging payments will be made by the end of May.  The RPA has said it is ‘committed to driving up performance on the Countryside Stewardship and Environmental Stewardship schemes’.  Payment delays are one of the reasons highlighted by land managers for not entering the schemes.

The RPA has also announced it will not be making any BPS 2019 bridging loans as 99% of claims have already been made and it is working quickly to resolve any outstanding.

BPS Deadline Extended

Farmers in England will now have until the 15th June to submit thier 2020 BPS applications.  Defra announced on the 27th April that the usual 15th May deadline will be extended by one month.  The extension also applies to annual revenue claims under Environmental Stewardship and Countryside Stewardship.  This brings England into line with Wales and Northern Ireland in delaying the deadline.  Scotland remains on the 15th May.

Entitlement transfers for the 2020 claim in England must still be made by the 15th May.  Forms should also be filled out showing the land use as at the 15th May.  The period for amending claims without penalty moves to 30th June with an absolute deadline of final submission of applications and claims (but with penalties) of the 10th July.  Applicants are being advised by the RPA to still submit thier BPS claims as soon as possible to enable processing to commence. 

At present the deadlines for new Countryside Stewardship agreement applications (for 1st January 2021 start dates) remain at 1st May and 31st July for Higher and Mid Tier respectively.  For further details see https://www.gov.uk/government/news/extra-month-to-claim-for-farm-payments .

Brexit Negotiations Resume

The Brexit saga has (rightly) taken a back seat due to the Covid Crisis, however, with the help of video conferencing technology, negotiations on the future UK-EU relationship resumed last week.  The impasses which hampered the first phase of the Brexit negotiations have re-emerged as the deadline for deciding on whether to extend the Transition Period (30th June) looms on the horizon.

As our recent article noted, the UK Government’s position appears to have hardened on this issue. Previously, it said it would not ask for an extension, leaving open the possibility that if the EU requested one it might take a more conciliatory stance. However, it is now claiming that even if the EU requests an extension, it will reject it also.

The negotiations themselves seem to have been focusing on different interpretations of the Political Declaration which both parties agreed to at the end of last year.  The EU side is insisting that the UK needs to accept the conditions of a level playing field on issues relating to environmental law, State Aid and labour rules.  However, the UK is pushing for a standalone Free Trade Agreement (FTA) similar to the EU-Canada (CETA) FTA with add-on arrangements covering issues such as access to fishing waters, which the UK wants to be negotiated annually.  The UK does not want the future relationship to refer to EU law (i.e. interpretation by the European Court of Justice) when issues arise and cites relationships that the EU has with Canada as examples of how this would be possible.

There are discrepancies in both sides’ arguments.  The Political Declaration did not state the UK as a whole should stay within the EU’s State Aid framework (but Northern Ireland would be subject to EU State Aid provisions for agricultural and industrial goods’ trade).  However, having a tariff-free and quota-free trade deal with the EU, which is what the UK is striving for, has not been granted by the EU to any other major economy in the trade deals it has negotiated to date.  Therefore, some form of close co-alignment with EU rules would be required for such a trade deal to be achieved.

It is difficult to see how much progress could be made on these substantive matters between now and the end of June, when a stock-taking exercise will be conducted before making a decision on whether the Transition Period would be extended, without some high-level political intervention.  Back in October, it was a meeting between the Prime Minister and his Irish counterpart, Leo Varadkar, which broke the impasse on the backstop.  Perhaps, as both the Prime Minister and Michel Barnier have been struck down by the coronavirus in recent weeks, that period of self-isolation would have given them some time for reflection, and to adopt a more constructive approach.

The agri-food sector has enough on its hands to deal with the Covid crisis and the economy as a whole is facing its most difficult slump since the Great Depression.  What needs to be avoided now is another major disruption to supply-chains, which is what a No-Trade-Deal Brexit in December would bring.  The UK is already out of the EU.  It is better to take the time needed to put the frameworks in place to have a stable and secure future trading relationship with its closest neighbours, which as recent weeks have shown, remains very important for future food security.

AHDB Reform

The statutory levies to fund the Agricultural and Horticultural Development Board (AHDB) will continue, but they will be subject to a ballot of levy-payers every five years.  This is the key finding of the Government’s review of the AHDB which was published on the 20th April.

Defra and the Scottish and Welsh governments ran a Request for Views on the future of the AHDB in the second half of 2018.  It received just over 900 responses.  The original plan had been to publish a summary of views in early 2019 but Brexit preparations has delayed this by over a year.  Defra has now produced a Summary of Views and Government response which can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/880143/ahdb-consult-sum-resp.pdf .

The review took place under a number of headings;

  • Purpose and Activities:  there was divergence in which of the AHDB’s activities levy-payers most valued.  There was strong support for market development, export development and research.  There was less backing for knowledge exchange market intelligence and communications.  Suggestions for new priorities that the levy board should look to address in the future include environmental sustainability, public engagement (particularly defending the sector from negative press), and promoting careers in the farming industry.  The Government response suggests that the AHDB should be structured around two core themes of ‘market development’ and improving ‘farm performance’.  Beyond this, it is largely left to the AHDB itself to set its future priorities in light of the review’s findings.  
  • Funding: most respondents (64%) agreed that a statutory levy was the best way to fund the organisation – there was limited support for other funding mechanisms such as voluntary levies or commercial charging.  There was a range of views between different sectors.  Only around half of respondents in the dairy and potato sectors backed a statutory levy, whilst this rose to around three-quarters for combinable crops and beef and lamb.  
  • Governance:  It was widely felt that the levy board needed to be more accountable to its levy payers and take more regard of their views.  69% of respondents agreed to a five-yearly vote on renewing the statutory levy in each sector.  The Government suggests that the AHDB would consult levy-payers in each sector nd then draw up a five-year-plan of activities.  Levy payers would then vote to approve that plan.  There were mixed views on whether there needed to be more farmers representation on AHDB boards, but there was a broad sense that the organisation was out-of-touch and remote from levy-payers.  The Government suggests that, whilst duplication has been reduced over the past few years, there is still scope for better cross-sector working.  It also suggests that the board should work more closely with external partners to develop such ideas as an ‘evidence hub’ for agriculture and coordinate marketing activities.
  • Collection:  most respondents were happy with the way that levies were calculated and collected.  There was a view that those further up the supply chain should also contribute however.  The Government response suggests that there is an opportunity to think from ‘first principles’ about how levies are calculated.  

Overall, the views of the levy board were mixed.  43% of respondents had a positive view of AHDB, whilst 36% were negative and 20% selected ‘neither positive nor negative’.  Again, those in the dairy and potato sectors were more negative overall about the AHDB.

The review was a long-time in preparation, but has not produced a radical shake-up of the levy board.  In many ways, the AHDB has been asked to go away and come up with a plan to address some of the issues highlighted by the survey.  The biggest change is the proposal for a five-yearly vote.   Whilst it must be remembered that it is levy-payers’ money, there is not necessarily the wisdom-of-crowds when it comes to how to spend it.  Farmers (as a collective) seem to prefer certain activities (for example, generic advertising of their produce) whilst not liking other activities (business management improvement) that is often more effective.