Category: Policy & Business

Import Controls to be Introduced

The Government has recently (10th February) confirmed that it plans to introduce import controls on EU goods at the border after the Transition Period ends on 31st December.  The Chancellor of the Duchy of Lancaster (Michael Gove) confirmed this in a speech to the Border Delivery Group and was positioned as part of the UK’s commitment to leave the Single Market and the Customs Union in order to take back control of its borders and strike trade deals with the rest of the world.

This means that traders of agricultural produce between the EU and GB will have to submit customs declarations and be liable for regulatory checks (e.g. sanitary and phyto-sanitary controls).  Mr Gove stated that it was important that UK exports and imports are treated equally (the EU has already stated that it will impose checks on UK products entering Europe).  Earlier in the Brexit process, it had been suggested that the UK could unilaterally lower its requirements to ease trade flows.  This is not now going to happen. 

The imposition of border controls will create challenges for Dover port especially, given its volume of trade with Calais.  This would be more manageable if the UK’s standards were aligned with the EU’s.  However, the UK has expressed its intention to reserve its right to diverge which will mean an increase in the amount of regulatory checks required.  As we’ve mentioned previously, the current Transition Period appears to be inadequate for ports and businesses to adjust.

Notably, Northern Ireland (NI) was not mentioned in the speech.  It is trade between GB and NI that the greatest challenges will arise.  As a result of the Withdrawal Agreement NI, as a constituent part of the UK, remains within the UK customs territory; however, it will apply EU customs and regulatory controls.  This means some friction will be created between imports coming into NI from GB, particularly where there is a risk that such products could end up in the EU Single Market (e.g. Republic of Ireland).  Furthermore, although that UK has committed to providing ‘unfettered access’ to the GB market for NI goods, many believe that some form of regulatory controls will also be required for this trade.  This creates the potential for substantial upheaval to GB-NI trade, particularly for companies (e.g. retailers) which bring in a substantial amount of mixed goods loads on a daily basis.  Theoretically, if a load contains lasagnes, pizzas (meat-based and vegetarian) as well as dairy products, then several Export Health Certificates would be required for each load.  This would add a substantial amount of costs and trade would quickly diminish.

Separately, the HMRC has announced that it has extended its deadline for businesses to apply for customs support funding to 3 January 2021.  There is £26 million available in total, which seems relatively small given the scale of the challenge at-hand, but £18.5 million has already been applied for.  So businesses need to act now if they wish to avail of the remaining £7.5 million.  Notably, this funding is only available for GB-EU traders and not NI-GB traders, who are arguably in the greatest need for support.  Further information is available via:

https://www.gov.uk/guidance/grants-for-businesses-that-complete-customs-declarations?utm_source=905b7fb9-f378-41cb-88cc-59b2769ced26&utm_medium=email&utm_campaign=govuk-notifications&utm_content=daily 

Eustice Gets Top Job

George Eustice has been promoted to Secretary of State for Environment, Food and Rural Affairs.  With his new job as Environment Minister, Mr Eustice gets a set at the Cabinet table.  The previous Defra Secretary, Theresa Villiers, was sacked after a little more than six months in post, in the Cabinet reshuffle undertaken by Boris Johnson on the 13th February.

Mr Eustice was previously a junior Minister (Minister of State) in Defra, responsible for agricultural matters.  He comes from a farming background and knows the sector well.  It is also positive that there is continuity in policy-making and that the new Minister will not have to spend time getting up-to-speed with matters in the Department.  For example, this should mean that the publication of the expected Policy Statement on farm support should not be delayed.  However, the promotion of Mr Eustice fits in with a wider theme in the reshuffle; in that the loyalty of Ministers to No.10 seems more important than the actual skills a Minister may possess.  Those that have dealt with him in his time as Farm Minister have not been universally complimentary about Mr Eustice’s grasp of the issues. 

At the time of writing, Mr Eustice’s old Minister of State position was unfilled.  Lords Goldsmith and Gardiner remain in place as does Rebecca Pow.

Countryside Stewardship

The window for Countryside Stewardship applications opened on 11th February, for agreements which will commence on 1st January 2021.  This covers Higher Tier, Mid Tier, Hedgerows & Boundaries Grants and the Wildlife Offers;

Deadline for requesting application packs:

  • Higher Tier – 31st March 2020
  • Mid Tier and Wildlife Offers via paper applications – 31st May 2020
  • Mid Tier online applications – 30th June 2020
  • Wildlife Offers online – a request for an application pack is not required
  • Hedgerows & Boundaries Grant – a request for an application pack is not required

Deadline for submissions:

  • Higher Tier – 1st May 2020
  • Hedgerows & Boundaries Grant – 1st May 2020
  • Mid Tier – 31st July 2020
  • Wildlife Offers – 31st July 2020

Further information and the new manuals are available on the GOV.UK website at https://www.gov.uk/government/collections/countryside-stewardship-get-paid-for-environmental-land-management

Agricultural Tariffs

The Government is consulting on what tariffs to impose once the Brexit Transition Period ends on the 31st December.  This is key for UK farming, as it sets the level of protection the industry has from low-cost agricultural imports from the rest of the world.  For the past 40 years, UK farming has benefited from the EU Common External Tariff (CET), but after Brexit, the Government has to implement its own trade policy.

The consultation can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/863880/Approach_to_MFN_Tariff_Policy.pdf.  It states ‘The consultation will close on 5th March 2020 and an announcement on the UK’s new Global Tariff schedule will follow shortly afterwards’.  This seems a little odd, as it would make more sense to us to see how the trade talks with the EU were going first before committing to specific tariff levels. 

The consultation explicitly states that the ‘No Deal’ Tariffs published last year  (see https://abcbooks.co.uk/post-brexit-tariffs-plans/) are no longer relevant.  This might be a relief to the industry as this saw most import tariffs lowered or set to zero (i.e. a ‘cheap food’ policy).  However, nothing stops the Government coming back with something very similar after the current consultation.  The document doesn’t really give any clue on likely levels (other than a desire to simplify tariff rates).

Migration Advisory Committee Report

The Government’s post-Brexit plans for migration policy have become a little clearer, but still present significant problems for the agri-food sector regarding future labour availability.

On 28th January, the Migration Advisory Committee (MAC), which advises the UK Government on labour policy, published its report on a future points-based migration system as well as recommendations on salary thresholds for migrant workers coming to the UK with a job offer.  This study was commissioned by the Government in September 2019.  The UK will be introducing a skills-based migration system for both European Economic Area (EEA) and non-EEA workers when the current Brexit Transition Period ends (i.e. 2021 onwards).

The MAC recommends lowering the salary threshold for experienced skilled workers (currently categorised as ‘Tier 2 General’) to £25,600.  This would remain an employer-sponsored route (i.e. migrants would have to have a job offer).  The category would be expanded to include ‘medium’ skilled occupations.  The new threshold is significantly lower than its heavily-criticised previous recommendation of £30,000 which would have precluded large swathes of jobs in the agri-food sector. Whilst this is an improvement, many agri-food businesses would still struggle to recruit skilled operatives where annual salaries are often in the £20,000 to £22,000 range.  Furthermore, there are questions as to whether some occupations (e.g. butcher) would be considered as a ‘skilled’ category according to UK Government definitions. 

Notably, the MAC also recommends setting a simplified formula for the salary thresholds of new entrants (i.e. those aged under 26 on application, or overseas students studying in the UK) to £17,920; a 30% reduction on the experienced rate.  This should help agri-food companies in recruiting some additional personnel, but would not be a long-term solution for manual food processing positions.

The report is lukewarm on adopting a Points-Based System (PBS), claiming that when it was adopted in the UK in the past for high skilled workers, it did not work well.  Frequently, immigrants would end up working in significantly lower-skilled positions than what was envisaged upon entry.  If a PBS were to be adopted in the future, the MAC would recommend a cap on the numbers participating.  It also advises that the Government should consider characteristics such as age, qualifications (which need to be rigorously assessed), having studied in the UK, language skills and the UK’s priority skills areas.

It also mentioned that the current UK system is rigid and that there should be flexible paths to long-term settlement.  This could include a PBS and occupations on the Shortage Occupation List in the past six years should continue to be exempt from thresholds.  As we have mentioned previously, agri-food businesses need to get key job functions onto the Shortage Occupation Lists, particularly given recent difficulties in recruiting employees.  Whilst the recent announcement by the Conservatives of an expansion of the Seasonal Agricultural Workers’ scheme pilot from 2,500 to 10,000 would be of some help, these numbers still fall well short of what is needed in the UK agri-food sector. 

The full MAC report is accessible via: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/860669/PBS_and_Salary_Thresholds_Report_MAC.pdf 

 

Business Resilience Grant

The Scottish Farm Advisory Service (FAS) has announced the business resilience planning specialist advice grant will be extended indefinitely.  The pilot scheme allows farmers and crofters to apply for up to £1,000 through the FAS to appoint an expert advisor to undertake a thorough review of the business and develop a ‘resilience action plan’ to address the challenges.  The scheme was due to expire at the end of March, but following positive feedback and acknowledgment that farming businesses are under pressure from factors such as Brexit, climate change and market volatility, the Scottish Government has decided to extend this support.

 

Natural Capital

Defra has launched a new online tool to help calculate the value of ‘natural capital’.  The ‘Enabling a Natural Capital Approach’ (ENCA) online resource is available at https://www.gov.uk/guidance/enabling-a-natural-capital-approach-enca.  It is not specifically aimed at farmers, but is intended to help policy makers, businesses, landowners and public sector organisations make better planning decisions to protect and enhance the natural capital.

Environment Bill

The landmark Environment Bill has been introduced to Parliament.  As reported in our article in October (see https://abcbooks.co.uk/queens-speech-and-ag-bill/) the new Bill will enshrine environmental principles in UK law for the first time and introduce measures to improve air and water quality and restore habitats.  In addition, the enhanced Bill will tackle plastic pollution, including the creation of new powers to stop the exports of polluting plastic waste to developing countries.  There is also a new commitment to review the biggest developments in environmental legislation from around the world every other year, the findings of which will be considered when developing the UK’s environmental plans.

The Bill will see the creation of a new independent Office for Environmental Protection.  Part of its remit will be to hold the Government to account over its commitment to reach net zero emissions by 2050.  The Office will also have powers to scrutinise all environmental policy and law, investigate complaints, and take enforcement action against public authorities if necessary, to ensure environmental standards are upheld.

England Scheme Update

Countryside Stewardship 2021

The Countryside Stewardship (England) Regulations 2020 have been published.  This will allow applications to be made to the scheme under our own domestic legislation once we have left the EU on 31st January 2020.  Agreements which will commence on 1st January 2021 will be the first under this new legislation, which can be found at http://www.legislation.gov.uk/uksi/2020/41/contents/made .  The regulations basically roll over the existing scheme rules, into domestic legislation to allow the scheme to continue.  The application window is expected to open in February.  With the new Environmental Land Management (ELM) scheme not expected to be open for a few years yet, and the BPS transition period starting in 2021, land managers may want to look at what the Countryside Stewardship can offer.

BPS, CS and ES Payment Update

Latest figures from the RPA show almost 97% of eligible farmers had received their 2019 BPS payment by 20th January (95.7% by end of December).  In total £1.69 billion has been made.  In addition, approximately £109 million has been paid out to ES and CS agreement holders, more than double the amount made at the same time last year.  ES and CS payments have moved to just one single payment this year, with all agreement holders expected to have received their money by the end of the payment window in June 2020.  The 2020 BPS application and the claim window for ES and CS will all open in March.

Countryside Productivity Small Grants (CPSG)

Claims for Round 2 of the CPSG can be submitted now, the deadline for submissions is 31st May 2020.  Claimants are reminded to make sure claims include all the information and evidence required as detailed in the CPSG Round 2 Handbook otherwise payments will be delayed.

Welsh Scheme Update

Glastir Entry & Advanced Support Scheme

The Glastir Entry and Advanced Support Scheme, subject to certain eligibility criteria, is available to those whose claim will not be fully processed by the opening of the payment window (31st January). The scheme will pay up to 50% of the anticipated Glastir Entry & Advanced claim value (excluding capital works).  The scheme is only available to those who submitted a Glastir Entry & Advanced claim via their SAF 2019.  This is an opt-in scheme which means claimants need to apply by 14th February 2020 if they wish to receive a support payment.  Payments under the scheme are expected to start during the week commencing 24th February.

BPS Entitlement Transfer

The application period to transfer or lease entitlements is now open.  The deadline for applications is 30th April 2020 for entitlements to be in place for the 2020 BPS claim.

Farm Business Grant

The 7th Expression of Interest for the Farm Business Grant will open on 2nd March.  Applications need to be submitted by 10th April.  Farmers can choose from about 80 items which have been deemed to improve the competitiveness of their business and also make it more environmentally friendly.  Grants of between £3,000 and £12,000 are available.