Category: Policy & Business

England

Latest figures from the RPA show 92.4% of claimants in England received their 2019 BPS by Friday 13th December.  According to the agency, 59,600 farmers received payments to a total of £1.2bn on the first day of the payment window.  Claimants are advised to check their payment carefully to make sure it is correct.  If payment is found to be incorrect a ‘Payment Query Form’ should be submitted to the RPA, this can be found at https://www.gov.uk/government/publications/basic-payment-scheme-payment-query-form.

It is usually not easy to check a payment until a Claim Statement has been received, and these arrive some time after payment.   It is reported that some of the first 2019 Claim Statements that have been sent are incorrect – the stated Financial Discipline rate and the payment rates were wrong (although the total payment was correct).  To avoid any further confusion, the RPA has halted the delivery of Claim Statements whilst this issue is resolved.

The RPA is also writing to some claimants regarding their entitlements.  It appears the one-off entitlement reconciliation in 2015 was not properly executed for some businesses and the RPA has now been looking into this.  Readers may recall that, when the BPS was introduced, for the first year (2015) excess entitlements were confiscated if these exceeded the area being claimed.   Letters are now being sent to those who did not have their excess entitlements properly removed in 2015 and to those who may have bought or leased entitlements from such a business.  It is not exactly clear what will happen, particularly to those who have bought or leased in entitlements which should have been confiscated.  The RPA has said 2019 payments have been adjusted accordingly but ‘as you have transferred or leased the affected entitlements into your business, without knowing their past history, we will aim to make sure that you are not unfairly disadvantaged’.  The extent of the problem is not yet known but potentially could be a difficulty ahead of 2020 claims.

The RPA has also announced the commencement of 2019 Countryside Stewardship (CS) and Environmental Stewardship (ES) payments.  To date £77.8m ES and £4.3m CS payments have been made.  Readers will recall these are being made in one full payment this year, between September and June 2020.  It is worth noting that, with the new single payments starting around the same time as BPS payments, there may be a view that the payment timetable will be similar – i.e. most paid by the end of December and almost everyone paid by the end of Jan.  However, Stewardship payments will run on a different timetable.  It is likely to be well into the New Year before many businesses are paid, particularly for CS payments.  

Wales

The Welsh Government has reported over 93.5% of farm businesses received either their full 2019 BPS payment or a BPS Support Scheme payment during the first week of the payment window.  Readers will recall the BPS Support Scheme was put in place so that those who didn’t receive payment on the first day would receive up to 90% of their estimated payment.  The Welsh government has said it has been unable to deliver the same level of BPS day-one payments as achieved in the past as preparing for the possibility of a No-Deal Brexit has been top priority this year.  Therefore, the BPS Support Scheme has been put in place to help businesses manage cash flows, whilst their payment is being processed.

Scottish upland farmers will soon be receiving an advance on their 2019 Less Favoured Area Support Scheme (LFASS) payments.  The Scottish Government is operating a national loan scheme – it is currently writing to farmers and crofters asking if they want to apply for a 95% advance on their payments.  Replies need to be made by the 17th January and then payments will commence shortly thereafter.  Final top-up payments will then be made in the spring.  It is expected that £50m will be paid via the scheme.  Although recipients will welcome the timely payment, 2019 LFASS amounts will only be at 80% of the 2018 level due to a change in EU rules. 

The Scottish Agricultural Wages Board has recommended that farmworkers wages continue to track the National Living Wage (NLW) from the 1st April 2020.  Nationally, the NLW only applies to those aged 25 and above, the under the SAWB it applies to all workers irrespective of age and duties apart from Apprentices.  At present the rate is £8.21 per hour.  The UK Government has yet to announce what the National Living Wage will be from 1 April 2020 but estimates suggest that it might be around £8.70 – thus a 6% rise.  There is also an aspiration to raise it to £9.00 per hour.  The Welsh Agricultural Wages Board consulted on its proposed rates earlier in the autumn.  It proposed that the minimum rates of pay for agricultural workers increases by 1.8% across all pay bands.  However, it is bound by the national minimum wage legislation so rates at the lower grades may well rise higher to comply with the NLW (or the Minimum Wage for those under 25) when they are set. 

The 2020 edition of the ‘Guide to Cross Compliance in England’ has been published.  This can be found at – https://www.gov.uk/guidance/guide-to-cross-compliance-in-england-2020.  Those that have last year’s edition can simply use that however because, as the 2020 version states ‘there are no confirmed policy changes to the cross compliance rules in 2020’.

With the Withdrawal Agreement now looking certain to pass following the General Election result, the focus is turning to the next stage of the Brexit process – negotiating a long-term trade deal with the EU.  Talks are expected to formally commence at the start of February, although the two sides are likely to have had informal discussions before then.

The key issue is what can be achieved in less than a year.  The EU-Canada Free Trade Deal (CETA), which is often cited as a model, took 7 years to negotiate.  The fact that the UK and EU start from the same place in terms of rules may help, but it still seems a ‘challenging’ timetable.  The Transition Period can be extended by one or two years, but this decision has to be made by the 1st July 2020 – i.e. it cannot be left to the 11th hour, if a deal has not been done.  Perhaps more importantly, Boris Johnson has stated that he does not wish to see the Transition extended.  Whilst he claimed this during the Election campaign, there was a school of thought that, given the scale of the Tory majority, the hardline Brexiteers within the Conservative Party would be less influential, and this pledge could be quietly dropped.  The Prime Minister has a bit of form in this area – see ‘dead in a ditch’.  However, it seems that a clause may be inserted into the Withdrawal Bill making it illegal to extend the Transition.  Whilst this could always be undone with another Act, it does show a real intent to spend as short a time as possible in the Transition.

The truncated timetable raises some uncomfortable questions.  If an agreement on the UK-EU Future Relationship cannot be reached by the end of 2020, then the UK would simply trade with the EU on WTO terms after the 31st December – thus a version of ‘No Deal’ re-emerges.  Even if a Free-Trade Agreement (FTA) is reached, it seems highly unlikely that the specific arrangements required to operationalise the Northern Ireland / Ireland Protocol in terms of Customs and SPS checks would be in place by that point.  Any attempt to rush it through opens up the strong possibility of it being a botched job.  Finally, to meet the tight timetable, any FTA might be far less ambitious than has been suggested.

A ‘deep and comprehensive’ FTA has been the plan – ‘Canada plus’ in the jargon, going beyond the provisions of CETA.  The EU can ratify an agreement that simply covers trade in goods, but any ‘mixed’ agreement that covers trade in services (plus other issues such as intellectual property rights, procurement, employment rights etc.) has to be signed-off by Member States.  This is how the CETA agreement was held up by the Wallonian Parliament.  Both to make the scope of the talks manageable in the timescale, and to have a chance of the agreement being legal before 31st December, a very cut-down ‘Canada minus’ deal might be the only possibility.  A more comprehensive agreement could be returned to later.  In terms of agriculture, an agreement that covered goods only would be better than nothing. Tariffs would be avoided altogether if the agreement was not subject to any quota limitations. However, quota limitations are frequently features of FTAs, even comprehensive ones. For instance, CETA has quota limitations on tariff-free beef imports from Canada. Similar restrictions would hinder UK-EU trade. 

The personnel involved in the talks will be interesting.  From the EU side, the new Trade Commissioner is Phil Hogan who will know the agricultural sector very well having served previously as Agriculture Commissioner.  At times, he has been scathing in his criticism of the UK position on Brexit.  A key decision that Boris Johnson will need to take in the formation of his Cabinet is who leads on the Brexit negotiations? Will the current DEXEU Secretary, Stephen Barclay, continue to lead or will there be a greater role for Michael Gove, who is rumoured to be set for a much greater role on trade?  Given his previous Defra role, there are arguably advantages to Michael Gove having a greater influence on the future UK-EU trading relationship.  We will keep readers informed as events progress.

Readers may recall that 2019 Countryside Stewardship (CS) and Environmental Stewardship (ES) scheme payments are to be made in one single payment.  Previously there was a 75% Advance payment and a 25% Final payment.  The single payments for both CS and ES are due to commence from 2nd December and be completed by 30th June (the same payment window as the BPS).  However, there has not, as yet, been any indication from the RPA as to how many businesses it expects to pay in December, or any payment targets at all.  All previous annual revenue claims must have been paid before a 2019 payment can be made.  The RPA continues to process historic (2016-2018) revenue claims; a number of businesses received Treasury funded bridging payments over the summer.  These need to be processed into full payments before the 2019 year can be paid.   This process is hoped to be completed by March 2020.

Defra has announced the dates for the first online auction under the Woodland Carbon Guarantee (WCaG) scheme.  Following the launch of the WCaG scheme (see last month’s article https://abcbooks.co.uk/50m-incentive-to-plant-trees/) the first auction, to agree the price at which the Woodland Carbon Units (WCUs) will be sold to government, will take place from midday on 20th January until midday on 31st January 2020.  To participate, landowners must have already registered their woodland project with the Woodland Carbon Code (WCC) and made a WCaG application to the Forestry Commission by 10th January.

A new European Commission starts work on the 1st December.  The Commission is often called the EU’s Civil Service, but it is rather more than that, as it also sets policy and proposes legislation for the Union.  Each Commission has a five-year term and is headed by 28 Commissioners (one for each Member State).  In fact this time there will only be 27, as the UK Government declined to nominate a representative, despite still being in the EU.  The Commission was due to start its term on the 1st November, but was delayed as some of the proposed members were not approved during the confirmation process.  The new head of the Commission is the former German Defence Minister, Ursula von der Leyen.  One of her first tasks will be to handle the UK’s exit, but there are other pressing issues such as European competitiveness, climate change, and the Euro.  The post of Agriculture Commissioner goes to Janusz Wojciechowski from Poland.  The previous Agriculture head, Phil Hogan (Ireland) moves to the high-profile job of Trade Commissioner.

The Welsh Government has confirmed the Basic Payment Scheme (BPS) will continue in Wales in 2021, as long as sufficient funds are made available by the UK government.  The Rural Affairs Minister, Lesley Griffiths has said the decision to continue the scheme for a further year has been made due to ongoing delays in the UK’s departure from the EU.  According to the Minister, plans to transition to the new Land Management Programme have had to be paused and the earliest any move to the new targeted system of farm support will commence will be 2022.  The decision by Wales to continue with the BPS for a further year will put more pressure on Defra/RPA to have a similar delay in England.  The ‘Agricultural Transition’ is due to commence in 2021; there have already been calls from the NFU for a postponement to 2022.

The Welsh Rural Affairs Minister also urged producers to apply for the 2019 BPS Support scheme which closes on 29th November.  If claimants do not receive their full 2019 BPS payment on day 1 (December 2nd), but have applied to the 2019 BPS Support scheme, they will receive up to 90% of their claim value from 9th December.  It appears an application to the scheme may be more important this year than normal.  In the past nearly all applicants have been paid on day 1, but the Minister has said, preparing Wales’ farmers for Brexit has been the top priority in 2019 and therefore the Government will not be able to deliver the same level of full BPS payments on day 1 this year.