BPS or June Survey Areas, which are Correct?

Since the revision of the CAP in 2015, when Greening was introduced, the claim form for direct payments has become considerably more complicated. The necessity to record each crop, which was simply not a requirement of the Single Payment scheme is present with the Basic Payment because of the 3-crop rule.

For the second year running, Defra has published a comparison table comparing the June census crop area figures for England against the claimed BPS crop areas. A noticeable difference between the 2 sets of data has emerged, specifically in wheat, with an almost 7% difference in 2018 (BPS lower). This is equivalent to 108,000 hectares which at average yields is over 850,000 tonnes of wheat potentially  missing, certainly enough to have a considerable impact on the market, especially as it would shift the UK’s balance from that of a net exporter to net importer. The market reacted with an assumption the survey was incorrect which may not be the case.

Examination of the other crops suggests the differences between the two data sources have increased this year compared with the previous 3 years. As the tables below show, considerable differences  of the magnitude experienced in wheat (as a percentage of each other) are also seen in oats, beans and fallow land.

There were no differences to the forms this year, so whilst it is possible that claimants entered field edges and environmental scheme information differently, or entire field versus cropped field areas, one would expect the differences to be consistent year to year. It is barely possible that the different date of each form made any difference (even with the extreme weather conditions) as crops would have been planted for both dates; 15 May and 1 June. Defra is examining the discrepancy and we will report of the outcome when we know it.

Arla’s 13th Payment

After previously announcing that the entire 2018 net profits would be paid out to its farmers (see September’s article https://abcbooks.co.uk/?s=Arla), Arla has now confirmed this 13th payment will be 2.3 Euro cents/kg; the highest since 2012.  The amount paid to UK Arla members is expected to be announced on 8th March.  The conversion from Euro cents/kg paid in Denmark to ppl in the UK is fairly complicated, including an adjustment made for lower milk constituents in the UK, but the payment is expected to be about 1.55ppl; worth £31,000 for a 2m litre producer.  The payment this year is of particular interest to UK producers because, as most have now completed their capital payments into the business, they will actually receive the cash.

Agriculture Bill Progress

The Agriculture Bill received its second reading in the House of Commons on the 10th October.  MPs voted to approve the Bill by 286 to 227.  During the reading there was cross party support for the move away from direct payments to paying land managers for providing public goods.  MPs also argued that the Bill should recognise the importance of home grown food.  In addition Michael Gove confirmed that the Barnett formula would not be used when setting post Brexit agricultural payments for Scotland, Wales and Northern Ireland.

Following this reading, the Bill progresses into the Committee stage where detailed amendments will be tabled and voted on.  We will report if any of these look likely to materially change the scope of the legislation.  The Bill will also have to pass through the House of Lords.  The Government is hoping it will receive Royal Assent and become law early in 2019.  To accompany the Second reading the House of Commons Library produced a briefing paper on the Bill.  Although not providing anything new, this does provide a good summary of the proposed policy.  It can be found at – http://researchbriefings.files.parliament.uk/documents/CBP-8405/CBP-8405.pdf

 

 

 

EU Withdrawal Bill

On 16th May, the House of Lords made its final amendments to the EU Withdrawal Bill.  During its passage in the Lords, the Government suffered 14 defeats during the report stage and one defeat at the third reading.  Peers also accepted 170 amendments that were proposed by the Government.

The amendments include;

  • Customs Union: would prevent the European Communities Act 1972 from being repealed until the Government has made a statement to Parliament outlining the steps it has taken to negotiate the UK’s participation in a Customs Union with the EU. This would need to happen by 31st October 2018. The Government can of course outline the steps it has taken but that does not mean that it will force the UK into participating in a Customs Union.
  • Challenges to retained EU law: if passed, it would remove the section of the Bill which enabled Ministers to use secondary legislation to establish when individuals could challenge the validity of EU law after exit day. Another proposed amendment would permit challenges to domestic law if it failed to comply with the general principles of EU law.
  • Meaningful vote: Parliament must approve the Withdrawal Agreement and associated transitional measures in an Act of Parliament.  If possible, this must be done before the European Parliament has debated and voted on the Agreement.  It also includes specific deadlines for the Government for agreeing, and legislating for, the Withdrawal Agreement with the EU and that it ‘must follow any direction’ approved by the Commons.  This would give the Commons the power to decide the next steps for the Government.
  • Future negotiations: would prevent secondary legislation to implement the Withdrawal Agreement until after Parliament has approved a mandate for negotiations about the future UK-EU relationship.
  • Northern Ireland: preserves North-South co-operation after Brexit and prevents the establishment of new border arrangements which did not exist before exit day, unless they would be agreed between the UK Government and the Government of Ireland.
  • Continuing relationship with the EU: to ensure that the UK could continue to replicate EU law, and to participate in EU agencies, after exit day. The former is seen as critical towards facilitating frictionless trade with the EU in agri-food products post-Brexit.
  • European Economic Area (EEA): if passed, the amendment would force the Government to make continued participation in the EEA a negotiating objective. Again, just because something is an objective does not necessarily mean that it will come to fruition and is seen by many as an attempt to give the Commons the option of keeping the UK in the EEA (Single Market).
  • Environmental principles: this would require the DEFRA Secretary to take steps to maintain the EU’s environmental principles in UK law post-Brexit and lists the specific principles which need to be given effect in domestic law. This amendment was passed as Peers argued that the ‘Environmental Principles and Governance after EU Exit’ published in a recent consultation document by DEFRA were inadequate, as it would subordinate the environment to housing and economic growth. This consultation document only makes limited reference to agriculture, primarily in the context of adopting sustainable land management systems. The document is available via: https://consult.defra.gov.uk/eu/environmental-principles-and-governance/
  • Devolution: proposed by the Government, this would give UK ministers the power to put temporary restrictions on the devolved administrations’ ability to legislate in certain devolved policy areas returning from the EU. The Government argues that these temporary restrictions are needed to prevent divergence across the UK as new frameworks are established. Whilst agreement has been reached with the Welsh Government on this, the Scottish Government is opposed. This amendment would potentially have significant implications for agricultural policy which is currently administered by the devolved regions. Greater control at the UK level would limit the extent to which agricultural policies in the four UK nations would diverge post-Brexit. It is also important in the context of food and animal health standards as any internal divergence in the UK would create headaches for the implementation of sanitary and phytosanitary standards for instance.

After the Bill has passed through the Lords, the Prime Minister appointed 10 more Conservative peers in an attempt to bolster her numbers. This will not make much difference to the Withdrawal Bill which will now be sent back to the Commons for consideration of the proposed amendments.  It is unclear exactly what the timeline will be as it had been hoped that the Bill could receive Royal Assent before the summer recess.  That target now seems unlikely.  It remains to be seen how many of the Lords’ proposed amendments will get acceptance from the Commons.  However, the stakes have been raised, and the greater the number of amendments, the greater the probability that the Government will lose on one or more of them.

Scottish Income Tax Rates

Rates of Income Tax in Scotland and the rest of the UK are set to diverge further following the Scottish Government’s Budget on the 14th December.  The proposals include a new Starter Rate and Intermediate Rate, as well as an increase on the Higher and Top Rates of Income Tax.  The proposals are designed to slightly reduce the tax burden on lower earners whilst taking more from those on higher incomes.  Overall it raises an estimated £160m extra.

INCOME TAX BANDS AND RATES - 2018/19
ScotlandRest of UK
BandsIncomeTax RateIncomeTax Rate
Starter Rate£11,850 - £13,85019%£11,850 - £46,35020%
Basic Rate£13,850 - £24,00020%
Intermediate Rate£24,000 - £44,27321%
Higher Rate£44,273 - £150,000*41%£46,350 - £150,000*40%
Top RateOver £150,000*46%Over £150,000*45%
Source: ScotGov, Treasury * Personal Allowance reduced by £1 for every £2 earned above £100,000