Select Committee on Environment, Food and Rural Affairs Seventh Report


2  The Government's announcement

5. On 12 February - the day after our final evidence session - the Government announced its decision about the basis on which decoupled payments would be made. In broad terms the Government opted for a 'dynamic hybrid': a Single Payment initially based on historical payment levels, but which over time would move to an area basis. The detail of the announcement is set out below.
Extract from Government announcement about the Single Payment Scheme, 12 February 2004[7]

Under the Single Payment Scheme, farmers will be allocated "entitlements" of a particular value. They can then make an annual claim for payment against each entitlement per hectare to the extent that they are farming or at least meeting the cross compliance conditions in respect of a hectare of eligible land.

We will take advantage of the possibility of implementing the new scheme on a regional basis in the UK, defining separate regions for Scotland, Wales, NI, English Severely Disadvantaged Area and England outside the SDA.

In England we will adopt a flat rate system of payment. This means that "entitlements" will be allocated on the basis of the number of eligible hectares (excluding permanent crops and forestry) a farmer has at his disposal in 2005.

The value of each entitlement in each region will eventually be the same (with different flat rates applying in each of the two regions).

The flat rate will be phased in over a transitional period, ending in 2012.

During this transition, the value of individual entitlements will initially be based to a large extent on individual historic receipts from existing schemes. This element will reduce as the flat rate element increases. The flat rate element will be 10% in 2005, 15% in 2006, 30% in 2007, 45% in 2008, 60% in 2009, 75% in 2010, 90% in 2011 and 100% in 2012.

By choosing the flat rate approach, set aside obligations are spread across all arable land so, whereas the total area of set aside will be the same as under the previous scheme (assuming a 10% rate), an individual's percentage will be lower. For some this may be a new requirement.

It will still be open to claimants to receive additional entitlements or increase the value of ones already allocated to them by invoking hardship procedures where the reference period (2000-2002) for determining historic receipts was not representative and, in defined cases, by applying to a national reserve.

All who are in receipt of the new payment will have to abide by new cross compliance conditions relating to the management of the land and a range of existing EU requirements on the environment, public and plant health, animal health and welfare standards. We plan to consult soon on these and a range of other detailed implementation issues.


The dairy premium and additional payment will be included in the new scheme from 2005.

6. Much of the written evidence we had received rehearsed the arguments in favour of various options for the Single Payment Scheme, and against others. Our oral evidence had been similarly dominated by discussion of the merits or otherwise of the various bases on which decoupled payments should be made. We do not, however, in this report seek to second-guess the Government's decision. Indeed it is worth noting that, in spite of the strong representations received by Government and by us in the run-up to the decision, once made it seems to have been largely accepted by most of the main stakeholders as an acceptable compromise.

7. We have decided that we should publish the evidence received together with this report, to help inform discussion of the Government's approach. This evidence reflects the ways in which the views of key stakeholders changed over the period of the Government's consultation and then our inquiry. The remainder of our report is devoted to questions raised during our inquiry about certain practical consequences of the decision made about the Single Payment Scheme. These questions are pertinent to decisions the Government must now make about the way its Single Payment Scheme will in practice be implemented in England and in the United Kingdom.[8]


7   From a summary of the announcement, on www.defra.gov.uk Back

8   See below for a discussion of the implementation of CAP reform in Wales, Scotland and Northern Ireland. Back


 
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