Government response
Introduction
The Government welcomes the Environment,
Food and Rural Affairs Committee's report on the implementation
of the Common Agricultural Policy in England 2014-2020. We are
pleased that the Committee found much to like in the Government's
proposals for implementation which we consulted on in autumn 2013.
We issued our response to the consultation on 19 December 2013,
and were able to take into account the views of the Committee
alongside the consultation responses.
The consultation response set out how
we will distribute £15 billion of funds over the next seven
years. The Committee highlighted the challenge of implementing
the new CAP in a short space of time. Our decisions mean we will
keep implementation as simple as possible and support a resilient
and competitive farming sector. For direct payments we will apply
the minimum reduction on basic payments over €150,000 and
keep rules on the new active farmer test to a minimum. The new
CAP greening requirements will be implemented through the basic
measures set out in the EU Regulation. By equalising the upland
and lowland direct payment rates we will help upland farmers.
Our decision to transfer 12% from pillar
1 direct payments to pillar 2 rural development means that the
new CAP will improve the environment, grow the rural economy and
create jobs. We will invest at least £3.5 billion in rural
development schemes, of which over £3 billion will be spent
on improving the environment. A review will be held in 2016
into the demand for agri-environment schemes and the competitiveness
of English agriculture. This is with the intention of moving
to a 15% transfer rate from pillar 1 direct payments to support
the final two years of the pillar 2 rural development programme.
We will respond on the outstanding issues
from the consultation in February, covering market management
measures, the Young Farmers Scheme, and further detail on the
Rural Development Programme and the greening Ecological Focus
Areas. Throughout 2014 we will continue discussions with stakeholders
on remaining issues to ensure we implement the CAP in the most
straightforward way possible to minimise burdens on farmers and
reduce risks of disallowance.
Direct Payments
Regional distribution
1. We agree with the Government that
the existing regional structure should be retained. (Paragraph
17)
The Government is pleased that the Committee
agreed with this decision. We decided that we should not create
any new regions nor amend the existing regional boundaries, to
avoid unnecessary complexity in the transition to the new direct
payments system.
2. Payment rates for the current
lowland and SDA non-moorland region should be aligned. There remains
merit in maintaining the moorland region at a separate lower rate
but we believe it should receive the same cash uplift as those
farming in the SDA given its high environmental value and the
impact of the end of the Uplands Entry Level Scheme. (Paragraph
21)
The Government welcomes the Committee's
support for alignment between the lowland and Severely Disadvantaged
Areas (SDA) non-moorland payment rates, and has now announced
its intention to align the rates, and to consider merger of the
lowland and SDA non-moorland regions. The Government shares the
Committee's support for an uplift in the moorland region rate.
We will carry out further analysis and consultation with stakeholders
before a decision is reached in the first half of 2014 on the
scale of uplift.
3. The Government must ensure that
the New Environmental Land Management Scheme is open to all upland
farmers. It would not be acceptable for those farming in the most
challenging of environments to be left worse off overall by the
changes introduced under the new CAP. (Paragraph 22)
The uplands have a vital role in providing
valuable ecosystem services (including maintaining the distinctive
uplands landscape) and upland farming will remain a recipient
of targeted funding under the new scheme, both for site specific
(e.g. designated sites) and wider landscape scale activity. Upland
farmers will be able to apply for both elements of the new scheme,
and the capital only grant scheme will also be available.
However, as referred to in recommendation
19, with greater emphasis on targeted agreements delivering meaningful
environmental outcomes it must be recognised that not all upland
farmers currently signed up to Uplands Entry Level Stewardship
will be able to enter into agreements under the new scheme.
The Committee has rightly sought to
ensure that upland farmers are not "left worse off overall"
by CAP reform. As we have explained above, the Government has
announced the rate paid per hectare in the Severely Disadvantaged
Areas non-moorland region will be set at the same level as the
lowlands, which will end the current differential payment which
favours lowland farms. We have also explained that further analysis
and consultation is being carried out on the scale of the uplift
in the payment rate merited in the moorland region.
REDUCTION IN DIRECT PAYMENTS
4. We agree with the Secretary of
State that setting a ceiling at a certain level may discourage
businesses from expanding and may simply lead to those affected
finding a way around it. (Paragraph 25)
The Government is pleased that the Committee
agreed with our proposal not to implement a cap on receipts of
direct payments. In line with our position in the negotiations,
we are aiming to minimise distorting influences on the decisions
that farmers take about the management of their farms, so as to
avoid adversely affecting the competitiveness of our farming industry.
Adopting the smallest possible reduction is consistent with this
objective. It also diminishes the likelihood of the artificial
restructuring of farms to evade the reduction, and so minimises
the burden for the Rural Payments Agency (RPA) to enforce against
any such evasion. Our decision is therefore to apply the minimum
level of reduction possible.
5. We recommend that the Government
increase the rate of reduction for those in receipt of basic payments
over €300,000 in order to boost the funding available for
rural development. We believe a higher level would not necessarily
impact unduly on the largest claimants, nor would it prompt them
to seek to carve up their holdings. It would however provide extra
funding to help deliver the Government's rural development policy
objectives. We believe our proposals to be administratively simple
and agree with the Government that reducing payments above a certain
level is preferable to the redistributive option. (Paragraph 27)
Consistent with the reasons given in
the reply to the previous recommendation, we intend to apply the
minimum level of reduction possible, which is 5% on the part of
the direct payment (excluding greening) exceeding €150,000.
The Government is pleased the Committee
agrees we should not implement the redistributive option. Given
that we were required to reduce payments to the largest claimants
either through this mechanism or reductions, our conclusion is
that we should achieve this through reductions rather than redistribution,
and to recycle the funds raised into the Rural Development Programme.
ACTIVE FARMER TEST
6. The Government should review annually
who receives direct payments and if it is clear that a business
type for which agriculture is not a significant activity receives
financial support, the Government should add it to the negative
list. (Paragraph 29)
The Government retains the option to
extend the negative list through the course of the next CAP term.
However, as the examples cited in the Committee's following recommendation
demonstrate, the addition of new entitles to the list, however
tightly defined, has the potential to inadvertently capture genuine
farmers. Whilst readmission criteria do exist, it is the Government's
position that avoiding, where possible, the readmission process
will help minimise any additional burdens on the farmers and the
RPA alike.
7. A number of organisations raised
concerns with us that the negative list might catch genuinely
active farmers who have responded to the Government's call to
diversify by, for example, providing private water supplies or
renting out real estate to supplement their farm income. The Government
must ensure this does not happen. (Paragraph 30)
The Government is mindful of this risk,
which was also raised by stakeholders prior to the consultation
and subsequently reiterated in many consultation responses. One
of the factors influencing the Government's decision not to extend
the negative list was a desire to minimise the risk posed to diversified
farmers of being inadvertently caught by the negative list. Whilst
there are three possible readmission criteria (based on annual
agricultural revenue level, business objectives or business activity)
the Government is also mindful of the burden that readmission
would place upon farmers and the RPA alike. The Government's attention
is consequently focused upon developing the definitions of the
mandatory negative list entities so that farmers can make informed
decisions about their status as an 'active farmer' prior to applications
under the new Basic Payments Scheme.
The Government is sympathetic to the
Committee's concerns and therefore will take an approach to implementation
that takes account of the needs and circumstances of modern diversified
farming.
8. The Government must use the flexibility
of the active farmer test to ensure that individuals who are not
in occupation of the land or rights of common, who are not taking
the entrepreneurial risk and who are not in day-to-day management
control of land do not receive direct payments. At point of application
claimants should declare that they are the active farmer, and
checking the evidence to support such a declaration should be
incorporated within the normal course of inspections. (Paragraph
31)
The Government cannot agree to this
recommendation. The 'active farmer' test is set out in article
9 of the Direct Payments Regulation. The Regulation is quite
specific about what the test requires, and there is only limited
flexibility to extend the test.
The Regulation already provides elsewhere
(in article 33) that land is only eligible for inclusion in a
claim if it is 'at the farmer's disposal'. In practice, this
means that where there is a tenancy in place, it is only the tenant
who may claim the direct payment. Incorporating a further test
requiring 'day-to-day management control' of land as part of the
'active farmer' test would duplicate that eligibility test which
applies to the land.
The 'active farmer' test bars claimants
from receiving direct payments if they operate certain non-agricultural
activities set out on a negative list (unless they can gain re-admission
by meeting certain criteria to demonstrate they nevertheless have
significant farming interests), and also contains a discretionary
power to exclude claimants whose agricultural activities form
only an insignificant part of their overall economic activities
or whose principal activity or company objectives do not consist
of exercising an agricultural activity. It would not be possible
to include either of the tests suggested by the Committee within
the framework set out in the Regulation.
In addition, even if it were possible
to include a test of 'entrepreneurial risk' it would not be easy
to define in simple terms how compliance would be determined and
demonstrated. There would therefore be extra complexity for both
farmers and the RPA, with resulting extra costs. All potential
claimants likely to receive more than €5,000 in direct payments
would need to demonstrate compliance with the test. The European
Commission's control requirements, which will be set out in implementing
legislation currently being drafted, are unlikely to permit the
Committee's suggestion that a self-declaration would be a sufficient
means of control: it is likely that evidence would have to be
provided if such a requirement were introduced.
9. Commercial factors, not arbitrary
criteria, should drive decisions to cultivate or rear animals.
Care must be taken to ensure that criteria are not set at levels
that would exclude low-intensity farming systems whose activity
make a positive contribution to some of our areas of greatest
environmental value. Furthermore, an over-prescriptive approach
to the minimum activity criteria would only add to the list of
eligibility checks that the RPA will have to undertake (Paragraph
32)
The Government agrees with the Committee
that decisions to cultivate or rear animals should be made on
the basis of commercial factors. The draft EU implementing legislation
for direct payments clarifies that the minimum activity aspect
of the 'active farmer' test shall not apply where farmers are
carrying out 'production, rearing or growing of agricultural products'
on their land naturally kept in a state suitable for grazing or
agriculture. Therefore, in line with the legislation, Defra does
not intend to apply the minimum activity test on land which is
used for genuine low-intensity farming systems. In the case of
naturally kept land where no production is being carried out,
Defra is currently exploring what minimum activities would be
appropriate, and ease of implementation for farmers and the RPA
will be a key consideration in this decision.
10. To help farmers plan for the
future Defra should communicate key decisions as soon as possible.
Defra's early announcement that entitlements will be rolled forward
is a welcome example of this. We appreciate that the details of
the active farmer test have yet to be published by the Commission
but we expect Defra to give those affected as much advance notice
as possible once final decisions on the test have been made.(Paragraph
33)
The Government have sought to give clarity
as soon as possible, and therefore announced some early decisions
at the start of the consultation process, and announced further
decisions before the end of last year. We note that stakeholders
have welcomed this, as has the Committee.
We will continue to make decisions as
soon as possible, both to give certainty to farmers for their
business planning, and to allow the CAP Delivery Programme the
maximum time to design and test business processes. We are also
putting in place a strategy for communication, to ensure that
farmers and others have clear information at the earliest possible
time.
MINIMUM CLAIM SIZE
11. We support the Government's intention
to raise the minimum claim threshold to five hectares, and in
so doing reduce the administrative burden on the Rural Payments
Agency. (Paragraph 34)
The Government welcomes the Committee's
support for a minimum claim size of five hectares. We announced
the decision in the October 2013 consultation on CAP implementation.
Greening
12. Disallowance under the previous
CAP already stands at £580 million; implementing a scheme
in the knowledge that it might attract further disallowance would
be reckless. We support the Government's position that England
should adhere as closely as possible to the measures set out in
the direct payments regulation. (Paragraph 36)
The Government announced on 19 December
2013 that it will implement greening in England in line with the
Direct Payments regulation, and without introducing a Certification
Scheme containing 'equivalent' greening measures. The disallowance
risk associated with the second course of action was a significant
factor in reaching this decision.
13. We do believe, however, that
greening of the CAP will provide a valuable opportunity to address
the decline in pollinators and we invite the Government to use
greening to encourage the growing of pollinator-friendly crops.
(Paragraph 37)
We are currently having further discussions
with stakeholders and carrying out further analysis to inform
our decision on the selection of Ecological Focus Area options.
This includes consideration of how they can deliver real benefits
for pollinators without adding complexity. The Crop Diversification
measure does not allow for any Government direction in the choice
of crops farmers decide to grow in order to meet the requirement,
but the Ecological Focus Area requirement includes an option for
allowing the growing of a nitrogen-fixing crop. We are considering
whether to allow this option.
We are also working with stakeholders
on how the Campaign for the Farmed Environment will deliver targets
at local level for protecting watercourses, providing habitat
for farmland birds, wildlife and pollinators. We will review the
success of this at the end of 2015.
ECOLOGICAL FOCUS AREAS
14. The Rural Payments Agency must
ensure that mapping for the purposes of determining ecological
focus areas is as wide as possible and all landscape features
such as hedgerows, hedge banks, stone walls and other historically
important boundaries, ditches and ponds should be included in
the measurements. Furthermore, land already taken out of production
under agri-environment schemes should be included though measures
must be taken to prevent double payment. In response to this Report
the RPA should set out how it intends to undertake mapping and
how farmers will be able to verify the accuracy of its work. (Paragraph
39)
We are looking extremely closely at
the mapping requirements for CAP reform as the new schemes and
associated rules carry with them significant potential bureaucracy
for applicants (with the associated chance of error) and very
significant operational costs. We need to find the
best approach to balance ease and simplicity for applicants and
building a mapping system, or in EU terms a Land Parcel Identification
System (LPIS), that is compliant with the regulations and won't
be a cause of financial correction (disallowance). The detail
of the implementing regulations, which are still emerging, will
contribute to that decision.
15. Options should not be moved from
Entry Level Schemes to greening Ecological Focus Areas, but should
rather be available under both with the farmer stipulating under
which Pillar the options are included. (Paragraph 40)
Farmers and land managers are able to
use agri-environment measures of a similar nature to fulfil their
greening requirements. However, in those circumstances the Regulations
are clear that there must be no double-funding. Discussions are
continuing in Brussels on exactly in what circumstances and how
the rules to avoid 'double-funding' are to be applied, in the
context of the implementing legislation. We are negotiating to
ensure we have the scope to implement the rules in ways which
are fair to agreement holders and administratively proportionate.
CROP DIVERSIFICATION
16. The introduction of the three-crop
rule in England places an increased burden on farmers while delivering
little benefit. The Government must push the Commission to review
this rule at the earliest possible opportunity. (Paragraph 42)
The Government is well aware of the
difficulties the three-crop rule will cause for some English farmers.
The Commission has been clear that even the option of implementing
greening through a Certification Scheme cannot provide an alternative
or an opt-out from this requirement. As the Committee concludes,
we must look to the planned review of the greening requirements
in the light of experience for a reassessment of the benefits
of the Crop diversification requirement.
PERMANENT GRASSLAND
17. The Government should consider
extending the areas of grassland that cannot be converted to include
all SSSI and Biodiversity Action Plan-quality grassland. We agree
with the Government that in the interests of simplicity the ratio
of permanent grassland to eligible land should be recorded at
a national level. (Paragraph 43)
The Government announced on 19 December
2013 that in England the ratio of permanent grassland rules will
be applied at a national rather than farm level. Active consideration
is currently being given to the possibility of designating additional
grassland areas in the way the Committee describes.
Rural Development Programme
18. English farmers lag behind their
main European competitors in levels of direct payment leaving
them less able to invest and innovate. With the ability of the
nation to feed itself growing in importance the Government should
increase funding for innovation and measures to boost agricultural
productivity. (Paragraph 45)
The next Rural Development Programme
will include support of around £140 million to help farmers
boost their agricultural productivity. We will seek to focus the
resources available towards those areas which we believe are most
likely to help farmers to generate an increasing share of their
incomes from the market place. We currently envisage support to
encourage the development of professional skills; to identify
whether efficiencies can be made and how they can learn from leaders
in their sector; encouraging improved resource efficiency; and
encouraging innovation, knowledge exchange and the use of new
technology to support implementation of our Agri-tech strategy.
NEW ENVIRONMENTAL LAND MANAGEMENT
SCHEME
19. Given the reduced pot of funding
for Pillar II it is inevitable that not all farmers currently
with land under environmental stewardship will have access to
agri environment schemes in the future. Those who have successfully
implemented Higher Level stewardship agreements and shown the
most interest in delivering environmental benefits should be first
in the queue. (Paragraph 49)
As we explained in the recent CAP consultation,
the intention is to have site specific agreements designed to
meet our legal and environmental commitments to protect and improve
designated and protected sites such as Sites of Special Scientific
Interest (SSSIs) or scheduled monuments and those deemed of very
high priority or complexity. The site specific agreements would
be broadly similar to the current Higher Level Stewardship (HLS).
Consequently, it is likely that a high proportion of existing
HLS agreements would be targeted for agreements under the new
scheme. This would not exclude other land which can deliver important
environmental benefits from being similarly targeted, both at
site-and area-specific levels.
20. We consider 10-year agreements
with the option of a five-year break clause to have considerable
merit—they offer farmers and landowners security to initiate
long-term projects. We recommend the option of a 10-year agreement
be retained for agreements with specific long-term ambitions.
(Paragraph 51)
We agree that we should retain the option
for 10 year agreements in some circumstances. We consulted on
the principle that five year agreements should be the norm. Although
the majority of respondents did not disagree with the principle
there was general acknowledgement on the need for exceptions and
flexibility in favour of longer agreements if necessary to secure
particular environmental benefits.
Under EU rules, agreements should generally
be undertaken for a period of five to seven years with the possibility
of a longer period for particular types of agreements, including
by means of annual extensions or renewals into shorter agreements.
The new scheme will therefore offer 5 year agreements as the norm,
with the option of annual extensions for a further two years.
This maximises the flexibility to offer agreement extensions and
may reduce land manager uncertainty and administrative burdens
during the transition into the programme after next.
Additionally, we will continue to offer
10 year agreements in cases where such exception to the five year
norm is clearly justified in recognition that different environmental
benefits can be expected to be realised at different rates. Where
10 year agreements are offered they should include a 5 year break
clause, which can be implemented by either party without financial
penalty. This is the current HLS position.
21. We support the proposal that
Natural England use trusted conservation organisations to provide
expert advice to farmers. But the Government has repeatedly stated
that it sees Pillar II as offering the best value for money for
the taxpayer. It would be perverse for the Government to seek
to transfer the maximum amount to Pillar II only to hinder the
ability of Natural England to make the best use of it by imposing
reductions in staff. Expert advice must not be seen as a cost
to cut but rather as an essential component of securing maximum
environmental benefit from Pillar II schemes (Paragraph 52)
We agree with the Committee that expert
advice is essential for securing maximum environmental outcomes
from agreements. Our evidence shows that the delivery of more
ambitious environmental outcomes and the implementation of more
technical measures through agri-environment schemes need a strong
and ongoing advice element. More than this, advice and support
is intended to maximise the value to the taxpayer of the environmental
public goods which are being bought through those schemes. Advice
and support will continue to be offered to site specific agreements,
which are often the most complex and demanding types of agreements.
In the recent CAP consultation we asked
about how best to deliver advice in the mid-tier in a cost effective
way. A significant majority of respondents agreed that advice
should be provided online and, to a great extent, via trusted
third parties. With the more targeted approach proposed under
the mid-tier, and with incentivised option choices, the need for
advice on what options to choose is likely to be reduced. However,
in principle we can see the scope for advice as a scheme option
where required, for instance in support for group applications.
22. Natural England must make sure
agri-environment scheme holders are aware that they may not have
a scheme to go to when their present one expires. Paragraph 53)
We made clear in the CAP consultation
our intention to move to a more targeted approach in delivering
environmental benefits, and that this will mean an end to the
current universally available Entry Level Stewardship. The design
of the new Rural Development scheme IT includes ensuring that
information for farmers on possible successor agreements and other
Rural Development Programme scheme opportunities will be made
available in one place. The options available for current agri-environment
agreement holders will be made clear well ahead of the expiry
of their existing agreements, as part of Natural England's communication
strategy and agreed customer service standards.
TENANCIES
23. The person doing the work that
qualifies for agri-environment scheme support, whose income is
foregone, must be the person who receives the payment. It is unacceptable
for a landowner to lay claim to part of that money through rental
increases or other payments. Such practices will discourage farmers
from putting land into environmental stewardship. (Paragraph 54)
Environmental Stewardship has proved
very popular, with over 40,000 farmers covering over 6 million
hectares signed up to the scheme. It is not apparent that current
arrangements between tenants and landlords have acted as a general
disincentive to applying for the scheme. Payments are made to
the signatory of the agreement and how that payment is divided
between other parties involved in delivering the required management
should be subject to internal private agreement between them.
However, we will explore with stakeholders the extent to which
the adverse circumstances described might apply, and the scope
for addressing these.
DUAL USE
24. We support the continuation of
dual use and recommend that Defra push the Commission for its
retention. The flexibility of dual use encourages more land to
be put into agri-environment schemes while its removal is likely
to undermine the landscape-scale agreements proposed under NELMS
which large estates are perhaps better able to deliver in a coordinated
way than their various tenants (Paragraph 56)
We plan to make an announcement about
our future approach to dual use in the spring, in the light of
our analysis of current usage and potential future disallowance
risks and administration costs.
Dual use continues to attract the attention
of the European Commission, and its auditors, even though the
existing and new EU Regulations do not expressly forbid it. However,
we recognise that its continuation has support from many in the
industry who, amongst other things, see it as providing flexibility
in applying for agri-environment schemes and it has been suggested
that dual use could have a role in facilitating landscape scale
agreements.
This needs to be balanced against the
disallowance risks associated with allowing dual use and the costs
for our delivery bodies in carrying out the required checks on
its use. In response to previous audit criticism, the RPA, Natural
England and the Forestry Commission introduced additional checks
and further clarified the guidance for farmers to reduce disallowance
risks. This work is continuing and will be used to help inform
our decision.
Although final details of the new greening
requirements have yet to be decided dual use may have the potential
to add complications to what we plan to be as simple and straightforward
a requirement as possible. For instance, it could further complicate
the division of environmental management responsibilities between
the two parties. We will explore these issues further with stakeholders
before we decide on our future approach to dual use.
25. Natural England should display
a lot more rigour in arranging agri-environment contracts. Before
contracts are signed they should offer advice to both parties,
and must do much more to reassure themselves and us that payments
for agri environment schemes go to those who do the work and whose
income is foregone. (Paragraph 57)
When setting up Higher Level Stewardship
agreements, Natural England already provide detailed advice and
guidance to all the parties involved to ensure that the planned
outcomes from agreements can be delivered. The guidance
was updated in October 2011 to reflect suggestions from stakeholders
and agreement holders. Where radical changes in management are
proposed, such as fencing to reintroduce grazing or tree planting,
then wider community engagement by the applicant is encouraged
and supported to ensure that measures are understood and the public
has a chance to engage with the change. All interested parties
should therefore have a clear view of what is required and are
at liberty not to sign up where they may have concerns.
For Entry Level Stewardship, no adviser
guidance is provided but scheme handbooks and guidance provides
detailed support on the terms and conditions which will apply.
In the case of commons agreements can be made with a lead representative
of the commoners' association or group, and this must be supported
by an internal agreement which sets out the divisions of responsibilities
and payments. Proof of the internal agreement is required for
audit but the content is private to the participants.
Natural England will continue to ensure
that the correct management options are in place to deliver environmental
outcomes through a robust agreement and that all parties involved
with the agreement are engaged with the negotiation process and
that their opinions are considered. However the division of payments
must remain the private business matter between the members of
the commoners' association or group.
26. We recommend that the Government
implement the recommendations prepared by the Tenancy Reform Industry
Group following the Report of the Farming Regulation Task Force.
Such a dispute resolution mechanism should include matters relating
to payments under both Pillars of the CAP. (Paragraph 59)
We are considering changes proposed
by the Tenancy Reform Industry Group to provide an alternative
route to dispute resolution, as recommended by the Farming Regulation
Task Force, alongside other proposed changes to agricultural tenancy
legislation as part of the Red Tape Challenge process. We aim
to implement changes to legislation by 2015 where possible. See
also our response to recommendation 23 above.
RURAL ECONOMY AND LOCAL ENTERPRISE
PARTNERSHIPS
27. We take this opportunity to remind
Defra of the value of the Rural Economy Grant Scheme and the Rural
Growth Networks it created. We recommend that Defra encourage
those Local Enterprise Partnerships in receipt of Rural Development
funding to offer similar schemes to rural businesses within their
areas. We will hold Defra to account if rural communities fail
to benefit from the Rural Development funding channelled through
Local Enterprise Partnerships. (Paragraph 63)
Growing the economy remains a top Government
priority. Rural Development Programme (RDP) funded rural business
schemes have already successfully transformed the prospects of
thousands of businesses and farms, created 8,500 rural jobs across
the country and safeguarded another 9,700. That is why 13% of
the next RDP funds will be spent on growth-focused schemes. A
total of 5% (£177m) will be allocated to Local Enterprise
Partnerships (LEPs) areas via England's Structural and Investment
(SI) Funds Growth Programme for rural economic projects. This
will ensure that this funding is targeted on local rural economic
circumstances. LEPs will set out, in their SI Fund Investment
strategies, how they want to target the EU funds in the Growth
Programme to support growth in their rural areas. We will also
involve LEPs in the development of the new programme and the decision
making process for farming competitiveness grants and LEADER.
In total 13% of rural development funds will be spent on growth-focused
schemes, including LEADER and farming competitiveness.
Government announced separate funding
for the pilot Rural Growth Networks (RGNs) in the Autumn Statement
in November 2011. Five pilots were subsequently established and
funded through section 31 of the Local Government Act 2003, giving
them the flexibility to test different models and mechanisms for
stimulating sustainable rural economic growth they considered
appropriate for the circumstances in different types of rural
area.
The five pilot RGNs selected, Cumbria,
Warwickshire, Heart of the South West, North East and Swindon
and Wiltshire are now starting to provide sound and practical
examples of what does and does not work. A key aim of the initiative
was to share the lessons learned from the pilot RGNs. To support
this we have established a continuous programme of monitoring
and evaluation so we can adequately capture the lessons learned
as they emerge. We have already begun to refer to these in our
ongoing discussions with Local Enterprise Partnerships: through
disseminating these lessons we hope to support other LEPs and
Local Authorities across the country in taking action to stimulate
sustainable economic growth in their rural areas, particularly
so that they can take them into account as they develop and implement
their European Structural and Investment Funds strategies and
Strategic Economic Plans.
LEADER PROGRAMME
28. During development of the new
Rural Development Programme Defra should explore how LEADER can
be used better to help those communities looking to retain services
that are under threat. (Paragraph 64)
LEADER in the next Rural Development
Programme will have a much greater focus on supporting jobs and
growth. A new National Delivery Framework for LEADER will clearly
set out the policy priorities, measures and types of projects
we expect LEADER groups' Local Development Strategies to be based
on. At the local level, every LEADER project will need to demonstrate
that it contributes to the local economy before it can be approved.
As part of this new approach we will
continue to encourage Local Action Groups to develop projects
that support and retain the provision of rural services in a community.
To be approved, these types of projects will need to support services
that are of benefit to the local economy, such as shops, pubs
and transport. The LEADER approach is community led development,
with local priorities addressed through innovative local solutions.
We see this as the best way of identifying and delivering any
shortfalls in local service provision, with a clear economic focus
ensuring rural communities remain great places to live, work and
visit.
Common land
29. The Government must update the
commons registers or implement Part I of the Commons Act 2006
to ensure accurate registers of common land are available for
the purposes of mapping and payment. We acknowledge the benefit
in the RPA mapping common land ahead of the implementation of
the new deal but we are concerned that it may be doing so based
on registers known to be inaccurate. In response to this report
we expect the RPA to set out how it will deal with this potential
problem. (Paragraph 70)
The commons registers are important
as a basis for the management of common land. The Government
announced on 9 January 2014 that we propose to implement Part
1 of the Commons Act 2006 in the counties of Cumbria and North
Yorkshire over the next three years. These counties have
been chosen because they have the highest area of common land
and are amongst the most agriculturally active commoning counties
in England. Together with the seven authorities where Part
1 has already been brought into effect, implementing Part 1 in
these two counties will enable updated registers to be available
for over 70% of the common land in England. We believe that
despite constrained resources this offers a significant step forward.
We will keep under review the opportunities to implement in the
remainder of England but do not expect this to be possible during
this Parliament.
The RPA already refers to the commons
registers in order to make EU payments on common land and uses
information from a variety of sources to build up a picture of
the actual situation on the ground. Therefore, while the information
held on the commons registers forms the starting point for the
RPA's project to map all of the commons on which EU payments are
being claimed in England, the Agency is also making full use of
the information it already holds on commons as well as other sources
such as aerial photography. The Agency will also engage with customers
who claim on commons, giving them an opportunity to review and
comment on the mapping. We expect those local authorities
implementing Part 1 and the Agency to share information to ensure
that both the mapping and the registers are as accurate as possible. This
will include any updates resulting from the implementation of
Part 1 being passed by local authorities to the Agency, so they
can update the Rural Land Register.
30. We support the recommendation
of the Farming Regulation Task Force that a single payment should
be made to the appropriate Commoners Association for them to divide
appropriately among those who are actively farming the common,
and this need not exclude the landowner. The Government should
consider ways in which the future national reserve can be used
to allocate payment entitlements to Commoners Associations to
enable them to do this. Such an approach should not require landowner
consent. Whatever approach the Government chooses it must make
sure that tenants using rights provided to them by the landlord
are included alongside those with rights in perpetuity. (Paragraph
71)
Defra has been in discussion with commoning
stakeholder representatives through the commons and CAP reform
working group, established under the auspices of the National
Common Land Stakeholder Group. The working group lacked a consensus
for the proposition that associations should be able to claim
instead of commoners, regardless of individual commoners' consent,
and did not support directing payments through a commoners' association
(regardless of commoners' wishes). Moreover, the Direct Payments
Regulation, which provides for 'payments granted directly to farmers'[1],
does not confer powers to mandate payments to commoners' associations
in place of commoners.
The Committee's and Task Force's recommendation
also poses practical concerns: many commons do not have commoners'
associations, and where they do exist, most lack any incorporated
status and therefore a robust legal identity, which would be a
prerequisite for handling large sums of public money. It is unclear
how the association would divide up the direct payments among
commoners. The RPA would either need to cease payments in the
event of an internal dispute, or act as an appellate tribunal.
We accept that tenants of a landlord
who graze common land in pursuance of rights lawfully granted
by the landlord may have a legitimate claim to direct payments,
and we will consider how such rights can be addressed in guidance.
31. The Government must ensure the
rules for common land are not designed in a way that would reduce
a farmer's ability to farm in an environmentally sustainable way.
(Paragraph 72)
The Government supports the Committee's
wish to adopt rules for common land which do not discourage environmentally
sustainable farming, but must also work within the framework of
the relevant EU regulations. We are currently considering how
to apply the requirements of the 'active farmer' test in relation
to 'naturally kept' land[2],
but farmers who are using their common land for production have
no reason for concern about this aspect of the test.
DISPUTE
32. Before an agri-environment scheme
agreement is signed Natural England must ensure that those affected
by the agreement either by undertaking work or through income
foregone receive appropriate payment. Such steps should include
advice to both parties. The inspection process should be used
to ensure that the payment is going to the right person. Where
there is dispute, graziers should have recourse to a similar dispute
resolution mechanism as that proposed for tenants. (Paragraph
73)
As we have stated in our responses to
recommendations 23 and 25, when setting up Higher Level Stewardship
agreements Natural England already provides detailed advice and
guidance to all the parties involved. It is not apparent that
current arrangements between tenants and landlords have acted
as a general disincentive to applying for the scheme. Payments
are made to the signatory of the agreement and how that payment
is divided between other parties involved in delivering the required
management should be subject to internal private agreement between
them. We have responded to the changes proposed by the Tenancy
Reform Industry Group to provide an alternative route to dispute
resolution for tenants and landlords, as recommended by the Farming
Regulation Task Force (as referred to in our response to recommendation
26). While graziers are not captured by agricultural tenancy law,
in practice most in signing a contract will have agreed a dispute
resolution mechanism in their contracts. If they have not then
their course of redress is through the courts, which is preserved
Transfer between pillars
33. We recommend the Government modulate
at 9% now, while new Pillar II schemes are being developed, and
only move to 15% in 2017 if the Government can demonstrate that
additional funds are required and there is a clear benefit from
the projects proposed. (Paragraph 82)
We announced on 19 December 2013 that
in England 12% will be transferred from pillar 1 direct payments
to pillar 2 rural development. We will review this in 2016 to
assess the demand for agri-environment schemes and the competitiveness
of English agriculture. This is with the intention of moving
to a 15% transfer rate from pillar 1 direct payments to support
the final two years of the pillar 2 Rural Development Programme.
We believe that this represents the
best balance between using rural development money to deliver
public goods and meet our obligations, helping the farming industry
become more productive and competitive, generating jobs and growth,
assessing the demand for the new programme as we deliver it and
enabling farmers to make a smooth transition to the new direct
payment budget.
As a result we will be spending over
£3.5 billion on Rural Development over the course of the
next programme period, 2014-20. The new CAP will make a difference
to the environment in way that it has not done before. We will
spend a bigger share of the rural development money on the environment.
We plan to spend around 87 per cent on this compared with 83 per
cent in the current programme. In total 13 per cent of rural
development funds will be spent on growth-focused schemes, including
LEADER and farming competitiveness.
Delivery
34. We remain concerned that farmers
can be heavily penalised for a genuine mistake but not appropriately
compensated when it is the Rural Payments Agency who is in error.
This culture within the RPA needs to be replaced by a more proportionate
approach. (Paragraph 84);
and,
35. We recommend that the Government
adopt a yellow-card approach to dealing with minor and accidental
breaches. (Paragraph 85)
The previous RPA complaint resolution
process did not fully take into account customer service concepts
and did not appropriately identify or remedy poor customer service
or RPA maladministration. The complaints process, implemented
by the RPA in December 2012, embedded the Parliamentary Ombudsman's
Principles of Administration, Principles of Complaint Handling
and Principles of Remedy as the criteria for the assessment and
resolution assessment of customer service complaints.
Now, where maladministration is identified,
and with reference to the Parliamentary Ombudsman Principles of
Remedy and HM Treasury Managing Public Money, RPA seek to put
the customer back into the position they should have been in had
the maladministration not occurred. RPA makes consolatory payments
by way of apology and compensatory payments where any financial
hardship or injustice has been evidenced. RPA considers its financial
remedies to be fair, appropriate and proportionate and advises
customers that they will reasonably consider for compensation
any representation they wish to submit for additional costs they
incurred as a result of maladministration.
A number of cases which have been through
the Agency's complaint process have been escalated by the customer
to the Parliamentary Ombudsman for further investigation. The
Ombudsman agreed that RPA remedied the maladministration appropriately
and proportionately for these cases. RPA continues to review
and develop its compensatory considerations and framework in accordance
with the findings of future customer representations and the outcomes
arising from any further Parliamentary Ombudsman investigations.
As RPA's approach to 'obvious errors',
'force majeure' and applying 'penalties' to claims is largely
determined by the EU legislation, it is likely any yellow card
system would have to be rooted in that. Currently RPA does issue
Warning Letters (rather than a financial penalty) for negligent
and rectifiable minor breaches in relation to cross compliance,
providing that there is no direct risk to animal or human-health,
as allowed by the EU regulation. During 2012 a total of 122 warning
letters were issued across a number of cross compliance matters.
The vast majority of these failures were attributable to minor
failures in maintaining on farm records for livestock, Nitrate
Vulnerable Zones, No spread zones and for the Soil Protection
Review requirements, whilst a smaller number were due to farmers
physically breaching the requirement to adhere to the protection
zones around hedgerows and watercourses.
How we will tackle these issues under
the new schemes to be introduced by CAP reform will be largely
determined by any changes in the new implementing regulations
which are still being negotiated, and in which the UK is asking
for increased proportionality in the application of penalties.
Where there is the opportunity to issue warning letters we will
do so, however whether the scope will be any wider than under
the current regime remains to be seen.
We are looking for further opportunities
to improve the targeting and co-ordination of inspections to reduce
the burden on those farmers who have a strong track record of
reliability and adherence to standards. More widely Defra is currently
reviewing the cross compliance rules for 2015 seeking to rationalise
or simplify where possible, including the list of standards of
Good Agricultural and Environmental Condition (GAECs).
36. The IT system remains, however,
one of the standout challenges of this round of the CAP not least
because the precise details of the implementing regulations have
yet to be published. Given the lessons of the past we question
whether this is the right time to be introducing a new IT system.
(Paragraph 88)
The existing systems supporting the
Single Payment Scheme (SPS) have been heavily customised, are
inflexible, and becoming difficult to support. The cost and risks
associated with modifying these systems to support this round
of CAP reform were unacceptable. The introduction of a single
online system will make it simpler for farmers to understand what
funding is available to them and to apply for it. This will address
one of the reforms recommended by the Farming Regulation Task
Force as the business, land and scheme data for farmers will be
stored securely in one place that is easy to view. It will also
provide better value for money to the taxpayer through lower running
costs and reduced risk of disallowance attributable to the IT
system.
37. We support Defra's ambitions
to encourage and support as many as people as possible to apply
online but there will be some for whom such an approach is not
appropriate. A paper-based application process must be retained
and those farmers who take-up this option or who choose to use
an agent must not be financially penalised as a result. (Paragraph
91)
The Government acknowledges the Committee's
concerns around the transition away from paper-based processes.
The current systems operated by CAP delivery bodies need updating
and simplifying for customers, so change is required.
The CAP Delivery Programme is testing
the developing service with customers every fortnight to get their
input at every stage. This includes those who up until now have
not transacted online. Farmers and agents have told us they
are keen to see simplified and flexible processes which allow
them to apply and amend their details swiftly online at times
which suit them.
We recognise in the early days of the
new service that some customers will require support to adapt
and that not all customers will be able to get online. We are
planning assisted digital support for users who really need it,
with an Assisted Digital solution based around three options:
paper, in house via telephony or face to face, and use of an intermediary.
38. Details showing precisely what
areas will be covered by the Rural Broadband Programme and when
must be published in order to encourage alternative providers
to fill in the gaps and provide certainty to those wishing to
invest in private solutions such as satellite. (Paragraph 94)
Broadband is a key priority for the
Government. The £530 million Rural Broadband Programme will
bring access to superfast broadband to over 4 million homes and
is currently giving access to 10,000 premises per week. The programme
is estimated to reach 90% of premises by early 2016. An additional
£250 million confirmed in the Autumn Statement will support
increased coverage of superfast broadband to 95% of UK premises
by 2017. We are also exploring with industry on how to reach 99%
of premises - whether that's fixed, wireless or 4G - by 2018.
Government recently announced a £10 million competitive fund
to test innovative solutions to deliver superfast broadband
in the most difficult to reach areas.
In England it is a matter for the local
authorities to publish roll out plans under the Rural Broadband
Programme. The Government wrote to local authorities in July encouraging
them to publish information on the expected coverage from their
projects. Most local projects have now done this, recognising
that the finalisation of detailed network plans is phased across
local authority areas, and will be subject to significant change
up until that point. We are continuing to work with BT and local
authorities to ensure transparency.
39. Given the complexities of the
new CAP, it is crucial that the implementing bodies do not lose
key staff at a time when their help and support will be most required
to ensure a smooth transition to the new scheme (Paragraph 95)
The CAP delivery bodies (the RPA, Natural
England, the Forestry Commission and Defra's Rural Delivery Teams)
are working together to ensure they continue to deliver current
schemes whilst fully supporting the development of arrangements
for the new CAP. Improved business forecasting coupled
with improved workforce planning means that the delivery bodies
have a clearer and more integrated understanding of workforce
requirements. They are able to plan effectively so that
they have the right mix of people in place to respond to demands.
They are also developing workforce capacity and capability, including
through leadership development programmes for managers at different
levels and talent management schemes.
Where exits are taking place, a cautious
approach is being taken, ensuring that resource requirements take
account of the transition to the new CAP. We are confident
that we have learnt the lessons from 2005.
40. We recommend that guidance is
provided to farmers in paper form in the run-up to the start of
the new scheme and from mid-2014 at the latest. Forcing people
to engage digitally when it is known that many cannot would undermine
successful implementation of the new scheme. If farmers understand
the new scheme from the outset, there are likely to be fewer compliance
issues, reducing the subsequent cost of inspection and enforcement.
(Paragraph 95)
The Government recognises that in the
early days of the new service some customers will require support
to adapt. On the provision of paper guidance we will ensure
that our digital uptake campaign makes clear to customers how
to find such guidance. Online guidance will be available
in printable formats and will of course be the most up to date
version. We are yet to take a final decision on issuing
of paper guidance in year one of new schemes.
1 Art.1(a) of the Direct Payments Regulation (EU) No
1307/2013. Back
2
Art.9.1 of the Direct Payments Regulation (EU) No 1307/2013. Back
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