4Financial Issues
45.The Common Agricultural Policy from 2014–2020 represents 37.8% of the total EU budget.73 This spend is the primary means of support to farmers in the UK. According to the RSPB over 50% of biodiversity public spending in UK is allocated through CAP agri-environment schemes, making the UK reliant on them to meet conservation goals.74 The reallocation of funding previously paid to the EU and the extent to which EU funding streams are replaced will have a significant impact on activity in the British countryside, and on the extent to which farmers provide environmental protection as part of their business. EU farm subsidies currently make up to around 50–60% of UK farm income.75
Targeting of funding
Current arrangements
46.Natural England reports that the CAP (plus compulsory domestic co-financing) is a significant source of funding for the natural environment. Approximately £400 million a year is invested through agri-environment scheme agreements under Pillar 2 of the CAP (rural development funding) and although it is difficult to attribute spend to a specific policy objective (such as biodiversity) Natural England believes that the majority of this spend contributes, to a greater or lesser extent, to biodiversity objectives.76 Further CAP support for biodiversity is provided through the requirement for recipients of Pillar 1 subsidies (approximately £1.8 billion a year in England) to comply with environmental conditions (cross-compliance and greening).77 DEFRA reports that these conditions are unpopular, add to administrative costs and deliver only modest environmental benefits.78 However as most farmers are subject to these conditions they provide a mechanism for the widespread enforcement of minimum environmental standards. Notwithstanding the claimed benefits of cross-compliance (and these are contested; for example our previous report on Soil Health found that the cross-compliance regime was not sufficient to prevent damage to soils from maize production),79 agricultural support under Pillar 1 is essentially a flat-rate subsidy, whereas Pillar 2 agri-environment payments are made in return for a contractual agreement to deliver environmental land management and are designed to compensate farmers for loss of production (income foregone) and additional costs.
47.Other non-CAP EU funding streams available to support UK biodiversity schemes include:
- The EU LIFE programme, with €3.4 billion of funding available between 2014 and 2016 for projects that address nature and environmental matters and the impact of climate change.80
- The European Regional Development Fund, over £210m of which is allocated in England to 2020 to support Green and Blue Infrastructure projects.81
- Interreg funding to stimulate cross-border cooperation between EU regions.82
- The LEADER programme of support to rural economies, providing £138m in England.83
- The Horizon 2020 research and innovation programme, which has nearly €80 billion of funding available over 7 years (2014 to 2020) across Member States.84
48.In addition to the direct benefits of spend, EU funding has an important role in leveraging other sources of funding. As Natural England has pointed out, all CAP Pillar 2 payments are subject to compulsory co-financing by the UK Government.85 The Yorkshire Dales Rivers Trust reports their experience that:
Relatively small but critical amounts of funding have levered in substantial amounts of external funding either as cash or in kind (time and materials).86
Sources of matched funding for EU spend include the Exchequer, National Lottery and other charitable and private funding streams: Natural England describes EU funding as having a significant multiplier effect on these domestic funds.87
The balance of support
49.A common concern regarding the current funding system is the balance between the flat rate agricultural subsidy of Pillar 1, which provides limited environmental benefits, and the voluntary activities supported through Pillar 2, many of which are directly targeted to specific environmental objectives. Funding is currently focussed on Pillar 1, which is allocated some 90% of the CAP budget.88 Murray Davidson of the Association of Local Government Ecologists told us:
All the reports show that biodiversity in the natural landscape is becoming more fragmented, degraded and less diverse. Part of that is due to the perverse incentives that we have heard of before about the Common Agricultural Policy. It is an agricultural policy, and we feel that we should be reversing that to make it an environmental policy.89
Pillar 1 of the CAP has been criticised for having limited articulation of its objectives. Consequently, farmers have complete discretion over how they use its subsidies (provided they meet the requirements of cross-compliance). Martin Harper of RSPB said:
At the moment [ … ] the existing Pillar 1 of the CAP has no policy objective, so people can interpret it as they see fit. So there is an opportunity to get the policy clear: what it is we are trying to achieve?90
50.The National Trust has called for a “smart” agricultural policy focused on addressing market failures, saying that:
This means taxpayers would only be paying public subsidy to farmers in return for things that the market will not pay for but are valued and needed by the public. We may need a transition period to get there, but that means payments for goods that go beyond food production–from the species we love to the services nature provides.91
Several organisations suggested the principle of “public money for public goods” as the basis for future funding to agriculture and the wider countryside.92 Some elements of Pillar 2 payments already follow this ethos, and the UK focuses on these elements of Pillar 2 to a greater extent than many other EU member states.93
51.Natural England indicated that the common understanding of public goods includes our natural air, soil, water, ecological and landscape assets and the benefits that flow from them.94 Specifically highlighted as public goods are the products that the market cannot or will not pay for, such as sustainable water and soil management, natural flood management, enhancement and connectivity of wildlife habitat, improving public access, protecting and enhancing landscape character and heritage and achieving high animal welfare standards.95
52.Martin Harper of RSPB provided an ‘economist’s definition’ of public goods, which is used by their organisation:
The mantra that we have used over the last 15 years or so is public money for the public good. So what does that mean? Economists have a view about that. It is things that all people can have access to and if one person has access to them that is not diluted to the next person. Things like an attractive countryside rich in wildlife is a public good that everyone can benefit from, whereas food is not. It is essentially one person or one business can benefit from it, so the differentiation of the two is quite important. I think the Treasury has the guidance and we hope that it allows us to have much of the £3 billion a year going back into the countryside to support these objectives.96
53.Although there was widespread support for the principle of refocusing funding on delivery of public goods, several witnesses highlighted concerns regarding the identification of public goods to support in this way. Dr Viviane Gravey told the Committee that “public good” was a “very political concept”, saying:
In the last round of CAP reform there was a strong message that we should reform the CAP to get public money for public good, and that was taken up by the agricultural sector as, “We should keep the CAP because we are providing public money for public good” [ … ] it is not just about food security or the environment. It is also about perhaps maintaining farmers on the land in not so well developed areas of the UK where there is not many jobs available; is this a public good?97
54.Some witnesses highlighted potential public goods which may be forgotten in a scheme with a purely environmental focus, such as the historic environment and cultural assets, which are currently supported by CAP but which may fall through the gaps of a new scheme.98 There is particular debate over whether some direct benefits of farming, such as food security, can be considered a public good. Guy Smith of the National Farmers Union argued:
If you survey British consumers, they will tell you that they want to be able to source local food. You could argue that is a public good and policies should put in place mechanisms to make sure that happens. You could argue food security is a public good, but I fully confess that that is politically debatable.99
55.In his paper “British Agricultural Policy after Brexit” Professor Dieter Helm claimed that the NFU fails to provide a reasoned case as to why it is in the public interest to “maximise production and in the process reduce external food dependency”, noting that full food self-sufficiency would be impossible to achieve without measures such as banning exports and changes in land use away from crops produced for other purposes.100 However a decrease in the level of food production would have potential environmental effects, for example through increased emissions generated from the transport of imported food.101
Integration of agriculture and the natural environment
56.We heard broad support for greater integration between environmental and agricultural payments. This support has come from both the environmental and agricultural sectors. Patrick Begg of the National Trust said:
It seems to me mad to have a food and farming plan and environment plan when everyone is talking cross-sectoral about the integrated nature of those issues. We have an opportunity now, if we want to take it, to bring those much closer together more formally and to give us a better outcome at the end of it.102
The Tenant Farmers Association has published a proposal for a post-EU farming policy. This proposes reallocation of the current pot of funding towards three equally weighted priorities: agri-environment schemes, farm business development schemes, and supply chain initiatives to support British produced food.103
57.Complete adoption of the principle of public money for public goods and the resulting removal of basic payments to farmers risks putting smaller farms out of business. A 2008 Defra report modelled the likely impacts of withdrawing subsidies both alone and in combination with trade liberalisation. The report concluded that the withdrawal of subsidies would cause a decline in agricultural production, particularly in the beef and sheep sectors, and could result in 9% of cropped land coming out of production.104 Dr Helena Howe recommended addressing this through offering a basic payment, with no environmental requirements, for small and vulnerable farms (such as hill farmers and organic farmers) only.105
58.The Secretary of State for DEFRA acknowledged the increasing support for adopting the principle of public money for public goods and the need for a rebalance between support for environmental land management and income support. She told us:
I think that it is really important that we get the right balance of environmental outcomes and food production outcomes. I don’t want to prejudge or second guess the consultation that we want to have on this, but I would agree with you that a lot of the anecdotal feedback that we get, that may translate into feedback in the consultations, is that people would like to see environmental goods being a focus.106
59.Any farm subsidies after the UK leaves the EU should be refocused to provide a better balance between support to agriculture and environmental protection. Policy should have clearly detailed objectives linked to the delivery of public goods, including the promotion of biodiversity and other environmental objectives, rather than simply providing income support to farmers. The nature and range of the public goods to be delivered through a new funding regime must be carefully considered and supported by strong evidence of the benefits they provide and the market failure they seek to remedy.
This conclusion is linked to our sixth recommendation.
The scale of need
60.The removal of the CAP means that Government must decide on the funding and objectives of any new scheme in this area. The starting point for this decision must be an understanding of the level of funding necessary to meet environmental commitments: Natural England’s written evidence noted that in 2009 the network of UK Conservation and Environment Agencies (LUPG) published research estimating the scale of future environmental land management requirements for the UK. LUPG tentatively concluded that spend in the range of £2 billion per year (£1–3 billion) was needed to deliver environmental outcomes from the farmed environment in the UK, with £1.3 billion of that in England.107 Natural England has reviewed these figures in response to a question from this committee108 and concluded that the figure today, taking into account climate change measures, would be significantly higher.109
61.Total UK CAP expenditure last year was £3.5 billion, although much of this has only limited environmental benefit due to being paid as income support through Pillar 1. RSPB reported that domestic spending on biodiversity has decreased over time, making the UK increasingly reliant on EU funding to plug the gap and ensure obligations are met.110 Martin Harper suggested that, even if the current cost of meeting environmental commitments remains about £2 billion a year, overall spending on environment issues is less than half what is required:
The bottom line is that the need is greater than we currently provide for through existing spend and agri-environment makes up a large percentage of that.111
62.In determining the scale of need for funding Government must consider other means of support to environmental objectives. The National Farmers Union urged the Government to “think outside the box” and look into ways to unlock private sector funding and delivery and to encourage voluntary activity.112 Guy Smith highlighted the example of water companies paying farmers to take action to improve water quality.113 However private sector funding may only be suitable for consideration as a supplement to public expenditure, rather than a substitute for it; South West Water reported their concern that a reduction in the amount of agri-environment funding available to land owners would significantly reduce the scope and effectiveness of their own investments in this area.114
63.There are also concerns about how private sector support might be distributed, as there are cases where incentives are only provided to land managers carrying out harmful activities and not to those who are already acting in an environmentally friendly way. Peter Melchett, from the Soil Association, reported that:
In Wessex Water they have been incentivising farmers to reduce nitrate pollution in Poole Harbour, and it has been very successful. Farmers bid. They will say, “For a certain amount of money, I will reduce the amount of nitrogen from my farm flowing into the catchment and into the river”. The problem is if I was in that catchment rather than in Norfolk, and I went along and said, “Look, I have not put any nitrogen into your water system for the 18 years since I went organic. How much are you going to pay me?” I asked Wessex Water this question the other day and they said, “Nothing”. They are paying the polluter, and the non-polluter is not being paid.115
The private sector has no obligation to support those who are already delivering environmental benefits, implying a limit to the extent it can be relied on to support environmental protection if the public sector is unable to provide.
64.The level of spend necessary to meet the Government’s environmental ambitions is greater than that currently provided or leveraged from the private sector through funding schemes. Work to refine the Government’s understanding of the amount needed and the objectives of any new funding scheme should be undertaken, and should include consideration of how private sources of funding can be leveraged to make up any shortfall.
This conclusion is linked to our second recommendation.
Payment by results
65.The existing CAP system has been widely criticised as overly complex and prescriptive, making it difficult for farmers to engage with it. The National Farmers Union reported that a survey of members highlighted difficulties applicants faced with the Countryside Stewardship scheme: the scheme was too complex, the guidance confusing, options did not fit with farm businesses and the risks of participation were too high.116 National Parks England said:
The schemes are overly prescriptive rather than outcomes focused. The lack of join-up between environmental and rural development pillars means it is difficult to engage with farmers in a holistic way [ … ] farmers feel they are subject to a scheme, rather than having a sense of ownership of the outcomes that are being sought.117
66.Both Natural England and Defra have highlighted that leaving the European Union provides the UK with an opportunity to design an innovative new scheme to address these issues, and have particularly highlighted a ‘Payment by Results’ approach as an option to explore.118 The Tenant Farmers Association calls for:
A new agri-environment scheme which sets out a menu of costed options that farmers can choose from to deliver on their farms and judged on the basis of outcomes, as opposed to the means of achieving those outcomes, to include specific options for hill and upland farmers focusing on ruminant livestock production.119
The National Trust has described how current prescription-based schemes, which tell farmers how to manage, can alienate them. In his oral evidence Patrick Begg said:
Setting down a recipe that they have to follow and inputs and processes to get there is less successful. That is culturally alien and is part of a lot of the problems that we have had, certainly with our tenants.120
67.A more results based approach has also been supported by the British Ecological Society, who consider that a prescriptive approach to environmental land management restricts the range of outcomes that can be achieved, especially in response to a changing climate. They suggest that a payment by results scheme could have flexible arrangements, such as National Parks or consortia of landowners and NGOs bidding to deliver all or some of the desired environmental outcomes for a region or local area.121 Payment by results may also improve farmers’ understanding of and engagement with environmental goals and so lead to more effective delivery. The Centre for Ecology and Hydrology believe that:
Payment by results and scheme self-assessment may offer opportunities for increased farmer buy-in to the schemes and improved outcomes.122
68.Evidence from elsewhere in government suggests, however, that payment by results may be a more complex and risky approach than those advocating it recognise. In July 2015 the National Audit Office published a report on ‘Outcome-based payment schemes: government’s use of payment by results’. This examined schemes in DCLG, DWP, MoJ and DFiD which used payment by results. The NAO concluded that payment by results contracts are hard to get right, increasing the risk and cost for commissioners. Use of payment by results requires credible evidence that the claimed benefits can be achieved to ensure that the approach is not used in circumstances to which it is ill-suited.123 As part of its report, the National Audit Office produced an ‘analytical framework’ to help decision makers decide when payment by results may be appropriate, and much of this appears to be relevant to agri-environmental payments.
69.A wholesale switch to payment by results in the environmental sector may be impractical due to the potential difficulty of auditing and attributing some environmental improvements to specific land management actions and the longer timescale over which some environmental improvements must be measured. Richard Quinn of Farmcare Trading Ltd highlighted some of these difficulties:
Rather than using a blunt instrument of the outcome, as was heard in the previous panel, if we develop a wild bird seed mix then you would hope the birds are going to come. That does not mean to say that you should get penalised because in year one they do not come. How do you measure that return on investment over an extended period of time? That is really challenging and difficult.124
70.A more cautious, step by step approach may be better. This approach is supported by the evidence from the CLA, who advises that the payments by results approach is only likely to be relevant to some types of activities, for example where biodiversity can be defined and monitored.125 Pilots of the payment by results approach are currently underway: Rob Cooke of Natural England reports that:
We are running a couple of pilots, one in partnership with the Yorkshire Dales National Park, on a payment-by-results approach, where rather than identifying a number of management prescriptions, we are identifying what it is we would like to see as a result of the scheme. [ … ] Rather than specifying sward type and suchlike or grazing pressure, it is how many particular indicator species you have. These are plants that are easily identifiable; they do not require specialist botanist skills.126
The results of these pilots are likely to be important in determining how far and how fast it is sensible to move to payment by results.
71.It is important that any future funding scheme has a clear view of the outcomes it wishes to achieve, and in some circumstances a payment by results approach may be the correct route to pursue. However the Government must ensure that it fully understands the practicalities of the approach and have rigorous empirical evidence that it will prove more cost-effective than the current approach. It is important that lessons are learnt from the pilots currently in progress and the significant difficulties faced by payment by results schemes in other areas of policy. In moving from the current CAP to new payments for public goods and payments by results, a reasonable transition period of three to five years should be given to enable farm businesses to plan for the change and to avoid perverse outcomes; or loss of employment in rural areas.
This conclusion is linked to our sixth recommendation.
Supporting innovation
72.In addition to innovation in scheme management, leaving the EU may present an opportunity for innovation in the approaches used by farmers and other land managers to protect the environment. Some of this may arise out of necessity, if a cutting back of support or new trade deals lead to less land being viable for profitable farming. The EU requirement that claimants of Pillar 1 support be an ‘active farmer’ limits the ability of the CAP to incentivise protecting, restoring and enhancing biodiversity, as does the designation of sites important to wildlife, such as ponds and woodland, as ineligible features for subsidy.127 Sir Charles Burrell told us:
One of the main stoppers at the moment is the permanent ineligible features and the temporary ineligible features. We get penalised if we have trees on our landscape, if we have wood pasture, if we have scrub, if we have extended areas where we have flood plains for streams, if we have ponds. They all are penalised at the moment. We get money taken away.128
Sir Charles also emphasised that the need to keep land in a “good agricultural condition” limited opportunities for innovation, such as his rewilding work on the Knepp Estate, which was only possible due to a derogation supported by Natural England and scientific advisers.129
73.Witnesses have advocated a range of innovative land management approaches that could be supported by a new funding scheme and so promote the natural environment. These include:
- Incentivisation of community growing initiatives, such as city farms and community-run allotments, so as to enhance the local environment and provide social benefits in the community.130
- Techniques to improve soils, such as specific animal husbandry techniques claimed to increase soil depth, carbon sequestration and biodiversity.131
- Techniques involving the co-location of different plant species to increase biodiversity and improve soil health, such as agroforestry and intercropping.132
These innovative techniques are not currently supported by CAP funding in the UK, but some may have desirable effects at a local scale for public engagement or for particular species, whilst others may help reduce the environmental footprint of agriculture whilst maintaining production. However for both projected benefits it is likely that further research may be required to establish if they will deliver what is promised.133
74.There has been particular focus on recent years on the concept of rewilding. Rewilding is a contested term that has been applied to a range of visions and land management practices;134 definitions range from complete land abandonment135 to species reintroduction,136 including of apex predators. Witnesses have called for a clear, shared understanding of rewilding so as to advance the debate.137 For this inquiry, our preferred definition of rewilding would is similar to that given by Dr Keith Kirby, which focuses on the changes in management approach required by rewilding:
[Rewilding] is about reducing human intervention in some areas, preferably in a planned way, so that natural environmental processes will have more scope to shape the composition and structure of such landscapes. The result should be a more resilient and sustainable form of land use that is also richer in wildlife.138
75.As with other innovative land management techniques, witnesses have pointed to the need to develop an evidence base and a critical and rigorous scientific framework for its monitoring and evaluation if rewilding is to be considered as a component of environmental policy.139 Work to develop this evidence base is ongoing, being particularly well developed in certain types of rewilding such as moorland restoration, but insufficient to produce a complete framework.140 Professor Sue Hartley highlighted that:
Rewilding is not alone in this position. Getting ecological data at a large scale takes a lot of time, a lot of effort and a lot of money. It is important to recognise that the rewilding approaches have not been lagging behind. It is just that this is a tough gig. It is hard to get this sort of evidence; the baselines change a lot; it is difficult to have controlled experiments.141
76.There is an opportunity for a new agri-environment funding system to explore support to innovative land management techniques, including rewilding. The requirement for land to be in an agricultural condition can create a barrier to innovation, as does the classification of some environmental features as ineligible: a future scheme should recognise this and give scope for innovation where it is appropriate and can deliver positive environmental outcomes. Full support to innovative techniques should be dependent on a solid evidence base: Government should define its understanding of the techniques it wishes to support and consider how a suitable evidence base can be developed, which may include funding additional, properly monitored pilot projects.
This conclusion is linked to our sixth recommendation.
Administration
77.Defra’s activities to protect the natural environment following the decision to leave the EU, both in negotiation of exit arrangements, future trading relationship, and in the design of any future funding scheme, are being delivered against a background of significant cuts to the department’s budget. Defra’s 2015 spending review settlement allocated the department a cumulative resource budget reduction in real terms of 15% over the period from 2015–16 to 2019–20, and it has been reported that that 900 staff (4%) were cut in 2014–15.142 Speaking to Farmers Weekly, the vice-president of the NFU described Defra as ‘stretched’ and argued that the challenges resulting from leaving the EU will require more resource.143 The Secretary of State for Defra has acknowledged this, saying:
I am sure that we will need more staff to work on the policy set and [ … ] when we repatriate some of the activities that currently go on in the EU. Yes, there will be resourcing requirements and those we are constantly reviewing and discussing with Treasury.144
Defra’s capacity to manage the challenges of leaving the EU is likely to be affected by the necessity to protect budgets for flood prevention and mitigation, meaning that other areas of the department (including those areas affected by leaving the EU) will be disproportionately affected by cuts. In April 2016 the then Parliamentary Under-Secretary of State for Defra, Rory Stewart MP, told us that “the people who are feeling the strain, are the non-flooding people.”145 The recent Autumn Statement reiterated support to flood defences, but made no mention of Defra’s other areas of business.
78.Defra and its agencies have been repeatedly criticised for their performance administering payments under the Common Agricultural Policy. Farmers are dissuaded from accessing higher levels funding, such as that provided by agri-environment schemes, by administration needed to demonstrate compliance with scheme requirements.146 Much of the complexity of the current funding scheme is the result of the development of CAP over a long period,147 so witnesses have described leaving the European Union as an opportunity to introduce a simpler system. CLA, for example, has highlighted the opportunity for a more proportionate approach to control and verification. It points out that one of the main determinants of scheme design in the UK has been the need to avoid the risk of ‘disallowance’ fines from the Commission, and it considers that this has led to a system that is unnecessarily detailed and not designed to take account of how the UK designs agri-environment schemes.148 There is support for this view across farming and environmental bodies, for example from the Game and Wildlife Conservation Trust, who stress that:
We are not advocating an “inspection free” regime; we fully accept the public should have confidence that their money is being invested in wildlife and protecting the environment [ … ] To be avoided are excessive regulations and inflexibility within the rules. The scheme should not just provide a financial incentive to landowners to participate but should actively encourage them to put together measures that they find personally enthusing, or better still, working with others in a larger scale scheme.149
79.A simplified scheme would, theoretically, be cheaper for Defra to administer than the current arrangements. However witnesses have also pointed to the need to improve the support and advice available to land managers: it is widely recognised that the potential benefits of agri-environment schemes have been reduced by minimal training of farmers and advice on scheme implementation.150 RSPB has particularly noted the importance of trusted and qualified advisors as part of a funding scheme,151 highlighting that successful outcomes happened due to a combination of good farmers, good schemes and good advice.152 George Dunn of the Tenant Farmer’s Association said:
We will need advice, but we need advice that works with [ … ] the skill set that farmers have and does not treat them pejoratively. Do not treat them as lesser citizens, which we sometimes have within advisory systems.153
80.The reduction in Defra’s staffing and funding over recent years has reduced the Department’s capacity significantly. Cuts have disproportionately affected the parts of the Department involved in negotiations to exit the EU and design future policy. We are unconvinced that the Department has sufficient resources to manage the much larger workload faced as a result of the referendum decision. Government must urgently examine the Defra resource necessary to deliver its environmental objectives for exiting the EU and ensure that capacity is available to support the design and implementation of any new funding scheme. Government should ensure that good quality support and advice is available to farmers and land managers through the new scheme. Simplification of future funding schemes may reduce the direct costs of administration, and an opportunity exists to reinvest these in other aspects of support.
This conclusion is linked to our second recommendation.
Devolution
81.The question of funding and the devolved administrations was also brought to our attention. Bound up with this were questions about where responsibility for policy making and delivery would sit. CAP Pillar 2 payments currently fund rural development programmes which benefit the wider rural economy. The CAP provides a framework with common standards for the four nations, which then devise and implement their own policies: each devolved administration in the UK has its own rural development programme. But in terms of funding, the UK Government allocates EU money to the administrations in proportions which it decides.154
82.On the question of policy, Wildlife and Countryside Link (WCL) said the “level playing field” which the CAP had created across Europe and the UK should be emulated domestically, because it required a minimum level of commitment to environmental land management schemes. WCL also suggested that any UK policy should place a floor under environmental standards, “while allowing all four nations to make additional commitments and to introduce country-specific approaches and schemes”. From a practical point of view, it suggested landscape-scale outcomes would be challenging without a consistent approach in cross-border catchments.155 We heard from the Centre for Ecology and Hydrology that from a scientific perspective there continued to be great benefit in maintaining a common approach to environmental land management policy across political boundaries. But the Centre noted an increasing tendency towards divergence and suggested any further deviation could be managed through a common approach to monitoring environmental outcomes, data analysis and informatics.156 The British Ecological Society also pointed to this trend, which it said could be attributed not only to different environmental conditions within the four nations, but to variation in political structures and priorities, and the co-ordination of the countryside agencies within them. It recommended a “common reporting framework” to ensure each nation’s approach is consistent with the UK’s international obligations and adapted to environmental change.157 The UK Environmental Law Association agreed, stating that any amended schemes or new ones should be based on, and comply with, international laws and standards.158
83.On the question of the future of funding across the four nations, and how it would interact with policy development, the RSPB said there should be a shared high level approach across the UK, but one that was:
more outcome focused [than CAP], setting shared objectives for environmental funding, and leaving each of the four UK countries free to design funding policies to deliver these outcomes whilst working together to ensure high environmental standards.159
84.Although CAP funding is allocated by the UK Government, the four nations are able to determine the proportion of Pillar 2 rural development funds that they assign to environmental land management schemes. For example, England intends to spend 71.4% of its Pillar 2 funds on them between 2014 and 2020, while Scotland intends to spend 15.71% of its funds on such schemes.160 The nations also differ on how much they transfer from Pillar 1 funds to Pillar 2: Wales has committed to transfer 15%, the maximum permitted; Northern Ireland has not transferred any funds.161
85.On a more fundamental note, the Soil Association noted the potential implications if EU funding were not replaced. It suggested that the Barnett formula, the system of grants dictating the level of public spending in in Scotland, Wales and Northern Ireland, allows for only half of what the EU currently provides.162 They did not speculate on how this might change once we leave the EU.
86.We asked the Secretary of State what consideration had been given to the allocation of money for environmental funding to the devolved governments. We also suggested there was a danger that the involvement of the devolved administrations in the allocation of funding might be undermined by the centralisation of responsibility of funding allocation to a UK-wide body. In response she said:
Our commitment to the environment is absolutely solid, as is our commitment to [ … ] fairness and transparency [ … ] with the devolved parliaments.163
87.The UK Government must ensure there is sufficient coordination within and between the devolved nations to ensure a common, high level approach to environmental protection, within which framework the devolved nations can determine their own priorities and implementation approach. This should include agreement of common standards for monitoring and reporting, to which the four nations should adhere, based on continuing international standards. The Government must ensure fairness and transparency in the allocation of funds, and allow the devolved nations to develop their own funding mechanisms and priorities, as they currently do under the CAP rural development programme, subject to the maintenance of a UK-wide ‘level playing field’ of minimum environmental standards.
This conclusion is linked to our seventh recommendation.
UK Overseas Territories
88.UK Overseas Territories also currently benefit from EU funding and, therefore, had their own particular concerns. The Anguilla National Trust reported that EU funds such as LIFE, BEST, and the EDF Caribbean Overseas Countries and Territories scheme provide vital financial resources to support biodiversity conservation in the UKOTs. It said:
If the UKG is committed to protecting its biodiversity, increased funding to both government and nongovernment agencies to conserve and preserve habitats and species in the UKOTs is necessary.164
The UK Overseas Territories Conservation Forum pointed out that BEST was the most significant source of EU funding for the UKOTs, and that securing their eligibility for it took “about a decade” of lobbying. The Forum added:
This fund is important because there are so few funds available to UKOTs. They cannot apply to most international funding sources because they are not independent states and it is assumed that the parent state meets needs. Whilst this is largely true for the overseas territories of France, the Netherlands and Denmark, it is not so to anywhere near the same degree with UK and its territories.
The Forum therefore recommended that the UK Government make available funding to replace the funding external to the UKOTs lost due to leaving the EU.165
89.Government’s plans for leaving the EU and the subsequent funding regime must include consideration of the particular problems that the UK Overseas Territories will face once EU environmental funding ceases. It needs to agree key principles with the UK Overseas Territories over how much environmental funding will be needed in future and in what form this is best made available.
This conclusion is linked to our second and seventh recommendations.
73 Agricultural Policy Perspectives Brief: Overview of CAP Reform 2014–2020, December 2013
75 House of Commons Library, Brexit: impact across policy areas, August 2016
77 Cross-compliance requires farmers to comply with 13 Statutory Management Requirements and 7 Good Agricultural and Environmental Condition standards. “Greening” is a compulsory measure which attaches 30% of the CAP direct payment to maintenance of the ratio of permanent grassland; crop diversification and the creation/maintenance of Ecological Focus Areas.
78 Defra (BRX0251). DEFRA’s evidence cites the example of the Crop Diversification requirement, which they estimate as costing farmers £20m-£40m per annum without significant environmental benefit due to the very limited evidence that monocultures have a detrimental impact on biodiversity.
80 Scottish Wildlife Trust (BRX0077). Natural England (BRX0244) reports that the LIFE fund has co-financed 235 UK projects worth €967 million since 1992.
88 GOV.UK Press Release, CAP allocations announced, 8 November 2013. The figure quoted in this press release does not appear to include the effect of a planned 12% funding transfer from Pillar 1 to Pillar 2: once this is included, Pillar 1 accounts for approximately 80% of the CAP budget.
89 Q257 (Mr Murray Davidson)
90 Q142 (Mr Martin Harper)
92 Shared Assets (BRX0058), Dr Christopher Sandom (BRX0078), Friends of the Earth England, Wales and Northern Ireland (BRX0125), Dr Olaf Scroth (BRX0145), British Ecological Society (BRX0162), and RSPB (BRX0240) refer to ‘public money for public goods’ directly, and many other organisations submitted evidence with similar arguments.
96 Q129 (Mr Martin Harper)
97 Q140 (Dr Viviane Gravey)
99 Q274 (Mr Guy Smith)
100 Professor Dieter Helm, British Agricultural Policy after BREXIT, September 2016, available at http://www.dieterhelm.co.uk/natural-capital/environment/agricultural-policy-after-brexit/
102 Q175 (Mr Patrick Begg)
104 Defra, Estimating the Environmental Impacts of Pillar I Reform and the Potential Implications for Axis II funding, 2008
106 Q378 (Right Hon. Andrea Leadsom MP)
108 Q305 (Mr Rob Cooke)
111 Q124 (Mr Martin Harper)
113 Q268 (Mr Guy Smith)
115 Q270 (Mr Peter Melchett)
120 Q202 (Mr Patrick Begg)
123 National Audit Office, Outcome-based payment schemes: government’s use of payment by results, June 2015, available from the NAO website at https://www.nao.org.uk/report/outcome-based-payment-schemes-governments-use-of-payment-by-results/
124 Q217 (Mr Richard Quinn)
126 Q315 (Mr Rob Cooke)
128 Q254 (Sir Charles Burrell)
129 Q255 (Sir Charles Burrell)
135 The National Farmers Union (BRX0131) highlights this as being the perception of many, although its evidence also acknowledges other definitions.
136 Evidence offering this definition includes George Monbiot (BRX0021), WWF-UK (BRX0142) and the National Association for AONBs (BRX0124)
137 Q163 (Mr Stephen Trotter)
140 Q232 (Professor Richard Brazier)
141 Q235 (Professor Sue Hartley)
142 National Audit Office, Departmental Overview: Department for Environment, Food & Rural Affairs, October 2016, available from the NAO website here: https://www.nao.org.uk/report/departmental-overview-2015–16-department-for-environment-food-rural-affairs/
143 Farmers Weekly, 22nd July 2016, 900 staff go at Defra as budget cuts bite, http://www.fwi.co.uk/news/900-staff-go-at-Defra-as-budget-cuts-bite.htm
144 Q368 (Mr Robin Walker MP)
145 Flooding: Cooperation Across Government inquiry, Oral Evidence 13th April 2016, Q228, available from the inquiry webpage here: http://www.parliament.uk/business/committees/committees-a-z/commons-select/environmental-audit-committee/inquiries/parliament-2015/flooding/
152 Q135 (Mr Martin Harper)
153 Q202 (Mr George Dunn)
154 The allocation for 2014–2020 is in the same proportions as the previous round, but in this round Scotland argued unsuccessfully (and unsupported by the other administrations) for a larger share.
157 British Ecological Society (BRX0162). The Scottish Wildlife Trust (BRX0077) noted some of these international obligations: Aichi biodiversity targets; the UN Sustainable Development Goals, the Paris Agreement on Climate Change, the Ramsar Convention, the Convention on Biological Diversity, the Bonn Agreement, the Bern Convention and CITES. Ulster Wildlife (BRX0074) also suggested these agreements might provide the basis for common standards.
158 Jenny Sable (BRX0010). UKELA noted some of these international obligations: Convention on the Conservation of European Wildlife and Natural Habitats 1979 (the Bern Convention), the Convention on the Conservation of Migratory Species of Wild Animals 1979 (the Bonn Convention), the Convention on Biological Diversity 1992 (the CBD) and the European Landscape Convention 2000 (the Florence Convention). The Scottish Wildlife Trust (BRX0077) also referred to the Aichi biodiversity targets; the UN Sustainable Development Goals, the Paris Agreement on Climate Change, the Ramsar Convention and CITES.
159 RSPB (BRX0240). See also Fauna and Flora International, BRX0136; Chartered Institute of Ecology and Environmental Management, BRX0153; and CLA, BRX0037, which suggested in England local authorities should be responsible for devising and implementing policies.
161 Transfers are discretionary and can also be made from Pillar 2 funds to Pillar 1.
163 Q364 (Right Hon. Andrea Leadsom MP)
21 December 2016