Agriculture and Rural Development Cuts - FUW Number Crunch

Leaders of the Brexit campaign promised that leaving the EU would not lead to reduced funding for  farming and rural areas 

The 2019 Conservative Manifesto stated “...we will guarantee the current annual [Common  Agricultural Policy (CAP)] budget to farmers in every year of the next Parliament” 

The EU CAP budget for Wales for the period 2014-2020, confirmed on 8th November 2013 by the then Secretary  of State for Environment Owen Paterson was “…a pillar 1 (direct payment) allocation of around €2,245  million, and pillar 2 allocation of around €355 million”  ( )

This is a total of €2.6 billion over the seven year (2014-2020) CAP budgetary period – an average of  £331 million a year based on the £0.89/€ exchange rate fixed by the UK Government On 25th November 2020 the UK Government announced that Wales’ 2021-2022 financial year  allocation for agriculture and rural development would be £242 million - £89 million less than the  average annual EU CAP allocation for the period 2014-2020 

The £242 million figure for the 2021-2022 financial year is £95 million less than the £337 million  received in the 2019 funding ‘baseline’ defined by the UK Government to calculate Wales’ allocation The UK Government maintains that the total budget available to Wales in 2021-2022 should be judged  to be the sum of the £242 million announced on 25th November 2020 and the £95 million in unspent  EU funding from the 2014-2020 funding period 

Under the EU’s ‘N+3’ rule, the Welsh Government is entitled to spend money from the 2014-2020  Rural Development Programme budget in the three years after the end of the budgetary period to  which the money ‘belongs’ 

The FUW maintains that since the £95 million is part of the 2014-2020 EU budget it should not be used  as part of the UK Government’s 2021-2022 calculation  

The average annual EU CAP budget for Wales for the 2014-2020 period was £286 million (Pillar 1) plus  £45 million (Pillar 2) 

15% of the £286 million Pillar 1 budget is transferred annually to Pillar 2 under the ‘Pillar transfer’ mechanism, reducing the annual amount paid to farmers through Direct (Pillar 1) Payments to £243, and increasing the average annual EU funding for Pillar 2 (Rural Development) to around £90 million  

On 30th December 2019, the UK Government announced £243 million would be made available for  Welsh Direct payments in 2020 

The total CAP replacement funding of £242 million for the 2021-2022 financial year announced by the  UK Government on 25th November 2020 is therefore £1 million below the 2020-2021 Direct Payment  budget announced by the UK Government on 30th December 2019 – and takes no account of the EU  annual Pillar 2 funding allocation 

While the UK Government announced £243 million in funding for the 2020 Basic (farm) Payment on  30th December 2019, they made no reference to the circa £42 million usually transferred annually to  the Pillar 2 (Rural Development) budget 

As such, there is an additional £42 million ‘missing’ from the £242 million 2021-2022 financial year  allocation announced by the UK Government on 25th November 2020 – bringing the total reduction in  Wales’ 2021-2022 allocation to around £137 million less than had been anticipated, based on  successive promises and the 2019 Conservative Manifesto 

The UK Government has pointed out in correspondence to the Welsh Government and FUW that the  total EU CAP budget for the period 2021-2027 is €344 billion - €39 billion (10%) less than the €383 billion allocated for the 2014-2020 budgetary period, arguing that this would equate to a £34 million  reduction in Wales’ annual allocation if the UK was still a member of the EU 

One of the reasons that the EU CAP budget has been reduced is because the UK has left the EU and  will therefore no longer contribute substantially to the EU budget - so the overall EU 2021-2027  budget is lower than would otherwise have been the case. However, the number of countries eligible  to receive funds from the CAP has also been reduced, as the UK is no longer a member, and the UK  previously received around 8% of the EU CAP budget – so the use of the new EU CAP budget in justifications for UK budgets is invalid. 

Notwithstanding this, if Wales was still eligible to receive the same percentage of the EU budget as  under the 2014-2020 CAP, Wales’ share of the new €344 billion CAP budget in 2021 would on average  be £298 million per year - £56 million more than was announced by the UK Government on 25th November 2020 

While the FUW has labelled Wales’ replacement CAP fund allocation as a ‘Brexit betrayal’, the Welsh  Conservatives have claimed that the Welsh Government has pulled the wool “...over the Farming  Unions [sic] eyes” and believe that unspent funds from the 2014-2020 CAP budget should be included  in the funding calculation 

Given that the same funding formula has been applied in Scotland and Northern Ireland, the FUW’s  belief that the 2021-2022 funding allocations are hundreds of millions below what they should be, based on the 2019 Conservative Manifesto commitment, is supported by the Welsh Government, the  Scottish Government, the Northern Ireland Executive, NFU Cymru and NFU Scotland