Farmers in England face losing at least half of the subsidies they receive under the EU system by 2024 under post-Brexit transition plans to be unveiled on Monday by the UK government.
Ministers plan to cut so-called basic payments, which were the main source of funding under the EU’s Common Agricultural Policy, by a minimum of 50 per cent in four years’ time, according to documents seen by the Financial Times and two people briefed on the matter.
Following the UK’s exit from the EU in January, the government took over responsibility for most farm subsidies. At present, it pays them out under the same system used by the EU as it works to develop its own schemes to support farmers.
However, under the plans seen by the Financial Times, English farmers currently receiving more than £30,000 a year are set to face cuts even higher than 50 per cent by 2024, with the slice of payments between £30,000 and £50,000 to be cut by 55 per cent from their pre-Brexit rates, the portion up to £150,000 to be cut by 65 per cent, and any payments beyond that to be slashed by 70 per cent.
The figures are likely to disappoint farming groups that had pushed for less steep cuts to EU-style payments, as the industry also navigates other challenges associated with Brexit, such as potential disruptions to food exports.
Farmers are heavily dependent on the payments to remain profitable. They are pushing for more information on a new bridging scheme, the Sustainable Farming Incentive, which is intended to help fill the gap created by the end of EU support. A flagship system for subsidies called the Environmental Land Management Scheme (Elms) is being developed and is expected to be rolled out nationally by 2024.
One person briefed on the plans said: “The issue is, for farmers making plans now, they face a 50 per cent cut without any clear view about how their business is going to be able to make use of other income streams.”
Another person briefed on the plans said farming groups wanted to see economic impact assessments on the proposed cuts, which are set to be unveiled by the environment secretary George Eustice on Monday.
Tapering of the EU-style basic payments scheme, which accounts for more than half the income of the average farm, begins in 2021, with details of next year’s cuts already announced.
These start with a 5 per cent cut to payments below £30,000, with stepped increases in the level of reductions on higher subsidies. The new plans set out additional cuts for each year after that.
Ministers have pledged to keep overall subsidy levels — which were about €4bn a year when the UK belonged to the EU — the same throughout the current parliament, and began planning the transitional funding initiative because Elms will not be fully up and running until 2024.
Farmers are anxious for further details of both schemes so they can confirm their businesses will remain viable through the transition, which will see basic payments end in 2027.
At the centre of the subsidy plans will be payments for practices with environmental benefits, such as flood mitigation and fostering wildflowers. Payments under Elms will initially be calculated on the basis of so-called “income foregone”, or what farmers could have otherwise made from farming on the same land, plus the estimated costs of the environmental work, the government has said.
However, there are concerns that this will lead to the largest payments going to farmers who are already the most prosperous, while neglecting those such as hill farmers raising sheep on inhospitable terrain while helping to maintain scenic areas, such as in the Lake District.
Farming groups have also pushed for some payments to be linked to food production.
The Department for Environment, Food and Rural Affairs said: “Our future farming policy will create cleaner, greener landscapes, helping build towards the government’s environmental goals and net-zero commitments.
“As we phase out direct payments over the seven-year agricultural transition period, we will offer financial assistance to help farmers prepare, and invest in ways to improve their productivity and manage the environment sustainably.”
The Welsh and Scottish devolved administrations will decide separately how to allocate their own farm funding. The Welsh government has accused Westminster of setting a funding level in Wednesday’s spending review lower than Welsh farmers had received pre-Brexit.