This note considers how much the UK contributes to the EU budget and how much it receives back. Potential payments to the EU on or after Brexit - such as the exit bill - are also discussed.
Documents to download
The Agriculture Act 2020 (2 MB, PDF)
Leaving the EU means the UK is leaving the EU’s Common Agricultural Policy (CAP). The Bill provides the legislative framework for replacement agricultural support schemes. It provides a range of powers to implement new approaches to farm payments and land management. In England, farmers will be paid to produce ‘public goods’ such as environmental or animal welfare improvements. The Bill also includes wider measures, including on improving fairness in the agricultural supply chain and on the operation of agricultural markets.
How are farmers currently supported?
Farmers in the UK currently receive around £3.5 billion support annually under the CAP. More than 80% of the CAP payments that UK farmers receive are ‘direct payments’ based on how much land they farm. The remainder pays mainly for rural and environmental farm management schemes. The Government has guaranteed the current annual budget to farmers in every year of this Parliament.
The new farm support framework proposed by this Bill does not apply to schemes immediately on exit day. Direct farm payments in 2020 across the UK are covered by the provisions in the Direct Payments to Farmers (Legislative Continuity) Bill. Payments in 2020 will continue much the same as under CAP schemes in previous years. The Commons Library Briefing on the Bill contains details.
What does this Bill do?
The Government introduced an Agriculture Bill 2017-19 in the last Parliament which fell at dissolution in October 2019. [Commons Library Briefing on the Agriculture Bill has full information on the contents and progress of that Bill.]
This Bill does several key things that the 2017-19 Bill did:
First: it provides enabling powers for Ministers to develop new farm support approaches in England. Direct payments to farmers are currently based on how much land is farmed. These will be phased out starting in 2021 over a seven year period. New schemes to pay farmers for producing ‘public goods’ such as environmental or animal welfare improvements will be introduced. New items have been added to the list of purposes in the previous Bill that can be given financial support, notably soil protection and improvement;
Second: it gives Ministers powers to intervene in agricultural markets in exceptional conditions, such as to provide farmers with financial support or operate public intervention and private storage aid schemes;
Third: it sets out measures to increase transparency and fairness in the supply chain for farmers and food producers. It does this by: introducing new requirements on collection and sharing of data; by placing fair dealing obligations on business purchasers of agricultural products; and by introducing new measures on Producer Organisations. However, this Bill has increased the reach of the fair dealing measures so that any business purchaser must comply and a wider range of people selling products can benefit from the provisions;
Fourth: the Bill includes measures on marketing standards and carcass classification. For example, to amend or revoke EU and domestic legislation or to set new standards tailored to suit UK agricultural sectors. New clauses are included in this Bill on certification of organic products. These are important for imports and exports as well as domestic sales;
Fifth: the Bill sets out provisions to enable the UK to meet its obligations under the World Trade Organisation Agreement on Agriculture. The WTO Agreement sets limits on how support that is considered trade-distorting a country may provide.
There are several additions to this Bill compared to the previous Bill. New measures include:
- A requirement for Ministers to consider the need to encourage the production of food in England, in an environmentally sustainable way;
- A requirement for Ministers to set out multi-annual plans about how they will use their financial assistance powers. The first plan will start in 2021 for seven years. Beyond that plans must be of at least five years’ duration;
- A requirement to report on food security at least once every five years; and
- Several varied measures in a new Part 4 on matters relating to farming and the countryside. Measures relating to agricultural tenancies, fertiliser regulation, identification and traceability of animals, and the Red Meat Levy are included.
How does this Bill apply to the UK nations?
The provisions on new farm support schemes mainly apply to England. Powers are included in a Schedule for Northern Ireland to enable preparation of replacement schemes. Some provisions in the Bill apply to Wales (for example to amend Direct Payments rules) but these are intended to be temporary. Notably provisions mirroring English provisions on new support schemes that were in the previous Bill have not been included in this Bill. Welsh Ministers intend to introduce this Assembly term a Wales (Agriculture) Bill. The Scottish Government introduced legislation in November 2019 which proposes to keep farm support approaches largely the same until 2024.
Aside from farm support, some measures such as those on food security and fair dealing in the supply chain apply to the four nations, while the various measures in the new Part 4 have different applications. Measures on meeting WTO obligations also apply across the UK. It is reported that the Scottish Government considers these matters to be devolved so intends to withhold legislative consent.
Farming organisations and environmental groups both broadly support the new ‘public money for public goods’ approach to future farm support schemes. Farmers had however called for the previous Bill to have a greater focus on food production. The new Bill requires Ministers to have regard to the need to encourage the production of food in England, in an environmentally sustainable way. The NFU has welcomed recognition in this Bill that “food production and caring for the environment go hand-in-hand”.
Farmers and environmental groups also expressed concern that there were no commitments in the Bill to maintaining food and animal welfare standards for imports under new trade deals. Some 62 farm and environment organisations wrote to the Prime Minister on 27 January calling for legislation to underpin Government commitments not to reduce such standards in future trade deals. Several amendments were proposed during the Bill’s passage dealing with such issues, and Government amendments now require reports to Parliament on the standards implications of future trade deals.
Farmers also wanted long-term assurances on funding. The National Farmers’ Union called for a “multi-annual budgetary framework that provides certainty for farmers and allows them to plan and invest for the future”. It has welcomed measures in the 2019-21 Agriculture Bill requiring the Government to publish longer-term plans.
Farmers and landowners were keen for the previous Agriculture Bill to make faster progress. Delays in progressing the legislation underpinning the new policy led, at various times, the NFU and the Country Land and Business Association to call for a delay to the agricultural transition.
Political party views
Opposition Parties broadly support the principle of paying farmers to provide public goods that underpins the Bill. Opposition Members have also criticised the failure of the previous Bill to reach the statute books. However, Labour called for commitments that food and animal welfare standards will not be reduced in future trade deals.
Progress of the Bill
The Bill completed its Commons stages on 13 May 2020, and its Lords stages on 1 September 2020.
Amendments were tabled at various stages of the Bill’s progress. Several of these concerned the issue of agri-food standards in future trade agreements, among other matters.
The Bill went through the “ping-pong” process between the two Houses during October and November, with the Lords agreeing the final Commons amendments on 9 November 2020.
Documents to download
The Agriculture Act 2020 (2 MB, PDF)
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