This briefing sets out the policy background to and provisions in the Direct Payment to Farmers (Legislative Continuity) Bill (2019-20). The Bill received Royal Assent on 30 January 2020. The Act provides powers to Ministers to allow farm support direct payments to continue in 2020 after the UK left the EU. The briefing summarises Parliamentary scrutiny stages of the Bill.

Supporting documents

The Direct Payments to Farmers (Legislative Continuity) Bill 2019-20 (HC Bill 5) was published on 9 January 2020. It received its Second Reading on 21 January and completed its Committee stage on 28 January. The Bill also received its Report and Third Reading on 28 January. It passed its Lords stages on 29 January and received Royal Assent on 30 January 2020.

The Bill does two main things: it makes provision firstly for the incorporation of the Direct Payments Regulation into domestic law for 2020, and secondly it will enable increases in the total maximum amount of direct payments.

An accompanying Explanatory Memorandum was published.

This briefing explains what the Bill does and sets out the wider context on farm support. UK farmers currently receive about £3.5 billion annually in farm support under the EU’s Common Agricultural Policy (CAP). More than 80% of this support is paid as direct payments, based broadly on the amount of land farmed. Library analysis of funding by constituency is published in this briefing.

The UK leaves the CAP when it leaves the EU. Under the terms of the UK-EU Withdrawal Agreement, most EU regulations governing CAP farm support will cease to apply to the UK from exit day. A new legal basis will therefore be required to enable Ministers to continue direct farm support payments in 2020. The Direct Payments to Farmers (Legislative Continuity) Bill sets out that new legal basis. It provides that on exit day the EU legislation, as it then stands, governing the 2020 CAP direct payment schemes becomes part of domestic law. This will ensure that the scheme can continue in each part of the UK for the claim year 2020.

The Bill includes time-limited powers. It contains a power to make secondary legislation to make corrections to the direct payments body of law to make it operable once the UK has left the EU. It also contains a discretionary power for the Secretary of State or the devolved administrations to replicate amendments the EU makes in that period.

This Bill also includes powers for Ministers to increase the total maximum amount of direct payments in 2020. The Bew Review recommended changes to the way in which UK CAP funds are distributed among the UK nations. Following the Bew Review, the Government increased the amount of direct payments for Scotland and Wales. An increase in the overall UK budget for direct payments will prevent that change from impacting negatively on allocations for Scotland and Wales.

This Bill applies to all parts of the UK. Legislative consent for this Bill is needed from the devolved administrations. This is because the Bill contains provisions affecting Scotland, Wales and Northern Ireland.

The wider picture

The Government has guaranteed the annual farm budget for each year of this Parliament. Nearly £3 billion of funding has been provided for 2020. The UK Government funding of £2.852 billion will top up the remaining EU funding to match the total funding for direct payments that was available for 2019.

Agriculture is a devolved issue. Each UK nation is developing its own agricultural policy to apply in the longer term after the UK leaves the CAP.

The Queen’s Speech in December 2019 included an Agriculture Bill which was introduced on 16 January 2020. A similar Agriculture Bill completed its Commons’ Committee Stage during the last Parliament but failed to progress further before the October 2019 dissolution. The Agriculture Bill will reform farm support. It will do so by phasing out direct payments in England over a seven-year period expected to start in 2021. It will also introduce payments for public goods such as environmental and animal welfare improvements. The Labour Party and Liberal Democrat Party Manifestos both broadly support payments based on such an approach. The Labour Party Manifesto also committed to maintaining “agricultural and rural structural funds”.

Farmers have called for Government agricultural policies to put food production at the centre. Specifically, they want production of food itself to be included as a public good eligible for support. Farmers have also called for certainty on future funding levels. The NFU welcomed the £3 billion commitment to 2020 farm funding and the provisions of this Bill. But it would like long term clarity. It has called for a “multi-annual budgetary framework that provides certainty for farmers and allows them to plan and invest for the future”.

The Direct Payments to Farmers Bill received its Second Reading on 21 January 2020. Members from all Parties welcomed the certainty for farm payments the Bill brought in the short-term. However, Opposition Members criticised the delay in progressing the Agriculture Bill in the last Parliament which they said had led to the need for this Bill to fill a legislative gap for 2020. Ministers noted that the Agriculture Bill provided for new schemes from 2021. A number of wider issues were raised which are the subject of Agriculture Bill provisions. These include agriculture’s role in combatting climate change and the need for longer-term certainty in farm funding.

The Bill passed its Committee stage unamended and completed its Commons consideration on 28 January. The Lords considered and passed the Bill unamended on 29 January. The Bill received Royal Assent on 30 January 2020. Secondary legislation under the Act came into effect on exit day, 31 January 2020.

Supporting documents