Post-Brexit farm support: can the start of the agricultural transition period be postponed?

Ultimately any decision to delay the introduction of the post-Brexit agricultural transition period is a political one. In this blog we explore the legislative processes – what would need to happen before the start date of the new regime can be delayed, and the possible impact of an extension to the Brexit transition period.

Background

• We left the EU on 31 January 2020.
• Under the terms of the Brexit withdrawal deal EU law continues to apply in the UK until the end of the transition period, set for 31 December 2020. A critical exception is the CAP direct payments regulation; this was explicitly disapplied for the claim year 2020 in the formal withdrawal agreement.
• Parliament filled this ‘gap’ by enacting the Direct Payments to Farmers (Legislative Continuity) Act on 30 January 2020. This Act ‘re-applies’ the CAP direct payment schemes in the UK for 2020, with effect from 1 January. Those direct payment schemes include BPS and the Greening and Young Farmer payment, and the schemes are substantially the same as before. Payments will no longer be financed by the EU, but by the UK Treasury.
• The Agriculture bill is the vehicle by which the Government plans to introduce a new agricultural support scheme in England, from 1 January 2021. The 2021 start date ties in with the 31 December 2020 end of the Brexit transition/implementation period.
• In the meantime, the EU Commission has brought forward proposals to keep its current CAP direct payment schemes in place for 2021, due to delays in agreeing the details of the new CAP regime, originally intended to apply from 2021. This will mean the EU’s CAP direct payments regulation remains in force for a further year.

Could the introduction of the agricultural transition period be postponed?

The short answer is, yes. It would need the Agriculture bill to be amended as it continues its journey through Parliament.

The bill was introduced in the House of Commons on 16 January 2020 and has now completed its Commons committee stage. A new draft of the bill, with amendments made during committee, has been published. A date for the next stage has yet to be set, although – with Parliament due to return on 21 April (albeit ‘virtually’) – we should see some firming up of the timetable.

The Commons can make further amendments at the next stage, the Report stage, as can the House of Lords when the bill arrives there. In other words, there is plenty of scope for Parliament to vote through an amendment which delays the start date of the agricultural transition period, putting it back from 1 January 2021 to 2022 or even later. The Government could, if convinced it was necessary, propose the amendment itself. So far, however, Defra Secretary of State George Eustice has insisted that the agricultural transition will start in 2021. He spoke out firmly against “dither or delay” as late as 26 February this year, at the NFU conference.

But that was before the coronavirus pandemic hit, and before commentators started making serious noises about a coronavirus-related extension to the Brexit transition period.

What is the significance of the start of the agricultural transition period?

The agricultural transition period is the 7-year period during which direct payments in England will gradually be phased out. Staged reductions to BPS payments will be put in place from the very start, and Defra has indicated that, in 2021, the cuts would range from 5 – 25% (the bigger the claim the greater the reduction).

At the start of the transition period the framework for direct payments will continue to be the CAP direct payments regulation. In other words, something very like BPS will stay in place in the early years, albeit with ever decreasing payment rates. The bill allows for changes to BPS rules e.g. to simplify the system, and for the introduction of a delinked payment scheme in place of BPS, unlikely to feature in the early years of the transition period.

Could BPS in its “full fat” form continue for another year or more?

The Direct Payments to Farmers (Legislative Continuity) Act applies only to BPS 2020. So, any extension of BPS into 2021 will have either to be implemented via the Agriculture bill, as is currently envisaged, or by implementing another “legislative continuity” act to cover 2021.

If there are no changes to the end date of the Brexit transition period, and it ends on 31 December 2020 as currently planned, then there are powers in the Agriculture bill that enable the Secretary of State to continue BPS (and greening etc.) in any year beyond 2020, with or without applying reductions. However, if the start of agricultural transition period is put back, the staged reduction in payments would also be put back.

Will it make any difference if the Brexit transition period is extended beyond 2020?

Almost certainly, but on the legislative side it gets complicated, particularly where farm support schemes are concerned. The Government’s hands will be tied in terms of how far it can diverge from EU law during any extension. As mentioned above, EU law continues to apply during the Brexit transition period, and will continue to apply during any extension to it.

The start date of England’s agricultural transition period was designed to tie in with the end of the Brexit transition/implementation period. The Government would then be free, subject to the necessary parliamentary approval, to put in place a radically different agricultural support scheme and move away from direct BPS-type payments. It would be able to make changes to Producer Organisation rules, to pay for public goods delivery on a different basis, to make its own decisions on supporting markets in exceptional conditions etc. None of this will be possible if the UK remains bound by EU CAP regulations for a further period.

What of the CAP direct payment schemes themselves? The difficulty here is that the EU/UK Withdrawal Agreement disapplied the direct payment regulation for 2020; it said nothing about future years. Unless this detail in the withdrawal agreement is amended, the default position will surely be that the EU’s direct payment scheme, now extended into 2021, will apply.

Roythornes’ agriculture team are continuing to monitor Brexit developments closely. Please do get in touch with any questions you have, either to your usual ag team contact or to Julie Robinson at julierobinson@roythornes.co.uk