Environment Secretary Owen Paterson has announced that the amount of funding transferred from farmers’ direct payments to the budget for environmental and rural growth schemes will be increased from nine per cent to 12 per cent.

The demand for environmental schemes and the competiveness of English agriculture will be reviewed in 2016, with the intention of moving to a 15 per cent transfer in the final two years of the CAP period.

Secretary of State for the Environment, Owen Paterson, said: “England’s £15 billion Common Agricultural Policy must deliver real benefits to farming, rural businesses, the countryside and the taxpayer.

“Today’s decision will see £3.5 billion invested in the environment and rural development schemes over the next seven years.

“This is a significant change in the way we allocate CAP money and even with a smaller overall CAP budget, the Government will be spending a bigger share of the budget on the environment than before.”

During the EU negotiations, the UK pressed for every country to have the freedom to make choices about how it spends its funding. One of these choices is the option to transfer a proportion of the budget for farmers’ direct payments into the rural development budget. As a result of this transfer, environmental schemes will get a higher proportion of the CAP budget than they do now, while ensuring that English farming remains competitive.

England’s hill farmers will also be helped by today’s announcement. For the first time ever, they will receive the same direct payment rate on their upland farmland as their lowland counterparts. This will support farmers working in some of the toughest conditions and least-productive land, who manage some of our most beautiful countryside and provide habitats for wildlife. This helps to sustain our £33 billion a year tourism industry.

The work of farmers and landowners through environmental stewardship programmes has already created lasting habitats for rare birds and pollinators boosting rural tourism by improving the natural environment.

Rural business schemes have already successfully transformed the prospects of thousands of businesses and farms, created 8,500 rural jobs across the country, safeguarding another 9,700.

Within a smaller overall CAP budget these decisions will help to grow the rural economy and improve the environment.

NFU 'delighted'

The decision by Government to modulate CAP at 12 per cent for the next four years is a sensible and pragmatic decision which will help England’s farmers and growers to remain competitive, produce more food and maintain the environment, the NFU has said.

NFU Deputy President Meurig Raymond said: “I am delighted that Owen Paterson has decided to keep the rate of modulation below the maximum for the next four years along with a Government review to be launched in 2016 to consider the transfer rate from payments in 2018. I appreciate this was not any easy decision for the Secretary of State to make but we are pleased that he has listened to our arguments.

“I would like to thank the EFRA Select Committee and many rural MPs who have supported us in recent days.

“The reduced rate of transfer to the Rural Development budget will mean that £224million will be retained in the farming sector over the next four years.

“This issue has falsely been presented as a fight between farming and the environment. It is not. Even at nine per cent transfer the NFU has demonstrated that we could continue to meet all our on-going commitments to agri-environment programmes and have a surplus to spend on other measures. At 12 per cent there will be additional funds available and we will play our full part in determining how these might best be spent.

“The decision to review the rate from 2018 onwards is the right one, and one we have consistently pressed for. If by then there are valuable programmes in the rural development programme, including the new Environmental Land Management Scheme, and there is clear evidence of demand, the NFU would certainly not oppose an increase in the modulation rate.

“Of course, the 12 per cent rate is higher than the current rate of nine per cent and more than most of our closest competitors, but the NFU acknowledges that once the decision had been taken at EU level to reduce the UK’s Rural Development budget allocation and once our own Treasury decided to reduce its contribution, it was difficult to avoid some increase in the rate. I must also express my deep disappointment at the decision by the Welsh Assembly Government to introduce a 15 per cent rate.

“The NFU strongly believes that voluntary action by farmers is generally a more effective way of meeting specific challenges. For this reason we have committed to promoting action that will encourage pollinators and improve water quality. We have pledged ourselves to ensuring these initiatives produce positive results.

“The NFU is well aware that there was strong pressure from other parts of government to transferring some of the CAP budget outside the farming sector to the so called “growth agenda”. This would have been wrong on many levels and we are pleased that Owen Paterson has largely resisted this move.

“The NFU remains convinced that the CAP Reform agreed in Europe this year was a missed opportunity and a step in the wrong direction. I am, however, pleased to state that Owen Paterson has made a number of decisions which have made the best of what was otherwise a bad job. This is the case for the modulation rate, but also the rolling on the existing payment entitlements, avoiding gold-plating of greening by implementing the standard EU measures, minimising distortions by applying scale back at the minimum level, avoiding the capping of payments, and streamlining the system of direct payments by not implementing any of the optional aid schemes in England.

"The NFU and Defra have both tried to find an alternative to the madness of the 3 crop rule, but unfortunately the European Commission has resisted attempts to implement an alternative approach that would work on the ground. We also look forward to continuing discussions with Defra to ensure that farmers farming in the moorland regions of England are treated fairly.”