Common Agricultural Policy
Agenda item 2 is an evidence session on the common agricultural policy. Today, we take evidence from Alyn Smith MEP on the CAP reforms. I welcome Alyn to the committee, face to face, and I will invite members to ask questions. We will have a dialogue as we go along.
I invite myself to ask the first question. What are the benefits of the new CAP for taxpayers, farmers and the environment?
Convener, committee members—thank you. It is great to be here to join up the two bits of this process. What you are doing domestically is crucial to our understanding of how we implement what we are deciding over in Brussels. It has taken long enough for us to co-ordinate diaries to get me here. I am impressed to see that you get croissants at your meetings; we have to struggle by with coffee. I am learning about how different Parliaments do things already.
There is a pretty good story to tell about the wider benefits of the new CAP, as opposed to where we are just now. We will see a much greater emphasis on rural development pillar 2-type activities. I have specifically sought out the shadow rapporteurship on rural development regulation. George Lyon, a fellow Scottish MEP on the Agriculture and Rural Development Committee, is the shadow rapporteur for his group on direct payments regulation. That pretty well represents where Scotland needs to be and the key dossiers for us.
On rural development, I stress that we are midway through the sausage-making process, so there is only so much that I can tell you that is definitive. However, I think that we will see a greater focus on rebasing the greening of CAP’s environmental benefits.
Farmers are land managers as well as food producers, and the reason why our landscape looks the way that it does is because it has been actively managed by our land managers over the centuries. Scottish agriculture has made a massive contribution of environmental benefits that has not been recognised or rewarded. I think that CAP will be much more amenable to rewarding us for the best practice that in Scotland we have got going on in spades.
We will see a much greater focus on things such as rural development support for small-scale rural abattoirs, which I am keen on. That will cut down on journey times for slaughter, ensure that animal welfare—which is close to my heart—is better maintained, and be good for short local supply chains, and thereby it will allow us to push towards niche, quality products, rather than volume.
We see a number of positive things coming through. There is a question mark over what the budget will be, but frankly in Brussels there is a question mark over what every budget will be. The budget will be hotly contested, but I think that we have a good story to tell about the overall legislative structure of CAP—pillar 1 and pillar 2—and I think that we will have a pretty positive outcome.
So taxpayers can be happy that we will spend the money wisely.
I think so. If anything, I have been pushing the various folks in Scotland to be a bit more on the front foot about what we get back for our CAP spend.
With regard to economic development, some parties in the discussion forget that farms are rural businesses, employers and land managers. The direct payment element of the CAP payment is a direct subsidy into job creation and retention in some of our most fragile areas, and it is money well spent. Likewise, from pillar 2 funding we get vast benefits with environmental management and the countryside that we all enjoy.
We all eat food, and the key objective of CAP is to maintain the critical infrastructure of food production in these islands and on this continent. If we are dependent on foreign imports of T-shirts, it is no great problem if the global supply chain breaks down, but it is unwise for us to allow ourselves to be as dependent as we now are on imported food in a world that is unstable politically and climatically. Bits of the world are getting drier and bits of it are getting wetter, but all of it is becoming climatically more unstable. We have a petrochemical-dependent agriculture in terms of transport costs and fertiliser.
For us to allow our food production infrastructure to wither away, as is happening in parts of Scotland and across much of Europe, is ruinously short-sighted. CAP is about long-term food production and maintaining food production. That is a public good in itself. There is an awful lot more public good that stems from CAP as well. I will look any taxpayer in the eye and say that CAP spend is well worth maintaining and promoting.
Thank you for that starter. I am sure that there will be much more detail in a wee while.
Good morning, Alyn. It is good to see you here.
I do not want to dwell on specific issues, but you mentioned your views on local abattoirs. Clearly, there are issues with island slaughterhouses. The Isle of Mull has had difficulties, the Isle of Lewis regularly reports an annual loss and we have seen the difficulties with Orkney Meats. Will you expand a bit on how you expect to be able to deal with those issues from a European point of view?
Sure. I proposed a number of amendments that were accepted in the March plenary vote on the rural development regulation. Forgive me while I run through the screeds of notes on them.
I stress that this is work in progress, but the European Parliament accepted a proposal that we encourage short supply chains and short animal transport distance to slaughter. The corollary to that is that we need to open up wider avenues of public support for small-scale rural abattoirs, even perhaps part-time abattoirs that would not otherwise be economic. We have opened the door to that.
The flip-side is that we will need to consider the state aid implications, because they have tripped us up a number of times in the past. If we set an objective in one dossier that is then tripped up by another, that is just silly—although sadly it is not unprecedented.
The problem in Scotland is not that we lack kill capacity. We have a problem with the market and where the supermarkets want their animals to be slaughtered. However, for the wider national and public interest, there is a clear case for opening up the door to avenues of support on the rural development side—pillar 2—for small-scale rural abattoirs, especially on the islands. That infrastructure is particularly under stress, which is regrettable.
I certainly appreciate the fact that you are considering that issue.
Let us move on to the wider question of money.
Where are we on the European Parliament approving the budget? Where is the process ultimately headed?
Upwards—that is about as good an answer as I can give you at the moment. The European Parliament claims a lot of relevance in the budget process, but it is worth remembering that it is the budgetary authority for how money is spent; it is not responsible for raising it. The money-in side is a member state discussion, and that is happening in the Council of Ministers at the moment across the 27 member states.
In the European Parliament, we are not part of the money-in process in any meaningful sense. That would be a controversial statement in Brussels, but I really do not think that we are. That does not prevent us from talking about it a lot or a few MEPs from claiming great relevance to things that are completely beyond our control. The money-in side of the European Union budget is entirely the choice of the member states. It is being hotly contested at the moment and is work in progress.
It has been suggested to us that there could be a vote by July but that it could slip into September. Would you go along with such a timescale or could it go beyond that?
That is certainly the latest working assumption. We will start to see real problems if it drags on beyond that. The Council negotiations seem to have been getting a lot more real in the past few months than previously, so that is positive. Some of the Council proposals seem to be a lot harder edged than they were.
The European Parliament will be involved in the last stage of the process, and September seems more likely to me than before the summer. We will need the summer to rattle the proposals around, not least because that is the way the EU does business. It works tolerably well in what we need to do, but it is slightly counter-intuitive. We are reforming the CAP from the point of view of its legislative form, what the outcomes will be and the priorities that we want to see, but we are doing much of that with the numbers in brackets. In the real world, of course, if you have £100 as opposed to £10 in the budget, you draw your priorities differently. We are looking at the CAP very much on the basis of what it might be in a range of outcomes rather than what it will be in a specific outcome.
I would hope that things will be much clearer in a budgetary sense by midsummer or September.
Good morning, Alyn. It is nice to see you again; I hope that you recall where you started your agricultural apprenticeship, some nine years or so ago.
I hope that you remember where you started your political one.
That was exactly the point I was going to make.
When George Lyon gave evidence to the committee, it was confirmed that member state allocations for pillar 1 for the transitional period were known. However, at that stage the figures for pillars 1 and 2 for 2015 to 2020 were unknown. Has there been any progress on that?
I read through the Official Report of your evidence session with George Lyon last night. I was looking to see whether there has been any movement about which I could speak with certainty, but frankly the answer is no.
The transitional arrangement is just that—a year’s transitional arrangement. Essentially, it is the same programme but with a new budget. That is well telegraphed. In the longer term, the matter is still a bun fight in the Council of Ministers across the member states.
That is fine. My other point is about the allocation key for pillar 2 funds. Again, when George Lyon talked about that, it was not known what that would be or what weighting would be given to criteria such as land area or historic spending. Do we know whether there is any progress on establishing that mix?
That is still under discussion.
My last question relating to the discussion with George Lyon is on how you would advise rural land users and businesses to make plans when all those points are unknown and when the Scottish Government’s plans for its devolved CAP are also unknown.
We should bear it in mind that, if any business is dependent on the single farm payment or on rural development spend, its business model probably needs to be looked at in the round and not just in terms of the public support that it receives.
We want people to be in the best position that they can be—namely, where they are getting a proper return from the market. That is what the legislative structure is for, for example in using competition law to ensure that the supply chain gives everybody a fair shake. We have had some movement on that, having seen the very welcome appointment of the United Kingdom supermarket adjudicator, but we will need to see what comes out of that process. There are things that we can do in legislative terms to encourage people to get a return from the market.
The best advice I can give is “Watch this space.” Until we know what the numbers are—until those numbers are decided by the member states—we will not be able to work out in much detail what the allocation keys are or other such matters.
I can say that avenues of support that currently do not exist will be opened. I had a meeting with a group of farmers recently. On the back of a number of amendments that I proposed on rural development, we will see increased support for renewable energy developments on farms. Farm-scale renewables are win-win situations several times over, in that the farm gets an income stream that defrays wider costs and provides assistance with capital expenditure and the facility helps to reduce emissions and to meet climate change targets. There is also a return for the rural economy. People can therefore start thinking in that direction without necessarily knowing what the numbers are.
I must stress again that we are midway through a process that we are not entirely in charge of. Until we get clarity from the member states about the budget, we can do only so much on the legislative form.
You have mentioned a couple of times already the question of support for rural businesses through the Scotland rural development programme. Do you recognise that many rural businesses are not farm-related? Do you think that we have got the balance right, historically, in taking account of that—or have we too often supported agricultural businesses through that programme at the expense of not encouraging other businesses in rural communities?
10:15
We had that discussion as we debated the rural development dossier when it was going through committee. There was almost an existential or philosophical question about whether a rural taxi company is a rural business. It is clearly rurally related. Its function is not food production, although it is ancillary to that—or is it? Should it be supported or should it not? Is an agricultural plant hire business rural, given that it, too, is not directly involved in food production?
We are broadening, to an extent, the type of businesses that will be eligible for support. That support will be based on the projects that businesses are involved in rather than their general activities. That approach gets us to a pretty useful place in which we can encourage co-operatives, local food supply chains, local quality marks, local innovative practices and, in particular, advisory services, which are crucial to bringing together the actors in particular projects. We will, I think, see a greater focus on what people are doing in projects, rather than on what they do as their business.
We have discussed the issue. There has been a degree of, “If you’re not an active farmer, you’re not getting in.” However, that applies only to the direct payments dossier. We will see a much greater degree of flexibility in rural development support, which should be that bit wider. Historically, the programme has been dominated by rural businesses that are farms, rather than just rural businesses, largely because of the farms’ familiarity with the CAP and how to get EU money out of it. Particularly through beefing up advisory services, more energy will be put into encouraging a greater diversity of rural activities that are based on food production or that are ancillary to it. The programme will be broader than has historically been the case.
I want to dig into the move from historical payments to area payments. The average pillar 1 payment per hectare for the EU is about €260; for the UK it is €250; and for Scotland it is €107. The European Council has agreed to move to equalise pillar 1 payments, so that by 2020 all member states reach an average payment of at least 75 per cent of the EU average, which is €196 per hectare—the so-called external convergence.
The proposal to converge payments is being done irrespective of the relative quality of land in different member states. Under external convergence, as the UK currently has close to the EU average, I presume that the allocation to the UK will not change much, apart from through its taking a share in the CAP budget cuts. Since the average payments in England, Scotland, Northern Ireland and Wales vary considerably and Scotland’s average payment is the lowest of the four countries, what will happen to Scotland’s share of the pillar 1 CAP budget?
Throw me an easy one, why don’t you? [Laughter.]
Convergence has been hotly contested and the numbers are pretty stark. Historically, Scotland has had a poor allocation when we consider what our chaps are getting versus what those in the rest of the continent get. We have been active in raising that issue. I will not get into the constitutional reasons for the situation, but the Lithuanians, Latvians and Estonians have been particularly exercised by external convergence, because they, too, have had an historically poor allocation. That is being remedied.
I might sound like a broken record, but I stress again that we are midway through the process. The European Parliament’s mandate and stance in the negotiations on direct payments and convergence, led by our rapporteur Capoulas Santos, is at variance with the Council’s position. The Council wants an awful lot more member-state flexibility both within and across member states. It is going for strong proposals on flexibility to avoid full convergence before 2020. The member states are looking for a much shallower lead-in to convergence. There is a strong argument that we would be better served if internal and external convergence proceeded at a much faster rate. However, that is very much a hot point between the Council and the Parliament.
Good morning, Alyn. Do you accept that Scotland’s position is a direct result of this Parliament’s unanimous decision to go for a system based on historic payments on an area basis? Do you agree with what George Lyon said on the subject two weeks ago? He said:
“If Scotland decides to abandon that historic basis for distributing the payments, and if Northern Ireland and Wales do the same”—
as they will obviously have to do under the CAP proposals—
“there will have to be a negotiation within the United Kingdom about what the new distribution key will be. However, that can happen only once we have moved away from historic payments”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 17 April 2013; c 2054.]
in discussion with the other constituent parts of the United Kingdom. To what extent do you agree with that?
There is certainly a grain of truth in it. However, we now have the year’s transition, which perhaps gives us a great deal more flexibility than we thought we had in the internal convergence within the UK as the member state. The decisions that will need to be made in implementing what we are doing over in Brussels will have implications. Under the present constitutional settlement, four sets of decisions need to be made in these islands about how the transition will be implemented. There are therefore knock-on effects from the budgetary allocations, but that is the case for this side of the North Sea rather than for my side of the North Sea.
Discussions on those decisions will need to be taken forward. Frankly, though, they have not happened yet in any meaningful sense. We are still working out the knock-on effects from the decisions that have been made. In addition, the member states have still to decide what the overall budget is going to be. Therefore, a game of several-dimensional chess is going on at the moment. Things will work out, but the decision that will be made in Scotland about the best method of implementation will not only be about getting the most money but about using that in the best way. That is a matter for the Government and, indeed, this Parliament.
I think that we might come back to that one but, in the meantime, thank you.
Indeed. What precedent is there for the UK to distribute money on a more equitable basis according to need? We know what decisions were taken in 2003, but we now expect the member state to have flexibility. Do examples come to your mind of the member state taking an approach that favours Scotland’s particular problems?
Frankly, no. However, that will be a discussion about the future rather than one about the past. The future is unwritten because the negotiations have yet to happen. Anything can happen and the omens might not be as positive as we like. That is the constitutional situation that we find ourselves in.
My job is to ensure as much member state flexibility as possible in how things are implemented in order to allow the constitutional settlement of these islands to be respected. I think that we have achieved that. We have devolved competence for the agricultural environment in Scotland. That continues, and it is right that the EU should reflect that. However, you should not underestimate the extent to which there have been proposals in Brussels for things like a single payments agency: one per member state. That would not fit our constitutional reality and how we do things, but the attitude in Brussels really is binary: either you are a member state or you are not—and if you are not, then you are very much second division.
That is the reality of the position that we find ourselves in. My job is to ensure as much flexibility as possible to hand over to the domestic authorities, however one defines domestic. There then needs to be a discussion within those authorities.
Thank you. Alex Fergusson wants to continue this line about money.
My question is on the subject of the ability to transfer from pillar 1 to pillar 2 payments. I think that we would probably accept that there is not going to be much temptation to transfer from pillar 2 to pillar 1. I found interesting what you said about the wider remit for rural development. I think that we all know that there will be huge pressure on any rural development budget, because of the wider remit and lessons learned from previous experience.
George Lyon told us that the European Council’s position is that member states believe that transfers up to 15 per cent would be allowed without any match funding from the member state but that the European Parliament’s position is that the same amount could be transferred only with match funding. Can you give us your views on that and on what you see as the potential implications of that decision for Scotland’s rural development budget?
You call it a decision, but there are two conflicting positions, which are subject to negotiation.
I will give you a flavour of how the trilogue discussions work. The Council is represented by the Irish presidency and is speaking to a mandate that has been agreed by the 27 member states. The Parliament is represented by a rapporteur, whoever he is—they are all he, sadly—for each of the four dossiers. In our case, it is Capoulas Santos, who is speaking to the mandate that was voted on at our March plenary session. The Commission is represented by the director general of the directorate-general for agriculture and rural development.
There are three sets of negotiations, but there are 27 voices from one side and about 750 voices from another side, so it becomes difficult for people to grab a place in the discussion. You are right that there are two conflicting positions between the Parliament and the Council, and they are being negotiated. As for which will win through, I cannot call it.
There are two aspects to the matter. One, on the direct payments side, is about the capping of the single farm payment. I am in favour of capping as long as the money that is top-sliced goes into a national reserve for use on other things that benefit the sector as a whole. If the money that is top-sliced goes back to Brussels, I see little advantage in that from a Scottish perspective, but it seems that that is where things will go.
Secondly, on the flexibility mechanism, the European Parliament has called for transfers from pillar 1 to pillar 2 to be done at regional level—which is how the European Parliament defines Scotland. That is positive for us, in that it is likely that Scotland would transfer less from pillar 1 to pillar 2 than the UK Government will, which will mean a bigger pot for direct payments. There are implications for the rural development side, however.
I must be frank. Anyone who is saying that they can tell which of the two positions is going to win has a better crystal ball than I have.
I will follow up on the subject of capping. I am concerned that given the sizes of Scottish farms—which are what they are for historic reasons—a cap would set a dangerous precedent. Once a cap has been set, the level is unlikely to go up. The pressure will always be for it to come down. Do you not feel that there are serious potential implications for Scottish agriculture if capping is introduced?
No—I am agnostic on that, and I run a consultation for farmers on my website for that reason.
From memory, I think that if the cap is set at €300,000 it will affect about 47 Scottish holdings. You are correct to highlight big farms, but a cap would not necessarily affect a lot of people. If the money that is top-sliced from that went to the wider benefit of Scottish agriculture—for example, to a small abattoirs fund, to a support for local supply chains fund or to expand the LEADER budget—that would benefit the sector as a whole. To my mind, the impact for Scottish agriculture as a whole would be positive, although it would be financially negative for the holdings that are affected.
You are right to highlight the question whether, once the cap is set, it will get tighter and tighter. It will do so only if we vote for that, and it is up to us to ensure that our position is sensible and robust and puts the wider interest of Scottish agriculture above the particular financial interests of a few big landowners. That decision will need to be made by the Scottish Parliament and ourselves going into the future. As the proposal stands at the moment, the cap is €300,000, which would not affect a huge number of Scottish holdings.
I accept that—I agree that that cap would not affect a huge number of holdings—but the temptation would be to bring the cap down, in which case it would affect more and more. The holdings concerned are probably those that employ most people in Scottish agriculture, so there is a people aspect to the matter, too. I hear what you are saying, but I think that it is a dangerous precedent to set.
Sure—and that argument has been made by people representing the 47 holdings. There is of course the idea that, once the principle has been accepted, it is the thin edge of the wedge. There were proposals for capping at €100,000, but they were roundly defeated by the Parliament. A compromise at €200,000 was proposed, and then one at €250,000, but they were rejected.
Beyond certain parts of the European Parliament and some member states, I do not detect a huge appetite for the measure to be limited. My view is that a single farm payment is big because there is a lot of farming, food production, employment and public benefit going on.
However, we knew that something had to give when the problem was given a name. In Brussels it was called the “Queen of England problem”: namely, it is iniquitous that a very small number of very big landowners get lots of public money. That is damaging the integrity of the CAP in the eyes of the public.
My red line on capping is that the money “liberated”—in inverted commas—by the cap needs to be used for the wider benefit of Scottish agriculture. If that happens, I am pretty content. The money would still be coming into the country and would still be used for the Scottish rural environment. However, if we are talking about the future risk that the cap on the CAP may be tightened, we should note that that has not been proposed thus far. Even if it is proposed, we are talking about post 2020.
The danger lies in the words “thus far”, but we will agree to have a little bit of difference on that.
10:30
That was a useful discussion. Richard Lyle has a process question.
I have listened intently to Alyn Smith’s points about the 27 countries, the number of MEPs, the number of negotiations, and all the different things that are being done. From your experience of being in the European Parliament, do you think that it will be possible for the Parliament to stick to a timetable of concluding a final agreement on CAP reform by the end of June 2013? Have there been any significant developments on that over the past fortnight?
We are still on track. We have had two or three trilogue negotiations—depending on which of the dossiers you are thinking about—and several more are scheduled to happen. From the Parliament’s side, the process is a bit easier, if anything, in that we have our mandate. That mandate is not going to change until such time as we have another full plenary vote, which will be a mess.
The Council’s mandate will need to be recalled, which will happen during that process. The watchword is that nothing is agreed until everything is agreed. When we think that we have made a bit of progress, we go to the next meeting, where it is said, “Well, actually we’ve not decided that; it’s all still in square brackets.” The biggest uncertainty in the whole process is over the budget. If the member states’ CAP budget allocation is not what we need it to be—and that is a moving target in itself—the Parliament has reserved its right to go back and rejig where our mandate is. There is certainly no appetite on the part of the Parliament to do that.
We are all ageing in dog years at the moment; we really want to get shot of this by June, not least because the European election is coming up in May next year. Although we are very focused on getting this done, getting it done right is important as well. From our side, our mandate is set and is pretty strong. On each of the four dossiers we had a substantial vote of the Parliament in favour of the mandate, so the vote was not 51:49; it was a substantially agreed Parliament mandate. However, the negotiation is on-going and to say that we are smoothly sailing to a safe harbour would be to give a misleading impression. The member states themselves could throw this up; particular member states could object to some of the provisions. If the member states do not agree to the budget, which is a parallel discussion even within the Council, we could see further delay in the whole process.
It sounds very frustrating for you.
We have our moments.
Good morning. Could I ask you about the transitional measures? As I understand it, the new CAP will not be implemented in 2014 and transitional measures will apply. How did the Commission come up with the allocation figures, first, for the pillar 1 budget in the annex to its transitional measures proposal?
On how the Commission came up with that and the methodology that was used—forgive me, that was above my pay grade. The Commission officials looked at the various member state programmes, the principle being that it is old rules, new budget. The measure is very much a temporary one to get us through to the next funding round. There is an on-going question about new financial commitments that are going to be made in 2014. There is a question about eligibility. It is likely that I will lodge amendments to address situations where funds will end and have a year’s hiatus because of the allocation rules. My position is that it is old rules, new budget but anything that is going to come to an end under the present proposals should have the option of continuing for the transitional year. If anything is missed by that, we will introduce amendments to bring it into the transitional measures. A couple of quite good schemes could be left out. There is a degree of ambiguity over that at the moment, which we are digging into.
How do new applicants fit into the transitional arrangement?
We have been doing a great deal of work with the new entrants forum to get them into the system, particularly on the evidence that they need to demonstrate for the activity component. I think that there will have to be a number of amendments, particularly with regard to crofters, food processing, skills development and young farmers, who would otherwise be at risk. New applicants will be part of that process. Where I need to introduce amendments for them, I will certainly do so.
Do you have any comments on schemes such as the Scottish beef calf scheme or on the fact that the less favoured area support scheme could continue with reduced budgets?
For the transitional period?
Yes.
My attitude is that all the schemes that we have should be eligible for the transitional period; if they are not eligible under the proposed methodology, it needs to be amended. The budget will be for a year, so where there is a budget hit—well, I am working on ensuring that they are part of the scheme at all. Presently, there is a risk that a few of the schemes, which are very good and have proven to deliver value, could just fall through the crack. However, as I said, there is a degree of ambiguity about what has been proposed. We are digging into that at the moment to ensure that we can build the bridge into the new sunlit uplands of the CAP post-2015, as it will be now.
Can I broaden that out a little bit? The committee has been working a lot on biodiversity issues. As you will know, the most recent targets for biodiversity were missed Europe-wide, not just in Scotland and the UK. We see the SRDP having a key role in implementing our biodiversity strategy. At European level, are the institutions aware of the importance of the rural development programmes for the strategy and the wider implications of the transitional delays for biodiversity?
Yes, very much so. This area concerns not only the directorate-general for agriculture but the directorate-general for environment and the directorate-general for climate action, which have a great deal of input into the rural development side. Nobody wanted there to be a transitional period. Nobody, not least the Commission, wanted us to be in this position. The fact that it has come up with a bridging mechanism and budget is very much to be welcomed. There is scope for further refinement, if that is needed.
It would be unconscionable if projects, particularly ones in biodiversity and ones with hard-won wider environmental benefits, collapsed because of a year’s hiatus. I certainly want to see them continue through the transition year. Where we need to broaden the scope of the transition mechanism from the Brussels side, we are certainly up for doing that.
If you are aware of any specifics, please let me know. We are working on the issue.
Thank you.
Angus MacDonald has a supplementary question.
It is just a brief one. As we know, an announcement from Luxembourg last week has resulted in the transitional arrangements being secured for single farm payment, LFASS and agri-environment schemes, which are going to avoid a break in SRDP funding. However, the Scottish Parliament information centre provided the committee with research statistics that highlight that the European Commission’s proposal for transitional measures includes a table that amends the UK’s pillar 1 allocation. It shows that the UK allocation for 2014 is €3.987 billion and that the proposal to amend that to €3.548 billion means a reduction of 11 per cent. However, the research shows that Spain will have a reduction of 6 per cent. Can you explain why there is that differential between the two member states? Are there any other examples of where things are not exactly fair?
I, too, am aware of that research, which is very helpful.
To be frank, your guess about how the Commission’s budgetary proposals were worked out is as good as mine. However, I am glad that there are transition mechanisms, because there was the possibility that all sorts of things could just fall off the cliff for a year while we sat in meetings talking about the future shape of agriculture.
On where the budgetary allocations came from, we are seeing different states being treated differently. I suspect that there has been horse-trading in the Council, which there always is, but that is beyond my ken. The Council meets in secret; as an MEP, I am not privy to its negotiations. We hear what we hear by the by, and certainly not in any formal sense.
You are right. There has been a degree of inequity in how the member states have been treated with the one-year transitional funding allocation. I put that down to horse-trading in the Council; I think that the Commission will have played with a pretty straight bat. The Commission can only make a proposal to the Council, which will have negotiated that point. If the UK has lost out in those negotiations, perhaps the question should be addressed to the UK minister.
We will do that. Thanks.
On the transition, I am the committee’s European reporter, and I met Paolo de Castro in Europe last year. At that stage, his view—it may be only his view; it will be interesting to find out yours—was that there would probably be a more ambitious mid-term review that would be led from the Parliament. Obviously, you have heard that before. He thought that it would be more focused on productivity and perhaps less on greening. Was that his personal view, or is that the way that the European Parliament is going?
Given that we are currently in Europe, you went to meet Paolo de Castro in the rest of Europe, of course.
Paolo de Castro is good value and good craic, and is mentioned as a potential next Italian commissioner. He has certainly been angling for that.
There has been some discussion of the mid-term review, but we are midway through reforming, never mind having a mid-term review. I would be keener to see us getting things right now rather than parking them to the mid-term review and the next reform. Paolo de Castro has talked about a Parliament that has not been elected yet relative to a Commission that has not been appointed yet. Those things will happen early next year. Some people claim to have a better crystal ball than others have—let us put it that way.
Okay. Let us think about changes to pillar 1.
Good morning. I would like to address the issue of greening. What is your take on what is likely to happen with greening and what you would like to happen?
What is likely to happen and what I would like to happen are not necessarily the same.
The European Parliament has accepted greening as something that needs to be done. The point of the greening proposals is that they will raise the baseline of the CAP’s environmental outputs. The double funding of the greening component of the single farm payment has been hotly contested, and that remains a controversial issue. I suspect that the idea that someone should be recompensed from two different budgets for doing the same thing is illegal under World Trade Organization rules, and it is flatly bizarre. I think that that would undermine public confidence in how we allocate things under the CAP and how it looks in the eyes of the public.
I am fiercely pro the CAP budget and fiercely defensive of the vast public outputs from our land management techniques and food production. There is a good story to tell about CAP spend. It is one of the most effective European budgets in delivering outputs on the ground across vast swathes of our territory. The point of greening is that it raises the environmental baseline; if it does not do so, let us throw it out. However, I am very much in favour of raising that baseline.
We have had discussions about the two dossiers. We had to have a joint meeting on the rural development and direct payments dossiers, because what they were talking about in terms of greening was different from what we were talking about. That became apparent as the two dossiers were going forward. A variety of points need to be ironed out. The double payments issue was a red line for the Parliament and that puts us at variance with the Council’s position. I think that the Council is putting up a straw man, but it is, at least nominally, in favour of direct payments. That strikes me as an odd place for the Council to be and it will not be sustained.
10:45
We have not discussed the greening issue in the trilogues as yet, although there has been a wee bit of shadow-boxing. The Parliament’s mandate is very clear; we have set our face firmly against double payment. We need the flexibility that comes with the Council’s position. In particular, the three strict measures in the European Parliament’s position would be difficult for us to implement in big old chunks of Scotland because the geography just does not permit it. I want to see flexibility in greening. We have talked about the idea of a menu-based approach, which would say, “If you can do this, this and this, you’re in.”
We need greater flexibility in the Parliament and I am very pro greening, but there is a great deal to work out around what greening is going to be. We can get it to a point at which it will be a range of opt-in menu options that will be available to land managers to carry out. There will also be the benefit of the activities that we are already doing.
We also have the issue of environmental focus areas. It is misleading to call it “set-aside” because I have yet to see a 100 per cent productive holding. There are always, for example, watercourses or bits of land on which we are doing good stuff but not necessarily being recompensed for it. Environmental focus areas will encourage Scotland’s farmers to look at their holding and decide to, for example, put in a beetle bank or water management and be recompensed where they are not necessarily being recompensed just now.
The whole issue is still hotly contested, but the key points are double funding and making sure that greening is as flexible as it needs to be to suit our climate.
Do you believe that those who are on the other side of the North Sea understand the Scottish climate and land? We are at the edges for all sorts of good geographical reasons and what happens in some of the more remote parts of Scotland bears no resemblance to what happens in much of the rest of Europe. Is that really understood by those who need to understand it?
I am reminded of a story that my dear dear predecessor, Neil MacCormick, used to tell. He was sitting at his desk in Brussels—the one that I am now privileged to use—when he received a call from one of his constituents in the Western Isles, who said, “Is the European Commission not aware of the prevailing wave and tidal conditions in the Sound of Barra?” The waves there are different and the constituent was talking about an animal transport regulation.
Everyone has tricky climate issues. Where we are wet and windy in parts, other areas are dry and windy. Spare a thought for those of us who are trying to cover a hugely diverse continent that has lots of climatic and geographical issues. Flexibility is being demanded from all points of the compass—north, south, east and west—and I am confident that greening will come as a range of menu options that land managers will be able to dig into.
Some of the proposals have been about monoculture in the low countries and the vast extent of maize production, for example. That is what the European Parliament is for. We have been vociferous in making our points and I think that we have won the argument. Greening will be something for Scottish agriculture to embrace rather than something for it to be afraid of.
Perhaps I am about to betray my ignorance. You talked about land managers opting into a range of measures. How will that work in practice? The original proposal was to link 30 per cent of the direct payment to greening, so how would the opt-in work in practice? Would 30 per cent be gained by those who opt in or would they be 30 per cent down if they did not? Have I picked up what you said wrongly?
Forgive me—I am sure that that was because I was not clear. The greening will be compulsory. In order to qualify for it, there will be a range of measures that you will be able to choose to fit your holding.
That is fine. However, it was the use of “opt in” that I was querying.
Forgive me. We spent a lot of time on a proposal whereby you were not green unless you carried out a three-crop rotation. That just does not fit for us. We have got the proposal to a place where greening will be compulsory and, frankly, it should be. We have nothing to fear from that from a Scottish perspective; we are already doing lots of good stuff. The greening will be a series of things that you can choose that will best suit you.
Thank you for clarifying that.
Would the reseeding of permanent pasture from time to time be allowed as part of greening?
Let me dig out the latest position on permanent pasture. Yes. There are two positions on the definition of permanent pasture. The first is the herbaceous issue, which I am sure Norman Leask has bent your ear about, as well as mine.
He is behind you.
I do not doubt that; I thought that I felt his hot breath on my neck. Norman has been great in coming out to Brussels on behalf of the crofters to ram the issue home.
The European Parliament position agreed at the March plenary was not as good as the one that we wanted. My view is that forage is forage and whatever historically the animals are foraging on should be viewed as eligible. However, the European Parliament now seems ready to accept—certainly it did at the first plenary vote—the Council definition of permanent pasture, which would set the basic eligible pasture as herbaceous forage but would allow exceptions for established local practices where grasses are not predominant. The issue is that the European Parliament’s position removes the notion that herbaceous forage as the default setting for eligibility is better. That is a live point in the negotiations. I think that we will get that to a place that will respect local practices, so that it takes account of beasts foraging on a particular thing, be it olive trees, seaweed or whatever else—there was some strange thing that animals in Finland eat, too. Nobody loses anything by allowing flexibility in the definition.
I understand the flexibility argument. We move on to other questions without exploring heather and whins and things like that.
Good morning. How will the requirements to ensure a minimum level of activity work? Will that allow support to be restricted to active farmers?
That is a key point. We have had a grievous slipper farmer issue. I have yet to meet a slipper farmer: they are like the Loch Ness monster—you hear a lot about them, but you do not necessarily see anybody standing up in a meeting and saying, “I am a slipper farmer.” The fact is that most people who were claiming for land that was not as active as it should have been were farmers in other places. That is tied into the naked acres issue and the tradeability of entitlements.
I am sceptical that a single farm payment should be tradeable to the extent that it is. I lodged amendments that were much more hard edged in that they would tie that to the land and the activity. We saw tradeable fishing quotas cause all sorts of unintended consequences; we have seen that with single farm payment tradeable quotas, too. It has become too tradeable in that sense, which has caused knock-on issues.
We have the Scottish clause, which calls for a minimum activity requirement as part of the active farmer criteria. That would allow us to deal with our slipper farmers. Both the European Parliament and the Council support the position, so the clause will be included in the negotiations. That is something to be positive about. However, the precise wording is being discussed so that conflicts with the WTO are avoided. Its rules do not permit tying that in with the green box and the wider implications in the way that I want to, so I am conscious of the legal reality. I think that that matter is in a good place post the European Parliament vote, and the Council seems to have accepted the argument, too.
When George Lyon appeared before the committee, he said that if the final agreement followed the position of either the Council or the Parliament, Scotland would be able to implement a better beef calf scheme. Do you agree?
The proposals give us a number of extra arrows in our quill, which we can deploy. The Government can decide in the RDP going forward how best to do that. As things stand, we are in a pretty good place with that as well.
There might be one final question.
Where are we at with regard to the capping of payments, which we touched on earlier? There seems to be some doubt about where we are headed. The Council appears to favour a voluntary arrangement whereas the Parliament appears to favour an obligatory cap of €300,000. What is your best guess about where we will end up with that?
Knowing the Council, I think that my best guess is that it will become voluntary, on a member state basis. If it is going to be voluntary, I want to see it on a home-nations basis rather than the UK being allowed to make that decision for us, because it has core implications for Scottish agriculture. My preference is for that to be obligatory across all member states, which is clearer, takes the heat out of the issue and allows us to give a clear signal that CAP spending will be directed to those farms that are doing lots of good stuff. Where a payment gets above a certain point, there is a legitimacy problem. I am perfectly comfortable with that as long as the money so top-sliced remains for the benefit of Scottish agriculture.
That is a fairly big ask of some of the elements of the Council at the moment, though, so I suspect that it will be a voluntary, member state measure in the round. However, that is a bet and not necessarily to be relied on.
On the subject of your preference that any money saved from the CAP would be top-sliced and kept within the Scottish budget, have you any idea how much that would be at the current rate? That question is not a test—I do not know what the financial implications would be and I wonder whether you do.
We looked into that as we were working out what we were talking about. Forgive me, but I am terrible with numbers, which is why I went into law a million years ago rather than anything else. From memory, though, it was about £8 million—not a vast amount of money but significant. It is also significant in terms of setting the signal for the holdings themselves. If you want more specifics, I will happily provide them, but I am afraid that I would need to refresh my memory.
If you are able to do so without much trouble, it would be useful information.
The UK Secretary of State for Environment, Food and Rural Affairs, Owen Paterson, is coming here in June to take part in this round of discussions before we make our report. Do you have any final message to him regarding the UK Government’s approach to the allocation of the share of the CAP that is finally agreed?
My wider advice would be to ask his colleagues to stop talking nonsense about opting out of human rights conventions. I cannot tell you the horror with which that was viewed in Brussels. I am concerned about the extent to which we are being looked at as just an odd bunch of people. That is damaging our credibility in talks—and we did not do so well in the transition mechanism for the interim funding. There is a credibility point here. Forgive me—I am a lawyer and this is close to my heart. That our Government, at member state level, could even hint at abandoning the human rights convention, blithely, deliberately and wilfully ignores the fact that that would mean automatic suspension of EU membership. It does not make us look sensible or credible.
The UK approach to CAP and budget issues is entirely driven by the Treasury. The Treasury position is setting the flavour of all discussions and UK representations on this. It is all about save the rebate, save the rebate, save the rebate. There is a strong argument that says that, from a Scottish perspective, we would see an awful lot more money coming back from each of the EU budgets—be it the Erasmus budget, the horizon 2020 budget, the CAP budget, the structural funds or the social funds—if we engaged properly. Instead, we get the booby prize rebate, which becomes a block to constructive engagement with many of those funding streams, which are otherwise not as available as they would be.
I suspect that the extent to which we will be able to shift the Treasury on that is pretty minimal, which is regrettable. Of course, we are not unique in that, and there are other rebates; for example, there is a Danish rebate. The solution is to ensure that we are engaging with all the projects in the same way as all the other countries do. If we are properly engaged, the rebate should not be necessary. However, because the rebate exists, the UK Treasury is hugely attached to it, which has negative implications for all the other EU budgets that we could be engaging with.
I would like to see that change although I do not hold out huge hope for it. If you could get Owen Paterson to put some nudges in that direction at the Treasury, that would be very welcome.
Thank you very much for your attendance. It has been most useful and gives as up-to-date a picture as we can get of the escalator on which the EU negotiations take place.
It is more like an M C Escher drawing. For my part, you are welcome. We will keep you in the loop as things go forward. Please keep in touch—let us keep the dialogue going.
11:01
Meeting suspended.
11:10
On resuming—