Government Spending Review Comment from Andrew Jamieson
2010-10-20

The government spending review axe has not fallen as heavily as it was feared on the rural economy. Speculation over where the axe would fall has on the whole proved to be off target.

Andrew Jamieson,
Rural Business Consultant – George F. White

The government has indicated where their priorities lie by making a series of specifically directed cuts and statements. They have highlighted that they feel that there is room to make significant changes to the Department for Environment Food and Rural Affairs (DEFRA) to improve efficiency and cost effectiveness, while also highlighting the importance of rural development and rural environmental schemes. They have stated that better use of European Union match funding is key to being able to achieve these goals.

Defra must save up to 8% annually from their annual £2.9bn budget equivalent to £600million by 2015. They will achieve this by reducing resource spending by 29%, capital spending by 34% and administration by 33% over the next five years. The number of Defra supported quangos is to be cut from 92 to 39 with increased accountability and transparency. Running costs are to be cut by £174 million by reducing staffing levels and improving efficiency and IT usage.

Farmers will benefit from the redistribution of Pillar II subsidies which will ensure that rural development and environmental schemes will remain open to all farmers. The Rural Development Programme for England (RDPE) will save £66 million, approximately one third of their annual budget by making better use of European Union match funding, ensuring that farmers wishing to diversify will be able to make use of funding opportunities. DEFRA are set to increase the funding available to Entry Level Stewardship (ELS) and Higher Level Stewardship (HLS) schemes, with HLS funding increased by 80% to deliver maximum benefit to farmland biodiversity.

Defra have indicated that they will aim to cut red tape and unnecessary regulatory burdens on farmers and food producers without compromising food safety or standards, a task force will report on where this can be achieved by early 2011.

Defra Secretary Caroline Spelman said: “Our strategic aim is to deliver on the Prime Minister’s pledge that the Coalition will be the greenest Government ever, whilst playing our part in tackling the economic deficit that we have inherited. This settlement reflects the need to make significant savings alongside meeting the priorities we have set and maintaining important frontline services in respect of flood defences, environmental protection and animal health monitoring.”

There is a clear indication that the current coalition government places a high priority on the development of rural farm businesses, whilst ensuring that farming activity continues in such a way to ensure that the environment is protected and enhanced.

The true impact of the proposed cuts in the DEFRA budget remain to be seen and only time will tell. It is however clear that the government feels that a more streamlined government body with the removal of unnecessary quangos will result in a more efficient and cost effective delivery of service.

The coalition government’s stance echoes that of the recently leaked Common Agricultural Policy (CAP) reform documents which indicated a movement towards a “greener” European agricultural system. Whilst redirecting a proportion of Pillar I Single Farm Payment (SFP) subsidies into Pillar II Rural Development and Environmental Schemes.

Farmers should take note of the implications of both UK and European policies and make sure that they are giving serious thought to how they can make best use of any potential funding opportunities. Whilst ensuring they keep up to speed on any developments in the coming days, weeks and months.

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