How to reform rural payments and make a ‘green Brexit’ a reality

How to reform rural payments and make a ‘green Brexit’ a reality

Brexit presents the UK with a once-in-a-generation opportunity to reform the current system of rural payments and, in turn, to deliver better outcomes for the natural environment and for wider society.

Currently, the policies and funding that affect the UK’s natural environment are complex and poorly coordinated. The main problem lies in the UK’s decades-long involvement in the EU’s Common Agricultural Policy (CAP). Under CAP, the UK receives around £3.1 billion a year that it then has to distribute to farmers and land owners under rules that are largely determined by the EU and that are not always aligned with the UK’s own priorities.

The rural activity of farmers and land owners is important: it has a major impact not just on the rural economy and the natural environment, but also on wider society. This is largely due to the fact that some 71% of Britain is devoted to agriculture of one form or another. Substantially reforming rural payments, therefore, could deliver a plethora of benefits, such as greater biodiversity, improved natural flood defences and better air quality, as well as more enhanced natural beauty and landscapes. Given the scale of benefits and the potential electoral backlash against a Conservative Government that draws much of its support from rural communities, it is a mirage to think that this funding could be scrapped or greatly reduced.

Most of the approximately £3.1 billion of funding which the UK receives from CAP is spent on subsidies allocated on a per acreage basis – so, the bigger your farm, the more you’re paid. Some is linked to measures explicitly designed to reward farmers for providing certain ecosystem services, or farming in a more environmentally-friendly way. A further, smaller pot of money goes on ‘rural development’ initiatives. Add to this the various other streams of funding which the UK Government has for certain schemes – such as natural flood management and grants for tree planting – and the inefficient, and sometimes contradictory, set of policies related to rural activity becomes vividly apparent.

In a new report published today, Bright Blue is proposing a new market-based commissioning scheme for rural payments after Brexit. Rather than having different bodies paying for different things using different methods and overlapping approaches, we propose the creation of a single rural payments budget that commissions farmers and land owners to deliver ecosystem services. Ecosystem services are essentially any element of the natural environment from which society derives benefit – for instance, good water quality or productive soils.

Under the scheme, ecosystem services will be commissioned through a competitive, online market-place – much like those which people are already familiar with, such as eBay – where farmers and landowners bid against each other in reverse auctions to provide ecosystem services for the lowest cost. Nor would it just be public funding being used to commission services, but taxpayers’ contributions would also help to crowd in new funding from NGOs, philanthropists and corporate interests such as water companies. Importantly, competition between farmers to deliver these services will ensure good value for money.

These reforms should be phased in gradually over time to provide farmers with long-term certainty over funding and to allow the system to learn and improve through experience. Starting in 2018-19, the first phase should involve a programme of pilots across the country and building capacity in the relevant organisations. The creation of new public organisations should be minimised where possible. Phase two would consist of central government directly commissioning particular ecosystem services from farmers.

In the third phase the scheme becomes fully operational as the online market-place is launched. This phase would see the first inclusion of private funding into the overall scheme, as NGOs, corporate interests, and others bid to commission services – either in tandem with, or independent of, central, devolved, or local governments. Only in phase four could the levels of public funding start to be varied once the scheme has become established and private and philanthropic interest has been discerned.

The UK can rightly claim to play host to some of the most breath-taking and inspiring landscapes in the whole world. The Environment Secretary, Michael Gove, has repeatedly stated his ambition for a ‘green Brexit’. After just a few months in post, he has set out a powerful vision for stronger environmental protections post-Brexit and announced he is consulting on a new independent, statutory body that will hold the government to account on its green record. Our new rural funding scheme would perfectly complement this properly-enforced set of high environmental regulations and help to make a green Brexit a reality.