Basic Payment Scheme

Ian Blackford Excerpts

Thursday 28th January 2016 Westminster Hall

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

It is a privilege to serve under your chairmanship, Mr Betts. Before I begin, I draw Members’ attention to my entry on the Register of Members’ Financial Interests: I own a croft in the north end of the Isle of Skye. This issue is important to us all, and it is certainly important to me as a small farmer. I thank the hon. Member for Wells (James Heappey) for securing this debate, which is important to us all in this Chamber. I also thank all Members who have spoken in the past hour or so with such passion and concern for their constituents.

The hon. Member for Wells said that farmers are not in the habit of writing to their MPs; that is a very important point. I go to our local marts, where people are selling livestock, which presents a great opportunity to hear people’s gripes, groans and mumbles. It is important we take seriously the contact we have with crofters and farmers, and that we understand the concerns they all face.

Many Members spoke of the importance of the agricultural sector to our economy. The hon. Members for Wells and for North Dorset (Simon Hoare) mentioned the importance of landscape, which I want to reiterate. We have to ensure that our farmers and crofters have a lifestyle that is supported and that they accept their obligations to look after the landscape. That is very important.

I particularly enjoyed the end of the speech by the hon. Member for North Dorset, when he said that a number of Tory Back Benchers were in full cry after the Minister. I felt for the first time in this Parliament that we were making common cause, so his words were welcome. I thank all hon. Members who have spoken: the hon. Members for Wells, for Brecon and Radnorshire (Chris Davies), for North West Norfolk (Sir Henry Bellingham), for The Cotswolds (Geoffrey Clifton-Brown) and for North Dorset. The hon. Member for North West Norfolk mentioned floods. Support for farmers in flood-hit areas is important and something that both the Scottish and UK Governments take very seriously, and there is support for that.

We all recognise the importance of crofting and farming and ensuring the right support. We need to retain farms and crofts as part of our landscape across the country. From the Scottish National party’s point of view, in general, the new scheme is welcome. The crofters in my area will benefit quite substantially over the years to come. Support for crofters and farmers will increase from £30 million in 2013 to £33 million by 2019. That is most welcome and a recognition of the importance of their activities to our country.

We should remember that basic payments act as a safety net for farmers and crofters by supplementing their main business income. To qualify for support, farmers must actively farm their land and produce agricultural products that the public want. The scheme also delivers environmental and other benefits by requiring farmers and crofters to meet certain practices and farm in a sustainable way through cross-compliance.

It is worth explaining what has been happening in Scotland, including the challenges the scheme has brought and how that contrasts with the experience in England, Wales and Northern Ireland. Compared with previous years, basic payments have been delayed due to CAP complexities. The payment window of 1 December 2015 to June 2016 is the same as normal. However, delays with the development of the system meant that the Scottish Government were not ready to make payments as early as in previous years.

There have been 21,050 applications for CAP funding to process, 19,160 of which were for basic payments and the remainder of which were for other non-basic payment schemes. Under EU rules, only claims that have been fully checked and validated can be paid. The Scottish Government face the possibility of a financial penalty being imposed by the EU if that is not adhered to. There is a risk of reputational damage if a customer is overpaid and subsequently asked to return payments.

The key issue with the basic payment scheme, which NFU Scotland has raised concerns about, is that CAP reform has introduced complexities that have resulted in payments being made later than usual. The first direct farm payments arrived into bank accounts from Hogmanay onwards. Around 3,500 crofters and farmers have had payments from the Scottish Government, with a first instalment of 75% of their basic payment and 90% of the greening payment. The issue of part payment, which has been raised by many hon. Members, is important and is one that the Scottish Government were happy to take up.

The first payments have been made to around 3,500 farmers and crofters, totalling about £33 million. Further payments will be made between late January and April, in line with the payment schedule announced in December, and the Scottish Government will continue to work flat out. The Government and the NFU have engaged in dialogue with the banks to ensure the banks have been supporting both the farming and crofting communities. Initial payments will be worth a minimum of 70%. Those first payments were, generally speaking, the simplest cases that the Scottish Government were able to safely pay at higher percentages. Payments were also made in two parts in the last CAP reform in 2005, when the single farm payment scheme was introduced.

To help farmers understand what is happening, they have been sent an explanatory mailing. Letters have been issued to around 16,000 claimants with an estimate of the value of their new payment entitlements, and remaining claimants will get theirs when their entitlements have been calculated. A customer helpline was launched on 4 December 2015 to answer questions on payments and entitlements, and there have been approximately 1,278 calls to date.

As we understand it—I am sure the Minister will clarify this—33,000 farmers, or 38% of claimants, were paid in full in England on 1 December 2015, and 18,000 payments had been made in Northern Ireland by 4 December. England faced the additional cost of abandoning the online process and moving to a paper system, totalling £3 million to £4 million in March 2015, due to serious failings of the IT system. More farmers have been paid in England, as they have a less complex policy to implement.

In Scotland, there is added complexity with additional schemes, coupled with a new IT system, as the online process has not been abandoned in Scotland. Wales, like Scotland, will pay in two instalments to avoid a situation where farmers and crofters do not receive any funding until much later than normal in the payment window. That also avoids a situation where a customer is paid earlier but incorrectly and is then required to reimburse the Scottish Government. Some calculations are complex, and those cases, of which there are approximately 1,200, have yet to receive a letter. The Scottish Government are working to resolve those issues.

We have discussed the issue that many farmers may be tempted to leave the market. That is something we have seen in many of the crofting counties in Scotland over recent years. The Scotland Government recognise that Scottish crofters and farmers still receive the lowest level of support among farmers throughout the European Union. One plea I make to the Minister is that he revisit at the earliest opportunity the convergence uplift money, because that would make a big difference to crofters and farmers in Scotland. We should remember that when the European Union granted to the UK €223 million of additional support, it was principally to support Scottish crofters and farmers, yet we are not getting our fair share of that money.

We have talked about a review to come in the future, but the industry is facing a crisis. We are facing low prices, as well as unprecedented weather. In crofting counties in Scotland, crofters were still feeding beasts well into June last year. The cost of feeding animals has risen dramatically, and the value of livestock has declined. We need to ensure that our crofters and farmers get what they deserve. I appeal to the Minister for an early review of the convergence uplift system. We must ensure that people get their due regard.