Public funding for public goods: A post-Brexit perspective on principles for agricultural policy

Ian J Bateman,Ben Balmford

doi:10.1016/j.landusepol.2018.08.022

Abstract

In early 2019 the United Kingdom is due to leave the European Union and with it the Common Agricultural Policy. The UK Government has announced its intentions to formulate a novel agricultural policy following the principle that public funding should be restricted to the provision of public goods. However, the acceptance, interpretation and application of this principle is the subject of intense debate. We overview the background to this debate, reveal the major flaws in present policy and identify and provide our answers to three key questions which future policy must address: (1) What are the farm related public goods that public money should support?; (2) How should that spending be allocated?; (3) How much should be spent? We believe that these questions and their answers will be of general interest beyond the UK.

Highlights

Following the Brexit referendum the United Kingdom is due to leave the European Union by March 2019
For more than four decades the relationship between the UK Government and the farming sector has been dominated by the EU’s Common Agricultural Policy (CAP) which has determined the public subsidies paid to farmers
The costs are not purely financial; despite 25% of CAP support being paid through its Pillar 2 Rural Development fund which supports a variety of Agri-Environment Schemes (AES) (Science for Environment Policy, 2017), these have been criticised as poorly targeted, relatively ineffective (Sutherland, 2002; Davey et al, 2010) and fundamentally compromised and overwhelmed by the 75% of funding which goes directly to farms under the more conventionally focused Pillar 1 of the CAP (Pe’er et al, 2014)

Summary

Introduction

Following the Brexit referendum the United Kingdom is due to leave the European Union by March 2019. While this will affect all aspects of the UK economy, probably no sector will be impacted more profoundly than agriculture. The recent publication of a Command Paper (Defra, 2018a) consulting upon a proposed Agricultural Bill expected within the current session of Parliament (Downing and Coe, 2018) has signalled an intention to radically shift the emphasis away from general support for agricultural activities and towards the longstanding objective of targeting public money towards the provision of public goods (H.M Treasury, 2007, 2013), in particular those environmental improvements that are the focus of the Government’s recent 25 Year Environment Plan (H.M. Government, 2018).

Why business as usual is not an option: the shortcomings of CAP

A new deal for public spending on UK farming: the key questions

What are the farm related public goods that public spending should support?

How should public spending on farm public goods be allocated?

Findings

Concluding remarks