Agriculture a ‘soft target’ for the spending cuts to come

IN the cold light of day, Liz Truss must be wondering why she took on a job that involves leading a discontented and divided party.

In just a few weeks she has proved what many feared – that she is not up to the task. She has also shown that allowing a very few party members to pick the UK’s prime minister is not a good idea.

For the Labour party, this produced Jeremy Corbyn and electoral disaster, and now the Conservatives have followed suit. What should have been a show-piece party conference in Birmingham became a spectacle of division and incompetence. It left many observers wondering if the Conservative party has become ungovernable by any leader, let alone one as weak as Truss.

No matter how many U-turns are made on what were supposed to be the economic principles of the new leader, cuts in public spending are inevitable. These will be the only way to convince markets that the Truss government can combine tax cuts with increased spending and more debt without destabilising an already weak economy.

Spending cuts would show some level of financial discipline amidst financial incompetence, potentially easing short term pressure on sterling. The problem is that the big spending areas, including welfare, education, defence and the NHS, are politically untouchable. This means the cuts will bear most on soft areas, of which agriculture is certainly one. Michael Gove, who has taken on the role of the chief Truss tormentor, has warned that his plans – when he was at Defra – for environmental payments are in danger of being scrapped. This would not be because the government has parked its green ambitions to favour food production, but because this spending is an obvious target for a government trying to find soft areas for cuts.

This would be a fresh blow for those who believed Brexit would deliver farmer-friendly policies, with support maintained but red tape eased. For all the problems with the CAP, farmers in the EU have income certainty, in terms of support, for five years with no real pressure to cut spending beyond that. Certainty in the UK has been sinking and could now evaporate even more quickly, because of new pressure on public spending.

The government has also committed itself to ending adherence to all EU regulations carried over after Brexit. This is logical, but it is not without risks for agriculture. The first is that given the UK record for gold-plating EU regulations, the default choice will be to create even tougher regulations.

Another risk is to trade and the need for new UK regulations to be accepted as offering the same protection as EU rules. This has all the makings of a new pressure point, in that EU regulations are globally recognised as a basis for business while new UK regulations would face an approval process to ensure they offer the same level of protection. This could be a problem, when trading with EU member states. Businesses there can cite adherence to EU regulations as part of their due diligence process, while trading with other countries with their own regulations is more complex. This is a huge administrative burden for the government and one it has hopefully thought out beyond the slogan of finally getting Brexit done.

Issues that make headlines are inevitably forgotten when something else comes along and that will certainly be the case if gas supplies are threatened this winter and the lights, literally, begin to go out in homes and businesses. The EU is even more anxious about gas, because of its traditional dependence on Russia, but the UK is vulnerable to any loss of Norwegian supplies or to losing access to French nuclear capacity.

The EU has responded to this threat by giving a long term green light to more biomethane production from large digesters. It claims this is sustainable energy, which is doubtful, and that it will represent a new diversification opportunity for farmers. That may be the case, but using land to grow crops for digesters flies in the face to food security and food production being priorities.

It also ignores questions around whether the seed material for digesters can continue to come from clean sources, such as farm crops, or whether they need to be byproducts of food production and other industries. This is further evidence that in the EU as well as here, joined up thinking on problem solving is not something at which politicians excel.

‘This would be a fresh blow for those who believed Brexit would deliver farmer-friendly policies, with support maintained but red tape eased. For all the problems with the CAP, farmers in the EU have income certainty, in terms of support, for five years with no real pressure to cut spending beyond that. Certainty in the UK has been sinking and could now evaporate even more quickly, because of new pressure on public spending’