Committee for Agriculture, Environment and Rural Affairs

Report on the Department for Agriculture, Environment and Rural Affairs Budget 2020/21


1. In February 2020, the Committee for Agriculture, Environment and Rural Affairs began its engagement with the Department on its budget requirements for the incoming year 2020/21. The situation, in mid-February, was very different from the situation now and the Covid 19 Health crisis will impact upon the DAERA Budget requirements in a way that was not envisaged in February.  The impact upon all of the DAERA remit, but our agri-food industry in particular, is likely to be stark, deep and long lasting.

2. The Committee has identified a number of areas that it has concerns about.  These range from funding of specific Covid 19 measures to lack of progress on other schemes due to Covid 19, to the impact of Brexit and replacement funding for EU funding etc.  This report contains further information on the Committee’s concerns with the DAERA 2020/21 budget.

Budgetary matters that the Committee draws attention to

Direct payments for Farmers

3. The first matter that the Committee draws attention to is funding for the direct payments to farmers.  Previously this has been via CAP Pillar 1 that was ring fenced for that purpose.  CAP Pillar 1 funding comes to the UK as the Member State.  This method of distribution between the four regions, including that it should be ring fenced, has been in place for some time. 

4. While the Committee welcomes the fact that £293m has been secured for funding for 2020/21, it still has concerns regarding what will happen beyond that date.  What will replace the funding for the basic payment scheme for farmers, in terms of amounts of funding, its distribution between the jurisdictions and possible UK Government centralisation of subsidy levels etc. is still unclear. 

5. The Committee are aware of the Bew Review, which made recommendations regarding the farm support budget 2020-22.  That may see Northern Ireland with reduced amounts of funding for farm support.  It also called upon the UK Government to offset that budgetary reduction.  The UK Government have committed to working with the devolved administrations on funding allocation including that the current annual budget for farmers in the UK would be guaranteed for every year of the Parliament i.e. until 2024.  However, what happens beyond that is not guaranteed. 

6. This is a major area of concern for the farming and wider rural community particularly in the current situation with many of our food producers facing a financial crisis as a result of Covid 19.  Related to this is one of the major concerns for the Committee regarding support for the farming sectors badly affected by the Covid 19 crisis.  This concern is detailed later in this report.

7. The Committee had previously noted that, in the 2019/20 financial year, DAERA had reduced resource reduced requirements of £12m. In response to questions on the budget, regarding the possibility of using this underspend for a farm support scheme or for Areas of Natural Constraint payments, DAERA responded that reduced requirements do not become firmed up until the last monitoring round of the financial years, and that all reduced requirements over £1m must be automatically surrendered at the earliest opportunity.  Thus the timeframe meant for identification and surrender meant that it was not possible to develop and deliver either a farm support / ANC scheme.

Rural Development including TRPSI and the Environmental Farming Scheme (EFS)

8. Related to replacement funding for CAP Pillar 1, are the Committee’s concerns on replacement funding for Rural Development that currently largely derives from CAP Pillar II.  The budget paper templates received from DAERA indicate that £10.8m, non-ring fenced, has been set aside for the RDP (LEADER and Forestry).  This is to continue with schemes such as the Rural Business Investment, Rural Basic Services and Village Renewal.   This is welcomed by the Committee.

9. A further £6.3m has been set aside under capital for the EFS and Rural Tourism, and £9.7m for the Farm Business Improvement Schemes.  The EFS funding would allow for the rollout of the next tranche of the EFS, bringing environmental benefits to farms.  Members have considered the EFS previously and noted that the rates of subsidies should be reviewed to ensure that, in order to maximise environmental sustainability, they are also economically sustainable for and attractive to farmers.  Additionally, there is scope for additional assistance on alternative energy sources although it is recognised that this may need further consideration by the Department including consultation with the Department for the Economy.  The Committee will follow the rollout of the EFS, including the application process and regulations, as well as spend throughout this financial year.

10. The Committee is also pleased to see that the Tackling Rural Poverty and Social Isolation Programme (TRPSI) will receive £2.5m of resource funding (non-ring fenced).  This is a programme that the Committee and indeed the previous DAERA and DARD Committees fully supported.  The £2.5m for the 2020/21 year will support rural community development and cohesion, develop youth entrepreneurial and employment opportunities, support rural transport etc.  

11. In terms of the New Decade New Approach the also Committee welcomes the £3m of capital that has been secured for TRPSI.  This is for a range of schemes from community facilities to fuel poverty, rural transport etc.  The £7m secured under the Rural Business Community Fund to replace the current EU priority 6 element is also welcomed.

12. The Committee emphasises that, the Covid 19 Health Crisis is having a deep impact on rural areas many of which are isolated from essential services.  The Covid 19 crisis has underlined the need for reliable and fast broadband provision.  The patchy broadband provision in some rural areas is therefore worrying.  To that end, the Committee noted and welcomed the £7.5m of capital funding set aside for Project Stratum.  However, the Committee did comment on the seemingly disparity between the £14.3m allocated for the DAERA Digital Transformation Project and the £7.5m for Rural Broadband and will continue to examine these aspects in the coming financial year.  The Committee will also continue to ensure that Project Stratum is targeting those rural areas with the worst broadband provision.

13. The Committee also welcomes the support the DAERA Rural Affairs Division provides to a range of statutory, community and voluntary groups to provide support in rural areas during this Covid 19 crisis. 

14. Notwithstanding the funding that has been put in place for 2020/21, Rural Development is largely funded from CAP Pillar II and other EU sources.  The Committee noted it is intended that the replacement for EU funding for rural development will come from the Shared Prosperity Fund (SPF).  Stakeholders from rural communities indicated that DAERA, prior to the Covid 19 crisis, had already begun work on a new rural development policy framework and this is welcomed.  However, there are concerns regarding funding for rural development. 

15. It was understood that the UK Shared Prosperity Fund (SPF) would be the mechanism to replace all EU Structural Funds including rural development.  No details of the SPF policy have yet been put forward by the UK Government, nor is there any guarantee that such replacement funding will be ring fenced.  This is creating a degree of concern and uncertainty about the future for rural communities. The Committee has serious concerns around clarity and lack of information on the UK SPF.

New Decade New Approach

16. New Decade New Approach has a number of actions that fall within the remit of DAERA.   The Committee, in February 2020, had taken oral evidence from DAERA exploring its proposals for the 2020/21 budget.  At that point it had noted specific interests in the funding associated with the development of climate change legislation, a scoping exercise for the creation of an Independent Environmental Protection Agency and the project to undertake a light detection and ranging (LIDAR) survey of the Northern Ireland coastline as well as some projects to tackle marine pollution.  At that stage DAERA officials had noted that it was envisaged that there would be between 30 – 40 staff to take forward the new climate change legislation. 

17. The Committee is pleased to see that around £2.1m has been allocated in capital for IT to support the additional staff and for R&D funding for NI partners in a collaborative all island research hub in the area of agri-food and sustainability.  It is also pleased to see that £2.2m has been allocated for additional staff to deliver the new Climate Change Legislation, as well as the scoping study for the Independent Environmental Protection Agency and the LIDAR study.

18. In connection with the Independent Environmental Protection Agency, the Committee draws attention to the Environment Bill that is currently making its way through the UK Parliament.  Large parts of this Bill apply to Northern Ireland including the Office of Environmental Protection (OEP); the remit of this Office will extend to NI.  There is still a lack of clarity on the role of the OEP and how it will interact with or be different from both the NIEA and the Independent Environmental Protection Agency.  Moreover, in connection with budget, there is no information on how much NI may have to contribute to its budget or pay for its services.

19. Members questioned the timeframe for the work on the Climate Change Legislation.  The written response from DAERA indicated that the £2m bid was to cover a range of actions, with around half of the £2m for additional staff.  However, the Covid 19 crisis means that there is likely to be delays, including the postponement of the COP 26 Conference to 2021.  Consideration is being given to the reallocation of resources to meet the current emergency as part of the June Monitoring.

EU Exit

20. As one of the departments that will be most affected by EU Exit, the Committee has and will continue to keep a close eye on how DAERA is preparing.  This includes the budget that is allocated and how it is spent.  The Brexit budget allocated to the Department in 2019-20 was not included in its baseline.  It is additional money that the Department must bid for year on year. 

21. The Committee noted that £23.6m of resource, non-ring fenced, has been allocated for EU Exit Staff Costs.  The Committee discussed this requirement with DAERA officials in February 2020.  At that stage officials noted that while there were 253 staff dedicated to preparing for EU Exit and its follow up, the Department considered that it needed around 454 staff.  Some of these staff were specialist posts that could not be provided from within the Department.  The Committee are also aware that many of the staff currently employed by DAERA are already spending all or a considerable amount of their time on EU Exit Preparations.

22. The issue of EU replacement funding has already been dealt with at the beginning of this report, with the biggest being the CAP Pillar 1 funding.   Overall £310.6m has been secured for this financial year.  What happens next year and the EU replacement funding for 2021-22 is a major concern for the Committee and one which it will keep a close eye on going forward.

Covid 19

23. Covid 19 is placing unprecedented demand on the NICS including DAERA. The departmental remit covers a wide range of areas and matters that have been affected by the current crisis from the agri-food sector to fly tipping of waste, to closure of forest parks and country parks.  We have seen already that £1.5m has been requested via the Department of Finance from the additional funding provided through the Barnett formula for Covid 19, for financial support to the Fishing Industry.  The Department has indicated that the first payments under the Fishing Support Scheme will be made week commencing 4th May with the majority paid by the end of May.

24. The European and domestic markets for fish has experienced a severe and extremely fast decline in demand particularly for high value shellfish such as crab, lobster and whole prawns.  There is also reduced demand for cod, haddock and scampi mostly driven by the closure of the hospitality trade including restaurants and takeaways.  The Committee considered this matter in some detail and has already indicated to the Department its support for this funding.   It is also aware that the aquaculture sector has seen a severe drop in sales and that Lough Neagh Fishing Cooperative has had to suspend its operations due to closure of markets and concerns around the health and welfare of its staff.  DAERA officials are watching these developments closely.

25. However, it is the agri-food sector that has seen the biggest impact and the implications of the severity of that impact is only just becoming clear.  There are a number of inter-related issues at work here including the collapse of the hospitality and catering industry both domestically and abroad, leading to a massive reduction in demand for certain produce. 

26. The industry is also facing falling prices for their produce.  The beef industry in particular has noted that while the domestic demand for mince has grown massively, the demand for the higher end cuts such as steaks and roasts, has fallen considerably.  This has led to a carcase imbalance in the trade, and in a few specific cases, suppliers meeting the demand by importing produce from other EU countries.  The dairy industry, used to exporting the majority of its produce, has also seen a drop in demand and in prices.

27. The additional funding, via the Barnett formula for Covid 19, will not be sufficient to fund all pressures identified by the Departments.  DAERA has updated the information on its bid for additional funding for Covid 19 from £124.2m to £124m to include a new bid of £1.3m for AFBI to assist the Department of Health with testing for Covid 19 and the removal of the bid for £1.5m for the Fishing Sector which has been allocated funding by the Executive.

28. A bid of £105m for farming and animal welfare issues has been made.  The largest element of this, some £40m, is required for the dairy industry, followed by £22m for beef (see table below)

Farming/Animal Welfare Dairy


Farming/Animal Welfare Poultry


Farming/Animal Welfare Pigs


Farming/Animal Welfare Beef


Farming/Animal Welfare Sheep


Farming/Animal Welfare Horticulture/ Eggs


Total Farming/Animal Welfare


29. The DAERA Minister has been highlighting the case for this at Executive Meetings and bilaterals with the Minister of Finance.  The Bid for each of the categories in the table has been based on an assumption that around 20% of product would not be moving off farm in the three months from April because of restrictions in processing chains.  The £105m would cover the cost of lost product and disposing of product.

30. It has also been noted that the EU has moved to introduce some measures to offset the crisis facing the beef and milk sectors by introducing private storage aid.  The UK expects to be able to prevail of this until 15th October.  While welcomed, it does not address the need for financial support to farmers and clarification on what would happen after 15th October is needed.

31. The Committee is also aware that some environmental NGO’s are, like many charities, struggling with falling donations during the Covid 19 crisis.  In response to a question on this, DAERA stated that they are working closely with the eNGO’s to give consideration to how this sector can be supported through this period.  This includes exploring how some of the existing DAERA budget may be used to provide further support as part of the June Monitoring Round.

32. In terms of the additional £1m bid on the Rural Affairs side, as a result of Covid 19, this would:

  • continue and enhance the Assisted Rural Travel Scheme to support isolated rural dwellers access assistance and essential services;
  • assist the work of Rural Support in providing helpline and follow-up support services for rural dwellers and farmers during and after the COVID-19 outbreak; and
  • provide community grants to organisations assisting the over 50s and those in rural areas in need of assistance in dealing with the impacts of COVID-19.

33. In terms of the bid for Waste, the written response from DAERA indicated that a COVID-19 Waste Management Contingency Group has been established to provide a DAERA aligned policy and regulatory response to the current COVID-19 crisis for the waste sector in Northern Ireland.  It has the following key objectives:

  • To provide support to local councils to prevent public health issues arising from waste;
  • To provide timely and responsive regulatory direction to local councils and the waste sector to safeguard human health and protect the environment;
  • To provide guidance and information to the waste sector to assist with maintaining a post-crisis viable sector; and
  • To contribute to, and provide support to local councils, for the communicating of clear and consistent information to the public on dealing with household waste.

34. The written response further outlined that this bid covered costs including communications, dealing with fly-tipping and waste storage.  However, the largest element related to landfill costs.  In the event that Councils were unable to maintain uncontaminated waste streams, Councils would be forced to direct increased levels or, in a worst case scenario, all waste to landfill.  The bid represented the cost of 12 weeks recycling diverted to landfill at £120 per tonne.  This would be a substantial burden on Councils for which they are not resourced.  In addition, remedial work would need to be carried out on existing landfill sites to facilitate increased usage and those sites that have been mothballed would need work carried out on them to bring them back into use.

35. The Committee also noted that the focus of DAERA is on dealing with and responding to the Covid 19 crisis.  This may mean for example, that other work, previously planned cannot be progressed which in turn may mean that funding can be reallocated within the Department to support the Covid 19 effort.  DAERA has indicated that this is an evolving situation, that officials are assessing the implications for the budget as part of the June Monitoring process.

Other Matters

36. Members give consideration to the capital projects included in the DAERA budget and indicated that they would like to see such projects fast tracked as a means of stimulating the construction sector post the current crisis.  In its written response, DAERA indicated that it will assess the potential to fast track such projects as part of its June Monitoring Round.

37. Reference has already been made in this report to the Environment Bill that is progressing through the UK Parliament.  The Committee has been working on this and two other UK Bills dealing with EU Exit matters namely the Fisheries Bill and the Agriculture Bill.  The Committee noted that these Bills, which will legislate for this jurisdiction, have a range of policies that will lead to actions, schemes and projects – such as a new regime in the Fisheries Bill or Environment Improvement Plans in the Environment Bill.  The source of funding and the budget for these has not as yet been clearly identified – although it is likely that may fall into the next financial year.

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