Loss of BPS will cost South West economy £883m, report finds

The rural economy in the South West of England is set to lose hundreds of millions of pounds over the next five years due to the withdrawal of direct support payments for farmers, a new study has concluded.

Latest example of “levelling up” – Owl

Philip Case , Farmers Weekly www.fwi.co.uk 

Research published by the Countryside and Community Research Institute (CCRI) predicts that £883m will be lost from the rural economy up to 2027 across Cornwall, Devon, Dorset, the Isles of Scilly and Somerset.

The introduction of the post-Brexit Environmental Land Management (ELM) schemes will coincide with the phased removal of the Basic Payment Scheme (BPS), which provided millions of pounds in direct support to farmers and landowners while the UK was a member of the EU.

Defra is introducing the first component of ELM this year, the Sustainable Farming Incentive (SFI), but the support package is expected to be much smaller overall. With other ELM schemes’ funding still in development, the wider impact on the rural economy remains uncertain.

Family farms

The South West’s rural economy, which is dependent on small, family-run farms, is particularly vulnerable to the financial impact of the transition.

With farming being a significant driver for the region’s economy, the predicted impact on the sector’s supply chains, producers, suppliers, business owners and workers is widespread.

The report, Assessing the Impact of Agricultural Transition (PDF), was funded by the Cornwall & Isles of Scilly Local Enterprise Partnership (LEP), Dorset LEP, the NFU and the Heart of the South West LEP, to shed light on the impact new payment schemes will have on farming and rural communities across the South West.

Currently, between a quarter and half of BPS money is spent on businesses supporting the farming sector, the report states.

But it warns of a significant knock-on effect for jobs in the local economy over the next five years due to a reduction of between £220m and £440m for feed merchants, machinery retailers, contractors, vets, solicitors and many others. In turn, this will reduce their own spending power in the rural economy.

Melanie Squires, NFU South West regional director, said: “The scale of reductions in available funds to businesses laid bare by this report is considerable and can’t be ignored,”

Defra’s response

Commenting on the report, Defra farm minister Victoria Prentis said: “Our new schemes are supporting the choices that individuals take for their own farms, and helping to boost their productivity and profitability. We have recently almost trebled our new Farming Equipment and Technology Fund to over £48m to support more farmers with their investment plans.

“In 2017, £1.775bn of payments were made across 85,000 farms and 10% of claimants received half of this total – 33% of farms received less than £5,000 each.

“This isn’t right and we are repurposing this money to pay farmers for the work that they do, rather than the amount of land they own. In the South West, more than 5,000 farmers are already in our Environmental Land Management schemes.”

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Sizewell C ‘may cost double government estimates and take five years longer to build’

The proposed Sizewell C nuclear power station could cost UK taxpayers more than double government estimates and take an extra five years to build, according to research.

Alex Lawson www.theguardian.com 

Ministers will decide in July whether to approve the development of the Suffolk power station proposed by the French developer EDF. The business department has estimated that the government-backed scheme will add an extra £1 a month to household bills to aid construction costs.

But research by the University of Greenwich Business School seen by the Guardian shows the average monthly cost could reach £2.12, or £25.40 a year. At its costliest point, the build could cost taxpayers nearly £4 a month. That represents the study’s gloomiest forecast, which predicts construction would take 17 years and cost £43.8bn.

The project had been expected to cost £20bn and take 10-12 years to build. Stephen Thomas, a professor at Greenwich Business School, said the average forecast put the cost at £35bn over 15 years, or £2.3bn a year.

The figures could further inflame the debate over the cost and time of building power stations after Boris Johnson last month set a target of building a new nuclear station every year.

EDF admitted last week that Hinkley Point C, the power station it is developing in Somerset, would cost an extra £3bn, taking it to up to £26bn. The already delayed project will take an extra year, and is expected to begin generating electricity in June 2027. EDF had originally planned for it be operational by Christmas 2017.

The French firm said consumers would not be hit by the extra costs at Hinkley Point C, which will be taken on by EDF and China’s CGN, its junior partner in the project.

However, at Sizewell C the government has already committed £100m to the project and plans to use a regulated asset base (RAB) funding model.

RAB funding gives investors a set return during the construction phase of a project, reducing their risk and making an asset more attractive to outside investors. However, it shifts the risk of delays and extra costs on to taxpayers.

The government argues that the RAB model could reduce the project cost of a nuclear power station by more than £30bn over its 60-year lifespan. The model was used in the construction of Heathrow Terminal 5 and the Thames Tideway super-sewer.

A final decision on plans for Sizewell C was recently pushed back from 25 May to 8 July. The site is located north of EDF’s existing Sizewell B plant.

Campaigners argue that the development would be costly and threatens the local environment.

The prospect of extra costs comes as consumers face soaring bills amid the energy crisis. The government has been urged to intervene with annual bills forecast to balloon to nearly £3,000 from October.

Johnson has thrown his weight behind nuclear power as a green option to boost Britain’s energy security in the wake of Russia’s invasion of Ukraine and as he targets net zero emissions by 2050.

Thomas said: “It may not seem a huge amount extra on bills but several of these projects will overlap, meaning consumers paying even more for a long time. If costs are even higher than expected, it could become a real burden.”

A spokesperson for Sizewell C said: “The RAB model is a tried and tested financing arrangement, which has already been used to raise funds for more than £160bn of UK infrastructure. Applied to Sizewell C, it will bring the cost of finance down and deliver significant savings to consumers.”

A government spokesperson said: “We firmly stand by our assessment that a large-scale project funded under our Nuclear Act would add at most a few pounds a year to typical household energy bills during the early stages of construction, and on average about £1 a month during the full construction phase of the project.”