Common Agricultural Policy: Rich List receive millions in EU subsidies

People featured in the Sunday Times Rich List raked in more than £10m in land subsidy last year – according to a major Unearthed investigation into the top 100 recipients of direct EU farming subsidies.

The investigation comes after Chancellor Phil Hammond promised that current levels of farm subsidy would continue until at least 2020, even after the UK leaves the EU.

The EU’s “direct” subsidy system – known until last year as the “single payment scheme” – has attracted criticism because it largely rewards landowners for simply owning land, rather than paying farmers to invest in environmental or other “public good” measures.

A prominent Tory MP, numerous donors to the Conservative party and a Saudi Prince were also amongst the hundred biggest recipients of the subsidy, the investigation found.

Commenting on the findings, the RSPB, which received £1,961,450 in single payments last year, told Unearthed that: “As a major landowner and farmer, we use the CAP funding we receive to deliver specific public benefits, such as managing vital habitats and providing a home for nature. The majority of the CAP though is still dominated by untargeted subsidies that provide little in return.

As we move toward the EU exit door, we need to take the opportunity to create a policy that encourages other farmers and land managers across the country to do much more for the environment, and provides greater support for those who are already farming in ways that benefit nature.”

Wealthy owners

At least 16 of the 100 largest pay-outs under the single payment scheme last year went to entities owned or run by people featured in the Sunday Times Rich List, Unearthed found.  

The group – which includes billionaires like Sir James Dyson and the Duke of Westminster, alongside others, like Lord Iveagh of the Guinness family – received £13.4m in total farm subsidies last year, of which £10.6m came from the single payment scheme alone.

Other recipients in the Top 100 include wealthy foreign owners not featured in the UK Rich List – including the internationally famous racehorse breeding operation Juddmonte Farms, owned by Prince Khalid Abdullah of Saudi Arabia.

The Top 100 received a total of £87.9m in agricultural subsidies last year, of which £61.2m came from the single payment scheme – this is more than was paid to the bottom 55,119 recipients in the single payment scheme combined. The payments take up the vast majority of the farming subsidy pot.

The investigation also found that

• At least one in five of the Top 100 single payments went to businesses owned or controlled by members of aristocratic families, including the Queen and the Duke of Northumberland.
• Four businesses in the Top 100 are owned through offshore companies based in the “secrecy jurisdictions” of Jersey and Guernsey, with two of those businesses using structures that hide ownership.
• Conservative MP Richard Drax received hundreds of thousands of pounds for his country estate in Dorset, while numerous recipients in the Top 100 have made donations to the Conservative Party.

Political pressure

The news comes as the government is under mounting pressure to set out how farming subsidies will work in the UK once the country exits the European Union.

A total of £3.2bn was paid in common agricultural policy (CAP) subsidies in the UK last year, according to latest published data from the Department for Environment, Food and Rural Affairs (DEFRA), and the CAP accounts for more than half of UK receipts from the EU budget.

Unearthed’s analysis of the latest DEFRA data is likely to prompt fresh calls for a fundamental shift away from so-called “Pillar 1” subsidies like the single payment scheme (see below: What are direct farming subsidies?).

Campaigners have long argued this system disproportionately benefits large landowners, and has not delivered enough public benefit for the amount of public money spent.

The single payment scheme made up nearly three quarters of all CAP subsidies paid last year – £2.3bn – with the overwhelming majority of that money going to the largest landowners.

More than two thirds of the £2.3bn single payment budget – £1.6bn – went to the top 20 per cent of claimants. The bottom 40 per cent of claimants received only £95m combined – just 4 per cent of the total pot.

The majority of those who claimed the single area payment last year received less than £6,000, while payments to the Top 100 ranged from £336,971 to £2.9m.

Offshore ownership

For some recipients in the Top 100, farming makes up a tiny proportion of overall income.

The Saudi owned Juddmonte Farms, which is owned through an offshore holding company in Guernsey, reported a turnover of £53.4m last year, but only £1.5m – 2.8 per cent – came from farming. The rest of the money came from its thoroughbred stud farm and horse racing.

Although the UK company reported profits of £8.7m in 2015 it paid no corporation tax, due to trading losses in past years.

Juddmonte’s training manager has previously told the Financial Times that it is “not run as a commercial operation” and that in most years the prince puts money into the business rather than taking it out.

Juddmonte was given £406,826 in farm subsidies last year, of which £378,856 came from the single payment scheme.

Three other firms in the Top 100 are owned offshore, including Saker Estates and Palgrave Farming Company Ltd, which both use complex ownership structures in Jersey that hide the identity of the owner.

Saker Estates received over half a million pounds from the single payment scheme last year. Its accounts state that “The company acts as agent for undisclosed principals”. A spokesperson for Saker Estates declined to comment when asked by Unearthed to disclose the identity of the owners.

The landed gentry

More than one in five of the Top 100 are owned or run by aristocratic individuals or families, many of whom have inherited titles and thousands of acres of land.

The 4th Earl of Iveagh, a descendent of the Guinness family, benefitted from £887,538 in single area payments and £1,398,962 overall, for Elveden Farms. The business is based on a 22,500 acre country estate, of which around 10,000 acres is farmland. The company is owned through an offshore trust based in Jersey, although there is no suggestion that this is to avoid tax.

Other recipients include the Duke of Northumberland, the Earl of Moray, Lord Rothschild, the family of Baronet Sir Richard Sutton, and the Queen.

A Buckingham Palace spokesperson told Unearthed: “The subsidies are open to all farmers, and like others with agricultural interests, subsidies are received on The Queen’s private estate.”

A spokesperson for the Earl of Moray said: “All our payments are received for land in hand and actively farmed by our business. As for the vast majority of farmers in the UK CAP support is an important part of our income and helps deliver the intended public policy objectives of maintaining food production, social fabric and environmental standards in rural areas.”

In addition to inherited land, several of the Top 100 recipients are estates that have been bought up by foreign billionaires. This includes Ramsbury Estates, which manages over 19,000 acres in the Home Counties and is owned by Carl Stefan Erling Persson, heir to the H&M fashion empire and reportedly the richest man in Sweden.

Conservative MP Richard Drax, who lives on the Charborough Estate in Dorset, also appears in the Top 100. Drax benefitted from £384,351 in single payments last year through ACF (Drax Farm). When contacted by Unearthed Mr Drax declined to comment.

A spokesperson for Grosvenor Farms, the Duke of Westminster’s farming operation, said: “Grosvenor Farms is a commercial agricultural business producing milk and combinable crops which employs more than 50 people and farms over 2,300 hectares of land. GFL is bound by the rules and regulations defined by the Common Agricultural Policy and in the same way as any other UK farming business.”

The National Trust, which is the second largest recipient of direct subsidies, told Unearthed: “We want to see the system of support for farming fundamentally reformed so that it delivers more public benefit. We accept that our income may go down as a result of subsidy reform. But what’s important for us is what the overall system achieves for the natural environment, not how much the National Trust gets”.

Click here to view the data.

What are direct farming subsidies?

Direct farming subsidies – also known as “Pillar 1” of the Common Agricultural Policy – are intended as basic income support for farmers. Until the European Commission’s 2015 financial year (which ended on 15 October 2015) these were paid under a system called the “single payment scheme”. The figures for that financial year are the latest available, and are the figures used in Greenpeace’s analysis.

The single payment scheme was based on the amount of agricultural land the claimant had at their disposal. Farmers were allocated payment “entitlements”, and to claim against them they needed to declare an equivalent number of hectares of land.

After this year, the single payment scheme was replaced by the “basic payment scheme” (BPS), which was intended to close some of the loopholes in the previous system and give greater weight to the provision of environmental public goods. However, the new system remains largely based on land ownership. Under the basic payment scheme around 30 per cent of a farmer’s payment depends on them meeting three “greening” rules. These require farmers to grow two or three different crops, to devote at least 5 per cent of their arable land to “ecological focus areas” like hedges and fallow land, and to take some responsibility for maintaining the proportion of permanent grassland in the country. The new scheme also bars some businesses from claiming the subsidy if they also operate airports, railway services, waterworks, real estate services, or permanent sports grounds. However, these businesses are still able to claim BPS if, for example, they have more than 36 hectares of eligible land.

This investigation was published in partnership with the BBC.