Kendall calls for English modulation rate cut

He has also urged the Department to re-think England’s Rural Development Programme to make it more attractive to farmers.

Mr Kendall’s comments came in response to a National Audit Office report warning that Defra could have to return millions of pounds allocated to the £3.9 billion RDP to Brussels due to a combination of a lack of uptake in some schemes and exchange rate movements.

The £4bn programme is funded by a combination of core EU funding, voluntary modulation receipts and UK Treasury match funding of both elements for some schemes.

The Government is responding by negotiating with Brussels to reduce the amount of taxpayers’ money it puts into RDP schemes.

But there appear to be no plans to cut voluntary modulation rates, which in England currently stand at 12 per cent, by far the highest in Europe, on top of 7 per cent EU modulation.

Mr Kendall said the situation ‘irked’ farmers. “No-one else is anywhere near our 19 per cent modulation and they should certainly be looking to reduce the skimming off of farm payments,” he said.

He said the situation could also be improved if rural development funds were used to help farmers run their businesses more efficiently, rather than ‘wasted’ by Regional Development Agencies, as was often the case.

He suggested, for example, that funds could be used to help farmers adapt to NVZ regulations or the move to enriched laying cages, as is the case in Ireland.

“It strikes me as absolute madness, when you look at what is skimmed off for rural development funding, that it is not going out to farmers in a way that could really help us invest in the future,” he said.

A Defra spokeswoman said the Department ‘recognises the concern that EU funds could remain unused’ but said the problem was more to do with the exchange rate than a lack of interest in RDP schemes.

While some rural development schemes, like Environmental Stewardship, got off to a slow start, Defra is working with bodies like Natural England and the Regional Development Agencies to increase uptake and has until 2015 to use the funds, she said.

The UK was looking to reduce the UK’s co-financing commitment to ensure the same services could be delivered at a lower cost to the taxpayer, she added. But she made it clear there was no intention to reduce England’s voluntary modulation rates.

The chairman of Parliament’s Committee of Public Accounts, Edward Leigh, issued a stern warning. “Unless the Department gets a grip on the situation quickly there is every risk that EU funds might not be used and hence have to be returned,” he said.

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