DEFRA secretary Caroline Spelman has called on the European Union to make “very substantial” cuts to Common Agricultural Policy (CAP) budgets.

In a letter to European Union farm commissioner Dacian Ciolos, Mrs Spelman said the CAP could not be immune to finance cuts being felt across the rest of Europe.

She said remaining resources should focus on enhancing competitiveness through rural development funding (Pillar 2) to take into account the difficult economic conditions across Europe. The letter was written in response to an EU communication on reform of the CAP, which failed to detail what would happen to the policy’s budget.

Current expenditure on the CAP stands at €55bn (£47.3bn) a year. “The CAP cannot be immune to the hard choices being made elsewhere in the EU,” she added.

“There must therefore be a very substantial cut to the CAP budget in the next financial framework.”

Mrs Spelman said arguments for “greening” direct support payments (Pillar 1) would not deliver greater environmental benefits. Instead, targeted payments and developing technologies through Pillar 2 would be more effective.

Urging the Commission to focus on an eventual phasing-out of subsidies, Mrs Spelman added: “This is the way to create resilience and build true competiveness in the sector.”

The 11-page document said Britain would support using new financial instruments such as loans and insurance, with financial “safety nets” being used as a last resort.