A MAJOR OVERHAUL of the way the EU supports and encourages rural development is under way.

New proposals published in Brussels on Thursday (July 15) call for the setting up of a single European Rural Development Fund, spending up to €13bn (£8.7bn) a year from 2007 to 2013.

This will be targeted at three “priority axes”: improving competitiveness, environmental/land management measures, and diversification of the rural economy.

Most of the policies within these three axes – for example early retirement, farm woodland and business starter schemes – will be optional.

But agri-environment measures, under axis 2, will remain compulsory.

Member states will also have to respect certain minimum levels of funding.

At least 15% of the cash will go on improving competitiveness (axis 1), 25% on land management (axis 2) and 15% on diversification (axis 3).

Another 7% should be spent on LEADER projects.

This presents a potential problem for DEFRA, which currently spends around 75% of its rural development cash on agri-environment measures and less favoured area support, both under axis 2.

If it is to meet the funding requirements for the other priority areas, it might have to cut spending on the entry level agri-environment scheme.

DEFRA may also have to beef up its funding of projects aimed at diversification, (axis 3), such as the rural enterprise scheme.

Another contentious area is that of the less favoured areas.

Following criticism by the EU court of auditors last year, the new proposals look to tighten up on definitions.

In particular, the “extended LFAs” will be limited to zones with low soil productivity or poor climate.

The socio-economic criteria will be dropped and maximum payments cut from €200/ha (£133) to €150/ha (£100).

The other vexed question for the UK is how to improve the share of the rural development cake.

The proposal says that in future this will be distributed according to “past performance” and “particular situations and needs”.

Currently, the UK gets just 3.5%, based on historic use only. “We will be looking for a far bigger share than this,” said one UK official.