The UK’s share of EU rural development funds will be substantially reduced in the 2007-2013 financial period, putting even more pressure on government to divert extra funds from farmers’ single farm payments.

EU Commission proposals published this week specify that member states in the old EU-15 will receive their rural development funds purely on the basis of their historic allocations.

For the UK that means just 3.5%. But the total pot available for the EU-15 countries has been substantially reduced since the agreement on the new financial perspectives reached by heads of state last December.

“This is really bad news,” said NFU chief economist Carmen Suarez.

“It just perpetuates past inequalities.

The UK has one of the most ambitious rural development policies in the EU and yet we’re getting one of the poorest deals.”

With well over half the €69.75bn (£47.4bn) available for 2007-2013 already earmarked for new member states, and with another chunk going in “special deals” to Austria, Finland, France, Ireland, Italy, Luxembourg, Portugal and Sweden, she estimates that the UK will be getting just 662m (450m) from Brussels over the next seven years.

“That compares with 1.1bn (748m) we got during the 2000-2006 funding period.”

The consequence of this is that the UK government will be even more likely to make use of voluntary national modulation to transfer more funds from SFPs to rural development.

Currently the UK is the only member state using this option, modulating at up to 10% rather than the EU norm of 4%.

Under the new financial package, and at the UK’s insistence, it will have the option to take 20% on top of the 5% compulsory EU rate.

“I am not against sensible moves to give member states greater flexibility, but only the British government will take up this option,” said Conservative MEP Neil Parish.

“This would put our farmers at a serious competitive disadvantage in relation to their European counterparts.”

The NFU says it is also alarmed that the new proposals call for modulated funds to be allocated among the three “axes” of rural development.

This means that at least 20% would have to go on boosting competitiveness and improving rural life, with a minimum 25% going to environmental projects.

“The more restrictions that are introduced, the greater the pressure for a higher rate of modulation,” said Ms Suarez.

Another worry is that the commission has remained silent on the issue of co-financing. As it stands, the regulation leaves it up to national authorities to decide whether to match-fund the sums removed from farmers’ SFPs.

philip.clarke@rbi.co.uk