EU is set to pay out extra thousands to the region

Jan 2 2009 by Adrian Pearson, The Journal

THE collapsing value of the British pound could lead to big euro payouts for farmers, landowners and regeneration chiefs.

Many of the region’s largest landowners will see thousands of pounds extra paid out in European Union farm subsidies, including the Duke of Northumberland who already receives around £450,000 a year in taxpayer-funded support.

Subsidies paid out by the EU are based on an exchange rate set when the pound was much stronger, a rate which has rapidly deteriorated this year.

The average farm receives around £45,000 in EU funds, according to the Institute of Chartered Accountants’ Farming and Rural Business Group.

But this was set against an exchange rate closer to 72p per euro than the current rate of around 96p, meaning many farmers will receive a rise in excess of £1,000 to help them through the difficult year ahead.

The Department for Environment, Food and Rural Affairs expects to see a continued windfall for landowners if the euro retains its strength into the new year.

And for regeneration bosses at One North East there is more good news.

Again, cash is allocated to them in euros, which is then spent by the development agency and claimed back from the EU.

But the amount of euros already allocated to the region is based on an exchange rate much higher than the current low rate.

Development bosses use longer-term exchange rate projections which mean that while they are not as vulnerable to the day-to-day changes, they still expect to see some increase in the nearly 400m euro fund awarded to them.

Chairman of the regional livestock board Malcolm Corbett said the currency problems making national headlines came with a silver lining.

He added: “The way the euro is at the moment we are certainly expecting some benefits to come our way.

“We should see some help in the form of increased European single payments, not a huge change but an increase that will help.

“But more than that, the low value of the pound has made for good exporting conditions for British beef and lamb, creating the best conditions really since the pound collapsed on Black Wednesday.

“That is having a much bigger impact on our profitability than the subsidy changes.”

A spokeswoman for the National Farmers’ Union North East said the move would offer only a small amount of help to some farmers.

“If this in effect means an increase in the value of single payments for farmers, this year that would be a big help.

“But as other people will know, the worsening economic situation brings with it other problems including rising costs.”

:: For more from Adrian on the local political scene, go to www.journallive.co.uk/blogs