Image: Sheik Mohammed bin Rashid Al Maktoum wins the 2012 St James’ Palace Stakes, Royal Ascot

It’s hard to imagine the Government devising a new system of Jobseeker’s Allowance or Housing Benefit where the claimant is told they that their entitlement to such payments is just about to quadruple whether they like it or not. Indeed, with the total benefits cap set at £26,000 per year, the trend is in the opposite direction. It has long eluded me why, when the poorest in society suffer cuts and caps, some of the wealthiest (like the individual pictured above) not only appear to suffer no such pain, but are rewarded with largesse.

I met a tenant farmer recently who told me that under the existing system of farming subsidies he receives £18,000 per year. That’s a fairly generous allocation. But under current proposals for the new system (to be introduced in 2015) he will receive £80,000. “I don’t need it”, he told me. He is not particularly wealthy but he doesn’t need the money. So why does it look likely that he will get it?

The existing system of farm subsidies is coming to an end in December 2015 and the Scottish Government is currently finalising the details of the new system that will take its place and run until 2020. The existing (historic) system awarded subsidy (single farm payments – SFP) to farmers on the basis of what they received in 2000-2002. This is rather like paying tax this year on the basis of what you earned 14 years ago.

Some farmers “gamed” the system by increasing their farming activity in those years and thus have done very well out of it over the past decade. Others have bought “entitlements” to subsidy from farmers who, for example, retire from farming, and have “attached” those “entitlements” to poor quality land. They rent this land very cheaply and have thus been paid substantial sums of public money for doing nothing. They are the slipper farmers (so-called because they sit in front of the fire in their slippers being paid for doing nothing). Young farmers who entered farming over the past ten years have typically received no subsidy because the Scottish Executive back in 2003 conveniently omitted to make any allowance for them.

From next year, a new Basic Payments System (BPS) of farming subsidies will be introduced on the basis of a straightforward fixed payment per hectare of land farmed. The current proposal is that this payment should be made over two separate “regions” of land – €20-25 for rough grazing land and €200-€250 for better quality land. This means that the more land you own or rent, the more subsidy you will receive. This explains the pleasant dilemma faced by my farming friend above.

So, will the new system eliminate slipper farmers, support new entrants and direct subsidy where it is most needed? There will be support for new entrants although how much and how soon remains to be seen. But on the first and third points the jury is still out.

Scottish farmers do well out of the CAP – they receive the second highest average payments in the EU (€31,955). But that figure masks a few who do very well and the great majority who receive much less. In the latest data for 2013, the recipient of the largest payment was the King of the slipper farmers, Frank A Smart who was awarded the tidy sum of £3,226,492 for 35,379ha of land that he “farmed”. (1)

That’s right – over three million pounds.

The recipient of the least got £0.22.

Of the £439.8 million handed out in 2013, 45% (£198 million) went to the top 10% of farmers and the top third received over 81% of the total pot. This distribution is thanks to the system of historic payments and the scandal of slipper farming which, according to the farming journalist Andrew Arbuckle, has been responsible for between £50 – £100 million of payments each year – almost 20% of the total amount of subsidy paid to Scottish agriculture. His article is worth a read. So will the new system be any fairer? That depends on a number of factors including how much land is eligible for the BPS and how the new system is phased in. And this is where things get interesting.

Under the old scheme, some owners of very large tracts of land undertook very little farming and so have received relatively small payments. But under the new scheme their estates are all eligible for the basic payment. In 2013, there were 4,480,561 hectares against which subsidy claims were made. However, there are a total of 5,744,610 hectares  of land registered and eligible for subsidy – an additional 1,264,049 hectares. The Scottish Government intends, under EU rules, to restrict the land that can trigger payments by applying an “active farmer” test. It is unclear what this will mean in practice and in any event, it is not likely to be difficult to hire a shepherd and run a few sheep over the hills and qualify for subsidy.

Image: Extract from Scottish Government’s IACS Field Boundary dataset for Highland and Aberdeenshire

Smech Properties Ltd. for example, is a company registered in Guernsey and owned by Sheik Mohammed bin Rashid Al Maktoum, the King of Dubai and Prime Minister of the United Arab Emirates (pictured above). It owns the Killilan, Inverinate, West Benula and Glomach Estate in Wester Ross which has 21,424 ha of eligible land registered, received £26,406 in 2013 and could be eligible for £439,192 paid straight to a tax haven every year until 2020.

The Duke of Westminster owns 37,303 hectares of eligible land and could be eligible for £764,712 of public assistance for each of the next six years.

Braulen and Glenavon Estate, owned by a company in Grand Cayman (beneficial owner unknown) consists of 26,632 hectares of land potentially eligible for £545,956 of state handouts for doing next to nothing.

The Duke of Roxburgh received £204,374 in 2013 and his 4637 of claimed hectares would be eligible for £950,585 per year over the next six years

Letterewe Estate is owned by a company in the Dutch Antilles and could be eligible for £372,280 every year until 2020.

Even the Queen could claim over half a million pounds over the 25,000 hectares of Balmoral Estate.

In addition, there is a distinct possibility that, instead of the new system being introduced in 2015, it will be phased in over the next six years. And that would mean that Frank Smart (and the rest of Scotland’s slipper farmers) would continue to receive a substantial proportion of his £3,226,492 until 2020 for doing next to nothing.

The existing system of farm subsidies has been extensively abused. The new system must not be. And that is why I and others will be paying close attention to whether Sheik Mohammed is going to be allowed to pretend that he is a farmer and whether Frank Smart continues to get given millions of pounds for doing next to nothing.

NOTES

(1) The matrix files for 2012 and 2013 in Microsoft Excel format

WR1826_SFPS_2012_Natural_Person_Obfuscated_Town_Removed.xlsx

WR1826_SFPS_2013_Natural_Person_Obfuscated_Town_Removed.xlsx

The files provide the following information

Name of the claimant for legal persons only. Natural persons names are redacted. See here for details.

Postcode District where the claimant’s business is registered.

2013 SFPS Payment – the sum in Euros (all sums been converted to £ for this blog)

Ha Paid is hectares over which payment was claimed

Person Type – Natural or Legal

UPDATE 7 May

Figures in the original blog for 2013 payments were expressed in Pounds Sterling when they were in fact Euros (this includes payment made in 2013 to Frank A Smart). All now been corrected. This does not affect the projected sums which were converted already.

On 22 January, the Scottish Government published an interesting map showing the density of tenanted agricultural land per parish (1162kb pdf here). What struck me about the map was the apparent coincidence of those parishes with >75% of the land tenanted with the locations of Scotland’s largest landed estates. So I produced another map, overlaying the ownership boundaries with the parishes and the coincidence is real. What this maps shows is that the pattern of farm tenancies is a product of the pattern of private landownership and has nothing to do with agricultural conditions. Recent reports in the press have claimed that the right to buy being pursued by tenant farmers is a “minority quest”. There is more than one minority, however.

The full map with overlay can be downloaded here (1.3Mb pdf)


A report was published today by Scotland’s Rural College (SRUC) entitled Family Estates and Rural Resiliance. It contains the findings from a series of 23 interviews with landowners of so-called “family estates”. The report contains a few interesting observations but adds little to our state of knowledge about landownership in Scotland.

First of all is the problem of definitions. What is a “family estate”? The report does not say. One presumes it is an estate owned by a whole family but I know of none that meet this definition. The report contains no analysis of whether estates are owned by companies, trusts, individuals or other legal entities. Such structures are important not least because they often constrain precisely who in the “family” is the owner – often this may be a son or grandchildren. But the most important information that is missing is any analysis of gender. Are these estates owned by men or women in the family and what stake do children have? Given the long history of primogeniture and male landowners, this missing gender dimension makes it difficult to understand precisely whose voice is doing the talking and on what basis.

Another problem is that the research in so far as it examines the role played by “family estates” in their wider community, only interviews the landowners and not the wider community. It would have been interesting to see whether the opinions of the interviewees are shared by the community with which most of them seem so enthusiastic to embrace.

For example (and this is purely anecdotal of course), I received this email today from somebody who is dealing with a well-known “family estate” I guess you might call it.

they have a huge influence on life in this area and I personally have noticed a fundamental change in the last 10 years or so where they have gone from being generally a well thought of and benevolant influence in the community to the complete opposite where now they are obstructive, disliked and untrustworthy. You will be hard pushed to find someone who has a good word to say about them.”

The most obvious problem with this piece of work, however is the sample. The findings are based upon interviews with only 23 landowners. That is a very small sample but there are two more serious flaws.

The sample is derived solely from the membership of Scottish Land and Estates (SLE) which immediately biases the sample towards those who choose for whatever reason to join this organisation. The most serious flaw, however, is the fact that Scottish Land and Estates had the final say selecting the 23 owners. SRUC initially selected random estates using codes from an anonymised database provided by SLE. Once selected, the codes were sent to SLE. In the words of the report, SLE “then checked that the ones we had selected were resident family estates. if not, we then re-selected, again from the anonymised database“.

This means that SLE had the opportunity of selecting those data subjects which would show “family estates” in the best light. Whether it did or not I cannot say and neither can the researchers – and that is the fundamental flaw in the research design. We cannot therefore trust that the sample is even representative of “family estates” who are members of SLE (a problem exacerbated by SLE who, it appears, used their own unpublished definition of a “family estate”).

Moreover, knowing the identity of the subjects means that SLE had the opportunity to speak to them in advance of the research. Whether it did or not I cannot say and neither can the researchers.

Not surprisingly perhaps, SLE are very happy with the report and are majoring on the theme at their trade stand at the SNP conference where they are launching a “Community Engagement Programme“.

In a tweet today, SLE Chief Executive revealed the flawed premise upon which much of their argument rests. I will leave you to spot it.

This kind of design flaw has happened before with research undertaken by the Scottish Agricultural College, the predecessor to SRUC. Nine years ago, in a study of nine estates, it was revealed that the subjects were chosen by the sponsor of the research – the Scottish Estates Business Group – my critique of the time is here).

The next report will look at the role played by “charity” landowners. I trust that SRUC will adopt a clear definition and it would be very interesting to see whether they include the Applecross Trust and Mount Stuart Trust in their sample.

This report is based on a seriously flawed sample methodology and cannot be trusted. It tells us little beyond the opinions of 23 individuals whose authority even to speak on behalf of their “family” is never explained. No attempt is made to validate the views and opinions of the 23 interviewees by seeking the views of others with whom they engage. The research amounts to little more than a series of chats with individuals who have a vested interest in findings that can be presented, interpreted and promoted in a positive light.

In the acknowledgements, the author writes, “I would like to thank the 23 interviewees for their time in sharing their views with me“. That about sums up the research.

But please don’t take my word for it. Read it and make up your own mind.