Revealed: how we pay our richest landowners millions in subsidies

Prince Charles, Serco and the Duke of Westminster - an NS investigation reveals who benefits from the EU's Common Agricultural Policy.

Were David Cameron to announce tomorrow that some of the wealthiest landowners in the country would receive millions in subsidies from the taxpayer, there would be predictable outrage. Yet, in the form of the EU's Common Agricultural Policy (CAP), such a programme already exists. The average British household contributes £245 a year to the CAP, most of which, a New Statesman investigation has found, is handed to the wealthiest landowners. Originally established with the intention of supporting small farmers and reducing Europe’s reliance on food imports, the CAP, which accounts for 43 per cent (€55bn) of the EU budget, has become a slush fund for assorted dukes, earls and princes.

A freedom of information request by the NS to the Department for Environment, Food and Rural Affairs found that claimants last year included the Duke of Westminster (net worth: £7.4bn), who was paid £748,716 for his ownership of Grosvenor Farms, the Duke of Buccleuch (£180m), who received £260,273, the Duke of Devonshire (£700m), who received £251,729, and the Duke of Atholl, who was paid £231,188 for his 145,000 acre Blair Castle Estate.

It was also a lucrative year for the Windsor family. The Queen received £415,817 for The Royal Farms and £314,811 for the Duchy of Lancaster, while Prince Charles was paid £127,868 for the Duchy of Cornwall. Similarly well remunerated was Saudi Arabia’s Prince Bandar, who netted £273,905 for his 2,000 acre Glympton Estate in Oxfordshire, alleged to have been purchased with the proceeds of the 1985 Al-Yamamah arms deal between Britain and Saudi Arabia.

Revealed: what we paid out in 2011 to the landowners of the United Kingdom

Payments are based on acreage alone, and take no account of wealth, making the scheme one of the most regressive imaginable - the more you own, the more you get. In addition, since the EU’s definition of “farmer” does not require individuals to actively produce food or other agricultural products, many recipients are, in effect, paid not to farm. The largest individual UK beneficiary is Sir Richard Sutton, who was paid £1.7m for his Settled Estates, the 6,500-acre property he inherited with his baronetcy in 1981, despite net assets of £136.5m.

Other unlikely recipients include Eton College, which received £4,622, Severn Trent Water, which was paid £779,436, and outsourcing company Serco, currently cashing in on the government’s privatisation of NHS services, which, courtesy of the public, received £2.7m.

With the exception of Spain, there is no European country in which land is more unequally distributed than Britain, with 70 per cent of acreage held by just 0.28 per cent of the population, or 158,000 families.

Aware that it cannot legitimately sustain such corporate welfare at a time of austerity, the EU has vowed to reform the programme by capping direct payments at  €300,000 and by ensuring that only "active" farmers receive subsidy. But even under these proposals, due to be implemented in 2014, aid will still be provided to landowners who derive just five per cent of their annual revenue from agricultural activity, whilst, in the case of the cap, the biggest farms will simply avoid it through restructuring.

The Conservative Party now rarely misses a chance to bash Brussels bureaucrats, yet, due to its enduring ties to the landed gentry, one hears little from it about the inequity of the CAP or the order it helps sustain. But as the Thatcherite dream of a property-owning democracy recedes, it should recognise that land reform is now both a political and an economic necessity.

The full version of this piece appears in tomorrow's New Statesman.

Prince Charles with the Duke of Westminster, both of whom benefited from the CAP last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

How will Theresa May meet her commitment to low-earners?

The Prime Minister will soon need to translate generalities into specifics. 

The curtailed Conservative leadership contest (which would not have finished yet) meant that Theresa May had little chance to define her agenda. But of the statements she has made since becoming prime minister, the most notable remains her commitment to lead a government "driven not by the interests of the privileged few, but by yours." 

When parliament returns on 5 September, and the autumn political season begins, May will need to translate this generality into specifics. The defining opportunity to do so will be the Autumn Statement. Originally intended by George Osborne to be a banal update of economic forecasts, this set-piece more often resembled a second Budget. Following the momentous Brexit vote, it certainly will under Philip Hammond. 

The first priority will be to demonstrate how the government will counter the threat of recession. Osborne's target of a budget surplus by 2020 has wisely been abandoned, granting the new Chancellor the freedom to invest more in infrastructure (though insiders make it clear not to expect a Keynesian splurge).

As well as stimulating growth, Hammond will need to reflect May's commitment to those "just managing" rather than the "privileged few". In her speech upon becoming prime minister, she vowed that "when it comes to taxes, we’ll prioritise not the wealthy, but you". A natural means of doing so would be to reduce VAT, which was increased to a record high of 20 per cent in 2010 and hits low-earners hardest. Others will look for the freeze on benefit increases to be lifted (with inflation forecast to rise to 3 per cent next year). May's team are keenly aware of the regressive effect of loose monetary policy (low interest rates and quantitative easing), which benefits wealthy asset-owners, and vow that those who lose out will be "compensated" elsewhere. 

A notable intervention has come from Andrew Tyrie, the Conservative chair of the Treasury select committee. He has called for the government to revive the publication of distributional analyses following Budgets and Autumn Statements, which was ended by George Osborne last year (having been introduced by the coalition in 2010). 

In a letter to Hammond, Tyrie wrote: "I would be grateful for an assurance that you will reinstate the distributional analysis of the effects of the budget and autumn statement measures on household incomes, recently and mistakenly discontinued by your predecessor." He added: "The new prime minister is committing her government to making Britain a country that works 'not for a privileged few, but for every one of us'. A high level of transparency about the effects of tax and welfare policy on households across the income distribution would seem to be a logical, perhaps essential starting point." 

Whether the government meets this demand will be an early test of how explicit it intends to be in reducing disparities. 

George Eaton is political editor of the New Statesman.