Researchers from the London School of Economics have today warned that rural areas will suffer as available subsidies dry up when Britain leaves the EU. What’s more, two economists claim that the loss of agricultural subsidies looks set to have a larger impact than the end of regional and rural development funding.

The pair, Dr Mara Giua and Prof Riccardo Crescenzi, made the assessment in a follow up piece to research by prof Crescenzi which last month concluded that ‘Top-down’ policies like the CAP can be a more effective way of channelling resources to the most deprived areas than ‘bottom-up’ policies - like a number of rural development (CAP Pillar 2) initiatives - which do improve regional growth, but were shown to be most effective in areas that are already performing better socially and economically.

Crescenzi’s analysis took account of almost 90% of the funds coming from the EU budget between 1994 and 2013, and found that rural development funding (from CAP Pillar 2), which has seen increases as direct farm payments decrease, is associated with positive impacts in better-off areas, and not in more peripheral, disadvantaged regions. The pair said the findings fly in the face of conventional wisdom and the general direction of EU support mechanisms, and hoped that they will be able to help the UK government find the best mix of top-down (centrally administered) and bottom-up (locally driven) policies as Britain leaves the EU.

The economists said, “The ‘renationalisation’ of regional development and agricultural policies might offer the opportunity to reconsider the overall model of intervention in areas of socio-economic deprivation and economic stagnation. Providing effective support to the poorest regions is essential if the UK Government is to avoid exacerbating existing social and territorial disparities in the UK.”

However, they fear that “in the absence of evidence-based public debate” on the best use of this public money, interest groups and powerful sector lobbies will act to increase their funding as policies are renationalised.

Though the country’s largest farm union, the NFU, has yet to wade into the debate on post-Brexit agriculture policy (the union is still conducting a consultation with its members, though it has announced the establishment of a ‘Brexit unit’ to lobby on its behalf), environment and countryside groups - some of them significant beneficiaries under the current payment regime - have called for fundamental changes to farm support spending, and key commentators have speculated that funding is likely to be reduced once the Chancellor’s guarantees made in August and at the Conservative Party Conference late last month expire.

On Tuesday, Tim Breitmeyer, deputy president of landlord’s association the CLA said any policy revamp in an independent Britain must have farming at its heart. Ahead of a meeting with the Parliamentary Environmental Audit Committee in Westminster, which is currently investigating the future of agri-environment schemes and protection for the natural environment outside the EU, Mr Britmeyer said "Farmers are the workforce that will protect and enhance our environment now and in the future" and claimed policies that support a resilient and profitable farming sector will also put farmers in a position to deliver for the environment.

He said, “There is no binary choice between supporting a thriving farming sector and delivering the best outcomes for the environment. As the country prepares for Brexit it is vital that the Government commits to establishing a ring-fenced, UK-wide and world-leading Food, Farming and Environmental Policy which allows farmers and land managers to provide a wide range of environmental public goods and enhancements, alongside producing food.”

However, green groups including Greenpeace and the National Trust have been highly critical of the lack of conditions placed on recipients of public monies under the current scheme, which disproportionately benefits wealthy landowners (the top 100 recipients of agricultural subsidies currently receive more than the bottom 55,000 combined). These groups want to see a fairer distribution of funds, and want payments to be linked to farmers’ environment performance or providing ‘public goods’. Prominent academics have also suggested that the huge sums of money in the farm support pot could be better spent to deliver for wider society.