Defra has announced how it plans to implement spending of Common Agricultural Policy funds in the UK. The new CAP phase will be introduced gradually over 2014 and 2015. Defra said "Farming, wildlife, rural businesses and the wider economy… are set to benefit from £15 billion from the next CAP."

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Whilst in the UK, Defra ministers had stated their intention to move all 15 percent from subsidies to rural development funding, farmers were outraged by the decision, which they claimed would put them at a competitive disadvantage to their European counterparts, as many other EU governments would transfer funds in the opposite direction.

Making his announcement on Thursday, Mr Paterson said that initially 9 percent of CAP funds would be transferred from farmers' direct payments to the budget for environmental and rural growth schemes, which will increase to 12 percent. A review of agriculture and environment schemes will be held in 2016, with the intention of moving to a 15 percent transfer in the final two years of the CAP period.

He added, "England's £15 billion Common Agricultural Policy must deliver real benefits to farming, rural businesses, the countryside and the taxpayer. Today's decision will see £3.5 billion invested in the environment and rural development schemes over the next seven years.

"This is a significant change in the way we allocate CAP money and even with a smaller overall CAP budget, the Government will be spending a bigger share of the budget on the environment than before."

Paterson reiterated that he was proud of having pushed for greater flexibility within the CAP, meaning member state governments have been allowed more freedom to govern CAP spending as they see fit. However, others have criticised this outcome; speaking in the wake of final CAP negotiations in September, European Greens agriculture spokesperson José Bové MEP said, "Heads of State and Government have turned a page by more or less allowing a renationalisation of the CAP. Member States won against the communitarian ideal of solidarity and equality: it is the politics of everyone for themselves wins."

Environment groups have said that, as only the UK and Portugal have historically expressed the intention of moving funds towards environment and rural development and away from subsidy payments, this renationalisation is likely to result in a further blow for Pillar two spending across much of Europe. The rural development pillar of the CAP has already suffered cuts of 12 percent under EU budget reductions, which the UK government supported.

Reacting to the announcement, NFU Deputy President Meurig Raymond said. "I am delighted the Environment Secretary has decided to keep the rate of modulation below the maximum for the four years until it is reviewed." TFA National Chair Jeremy Walker added, "Today's announcement shows the benefit of industry lobbying."

However, Soil Association head f policy Emma Hockridge, said, "We are disappointed with the announcement today that the full 15 percent transfer of funds from Pillar 1 to Pillar 2 has not been agreed. We think that public support for CAP funding will only be sustained if the public see the money delivering real benefits like more wildlife, less water pollution, better protection for soils and lower levels of greenhouse gas emissions. The future funding for all farmers ultimately requires public support, which is why higher transfers to Pillar 2 are important."

She continued, "Although the NFU see this as a victory, we don’t believe this is the case as in the long run it will weaken public support for the farming industry. An opportunity has been missed to bring England’s funding into balance with the much higher proportion of money that other European countries spend on looking after nature and the wider countryside. This would have enabled more resources to be made available for agri-environment schemes for farmers."

Defra's CAP announcement only covers farming in England; the Welsh Assembly has declared it will pursue the full 15 percent modulation towards Pillar Two.

Commenting on the decision by Welsh Natural Resources minister Alun Davies, Katie-jo Luxton, Director of RSPB Cymru said on Wednesday, "In Wales almost 80 percent of the land is farmed, so farmers hold the key to restoring our wildlife. We hope this marks a turning point for our countryside and begins improving the plight of our farmland wildlife, so that iconic Welsh farmland species such as curlew and lapwing have a positive future in Wales."

Hill farmers to benefit under new CAP

For the first time ever, hill farmers will receive the same direct payment rate on their upland farmland as their lowland counterparts. The government said this will support farmers "working in some of the toughest conditions and least-productive land, who play a part in managing beautiful countryside and providing habitats for wildlife."

Defra maintains that "Within a smaller overall CAP budget these decisions will help to grow the rural economy and improve the environment."

The full CAP consultation response can be read here.

**Update 19/12/2013. 14:30. RSPB Cmryu comment added. 16.20 Soil Association coment added**