In previous posts, I have made it abundantly clear that I am enthusiastically in favour of Britain retaining its membership of the European Union. For Britain to retain its influence in the world, as well as ensure that it is well-placed to build a prosperous future for itself, we must not remove ourselves from the largest and richest economic box in the world.

But with David Cameron stating already that any future EU referendum would take place after he had attempted to negotiate EU reforms, it begs a number of questions. What does ‘EU reform’ look like exactly? What is it that actually needs to change? And how do we achieve it?

Now, clearly, there are a number of things that I – and indeed many Progress readers – could choose to discuss. This time round, however, let us examine the common agricultural policy, one of the EU’s flagship policies.

The CAP, established in 1962, is essentially a common set of rules consisting of import tariffs, internal price support, export subsidies and direct income support to assist European farmers. In the 50 years since its conception, the CAP has grown to become the biggest single item in the EU budget, accounting for 40 per cent of the annual budget, or €55bn.

The CAP is based on a two-pillar structure. Pillar one, funded directly through the EU budget, is mostly composed of direct payments to farmers and landowners through the single payment scheme, and accounts for around three-quarters of total CAP spending.

The other quarter of the CAP budget is dedicated to pillar two, or ‘rural development’, aiming to promote economic, social and environmental development with a specific focus on rural areas. This is subject to co-financing from the EU and national governments. The CAP’s internal subsidies are complemented by external tariffs and quotas on imports from third-party countries, and effectively form an integral part of shielding European farmers from the effects of global competition.

The rationale for all this is that by guaranteeing farmers a certain level of income (usually above market prices), food security is safeguarded. Yet in a continent whose comparative advantage is generally not in agricultural products, there is much that is imperfect.

Yet, the reform-oriented thinktank Open Europe has astutely observed in its report ‘More for less: Making the EU’s farm policy work for growth and the environment’ that there is no clear link between the wealth of a country and how much it receives from the CAP. The EU’s poorest member states benefit the least, for example in Latvia where farmers receive £115 per hectare from the EU’s direct subsidies despite average farmers’ income being only 35 per cent of the EU average. In contrast, wealthier member states such as Ireland and France continue to do well out of the CAP.

What is more, the United Kingdom remains one of the biggest net contributors to the CAP, providing £33.7bn, and receiving just £26.6bn between 2007 and 2013 – a net contribution of £7.1bn. Furthermore, the UK receives over £50 less per hectare than France, Germany and the Netherlands.

The House of Commons environment, food and rural affairs committee has calculated that the cost to the EU’s farm subsidies and tariffs to consumers and taxpayers in the EU now stands at €86.9bn, of which €52.5bn stems directly from CAP subsidies. It predicts that the full liberalisation of the CAP and other EU measures to protect framing such as tariffs, and the reinvestment of the money into more productive areas of the economy, could be worth a boost in output equivalent to €139bn, or 1.1 per cent of EU gross domestic product. Britain would experience a boost in output of €14.2bn or the equivalent of 135,000 jobs.

By simultaneously streamlining the CAP budget, such a system would reduce the size of the CAP budget by around €122bn over seven years. This sum could either be invested back into the EU budget, in areas such as research and development, or returned to member states.

The money saved from reforming the CAP could be far more wisely invested. After all, farmers represent just 5.4 per cent of the EU population, and generate just 1.6 per cent of EU GDP. With China and India churning out millions of graduates from STEM subjects (science, technology, engineering, and mathematics), as well as substantially raising their levels of research and development into technologies and industry that will form the bedrock of all our economies tomorrow, we in the European Union have no choice but to do the same.

Similarly, with relations with Russia deteriorating and not looking to improve any time soon, the continuous instability of the Middle East and the general irreversible decline of non-renewable energy sources, the EU should be investing far more heavily into renewable energy resources: solar, wind and hydroelectric power being the most obvious avenues to pursue. Not only will this reduce dependence on unstable and, frankly, untrustworthy partners, but we will also gain access to cheaper and more environmentally friendly fuels that can contribute to building a sustainable economy.

Ultimately, progressives, not just in the Labour party but also elsewhere, will not only have to confront the yearning for EU reform, but also embrace elements of it. Reforming a programme as big as the CAP will be a monumental challenge. But as former prime minister Tony Blair once tersely put it: to spend so much on something we have no natural advantage in, in the twenty-first century, simply makes no sense.

Let us now reform the CAP with our European partners to fix it.

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Callum Anderson is a Labour activist and blogger

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Photo: Jon Whitton