Chapter 3: Other Financial Support After EU Exit
This section empowers the Secretary of State to make regulations that modify, in relation to England, the "horizontal basic act", retained direct EU legislation made under it, and related domestic subordinate legislation (as incorporated into domestic law and modified, principally under the EU (Withdrawal) Act 2018).
	The horizontal legislation concerns the financing, management and monitoring of the CAP. It is known as the horizontal legislation because it applies to schemes and measures that were established under the CAP: Direct Payments, Rural Development programmes and Common Market Organisation measures, such as the fruit and vegetable Producer Organisations (see section 15). For a fuller explanation of the scope and purpose of the horizontal legislation, please see Boxes 1 & 2.
Box 1: The horizontal legislation
Regulation 1306/2013 (the "horizontal basic act") has a fundamental role in making the CAP work. It works together with Implementing and Delegated Acts to create an overarching horizontal legislative framework for the financing, management and monitoring of the CAP. Regulation 1306/2013 contains crosscutting provisions that apply to payments made under both pillars of the CAP (Direct Payment schemes, Rural Development measures, and Common Market Organisation measures).
It should be noted that some of the horizontal regulations were incorporated into domestic law and amended at EU Exit using the powers in the Direct Payments to Farmers (Legislative Continuity) Act 2020. This ensures the overarching CAP framework, as far as it applies to 2020 Direct Payments (which will be domestically funded), operates in a UK setting. Further operability amendments will be made to the horizontal regulations at the end of the implementation period to ensure the remaining provisions in those regulations, which will continue to be EU law during the implementation period, work domestically.
The horizontal legislation is designed to ensure the proper management of CAP funds. The regulations include rules governing paying agencies and other bodies involved in the administration of the CAP. Under the regulations, the UK Government has set up a "UK Coordinating Body", whose main task is currently to collect and send information on implementation of the CAP to the Commission on behalf of the four UK paying agencies.
The horizontal regulations also include rules on application procedures, calculation of aid and penalties, payment windows and payment recovery. They include rules on checks to be carried out, including databases used to check compliance, audits and farm checks and administrative checks. They also include rules for the implementation of the farm advisory system, calculating the funds for public intervention purchase and the establishment of a single beneficiary website, which contains information relating to CAP beneficiaries. They also establish the system of "cross compliance" (see Box 2). They do not contain financial ceilings for schemes.
Box 2: Cross compliance
The horizontal legislation includes a cross compliance regime. CAP expenditure is primarily controlled through inspection programmes that check whether beneficiaries meet the eligibility rules of the scheme in question. In addition to meeting the eligibility rules, beneficiaries that receive payments (either as a Direct Payment or as part of area-based CAP Rural Development schemes, e.g. agri-environment scheme) must also comply with a series of standards on the environment, animal and plant health and animal welfare collectively known as cross compliance.
Under cross compliance there is an obligation on beneficiaries to comply with statutory management requirements (known as SMRs) which are existing requirements already set out in separate EU legislation, and standards for good agricultural and environmental condition of land (known as GAECs) which are established at national level. In the event of a breach being detected (through inspection or otherwise) the horizontal regulations enable reductions to be made to the beneficiary’s payments.
	Subsection (1) outlines the overall scope of the power. It empowers the Secretary of State to modify, in relation to England, the retained horizontal legislation, including any related domestic subordinate legislation.
	Subsection (2) qualifies the use of the power and lists a number of purposes for which it may be exercised. These are to secure that any provision of legislation referred to subsection (1) ceases to have effect; the simplification of the operation of such provision or to make its operation more efficient or effective; the removal or reduction of burdens (defined in subsection (3)) on people governed by the legislation, or making other improvements to the way the legislation applies in relation to these people; and securing that any sanction or penalty imposed is appropriate and proportionate.
	Subsection (3) states that ‘burden’, which the power in subsection (2)(c) is designed to remove or reduce, includes: a financial cost; an administrative inconvenience; or an obstacle to efficiency, productivity or profitability. Subsection (3) also sets out a non-exhaustive list of the retained direct EU legislation that may be modified under this power and is intended to encompass direct EU legislation made under the horizontal basic act, as well as certain ‘legacy regulations’, relating to Rural Development schemes established before 2014, which are listed in subsection (4).
	Subsection 4 provides a non-exhaustive list of the ‘legacy regulations’ referred to in subsection (4).
	Subsection (5) provides that regulations made under this section are to be subject to negative resolution procedure, unless section 50(5) applies, in which case the procedure is affirmative.