The Money Farmers Panorama

Tonight: Why we are paying out millions of pounds of public money.

And why are we asking for almost nothing in return? What did you get

last year? I got �1.3 million. �1.3 million? Yes. How money that

is meant to help preserve our countryside is divert for private

profit. It's a system that is broken a

system that's corrupt, a system that's abused and public money

going to people who don't need it And those getting rich as a result.

Do you own a farm? No. I am clearly not rural in any way. I don't even

own a pair of wellies. Tonight, Panorama exposes the money

farmers by joining them. We track down the wealthy people paid large

sums of public money. The starkest warning yet of the

spending cuts to come... This is the unavoidable Budget. �6 billion

of spending cuts... Many of reduce fighting for our jobs, benefits,

capped or cut, but is everyone facing the same, hard times? There

is one area of public spending that is not being cut.

We spend around �3.5 billion a year on farming subsidies, but what are

we getting for our money? To answer that question, I travelled to a

well-heeled part of Edinburgh. This is Paul Millan. He's a townie

through and through. Making his money on upmarket property

developments like this one, a �1 million town house.

This one will stay as a dwelling house.

So this is not for you to buy for you? No, this is another property

development. Paul's business is thriving, but he

has a sideline going on. A lucrative one. He's found a way of

tapping into a private source of public money.

I own a farming subsidy, that I bought in 2006.

On Ann newel basis I claim that farming subsidy. So, although it

seems a little odd officially, I am legally a farmer as well.

Do you own a farm? No. I am clearly not rural in any way. I don't even

own a pair of wellies. Confused? So was I, but Paul Millan

has discovered a loophole in the farming subsidy system. It allows

him, basically, to get lots, and lots of public money, which was

meant to go to farmers. You thought, kerching, that is a

money opportunity? Absolutely. I have been able to do it, I've been

smart enough to do it, but it is odd. No doubt.

A happy odd when you get the cheques? Absolutely.

The loophole is giving Paul a very good return on his investment..

It will be about 275 times on my initial investment.

That is a massive return? It is huge. With the benefit of hindsight

I would have sold everything that I own, including my own house, to

have this type of investment with this return. It is over 30% a year.

Paul Millan is clearly a man with an ie for a deal. In the past five

years, he has doubled his money -- eye. So far, he's been paid almost

a quarter of a million pounds in public cash. It is effectively an

investment guaranteeed by the state. If he had put his money in

Government bonds, he would have been lucky to get a return of 4% or

5% a year. Now if what pall is saying is right,

it sounds like money for doing absolutely nothing. To a hard-

working person like me, that seems like a good deal. If he can do it,

then I can too, but first, how does the loophole itself work? Well,

farmers get financial support in the form of a Government subsidy

payment for every hectare of land that they have. In this example,

our farmer has ten hectares. Each is worth �100 in subsidy. It is ten

times �100, that is �1,000 a year from the Government. Well, us, it

is public money, after all. Now, he can sell the right or the

entitlement to claim that money to anyone he likes. So an investor

like Paul Millan buy it is from the farmer. The farmer walks away with

a one-off lump sum in his pocket. Now all the investor has to do is

rent ten hectares of any land, now the Government pays the investor

�1,000 eefr year. He doesn't have to farm -- every year. He doesn't

have to farm, the obligation is to keep the land in good condition.

Which, the barren ground rented for by investors means just leaving it

alone, but this is not what the farming subsidy system was meant to

be used for. Its roots lie in the end of the Second World War.

ADVERTISEMENT: Among the workers are boys putting in their week of

working. There was a fear that Europe may

not be able to feed itself. That led to farmers getting spoth from

public bodies. But our investigation suggests that it is

not all going where it should. You can get small farmers or non-

farmers who buy the entitlements and rent land that produce s very,

relittle and gain all of the subsidy. That's a, to my mind, a

startling abuse of the system. We can reveal for the first time,

the full extent of the abuse of the subsidy system. Different rules

apply to different parts of the UK. We have discovered that the

Scottish Government is paying out huge sums of money to people who

are not actively farming the land. Their own estimate, prepared for us,

is that figure could be anywhere between �3 million and �30 million

a year. But how easy would it be for anyone,

including me, to get their hands on some of that cash? First, he to

register myself as a farmer. There was not a test. I did not need land.

I just had to fill in a simple form. What's just arrived is what I've

been waiting for. It is a letter from the Scottish Government. It is

to say that my business, Sam's Farming is now official. It

basically means that as of now, I am a farmer.

So, step one of exploiting the loophole is completed. Step two is

to buy the right to claim the subsidy. Moving on to the next lot.

Lot 11 is ours. Fingers crossed. No bids yet. It is all very

civilised doing it this way. I quite like being a farmer. On this

live auction website, farmers owning subsidy entitlements can

sell them to other farmers or investors like me. Oh, we are

winning! I'm winning. I am the current buyer of these entitlements.

Sold to remote buyer, that's me, I think.

The transaction is successful. I have just bought my first

entitlements. Fantastic. All I have to do now is attach that

entitlement to a piece of empty land, do nothing and the Government

will pay me as a farmer. So now I've got a whole new life

ahead of me. A lady of leisure. I might get myself just one cow to

keep me company, but no muddy farms for me.

That might seem like a dream, but others are using the loophole to

generate serious money. I'm in the middle of a field in

Sutherland, the reason why is because Balnacoil Estates is just a

few miles over the hills. Last year, that estate attracted almost half a

million pounds in public subsidies. We have spoken to local farmers and

checked with the experts and no-one thinks that there is a farming

business here. So we are tpwing to have a little look at Balnacoil

Estates. -- we are going to have a little look at Balnacoil Estates.

Our suspicion is that they are using the naked acres, as they are

called, to exploit the subsidy, but on a bigger scale.

We know that Balnacoil Estates has been buying up lots of subsidy

entitlements. You just have to look to see that they have a ready

supply of acres. It is incredible. Balnacoil Estates is not a farm. It

is a sporting estate where the owners or guests can fish for

salmon or shoot wild deer. Our research shows that after this

estate was purchased for �3.5 million, the Danish other than

bought entitlements worth nearly half a million. That means that a

foreign multi-millionaire is being paid this country's public money,

but for what? Well, I have seen a couple of lochs, and deer, but no

much farming. In fact, I have not seen any farming yet. I'm looking...

I'm looking hard, but nothing. Actually, there is some sheep.

I think that counts as farming. We've found no evidence of a

significant farming business here. Certainly not one that might

justify a pay-out on the scale that the estate is getting. The other

than is Peter Nissen. He made his money selling outsized clothing for

the larger customer in Scandinavia. We put our findings to him of the

fact that he claims almost half a million pounds a year, despite

doing no significant farming. He refused to answer our questions.

It is scandalous. I think that is a very good example of a system that

is broken, a system that's corrupt, a system that's been abused and

public money that is going to people, who frankly don't need it

I met up with someone to talk to about this.

Stephen Strathdee is one of Britain's biggest recipients of

farming subsidy. Sitting here alone is how much? It is over �1 million

here. They are well over �1 million. The combines? They are up to

�200,000 -plus. He and his wife, Freida, own 39 farms.

You must be worth quite a lot of money? OK! I'm not complaining!

Seriously, though, you must have a few pounds in the pocket? Aye. Well,

worth about �50M net worth. �50 million by anyone's standards

is a large sum of money. Stephen Strathdee is not someone who seems

in desperate need of public cash. Yet that is exactly what he is

getting. In terms of a farming subsidy, how

much do you get? What did you get last year? I got �1.3 million.

million, that is a lot. Do you actually need public money to fund

a business and your worth, which is tens of millions? Do you need that

public money? Yes, we need to do the farming unless we would not be

producing the food. We could hot do without it. It would be pointless

to do it. You would not make a profit. It would be a big loss.

Stephen Strathdee wanted us to see his active farm business, but he is

also a major trader in entitlements. He spent around �3 million in

buying them up and attaching they will them to empty land. In return,

he is getting back millions more in money. What does the taxpayer get

in return? It is not just me that gets the benefit. The farmers pay

tax on sale of the entitlements. The money that I borrow, the bank

gets a profit off it. It keeps people in work. But how does

Stephen Strathdee defend himself from critics who say that the

system should not be paying him for using the loophole? It is a system.

It is in place. We stay within the rules.

If they want to change it to get new rules, then we will look at how

it works in the future. So, Stephen Strathdee says he just

does what the rules allow him to do. After all, he is a businessman. He

invests in forestry, wind farms, developing housing, the subsidy

loophole is no different. The profits go back into his business,

but where there are winners, there are losers too. In much of the UK,

the system discriminates against helping out on his father's farm in

Powys. It is a beautiful view out there.

You cannot beat this kind of farmingment once it is in your

blood you just want to carry on. But for a young farmer like Marc,

the system that allows those with deep pockets to benefit from

subsidy entitlements acts against him. As well as finding the capital

to buy livestock and rent the land, he needs to find the money to buy

the subsity entitlement when the banks are not lending. Why buy the

entitlements? That should come with the farm that you have? No, it does

not. The system was set up on a traditional basis. So what the

farmers were getting ten years ago is basically how they have set it

up now. So anyone new coming in to the industry has to buy

entitlements, which is a bit of an Without single farm payment and

entitlements, the farm doesn't make any money at all. Mark is stuck

helping out his dad, despite being desperate to start his own farm.

That's because the payments farmers get today are based on activity ten

years ago. New farmers coming onto the ground either have to buy the

right to claim subsidy on do without. -- or do without. The

people selling that right are often retired or renting out their

farmland to someone else. It's another case of money going to

people who aren't actually farming. Mark arranged for me to meet a

couple of other young farmers in his local. I wondered whether

they'd resent those who are able to claim without working the land.

can see it in a way as being very shrewd businessmen or women, who

have worked the system. There's nothing wrong with that really, but

what does frustrate you is seeing the amount of money they're

receiving for actually, they're playing the game,if you like. It's

the system that is wrong. Is it a bit of envy as well then? Of course,

it is. There's an element there, because it frustrates you that you

can't go to that level because you haven't got the financial backing

to be able to do it as the way things are. The problems we've seen

so far are largely down to the trade in subsidy. But the Common

Agricultural Policy means there are also some recipients that might

seem a bit odd. For example, Manchester airport gets subsidy

because there are tenant farmers on some of its lan. Eton gets subsidy

from environmental improvements. Christ Church Oxford get payments

because they craze cattle on land that they own. There's even money

that go to the estates of dead people and some golf courses claim

as well. There's a more fundamental issue, the Common Agricultural

Policy plays people a flat rate for every hectare of land they own.

When it comes to subsidies paid to land owners, there's no upper limit

on payments or means testing. So the biggest land owners are the

real winners. Some of those whom we the public are supporting might

surprise you. The search for them brought me here to Central London.

Subsidy campaigner Jack Thurston agreed to accompany me on a tour

which went in search of some of the people who are perfectly legally

pulling down six-figure sums. Over my left shoulder is London's Ritz

Hotel. We're not far from Park Lane. That's home to someone who

invariably pops up every now and again on Britain's rich list, Sir

Richard Sutton. Last year he got �1.9 million in farming subsidies,

over ten years that's �13 million of public money. Sir Richard Sutton

is a barren et with extensive property holdings. You might not

have heard of him, but you will have heard of the Duke of

Westminster, reportedly worth �7 billion, which makes him the

richest Briton alive. This is Grosvenor Street it's home to the

business enterprises of one Major- General Gerald Cavendish Grosvenor,

the Duke of Westminster to you and I. In the last ten years, he has

earned around �6 million in farming subsidies alone. And you may be

surprised to hear that Her Majesty the Queen is also a significant

recipient of subsidies. In the last ten years, she's received around �7

million in farming subsidies. We ran all these numbers, which have

been taken from Government records, past the Queen, the Duke of

Westminster and Sir Richard Sutton, none of them wanted to be

interviewed or comment on the figures. But a Buckingham Palace

spokesperson said, like others with agricultural interests we have in

receipt of the single farm payment. The Queen, the Duke of Westminster,

Sir Richard Sutton don't strike me as people who are in particular

need of public money. You're absolutely right. These are very

wealthy people F we're in the business of handing out public

money to farmers because they're poor, these are not the kind of

people we'd be handing that money to. We're talking millions. It's a

lot of money. It's public money. It's an awful lot of money. The

reason they get so much is because they own so much land. The farm

subsidies are allocated on the basis of how many land you have,

not how much financial need you're in. Panorama can reveal for the

first time the true extent of large payments across the UK. We've

established for the last year available, 2010, almost 900

recipients were paid over �250,000. Of them, 133 got over �500,000 and

47 were paid over �1 million. But European privacy rules mean that we

have no right to know who these people even are. In fact, the

published information only names about a quarter of recipients. Why

do you think there is such a lack of transparency? I think it's

easier for governments and bureaucrats to keep things secret.

It reduces the public scrutiny on a policy that's hard to justify, when

everything is out in the open. doesn't seem fair. What it seems to

mean is that the elite view, the wealthy land owners of this country,

get' huge amount of money, but we don't actually have to be told

clearly what they get. It's not fair. This kind of information

should be made public. So how would the organisation representing

farmers defend the payments made bit Common Agricultural Policy,

also known as the CAP? The Queen, the Duke of Westminster, Sir

Richard Sutton, do these people really need our money? Public

financial support? We could have a very long debate about CAP...

a simple yes or no frankly. Do these people need the financial

support in terms of public money that they're getting? Your average

farmer desperately needs that money. They're not your average farmer.

point is, if you give me time to explain, is we've moved from

supporting cows and sheep or a ton of wheat to paying it on a land

area. Why did we make that change? Because when you subsidise a sheep,

the more you kept, the more you got. When we subsidise the cow the more

cows you kept the more support you've got. We rightly moved from a

system that developed grey mountains and milk lakes etc, to

one that paid on land and demanded people kept it in good condition.

One of the anomalies is some with large land holdings receive some

support. I'll ask the question again because I feel you haven't

answered it. Do these people deserve the financial support

they're getting in terms of the public money? Do they need the

money? They are competing. I think, this is an agricultural policy not

income policy. What we're saying is producing food receives some level

of compensation from taxpayers. I don't think it's a great PR story

from farming that someone might receive �1 million or �2 million.

Of course I don't I -- don't. I would be naive. It's a side effect

of the current system. I want money to go to farmers producing food

whether it's two acres or 2,000 acres. With the current system with

CAP it's unavoidable. So the NFU argues the European system makes

these big payments unavoidable. That system is under review with a

new regime due in the next two years. The man leading that process

is determined that the big sums handed out to UK land owners will

soon be a thing of the past. He proposes to cap payments at 300,000

euros a year, about �250,000. very frustrated because these

millions of very honest farmers have to suffer because some

speculators, who use this opportunity, this Common

Agricultural Policy, to become more rich only because they have some

hectares. So this way, for me, this capping and definition of active

farmer are two main elements of the next reform and I really hope that

taxpayers in UK and in all around European Union will support this

proposal of European Commission to obtain this more transparent, more

targeted and more fair unite illisation of the use of the policy.

In the UK the Scottish and Welsh administrations are willing to

consider a cap N Northern Ireland - - Northern Ireland wants one set at

just 100,000 euros. England's administration DEFRA is totally

opposed to one. We wanted to ask DEFRA why, but they declined an

interview, instead issues this interview, instead issues this

I think it's in the a strong and good argument, because if business

in agricultural is linked only to the subsidies, it's not a real

business and efficient business. We have to ask these people to

reorient this activity in another direction and be more efficient.

Back in Scotland, it was time to wrap up my business decision to use

the trading loophole. Although I may not be an actual working farmer,

I thought I might as well travel like one. Do you know, everybody

I've met has been telling me the same thing, it's not me, it's the

system. What I'm doing is legal. It's the system. So I'm off to meet

the man who's in charge of the system. I decided to take the

opportunity to meet up with my farming colleagues at the union's

AGM, where I'd have the chance to meet the man in charge of

Scotland's subsidy system. Good morning. What a pleasure it is to

be with you again at the AGM here in St Andrews. It's nice to spend

St Valentine's Day with your loved ones.

LAUGHTER Ultimately he's the man responsible

for the loophole, which I've used to register as a farmer. I really

am very frustrated by the serious flaw at the moment in the Common

Agricultural Policy. I'm in the ludicrous position where I'm unable

to support under European legislation farmers new entrants

perhaps, young farmers, to help them produce, but we are paying out

to some people who are not active. Like me. I'm a registered farmer

now, apparently. There's my farm. I'm registered. There's the receipt

for the entitlements I've bought. I've no interest in farming. This

is what your system allows. It's Europe's system. We're trying to

change the legislation. This is how it can be abused. This is why I've

put so much effort in trying to persuade Europe to change the

legislation with some success. We're going to get into the new

policy what's called the Scottish clause. But this has been going on

for long enough. Would you accept that? It's been going on for far

too long. I've sat down face to face with European officials and

said to them - can you help us fix this loophole? The European

Commission said member states should have closed the loophole

using rules introduced two years ago. The Scottish Government said

those measures would have penalised genuine farmers. Whoever's

responsible my experience of registering as a farmer was that it

was easy. Why should people care about this? Because it's their

money. This is public money and particularly in a time of cuts and

austerity, we need to make sure every penny is spent as efficiently

as possible. At the moment millions are going to people to do nothing.