The Queen would be one of the big losers under plans unveiled yesterday to reform the £40 billion Common Agricultural Policy by capping subsidies to large-scale landowners.

Income on her farming estates, which received £465,000 in European Union handouts in 2005, would drop by at least £140,000 under a proposed system to rein in larger payments.

British officials described the latest idea for trimming the EU’s massive agriculture budget as a licence for lawyers to print money, forecasting that big landowners would seek legal help to present their farms as smaller holdings.

They called instead for a more fundamental rethink of a policy introduced to ensure Europe’s food self-sufficiency but which has become synonymous with waste, food mountains and paying farmers not to farm. “It is perverse to encourage farmers to become more efficient, which can mean larger farms, and then to put in place a policy that encourages the opposite,” said a British government source in Brussels. “The cap will not bite and economies of scale for big farms could be lost while lawyers end up receiving CAP money.”

The CAP, introduced in 1962, led to vast overproduction that drove down prices and left many farmers dependent on EU handouts. Over the years EU priorities have changed and next year for the first time there will be no subsidy for fallow land set-aside, because of soaring grain prices as arable land is increasingly used for bio-fuels. Mariann Fischer Boel, the EU Agriculture Commissioner, said that her proposed changes were needed to simplify the CAP from 2009, ahead of a more wide ranging reform for 2013 when various subsidies will be phased out.

“We need to look at whether we need to adjust the Common Agriculture Policy for an EU of 27 and a rapidly changing world. The changes I propose will make a real difference for farmers, consumers and taxpayers,” she said.

The Commission said that it wanted to cut money going to huge farms, since they did not face the same pressures as smaller family ones. British farmers stand to receive €78.5 million (£56 million) less while Germany’s collectivised farms would be the biggest losers, with a cut of €270 million.

Farmers receiving between €100,000 and €200,000 face a 10 per cent cut; those receiving between €200,000 and €300,000 a 25 per cent cut. Those receiving more than €300,000 could expect a 45 per cent cut.

Mrs Fischer Boel said she was aware that big farms could simply seek to split up to avoid cuts in subsidy. “If everybody that hits a ceiling makes that calculation, then of course we will have to take stock of that because then the only winners will be the lawyers,” she said.

The plan also proposes to increase the amount of land a farmer has to own before qualifying for EU aid, from the current 0.3 hectares, to ensure that only genuine farmers receive subsidies. Mrs Fisher Boel said: “It has caused problems in some member states to handle so many applications. If you have a goat in your backyard you are not a farmer, so let’s get those pseudo-farmers out of the business and concentrate on real agriculture.”

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