Farming conditions across the UK’s regions are to be assessed for the first time with a view to allocating financial assistance after EU subsidies are withdrawn, the government has said.

A new independent advisory panel will consider what factors should determine how future funding is divided among England, Scotland, Wales and Northern Ireland, with a remit to look at farm sizes and farm numbers, as well as environmental and socio-economic issues.

It is the first indication of how the government may be planning to allocate funding so as to repay farmers for preserving “public goods”, as sheep farming on Welsh or Scottish hillsides is very different from tilling fertile arable land in east England, but they are treated similarly for their main subsidies at present.

Such a system is likely to be particularly important in Northern Ireland, which is more economically dependent on farming and food processing than other regions. The Democratic Unionist Party has played a central role in recent days in the Brexit negotiations, which have focused on the Irish border.

A Belfast professor of Irish politics, the life peer Lord Bew of Donegore, who advised David Trimble in the Good Friday agreement process, has been appointed to chair the panel.

Facebook Twitter Pinterest Michael Gove, secretary of state for the environment, said that ‘the government won’t simply apply the Barnett formula to Defra’s funding beyond this parliament’. Photograph: Darren Staples/Reuters

Michael Gove, secretary of state for the environment, on Tuesday said: “We are committed to making sure that future funding is fairly allocated and are confirming that the government won’t simply apply the Barnett formula to Defra’s funding beyond this parliament. Meanwhile, our funding commitment up until the end of the parliament gives more certainty for UK farmers than any other EU member state.”

The Barnett formula is used to calculate government funding for services on the basis of the population, balancing spending in the devolved regions with spending in England. Gove’s explicit rejection of it for future farming subsidies signals that the special conditions of farming in the UK’s regions will be taken into account, and subsidies will be spread unevenly across the country.

The appointment of the panel is also a recognition that much of the responsibility for farming belongs to the devolved governments in Wales, Scotland and Northern Ireland.

Farms are awarded subsidies on an identical basis at present, with all applicants judged by the same criteria under EU rules, and the money issued through central government. The biggest subsidies are the single farm payment, for which the main criterion is the amount of land farmed. Beyond that farmers can qualify for schemes such as improved environmental stewardship, and special payments can apply to uplands.

Until 2022, the government has promised to match current total EU subsidies, but after that the biggest landowners will see the amount they receive cut sharply.

From 2021 to 2027 a new system of “environmental land management contracts” will be phased in, under which ministers have pledged that farmers will be rewarded for protecting and improving public goods, some of which are outlined in the agriculture bill now going through parliament. These may include payments for preserving waterways, natural landscapes and wildlife.

However, the amount of subsidy to be made available under the new system has not been set, and Tuesday’s announcement was seen as a first step in setting out how the contracts will work across the regions.

Alun Cairns, secretary of state for Wales, said: “Farmers in every part of Wales can look forward to greater future financial protection.”

David Mundell, secretary of state for Scotland, said Scotland received twice as much money for farming under the present system than if the Barnett formula were used.