The Department for Environment, Food & Rural Affairs (DEFRA) has now published its consultation on the proposed changes to the Basic Payment Scheme (BPS) and future funding for farmers. This includes its proposals for a lump sum exit scheme and the approach to delinked payments in England post-2023. It includes details of potential eligibility criteria, how the lump sum is calculated and the reference period to be used for determining both the lump sum payment and the value of delinked payments. The main points of the consultation are summarised below:
Lump Sum Exit Scheme
DEFRA plans to offer farmers in England who want to exit the agricultural industry the opportunity to do so by offering a lump sum payment. It is proposed that this lump sum will be offered in 2022 only and will create early opportunities for new entrants to access the industry.
If a farmer chooses to take the lump sum payment, all English BPS entitlements held by them will be cancelled, with no option for taking a partial lump sum. To be eligible for the lump sum scheme, a farmer would have to give up their land in England either by gift, sale or letting for a term of at least 5 years. To prevent recent entrants from applying for the lump sum payment, eligible applicants must have first claimed direct payments in 2015 or earlier. Additionally, free entitlements for young and new farmers will cease.
It is proposed that the lump sum payment will be calculated using an average of the values of BPS payments made to a farmer during 2018, 2019 and 2020. The lump sum payment will be calculated at 2.35 times the reference amount, with a proposed payment cap of £100,000.
DEFRA is aiming to provide the key rules and guidance for the lump sum payment by the end of October 2021 in advance of the introduction of the scheme in 2022. It is anticipated that the application period for the lump sum exit scheme will be in the first half of 2022.
DEFRA intends to introduce delinked payments in 2024. This means that recipients of BPS will no longer need to farm the land to receive the payment. The eligibility for delinked payments will, similarly to the lump sum payment scheme, be based on a reference period. In order to receive the delinked payments, it will be necessary for the recipient to still be farming at the end of the reference period and in 2023 if the reference period is earlier than this. New entrants who enter farming after the reference period will not be eligible for delinked payments but will be able to apply for payments through any newly available schemes, such as the Environmental Land Management Scheme (ELMS).
The value of the delinked payments between 2024 to 2027 will be calculated based on the BPS payments made to the farmer in a reference period, by using a ‘reference amount’ for each applicant. DEFRA is currently proposing some potential dates to use for the reference period, the first being 2018, 2019 and 2020 as per the lump sum payment scheme. The second option is to use the average of the 2018 to 2022 payments and the third is just the 2022 payment. The reference period used to calculate the delinked payments will be confirmed following the consultation. Additionally, DEFRA will inform farmers of their reference amount prior to making the delinked payments in 2024. This has an immediate impact on those who are looking to rent or buy land as the reference period chosen will effect your level of payments between 2024 and 2027.
The consultation period commenced on 19th May 2021 and will end at midnight on 11th August 2021. Anyone wishing to respond to the consultation can do so via the following link: https://consult.defra.gov.uk/agricultural-policy/lump-sum-and-delinked-payments-england. Alternatively, responses can be made by email to DirectPaymentsConsultation@defra.gov.uk or by post: Direct Payments Consultation, Consultation Coordinator, Defra, 2nd Floor, Foss House, Kings Pool, 1-2 Peasholme Green, York YO1 7PX.
For further information please contact our Rural Property & Business team on 01234 352201.