De-Linking Basic Payment

At the end of last year the Government put forward their proposals to phase out the Basic Payment Scheme (BPS) in favour of a new Environmental Land Management (ELM) scheme. The phase-out is currently scheduled for 2021 to 2028 during which direct subsidy payments will be gradually reduced, with the money saved being put towards the development and trialing of the replacement scheme.

In addition to tapering the subsidy payment the Government have also proposed “de-linking” at some point during the phase-out period. In short, “de-linking” means the breaking of the link between the land and the subsidy payment, i.e. people or businesses could continue to claim regardless of whether or not they are farming the land. It is the “de-linking” of the Basic Payment that, we say, urgently requires further detail.

There are many “unknowns” at this stage. We do not know when de-linking will occur, and what reference period will be used to determine who is eligible for making a claim. Will it be the previous years’ BPS claimant? Will eligibility be transferable? What about where a tenancy ends, or a claimant business merges or splits?

And what about new entrants? At the moment there is no provision for a new entrant looking to make a claim for a direct subsidy payment once de-linking has occurred. In the absence of this information we are strongly advising all landowners and tenants to seek advice if they are considering restructuring their business or entering into any new contracts (tenancies, contract farming agreements etc.)

 In addition there is a proposal to offer a lump sum to eligible claimants as an alternative to them receiving tapered payments over the phase-out period. Again, eligibility is the key concern for all those with re-structures looming, or contracts due to expire before 2028.

For those without any significant changes planned, the option of a lump sum payment could help to finance change, for example the money could be used to solve concerns linked to retirement.

For the time being it is business as usual, with the 2019 Basic Payment window fast approaching and the 2020 scheme looking to remain much the same, if not (supposedly) a little simpler. Nevertheless in these changing times it is vital to keep one, if not two, eyes on the future.

Simon Evans | Agricultural Partner