For decades the UK took part in the EU’s Common Agricultural Policy (CAP) and by 2019 was receiving around £4.7 billion of CAP funding. Around 80% of this was provided as ‘direct payments’ under the Basic Payment Scheme (BPS) based broadly on how much land was farmed. A further tranche of CAP money was spent on rural and environmental programmes such as England’s Countryside Stewardship (CS) scheme.
All this changed with Brexit. Since the UK formally left the European Union at the end of 2020, the Agriculture Act 2020 has been passed, enabling the Government to develop very different approaches to supporting agriculture in the future. Whilst they have guaranteed the current annual support budget to farmers every year since then, this arrangement will end in 2024, and that money will then be allocated in different ways. CAP-style direct payments will be phased out, and payments to incentivise farmers and land managers to look after and improve the environment will be introduced. These changes will take place over a seven-year ‘Agricultural Transition’ period running from 2021-28.
2023 is the last year in which BPS will be paid. From 2024 to 2027, delinked payments will be paid each year. Farmers will receive payments based on their BPS payments in 2020-22, provided they are eligible for and claim BPS for the 2023 scheme year. Delinked payments rules will not require farmers to hold land or continue to farm.
The House of Commons Library briefing on the Agriculture Act 2020 sets out more detailed information on the policy aims of the new funding framework. For future updates on farm schemes it may be useful to look at Defra’s farm blog which provides a rolling update on the latest developments.
What are the new schemes?
Defra is gradually introducing new schemes under the provisions of the Agriculture Act 2020. The main part is known as Environmental Land Management (ELM), which has three main elements, which are being introduced in stages:
- In 2022, all farmers who were at that time paid Basic Payment Scheme (BPS) funds could apply for funding under a new Sustainable Farming Incentive scheme.
- A Local Nature Recovery scheme will be introduced to replace the Countryside Stewardship scheme. It will pay for locally targeted work to create space for nature alongside food production. Examples of funded actions are managing and creating habitats as well as adding trees or hedgerows to fields.
- Finally, Landscape Recovery programmes will focus on large-scale, long-term, significant habitat restoration and land use change.
The Countryside Stewardship (CS) scheme set up under the CAP remains open while these new environmental schemes are being phased in, and the last new CS schemes will start in January 2024. Farmers may apply for a new environmental scheme whilst also receiving CS payments, provided the same land is not claimed for twice.
Separately, funding will also be provided for productivity improvements and innovation on farms. Other schemes to support animal health and welfare improvements for example are also being developed – follow the defra farm blog for more details.
What about the views of farmers and other stakeholders?
Farm representatives and green groups have broadly supported the replacement of the CAP system of paying farm subsidies based on the area farmed and instead paying farmers to provide publicly beneficial programmes such as environmental improvements. However, farmers and agricultural producers continue to express their deep concern that food production was not included in the Government’s list of purposes for which funding could be provided.
Farmers have also expressed worries about implementation of the new approaches. There is particular unease around the timescales for the new measures to be implemented and the extent to which the new schemes will provide farmers with enough support. DEFRA has been criticised by the Public Account Committee for their “blind optimism” over the schemes’ introduction, and insufficient detail on how the schemes will compensate for the end of current funding systems.
One thing that can be agreed on by both farmers and the Government is that the claims processes and IT systems support need to be simple and effective. The former CAP scheme had complex application and compliance processes which caused problems for farmers, added to which the Rural Payments Agency’s record for processing claims was widely criticised for many years.
At Scrutton Bland we know from our farming clients that they have many questions about how to manage the financial and administrative aspects of their agricultural enterprises. Our agriculture specialists have a deep understanding of the challenges facing this sector, and will work with you to understand your business, and to determine whether there are opportunities to help you achieve your aims and objectives. To get in touch with Nick Banks, our Agricultural and rural team lead, or to speak with another member of the team, please call 0300 058 6559 or email email@example.com