Direct Payments to farmers: Lump sum exit scheme and delinked payments in England

Overview

Foreword

There are many things that make the farming business unique but one of the most powerful is that most farmers have an emotional connection with their land. For farmers, home is more than just the house they live in. In many cases land has been in the same family for generations. Herds of cattle or flocks of sheep have genetic lines running back generations. For all of these reasons, the decision to retire or to exit the industry can be the most difficult of decisions, and is frequently postponed.

The generational nature of farming also means that a younger generation often feels a great sense of duty to carry on the family tradition, but that might not be right for all. What of those who feel pride in what their family have achieved but actually yearn to pursue a different career? Or what of those who would like to do something different for a while, but maybe return to the family farm in later life? Often, inter-generational conversations on such dilemmas are too difficult to have.

At the other end of the spectrum are a completely different set of people. Those who yearn to go farming but cannot afford to enter the industry nor get access to land. Those who left the family farm as teenagers and saw their parents sell their land only to discover that in later life they would like to return to the countryside they miss, to do something that is fulfilling and has meaning, and for their children to have the childhood they had.

This consultation sets out to address these twin challenges. Our proposal is to offer farmers who want to exit the industry a one-off lump sum payment to surrender their BPS entitlements and then either rent out, sell their land or transfer it by gift if they are an owner occupier, or surrender their tenancy if they are on tenanted land. The amount of land we have is fixed. It is only by assisting people to exit the industry with dignity that we can help others fulfil their dream, and people at either end of this spectrum will ultimately be happier if more people manage to confront difficult decisions.

Those of us who grew up with farming know that families face these dilemmas all the time, but that too often difficult decisions are ducked rather than confronted. I do not pretend that the policy outlined in this document on the lump sum exit scheme and delinked payments will make those conversations and decisions easy, but I hope they might make such decisions easier.

The Rt Hon George Eustice MP

Secretary of State for the Environment, Food and Rural Affairs

Overview

As part of the transition to our new agriculture policy in England we plan to:

• in 2022, offer farmers who wish to exit the industry the option of taking a lump sum payment in place of any further Direct Payments; and
• in 2024, ‘delink’ Direct Payments from the land for all farmers. This means that recipients will no longer have to farm the land to receive the payments.

We believe that offering a lump sum will help those who wish to retire or leave the industry to do so in a planned and managed way. This will make more space for the next generation of farmers, as well as providing opportunities for existing farmers who wish to expand to improve their profitability. This should help bring additional fresh thinking into the industry, helping to support an innovative and vibrant farming sector and boost overall farm productivity. The proposed lump sum exit scheme will sit alongside extra support to help new entrants into the industry, as outlined in our Agricultural Transition Plan.

Our plans to delink Direct Payments in 2024 will bring further simplification as we phase these payments out. When delinked payments are introduced, they will replace the current Basic Payment Scheme (BPS) for all farmers. Annex A of the consultation provides an overview of BPS. By 2024, over halfway through the agricultural transition, we will have reduced the total amount we spend on Direct Payments by around 50% which will mean the rules and administration associated with BPS will be disproportionate. Once we have introduced delinked payments, recipients will no longer need to meet the current BPS rules and will not have to continue farming in order to receive these payments during the rest of the agricultural transition.

Why your views matter

The purpose of this consultation is to seek your views on:

• the proposed lump sum exit scheme; and
• our proposed approach to delinked payments.

It seeks views on a set of questions including on:

• the eligibility criteria and aspects of how we should calculate the value of the lump sum; and
• the reference period to be used to determine eligibility for, and calculate the value of, delinked payments.