October Professional Ponderings
As I sit here writing the Ponderings, it is a beautiful Autumnal morning, with the sun shining, the leaves turning and a slight chill in the air. Unfortunately, much of the region is still in desperate need of rain, and I note from my jaunts around the region that many are now turning to diesel and heavy metal to break down the soil for Autumn drilling! This has a significant cost attached to it, which many will be acutely aware of, especially following the publication of the draft Agriculture Bill, which seeks to significantly reduce farm subsidies over the next 9 years; more on that later!
On Friday, the Rural Payments Agency (RPA) confirmed the exchange rate for the Basic Payment Scheme (BPS) 2018 payments made in sterling. The exchange rate for calculating BPS 2018 payments has been set. The rate, an average of the European Central Bank Exchange Rates set in September, will be €1:£0.89281. (By comparison, the 2017 scheme year was €1:£0.89470). Consequently, this year’s payments will be down by 0.21%, and will be around £92 an acre (£227 per hectare). The RPA have stated that they will begin to make full payments in respect of the 2018 year from the beginning of December; it will come as no surprise to many of you that we are still waiting for post-payment adjustments in respect of previous years. As ever, when your payment comes in, please check that you have received the right amount, as I am afraid that mistakes are common. Incidentally, we are aware that the RPA have started making Financial Discipline Mechanism (FDM) reimbursement payments; FDM reimbursement payments from the 2016 FDM fund should be made to BPS claimants where their 2017 claim had the value of more than €2,000 (£1,789.40). These payments will be made directly into bank accounts by BACS transfer and remittance advice should be received.
In early September, the Agriculture Bill was introduced into Parliament. The Bill, which represents a draft proposed law presented to Parliament for discussion, sets out in broad terms how the current BPS will be replaced in England by an Environmental Land Management System. The proposed new scheme is intended to use “public money for public goods”, and will begin tests and trials next year, and pilots from 2021. In broad terms:
- BPS will continue in its current form for 2019 and 2020; there have been suggestions that simplifications may be made where possible. From 2021, a 7 years transitional period will begin where BPS will be phased out and the new system will commence.
- Capping is to be applied to all Basic Payment Scheme claimants; the amount will depend upon the level of claim, but it will affect all claimants, and not just those with high payments. The proposed reduction model is much like income tax, with deductions applied to payments falling within each band. A claimant receiving up to £30,000 will receive a 5% deduction, the next £30,000 to £50,000 will receive a 10% deduction, the next £50,000 to £150,000 will receive a 20%, and amounts over £150,000 will receive a 25% deduction.
- BPS payments are to be “de-linked” during the transition period (2021 to 2027) from the existing requirement to carry out an “agricultural activity” on “agricultural land”. Instead, the payments may be calculated according to money received in previous years, so we could see an historic reference period applied akin to the commencement of the Single Payment Scheme.
- BPS 2027 will be the final year of the Basic Payment Scheme and direct payments.
In respect of Countryside Stewardship Agreements, we understand that these will continue to be signed for the next 3 years (2019 to 2021). For the period 2021 to 2024, the number of Countryside Stewardship Agreements to be signed will depend upon the development of the new Environmental Land Management Scheme (ELMS), which is to replace the Basic Payment Scheme. It is proposed that from 2025, the new Land Management Scheme will be fully up and running.
In other news, we understand that responsibility for the operational delivery of the Countryside Stewardship and Environmental Stewardship will pass from Natural England to the RPA, with effect from the 1st October 2018. According to the RPA’s Operations Delivery Director, the transfer should be reasonably seamless from a farmer’s and landowner’s perspective; I have my doubts.
Finally, for those of you with tenancies with an 11th October term date, please consider whether you should be serving Notice to review terms, including rent!
Chris Templar – Rural Surveyor
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