Hopefully the fact that Basic Payment Scheme (BPS) payments are being phased out will not be news to anyone. We are now in the third year of progressive reductions, which will increase year on year up until 2027, when the final payments are made.
A lot of focus at present is taken up by emerging details on policy of the future, including the Environmental Land Management schemes (ELMs). However, direct payments have continued to be the primary delivery vehicle for spending England’s £2.4bn agricultural budget in these early years of the transition. As we know, this picture is set to change, but CLA members should acknowledge that direct payments will continue to be an important financial factor for their businesses for the remainder of the agricultural transition.
What is delinking?
Defra and the Rural Payments Agency (RPA) are eager to simplify the task of paying out the remaining direct payments over the course of the transition. Therefore from 2024, BPS payments will be ‘delinked.’ This means that the payments due from 2024-2027 will be paid without the need for the applicant to submit an annual claim, or the need to hold entitlements. Recipients are not even required to continue farming in order to receive the delinked payments from 2024 onwards. This means that 2023 is the final year where BPS applications will be required, with the 15 May application deadline fast approaching.
The delinked payment will be based on a reference amount, which will be the total of the 2020, 2021 and 2022 claims, divided by three. If no claim was submitted in one or two of the three reference years, the total will still be divided by three. The delinked payment for each year will then be calculated by applying a reduction percentage each year, with the payment for each year being issued in two installments- one from August and another from December.
Percentage payment reductions for the 2025, 2026 and 2027 years have not been published, and will be a matter for the next government to decide. In order to receive delinked payments, applicants must submit a claim in 2023. The size of this claim does not affect the value of the delinked payment, as the 2023 claim is not included when calculating the reference amount.
Frustratingly then, businesses will not be in a position to determine what their annual payments will be in the 2025, 2026 and 2027 years. However, what we do know is that 2027 will be the final year of BPS, and that the 2024 payment will see recipients receiving 50% of their full 2020 payment, or less for the larger claims (see RPA’s online calculator). Therefore, members could make reasonable assumptions regarding cuts for the remaining three years.
Transferring the reference period
In many cases where there has been continuity of land occupation and annual BPS claims have been submitted by a single party, the delinking process should be straightforward. However, there are cases where different parties have claimed at various points during the reference period. There are also cases when the one party has been in occupation for the reference period but has not submitted a claim after 2022, or will submit a claim in 2023, but will not be in occupation of the land after 2023.
To help resolve this, the RPA will open a window for a limited time in early 2024, during which reference data can be transferred between different businesses. Businesses in possession of the reference data will be able to choose to transfer as much or as little of the data as they please.
Impact on cross compliance
The vast majority of the BPS cross compliance rules are legal requirements. These were rules that needed to be adhered to in order to receive the full BPS payments. Looking ahead, there will be no penalty payment reductions on delinked payments as a result of any breaches of these legal requirements, although they will continue to be monitored and enforced.
There will be no need to apply for delinked payments. The RPA intends to notify each BPS recipient of their reference amount towards the end of 2023. Later this year we are expecting more details on the transfer period and guidance on how reference data can be transferred in early 2024.
Full delinking guidance is available here.