New Rural Support Scheme development - evidence: outputs summary

W3 Summary of Delinking and Lump Sum Direct Payments in England

Authors: Andrew Moxey and Steven Thomson

Ref: RESAS/005/21 – W3

The Report is available in the supporting documents of this publication.

Key Points

The Basic Scheme (BPS) is being progressively removed in England, with final payments to be made in 2027/8. It is also being 'delinked' from 2024/5.

Recipients will not have to be active farmers, not have to activate entitlements via control of land and not have to observe current conditionality requirements unless undertaking agricultural activities.

The rationale is one of simplification to allow farmers to focus on land management and to remove disincentives to sell/rent land out, thereby facilitating structural change.

Yet if agricultural activities are undertaken, statutory obligations currently within cross-compliance requirements will remain relevant. This means that cross-compliance with be replaced by compliance, which will still require some form of administrative overview and control (i.e., simplification is not guaranteed).

Given that the BPS will have been eliminated by 2028/9 anyway, it is not clear what will be gained by delinking for a few intervening years.

Hence it may perhaps be inferred that the prime motivation for delinking relates to accelerating the facilitation of structural change. Delinking may indeed encourage land mobility between different land managers, which in turn may improve production efficiency and/or environmental performance.

This is consistent with the rationale of the parallel lump sum payments also being offered to encourage farmers to exit from the industry. In this case, farmers can forgo remaining future direct payments in exchange for a one-off, upfront payment. This is, however, capped and seems unlikely to appeal to many.

Delinking and, particularly, lump sum payments, may have been inspired by the idea of transferable (aka Tangermann) bonds proposed periodically in past decades, but not adopted because of practical shortcomings.

If delinking and lump sums were to be considered in Scotland, three issues would need to be addressed:

(i) a reduction in support leverage over at least some land managers (i.e., those least dependent on public payments) and areas of land, thereby potentially weakening influence over environmental performance unless accompanied by new regulatory controls;

(ii) a need to evolve administrative cross-compliance systems into compliance monitoring and enforcement systems, potentially incurring additional development costs and confusion at same time that other aspects of implementation infrastructure are already changing;

(iii) the compatibility of accelerated structural change with the principles of a Just Transition and commitments to rural communities, and/or the additional non-agricultural support measures that might be needed (e.g., training, housing, transport).