Direct Payments – where next?

Leaving the EU no doubt leaves many farming businesses concerned about direct payments, with most relying heavily upon these. To put this into perspective, according to the Farm Business Survey Data 2017/18 the average English farmer relies their Basic Payment Scheme (BPS) income for 66% of their profit.

So where does this leave us…

Direct payments will be phased out from 2021 – 2027 with a new “public money for public goods” system. It has already been confirmed that that the BPS for 2020 will stay the same, and the overall budget for agriculture will not change until the end of the current parliament in 2024. Whilst the UK Chancellor has confirmed nearly £3 billion for UK farmers to be spread over two years the biggest cuts will come from 2021 onwards. The reductions will be calculated on a % reduction depending on the amount received from 5% for payments up to £30,000 to 25% for payments £150,000 or more.

It is thought that delinking the payments from the requirement to farm the land could start as soon as 2021 but this is yet to be confirmed, the idea being that the payments could be used to invest or diversify businesses, or to retire from farming to provide more opportunities. The option of offering farmers a one-off lump sum in place of any further direct payments is again subject to consultation.