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Brexit and Basic Payment Scheme Mark 2

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The Treasury announced on 13 August that it will guarantee the current level of agricultural funding under Pillar 1 of the CAP until 2020. In essence this means that the “direct payments” element of the CAP will continue beyond the date the UK leaves the EU, as part of the transition to post-Brexit domestic agricultural policy.

This is a welcome move, giving farmers some certainty as far as medium-term farm budgets are concerned.

However, even this apparently straightforward guarantee will need to be backed by legislation, and it is not a foregone conclusion that exactly the same provisions will apply to direct payments during the transition as apply now. Indeed, ‘bringing home’ the Basic Payment Scheme, without the legal requirements imposed by the EU regulations which govern the scheme, may be seen as an opportunity to get rid of some of the more restrictive or administratively burdensome elements of BPS.

Same again for England – BPS mark 2?

The NFU seems to think we will have the same scheme in place during the transition. In its own announcement welcoming that of the Treasury, the NFU said “ This should mean that farmers can count on receiving the Basic Payment Scheme through to 2020.”

Certainly, from an administrative and IT point of view, it will surely be easiest just to transpose the same scheme into domestic law. The more changes that are made, the more tweaking of the current system will be needed; as we know, that can all too easily lead to delay and error.

Farmers may just have to accept the much-hated greening requirements, active farmer rules and strict cross-compliance penalty regime as the price of stability. In any event, the last thing the sector will want is yet another new, short-term scheme that needs a 188-page handbook, fresh online registration and new-style claim forms.

Our hunch, then, is that the transitional scheme will be an entitlement-based BPS for England, Wales and the other devolveds, in much the same form as each administration has today.

Post 2020 we can look forward to something different, the “new approach to supporting agriculture ” Defra Secretary of State Angela Leadsom has talked about.

Advice for farmers

New medium and long-term farm business tenancies will need to provide for both the transitional “successor scheme” and any new support scheme that may be put in place after 2020.

From the landlord’s point of view, provisions should be put in place to ensure that tenants take up payment entitlements that may be on offer when we leave the EU scheme and switch to the transitional scheme. Landlords will also want to protect their position with regard to post 2020 policies, although that is more difficult to nail down at this stage.

Tenants will want to ensure that they have some flexibility for review (or even to terminate early) should support to the farming sector take a radically different form, or not be available at all post 2020.

One of the ideas being mooted is a system of tradable environmental credits and/or obligations. Parties to medium and long-term arrangements (tenancies, sharefarming and contracting agreements) may want to think about the position that they would take should this kind of system be introduced.

We are generally discouraging “good faith” side letters which leave things uncertain, and encouraging parties to make provision for what will happen if X, Y or Z is introduced (or not) post 2020.

Please do get in touch with us if you would like to discuss your farming arrangements, or other specialist farming matters. Call your usual contact, or speak to or email Julie Robinson (Tel: 01775 842618, email