Background
One important historic consideration when claiming the BPS, and the SPS before it, is the Active Farmer Rule. As of 2015, the birth year of the Basic Payment Scheme whose departure we are now witnessing, the “Active Farmer Rule” was a negative stipulation for national farming subsidy claims. That is, it gave circumstances in which claims could, or should, be rejected. Some of these were mandatory, some were optional for EU member states wishing to take a more restrictive approach to the scheme.
The mandatory rejection conditions were:
- The claim is on “land in a state naturally suitable for grazing” and the claimant was not carrying out minimum activity.
And
- The claimant operates an airport, railway service, waterworks, real estate service or permanent sport and/or recreational ground.
However, anyone meeting either of these criteria could still claim if they showed that farming subsidies would be at least 5% of their non-agricultural income or that their principal business is agricultural or, at least, that their agricultural activity is “not insignificant”.
Note use of the phrases “agricultural activity” here. The EU explicitly considered activity to keep land in good condition, e.g. by maintaining boundaries, to be “agricultural”.
Optional criteria for rejection of claims under the Active Farmer Rule included being able to add other proscribed business activities to number 2 above, and also to come up with other “non-discriminatory” criteria for when a claimant’s agricultural activities (by the above definition) are either “insignificant” or not their “principal activity”.
Scottish Implementation
There is in Scotland serious concern about farming subsidies being collected by so-called “slipper farmers”. This means people who own land and perhaps pay contractors a bare minimum to maintain it but do not actually practice what the public would call “farming”. That is, they grow no crops and own no farm animals. The Scottish Government has consistently aimed to deny subsidy to “slipper farmers” as a conscious political objective.
The “active farmer rule” was seen by the Scottish government as a way to realise this. Written into RPID guidance was, and at the time of writing in one place still is, the line that “an active farmer is a farmer who produces, rears or grows agricultural products, including through harvesting, milking, breeding animals, and keeping animals for farming purposes.” This rule was, at first, consistently enforced, with many claims denied because of it.
It does not however seem to match the EU approach. The EU definition on introduction of the BPS made an active farmer someone who doesn’t own one of a small handful of business types; produces agricultural products if their land is not naturally kept in grazeable condition; and (if the member state so chooses) carries out a prescribed minimum amount of “agricultural activity”, which does not necessarily have to be production. A requirement for agricultural production is only mentioned specifically in relation to land naturally kept in a state suitable for grazing,
There appears therefore to always have been a tension between the Scottish definition and EU law, although we are not aware of this ever having been tested in court.
Scottish secondary legislation for the implementation for the BPS (to be precise, The Common Agricultural Policy (Direct Payments etc.) (Scotland) Regulations 2015) did refer to the Active Farmer Rule. However, this was only to clarify when agricultural activity was “not insignificant” and when it could be considered the “principal business activity” under the EU regulation. Agricultural Production was, again, unmentioned.
2018: changes to the rules
In 2018, the EU changed its approach to the Active Farmer Rule. Criterion 2 above, relating to denying payments to certain kinds of business, was made optional. The Scottish government decided, along with England and Northern Ireland that it would scrap this requirement.
This meant that the only grounds for claim rejection under the Active Farmer Rule were the mandatory ground for not meeting minimum activity requirements on land naturally suitable for grazing, and the optional ground for “non-discriminatory” criteria regarding agricultural activity being “not insignificant” or “principal”.
In order to enact the EU’s change, the Scottish Government amended their secondary legislation. They did this by removing the Active Farmer requirement from it in its entirety. This meant that the definitions of “not insignificant” and “principal business activity” had been struck out of Scottish law.
After this 2018 reform, then, all that was left in Scottish law regarding the Active Farmer Rule was the requirement for minimum activity on land naturally in a state suitable for grazing. The guidance, however, does not seem to have been fully updated to reflect this even at the time of writing, four years after these changes.
The implications today
This all became pertinent regarding a particular Scottish BPS claim submitted by Townsend Chartered surveyors in 2022 and successfully defended. This was a young farmer claim on only Region 1 land (which under Scottish law is not naturally kept suitable for grazing). Significant investment had been made into improving the land’s condition, amounting to tens of thousands of pounds of fencing and scrub clearance. However, the landowner had yet to begin production.
The claim was blocked, initially for “minimum activity” requirements (which on provision of further evidence, the claimant was shown to meet easily) and then on the Active Farmer Rule. Townsend Chartered Surveyors was told that, even though the land is Region 1, the client was not directly producing anything so the claim was invalid. However, the EU regulation regarding the BPS is one of many EU laws which were integrated into UK law following Brexit so, subject to some modifications which are not relevant here, it is just as applicable to UK subsidy claims today as it was in 2018. Therefore, legally, the Active Farmer Rule could not be applied in this way and this was eventually accepted by the Scottish office.
Therefore, despite what is still the common wisdom, it can be entirely legitimate to claim on Region 1 land in particular without undertaking agricultural production. Note that this is not the case with Regions 2 and 3. Thus, when submitting such claims, even though you may be entitled to payment, it is important to ensure you employ a representative with appropriate legal knowledge and experience in this field. You could otherwise find your claim rejected even if it is legally valid.