The Delinkage and Entitlement market is underway with more vendors and purchasers needed. For information on what’s available/wanted or to go on our register contact Henry Chamberlain on 01392 823935 or email entitlements@townsendcharteredsurveyors.co.uk
ENGLAND – DELINKAGE: 2024-2027
Delinkage Payments
As long as you claimed BPS in the reference period of 2020, 2021 and 2022, you will possess a ‘delinkage’ figure based on your average claim during those years. The RPA have now sent out information statements informing all BPS recipients of their eligibility and specific delinkage reference amounts. You need to check that these figures match up to your actual claims for each of the reference years. If there is any discrepancy, you have until 29th February 2024 to challenge this amount. The RPA have confirmed that each annual payment between 2024 and 2027 will be made in two instalments – 1st August and 1st December. Do note that the reference amount figure is not the amount you will receive as each year progressive reductions will be applied, 2024 being confirmed as 50% for the first £30,000 of reference amount with higher percentage reductions for reference amounts over this figure. You also must have put in a claim in 2023 to qualify, although the size of this claim will have no impact on the amount you receive as delinkage.
Delinkage Trading
Claimants have the option of trading delinkage data for an upfront sum in lieu of receiving annual delinked payments. This is a valuable tool for those who for whatever reason weren’t able to put in a BPS claim in 2023 and so can’t otherwise access delinked payments.
We await the mechanism for transfer but have confirmation that the window for doing so is the 15th February to 10th May 2024.
It is difficult to estimate the exact value of purchased reference data as we only know the reductions for 2024 of 50%. Assuming continual equal reductions you may end up getting around £1.25 for every £1 of reference claim you own. Note that the total reference data is different to the actual reference claim as this is an average across three years. So, in effect, if you purchased £15,000 worth of data, then your average amount which forms your delinkage reference claim would have gone up by £5,000 gaining you £6,250 across four years, pre-tax. If the vendor put in a claim in 2023 then there is no reason for them to accept less than 16p to £1 of reference data as this is around what they will receive in 2024 anyway. This sets a bottom to the market, in the example above the vendor would receive £2,400 in 2024 anyway. However, we wait to see at what rate the market will kick off at and this could be as high as £1 for every £1 of reference claim.
This is all subject to the whole reference claim (including both the purchaser’s own original amount and the newly acquired data) not exceeding £30,000 at which point higher reductions come into play.
If purchasing a ‘reference amount’ you must have claimed yourself in 2023 and not received the ‘lump sum’ exit support payment, an exception to the 2023 claim rule is made in the case of inherited land. The reference amount does not have to match any land held currently (or previously) although a transfer of land may be required if the reference amount is more than £30,000 but only makes up part of the total reference figure or if you have acquired land where the transferor’s SBI has been registered as closed. It is expected that new businesses will not be able to receive a transfer of reference amount unless this is directly due to a restructuring of the two businesses in question.
You can choose how much to transfer and to who, this will be a private transfer and the RPA will not get involved in disputes. Do call us to discuss the potential for trades, whether buying more or selling.
SCOTLAND – BPS TRANSITION: 2025-2027
Whilst there was some fear that 2024 may be the last year of submitting a BPS claim as we know it, SGRPID have recently released a roadmap of how BPS will be dealt with going forwards. It is short on detail with the first amendment being in 2025, with a ‘Tier 1 base’ being introduced. This introduces a conditionality factor to the Single Application Form. Although this is already present, to an extent, in current ‘Greening rules’, it is likely that this will involve further environmental obligations that must be complied with to receive full payment.
The 2025 year will retain the present payment Regions of 1, 2 and 3, based on the land type being claimed upon. However, it is expected that this will be reviewed to be fit for purpose for the introduction of Tier 1 standards. It is suggested that the ‘conditionality’ aspect will make up half of the payment received and involve ‘essential standards to ensure climate, biodiversity and business efficiency outcomes’. In practice, this level ought to be a relatively light touch approach aimed at ensuring actions that many will be doing as part of their existing operations.
From 2026, enhanced support will be launched as part of Tier 2 of the new framework. This will directly link payment support received, with the works done by farmers in delivering specific environmental objectives. In theory this recognises and rewards those doing additional work to achieve agreed climate and nature objectives. It will benefit businesses that intend to integrate climate and nature restoration actions.
By 2027 further elements will be introduced, including elective options and complementary support to achieve these electives. This won’t necessarily involve direct payment but may take the form of skills, knowledge, training and Continuous Professional Development.
In summary, BPS in 2025 will see some changes but continue in a recognisable form. From 2026, payments will be split between base and enhanced support whilst from 2027 we will see a refresh that may or may not involve entitlements as a means of claim. Overall, this is positive, we knew that area-based payments were likely to be phased out sooner rather than later and this confirms that there will be a transition period up to 2027, much like in England. Whether entitlements will be tradeable or not in the latter years remains to be seen and as the scheme becomes more elective and environmentally focussed there is less of a need to represent this via entitlements, however, there is some comfort in knowing that payments will not suddenly be pulled without replacement.
WALES – SUSTAINABLE FARMING SCHEME – BPS TRANSITION: 2025-2029
The basic payment scheme budget for 2024 was announced back in December 2022, since then updates have been few with a proposed Sustainable Farming Scheme (SFS) coming in from 2025. This will replace both BPS and Glastir, the latter having an interim ‘Habitat Wales Scheme’ between 2023 and 2025. Like Scotland, the SFS will have universal and optional actions. Controversially it contains a 10% tree cover of the holding, although this includes existing woodland and now only applies to ‘plantable’ areas. Potentially, tenant farmers, peatlands and priority areas and of course permanent features like tracks/yards/ponds etc will be excluded from this requirement.
Other than confirming BPS will apply in 2024 there is a real lack of available information, with the statement of ‘subject to budget’ often made. It is expected that phasing out will occur in the period 2025-2029, presumably in reducing quantities as with England’s delinkage system although this is not confirmed. It is unknown whether annual BPS applications will be required or if entitlements may be traded between farmers gaining and losing land. Importantly all current claimants ought to qualify for these payments regardless of whether a farmer enters the SFS.
NORTHERN IRELAND- FARM SUSTAINABILITY PAYMENT – BPS: 2024 – ONGOING FOR NOW?
BPS will continue as it is in 2024, before being replaced in 2025 by the Farm Sustainability Transition Payment (FSP), which will then be fully implemented in 2026. This seems on the surface to be a simple renaming exercise as it will be an area-based payment, use current entitlements and is aimed at all land-based agriculture and horticulture businesses with 5 ha of eligible land and 5 entitlements, subject to eligibility conditions.
Crucially this will use existing entitlements with current arrangements continuing for allowing entitlements to be leased, transferred or sold. However, this still appears to be a stop gap as DAERA also state that funding allocated to FSP will be reduced over time to support other Farm Support and Development Schemes. There is no time frame for how long this will continue, how long reductions will last and at what rate.
There is clearly a consensus on how support will be provided going forwards, that being a ‘public money for public goods’ approach, to borrow the terminology used in England. This shift from agricultural production to environmental gain may have various consequences for the sector and the country as a whole, but for now the path is set.
