Category: Policy & Business

According to the Rural Payments Agency, over 51,000 farmers in England received their 2016 BPS payment either on 1^st or 2^nd of December.  This represents 59% of eligible claimants and is worth £660m.  The RPA’s aim is to have paid 90% of eligible claims by the end of December.  We understand payments have been made to varying claim sizes, including those who have been inspected and also to some with common land.

Once payment has been made, claimants will receive a Remittance Advice through the post.  As previously stated, actual Claim Statements will not be received until February 2017.  Like last year, they will not contain individual parcel information, making it difficult to cross check if payments do not seem correct.

Those who still have outstanding problems with 2015 payments should receive an e-mail from the RPA.  This is basically saying that issues have been put on hold until the New Year and it will not be possible to discuss these with the ‘Complaints Resolution Team’ until then.  It seems that all available resources are being put into meeting the RPA’s target of 90% of all claimants being paid by the end of December.  The RPA has said where there is an outstanding 2015 issue this should not hold up the 2016 payment which is good news for those waiting to be paid.  Although it seems obvious, where the problem will have a knock on effect on this year’s claim then, payments will have to checked carefully and issues raised in the New Year.

The Forestry Commission has announced the Woodland Creation Grant for 2017 will open for initial applications on 3^rd January and close on 1^st March.  There are no significant changes to the scheme this year, prospective claimants are advised to get in contact with their local Woodland Officer.  Guidance and application forms can also be found at https://www.gov.uk/government/collections/countryside-stewardship-woodland-support .

The Woodland Creation Grant is a capital grant available through the Countryside Stewardship Scheme.  Applicants can apply for one-off payments for the trees themselves (TE4 – £1.28 per tree) and any associated protection items.  The maximum available grant is £6,800 per hectare.  Successful applicants have two years to plant and install all capital items.  Once the final capital claim is paid, it is possible to subsequently apply for the Woodland Creation Maintenance.  This provides £200 per Ha for 10 years to support the newly created woodland.

The Woodland Planning Grant will also be available once again in 2017.  There are no significant changes to the grant except there will be a new online application process.  This will be available from the week beginning 19^th December at https://www.gov.uk/government/collections/countryside-stewardship-woodland-support.  Applications won’t start being processed until 3^rd January, although it is possible to submit the application as soon as the form is available on the website.

Woodland Tree Health applications are available all year round, for further information see https://www.gov.uk/government/collections/countryside-stewardship-woodland-support

In 2016 there were 167 Woodland Creation applications, 953 Woodland Planning Grant Applications and 283 applications for the Woodland Improvement Grant.

Farm Income Update

Farm incomes in 2015 were 6% better than first estimated.  Latest figures from DEFRA for Total Income from Farming (TIFF) show returns in the sector at £4,003m for the year.  This is against a figure of £3,769m when the provisional estimates were produced in the spring (see May article).  However, even with the upwards revision, the 2015 TIFF is still 24% down in real terms compared to 2014.  The full data can be found at – https://www.gov.uk/government/statistics/total-income-from-farming-in-the-uk.  The current 2016 year should show an improvement on 2015 in terms of profitability.  Andersons’ current forecast is a TIFF of £4.3bn for the year.  Prospects for 2017 look reasonable at present.  Assuming no major shift in the currency, aggregate profit just under £5bn looks possible.

Farming Balance Sheet

For the first time since 2005 the Net Worth of the farming industry dropped in 2015.  In real terms, the wealth of the sector fell by 1.9%.  However, it still stood at £265bnat the end of the 2015 year.  The balance sheet figures are drawn up as part of the aggregate accounts that produce the TIFF data.  The drop in net worth is mainly a result of a weakening of land values (although breeding livestock valuations also fell).  The table below sets out the data;

UK FARM BALANCE SHEET – Source: DEFRA
£ billion	December 2000	December 2010	December 2014	December 2015
Land	57.5	163.5	231.9	228.1
Buildings, Plant and Machinery	23.1	28.9	33.5	34.1
Breeding Livestock	3.6	6.8	7.1	5.9
Total Fixed Assets	84.3	199.2	272.5	268.1
Total Current Assets	8.5	11.9	14.0	14.0
Total Assets	92.8	211.2	286.5	282.1
Long and Medium Term Liabilities	4.6	8.3	11.4	11.7
Short Term Liabilities	5.0	5.0	5.6	5.5
Total Liabilities	9.6	13.3	16.9	17.2
Net Worth	83.2	197.8	269.6	264.9
Net Worth Index in Real Terms (2012 = 100)	48.9	88.9	113.7	111.5

The AHDB has set out plans to make British farming more efficient and competitive.  The Levy Board’s Strategy for 2017 to 2020, called ‘Inspiring Success’, aims to help agriculture thrive in a post-Brexit environment.  It sets out four strategic priorities;

• inspiring British farmers and growers to be more competitive and resilient
• accelerating innovation and productivity growth through coordinated Research and Development (R & D) and Knowledge Exchange (KE)
• helping the industry understand and deliver what consumers will trust and buy
• delivering thought leadership and horizon scanning

The first of these will see more international benchmarking undertaken so that it is clearer how British farming ranks in a glo0bal context.  Domestically, there will be a new, whole-farm, benchmarking programme, known as Farm Bench which will incorporate the existing Stock-Take and CropBench initiatives.  There will also be programmes for farmers to develop their businesses management skills.

In terms of Research, AHDB wants to move it closer to the ‘farm gate’ to provide solutions to practical on-farm problems.  It sees KE as currently fragmented and sets out to provide more co-ordination and ensure innovation and best practice is disseminated faster and more widely through the industry.  A new ‘farm Excellence Platform’ will be set up to deliver these targets.

The ‘consumer’ strand of the strategy will focus both on informing farmers of what the market is looking for, and also promoting British produce to consumers – both at home and abroad.  Lastly, the AHDB sees a role in highlighting future challenges and opportunities for the farming industry.

The strategy sets out a number of targets that will be used to measure how successful it has been.  The AHDB are asking for comments on it by the 9th January.  More details can be found at http://www.ahdb.org.uk/publications/consultation.aspx

Farmers in Scotland who wish to take up the loan offer for the National Basic Payment Support Scheme must respond by 14^th December.  All eligible claimants should have received an offer by now which is estimated to be 80% of their 2016 Basic Payment.  By the end of November over 12,500 farmers had already received their loan offer, which is being offered out of national funds to help farmers with their cashflow over the winter months.  The Scottish Government made the decision to operate a national scheme after it realised its computer system would not be in a position to completely validate 2016 BPS applications until into the New Year.  The remaining 20% will be paid once claims have been completely validated and EU funds can be utilised.

The Welsh Government has announced that 90% of BPS payments will be issued in the first week of December.  Many of them will be paid on the 1^st of the month.  The reason given for the prompt payments is Wales’ move to all-online applications for 2016 – this has allowed claims to be processed for efficiently according to Cabinet Secretary for Environment and Rural Affairs, Lesley Griffiths.  A rare example where a BPS IT system has actually improved payment times.

There has been a number of announcements regarding Welsh grant schemes, below is a summary;

Glastir Small Grants – The next Expression of Interest (EOI) window opens on 12^th December and closes midnight on 23^rd January 2017.  The ‘theme’ for this round will be water quality.  Businesses can apply for up to £7,500 to spend on capital works for projects including the separation of clean and dirty water in farmyards, hedge planting & restoration, and for small scale tree planting.  Farming Connect is holding three events during December to make farmers aware of what is on offer and to provide help with applying for the scheme.  For further information and the dates go to  https://businesswales.gov.wales/farmingconnect/posts/diary-marker-glastir-small-grants-water-events

Glastir Advanced 2017 – Contract offers are being made via RPW online and must be accepted within the the deadline given.  Those waiting for an offer are encouraged to check their online account.

Glastir Commons – A stocking diary must be submitted in order to validate 2016 claims for payment.

Other grants, indirectly related to farming, currently or shortly available, include the Rural Community Development Fund.  This opens on 1^st December and is aimed mainly at LEADER LAGs and community based groups to improve conditions and job growth in rural communities.  Also available is £2.8m for food producers to grow their business through the Food Business Investment Scheme.  EOIs need to be submitted by 18^th January 2017.  Further information can be found on the Welsh Government website at  http://gov.wales/topics/environmentcountryside/farmingandcountryside/cap/ruraldevelopment/wales-rural-development-programme-2014-2020/food-business-investment-scheme/?lang=en

The Scottish Agricultural Wages Board (SAWB) is seeking views on changes to the agricultural minimum wage in Scotland.  Proposals include a single minimum hourly rate for all agricultural workers, equal to the UK Government’s National Living wage of £7.50 per hour.  This will be irrespective of age.  There are also proposed changes to Apprenticeship rates which would see the current rate increased to £4.40 per hour.  Further changes are proposed to overtime hours, working dog rate (£5.60/dog) and the daily rate for accommodation off-set (£6.00/day).  Representations need to be made to the SAWB by 31^st December.  If agreed the new Wages Order will come into effect on 1^st April 2017.

BPS 2016 Payments

We understand that the RPA are on track to start making payments on 1^st December.  Remember applications, whether made online or by paper, can be tracked by selecting ‘Applications’ from the Business Overview page on the Rural Payments website and clicking on ‘Apply for BPS’.  Once the status says ‘Preparing for Payment’ this means all the validation checks have been completed and the claim will be sent for payment.

The aim is to make payments to 90% of claimants by the end of December.  Some may wonder how this will be possible as a significant number of 2015 claims are still incorrect or outstanding.  Progress with these seems to have largely stalled as the RPA seems to have switched its attention from 2015 reconciliation work to meeting this 2016 deadline.  It appears that the 2016 BPS payment may still be made, even where there are 2015 issues still outstanding.  Payments will be calculated using the data that the RPA holds for the business; where entitlements or land area has not been updated the payment may still be made but will obviously be incorrect.  On the one hand this may help clients’ cashflow, but on the other it is just compounding 2015 errors.  To make matters worse, Claim Statements are not expected until February 2017 (by post) and once again, these are not expected to contain individual land parcel information.  It will therefore be necessary to check the maps on the Rural Payments service to see how payments have been calculated if they do not seem correct.

Those who haven’t received a payment in December will be contacted in January and told what is happening with their claim and whether they can expect payment before or after March.  From January those who haven’t been paid will have access to a Caseworker who will be able to provide updates on the claim.

Entitlements and Land Transfers

The functionality to transfer land via the Rural Payments online service should be available from late January.  However, the ability to transfer entitlements will not be available until mid- February.  As we have said previously it is still probably better to wait until this functionality is available where possible as paper RLE1 forms are unlikely to be processed until after May15^th deadline, indeed some 2016 ones are still being worked through now!  Readers will also be aware that the ‘Entitlements’ section is currently not available online, whilst it is being ‘revamped’.  But it is possible to view a business’ entitlement position through the ‘Business Summary’ page located from the ‘Business Overview’ page.  Users can ‘Generate’ and ‘Download’ a summary of the business which includes the number of entitlements the RPA has registered to the business, plus a summary of each land parcel – quite a useful summary.

Leaflet, Inspections & Payment Reconciliation Letters

All 2016 claimants will be receiving a leaflet through the postgiving them an update on the scheme; most of the information contained within it has already been covered in the articles on this site.  Those claimants who have received a physical or a remote inspection this year should shortly be receiving their report.  These will be the first under the BPS, as last year they were unavailable.  Finally, around 13,600 claimants should have received a ‘reconciliation’ letter during November.  If claimants are still not satisfied that they have been paid correctly they need to contact the RPA by email at [email protected] with the subject heading BPS 2015 Payment Reconciliation or they can send a letter by post.

The Chancellor, Philip Hammond, delivered the Autumn Statement on the 23^rd November.  This was Mr Hammond’s first major chance to reset fiscal policy since becoming Chancellor and following the ‘Brexit’ vote in June.  It was thought in the months leading up to the Statement that we might see some sweeping expansionary spending plans to offset the effects of Brexit.  However, the measures announced are pretty small-scale – perhaps this was to be expected from a man with a fairly dull reputation who has the nickname ‘spreadsheet Phil’.  But probably of more importance was a fairly poor outlook for the UK economy which limited the Chancellor’s room to make grand gestures.

The Office for Budget Responsibility (OBR) estimates for the UK economy are all downgraded from those seen at the time of the spring Budget. The table below shows some of the main economic indicators both now and then.

ECONOMIC FORECASTS – Source: OBR
	GROWTH – %		DEFICIT – £bn		NATIONAL DEBT – £bn
	Spring	Now	Spring	Now	Spring	Now
2016 (2016/17)	2.0	2.1	-55.5	-68.2	1,638	1,725
2017 (2017/18)	2.2	1.4	-38.8	-59.0	1,677	1,840
2018 (2018/19)	2.1	1.7	-21.4	-46.5	1,715	1,904
2019 (2019/20)	2.1	2.1	+10.4	-21.9	1,725	1,945
2020 (2020/21)	2.1	2.1	+11.0	-20.7	1,740	1,950
2021 (2021/22)	–	2.0	–	-17.2		1,952

It can be seen that the George Osborne’s target to eliminate the deficit has been scrapped.  Closing the gap between government income and spending looks impossible in the short-term as a result of lower tax receipts due to lower growth, and higher government spending.  Of course, much of the change in forecasts is a result of Brexit.  In its outlook, the OBR has made the following assumptions;

• The UK will leave the EU in April 2019
• New trading arrangements will slow import and export growth in next ten years
• There will be a tighter migration regime in the UK and it will be a less attractive place for foreign workers
• EU-wide taxes, such as VAT, won’t change immediately

The OBR cautions that, with rising inflation (CPI is forecast to peak at 2.6% in spring 2018) and little productivity growth in the short-term, real wages will decline.  A number of specific policy announcements were made;

• There will be a £23bn National Productivity Investment Fund to boost house building, transport, communications and R & D.  As with many such announcements, it is not clear how much of the £23bn is new money, or whether this is just a re-packaging.  productivity does seem a subject close to Mr Hammonds heart however, he provided some damning statistics showing how the UK lags its major competitors in this respect
• Some of this fund will be spend on improving transport.  There were no ‘big ticket’ announcements such as HS3 or Crossrail 2, but funding for a Oxford-Milton Keynes-Cambridge ‘expressway’ was promised
• Lettings fees charged by Agents to Tenants will be outlawed
• Confirmed that for 2017-18 year Income Tax the Personal Allowance will rise to £11,500 and the Higher Rate threshold to £33,500.  The target is for the Allowance to reach £12,500 by 2020
• Also confirmed that the rate of Corporation Tax will fall to 19% for 2017, 2018 and 2019, before dropping to 17% for the financial year commencing on 1st April 2020.  However, there will be an review of the use of incorporation as a tax-avoidance measure
• National Living Wage to rise from £7.20 an hour to £7.50 from April
• Fuel Duty is frozen (again)
• Increase in insurance tax from 10% to 12% (probably offsetting any gains from a crackdown on fraudulent whiplash claims)
• Rural Rate Relief (for shops, Post Offices, pubs and petrol stations) will rise to 100% from April 2017
• Finally, this will be the last Autumn Statement.  Following next spring’s Budget this will move to an autumn date.  There will then be a ‘Spring Statement, but this will simply be a response to the OBRs latest economic forecast and not a policy announcement.