Category: Policy & Business

Defra has published its Key Dates for 2023, these include the application and claim windows for the BPS, Countryside Stewardship, Environmental Stewardship and the Lump Sum Exit Scheme.  A summary chart can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133033/Key_Dates_2023_v1.0_FINAL.pdf

Basic Payment Scheme (BPS)

The scheme will open on 14th March and close, as usual, at midnight on 15th May 2023.  These dates also apply to Young and New Farmer applications.  The Entitlement Transfer deadline also closes on 15th May.  It will be possible to make certain changes to a BPS application which has been submitted by 15th May, without penalty, until 9th June. Applications made after 15th May can still be made up until 9th June but these will attract a penalty.  Payments will once again be made in two instalments.  An advanced payment of 50% of the estimated total, will be made from 1st August with balance payments made from 1st December 2023.  Although the application window does not open until 14th March, it is possible to start preparing for this now.  The online land and Entitlement transfer facility is available and it is possible to update Land Use data onto Rural Payments.  The email Add-Land facility is also available; for BPS applications, requests need to be sent to RPA by 2nd May in order for them to process them in time for the 15th May deadline. 

Countryside Stewardship (CS)

Higher Tier – Applications to the Higher Tier of CS opened on 7th February and will close on 28th April 2023.

Mid Tier and Wildlife Offers – These will open for applications at the later date of 14th March and close on 18th August.  Defra has decided to delay the opening of the CS Mid Tier, including the Wildlife Offers, so they have time to amend the application process to make it more straightforward.  Feedback from the SFI has been positive regarding the application process and Defra has said, where it can, it wants to introduce this into its other services.  This means that the Mid Tier application will be different this year, but should be easier(!)  Although opening of the application has been delayed, the deadline has also been put back, meaning those wishing to apply still have the same length of time.  Just like the BPS, it is still possible to check land on Rural Payments and make sure it is all in order ready to make an application.  Remember any land details on Rural Payments is used across all schemes – BPS, CS, ES and SFI.

CS and ES Revenue Claims – This runs from 14th March until midnight on 15th May (same as BPS).  It will be possible to make certain changes to a CS claim which has been submitted by 15th May, without penalty, until 31st May 2023 (different to BPS).  CS and ES claims made after 15th May can still be made up until 31st August 2023 but these will attract a penalty.  Both CS and ES payments will be made from 1st December in one lump sum.  One thing to remember with CS and ES is an annual claim must be made.  Unlike BPS where the application generates a payment, the application or signing the agreement does not give rise to a payment; this must be claimed each year Even for agreements which have commenced in January this year, including ES extension offers, a claim must be made before 15th May 2023.  Applicants should receive reminders throughout the claim period.

CS Capital Grants – Including the new Higher Tier Capital Grants are open all year round for applications.  Claims can also be made at any time throughout the year, as long as the works have been completed and paid for.

CS Woodland Tree Health and Woodland Management Plan – Applications can be made all year round.

Lump Sum Exit Payments 

The deadline to return Lump Sum Exit Scheme evidence is midnight on 31st May 2024.  Payments are made once the evidence has been submitted.  Those who have applied for the Lump Sum Exit and will not have submitted their evidence before 15th May 2023, would be advised to submit a BPS claim this year.  To receive the BPS for the remainder of the Transition period, a claim must be made this year, even if it is just for the minimum 5 hectares.  Then if for some reason the land sale or FBT which is supposed to provide the evidence for the Lump Sum Exit Payment does not ‘go through’, at least the BPS would still be available.  If it does go through, the 2023 BPS payment would just be taken off the Lump Sum Payment.

 

The Farming in Protected Landscapes (FiPL) scheme is to run for an extra year and receive additional funding.  This announcement was included in the Environmental Improvement Plan (see other article).  This means the scheme will now run until March 2025 and will be boosted by an extra £10m in funding for each of the remaining years.

The FiPL programme supports farmers and the wider community in National Parks, Areas of Outstanding Natural Beauty (AONB) and the Broads.  It is not an agri-environment scheme, it funds one-off projects that;

• support nature recovery
• mitigate the impacts of climate change
• provide opportunities for people to enjoy the landscape and its cultural heritage
• support nature-friendly, sustainable farm businesses

More information can be found via https://www.gov.uk/guidance/funding-for-farmers-in-protected-landscapes?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=894d2924-aec2-4773-af52-3aa7c1257e0b&utm_content=daily 

The Bank of England raised Base Rates to 4% on the 2nd February 2023.  According to statistics released on the 10th February, the UK economy just avoided entering recession in late 2022.  A recession is technically defined as two quarters of negative growth.  The economy contracted by 0.2% in Q3 of 2022 but there was zero growth in Q4.  The figures are often revised, so it is still possible that the UK went into recession. Any reprieve may be temporary, as the Bank of England still expects a recession during 2023.

The RPA has announced that the window for 2023 BPS applications in England will open on Tuesday 14th March.  As usual, the closing date will be the 15th May (a Monday this year).  The 2023 will be the last ‘classic’ BPS claim with delinking happening for the 2024 BPS.  The delinked payment will be based on average BPS claims for the three years 2020, 2021 and 2022.  Those that have given up land since then will still be eligible for the delinked BPS through to 2027.  However, a minimum claim (5 Ha) must be made this year.  

Defra has published further details of Environmental Land Management (ELM).  It includes new SFI Standards, changes to the Countryside Stewardship (CS) scheme and details of a further round of the Landscape Recovery (LR) scheme.

The details were announced in a comprehensive ‘Policy Paper’ – Environmental Land Management Update: how Government will pay for land-based environment and climate goods and services.  This can be found at https://www.gov.uk/government/publications/environmental-land-management-update-how-government-will-pay-for-land-based-environment-and-climate-goods-and-services/environmental-land-management-elm-update-how-government-will-pay-for-land-based-environment-and-climate-goods-and-services

Sustainable Farming Incentive (SFI)

Six new Standards will be available under SFI this year.  These will be in addition to the existing three made available in 2022.  The new Standards are no longer structured by Levels (Introductory, Intermediate etc) – the thought being this gives land managers more flexibility to pick and choose.  Those already participating in SFI can add these Standards and also more land (it is not yet clear whether this also applies to those in the SFI Pilot).  No specific date has been given for when they will be available but it is stated to be from ‘this summer’.  The table below includes a summary of the required actions and payment rates for each standard.

The six new Standards will be offered alongside the two existing Soil Standards and the Moorland Standard already available.  There does not appear to be any change to these Standards which look like they will continue with a ‘package’ of actions within different Levels (Introductory and Intermediate).  The new SFI Management Payment (see article https://abcbooks.co.uk/cs-sfi-payments/) of £20 per hectare per annum, payable on the first 50 hectares will be available to all new and existing agreements.

As SFI expands each year, Defra will be introducing more Standards and actions incrementally, with the full set planned to be in place by the start of 2025.  This means that each year there will be more that land managers can choose to do and get paid more as a result.  It will be possible for farmers who already have an SFI agreement to:

• add more actions/Standards
• increase levels within Standards already in the SFI Standards agreement
• add more land

The schemes are being designed so that they are accessible to Tenant farmers.  This includes those on tenancies that are rolling-on from year-to-year if the Tenant expects to have ‘management control’ of it for the 3-year duration of their SFI Standards agreement.

Countryside Stewardship Plus (CS Plus)

An enhanced version of Countryside Stewardship will now form the second tier of ELM, replacing the previously planned Local Nature Recovery.  It will reward farmers for working with their neighbours to support ‘climate and nature aims’ – i.e. reducing carbon emissions and increasing biodiversity.  Under CS Plus, a further 30 actions will be available by the end of 2024 in addition to the 250 plus already available.  The aim is to improve the existing actions where possible as the scheme evolves, by making them more ‘outcome focused’, less prescriptive and more flexible about how to achieve the intended outcomes.   Defra has said there will be greater flexibility over when farmers can apply (could this mean all-year round ?) and how they manage their agreements.  It has also said payments will be quarterly rather than annually – there is no indication if this will apply to existing agreements.  It is also replacing the current ‘burdensome’ annual revenue claim with an annual declaration, this will apply to all CS agreements. 

CS Plus will be available from 2024, further details along with payment rates are expected to be published later this year.  In the meantime the next round of Countryside Stewardship Higher-Tier will open in February, with Mid-Tier following in March for agreements starting on 1st January 2024.

As SFI and CS Plus evolve over the next two years, Defra aims to offer them in a single ‘integrated service’.  Applicants will be able to select a combination of actions from both schemes.  The intention is for England Woodland Creation Offer (EWCO) to also be available via CS Plus once the scheme has been transitioned over.  It appears there will be a lot more flexibility around the schemes allowing applicants to ‘mix and match’ between schemes and be flexible on adding land to an agreement.  However, this aspiration will need to be matched by efficient systems to handle applications.

Landscape Recovery

This is the third element of ELM.  It supports ‘ambitious’ large-scale nature recovery projects focusing net-zero, protected sites and habitat creation.  A pilot opened last year (see Bulletin article https://abcbooks.co.uk/landscape-recovery-2) and following high demand Defra has confirmed a second round will open in the spring of 2023 and a further round in spring 2024.  The second round will take up to 25 projects and will focus on net zero, protected sites and habitat creation.  Further details are expected soon.

Although we are still awaiting some of the practical details, this announcement does provide land managers with more clarity on what and how much the ELM schemes are going to offer.  By 2028 the BPS will have completely disappeared in England.  We have known for a while now that future support will not be as ‘profitable’ as the BPS – something will have to be done to receive money under ELM.  But this latest announcement should help with planning and it will now be down to land managers (and their advisors) to decide what will be the best way forward for each business.  It does appear from this announcement, and those made earlier in the year on CS payment rates, that Defra are listening to the industry.  It does have environmental targets to hit and, to this end, needs as many farmers as it can to sign up to these schemes.  On the other hand it also has to provide value for money to the tax payer.

The Agri-Environment Climate Scheme (AECS) will open in Scotland for another round from 30th January.  A summary of application dates and scheme changes are outlined below.  Full scheme details are available via https://www.ruralpayments.org/topics/all-schemes/agri-environment-climate-scheme/

• Slurry Storage – applications for Slurry Storage must be made by 24th March 2023.  Under this round, slurry storage will now be available nationally, with the exception of areas designated as Nitrate Vulnerable Zones.  Those businesses that currently house livestock on slurry-based systems with less than 6 months storage capacity are eligible to apply.  Contracts will be issued by the end of April 2023; all work must be completed and claimed for by 29th February 2024.  It will not be possible to defer the works to another year. The Scottish Government has announced that this year’s £5m Agriculture Transformation Fund will be made available to support slurry storage through the AECS, allowing funding to be available to all areas other than Nitrate Vulnerable Zones.
•  Organic Conversion or Maintenance – applications must be made by 7th June 2023.  From this year the area caps have been removed, this will also apply to those with existing contracts.  The Scottish Government has announced the forthcoming round of AECS will target and support its ambition to double the amount of land under organic management by 2026.  
• Agri-environment – applications must be made by 7th June 2023.  However, due to ‘budgetary pressures’ some options have either been capped or suspended for this round meaning the following agri-environment capital items will not be available:

• • Restoring Drystone or Flagstone Dykes
  • Pond Creation and Restoration for Wildlife
  • Muirburn and Heather Cutting
  • Primary Treatment of Bracken – Mechanised or Chemical
  • Follow up Treatment of Bracken – Mechanised or Chemical

In addition the Creation of Hedgerows option will be restricted to just 500 linear metres per application for 2023 and the following items/options remain suspended for the 2023 round.

• • Creation of Species Rich Grassland
  • Heather Restoration
  • Heather Restoration – Follow – up Molinia control

• Improving Public Access (IPA) – this element will not be available this year

 

Countryside Stewardship (CS) agreements starting on or after 1st January 2023 are now eligible for the new revised higher capital payment rates.  Readers will recall we wrote about amendments to CS Capital Grants earlier this month (see https://abcbooks.co.uk/countryside-stewardship-capital-grants-update/).  This included a review of the payment rates, but the new rates were only to apply to applications made from 5th January 2023.  This seemed to harshly discriminate against those whose CS Agreements commenced on 1st January 2023.  Defra has said it has ‘listened’ to feedback from farmers and landowners and has amended the date from when the new rates apply from 5th to 1st January 2023.  This means those whose agreements started from 1st January 2023 will receive the new capital rates (increases but no reductions) these include:

• CS Higher Tier and Mid Tier with capital grants
• CS Capital-only agreements
• SFI Pilot capital grants

For applications received from 1st January they will receive the new rates, including any reductions.

CS and SFI Pilot agreements starting in 2022 or earlier will receive the rates within their agreement.  It is possible for these applicants to withdraw individual capital works from CS agreements or even whole agreements and re-apply, but only where capital works have not commenced and materials have not already been ordered.  New applications would also require any endorsements, such as Catchment Sensitive Officer approval to be renewed.

Another point which has been mentioned is the £20,000 per group ceiling in CS Capital Standalone agreements.  This has remained unchanged even though rates have increased and in the case of new hedges, doubled.  Defra has said this is under ‘consideration’ along with how the new rates interact with Farming in Protected Landscapes (FiPL) agreements as these use CS payment rates.  An announcement on these is expected shortly.

 

The latest agricultural rents data once again shows a mixed picture.  Following a rise in the overall average rent in 2020, the All Farms rent in 2021 has come back down to 2019 levels.  Some sectors have experienced a rise in ‘full’ Agricultural Holdings Act (AHA) rents whilst at the same time seeing a fall in FBT rents; for other sectors it is vice versa.  The table below shows a summary of the last three years.  Defra’s Farm Rents publication uses data from the Farm Business Survey.  Due to the time taken to collect the data, it is somewhat historic.  The figures just published are for the 2021/22 year, March to February, (shown as ‘2021’ in the table below).  The full statistical notice can be found at https://www.gov.uk/government/statistics/farm-rents/farm-rents-england-2020

Cereals farms on AHA Tenancies recorded an 8% decline (although this is following a 10% increase in 2020) whilst FBT Cereal rents declined marginally.  Although only a small decrease this year, this is the third year in a row that Cereal FBT rents have fallen; they do however, remain 24% higher than AHA rents.  Full AHA rents for General Cropping have seen a further decline in 2021 and after a ‘sizable’ increase in the 2020 FBT rent, these agreements have also seen a rental reduction in 2021; although not quite back to 2019 levels.  Rents for Dairy land are strong, particularly FBT rents but have remained fairly stable over the last three years.  LFA Grazing  rents show a steady increase for both AHA and FBT agreements and this is the same for Lowland AHA Grazing farms.  FBT Lowland Grazing rents continue to fluctuate, falling by 19% in 2021 following a 30% increase in 2020.  The livestock sector has seen better prices recently, but is also, in the main, more dependent on the BPS and as this declines, will see margins squeezed.

As written previously, data on rents can fluctuate annually and one year’s information should not really be taken in isolation.  In general, rents have been on an upward trend, but looking to the future it would be expected that, as the BPS is phased-out, then overall rents will fall.  

The Government has announced a new business energy scheme to replace the existing one when it ends.  The current Energy Bill Relief Scheme (EBRS) is scheduled to finish on 31st March (see our article of 25th September https://abcbooks.co.uk/energy-price-cap/).   The new Energy Bills Discount Scheme (EBDS) will be available for all non-domestic consumers in Great Britain and Northern Ireland and will run from 1st April to 31st March 2024 – i.e. a further year.  However, the current EBRS is worth £18bn, whereas the new EBDS will have a cap set at £5.5bn – based on estimated volumes.  The Government says it has always been clear that the current levels of support were ‘time-limited’ and intended as a ‘bridge’ to allow businesses to adapt.  It refers to wholesale gas prices having fallen to levels seen just before the invasion of Ukraine and having halved since the current scheme was announced.  It states the new scheme ‘strikes a balance’ between limiting taxpayers’ exposure to volatile markets and supporting businesses over the next 12 months.

In terms of what support will be available, under the EBDS, non-domestic users will receive a unit discount of up to £6.97 per MWh to their gas bill and a unit discount of up to £19.61 per MWh to their electricity bill for the period April 2023 to March 2024, above a threshold of £107 per MWh for gas and £302 per MWh of electricity.

As under the previous scheme, customers should not have to do anything, the support should automatically be applied to bills by the energy supplier.  The discount will be available to those;

• on existing fixed price contracts that were agreed on or after 1st December 2021
• signing new fixed price contracts
• on deemed / out of contract or standard variable tariffs
• on flexible purchase or similar contracts
• on contracts paying energy costs above a price threshold
• on variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only)

There is further support for those in energy and trade intensive industries (ETIIs).  These are mainly manufacturing industries and it does not include agriculture.  However, many associated sectors in the food chain are covered such as the processing & preserving of meat, operation of dairies & cheese making, and manufacturing of beer, wine & cider.  The full list can be found via https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1128021/230104_ETII_List_for_gov.uk.pdf .   This discount will apply to 70% of energy volumes and will be subject to a maximum discount of £40 per MWh for gas and £89.10 per MWh for electricity with a threshold of £99 and £185 per MWh for gas and electricity respectively.  Businesses may need to register to be eligible for this additional support; details on how to apply will be released in due course.