Jeremy's Blog 20th January 2023: From Area Payments to Debating Land Use

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 19th January 2023

Twenty years ago this week the EU Commission, then a power in Britain, published the draft legislation for the Single Payment Scheme. It being immediately clear that access to land would be the key to securing entitlements and then give access to future payments, this draft froze the agricultural land sales market.

That required work and ingenuity by the CAAV and lawyers to develop the arrangements for transactions to continue. It soon had similar effects in the let land market though, in England in 2005, existing tenants’ command of the history of past payments saw a great surge of 7 year FBTs, covering the period in which that history would be exhausted. Counter-balancing that, other owners held onto land for the initially tiny area element, waiting for it to grow to the standard payment rate. Other English tenants chose to stack their history on a small parcel to let it work out – just as some need only a 5ha claim this year to be eligible for the de-linked payment.

Both Single and Basic Payments meant occupying land was seen to give access to an apparently high margin payment, as an income stream in its own right though it soon fed into costs, including rents. While of limited scale in relation to land prices, by encouraging continued occupation they have been one factor among many limiting the supply of land for sale.

Those features of the Single Payment were retained in the essentially failed attempt at reform with the Basic Payment Scheme. Great effort went into long and tortured negotiations (and haggling) whose only achievement was to be concluded with difficulty. “The mountains laboured long and brought forth a mouse.” It offered “greening” that did not green and a bizarre “active famer” that was nothing of the sort, partly responding to France’s grievances with its railways and then progressively de-fanged in the UK.

While decoupling subsidy from production decisions (payable on land in most forms of production and with the option of maintaining Good Agricultural and Environmental Condition), both schemes have put land occupation decisions before business realities. One indicator of that is that, for every year since 2007, the CAAV annual surveys show:

• activity in the let sector only at between 30 and 40 per cent of that in 1999
• new FBTs at only 25 per cent of the number in 1999.

Area payments have inhibited the business and structural change that would otherwise have happened and may now happen.

The schemes’ detailed prescriptions and disproportionate penalties were, with greening, among the first points to be tackled by UK governments after leaving the EU. Now England is advancing with removing Basic Payment altogether – the link with land broken after this year and the last remaining payments made in 2027– with Wales following, while Scotland is to demand much more for climate change and biodiversity from 2025.

Such changes can clear the way for farmers to look at their businesses. Landowners and those who stayed farming for the Basic Payment can now look again at letting land out. Occupying land to get a payment will no longer be an option.

Beyond farming, we have a widening debate about the competing uses for land with energy, nature and carbon vying with farming, forestry, development and infrastructure. DEFRA’s Land Use Framework is due soon and this is a theme in the current NPPF consultation – which land is best used for what?