Opinion: Paying BPS to retired farmers could be a stroke of genius

I have recently reached the age of 59 – the average age of a UK farmer.

How appropriate then that, as I start to count down the days to my 60th, Defra secretary Michael Gove has dreamt up an option for reforming the Basic Payment Scheme (BPS) that would allow a lot of old-timers like me to accept a generous government-funded pension and get out of farming altogether?

I refer, of course, to the proposal outlined in Mr Gove’s “Health and Harmony” consultation, whereby BPS payments from 2019 to 2024 would continue to be made “to current recipients, irrespective of the land farmed”. 

In other words, farmers would be able to stop farming entirely, but continue to receive the BPS for the next five years.

See also: Charlie Flindt on “Health and harmony”

The reason he is considering such a crazy idea is that it may be the only way he can prevent large farmers dodging his other proposals for BPS reform – which include an absolute cap on payments above £100,000, or very severe progressive deductions.

Stephen Carr farms 800ha on the South Downs near Eastbourne with his wife Fizz

With some justification, Mr Gove worries that the largest farms will simply split their trading entities into as many fragments as it takes to sidestep the worst effects of any capping.

So, the theory goes, if future BPS payments are allocated to payees on an “historic” basis with a number of reference years (say 2015-18) then those payments cannot be split up and therefore can be capped effectively.

Money for nothing

The proposal might look mad as it completely removes recipients from any requirement to occupy farmland. It will allow some farmers to claim very substantial amounts of money for doing absolutely nothing.

But the BPS has been an unmitigated disaster for UK agriculture; it has driven up farm rents and land prices to ludicrous levels and – most damaging of all – it has encouraged a generation of farmers who might otherwise have hung up their wellies to “farm on for the payments”.

So the early removal of BPS payments from the farm economy by completely detaching them from land might actually be an unintended stroke of genius.

Just imagine the impact of removing the BPS from any requirement to occupy land on farm rents?

Suddenly farmers and land agents would be discussing rents based on what profit margin there was on producing grain, beef and lamb ie a zero rent, or possibly a negative rent paid by the landlord to the tenant to keep the farm from going to rack and ruin. 

Having to return a profit

Equally, purchasers of land who are currently looking for a safe investment that carries the guarantee of a taxpayer-funded annual payment will suddenly be faced with the prospect of having to return a profit from farmland without the BPS.

This might well take the heat out of the farmland market, particularly if the chancellor Philip Hammond also removes agricultural property relief for farmland from inheritance tax and roll-over relief for capital gains tax – both of which he is considering.

I am 60 next year – just a few days after Brexit. By then I might be able to claim my BPS without having to occupy my farm. So, in 12 months’ time, if this space in Farmers Weekly is suddenly occupied by another, you will know that I’ve decided to take the money and run.