ELMS- Public Money for Public Goods

Thursday, 19 March 2020

ELMS- Public Money for Public Goods

The discussions around what will happen to farm payments have rumbled since before the referendum in June 2016. DEFRA, in recent weeks, has begun to provide more details around what will replace the Basic Payment Scheme (BPS), the Countryside Stewardship (CS) and the many other funds presently available to farmers and landowners. 

The recent policy statement to accompany the Agriculture Bill, introduced to Parliament on the 16th January 2020, aiming for Royal Assent by June 2020 has provided commentary to the legislative framework for the policy, including the phasing out of BPS, the transition of CS agreements and the introduction of ELMS (Environmental Land Management Scheme). 

Public money for public goods

Farming for the Future

On the 25th February, DEFRA published Farming for the Future; Policy and progress update. Key messages surrounding the current BPS regime include:

BPS will remain in place and almost entirely unchanged for 2020, together with a funding guarantee for agricultural support in 2020. Minor changes include administrative simplifications such as not requiring Young Farmer Payment evidence for repeat applicants and reducing over-claim penalties for minor errors. 

For 2021, further simplifications are likely to include: removing some or all of the greening rules; improving the arrangements for cross-border holdings and removing the 2-year usage rule for entitlements.  Reductions in the amount of subsidy paid will also come into force.

In addition to administrative streamlining, amendments will be allowed to remove provisions that have no practical utility, securing more appropriate sanctions or penalties and limiting the application of the scheme to land in England only. 

In practice, it is expected that these simplifications are likely to include the removal of existing requirements for Crop Diversification and the ‘three crop rule’, as long as the other BPS rues are still being met. 

The document also covers;

Delinking Payments

Perhaps the most significant change gives the power for DEFRA to delink direct payments from the land. The explanatory note states that ‘there would be no obligation for the recipient of the payments, during the agricultural transition period, to remain a farmer [as] the current connection between the value of the payment and the area of land for which it is being claimed will be broken.’ Therefore, recipients of the ‘delinked’ payments would no longer need to meet the definition of ‘a farmer’ as someone who ‘exercises agricultural activity’, i.e. agricultural production or maintaining land for grazing or cultivation, nor would they need to hold entitlements or declare land. The earliest delinked payments could replace BPS is 2022. The power to provide phasing out of direct payments allows for reductions throughout the 2021 to 2027 transition period and for BPS to be terminated once the payments are ‘delinked.’

Providing Public money for public goods

Who is eligible for Delinked Payments?

To be eligible for a delinked payment, it is expected, that applicants must have been successful in their application for BPS in a certain year or years- yet to be confirmed by DEFRA. It is expected that the value of delinked payments will be on the basis of the value of the BPS payment entitlement in the reference year or years. As such, new entrants to the farming industry after the reference period are unlikely to be eligible for the delinked payments, and that it will be the tenant who will receive the delinked payment and not the landlord of any tenant farms.

Environmental Stewardship and Countryside Stewardship

It is likely that before 2024, when ELMS is due to be rolled out, annual extensions for Environmental Stewardship & Countryside Stewardship will be offered and that a simplified Countryside Stewardship scheme will remain open for applications. Any agreements in place before the 1st January 2021 are likely to be adhered to for the duration of the agreement- even though this may extend past the end date of BPS, with no option for penalty-free early exit, as they will still be under EU ruling/governance. However, Countryside Stewardship agreements put in place after the 1st January 2021, are expected to be offered an exit-without-penalty at agreed periods during the term of the agreement, being under UK ruling/governance. 

The Future: ELMS

ELMS will be focused on “Public money for Public Goods” through the delivery of six environmental benefits to support the 25 Year Environmental Plan. These are:

A, very slight glimmer of hope to farmers and producers may be that, whilst the focus of ELMS is on the environmental outcomes, DEFRA also states that all new schemes must consider the need to encourage the production of food by producers in England, and its production by them, in an environmentally sustainable way, thus driving for public goods production to co-exist with sustainable agricultural production. The end game is to encourage behavioural change within agricultural production to help farmers become more environmentally sustainable- with a focus addressing environmental challenges in the short term. 

Three Tiers of ELMS

At present the discussion is around Three Tiers of ELMS

T1- Incentivising environmentally sustainable farming and forestry

T2- Locally targeted environmental outcomes and collaboration

T3- Landscape-scale land-use change

They acknowledge that the existing scheme(s) are open to administrative mistakes and associated penalties. It is hoped that the new scheme will simplify systems and to incentivise the ‘right behaviours’ with a regulatory baseline which must be reached to gain access at tier 1. 

What will each ELMS tier be?

Tier 1 is expected to be a ‘broadly accessible’ entry-level tier, for activities such as nutrient management, pest management & livestock management. 

Tier 2 can be expected to look to deliver a broad range of high-value environmental benefits such as tree, shrub & hedge planting, habitat creation/ restoration / management or education infrastructure. This land could, under the new scheme, be land previously not associated with agriculture, for example, peri-urban land.

Tier 3 is likely to be the most complex, driving major change in national land-use to make a substantial contribution towards national targets, such as net zero emissions. These projects could include forest & woodland creation, peatland restoration or restoration of coastal habitats. 

The provision of Public money for public goods

The timeline to ELMS – The basic version(!)

2019 – 2027 Test & Trials – 50 proposals are being taken forward with 44 already in place, to road test the viability of the ELMS ‘building blocks’ and identify and gaps.

2021 – 2024 The three-year national pilot running from the end of 2021 is set to prepare for full implementation with large pilots for tier 1 & tier 2 and a smaller pilot for tier 3. It is expected that around 18% of current BPS claimants will be involved in the trial by the end the 3-year trial. 

To avoid ‘double funding’ a similar timeline will run on land payments, simplified as follows: 

2021 – 2024 – a simplified Countryside Stewardship Scheme will be open for applications until 2023 with final agreements starting on the 1st January 2024. 

Before 2024 – HLS & Countryside Stewardship Extensions. Annual extensions will be offered before 2024 for expiring agreements, although annual extensions are still in question. 

Late 2024 – ELMS Rollout. ELMS is hoped to be open to everyone from late 2024. 

DEFRA are seeking Feedback

Future ‘subsidies’ will be in the form of ELMS; at the moment we do not have enough information about the roll out of the Schemes to be confident in guaranteeing the same, or anywhere near similar levels of income as BPS has provided. There will be winners and there will be losers. We encourage our clients and local farming communities to seriously consider their businesses without BPS support. If you would like assistance in looking at budgets and opportunities to diversify or build on existing enterprises to cover that shortfall do get in touch with your local office.

DEFRA is seeking feedback on the ELMS design proposals by 5th May 2020. If you would like to discuss your thoughts with a member of our team, please call your local H&H Rural office. 

Contact your Local Office

If you have any questions or queries regarding ELMS or require any support for payment applications, please contact your local H&H Rural office on:

We will be updating our clients as more information becomes available. We will also be hosting discussion panels on our monthly podcast, ‘Public Money for Public Goods’ available on most streaming platforms. If you would like us to discuss a specific topic, please contact H&H on rugrural@howkinsandharrison.co.uk.