Savills | AOL

12 / 36

L
September 2018
First reading
October 2018
Second reading
March 2019
Report stage
Expected later in 2019
Third reading and Lords’
scrutiny
12 Aspects of Land Spring / Summer 2019
enough to cause some farms and estates
to already start thinking differently about
their enterprises.
At the end of 2018, Savills Rural
Research team carried out a survey of the
firm’s rural consultants and surveyors.
Emily Norton, head of the team,
says: “Even though we’re so early in the
process the research shows that the Bill
is already having an impact. People were
making decisions about their businesses
just three months after it was published.”
Reduction in direct payments
With so many businesses reliant on the
Basic Payment Scheme (BPS), the future
of subsidies was a hot topic.
A seven-year transition phasing out
BPS has been outlined, beginning in
2021. Payments have been grouped into
four bands in a fashion similar to the
structure of tax thresholds. Payments
of up to £30,000 will be reduced by 5%
annually, while at the other end of the scale
payments of £150,000 upwards will shrink
by 25% annually.
Farms and estates were already aware
that direct support was likely to reduce
or disappear, but the research has
highlighted that the Bill is likely to change
the nature of capital investment.
The research found that farmers would
prefer to invest in infrastructure and
machinery, but now feel they have to
look at rural development and alternative
income streams.
“One of the strongest lines to come out
of our research is the difference between
what people think they need to invest in
given the withdrawal of BPS, versus what
they would like to invest in given the
choice,” says Emily.
“The research highlights that investment
is likely to be directed at rural development
and diversification to generate non-
agricultural income streams.”
Surrender and retirement
The Savills professionals who took
part in the research expect an increase
in retirement as a result of the Bill,
especially among Agricultural Holdings
Act (AHA) tenants where 84% of those
who completed the survey felt retirement
would become more likely.
Rupert Clark of Savills Estate
Management believes the prospect of
so-called “golden parachute” payments
Benefits to the public will be rewarded
THE BILL’S TOP LINE
n Direct payments phased out in
a transition period from 2021-27
n Farmers offered capitalised
payments that could aid
retirement plans
n New Environmental Land
Management Scheme contracts
for delivering public goods
n Funding for research enabling
profitability and reducing
environmental footprint
n Countryside Stewardship
to be simplified
AT A
GLANCE
SPECIAL
REPORT
has had an effect on the market and some
farmers have put surrender negotiations
and retirement plans on hold while the
fine detail of the policy is scrutinised.
Under the proposals, farmers in England
might be able to receive several years’
worth of the payments they are due during
the transition period as a lump sum.
The cash could facilitate retirement for
those needing money to invest in property
away from the farm they occupy.
“This is focused more towards AHA
tenants but also owner-occupiers,”
Rupert adds.
The Government’s aim is that the
knock-on effect brings more opportunities
for new entrants to the sector.
HOWWILL YOUR
PAYMENTS CHANGE?
The average English farm
business relies on the direct
payment subsidies for 61% of
its profit. As the subsidies are
phased out, farmers and land
managers will need to adapt
their business models and take
account of a time-lag before the
new income stream based on
“public money for public goods”
becomes available.
To help farmers and
land managers plan for the
withdrawal of direct subsidies,
Savills has developed the Savills
Calculator which illustrates how
a farm’s direct payments could
fall over the transition period.
n To put your figures through
the Savills Calculator and see
how subsidies for your business
will change, contact Andrew
Teanby, Lincoln, 01522 507 312,