Single Payment Scheme
The Mid Term Review introduced the Single Payment Scheme (SPS) with effect from 1st January 2005. The SPS has replaced all direct subsidy payments relating to arable crops and livestock and also extends payments to agricultural land which was not previously been treated as eligible to receive similar payments. This includes land used for horses and land not previously used as arable land.
Of major importance is the severance of the payment entitlement from land. Although land is required to validate the entitlement units and therefore receive the payment, this entitlement will not be tied to any particular area of land. Initially the annual payment was principally based on the historical entitlement derived from subsidy claims made during 2000-2002. However the payment is being phased to a standard area payment and by 2012 all agricultural land in lowland England will receive the same payment rate per acre. Different regional payment rates will apply in upland areas of England. Scotland and Wales operate their own separate schemes.
The one-off date for establishment of entitlement units was 16th May 2005. New entitlement units cannot be created now, but entitlement units can be traded between people who meet the definition of a farmer under the regulations. Entitlement units can be bought, sold or leased provided that all such transfers are completed and notified to the Rural Payments Agency at least six weeks before the deadline for SPS applications for that year. In practice this means that transfer paperwork should be completed by the end of March to allow the transferee to include the entitlements on his SPS form in May and claim the payments during the following payment year.
Set-aside entitlements were issued to farmers in 2005. In previous years, these have had to be matched to set-aside land, but in 2008 the rate of set-aside has been set at 0%. In practice this means that a farmer can claim against his set-aside entitlements, but he does not have to manage the land as set-aside and can crop it as usual if he wishes. If he does not wish to crop the land, it can be managed as “land in good agricultural and environmental condition” and identified as such on the SP5 form.
The other key change for 2008 is the removal of the 10 month rule for the occupation of land. In order to provide more flexibility for land occupation, claimants now have to be in occupation for only one day (expected to be 15th May each year). It is vital to remember, however, that the claimant is responsible for cross compliance on the holding for the whole calendar year – even if he is not in occupation for the whole of that time.
JHWalter can provide advice on a wide range of SPS issues including completing SP5 forms, arranging entitlement transfers, sales or purchases and resolving outstanding problems with the RPA.
