Lump Sum Exit Scheme to open in April, govt confirms
8th February 2022
Farmers who wish to leave the industry will be able to apply for a lump sum payment from the government.
Environment secretary George Eustice has confirmed plans for a Lump Sum Exit Scheme for farmers wishing to leave the industry, following a public consultation last year.
The scheme is due to open in April and the application period will run until the end of September. The payment will be based on the average direct payments made to the farmer for the 2019 to 2021 Basic Payment Scheme years. This reference figure will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum, meaning that farmers could receive up to around £100,000.
In return for the payment, farmers will be required to surrender their entitlements and either rent or sell their land or surrender their tenancy.
Mr Eustice commented today (8th February): “Those of us who grew up with farming know the emotional connection farmers have with their land and the decision to retire or to exit the industry can be extremely difficult and is frequently postponed.
“The purpose of The Lump Sum Exit Scheme is to assist farmers who want to exit the industry to do so in a planned way and provide them with the means to make a meaningful choice about their future. The Scheme will also free up land for new entrants to farming and those who want to expand their businesses.”
The government first proposed the lump sum scheme in May last year. Responding to today’s news, NFU vice president Tom Bradshaw said the clarity provided by the government is “incredibly important”.
He added: “Every farming business is unique, with personal circumstances, land tenure and enterprises varying massively, so it’s positive that Defra is understanding of this.
“Farming is a job like no other and deciding to leave the industry will be deeply subjective to each person. I would encourage anyone considering this to take advantage of the free and confidential business advice being funded by Defra [under the Future Farming Resilience Fund].”
“Practically”, it is good news that Defra and HMRC will treat the lump sum as a capital payment, Mr Bradshaw explained. “This will ensure more of the payment is retained by the retiring farmer, which is reflective of the nature of the scheme.”
He added: “The NFU will continue to analyse the detail of today’s announcement and how the implementation will work for any interested farmers, but particularly those with more complex situations such as tenant farmers. We will also continue working with Defra on the crucial New Entrants Scheme which we hope will provide a pipeline for new talent to enter the industry.”
The government said it has also been working in partnership with industry leaders, local councils and land owners to design a New Entrants scheme to create opportunities for new farmers.
Following the consultation, the government will progress with plans to separate Direct Payments from the amount of land farmed, from 2024.