TOWNSEND & CLARK UK BPS ENTITLEMENTS USER GUIDE JANUARY 2017 1 TOWNSEND & CLARK UK BPS ENTITLEMENTS USER GUIDE BIOGRAPHICAL NOTES Hugh Townsend FRICS FAAV FCIArb. Hugh left the Royal Agricultural University in 1984 having qualified as a chartered surveyor with Strutt & Parker in Essex. In 1986 he joined Lowther Scott Harden at Lowther Estate in Cumbria where he developed a national quota agency and also became involved in the first arbitration ruling on milk quota compensation for tenants under the Agricultural Act 1986. In 1987 he became a Fellow of the Central Association of Agricultural Valuers, and shortly after joined Rendells in Exeter in 1988. Whilst there, in 1989, he became a Fellow of the Chartered Institute of Arbitrators. After leaving Rendells Hugh set up his own firm of land agents based in Exeter’s livestock market in 1992. He became a Fellow of the Royal Institution of Chartered Surveyors in 1995 and an RICS trained arbitrator in 2009. He has been involved in a number of test cases affecting farm quotas and farm rents, in court and at arbitration. Currently the country’s leading authority on all things involving farm quota/subsidy trading, he also runs a broad-based traditional firm of land agents managing land throughout the country. Julia Clark BA(Hons) Julia joined Townsend Chartered Surveyors in 1997 and now has nearly 20 years of experience in trading farm subsidies. She was involved in the sale and leasing of Sheep & Beef Quota, and most particularly Milk Quota. Julia became the Quota Plan department administrator from 2003, and for many years assisted with the running of the successful national Milk Quota trading department, having experience of the leasing and sale market, together with the various schemes the firm introduced to assist dairy farmers. From the end of 2007 she ran the Milk Quota trading department until Milk Quota was abolished in March 2015. Julia has run the administration for the transfer of UK entitlements since the introduction of SPS in 2005, more recently also trading entitlements herself, and has been involved with Naked Acre lettings and Entitlement Hosting arrangements. The combination of these experiences means she has amassed an unparalleled breadth of knowledge and understanding of UK quota/subsidy systems. Dominic Rees BSc.(Hons) Dominic graduated from Newcastle University with a BSc. in Agricultural Business Management and joined Townsend Chartered Surveyors in 2015. Dominic has become a specialist in Basic Payment claims on Commons land, as well as the Welsh, Scottish and Northern Irish schemes. 2 TOWNSEND & CLARK UK BPS ENTITLEMENTS USER GUIDE PREFACE This is the first independently published guide for those involved with UK entitlements not only in respect to buying and selling, but also how they affect decisions taken by farm businesses and managers of land. The Guide provides historical insight into agricultural subsidies in the UK which date back to 1932, and how they have evolved into the Entitlement-based system we know today. Following the 2016 UK Referendum it has never been so important to fully understand how the EU Basic Payment Scheme entitlement system works, why it is in place, and how it will influence any future UK subsidy system. One needs to know how previous schemes were developed and worked, and subsequently how these may influence the way the UK authorities interpret and manage not only the current scheme, but also design new ones. The authors have made use of their experience running nationwide quota agencies for over thirty years and also being involved in the practical implications for farmers and land owners, resolving disputes with the RPA, court and arbitration test cases and the effect entitlements have on all aspects of rural farm and estate management. The Guide provides a synopsis of the current entitlement system in the UK, and what should be considered when buying, selling and managing entitlements. This has been designed as an interactive e-book allowing readers to more easily find relevant subjects/sections. We are expecting users of the guide to “dip in and out” in order to find sections of interest to them. Whilst an effort has been made otherwise to order the information, a balance has been taken between comparing how different UK regions operate the same EU rules, with setting out everything relating to a specific UK region in one section. The authors also recognise that there is less coverage of the smaller regions and therefore are offering this ebook as a guide and not a text book. Hugh Townsend Julia Clark January 2017 Whilst the publishers and the authors have taken every care in preparing the material included in this work, any statements made as to the legal or other implications of particular transactions are made in good faith purely for general guidance and cannot be regarded as a substitute for professional advice. Consequently, no liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in this work. All rights reserved. No part of this publication may be reproduced, stored in a retrievable system, or transmitted in any way or by any means, including photocopying or recording, without the written permission of the copyright holder, occasion for which should be addressed to the Publisher. UK BPS Entitlements User Guide – Townsend & Clark © 2017 Townsend Chartered Surveyors Published by Townsend Chartered Surveyors, Matford Centre, Matford Park Road, Exeter, EX2 8FD www.townsendcharteredsurveyors.co.uk Tel: 01392 823935 Email: [email protected] ISBN 978-0-9957435-0-2 3 TOWNSEND & CLARK UK BPS ENTITLEMENTS USER GUIDE ACKNOWLEDGEMENTS The legacy of the knowledge and experience built up over thirty years of dealing with farm quotas has been contributed to by dedicated and hard-working trainee land agents, associates, administrators and partners, who have given an outstanding level of service to the farming community. Mark Dyson (1992-2007) had a particular talent for quota agency, picking up on the needs of the market and making the most of the quota systems to the advantage of the farmer. Ashley Taylor (2010-2015) was not only a thoroughly efficient entitlement agent, but also made full use of his training with the Chartered Institute of Arbitrators to carefully guide farmers to avoid the pitfalls of the schemes and when needed championed farmers with the RPA resolving disputes and claiming compensation. Others since 1992 include Sheila Toon, Amanda Collins, James Sheppard, Lara Brockington, Nigel Astbury, George Jenkinson, Amy Westcott, Sarah Yates, Claire Stuckey, Adam Downing, Neil Perrin, Maxine Perry, Stephanie Swadden, Mark Smith, Edward Coate, James Clack, Charles Gregory, Chris Allen and Jessica Bradley. We would also like to acknowledge help in preparing this book received from Jeremy Moody (CAAV), Dominic Rees, Kathy Dean and Hannah Phipps. 4 TOWNSEND & CLARK UK BPS ENTITLEMENTS USER GUIDE 1. BACKGROUND ...................................................................................................................... 9 1.1 Farm subsidies in the developed world .................................................................................. 9 1.2 Free trade in the 17th century ................................................................................................ 9 1.3 First import controls ............................................................................................................. 10 1.4 First farm price support – Corn Laws .................................................................................. 10 1.5 Effect of Industrial Revolution ............................................................................................ 10 1.6 Effect of Reform Act ........................................................................................................... 11 1.7 Food supplies during WW1 ................................................................................................. 11 1.8 Agricultural revolution, steamships and railways ................................................................ 12 1.9 First “Quota Payment” ......................................................................................................... 12 1.10 The model for future agricultural subsidies ......................................................................... 12 1.11 WW2 continued the Wheat Act ........................................................................................... 13 1.12 Post-WW2 – The Agriculture Act ....................................................................................... 13 2. DEVELOPMENT OF MODERN DAY SUBSIDIES ........................................................... 14 2.1 Joining the EEC ................................................................................................................... 14 2.2 Evolution of the CAP ........................................................................................................... 14 2.3 Why do farmers and growers need support today? .............................................................. 16 2.4 CAP subsidies and how they are administered .................................................................... 17 2.5 IACS ............................................................................................................................... 17 3. SINGLE PAYMENT SCHEME ............................................................................................ 18 3.1 Direct