Agriculture Act 2020

Commentary on provisions of Act

Part 1: Financial Assistance

Chapter 1: New Financial Assistance Powers

Section 1: Secretary of State’s powers to give financial assistance

16. Section 1 provides the Secretary of State with the power to give financial assistance. Financial assistance may be given to beneficiaries including, but not limited to, farmers, foresters, or those responsible for the management of the land. Section 1 sets out a list of purposes for which, and in connection with which, the Secretary of State could provide such assistance in England.
17. Subsection (1)(a) enables the Secretary of State to provide financial assistance for the delivery of environmental outcomes such as cleaner air, clean and plentiful water and thriving plants and wildlife by carrying out environmentally beneficial land and water management activities. It is intended to apply to land and to bodies of water such as ponds, lakes and rivers (excluding the sea) being managed to deliver environmental benefits. One example of how this subsection may be used is to improve air quality by creating financial incentives for the targeted planting of trees to help capture ammonia emissions and protect nearby sensitive habitats from damaging nitrogen deposition. This land management activity would contribute to the delivery of cleaner air and the protection of biodiversity.
18. Subsection (1)(b) enables the Secretary of State to provide financial assistance to support public access to and enjoyment of the countryside, farmland and woodland. This subsection also enables the provision of financial assistance to support understanding about the environmental benefits that land can provide. This subsection may be used, for example, to incentivise foresters to provide facilities for educational visits for schools, supporting pupils to visit natural environments and learn about the environment. This would contribute to the delivery of societal benefits including that of engagement with the environment. It may also be used to give financial assistance to farmers and land managers to share information about agroecology.
19. Subsection (1)(c) enables the Secretary of State to provide financial assistance for managing land or water in a way that maintains, restores or enhances cultural or natural heritage. This may include a building, monument, site, place, area or landscape identified as having a degree of significance due to its archaeological, architectural, artistic, historic or traditional interest. This subsection may be used to incentivise activities which conserve our cultural or natural heritage, which includes uplands and other landscapes. Funding could be used to support, for example, the maintenance of historic farm buildings, dry stone walls and conservation of limestone pavements. These all have intrinsic value as well as being resources for research, education, recreation and tourism. Funding under this subsection would contribute to the provision of societal benefits such as beauty, heritage and engagement with the environment.
20. Subsection (1)(d) enables the Secretary of State to provide financial assistance for or in connection with managing land, water or livestock in such a way as to mitigate or adapt to the effects of climate change. This subsection may, for example, be used to mitigate the causes of climate change by incentivising peatland restoration to protect the existing carbon store and reduce emissions of carbon dioxide to the atmosphere.
21. Subsection (1)(e) enables the Secretary of State to provide financial assistance for or in connection with managing land or water in such a way as to prevent, reduce or protect from hazards to, or caused by, the environment. This subsection, could, for example, be used to support actions that improve soil water infiltration and porosity to help mitigate against flooding.
22. Subsection (1)(f) enables the Secretary of State to support action by farmers, vets and other organisations to improve animal health and welfare, reduce endemic disease and keep livestock well maintained and healthy. This subsection could, for example, be used to fund measures to encourage participation in animal health or disease control schemes or support the financing of testing for a particular disease. It could also be used to strengthen animal welfare outcomes, such as ensuring animals have access to materials that allow them to express their natural behaviours.
23. Subsection (1)(g) enables the Secretary of State to provide financial assistance for measures to support the conservation and maintenance of UK native Genetic Resources relating to livestock or equines. These measures could, for example, be used to incentivise farmers to invest in rearing rare and native breeds or species, because these genetic resources may offer a way to sustainably increase food production and improve our capacity to adapt to climate change or the emergence of new animal or plant diseases by providing a breadth of genetic traits. These powers could also be used to incentivise existing gene banks to safeguard UK native and rare breed genetics or to provide on farm measures to manage disease risks amongst populations of rare breed livestock.
24. Subsection (1)(h) enables the Secretary of State to provide financial assistance for measures which protect or improve the health of plants, including wild plants, agricultural and horticultural crops, trees and bushes. This could, for example, include support for measures across the forestry, horticultural and other sectors, which reduce the risk of the introduction and spread of harmful plant pests and disease.
25. Subsection (1)(i) enables the Secretary of State to provide financial assistance for conserving plants grown or used in agricultural, horticultural or forestry activity. This includes conserving their wild relatives, or the genetic resources relating to any such plant. This could, for example, include support for measures to conserve and utilise crop wild relatives to improve our capacity to adapt to the emergence of new plant diseases, thereby increasing resilience and biosecurity across the agricultural, horticultural or forestry sectors.
26. Subsection(1)(j) enables the Secretary of State to provide financial assistance for protecting or improving the quality of soil. This could include measures which support farmers with decision making and soil management to improve soil health, such as assistance for soil monitoring programmes and funding of necessary soil health research to provide baseline site-specific understanding of soil properties. This power could also be used to incentivise farmers to invest in practices which protect and enhance soil health.
27. Subsection (2)(a) enables the Secretary of State to give financial assistance for starting, or improving the productivity of, agricultural, forestry, or horticultural activities (including the growing of flowers and non-food crops). This could be used, for instance, to enable a farmer to invest in equipment that would both increase productivity and deliver environmental benefits. For example, this could include giving a farmer a grant or loan to enable the purchase of precision application equipment for slurry. This equipment would allow the farmer to use slurry more effectively, reducing costs as well as reducing ammonia emissions.
28. Subsection 2(b) enables the Secretary of State to give financial assistance to support the ancillary activities of selling, marketing, preparing, packaging, processing or distributing agricultural, horticultural or forestry products. These activities can be funded if they are, or will be, carried on by a producer (which is defined in subsection (5)) or by someone acting for the producer.
29. Subsection (3) specifies that financial assistance under subsections (1) and (2) may only be given in relation to England.
30. Subsection (4) places a duty on the Secretary of State, when framing any schemes under Section 1, to have regard to the need to encourage the production of food by producers in England, and its production by them in an environmentally sustainable way. This duty applies when the Secretary of State is making relevant decisions about the design of schemes under which financial assistance may be obtained under Section 1.
31. Subsection (5) provides definitions for Section 1.
32. Subsection (6) provides definitions for the Chapter.
33. Provisions relating to the form in which assistance may be given, conditions that may be imposed, delegation of functions, and publication of information about financial assistance that has been given are set out in Section 2. Provisions in relation to checking, enforcing and monitoring financial assistance are set out in Section 3.

Section 2: Financial assistance: forms, conditions, delegation and publication of Information

34. Subsection (1) provides that financial assistance may be given in any form. The form may depend on any number of factors, including the framework for giving assistance and the purpose for which it is provided. The examples included in the subsection are grants, loans and guarantees but financial assistance may be given in any other form. This enables the flexibility to make one-off payments for assistance such as a loan for capital items or ongoing payments as part of a longer-term agreement such as grants for the delivery of environmental benefits or other public goods.
35. Subsection (2) allows the Secretary of State to attach conditions to which the financial assistance will be subject.
36. Subsection (3) clarifies that a condition of receipt of financial assistance may include provision under which it is to be recovered.
37. Subsection (4) confers power on the Secretary of State to give financial assistance to another person or organisation who has designed or operates a scheme that provides financial assistance for one of the purposes specified in Section 1. Financial assistance may support both expenditure incurred by a third party in establishing and operating a scheme, as well as funding provided through that scheme. For example, this would enable the Secretary of State to fund local partnerships or other organisations or bodies (such as National Parks) to deliver a project that supports public access to and enjoyment of the countryside, farmland or woodland.
38. Subsection (5) provides a definition for "third party scheme" in subsection (4). This definition clarifies that a third party scheme is one that is made and operated by a third party (not the Secretary of State) and that funding for such a third party scheme must be used to support the delivery of one or more of the purposes described in section 1(1) and 1(2).
39. Subsections (6) and (7) enable the Secretary of State to delegate functions in relation to giving financial assistance including giving guidance or exercising a discretion.
40. Subsection (8) allows the Secretary of State to make regulations requiring the publication of information about payments under section 1. Subsection (9) provides that such information may include information about the recipient of financial assistance, the amount of financial assistance received and the purpose for which the financial assistance was given.
41. Subsection (10) specifies that regulations made under this section are subject to the affirmative resolution procedure.
42. Subsection (11) provides a definition for "specified" as used in this section.

Section 3: Financial assistance: checking, enforcing and monitoring

43. Section 3 provides the Secretary of State with the power, to make regulations to check, enforce and monitor the conditions of financial assistance provided under section 1 in this Act.
44. Subsection (1) sets out that regulations made under this section should be in connection with the provisions of subsections (1)(a), (1)(b), (1)(c) and (1)(d).
45. Subsection (1)(a) sets out that regulations made under this section may make provision for checking eligibility criteria, and the consequences, where financial assistance has already been given, of those criteria not being met. These checks can be before or after receipt of financial assistance. For example, it might be necessary to check that an applicant for financial assistance for a scheme to protect a particular natural habitat has control of land that includes that particular habitat.
46. Subsection (1)(b) sets out that regulations made under this section may make provision for enforcing compliance with conditions as provided for by section 2.
47. Subsection (1)(c) sets out that regulations made under this section may make provision for monitoring to what extent the purposes as provided in subsections 1 and 2 of section 1 are met.
48. Subsection (1)(d) sets out that regulations under this section may make provision for the Secretary of State to investigate cases of suspected offences in connection with financial assistance. For example, where checks made under the provisions in subsections (1)(a), (1)(b) and (1)(c) reveal possible fraud offences concerning use of financial assistance given, the Secretary of State may investigate suspected fraud in relation to a potential prosecution under the Fraud Act 2006.
49. Subsection (2) sets out a list of enforcement options that regulations made under subsection (1) of this section may provide. This list is not exhaustive, and the regulations may be made for any of the purposes set out in subsection (1).
50. Subsections (2)(a) to (j) list some of the types of enforcement option that may be included within the regulations. These include provisions about the information that must be provided to assist with enforcement, powers of entry, inspection, search and seizure, record keeping requirements, and how eligibility criteria and conditions of financial assistance will be checked. It also includes provisions concerning the consequences if conditions of financial assistance are not met, including recovery of money that has been paid, suspending someone from a scheme and imposing monetary penalties. There is also the power to make regulations conferring functions to others and to establish a mechanism for appealing against decisions.
51. Subsection (3) specifies that powers included in regulations created under subsection (1) may not authorise entry to premises used wholly or mainly as private dwellings without a warrant issued by a justice of the peace. Private dwellings are defined in section 51 as to include any gardens, yards, garages and outhouses enjoyed with such a structure.
52. Subsection (4) expands on provisions made under subsection (2)(f) to include provision for interest on any recoverable amount to be payable from such a day (whether the day on which financial assistance was given or a later day) as may be provided for in, or determined under, the regulations. The words ‘determined under’ allow for the regulations to set out a mechanism for a decision to be made on a case by case basis.
53. Subsection (5) specifies that regulations made under this section are subject to the affirmative resolution procedure.
54. Subsection (6) provides a definition for the use of the word "specified" for use in this section.

Section 4: Multi-annual financial assistance plans

55. This section places a duty on the Secretary of State to prepare, and then once prepared have regard to, multi-annual financial assistance plans, setting out the Government’s plans for giving financial assistance using the powers in section 1. The periods that these plans must cover is set out in subsections 3 and 4.
56. Subsection (1) places a duty on the Secretary of State to prepare a document giving information on the expected use of the financial assistance powers under section 1.
57. Subsection (2) specifies the minimum information which must be included in a multi-annual financial assistance plan. This includes the plan period, the Government’s strategic priorities for giving financial assistance during the plan period and appropriate details of financial assistance schemes under section 1 which are either in operation at the time that the plan is published or are expected to come into operation during the plan period.
58. Subsection (3) sets the period for the first multi-annual financial assistance plan as seven years, beginning with 1 January 2021. This covers the agricultural transition period.
59. Subsection (4) specifies that subsequent multi-annual financial assistance plans must cover a period of at least five years.
60. Subsection (5) specifies that the Secretary of State may not allow a plan to expire without a new plan being in place for the following period, ensuring that there is no gap between plans.
61. Subsection (6) places a duty on the Secretary of State to lay before Parliament and publish a multi-annual financial assistance plan at least 12 months ahead of it coming into effect. This will apply for all multi-annual financial assistance plans, except the first plan, which must be published as soon as practicable before 1 January 2021.
62. Subsection (7) places a duty on the Secretary of State to amend the multi-annual financial assistance plan, as soon as is practicable, if the Government’s strategic priorities change, or if it appears to the Secretary of State that any information given in the plan has ceased to be accurate. For example, information may cease to be accurate in the light of updates and improvements to financial assistance schemes.
63. Subsection (8) places a duty on the Secretary of State, where a multi-annual financial assistance plan has been amended, to publish and lay before parliament a document setting out these amendments. This must be done as soon as is practicable.
64. Subsection (9) places a duty on the Secretary of State to have regard to priorities set out in the multi-annual financial assistance plan when determining what financial assistance to give, or the budget for any financial assistance schemes.
65. Subsection (10) provides a definition for "the Government" as used in this section.

Section 5: Annual and other reports on amount of financial assistance given

66. This section places a duty on the Secretary of State to prepare a report each financial year, detailing the financial assistance given under section 1 of the Act.
67. Subsection (1) places a duty on the Secretary of State to prepare an annual report about the financial assistance given under section 1 of the Act during the preceding year.
68. Subsection (2) specifies that the first year for which this duty will apply is 2021-22. This is the first year of the agricultural transition period.
69. Subsection (3) specifies information which the annual report must include, in addition to any other information which the Secretary of State considers appropriate. This includes the total amount of financial assistance given, the total amount of financial assistance given under financial assistance schemes in operation during the year and required information about those schemes as specified in subsection (4).
70. Subsection (4) specifies required information about financial assistance schemes to be included in annual reports. This includes the total amount of financial assistance given under a scheme and the extent to which this financial assistance met any obligations or commitments under the terms of the scheme, which may include, for example, the extent to which any financial assistance was given on time.
71. Subsection (5) enables the Secretary of State to include information in an annual report about amounts of financial assistance given by means other than by way of financial grants and to do so in a way that they consider to be most appropriate. For example, this could include information on financial assistance given by way of loans, guarantees or in any other form.
72. Subsection (6) enables the Secretary of State to prepare interim or other reports about the amounts of financial assistance given, in addition to the annual reports. For example, it may be necessary to produce interim reports covering financial assistance given during a set period of time within a financial year. There may also be occasions where it is appropriate for the Secretary of State to publish an additional report covering the financial assistance given over a period of several years. For example, the Secretary of State may publish a report covering three years’ worth of expenditure on a particular scheme, to make it more convenient for the public to interrogate expenditure on that scheme.
73. Subsection (7) requires the Secretary of State to publish and lay before Parliament any report published under this section. This includes both annual reports, and any additional interim or other reports.
74. Subsection (8) sets a deadline for the laying of annual reports. Reports must be laid on or before 1 October in the year following the financial year to which they relate.

Section 6: Monitoring impact of financial assistance etc

75. This section places a duty on the Secretary of State to monitor the impact of financial assistance schemes under section 1 and requires these reports to be published and laid before Parliament.
76. Subsection (1) requires the Secretary of State to monitor the impact of financial assistance schemes. This could include, for example, monitoring the level of uptake of the schemes, the extent to which the actions required under these schemes have been taken, and an assessment of the extent to which public goods have been delivered. The Secretary of State must then make reports on the impact and effectiveness of the financial assistance schemes.
77. Subsection (2) enables the Secretary of State to monitor the impact of financial assistance given other than through financial assistance schemes made or operated on behalf of the Secretary of State, and to make reports on the impact and effectiveness of the financial assistance given. This would enable the Secretary of State to monitor the impact and make a report on the impact and effectiveness on, for example, a scheme made or operated by a third party.
78. Subsection (3) allows that monitoring under subsections (1) and (2) must be carried out in such a manner and for such period or periods as the Secretary of State feels appropriate for the scheme or financial assistance in question. This allows the mechanisms and length of monitoring to be adapted to reflect the scheme or type of financial assistance in question, and to reflect the period over which any effects would be expected to become apparent.
79. Subsection (4) allows that the number and frequency of reports made under subsections (1) and (2) to be as the Secretary of State considers appropriate for the scheme or type of financial assistance in question. This allows reporting periods to be matched to the schemes in question, and to reflect the period over which any effects would be expected to become apparent.
80. Subsection (5) requires that reports prepared under this section must be published and laid before parliament.

Chapter 2: Direct Payments After EU Exit

Section 7: Meaning of "basic payment scheme" and other expressions in Chapter 2

81. This section sets out definitions for terms used in Chapter 2, in relation to the continuation and phasing out of Direct Payments during the agricultural transition period in England.
82. Subsection (2) defines the term "basic payment scheme" as covering the basic payment, which accounts for almost 70% of the overall payment; the greening component, which accounts for around 30% of the total payment and is made if certain agricultural practices that are beneficial to the environment and climate are upheld; and the young farmers payment, a top-up for eligible farmers aged 40 and under.
83. Subsection (3) defines the term "legislation governing the basic payment scheme". This includes the EU "basic act" (the "Direct Payments Regulation" (Regulation 1307/2013)), which sets out the framework for CAP Direct Payments and was incorporated into UK law from 11pm on 31 January 2020 for the remainder of the 2020 scheme year under the Direct Payments to Farmers (Legislative Continuity) Act 2020. It also includes retained subordinate legislation relating to the "basic act".
84. Subsection (4) defines the term "agricultural transition period for England" as that set out under section 8(1). The agricultural transition period is the period during which reductions will be applied to Direct Payments to phase them out in England.
85. Subsection (5) sets out that a direct payment under the basic payment scheme may be defined as such whether or not the greening and young farmer payment elements are included.
86. Subsection (6) defines a "Delinked payment" as that set out in section 12(2)(a). A delinked payment means that the Direct Payment would be delinked from land, so that there would no requirement for a recipient to farm land in order to receive the payment during the agricultural transition period.
87. Subsection (7) defines a "Relevant payment" as either a direct payment made under the basic payment scheme or a delinked payment.
88. Subsection (8) explains that the "Direct Payments Regulation" referred to in subsection (3) is Regulation (EU) No 1307/2013. This is the "basic act".

Section 8: The agricultural transition period for England and the termination of relevant Payments

89. Section 8 sets out the starting year and duration of the agricultural transition period, during which Direct Payments will be phased out in England.
90. Subsection (1) sets the agricultural transition period as being seven years beginning in 2021. This means the last year in which Direct Payments will be made is 2027 unless the agricultural transition period is extended under subsection (3).
91. Subsection (2) sets out that once the agricultural transition period has ended in England, no more relevant payments will be made in England unless they are made in relation to the final year of the agricultural transition or earlier.
92. Subsection (3) provides powers to the Secretary of State to extend the agricultural transition period. This allows the Secretary of State to respond to unforeseen circumstances, which may warrant such an extension.
93. Subsection (4) qualifies the use of the power in subsection (3). The Secretary of State may extend the agricultural transition period more than once but, in doing so, any regulations must be made before the agricultural transition period, as it stands, runs out.
94. Subsection (5) specifies that regulations made under this section are subject to the affirmative resolution procedure.

Section 9: Power to modify legislation governing the basic payment scheme

95. Section 9 provides the Secretary of State with powers to modify retained EU legislation governing the basic payment scheme (including the greening and young farmer payment), as defined in section 7(3).
96. Subsection (1) provides the power to modify the legislation where the Secretary of State considers this would serve one or more of five specific purposes. The first purpose is the simplification of the administration of the basic payment scheme or making its operation more efficient or effective. The second purpose is the removal of provisions in the legislation which are either spent or of no practical use. The third purpose is the removal or reduction of burdens (as defined in subsection (3)) to people applying to or entitled under the basic payment scheme or making other improvements to the way the scheme operates in relation to those people. The fourth purpose is to secure that any sanction or penalty imposed is appropriate and proportionate. The fifth purpose is to limit the application of the basic payment scheme to land in England. This latter purpose will allow the Government to simplify the administrative arrangements for farmers who have land both in England and in one or more other part of the UK (i.e. Scotland, Northern Ireland and / or Wales).
97. Subsection (2) expressly provides that the power in subsection (1) includes the power to end greening payments before the end of the agricultural transition period. The greening requirements include the so-called "three crop rule" which determines the number of crops a farmer must grow. The power can only be exercised so long as the 30% portion of the overall budget currently allocated to greening remains available to recipients, providing they observe remaining basic payment scheme requirements. Subsection (2) is required to enable the ending of greening payments, otherwise this would be a change which would be beyond the scope of the power in subsection (1).
98. Subsection (3) states that ‘burden’, which the power in subsection (1)(c) is designed to remove or reduce, includes: a financial cost; an administrative inconvenience; and an obstacle to efficiency, productivity or profitability.
99. Subsection (4) specifies that regulations made under this section are to be subject to the negative resolution procedure, unless section 50(5) applies, in which case the procedure is affirmative.

Section 10: Power to provide for the continuation of the basic payment scheme beyond 2020

100. This section provides the Secretary of State with a power to make provision for the continuation of the basic payment scheme in England beyond 2020. The power in this section can only be exercised until the Department replaces the current basic payment scheme with delinked payments (which can occur, at the earliest, in 2022) or until Direct Payments are phased out completely at the end of the agricultural transition period.
101. The Direct Payments Regulation, which governs the basic payment scheme and became retained EU law for the 2020 scheme year at 11pm on 31 January 2020, does not contain a financial allocation after the 2020 scheme year. That Regulation only specifies annual financial ceilings in Annexes II and III up to, and including, the 2020 scheme year. The financial ceilings are used as the basis for calculating Direct Payments. There are no ceilings specified for 2021 or later years. Without a power to specify the Direct Payments ceiling, the Department could not make payments under the basic payment scheme after 2020.
102. This section is only concerned with payments under the basic payment scheme and is not concerned whatsoever with delinked payments. The power to make delinked payments is contained in section 12.
103. Subsection (1) provides the power for the Secretary of State to make regulations that modify the legislation governing the basic payment scheme, with the express purpose of ensuring that the basic payment scheme in England can continue for one or more years beyond 2020. The scheme cannot be extended if payments under the scheme have ceased by virtue of section 8(2) (the end of the agricultural transition period) or 12(7)(a) (the introduction of delinked payments). The power in subsection (1) is beyond the scope of section 9 which is concerned with modifications that, in the opinion of the Secretary of State, serve the purposes defined in that section.
104. Subsection (2) specifies that the power under subsection (1) includes a power to determine the Direct Payments ceiling in a specified manner, instead of, for example, specifying the amount in the Direct Payments Regulation. There is an important restriction in subsection (3)(a), namely, the Direct Payments ceiling for the relevant year, once determined, must be published as soon as practicable after it is made. Subsection (3)(b) allows the Secretary of State to delegate the determination of the Direct Payments ceiling to any person.
105. Subsection (4) provides definitions for certain terms used in this section.
106. Subsection (5) means that this section does not affect any power in the rest of Chapter 2 or any other enactment from being able to amend or revoke legislation applicable to the basic payment scheme after 2020.
107. Subsection (6) specifies that regulations made under this section are subject to the affirmative resolution procedure.

Section 11: Power to provide for phasing out direct payments

108. This section provides the power for the Secretary of State, during the agricultural transition period, to make reductions to Direct Payments under the basic payment scheme to phase the payments out.
109. Subsection (1) empowers the Secretary of State to make regulations that apply reductions to payments made under the legislation governing the basic payment scheme (as defined in section 7(3)). This power is beyond the scope of section 9 which is concerned with modifications that, in the opinion of the Secretary of State, serve the purposes defined in that section.
110. Subsection (2) refers to section 12(7) for the circumstances under which the power (and provisions made under it) in section 11(1) will cease to have effect. The power, and related provisions, to phase out the basic payment scheme will cease to have effect once delinked payments are introduced, as the introduction of delinked payments will automatically lead to the termination of the basic payment scheme.
111. Subsection (3) defines the term "phasing out" as meaning the application of reductions to Direct Payments (under the power in section 11(1)). These reductions will be applied during the agricultural transition period (set out in section 8).
112. Subsection (4) provides that where the greening payment has ended under the power in section 9(2), during the modification of the basic payment scheme, references to Direct Payments under the basic payment scheme exclude greening payments. This would not affect the overall money available, as the greening element of the budget would still form part of the overall basic payment scheme budget.
113. Subsection (5) specifies that any regulations made under this section are subject to the affirmative resolution procedure.

Section 12: Power to make delinked payments

114. This section provides the power to the Secretary of State to delink Direct Payments from land. With delinked payments, there would be no obligation for the recipient of the payments, during the agricultural transition period, to remain a farmer. This will be called "delinking" payments because the current connection between the value of the payment and the area of land for which it is claimed will be broken. The amount of Direct Payments received by applicants during the agricultural transition, whether that be under the basic payment scheme (see sections 10 and 11) or delinked payments, will be less than received now and will be reduced further during the agricultural transition period as the payments are phased out.
115. Subsection (1) allows the Secretary of State to make provision, in regulations, to make delinked payments in relation to England. Delinked payments will be in place of Direct Payments under the basic payment scheme.
116. Subsection (2) defines the term "delinked payment" and specifies the conditions which satisfy the delinking period. The delinking period cannot begin, and therefore delinked payments cannot be introduced, before 2022. The delinking period ends at the end of the agricultural transition period (set out in section 8).
117. Subsection (3) lists the things that must be included in regulations for delinked payments. Subsection (3)(a) requires the Secretary of State to define who will be entitled to a delinked payment. The Secretary of State intends to set qualifying criteria based on a reference period (see subsection (5)). Subsection (3)(b) requires the Secretary of State to set out the method to calculate the value of delinked payments. The Secretary of State intends to calculate delinked payments based on a reference period (see subsection (5)) and then apply reductions during the remaining lifetime of the agricultural transition period for England as the payments are phased out.
118. Subsection (4) allows the Secretary of State to make further regulations concerning delinked payments as follows:

• Subsection (a) allows for recipients to opt out of receiving delinked payments. This avoids the perverse scenario of the Government making a payment that the recipient does not wish to receive;
• Subsection (b) allows for the Secretary of State to determine any circumstances under which a recipient is no longer regarded as entitled to delinked payments. Potential circumstances could include a business which has ceased to operate; and
• Subsection (c) allows the Secretary of State to introduce regulations so that it can pursue recovery of delinked payments to which the recipient was not, in fact, entitled.

119. Subsection (5) provides that entitlement to delinked payments may be defined by whether an individual was entitled to payment under the basic payment scheme during a reference period, of one or more years, prior to the introduction of delinking. Other definitions are not ruled out, which allows for further consultation.
120. Subsection (6) provides that the method for calculating the value of the delinked payment to any recipient may be based on the value of the "basic payment scheme" payment they were entitled to receive. This could, for example, be based on a single previous scheme year or an average over a number of previous scheme years. Other definitions are not ruled out, which allows for further consultation.
121. Subsection (7)(a) specifies that no payments under the basic payment scheme are to be made after the introduction of delinked payments (save for basic payment scheme payments related to prior years).
122. Subsection (7)(b) sets out that the power in section 11(1), and any regulations made under it, providing for the phasing out of Direct Payments under the basic payment scheme, will no longer have any effect once delinked payments are introduced.
123. Subsection (8) provides that regulations made under this section are to be subject to affirmative resolution procedure.

Section 13: Power to provide for lump sum payments in lieu of relevant payments

124. Section 13 provides a power to the Secretary of State to offer farmers the opportunity of taking a lump sum payment in place of the relevant payments they would otherwise have been entitled to receive during the agricultural transition period.
125. Subsection (1) empowers the Secretary of State to make provision in regulations to offer a lump sum payment to eligible persons.
126. Subsection (2) sets out conditions for eligibility for the lump sum payment. Eligible persons must apply for it; must be entitled to a relevant payment (which section 7(7) defines as either a Direct Payment under the basic payment scheme or a delinked payment) in respect of a year within the agricultural transition period (except for the last year of that period); and must meet any other eligibly criteria set out in regulations.
127. Subsection (3) sets out that those persons choosing the lump sum would do so in forfeiture of continued relevant payments (which section 7(7) defines as either a Direct Payment under the basic payment scheme or a delinked payment) during the agricultural transition period.
128. Subsection (4) provides the Secretary of State with the power to set the circumstances in which a lump sum payment is to be paid.
129. Subsection (5) provides that regulations made under this section are to be subject to affirmative resolution procedure.

Chapter 3: Other Financial Support After EU Exit

130. This section empowers the Secretary of State to make regulations that modify, in relation to England, the "horizontal basic act", retained direct EU legislation made under it, and related domestic subordinate legislation (as incorporated into domestic law and modified, principally under the EU (Withdrawal) Act 2018).
131. The horizontal legislation concerns the financing, management and monitoring of the CAP. It is known as the horizontal legislation because it applies to schemes and measures that were established under the CAP: Direct Payments, Rural Development programmes and Common Market Organisation measures, such as the fruit and vegetable Producer Organisations (see section 15). For a fuller explanation of the scope and purpose of the horizontal legislation, please see Boxes 1 & 2.

     Box 1: The horizontal legislation Regulation 1306/2013 (the "horizontal basic act") has a fundamental role in making the CAP work. It works together with Implementing and Delegated Acts to create an overarching horizontal legislative framework for the financing, management and monitoring of the CAP. Regulation 1306/2013 contains crosscutting provisions that apply to payments made under both pillars of the CAP (Direct Payment schemes, Rural Development measures, and Common Market Organisation measures). It should be noted that some of the horizontal regulations were incorporated into domestic law and amended at EU Exit using the powers in the Direct Payments to Farmers (Legislative Continuity) Act 2020. This ensures the overarching CAP framework, as far as it applies to 2020 Direct Payments (which will be domestically funded), operates in a UK setting. Further operability amendments will be made to the horizontal regulations at the end of the implementation period to ensure the remaining provisions in those regulations, which will continue to be EU law during the implementation period, work domestically. The horizontal legislation is designed to ensure the proper management of CAP funds. The regulations include rules governing paying agencies and other bodies involved in the administration of the CAP. Under the regulations, the UK Government has set up a "UK Coordinating Body", whose main task is currently to collect and send information on implementation of the CAP to the Commission on behalf of the four UK paying agencies. The horizontal regulations also include rules on application procedures, calculation of aid and penalties, payment windows and payment recovery. They include rules on checks to be carried out, including databases used to check compliance, audits and farm checks and administrative checks. They also include rules for the implementation of the farm advisory system, calculating the funds for public intervention purchase and the establishment of a single beneficiary website, which contains information relating to CAP beneficiaries. They also establish the system of "cross compliance" (see Box 2). They do not contain financial ceilings for schemes.

     Box 2: Cross compliance The horizontal legislation includes a cross compliance regime. CAP expenditure is primarily controlled through inspection programmes that check whether beneficiaries meet the eligibility rules of the scheme in question. In addition to meeting the eligibility rules, beneficiaries that receive payments (either as a Direct Payment or as part of area-based CAP Rural Development schemes, e.g. agri-environment scheme) must also comply with a series of standards on the environment, animal and plant health and animal welfare collectively known as cross compliance. Under cross compliance there is an obligation on beneficiaries to comply with statutory management requirements (known as SMRs) which are existing requirements already set out in separate EU legislation, and standards for good agricultural and environmental condition of land (known as GAECs) which are established at national level. In the event of a breach being detected (through inspection or otherwise) the horizontal regulations enable reductions to be made to the beneficiary’s payments.

132. Subsection (1) outlines the overall scope of the power. It empowers the Secretary of State to modify, in relation to England, the retained horizontal legislation, including any related domestic subordinate legislation.
133. Subsection (2) qualifies the use of the power and lists a number of purposes for which it may be exercised. These are to secure that any provision of legislation referred to subsection (1) ceases to have effect; the simplification of the operation of such provision or to make its operation more efficient or effective; the removal or reduction of burdens (defined in subsection (3)) on people governed by the legislation, or making other improvements to the way the legislation applies in relation to these people; and securing that any sanction or penalty imposed is appropriate and proportionate.
134. Subsection (3) states that ‘burden’, which the power in subsection (2)(c) is designed to remove or reduce, includes: a financial cost; an administrative inconvenience; or an obstacle to efficiency, productivity or profitability. Subsection (3) also sets out a non-exhaustive list of the retained direct EU legislation that may be modified under this power and is intended to encompass direct EU legislation made under the horizontal basic act, as well as certain ‘legacy regulations’, relating to Rural Development schemes established before 2014, which are listed in subsection (4).
135. Subsection 4 provides a non-exhaustive list of the ‘legacy regulations’ referred to in subsection (4).
136. Subsection (5) provides that regulations made under this section are to be subject to negative resolution procedure, unless section 50(5) applies, in which case the procedure is affirmative.

Section 15: Aid for fruit and vegetable Producer Organisations

137. Section 15 provides the Secretary of State with the powers to modify retained EU legislation on the EU Fruit and Vegetable Aid Scheme in England. This scheme provides financial aid to Producer Organisations recognised in the fruit and vegetable sector. The EU regulations underpinning the scheme will be converted into retained direct EU legislation, at the end of the transition period, through the European Union (Withdrawal) Act 2018. The intention is to introduce transitional provisions under section 50(3)(d) to allow approved operational programmes to run through to completion.
138. Subsection (1) will enable the Secretary of State to make regulations to ensure that the retained EU legislation (both the CMO and the related Delegated and Implementing Acts that sit underneath the CMO) which underpin the Fruit and Vegetable Aid Scheme), no longer applies in England.
139. Subsection (2) confirms that regulations made under this section are subject to the negative resolution procedure, unless section 50(5) applies, in which case the procedure is affirmative.

Section 16: Support for rural development

140. Section 16 provides the Secretary of State with the power to modify or repeal retained EU legislation relating to rural development in England. The power allows some existing rural development agreements to be extended with fewer restrictions, to be shortened and for agreements to be converted or adjusted into new agreements set up under Chapter 1 of this Act. It also allows the duration of the current Rural Development Programme for England to be extended and its budget to be increased and expressed in a currency other than Euros in the retained EU legislation. This section will not be used to introduce any new schemes, as they will be covered under section 1.

     Box 3: Pillar 2 Pillar 2 of the CAP is implemented through Rural Development programmes in each devolved administration. Rural development programmes provide rules and financing for grants and other forms of financial assistance and procured services for the farming, forestry and food sectors and to rural businesses and communities. The objectives of Rural Development programmes include improving economic performance, promoting economic development and improving the competitiveness of primary producers (through socio-economic schemes) and protecting and enhancing ecosystems relating to agriculture and forestry (through agri-environment schemes). The European Commission formally adopted the Rural Development Programme for England covering the 2014-2020 CAP round ("the RDPE") on 13 February 2015.

141. Subsection (1) enables the Secretary of State to modify the Rural Development basic act and retained direct EU legislation made under it for the purposes specified in relation to England.
142. Subsection (2) defines the "core contribution," which is referred to in subsection (1). It should be noted that there is currently no reference in the Rural Development basic act to the "core contribution". This will be inserted by the Rural Development (Amendment) (EU Exit) Regulations 2019, which are currently due to come into force on the Implementation Period completion day pursuant to paragraph 1 of Schedule 5 to the EU (Withdrawal Agreement) Act 2020.
143. Subsection (3) enables the Secretary of State to modify any retained direct EU legislation relating to support for rural development in England so that: the initial period for a commitment can be less than 5 years; restrictions on extending commitment periods can be removed; commitments can be converted or adjusted into new commitments under section 1 of the Act and; legislation can cease to have effect.
144. Subsection (4) gives a non-exhaustive list of the restrictions that may be removed in subsection (3)(b) in relation to extending commitments.
145. Subsection (5) enables the Secretary of State to modify the Common Provisions Regulation and retained direct EU legislation made under it to allow the payment deadline to be extended so that commitments can continue to be eligible for rural development support.
146. Subsections (6) provides definitions for terms used in subsections (1) to (5) in this section whilst subsection (7) provides a non-exhaustive definition for "the legacy regulations" which is referred to in subsection (6).
147. Subsection (8) states that regulations made under this section are subject to the negative resolution procedure, unless section 50(5) applies, in which case the procedure is affirmative.

Section 17: Continuing EU programmes: power to provide financial assistance

148. Section 17 enables the Secretary of State, the Welsh Ministers, the Scottish Ministers and DAERA to give financial assistance to existing rural development agreement holders and Producer Organisations under continuing EU programmes.
149. Subsection (1) sets out who is eligible to receive the financial assistance.
150. Subsection (2) provides definitions for the terms used in this section.

Section 18: Retained direct EU legislation

151. Section 18 provides that legislation relating to support for rural development, producer organisation aid, apiculture aid and agricultural promotions that has direct effect under the Withdrawal Agreement by virtue of section 7A of the EU (Withdrawal) Act 2018 in relation to existing EU programmes will also be retained direct EU legislation notwithstanding the effect of section 3(2)(a)(bi) of that Act.
152. Subsection (1) ensures that the relevant legislation provided for in this section will be retained direct EU legislation.
153. Subsection (2) sets out the EU regulations which will become retained direct EU legislation that relate to support for rural development.
154. Subsection (3) sets out the EU regulations which will become retained direct EU legislation that relate to producer organisation aid.
155. Subsection (4) sets out the EU regulations which will become retained direct EU legislation that relate to apiculture.
156. Subsection (5) sets out the horizontal regulations which will become retained direct EU legislation, to the extent that they relate to the support schemes described in subsection (1).
157. Subsection (6) sets out the EU regulations which will become retained direct EU legislation that relate to agricultural promotions.