Earlier this week, Defra published a high-level breakdown of its budget as part of the Chancellor's Spending Review.
The department confirmed cuts to delinked payments in 2026 and 2027 which will result in a maximum payment of £600 – a further significant reduction from the £7,200 maximum payment available in 2025 following announcements made in the Autumn 2024 budget.
NFU Deputy President David Exwood has criticised the news: “Having had significant reductions to delinked payments announced only last autumn in the Budget, to have further big reductions starting next year will be yet another financial blow to many farmers who haven’t had the time to effectively plan for them.
“Defra has committed to making the savings from these payments available to farmers so they can deliver the government’s environmental targets and invest in sustainable food production. We now need clarity on how this funding will be used, particularly with the current closure of the Sustainable Farming Incentive to new applicants. When SFI fully reopens, it’s vital that the scheme is accessible to all farmers to unlock investment and productivity and prevent ongoing cashflow pressures which are hindering progress.
“While farmers finally have certainty over what payments they will be receiving, they need to know that they can access the funding saved from these reductions so they can plan ahead.”
What's happened so far
Delinked payments replaced BPS in England under the agricultural transition scheme, with BPS ending in 2023.
Following the October Budget in 2024, Defra said it would be accelerating the end of the direct payment phaseout, and prioritising directing investment towards its ELM schemes.
Delinked payments were always planned to be reduced progressively through to 2027. In 2024, reductions were 50% for the lowest payment band, increasing to 70% for amounts in the highest payment band.
“To have further big reductions starting next year will be yet another financial blow to many farmers who haven’t had the time to effectively plan for them.”
NFU Deputy President David Exwood
For 2025, Defra is applying a 76% reduction to the first £30,000 of a payment, while making no payments for any portion of a payment above £30,000. These payments will be issued from 1 August 2025 onwards as a single instalment.
For 2026 and 2027 Defra will:
- Apply a 98% reduction to the first £30,000 of any delinked payment (the maximum payment now being £600).
- An amount above £30,000 will be reduced by 100%.
- The RPA will calculate the reductions using the farmer’s reference amount (based on average of BPS 2020-2022 and not the value of their 2025 payment).
The RPA will write out to farmers in due course to explain the position.
