Regulations to reduce farmers’ delinked payments for 2025

Approximate read time: 15 minutes

1. Introduction

On 30 April 2025 the House of Lords is scheduled to consider the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025. The regulations would set the percentage reductions to be applied to delinked payments to farmers in England for 2025. These are a form of direct payment to farmers, as explained in more detail in section 2 below.

The regulations are a statutory instrument subject to the draft affirmative procedure.^[1] They must be approved by both Houses of Parliament before they can become law. The House of Commons approved the instrument on 31 March 2025 by 296 votes to 164.^[2]

The House of Lords is due to consider a government motion to approve the instrument on 30 April 2025. However, Baroness Grender (Liberal Democrat) has tabled a motion calling on the House not to approve the regulations. It reads:

[…] this House declines to approve the draft regulations as they accelerate the reduction of delinked payments made to British farmers; regrets the failure to establish alternative funding schemes; and calls on the government to reinstate applications to the sustainable farming incentive scheme.

If agreed, this motion would prevent the regulations becoming law. ’Decline to approve’ motions are sometimes referred to as ‘fatal’ motions. Baroness Grender is her party’s spokesperson on environment, food and rural affairs issues in the House of Lords.

In addition, a ‘regret motion’ has been tabled by Lord Roborough (Conservative), which would instead signal the House’s opposition to the regulations without stopping them becoming law. His motion reads:

[…] this House regrets that they reduce the delinked payments to farmers at a faster rate than previously expected, undermining the viability of farm businesses and harming rural communities.

Lord Roborough is a shadow minister in the House of Lords.

2. Information on the regulations

2.1 Explanation of delinked payments

Delinked payments are direct payments to farmers introduced in 2024 as a replacement for the ‘Basic payment scheme’ (BPS).^[3] The BPS provided direct payments to farmers between 2015 and 2023. The BPS’s introduction was linked to reforms made to the provision of payments under the ‘EU common agricultural policy’ (CAP).^[4]

Full information on how delinked payments are calculated can be found on the government’s website.^[5]However, the regulations’ explanatory memorandum (EM) gave the following overview:

Delinked payments are not based on having land, keeping animals or delivering environmental outcomes. Instead, the delinked payment for each year is based on a reference amount, calculated by reference to the recipient’s historic BPS payments.^[6]

The EM also explained it is government policy that these direct payments are phased out. It said this was part of plans to move on from the old CAP system and would allow funding to be spent on more focused support. It stated:

As part of the move away from the common agricultural policy, Defra [the Department for Environment, Food and Rural Affairs] has been phasing out direct payments in England. It has been doing this over an agricultural transition period (2021 to 2027), as provided for in the Agriculture Act 2020. Defra applied reductions to direct payments to farmers under the BPS in England for the 2021 to 2023 claim years and to delinked payments in 2024. Delinked payments are a simpler type of payment which replaced the BPS in England in 2024. The government is committed to continuing to phase out delinked payments by the end of the agricultural transition period.

Phasing out delinked payments frees up money to be spent on other schemes for farmers and land managers in England. The government considers that these other schemes will better support farmers to protect and enhance our natural environment, support the sustainable production of food, and boost farm productivity and resilience. These other schemes offer funding for all farm types, including small, grassland, upland and tenanted farms […]

Defra is applying percentage reductions to these payments each year as it phases them out. The reductions that were applied to the 2024 payments were set by the Agriculture (Delinked Payments) (Reductions) (England) Regulations 2024 (SI 2024/691).^[7]

Information on government funding available to farmers is set out in the departmental guidance on ‘Funding for farmers, growers and land managers’ and in the House of Commons Library briefing, ‘New approaches to farm funding in England’ (28 May 2024).

Funding includes grants, including for farming machinery, woodland improvements and animal welfare, and payments available through the environmental land management schemes.^[8] However, Defra announced the ‘Sustainable farming incentive’ (SFI) scheme, one of the main environmental land management schemes, was closing for applications in March 2025 as it had reached the scheme’s budget cap.^[9] Defra provided updates on what this meant to current applicants and said details on a revised scheme would be provided in the summer of 2025:

A reformed SFI scheme, with a budget to be confirmed in the spending review this summer, will direct funding where there is greatest potential to do more on nature and where there is the least ability to access decent returns from agricultural markets, or other sources of investment, as set out in the land use framework.^[10]

As a result, at the time of writing, the departmental guidance on ‘Funding for farmers, growers and land managers’ did not list any of the environmental land management schemes as open to applications.

In addition, details on how the government’s £5bn package of financial support for farmers has been allocated for 2024/25 and 2025/26 can be found on the government webpage ‘Update on the farming budget’ (12 March 2025). This shows the different levels of funding allocated across grants and schemes. The SFI’s allocation was £1.05bn

2.2 Reductions proposed to delinked payments

The regulations set out how the 2025 reductions to delinked payments will operate. The EM explained:

The reductions to 2025 delinked payments will be applied in payment bands, with the highest percentage reduction applied to amounts falling within the highest payment band. This is a method known as progressive reductions. This method was also used to apply reductions to BPS payments for the 2021 to 2023 claim years and to delinked payments in 2024.

This instrument applies a reduction of 76% to the first £30,000 of a payment and a 100% reduction to the portion of a payment which is above £30,000. 80% of the 82,000 delinked payment recipients will have payment amounts, before reductions are applied, which are £30,000 or less. This means these recipients will have their payment reduced by 76%. For 2024, these recipients had their payment reduced by 50%.^[11]

The EM acknowledged that the reductions for 2025 were bigger than those for 2024.^[12] It said this was because of the government’s continuing commitment to phase out direct payments and also due to increased demand from farmers for the environmental land management schemes, which it said were partly funded by the money saved on reducing delinked payments.

The EM also set out information on consultations run by the previous Conservative government on reducing direct payments to farmers and the government’s reasoning for not issuing an impact assessment alongside the current regulations.

3. Parliamentary scrutiny of the regulations

The House of Lords Secondary Legislation Scrutiny Committee highlighted the regulations as an “instrument of interest” in its 27 February 2025 report.^[13] It did not, however, draw the instrument to the special attention of the House.

In its report’s section on the regulations, the committee highlighted the background and operation of the provisions and Defra’s proposed intention to re-invest the savings “in full” into the other schemes for farmers and land managers in England, within an overall farming budget of £2.4bn for 2025/26.^[14]

Daniel Zeichner, the minister for food security and rural affairs, emphasised Defra’s financial support in the House of Commons delegated legislation committee debate on the regulations. He said the government had committed £5bn to the farming budget over a two-year period, also highlighting the £2.4bn planned for 2025/26.^[15]

Providing further details on the support being offered, Mr Zeichner outlined:^[16]

• £1.8bn allocated by the government for 2025/26 for the environmental land management schemes. He said record numbers of farmers and more than half of all farmed land in England were now in these schemes. He also stressed that more information on the government’s plan for the SFI would be published in summer 2025.
• Support being provided through the new countryside stewardship higher tier offer (which he said would open for applications in summer 2025), increased payment rates for the higher-level stewardship options, and by extending the farming in protected landscapes programme until March 2026.
• Investment in other available grants, including up to £47mn for farming equipment and technology fund grants and £63mn available for farming innovation programme grants.

Mr Zeichner said all of this was part of the government’s commitment to move towards more targeted funding for farmers and away from direct payments, such as the delinked payments model.^[17] He claimed delinked payments did not offer value for farmers or the taxpayer, describing direct payments as “payouts to large and wealthy landowners simply for owning land”. However, he said the government did recognise the potential impact on farmers and was therefore trying to achieve the transition in the fairest way possible. He explained:

We are applying the reductions in payment bands in the same way as the income tax bands work, which means that those with the broadest shoulders will see the highest reductions.^[18]

Mr Zeichner closed his speech by setting out how the changes linked to the government’s general position on supporting farming:

By investing in healthy soils, abundant pollinators and clean water, the government is investing in the foundations that farm businesses rely on to produce high crop yields and turn a profit. Adopting the sustainable farming practices rewarded under our schemes will also help farmers to reduce their input costs. Reducing delinked payments as planned enables us to make those investments through our other schemes. That will serve the best long-term interests of farming. We are also developing a 25-year farming road map to make the sector more profitable in the decades to come. As we set out in our “Plan for change”, we are focused on supporting farmers, supporting rural economic growth and boosting Britain’s food security.^[19]

Robbie Moore, the shadow minister for environment, food and rural affairs, was highly critical of the changes.^[20] He acknowledged the direction of the policy to taper down direct payments had been started by the previous Conservative government, but said the 2025 reductions proposed by the regulations were “significantly” more severe than expected. He added this had caught the farming industry off-guard and would increase the economic difficulties currently felt across the industry. He stated:

Slashing the payments without warning ahead of the expected timeframe has thrown thousands of farming businesses across the country into disarray and forced [them] to reconsider their financial position and many of the ongoing projects and investments on the farm.^[21]

Mr Moore also highlighted the recent closure of the SFI scheme as a particular issue. He noted that the EM had outlined the government’s hope the changes would increase demand for environmental land management schemes, but there was currently no way to apply.^[22] He said this had left many farmers and their applications in flux. He continued:

The idea of SFI, and public services for public goods, is the right one. The changes we are discussing today would be understandable had they been announced alongside a massive increase in the SFI offering to make up the difference in the shortfall.^[23]

He said more information was needed on the future of the SFI, such as when the scheme would reopen and whether it would be altered in any way. In addition, he questioned how the money saved through the reductions in delinked payments would be used.

Mr Moore argued all of this was increasing pressure on farmers and did not demonstrate the government’s support for them.^[24] He therefore said his party would be voting against the regulations. He also criticised the government for not issuing an impact assessment alongside the proposed changes.

Tim Farron, the Liberal Democrats’ spokesperson, was also critical of the proposed changes and the lack of an impact assessment.^[25] Although he generally backed the transition away from direct payments and towards the environmental land management schemes, he said the transition and the timings of the reductions had been handled badly. He claimed this was particularly affecting smaller or disadvantaged farmers. He continued:

My concern is that we are now being asked to vote for the hastening of something that is already doing huge damage to the sector. A 76% cut to the basic payment in one fell swoop will be crippling for many farmers, particularly those who are not yet inside the other agri-environment schemes, particularly SFI. I worry about tenant farmers in my constituency and around the country. That money was probably paying the rent this year.^[26]

Mr Farron also expressed concerns about the impact on the country’s food security, particularly if farms have to close. He concluded:

I will also vote against the motion for all the reasons that have been set out. There is a way forward for farmers, if this government takes food security seriously and seeks to deliver public money for public goods, as was promised at the beginning of this process.^[27]

The minister, Daniel Zeichner, concluded the debate by defending the policy.^[28] He said it represented a change to how the money is distributed and said the closure of the SFI scheme, due to reaching the financial cap, showed it was a success. He then stressed:

Reductions in the 2025 delinked payments are necessary so that we can fund our committed and planned spend under our other farming schemes, which support sustainable food production, exactly as I have laid out, including meeting the unprecedented demand for capital grants, which will reopen in a few months’ time. The money released from the reductions to delinked payments is being fully reinvested through our other schemes. I reiterate that every penny is staying within the sector.^[29]

The committee voted in support of the regulations by 11 votes to 5.^[30]

4. Further information

Farmers and farming organisations have expressed concern about the changes, particularly in light of the current closure of the SFI. For example, the National Farmers’ Union has been highly critical of Defra’s closure of the SFI scheme alongside the announced delinked payment reductions.^[31]

Further material and statistics on the subject can be found in:

• Department for Environment, Food and Rural Affairs, ‘Future of farming in England’, 17 April 2025
• Department for Environment, Food and Rural Affairs, ‘Farm business income by type of farm in England 2023/24’, 11 March 2025
• House of Commons Library, ‘Debate on the future of farming’, 12 March 2025
• Debate on ‘Farming’, HC Hansard, 13 March 2025, cols 1318–52

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