WITH a payout rate of just 2.35 times the annual basic payment scheme payment and with an overall limit of £100,000, the Basic Payment Lump Sum scheme is never going to provide a sufficient amount of money on its own to assist people into retirement. However, as part of a portfolio of available resources it should help some particularly if it is possible to add to the scheme money a payment for the surrender of a tenancy, the sale of live and dead stock and other pension provision, says Farmer columnist, George Dunn, CEO of Tenant Farmers Association (TFA).

The scheme could be especially attractive to older, owner-occupiers with relatively small holdings and without available successors. In taking part in the scheme, DEFRA will allow retiring farmers to retain ownership of their land subject to granting a lease for a period of at least five years. They will also be able to continue living in the farmhouse and holding onto up to five percent or five ha of their land, which-ever is the smaller. However, DEFRA should be bolder in its aspiration by requiring these owner occupiers to offer tenancies of at least 10 years or more. With 90 percent of all new tenancies already lead for only five years or less, now is the chance to create more sustainable tenancy opportunities.

Another possible potential beneficiary are tenant farmers with rights of tenancy succession and who have eligible and suitable successors waiting in the wings. The scheme will allow the retiring tenant to participate with the successor taking on the holding. A slight problem in the scheme rules however is that in situations where farms have been run as a partnership, all partners must take the pledge to leave the industry. Very often, when succession is envisaged, the next generation are brought into the family partnership as a means of preparation. DEFRA must change its position such that younger partners, who have just been brought into the business in the past few years, can be exempt from the requirement to be no longer in farming.

Thirdly, another possibility is that older tenant farmers, either with lifetime agreements or without successors, might be attracted to take up the scheme, particularly if they are able to have a sensible negotiation with their landlord to obtain, alongside the scheme money, a sum of money to surrender the lease back to the owner. Landlords should not waste this opportunity. There are many who have been extremely keen to obtain the vacant possession of land that may have been held by generations of farm tenants. Disappointingly, there have been situations where landlords have sought to scale back offers for surrender previously made on the basis that the tenant will now be obtaining the benefit of the lump sum scheme. Landlords should not be greedy. The lump sum scheme is to assist individuals into retirement, not to line the back pockets of landowners to give them the option of a cheaper deal.

There will be many who will criticise the scheme, rightly or wrongly, for being too limited and too restrictive. However, where it can provide benefits we should all work together.