Defra indicates spending review pivotal to future of SFI

The future rollout of the Sustainable Farming Incentive (SFI) hinges on the upcoming spending review, Defra officials told a meeting of the Environment, Food and Rural Affairs (Efra) select committee on Tuesday (14 January).

Officials indicated that, while the budget is not under threat at the moment, they will be keeping a close eye on application rates.

So far, 11,000 applications for SFI 2024 have been submitted, with about 7,000 contracts offered.

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Industry concerns around funding have been exacerbated, as Defra closed applications for new capital grants overnight in 2024 as pressure on budget lines tightened.

“We had to pause handling new applications,” said Emily Miles, director-general for food, biosecurity and trade at Defra.

“As an indication of scale, in 2022-23, we received 2,600 capital grants applications, worth about £34m.

“This [financial] year, between May and November, we had more than 8,000 applications worth about £382m.

“The scale of uptake has gone up significantly and caused pressure on that budget line.

“It is just a pause and doesn’t mean it’s closed forever.

“We have to think how we take that forward into the next financial year.”

Underspend

Concerns were also raised by MPs on the Efra committee about how the department might address any underspend, as has happened in the past three years.

The Defra officials, however, were more concerned about budget running low and keeping the SFI open for applications.

“We’re receiving about 600 [SFI] applications a week at the moment,” said Ms Miles. 

“We’ve got about 11,000 applications submitted at the moment and 7,000 contracts offered.

“If that continues at that scale, there may come a point where the budget comes under pressure and we have to consider taking action.

“At the moment, we’re OK, but we’re keeping a close eye on it.”

Asked how confident Defra was that they will be able to meet spending commitments in the next financial year, permanent secretary Tamara Finkelstein said: “We’re preparing for the spending review that will happen in June, which will give us certainty over the following years in the department.

“We’ve got to look across all our budgets and be prepared for the spending review, which can take a zero approach to all of our strands of funding.

“We will be looking right across the department at the efficiencies we need to drive,” Dame Tamara added.