Fears grow of further budget pain for farmers

Concerns are mounting within the farming community as the government prepares for its spring spending review, which could further undermine support for UK agriculture.

Fears are growing that more financial pain may be coming for the sector, after the October 30 Budget revealed several measures that have angered farmers, including plans to reduce inheritance tax (IHT) relief for farms and drastic cuts to basic payments for English farmers in 2025.

See also: BPS cuts were ‘probably’ needed to save farming budget, says Bradshaw

Beleaguered farm businesses also face being hit with increasing national insurance (NI) costs for employers and punishing increases to the national minimum wage, forcing up costs again.

The autumn Budget “Red Book” hints at potential cuts to the farming budget.

It states: “The government is facing significant funding pressures on flood defences and farm schemes of almost £600m in 2024-25.

“While the government is meeting those commitments this year, it is necessary to review these plans from 2025-26 to ensure they are affordable.”

NFU president Tom Bradshaw expressed serious concerns to Farmers Weekly over Basic Payment Scheme (BPS) cuts for farmers in England this financial year, especially for those in the uplands, while their colleagues in Scotland and Wales will continue to receive full BPS payments.

Underspend lost

Mr Bradshaw said he also understood that only £200m of the £358m Defra underspend under the previous Conservative government would be rolled over into the next financial year.

He added: “My bigger fear is we don’t have a ring-fenced budget for the following financial period. What happens with the next spending review? There is a lot of ­uncertainty.”

While Mr Bradshaw gave some credit to the new Defra ministers for at least avoiding cuts to the overall budget for England, he suggested this had only been achieved by agreeing to savage cuts in delinked payments for 2025.

He told this week’s Egg and Poultry Industry Conference: “In reality, that was probably the deal that had to be done to secure the budget in the first place.”

George Dunn, chief executive of the Tenant Farmers Association (TFA), warned that given the government’s “radical approach” to IHT reforms, farmers should prepare for more difficult news next spring.

“We will be carefully looking at how things pan out for the farm budget as we head towards next year’s announcements,” he added.

The TFA continues to advise farmers to engage with the Sustainable Farming Incentive (SFI) to secure their payments for the next three years, regardless of any future budget cuts.

‘Difficult decisions’ – Zeichner

Defra farming minister Daniel Zeichner told Farmers Weekly his government had inherited a “really difficult budgetary decision” from the previous Conservative government.

Asked whether farmers could expect further funding cuts in the spring spending review, Mr Zeichner said: “There are going to continue to be difficult decisions we have to make, and that is because of the decisions the Conservatives and Liberal Democrats made in 2010 to plunge this country into a decade of austerity.

“But our choice is different.”

Liberal Democrat rural affairs spokesman Tim Farron responded, saying: “For far too long, farming communities have been left struggling to cope as their costs continue to rise.

“The government must act now, and back British farmers and support our call for an extra £1bn boost or risk the next generation of farmers.”