Labour is cutting the farming budget in England by £100m a year, spending review figures show.
Despite the decrease, the budget has been cautiously welcomed by nature and farming groups, as there were fears the Treasury had wanted to reduce the funding further.
Farmers have felt squeezed by the Labour government’s policies over recent months, with mass protests over the introduction of inheritance tax on farms worth more than £1m. Extreme weather and rising input prices have increased financial pressures on the sector, which has meant that a cut to the budget could have serious impacts.
Ministers have also indicated that larger farms could be ineligible for the nature-friendly farming fund in future. The Department for Environment, Food and Rural Affairs was recently forced to U-turn on a freeze to new applicants for the fund after the National Farmers’ Union (NFU) threatened legal action.
Previous research by the RSPB has found that a £100m a year cut would lead to 239,000 fewer hectares (590,580 acres) of nature-friendly farmland.
Defra said the funding paid to farmers under of environment land management schemes (Elms) would “skyrocket” from £800m in 2023-24 to £2bn in 2028-29. However, the NFU has called this “misleading” because after Brexit, farmers were promised that their subsidies would be the same as they were under the EU and were promised a figure of £2.4bn a year.
The Elms programme was devised by the conservatives after Brexit: the goal was that rather than being paid per acre, farmers should be paid for improving nature. While the programme was being put in place,the acreage payments known as basic payments schemes (BPS) were kept, and cut each year as Elms increased. BPS is due to be phased out entirely by 2028. Farmers currently get the £2.4bn a year in the two streams as well as a smaller amount of money in grants for things such as robotics trials.
Going forward, the government has promised an average of £2.3bn a year up to 2028-29 for the farming budget. By the end of the spending period the budget will shrink to £2.25bn, with £2bn allocated for Elms and the rest paid in productivity grants.
Sanjay Dhanda, the NFU’s senior economist, has said Defra has been “misleading” in its claims.
He said: “A key pillar of Defra’s budget is the continued investment in Elms, with funding set to rise to £2bn by 2028-29, compared with the £1.8bn earmarked in the autumn 2024 budget. While the government has framed this as a significant uplift from the £800m spent in 2023-24, this comparison is misleading as Elms was not fully operational at that point, and delinked payments [BPS] absorbed a large share of funding.”
However, Defra sources pointed out that although the previous government allocated £2.4bn a year for Elms, the Tories in fact underspent it by about £100m a year. That government had, however, promised that by the end of the spending period, which was cut short by the general election, the full fund was ringfenced and would be allocated to farmers.
Tom Bradshaw, the NFU president, said: “While the Defra secretary of state has listened and managed to maintain the overall funding for farming and nature recovery, from what we can see so far, the £100m cut to farming means farmers and growers will need to do more with less.”
Mark Spencer, a former farming minister who was in charge of issuing the farming budget, said the amount spent on Elms would have been higher than £2bn at the end of the spending period, under the Tories.
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“The 2.4bn was meant for Elms. It was always our intention and emphasis to reduce BPS and pour the money into Elms and for the vast majority of it to go to Elms,” he said.
Reacting to the cut, Spencer added: “A part of me is angry, a part of me is just so sad. We made such huge progress and now it is in jeopardy.”
Nature groups have credited Steve Reed, the environment secretary, for protecting most of the budget.
Hilary McGrady, the director general of the National Trust, said the chancellor Rachel Reeves had maintained the budget for nature-friendly farming, adding: “Steve Reed deserves credit for securing this budget in challenging financial circumstances.”
A Defra spokesperson said: “Contrary to media reports that the farming budget would be slashed by £1.2bn over the next three years, the government is investing a record £5.9bn into nature friendly farming schemes.”
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