Westminster is again talking about family farms after an analysis published by the Confederation of British Industry’s Economics Consultancy (“CBI Economics”) has revalued the anticipated tax yield of proposed changes to APR and BPR and the Department for Environment Food and Rural Affairs (“DEFRA”) is reconsidering the distribution of the Environmental Land Management (“ELM”) fund. In this article, Nicholas Thompson, a Trainee Solicitor, summarises present discussions.
At the City Food and Drink Lecture 2025 on 11 March, following John Shropshire’s key-note speech Preparing to Farm for 2040 with Success, HRH The Princess Royal (as Past Prime-warden of the Worshipful Company of Fishmongers; Past Master of the Worshipful Company of Farmers; and Past Master of the Worshipful Company of Butchers) spoke about the need to change perceptions of the farming industry to recognise the range of professional careers reliant on the sector and improve understanding of recent adaptations in seasonality, foreign produce types, logistics, and customer relations. Unfortunately, the Chancellor’s Autumn Budget and Spring Statement do not appear to have encouraged the investment and jobs growth which would be required to achieve these ambitions for British agriculture.
Proposed changes to APR and BPR (discussed here: RIP British Farming? - What is agricultural property anyway? Solicitors in Westminster - Lee Bolton Monier Williams and Tractor Tax - What is business property anyway? Solicitors in Westminster - Lee Bolton Monier Williams) were initially estimated by HM Treasury eight months ago to raise £1.8 billion in additional taxes. This was based on a presumption, as yet unachieved, that the economy would grow significantly following the Autumn ‘Growth’ Budget. CBI Economics have recently published new analysis which shows that the slow-down of the economy following a lack of investment and jobs means the proposed APR and BPR changes will cost HM Treasury £1.9 billion by 2030. The President of the National Farmers’ Union (“NFU”), Tom Bradshaw, responded by characterising the analysis as a “wake-up call to Treasury” and heralding further “major costs to investment and significant job losses” if the situation for farmers is not improved.
Unfortunately, rather than looking to improve the situation, it has been reported Government is considering cancelling ELM payments. Sir Robert Goodwill, the former Chair of the Commons Environment Food and Rural Affairs (“EFRA”) Committee, noted, “For many farms their profit line is less than the support they get.” NFU figures show 40,000 farms presently claim ELM subsidies and the NFU Policy Director, Andrew Clark, fears, “a significant risk that thousands of family farm businesses would be at risk if this scheme were axed.” The £2.5 billion per annum ELM fund was introduced to replace the £2.6 billion per annum funding British farmers formerly received from the European Union’s common agricultural policy. ELM’s allocation of subsidies differs from the European Union’s scheme as, whereas the European scheme links payments to food production outcomes, ELM payments are based on nature-friendly cultivation. Government is committed to ELM payments only until next year, after which time, Westminster sources suggest, only ‘small farms’ will gain the subsidy. We note that ‘small farms’ remains an undefined term.
Alistair Carmichael MP, Present Chair of Commons EFRA Committee, considered the removal of ELM subsidies the “final blow for many farms.” He elaborated on this point saying,
“Since Labour came to power, they have had basic payments ended earlier than planned, they have seen the shambles of the sustainable farming incentive closed without notice – all on top of the family farm tax and other tax changes – and trade deals that could be devastating for some farming sectors. No matter where farmers turn, there is a Government minister wanting to clobber them. Keir Starmer says that food security is national security, but if he treated our security services like he treats our farmers we would all be learning Russian or Chinese.”
Victoria Atkins MP, Shadow Secretary of State for Environment, Food and Rural Affairs, added to discourse concerning the links between certainty in agricultural policy and food security, stating, “Labour’s lack of understanding about our rural communities is putting our nation’s food security at risk.” Food security has been at the forefront of the NFU’s campaign to save family farming.
Outside of food security discussion, Tom Bradshaw noted that, given ELM subsidies are not linked to food production but environmental concerns, scrapping ELM subsidies, “will be another blow not just for farmers and growers but also for the viability of nature-friendly farming and for the environment.” British agriculture has been, rightly, heralded as a champion of extensive rather than potentially more profitable intensive farming methods. To remove Government support for nature-friendly cultivation could have a detrimental effect on the viability not only of family farms but also of environment-conscious management of the British countryside.
ELM subsidies cover three key areas:
- the Sustainable Farming Incentive (“SFI”) pays farmers to adopt and maintain sustainable farming practices that can protect and enhance the natural environment alongside food production, and also support farm productivity (including by improving animal health and welfare, optimising the use of inputs and making better use of natural resources);
- Countryside Stewardship (“CS”) pays for targeted activity in specific locations, features and habitats. Additionally, CS Plus incentivises land managers to join-up locally to deliver bigger and better results; and
- Landscape Recovery (“LR”) supports bespoke, longer-term, larger scale projects to enhance the natural environment.
Without funding, the above types of projects are unlikely to be considered viable, let alone enacted on a meaningful scale. This would significantly impact Britain’s natural environment and ability to maintain its market share in competition with foreign producers. HM Treasury’s reported consideration of cutting ELM subsidies is therefore a drastic step which suggests that amendments to the proposed APR and BPR changes are unlikely to be forthcoming. It is therefore imperative that all agricultural estate planning is reviewed in preparation for the changes coming into effect in the form they were originally proposed.
If this affects you or your family, we would be happy to assist with legal advice regarding subsidies and reliefs currently available and estate planning measures which might be taken now. We can advise anyone who may need to update their existing Will, or make one for the first time, in order to ensure their estate planning is up to date. A professionally drawn Will alongside an estate planning strategy, both updated at regular intervals, is always advisable to minimise the risk of falling foul of changes to legislation.
Please contact Catherine Pugsley or Nicholas Thompson on 0207 222 5381 to discuss this further.