Food and farming groups have offered a cautious welcome to Wednesday’s Treasury spending review, which avoided significant cuts to Defra’s total expenditure.
The department was handed a £2.7bn annual settlement for sustainable farming and nature recovery from 2026/27 until 2028/29 in Rachel Reeves’ review – similar to previous budgets.
Farmers would benefit from an average of £2.3bn through Defra’s Farming and Countryside Programme and up to £400m from additional nature schemes, the Treasury said. This would “boost productivity and protect the natural ecosystems underpinning food production and broader economic activity, supporting food and economic security”, it added.
However, the settlement amounted to a real-terms cut of 2.7% by the end of this parliament, with the NFU pointing to a £100m cut to farming and countryside programmes such as the Sustainable Farming Incentive, Countryside Stewardship, Landscape Recovery and capital grants.
Further detail on how this would impact specific programmes is expected to be announced by Defra in due course. But it comes as the agriculture budget “has already been eroded over the past decade by inflation, significantly reducing its spending power”, the NFU said.
The Chancellor additionally “failed to reverse the devastating family farm tax [or controversial changes to Inheritance Tax liabilities] which will mean many farming families continue to be left in the lurch, unable to afford the future tax bill”, the union added.
“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,” suggested NFU president Tom Bradshaw.
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“The devil will be in the detail. And it’s essential that the Environmental Land Management schemes will be accessible for all farmers to get involved,”
Bradshaw also took aim at Reeves’ speech, which proclaimed the government “cares about where things are made and who makes them”.
“But British farmers and growers haven’t felt this applies to them, and their confidence has been battered by constantly moving policy goalposts, global volatility and unpredictable climate events,” he added.
“It’s also incredibly disappointing that the chancellor didn’t take this opportunity to do the right thing on the family farm tax, especially when farmers and growers are the working people of Britain, the same people this government claims it wants to see thrive.”
Many farmers would be “breathing a sigh of relief” with the overall settlement, said Country Land and Business Association president Victoria Vyvyan.
But it was “clear that government still has not fully understood the consequences of its anti-business policies. Taxes are going up, jobs are being lost and investment in the rural economy is crumbling”, she warned.
In many ways, the spending review “could have been much worse for the food and drink system”, added James Walton, chief economist at the IGD.
Defra had seen real-terms cuts to spending, but not to the degree that some feared. Increased government investment in energy, roads and Health was “clearly a good thing, if executed with speed and skill”, he said.
“However, the key part of the story that is currently missing is how future spending will be paid for,” he warned. “Budget 2025 will need to provide a credible, detailed and sustainable plan for raising funds.”
And as a result, the IGD “anticipates that most households in the UK will remain under financial pressure for some time to come, with pressure increasingly coming from taxes not inflation”, Walton suggested. “This means that we expect most shoppers to remain value-focused and cautious when approaching the food and drink shop.”
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