Blog: Concerns over Budget 2024 and its implications for British agriculture
A week on from the Labour Government's first Budget on 30 October, the Agricultural Industries Confederation's (AIC) Head of Policy and External Affairs Ed Barker sets out a series of concerns over the potential implications for the agricultural industry.
Following the publication of the 2024 Budget, AIC is concerned by the combination of proposals that will stifle productivity and inward investment into British agriculture and its allied supply sectors.
As the UK agricultural supply industry's leading trade association, AIC represents more than 230 businesses in key sectors within the supply chains that feed the nation.
Our Member businesses supply UK farmers and growers with the animal feed, fertiliser, seed, crop protection products, trusted advice and quality services that are essential to producing food, as well as trading crops and commodities across the globe.
While AIC welcomes the Government's overarching ambition to drive economic growth throughout the UK, it is concerning to see the tax burden mounting at a time when agricultural supply businesses need the confidence to invest in infrastructure and boost productivity.
Delinked payments in England
AIC notes with concern the speed at which 'delinked' (former Common Agricultural Policy/Basic Payment Scheme) payments will be cut, with all payments in 2025 capped at £7,200.
Since 2019, all BPS payments have had their payment reduced on a linear scale, until a full phase-out in 2028, which has helped provide longer-term clarity and predictability.
Many farms will now be facing a shortfall in income of 50% or more, for which they had not budgeted at the start of this 2024/25 farming year.
AIC is calling for the Government to urgently explain how the money that has been removed from delinked payments can be made available to farmers via other environmental or productivity schemes, in order to avert a cashflow crisis for many farming businesses and the wider agri-supply sector.
In addition, AIC is calling for a full impact analysis to show how this will affect farm businesses.
Agricultural and Business Property Relief
Proposals to lower rates of Agricultural and Business Property Relief (APR/BPR) have understandably been met with alarm by AIC businesses and their farming customers.
Many family farming businesses will exceed the £1 million rates of APR or BPR set by the Chancellor, and an implementation date of 18 months will not be enough time to prepare.
AIC is calling on the Government to pause this proposal and engage in a comprehensive review process with the industry as to both reliefs' wider application.
AIC welcomed one of the Environment Secretary Steve Reed MP's priorities back in July, to instil more confidence in the farming sector. So far this proposal, and the way it has been implemented, has had the opposite effect.
Other Budget implications
- The proposal for National Insurance contributions to be increased to 15% and the threshold at which some businesses begin to pay this will be lowered, is an immediate cost pressure on companies. AIC Members have already stated that this measure will prevent inward investment, job creation or wage growth.
- We welcome a new Trade Strategy to be announced in 2025 and hope this will be an opportunity to join up business trade needs with Government support properly.
- Measures to change the application of double cab pickups as cars for capital allowances and benefits in kind will see additional costs of circa £5,000 per employee. These vehicles are integral for many farming and rural businesses and AIC is urgently calling for a reversal of this measure, after having already been reversed once in 2024.
- With a Carbon Border Adjustment Mechanism (CBAM) confirmed to include the fertiliser sector, the Government needs to be clear as to the possible impacts on the wider food and farming supply chain. Based on the information in the original consultation, a CBAM on fertiliser equates to approximately £1 additional cost per tonne product for each £1 increase in the cost of carbon. At today's prices, this is equivalent to approximately £36-40 per tonne.
- An additional £6 million funding for the Food Standards Agency (FSA) is very welcome. Industry urgently needs the FSA to deliver on its pledge to speed up regulatory approval processes for novel foods and feed additives, as we as ensuring it is able to maximise the full benefits of the Precision Breeding Act. AIC is now calling on the Government to release its much-anticipated Land Use Framework, in addition to providing clarity on wider land use pressures in our food and farming businesses.
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