Disconnect in government sends contradictory signals to farmers on budget

This year’s Pre-Budget Report comes with a nasty sting in the tail for many farmers and growers, the NFU said today.

The discount obtained by some farming businesses participating in Climate Change Agreements from the Climate Change Levy (CCL) will be reduced from 80 per cent to 65 per cent, while it was also announced that £92 million of savings will be generated through “more cost-effective management and efficient use of the Rural Development Programme for England”.

NFU President Peter Kendall said: “The change in the Climate Change Levy relief is a kick in the teeth for our horticulturalists and pig and poultry farmers who are captured by the levy. They have worked hard to reduce emissions and have received scant recognition or financial support for their efforts. This announcement will have a significant negative impact on these businesses which previously could have claimed up to 80 per cent relief for investments in energy-saving equipment and processes.

“But what makes this worse is the contradictory signal it sends when you have a desire from Defra to assist the farming sector to meet the challenge of climate change on the one hand and a decision by the Treasury which will discourage farmers and growers from participating in a scheme that has helped businesses reduce their environmental impacts on the other.

“When the CCL was introduced it was on the basis that it was neutral for the economy as a whole - the new levy was offset by a reduction in National Insurance. This change in the levy breaks the promises it was established on. To make matters worse, there is actually an increase in NI contributions at the same time. The pig, poultry and horticulture sectors are big employers, as well as being subject to the CCL, so they will effectively suffer a double whammy.”


The claim that the Treasury intends to find £92 million through “more cost-effective management and efficient use of the RDPE” in fact amounts to a decision to cut some of the national co-financing for agri-environment schemes while drawing down additional EU rural development funding made available due to the weak Pound. The NFU believes that this support should have been made available to more vulnerable farmers or go to English farmers and growers to help them become more competitive and tackle climate change.

Mr Kendall said: “Farmers in Scotland have recently heard that the sustained weakness in the Pound will lead to a £10m annual increase in LFA support. They will benefit from the weakness of the Pound; similarly disadvantaged farmers in England will get nothing. What makes matters worse is that when the NFU has made enquiries about the potential windfall that might come from the weak Pound to RDPE, Defra has persistently told us that new money would not be available. This proves that it has and it has been used to line the Treasury’s coffers.

“The RDPE is small in comparison with many other EU countries. There would have been exciting opportunities to spend at least some of the extra money on helping our farmers become more competitive, encouraging innovation, and mitigating climate change. I am extremely disappointed that this opportunity has been missed.

“What both these examples show is yet another example of government disconnect. We need to see farmers investing more to meet the challenges of growing demand for food, climate change and protecting natural resources. Defra agrees. But both these decisions by the Chancellor work against this ambition.” 
 

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