In today’s Budget (11 March) Chancellor Rishi Sunak said while he would “abolish the tax relief for most sectors” agriculture would keep it for red diesel alongside the rail and fishing industries.
Changes to this duty could have virtually doubled fuel costs for farmers across the region.
The NFU is also pleased to see a commitment on investment in flood prevention, additional funding to tackle fly-tipping and support in the wake of the coronavirus for small businesses, which were among other measures outlined by the Chancellor.
NFU President Minette Batters had previously urged Government to keep the lower red diesel rate to allow farm businesses to remain competitive and said the use of the fuel remained “absolutely crucial to farm businesses and maintaining food production”.
During The Budget the Chancellor said: “It’s been a £2.4 billion tax break for pollution that has also hindered the development of cleaner alternatives, so I will abolish the tax relief for most sectors, that’s the right thing to do but I recognise it will be a big change for some industries.
“So firstly, this change will not take affect for two years giving business time to prepare, secondly I have heard the concerns about agriculture particularly from the NFU, rural colleagues and indeed my right honourable colleague the member for Sherwood, so I have decided that agriculture will retain the relief.
“I will also keep the relief for rail, for domestic heating and there will be no impact on fishing, we will consult over the summer with other sectors. “
David Hall, NFU North West regional director, had previously called for a range of measures to help farm businesses remain viable during the transition away from the European Union.
He said: “On the face of it, this Budget seems positive for the region’s farmers and growers and we will be looking at it in more detail.
“We are pleased about tax relief on red diesel as there has been quite a lot said on this in recent weeks, while we have been busy lobbing Government in the background.
“Changes to this duty could have virtually doubled fuel costs for farmers and, with no current alternative fuel for agricultural vehicles, this would have left farms immediately uncompetitive with many other countries who continue to provide lower fuel duty for their agricultural industries.
“We are also really pleased to see the increase of £5.2 billion into flood defences, particularly the £120 million for the repair of damages caused by this winter’s storms.
“It’s crucial a significant chunk of this is spent on helping repair defences in rural areas.
“I hope this Budget signals a period of sustained support from Government given the difficulties over the past few months for our members with the weather and storm damage, among other issues.”
The NFU has said it is also keen to see more detail on the new £640 million nature for climate fund and what role is seen for farming and food production within this, alongside playing its role for the environment.
NFU President Minette Batters said: “The most significant decision today for British farmers is the announcement to retain the relief on red diesel.
“This is absolutely crucial and we are pleased to see the Chancellor has acknowledged our concerns.
“The NFU has also called for an increase to the structure and buildings allowance in its Budget submission and this increase will deliver more effective tax relief for farm buildings.
“It will go some way to supporting farms investing in modern, efficient infrastructure which could help to improve productivity and deliver our net zero ambition.
“We have seen in recent times a significant increase in fly-tipping on farms. The NFU has been calling for the government to invest in new approaches to tackling this crime and the extra funding to tackle this blight on our countryside is welcome.
“Finally, we recognise the Government’s commitments to helping small businesses with the impacts of the coronavirus.
“The commitment to cover statutory sick pay costs, providing business rates relief for many small businesses and mobilising banks lending for SMEs will help to provide resilience and support cash flow in these difficult circumstances.”
For further information about the NFU’s lobbying work or to join the union, farmers and growers can contact their local group secretary or the regional office on 01695 554900.