NFU President Minette Batters wrote to the Chancellor Jeremy Hunt, urging the government to prioritise food production ahead of the Spring Budget on 15 March.
She said: “Ahead of the Budget, the NFU was clear that greater support is needed for the thousands of farm businesses which are trying, but struggling, to keep our nation fed amidst soaring production costs. It’s therefore extremely frustrating that the Energy and Trade Intensive Industries scheme was not extended to include energy intensive sectors such as horticulture and poultry.
She went on: “It begs the question – where does boosting Britain’s food security fit into the Treasury’s growth plans?”
What are the NFU’s main asks?
Energy support
The letter reinforced the need to extend the ETII (Energy and Trade Intensive Industries) scheme to include energy intensive sectors such as horticultural and poultry production.
Current support, under the EBRS (Energy Bill Relief Scheme) is due to expire at the end of March and will be replaced with the EBDS (Energy Bills Discount Scheme) which will run for 12 months.
The scheme offers far less protection to businesses with the removal of the price cap which will instead be replaced with a token discount. A pre-defined selection of industries have been identified for additional support under the ETII, however farm level sectors have been left out of this scheme.
“Greater support and confidence is needed for the thousands of farm businesses which are trying, but struggling, to feed our nation.”
NFU President Minette Batters
The scheme offers far less protection to businesses with the removal of the price cap which will instead be replaced with a token discount. A pre-defined selection of industries have been identified for additional support under the ETII, however farm level sectors have been left out of this scheme.
Minette called for an urgent review into the ETII, stating that it is “irresponsible that the ETII scheme completely overlooks food production, not to mention it being wholly at odds with the government’s own ambition to produce more home-grown fruit and vegetables”.
“An urgent review into the ETII is needed to ensure that essential and vulnerable food producing sectors, such as protected horticulture and poultry production, do not face a cliff edge when the Energy Bill Relief Scheme ends later this month,” she said.
In the Spring Statement Mr Hunt did not extend the ETII to farmers and growers.
Capital investment
The NFU asked for improved support for capital investment in order to alleviate costs for farm businesses and drive crucial investment to enhance productivity.
Specifically, this would mean an extension to the Annual Investment Allowance to include structures and buildings or increase the general rate for structures and buildings to 10%, to encourage small business investment in UK agriculture.
Companies incurring qualifying expenditure on the provision of new plant and machinery on or after 1 April 2023 but before 1 April 2026 will be able to claim one of two temporary first-year allowances. These allowances are:
- a 100% first-year allowance for main rate expenditure – known as full expensing; and
- a 50% first-year allowance for special rate expenditure.
The NFU is disappointed that this measure is only available to limited companies.
It is also disappointed that there is again no apparent recognition that businesses need to balance capital investment between equipment and physical infrastructure which is still written off over 33 years for tax purposes.
Fuel duty costs
The NFU were pleased that The Chancellor announced to extend the cut in the rates of Fuel Duty introduced at Spring Statement in March 2022 for a further 12 months.
This maintains the cut in the rates for heavy oil (diesel and kerosene), unleaded petrol, and light oil by 5 pence per litre (ppl), and the proportionate percentage cut (equivalent to 5ppl from the main Fuel Duty rate of 57.95ppl) in other lower rates and the rates for rebated fuels, where practical.
These measures will go some way to assist farm businesses with their cost of production.
Delay to Basic Period Reform
The NFU also asking for a delay to the implementation of Basic Period Reform for business with accounting periods that don’t align to the tax year, and amend the date from which interest is charged on additional tax resulting from the reform from when that payment is due.
Working on your behalf
Though many of the key announcements in the Spring Budget fail to address the needs of agricultural and horticultural businesses, the NFU will continue to work on behalf of our members to get a better deal for farmers.
For a deeper dive into what the budget means for the farming community read the full member-only Spring Statement 2023: Key announcements & analysis briefing from NFU Economics team.
