Autumn Budget: How will the Chancellor's announcements impact farms?

Following the Chancellor's announcements on Inheritance Tax and Agricultural Property Relief in the 2024 Autumn Budget, Farmers Guardian's Alex Black, Rachael Brown and Jane Thynne dig into what the changes may mean for the farming industry. The news team take a look at the implications of all the announcements this week, from the agriculture budget to the minimum wage and changes to delinked Basic Payment Scheme payments.

Transcript

It's finally here. The autumn budget, which has been long awaited, was announced this week in Parliament. And there's some big changes for farmers, contained in there. I'm Alex Black.
I'm Rachael Brown.
And I'm Jane Thynne.
And we're going to be digging into some of the detail.
The headline for many farmers was inheritance tax, specifically the changes to agricultural property relief. And we did get a mention of farming, from the chancellor in parliament, which is quite unusual. So the headline appears to be that, owners should assume that aside from the unchanged nil rate and main residence nil rate bands, only  million pound of assets qualifying for EPA and business property relief combined.
So not  million pound on the Eat relief will obtain a % relief. After that, inheritance tax will be payable on % of the value, meaning that the effective rate of tax will be %.
So what's the reaction been from the industry to this news?
it was really strong straight away from Tom Bradshaw, president at the NFU.
He said really quickly it was clear that the government didn't understand or even care about farming, which was, you know, really strong. People had been very, very afraid. And I think, well, I think they've got, you know, they were possibly quite right to be, but there it is so complicated. I think that's the main thing that's come out of it.
And there'll be a lot, a lot of people who need a bit of help to just work out where they are.
Yeah, I agree, I think the devil, as always, is in the detail. I think that has been a huge reaction from farmers. There has been a lot of fear around the EPR, building up to this budget.
And let's face it, it's been the longest lead into a budget that I've known. And I don't think that's helped kind of anxiety and fears within the sector. But I think this is a period now for the dust to settle and to really take the time to get your head around the kind of the detail within EPR, and how you can kind of plan over these next few years, because obviously there's a bit of a lead in time before the new change comes into place.
And that gives kind of farmers a breathing time to get things in place, get that planning. And I think there's real emphasis here on succession, and early succession. So I think really farmers need to speak to their advisers. And I think, you know, the money of those advisers will be shown over the next couple of months, really, in terms of trying to get, the very best outcome for farmers in this situation.
But I think there's a lot of fear amongst those small, medium sized farms. In terms of, you know, the real driver behind this fear is, you know, they really want to pass on their farms to the next generation, to their daughter, to their son. And they, you know, want to be able to do that in the best way possible.
So, yeah, I think also it's important to highlight there is a lot of fear around tenant farmers. We know that TFR levels for EPR, to be available, if you let out, you land for more than ten years. I think it was. And obviously that was something that they lobbied really, really hard on. And that hasn't, landed, with the Chancellor.
I think it's important to point out that said, you know, within this kind of grace period, there is open conversation and consultation that's going to take place. You know, and, you know, the legislation hasn't gone through yet. There has to be that dialog. But, you know, obviously the Chancellor has made clear that APRA is going to change.
But I think the detail within that still needs to be mapped out.
Rachel, it's kind of important to say, obviously the TfL have been lobbying for that. But, you know, all of the farming unions at all four nations and the CLA obviously have been lobbying hard against changes to API, and that's not been listened to know.
And I think, you know, it's been reported by the NFU that the FAA secretary, Steve Rita, previously said that API would go untouched. And I think that signal to the farming community hasn't gone down well, that because, you know, this new government, the Labor Party,
has given that message to the farming community that they want to rebuild trust, rebuild confidence.
And really, this budget doesn't do that for the farming community. At the moment. And I think when you have promises made, reportedly promises being made and then that hasn't been you know, listened to, I think that has created some concerns and anxiety. But I also think, obviously PR really, really kind of dominated the headlines yesterday. But budgets, I think is a big, big thing.
Obviously farmers are being asked a lot of and deliver more, but it feels like this budget, you know, obviously hasn't delivered what farmers in the sector wanted. Significantly short of what the NFU wanted in terms of budget.
Yeah. And and I think that kind of it's been hanging over us, hasn't it. The underspend from the past few years of, of obviously what was a conservative government and went out into labor.
But that underspend you know we've kind of known and like you say, the massive build up to this budget that that is going to be something that people are looking at in government and going, well, they're not spending that budget. What why did they have it?
And I think people, you know, are really trying to campaign for that idea that this budget shouldn't just be a farming budget.
They, you know, the government should be looking at this budget as a key thing to delivering environmental and climate targets, but also for health and driving down NHS waiting lists and, and and you know, that message was really relayed to, you know, the many fringe events at the Labor Party conference, but still feel that that hasn't been listened to.
And I know, obviously the Chancellor has asked for cuts across all departments, but it just feels like
the budget is a real disappointment for the sector.
Yeah. I mean, I think, you know, I think from the farming point of view, they've been hit in every category. She sort of announced yesterday from the minimum wage rises, National Insurance for employers rises, even sort of bus fares.
We've got that that rural,
people who live in the countryside typically using the busses, the more expensive, etc., they sort of, apart from the penny on the pint, they've possibly been hit in every category. She announced yesterday,
not slightly. And I think that rising minimum wage and the increase in national Insurance for employers is shouldn't be underestimated in terms of the impact it will have on farm businesses.
That is a real concern because obviously farm businesses are struggling and there is a real tough climate out there, and then this is just an additional cost to the business that they need to consider. And we all know labor shortage is a huge issue. Continuous continues to be a huge issue within the sector. So yeah, that was also, you know, a consistent concern raised by farmers yesterday.
Yeah. And is important to note, you know, it's going up to . pound an hour for for employees over . But there's also an increase for the younger workers and especially for apprentices as well, which I know quite a few farming businesses of rural businesses will hire apprentices, within their business.
No, definitely. And of course, it applies the seasonal worker scheme, I believe, as well.
And obviously that is a particular area which struggles, in terms of, labor. So, yeah, real kind of a ripple effect across all areas of the farm business, really.
Another thing I wanted to also raise was obviously there has been a huge build up to this budget. Real concerns around kind of the mental health side of the farming sector. We've heard time and time again the deficit in many speeches. The farming minister, Daniel Zeichner, mentioning about trying to really, really tackle the mental health challenges within the farming industry.
And I think,
lessons should be learned from yesterday because there was that broad announcement made by the Chancellor. Obviously, she has to go through loads of things in the budget, and there was a time to go into that detail. But but I think given there is there was so much anxiety around this budget and a PR, you know, to reset all kind of the mood in the sector, I think that level of detail or some reassurance answers should have come out yesterday from the different team.
I think that kind of I know a lot of it's about parliamentary protocol, etcetera, which is infuriating for many reasons at the best of times. But you know, that that long lead up is, you know, we know that people have already made decisions, you know, even if she'd have left appear untouched yesterday, which obviously she did. And people had already made decisions and it had been weighing on people's minds because of that, such a long lead up to the budget.
You know, even making those announcements crystal clear yesterday, we've still had months of speculation and worry on farmers minds already.
Yeah, no, absolutely. And I think now going back to the budget now, we've established how much money there is to go off. I think now it's key that the Secretary of State and also the Prime Minister get out their plan, their vision, they keep going on about this idea that we know where where the end point is, they criticize the previous conservative government, saying that they didn't know what the end point was, what you know, what we were aiming for for the farming sector.
They say they are clear on that, but we need to be part that vision when we need to understand what their vision is. And we haven't had real insight into that. So I, I expect there will be some, you know, some announcements in coming about what the policy looks like going forward and how they look to utilize that money.
And, you know, all eyes will be on that budget because obviously we've had several years, you know, three years of an underspend. They will want to make sure, you know, the sector will want to make sure that all that money is being used.
So another thing that's maybe not, not hit the headlines in quite the same way because we've obviously seen a PR not just hit the headlines in Farmers Guardian.
It's been on the BBC and all the other, major news outlets as well, is further reductions being made to BSD linked payments from next year.
I mean, obviously this year they didn't make, the parliamentary speech. And it is something that was, you know, in the paperwork. But it will really affect our readership. And it's, you know, a bit more bad news.
Yes. I mean, the detail is that the fastest subsidy reductions will apply to those who historically received the largest payments, which we know. So, for example, the top % of recipients who received over , in Beeps in  will receive no more than  by . And I think concerns have been particularly held by those in the uplands, obviously with the, the idea of reducing beeps is what people switchover from beeps to Elms, but those in the uplands can't really access the schemes.
And in the album scheme.
there's far fewer, actions that, you know, available to people who farm in the uplands or on common land. And you have to be in a scheme to qualify for the beeps and it's reduction. So that that's a really, difficult area for those farmers who are being impacted by destocking and whatever is, you know, all the stuff that's going on with Dartmoor and things like that.
So it's just it's just piling on at the moment. But again, it's something that is going to have to be we're going to have to speak to Deaf Ear about and they're really going to have to explain this kind of stuff for, for everybody. I think.
But but it goes back to what we were talking about earlier.
You know, if we are finding it complex and there's a lot of caveats and detail that need unpicking for the farmer that is busy farming and doing, you know, producing food and looking after the environment and landscape to have that time to look through that data all is simply not there
now. So, I mean, she kept saying yesterday, didn't she?
It's a it's a budget for working people. I think that from our point of view, it's it's sort of a budget for account working accountants and
they're going to be busy over the next couple of months on this.
Very busy. Yeah. So they, they probably.
I think something else to consider is something we will be digging into in more detail in Farmers Guardian. Is whether this will have any impact on the farmland market.
And obviously people will be making decisions now, you know, for investors, you know, those people who are invested in agriculture land,
does it make it a less attractive investment, you know, does that mean that they will buy. Does that mean that they'll sell? You know, and obviously that you will have people who have an inheritance tax bill to pay that might mean to sell the farm or sell a portion of the farm.
And how that changes the dynamics in the farmland market. I don't know the answer to that question, but it's a good question to to follow and, to see what happens.
definitely we'll see the implications both in the short term. There'll be, you know, sudden shocks on the, on the, on the land market. And then obviously, as detailed unveils, we'll see kind of that long term impact. But I think the main justification for the Chancellor on this change day, if we all was to really target those large, large estates that own vast amount of land that, using it as a, as a way of, dealing with their tax situation.
Also the people that are buying up land but not actually farming. Yes. I think that's what, you know, they really want to focus on that. They reiterated both the Chancellor and also Defra several times that they don't want to target. This is not a changed IP. All that will impact small and medium farms. They don't want it to impact on farmers, but I think they will really need to do some sort of up to date impact assessment.
If you like to see how actually this is changing and how the sector is reacting to it.
The figure
that she said it was , % would not be affected. So I think I don't know where that figures come from, I don't know. Yes. And surely that that is a, you know, so that
think that figures from the Treasury.
So I did ask that question.
But I said, you know, is there going to be a subsequent analysis of that figure, given the announcement today to see, you know, how a sector responds to it? Because surely it will have an impact and that figure will change.
And and the thing is that kind of obviously it's a set rate across the country, depending on where you are in the country,  million pounds buys you a very different thing down in, in the South than it does in, in in northern England, Wales, parts of Scotland, you know, so I know the farmers that we've spoken to and the farmers that are here at Farmers
Guardian. I kind of tried to do the sums and figure out, you know, what their, what their farm or what their inheritance is going to be worth and whether they then fall into that, that bracket. And there's a real concern from a lot of them who, who aren't inherited, you know, a vast mega farm, for want of a better word, that are worried that they will fall foul of that.
And I think also, I well, I'm slightly concerned about the narrative that this kind of sends out to the general public around farms because, you know, there is that disconnect on a wire while the farming sector grumbling about Apple, you know, everyone else has to do inheritance tax. Why is the sector should be treated any, any, you know, that he should be treated differently.
And that is a narrative that's coming out. And, and I don't think it's helping the perception of farmers and farming. And I think it's important, you know, here at the Farmers Guardian that we make sure that messaging is sent out to that general public and to the consumers to make them understand why IPR is such an integral part of of small and family farms in rural communities, both in England, Scotland, Wales and Northern Ireland.
And it all comes
back to that idea that the idea that reality that, you know, farmers are often asset rich and cash poor, whereas your farm might be worth, you know,  million pounds or whatever, but actually you don't have that money in your pocket. And if that, that means that you're having to pay an inheritance tax bill when that farm, you know, is passed down to you, you don't have that money in your pocket, so you're going to have to sell at least some of that, that land to, to pay that bill is, you know, farmers work on small margins.
You know, I'm generalizing here, but farmers work on small margins. The farms are worth a lot. But that doesn't mean that they'll be able to meet the a hefty inheritance tax bill.
And of course, obviously if they start selling, you know, good quality, productive land, which obviously would normally used for food production. And that's when food production does take a hit.
And, you know, that narrative of food security is something that this labor government keeps going on about. Daniel Zeichner is a food security minister. So, I mean, he's very passionate about it. And I think that impact assessment of all of these changes, all needs to take that into account.
Yeah. I mean, I think with the the land thing and the success, I think that's already been saying quite a lot in Wales.
I think a couple of years ago there was this huge land grab once the government announced the forestry and the tree planting schemes,
story after story of sort of elderly farmers who, although they initially thought they were selling to an up and coming farmer, within a few months that land had been passed to a hedge fund that was a London based investment company.
And had all sold for trees and trees that weren't the right trees for the area and things like that. And so if, if, if Rachel Reeves has done this in order to, you know, protect smaller farms as opposed to large landowners, I'm not sure that that is the way to go. And I think as well, the the amount of solar farms, wind farms that have become that have been passed well, since, you know, labor got in in July, you know, if you've got a lot of land to sell, you know, you might be looking more at doing something like that.
Then the bothering with farms and all these complications we've listed today that. Yeah. So I really don't they I really think they've, they've missed the mark with this.
complex isn't it. And I think
it's going to take a bit of time to see what the impact is going to be I think important actually, though, to we must also,
address obviously, that the doctor have confirmed that the environmental environmental land management schemes are continuing.
So those schemes under Elms, will be continuing. And the funding allocated to them is . billion, which is more than last year. And there's a real drive by this labor government to, to make these schemes work. But obviously they need modifications. You've alluded to already, Jane and Alex, about, you know, upland farmers. There are changes that need to be made, but they I think their main goal is to ensure that these schemes are up and running and working for all farmers.
of course, you know, this is a different responsibility. And we're talking about, a UK government budget. But, you know, the farmers in Scotland and in Wales, you know, they're in a very different situation. Yes. Elms is up and running to, to some degree here in England, but we're still kind of obviously wasted on SFS and, and in Wales and waiting to see what the agricultural payments are going to look like in Scotland, which, you know, we don't seem to be too much further down the line.
But yeah, I obviously don't want to be too doom and gloom. Obviously we've been quite looking at kind of the, the more negative sides of the budget, but there were some plus points. I think the farming Recovery fund. So obviously this is for all those farmers that were hit by the floods and the long awaited funding for that.
We've been told that will be released imminently.
So so that is some positive news. That was obviously a commitment from the previous government. And this labor government have all had that commitment, which is good to see, although obviously
many people would argue that funding should have been available a lot sooner the more it has become available.
And obviously the fuel tax, that was another positive thing as well.
And CPR, the countryside charity as well, were welcome in some of the announcements on housebuilding, which they were hoping would help to tackle the housing crisis in rural areas. I think they wanted it to go go further. They're not expecting the, anything to solve overnight.
But yeah, there was some welcoming of that news as well.
The yeah, the the capital gains stuff is to avoid this sort of, you know, and buying up a second homes which a lot of, you know, rural communities really you know, they local people can't afford local workers can't afford to, to buy property where they work because, you know, people have bought second homes and the prices go up and up and up.
So maybe the capital gains tax will help help in that way. So maybe a few positives,
No, definitely. And I just think I go back to my original point. There is a sense of frustration out there that this.
Farming budget hasn't been valued as much as what the sector would like. And that messaging over the last  months around, you know, farming is not just about food production.
It's about climate change, nature recovery. It's about helping with the health in society. It's about education and careers, creating job opportunities. It's about the renewable energies. These are also, you know, all areas of the labor government that they're passionate about. And it just feels like the dots have been connected up.
Yeah. And the classic line that we've heard how many times that food security is national security, I think everybody's probably talking about one of
accused as a bit of a throwaway line now, isn't it?
It's just repeatedly without any kind of actually, you know, there's a lot of meaning behind that, that food security is national security is a big, big message to send out. But, I'm not sure whether the actions actually deliberate at the moment
So that was a bit of a whistle stop tour of, some of those budget announcements and how they'll affect the farming sector. Obviously, like we've said, the devil is going to be in the detail, and this isn't something that's going to be all unpicked in a week or a few days.
And Farmers Guardian will be doing that, unpicking. Obviously we've mentioned about mental health as well, and it is important, you know, if you're struggling.
With some of the news that you do. Do reach out. There is help out there. Rachel.
No, absolutely it isn't fantastic. And cultural charities out there to support with your mental health if you're struggling rb I the farm community network there's lots out there. So please go find that support if you need it. And I think the overriding message here for the sector is to look out for one another.
This is a tricky time. But, you know, the sector has had tricky times before and got through it. So I think, you know, we're a lot stronger as a sector if you support one another.
Definitely. Well, that's it for this week's, podcast. Thanks very much for joining us. We'll be back with another episode next week.
Goodbye for now.