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The government has announced an overhaul of England’s post-Brexit agricultural subsidy scheme that will prioritise funding for small farms, as Labour continues its bid to win over rural communities after its U-turn on inheritance tax last month.
At the Oxford Farming Conference on Thursday, environment secretary Emma Reynolds announced that a simplified Sustainable Farming Incentive (SFI) scheme, which was abruptly cut off in March last year, would reopen in June, but with caps on the amount of funding that farms can access.
The country’s farming sector has been hit hard by volatile energy and feed prices since Russia’s full-scale invasion of Ukraine, extreme weather events and a sharp drop in the subsidies it received when the UK was part of the EU. A third of farms in Great Britain were lossmaking in 2024, a government-commissioned review found last month.
Planned reforms by Labour, forcing farmers to start paying inheritance tax from April, had worsened confidence in the sector.
But in an unexpected U-turn before Christmas, the government raised the threshold above which farmers will have to pay death duties. The move followed months of tractor protests across the country and intense lobbying by farming groups.
Protesters in Oxford on Thursday. Farm incomes in England have plummeted since the government phased out the EU-era subsidies © Andrew Matthews/PA Wire
Outside the conference venue on Thursday, rows of tractors honked their horns during Reynolds’ speech.
“That is it now . . . we are not going to make any further changes,” the environment secretary said after her announcement, adding that it was negotiations with the National Farmers’ Union (NFU) and not the protests that helped get the government to change its mind.
“We always said that the objective of the policy is to raise inheritance tax on the largest estates. And now that’s what the policy delivers,” she added. “I’m really proud that as a government we have listened.”
Farm incomes in England have plummeted since the government phased out the EU-era subsidy payments and then paused its replacement, the SFI, causing an outcry among farmers. The new scheme pays farmers to adopt sustainable farming practices and restore the natural environment.
The original iteration of the SFI, introduced by the former Conservative government, had no limits on the amount of funding farms could access, leading to accusations that large and wealthy farms benefited the most.
“Right now, a quarter of the money goes to just 4 per cent of farms. How can that be fair?” said Reynolds. “We want to see farmers helping nature thrive everywhere, not just in a few places.”
Reynolds said a simplified Sustainable Farming Incentive scheme would include caps on the amount of funding that farms can access © Andrew Matthews/PA Wire
Labour ministers at the time blamed the removal of support on the previous government’s lack of budgetary controls.
Farmers warned that smaller growers who cannot afford consultants to help them make the most out of the schemes were being left behind.
Reynolds said there had been too much “chopping and changing” over the scheme and too much complexity. “We want to make it easier and more accessible for farmers to get that money,” she added.
The reforms to the SFI include reducing the number of environmental schemes farmers can sign up for, limiting how much land can be put into these schemes and making it easier to apply for funding.
Reynolds said 90 per cent of spending at present went to fewer than 40 of the 102 schemes available. These include adopting no-till farming, planting cover crops and feeding wild birds.
NFU president Tom Bradshaw said that while he recognised the farming budget was finite and had to be spread evenly across the industry, it should remain accessible and relevant to all food-producing businesses, “no matter the size”.
“If there has to be an SFI funding cap, we support a cap per hectare for SFI agreements on farm.”