On 25 November, the Chancellor delivered his latest Autumn Statement. In a year which has already seen the two Budgets and a General Election, and on the back of a volatile market and erratic weather conditions, agricultural businesses were perhaps uncertain about what this year’s Autumn Statement might bring. There were also strong rumours that the Chancellor’s comprehensive spending might see the disbandment of DEFRA, so that will undoubtedly be a key focus for the sector.
In this article we summarise the key points arising from the Autumn Statement and focus specifically on what the changes may mean for the agriculture sector.
In summary (general):
- Tax credit cuts scrapped all together
- £12bn in targeted welfare savings to be delivered in full
- Small business rate relief to be extended for one more year
- NHS to receive £10bn more funding a year in real terms by 2020
- Basic state pension will rise by £3.35 to £119.30 a week
- New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016
- Doubling of housing budget to £2bn a year
- Capital funding of transport projects to rise by 50%
- Increased devolution with 26 new or expanded Enterprise Zones announced
- Transport (37%), environment (15%) and energy (22%) departments all face funding cuts
In summary (agriculture specific):
- DEFRA to face 15% cut in funding; much less than the anticipated 30%
- Government to continue to prioritise funding for flood defences
- DEFRA to reduce administrative budgets by 26% by 2019-20
Autumn Statement agriculture impact
DEFRA – 15% funding cuts
Richard Marsh, Partner at Hawsons, commented: “In the lead up to this year’s Autumn Statement and comprehensive spending review there was a lot of speculation over the future of DEFRA (the Department for Environment, Food and Rural Affairs)…with suggestions that DEFRA had even already agreed a major 30% spending cut. That hasn’t been the case, but DEFRA will still face big funding cuts. This is the announcement that will impact the agricultural sector the most.”
“The Chancellor confirmed in Wednesday’s Autumn Statement that DEFRA will face cuts of 15%, as well as highlighting a continued commitment of investment in flood defences. Although, on the face of it, that funding cut is much less than many thought, it still leaves the agriculture sector in a state of limbo. DEFRA has now lost nearly half of its funding since 2009; one of the most significant budget cutbacks of all government departments in the last few years. Additionally, with the extra focus and funding given to research and flooding, this cut of 15% might still be more like the anticipated 30% for DEFRA overall.”
“It will be interesting to see how this develops and what the future holds for DEFRA.”
Environment Secretary, Elizabeth Truss said: “With today’s settlement we can now plan for the future. This strong funding settlement means we can press ahead with our vital work to protect the country from floods and animal and plant disease, put in place stronger protections for our natural landscape and deliver on our commitments for a cleaner, healthier environment which benefits people and the economy.”
Richard Marsh, Partner at Hawsons, commented on other possible agricultural implications from the 2015 Autumn Statement: “From a tax perspective there was very little of note, which is actually quite refreshing. Although not part of the Autumn Statement it is worthwhile reiterating the extension of farmers’ averaging from two years to five years as of April 2016. That announcement was made in the March Budget and will bring greater flexibility and stability to farming accounts.”
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