For the first time in 14 years, a Labour government in the United Kingdom has announced its government budget. The British are unanimous on one thing: Everyone is unhappy with the outcome. Labour's agricultural plans are clear. There are major budget cuts. In particular, an upper limit on the agricultural exemption goes down the wrong way. 'They're forbidding you to die', sounds the typical black British humor.
It was a bitter pill to swallow for many Britons when Rachel Reeves, the British Chancellor of the Exchequer, presented the plans of the first Labour government since 2010 on Wednesday. Taxes will be raised and the government will make cuts in many areas to free up money, which will ultimately be pumped into the economy but also into healthcare. It is a major overhaul of government finances. The measures should free up €48 billion. The largest part will be returned to the national health service.
Working people
Labour is for 'working people' was always the idea. Also with many farmers. And then especially the small(er) family businesses, with this approach it was thought that the new government would make it easier for them. The opposite is true. The British agricultural sector in particular - which has not had it easy since Brexit - has to make major concessions to free up the necessary billions.
The pain is primarily in the agricultural exemption. A ceiling of £1 million is set for this. Converted to €1,19 million. Every entrepreneur knows that such an amount is quickly achieved in practice with a company and some land. Next year, those who stop will have to pay 50% of the imposed tax and in 2026 that will be 80%. "Effectively, it comes down to Labour forbidding you to die", is what is said on social media. If you do, it will cost you tons of tax.
The measure is the death knell for business takeovers, many farmers believe. Only the very small businesses will be able to be taken over under the agricultural exemption. Many successors fear for their future. It is precisely the many family businesses that feel betrayed by Labour.
Linked payments are disappearing
Agriculture Minister Daniel Zeichner and Defra Secretary (the British Agriculture Minister) Steve Reed have also unveiled their plans for agricultural finances. The coupled payments, a remnant of the Brussels CAP, will eventually disappear completely. Next season, 76% of the amount will be removed. This year, it was 50%. There is a ceiling of the equivalent of €35.700 in payments. A farmer who received £100.000 in subsidies in the 'first pillar' this year will only receive £8.000 next year. With this measure, the ministry wants to prevent landowners, who do not actively farm themselves, from profiting from their land position.
Total budget unchanged
The total agricultural budget for 2025-2026 remains the same as last year, with £2,4 billion available (€2,85 billion). There is also £200 million from the current season available that will be carried over to the new year. By far the largest part of this amount (£1,8 billion) goes to so-called 'Environmental Land Management'. In short, these are the green services that a farmer provides to his environment. This budget has been increased significantly.
The ELM is comparable to the second pillar in the European CAP. Farmers can choose from dozens of measures to implement on their farms. From planting hedges and creating bird feeders to completely taking agricultural land out of production. The latter measure turned out to be so popular that the then Minister of Agriculture put the brakes on it.
Farmers' organizations and landowners are not satisfied with the freezing of the total budget because the costs have increased but the amounts do not take this into account. The fear is that the announced policy - and in particular the agricultural exemption - will cause land prices to plummet because a company takeover is suddenly no longer possible.