Agriculture funding change sent shock waves through Scottish farming, says NFU

The UK Government “sent shock waves” throughout the agricultural sector due to funding changes announced in the Budget, a union has said.

Martin Kennedy, president of the National Farmers’ Union Scotland (NFUS), led a demonstration outside the Scottish Parliament in Edinburgh on Thursday calling on the Scottish Government to ring-fence agricultural funding in Scotland in its Budget statement on December 4.

He was joined by hundreds of farmers, crofters and agricultural workers, and told them the UK Government has thrown the existing financial framework in the industry “out the window”.

He said: “On October 30, the new Labour Government sent shock waves throughout the whole of agriculture throughout the UK. It was really devastating – it sent shock waves through us all.

“Not only on the agricultural property relief and business property relief issues that we’ve been talking about, and that has been highlighted very much last week in London, but particularly, it’s every bit as important as the funding element.

“The funding element is so important for what is the catalyst of what we do. Six hundred and 20 million pounds was the ring-fenced fund that we had here. For over 50 years, we have had a multi-annual ring-fenced fund that’s come into Scottish agriculture.

“First of all, under Europe, a seven-year multi-annual financial framework and after Brexit we’ve had a five-year multi-annual financial framework so we can plan ahead.

“The Labour Government threw that out the window.

“They’ve completely washed their hands of that. They’ve said to the devolved parliaments, ‘you do what you like with agriculture’.

“Agriculture is devolved, and that’s fine, the policy is devolved, but so is the funding and it’s now part of the block grant, so we have no security, and no idea how much the Scottish Government are going to commit to Scottish agriculture going forward.”

He said the Scottish Budget is going to be “absolutely critical” and he wants to see the Government ring-fence the £620 million, saying there is no reason for them not to do so.

He told the crowd: “They have had a £3.4 billion uplift in the block grant coming to Scotland, and that is an 8.1% uplift in their overall budget.

“We are asking the Scottish Government to not only ring-fence the £620 million, but to add on the £80 million that they have traditionally put towards the block grant or towards agricultural funding, plus the £50 million that is the 8.1% uplift in funding, and let’s not forget, the £46 million that has still got to come back into our portfolio because it was ours before it was taken out.

“We need to see that on December 4.”

Other speakers from the NFUS echoed Mr Kennedy’s message to the Scottish Government, as did a number of political figures, including Scottish Conservative leader Russell Findlay.

Mr Findlay warned that the agricultural industry is under “critical threat like never before”, and said a number of NFUS members had spoken to him previously about their fears over the funding.

“I heard loud and clear about the many concerns, one of the biggest of those being around the uncertainly on funding,” he said.

“Since then, that’s become even worse due to Sir Keir Starmer’s Budget in which he decided that the farming finances will no longer be ring-fenced when they are sent to the Scottish Government, which of course means there’s a very real risk that that, being in the general pot of Government spending in Edinburgh, risks being spent on other things.

“My party will do whatever we can to ensure that funding is guaranteed and ring-fenced.”

He went on to decry agricultural property relief changes as being “hugely harmful”, warning some farms may have to close down as a result.

He said: “I actually believe it was spiteful, and it could make the difference between farms being able to continue to operate and no longer being able to do so. Labour can, and they should, change course.

“I will do everything as the leader of the Scottish Conservative Party to ensure that they listen to you.”

Scottish Liberal Democrat leader Alex Cole-Hamilton told the rally: “The Budget, I think, is a new era for farming in Scotland because the £620 million is now being given straight to the Scottish Government.

“We need to make sure that this is ring-fenced and goes directly into farming, but over and above that, there is an actual real-terms increase in the money that we invest in farming and agriculture, because it is the engine room of our economy.

“It is so important to Scotland, to our food security, our national heritage and our environmental sustainability.

On Thursday, a joint letter from Scottish Rural Affairs Secretary Mairi Gougeon and Finance Secretary Shona Robison was sent to Chief Secretary to the Treasury Darren Jones.

The letter expressed the Scottish Government’s “shock and alarm” at the decision to apply the Barnett formula to future agricultural and marine funding, and warned that the changes to inheritance tax could become a “barrier” or “perhaps even greater than that” for tenant farmers.

A UK Government spokesperson said: “The Budget provided the Scottish Government with a record £47.7 billion settlement and it receives over 20% more funding per person than equivalent UK Government spending.

“It is for the Scottish Government to allocate this across its devolved responsibilities, which include agriculture, to deliver on the priorities of people in Scotland and support Scotland’s rural economy.

“We have been clear that around 500 claims of agricultural and business property relief each year will be impacted – this is based off actual claims data – and even when inheritance tax does kick in, it is effectively at half the rate paid by others.”

Rural affairs cabinet secretary Mairi Gougeon said: “I was clear when I spoke with the NFUS that the Scottish Government is unequivocal in our support for Scotland’s farmers and crofters. They are vital to our rural communities and make our world-class food and drink sectors possible.

“The UK Government Budget failed to give them or us any certainty, with no multi-year agreements, imposed changes to Agricultural Property Relief with no consultation and a move from rural funding being determined based on the amount of land and sea in Scotland.

“The First Minister repeated his cast-iron commitment that £46 million will be put into the rural affairs budget so farmers benefit from that investment and more detail will be provided in the upcoming Scottish Budget.

“I met with NFUS once again today and the Finance Secretary and I have both written to the UK Treasury calling for them to urgently reconsider the cumulative impact of their decisions on Scottish farmers, tenant farmers and crofters.”