UK minister ‘sorry’ for inheritance tax raid

UK government minister Steve Reed used his speech at the Oxford Farming Conference last week to defend controversial changes to Agricultural Property Relief (APR) for inheritance tax.

Reed acknowledged that Labour had previously promised not to change APR, although he maintained the reform was needed due to an unforeseen £22bn shortfall in public finances.

I am sorry that some of the action that we had to take shocked you in turn

“Our planning in opposition was done without knowledge of a hidden financial black hole greater than the cost of the entire police service in England and Wales.

“We were shocked with the size of the financial black hole we were left to fill, and I am sorry that some of the action that we had to take shocked you in turn,” Reed said.

In his speech, the Environment Secretary stuck firmly to the government’s line on the inheritance tax issue, indicating that the controversial policy is not up for review.

However, when answering a question about how the inheritance tax raid could mean less land becomes available for tenant farmers, Reed appeared to have a more moderate tone.

“I think it’s very important that we keep listening to the points you are making. We need to keep listening and we need to improve the environment for opportunities to succeed,” he said.

Likewise, speaking to reporters afterwards, Reed suggested that the make-up of the current parliament means Labour will have to be more attentive to voters in rural areas.

“We have over 120 MPs representing rural and semi-rural constituencies. They operate as a rural group and they make their views very well known to me and my colleagues in cabinet,” he said.

Public procurement

The main announcement in Reed’s speech was that the UK government will start to monitor the origin of food bought by the public sector, such as hospitals, army bases and prisons.

The Labour MP described this as “a critical first step” to meet a pre-election commitment that at least 50% of publicly procured food should be from the UK.

“It is about ensuring farmers get a fairer share of the £5bn a year spent on public-sector catering contracts,” he said.

Reed also said the new government had “a farming roadmap” which will “make farming and food production profitable for decades to come”.

He said the plan has three strands, namely that food production remains central to farming, the sector helps restore the natural environment, and there are opportunities to diversify farm incomes.

“For all farm businesses, tenants, uplands and others, to stay viable in an increasingly uncertain world, and make sure you can keep producing the food we need, you must be able to profit from other activities,” Reed said.

The suggestion that farms must diversify to stay profitable raised eyebrows at the conference, particularly as the government has frozen the agricultural budget and opposes food price rises.

“Should everyone with a loss-making farm business subsidise it with a glamping pod?” asked Richard King from consultancy firm The Andersons Centre.

Concerns about funding formula for UK regions

Agriculture ministers in the devolved regions of the UK have all raised concerns about the formula that could be used for allocating future agricultural funding.

In October 2024, the UK government announced that the budget for agriculture will no longer be ringfenced and will instead be added in to each region’s overall block grant.

“There will be an awful lot more scrutiny of this funding and how it delivers a return on investment,” NI Agriculture Minister Andrew Muir told the Oxford Farming Conference.

A key concern is that any future increase in funding might only come from a mechanism which is based around the population of each devolved region, known as the Barnett Formula.

For the likes of NI, which makes up just 3% of the UK population, any increased funding that could be made available for agriculture will be small compared to the size of its farming sector.

“If we are planning to move this just towards Barnett, it will not reflect the needs of NI in terms of how we feed the rest of the UK,” Minister Muir said.

In his address, Scotland’s Agriculture Minister Jim Fairlie said the ringfence for farm funding should not have been removed by the Treasury in London in the first place.

“As the main nation state that have all the money raising powers, then it should be they who are ringfencing it in the same way the EU did. It should come from central government,” he said.

His counterpart in Wales, Huw Irranca-Davies, said he was “less concerned” about ringfence removal as the Welsh government wanted more powers to allocate funding across its departments.

However, the Labour politician admitted that he had concerns about the use of the Barnett Formula for agriculture.

“For all devolved nations, that carries consequences,” Irranca-Davies said.

Climate expert praises NI farm data collection

An ongoing project for calculating how much carbon is stored on NI farms has been praised by a leading climate change expert.

At the Oxford Farming Conference, Professor Piers Forster said governments need access to “good quality data” when designing policies about how land is used.

“I was inspired by the data collection in NI where they have a lot of good data coming in,” he said.

Forster is the chair of the Climate Change Committee (CCC), which is an independent body that advises the UK government on climate policies.

He said there is potential to get significant greenhouse gas reductions from “on-farm actions” such as improving animal health and using legumes to lower fertiliser use.

We also have to take some pastureland out of production to plant woodland and restore peatland

“We as a committee are becoming more and more optimistic about what these innovations can deliver,” he said.

However, Forster said new technologies and improved efficiencies on farms alone will not be enough to hit net zero targets.

“We also have to take some pastureland out of production to plant woodland and restore peatland. This is somewhere where we are increasingly pessimistic,” he said.

The CCC chair said targets for tree planting were not being met in the UK, with a key issue being a lack of financial incentive for landowners.

“We want to put in good, resilient woodland of native species and that takes a lot of time to sequester carbon. You have to put it in immediately if you want to affect that 2050 net zero target,” Forster said.

Hydrogen combustion engines are currently the most promising technology for de-carbonising heavy plant and farm machinery, a key figure from JCB has said.

Tim Burnhope, JCB’s chief innovation officer, said the machinery manufacturer has spent eight years researching and trialling technologies to move away from fossil fuels.

“With hydrogen, we are effectively taking a water molecule and splitting the hydrogen from oxygen. It can be done on an industrial scale, or it can be done locally, even on a farm,” Burnhope said.

Initially, JCB designed machinery prototypes that were powered by a “fuel cell” which is like a large battery that uses hydrogen to make electricity.

“They are not robust enough for our industry. They are too complicated and too expensive. We would end up with a product probably four times the cost of an existing machine,” Burnhope said.

After more consideration, the team at JCB decided that hydrogen-powered engines that are based around existing diesel engines should be trialled.

“There is zero carbon fuel going in and clean steam coming out. It matches existing technology, so same power, same torque, same performance.

“We have been running over 30 machines for three years now, with 50,000 hours of testing and 25,000km on the road. We are really proving that the technology works,” Burnhope said.