Chancellor Philip Hammond has increased investment in emerging technologies, increased the National Living Wage and set aside billions for Brexit contingency planning.
Farmers and rural businesses have been eagerly awaiting today's Autumn Budget as the industry battles with increasing uncertainty of Brexit and a darkening economic outlook.
Hammond has said that the UK must "seize the opportunities" from Brexit while tackling deep-rooted economic challenges "head on".
The Chancellor, in his second budget, has promised investment to make Britain "fit for the future" as an "outward looking, free-trading nation" once it leaves the EU in 2019.
Facing a dark economic outlook and the threat of Corbyn's Labour party, Hammond has confirmed the government will set aside an extra £3bn for Brexit contingency planning, and said that £700m is already invested in Brexit preparations.
The Treasury will give £2bn more for the Scottish government, £1.2bn more for Wales and £650m more for Northern Ireland.
Emerging technologies
Hammond has increased government spending on emerging technologies. It will invest more than £500m “in a range of initiatives from artificial intelligence, to 5G and full fibre broadband”.
The National Farmers' Union (NFU) submitted six key asks ahead of the budget announcement at 12:30pm, which included a plea for the roll-out of superfast broadband and emerging technologies such as robotics.
The Government has been urged by the rural community to continue its commitment to deliver superfast broadband, as well as providing them with comprehensive mobile phone coverage.
The rollout is seen as a chance for farmers to utilise emerging digital technology, improve productivity and assist rural businesses to compete with their urban counterparts in an ever-increasing sense of uncertainty.
National Living Wage increase
Hammond has also increased the “national living wage”. From April 2018, it will rise 4.4% from £7.50 an hour to £7.83. The government has accepted the low pay commission’s recommendations.
Suppliers expect the price of strawberries to rise due to the pressure of the National Living Wage on British farmers, with some predicting the closure of British farms as it becomes an unprofitable operation.
A recent National Farmers Union (NFU) report states that the impact of the NLW could see growers lose up to 58% of their profits immediately.
It stated that over the next four years, it could cost fresh food businesses up to 158% of current business profit, making strawberry growing completely unprofitable for British farmers without additional Government support.
Business rates and VAT
Hammond explained that the government has listened to concerns about the costs of uprating business rates.
He said he will bring forward the uplifting of this by the CPI inflation index, not RPI. It will switch to CPI in April 2018, two years earlier than planned. That will save business £2.3bn, he said.
The VAT threshold is to stay at £85,000 for the next two years, which will be seen as good news for small businesses.
There had been speculation Hammond might lower the threshold to bring it in line with other European countries.
He said: "I will consult on whether its design could better incentivise growth and in the meantime we will maintain it at its current level of £85,000 for the next two years."
House building
The Chancellor has looked to address housing challenge. He has committed £44bn of funding to support house-building over the next 5 years.
There was a strong focus on urban housing, with some farmers on social media criticising the government's lack of support for the housing needs of farmers and growers.
The NFU believes it is important for the town planning system to plan for the housing needs of farmers and growers as well as their rural communities.
Oliver Letwin MP for West Dorset will chair a review of how land is being used for housing. It will report by the spring of next year, in time for the financial statement then.
If necessary, the government will take powers to intervene to ensure land is used for housing, Hammond said.
Tax saving reliefs
Commenting on the Autumn budget, Rural Affairs Specialist at NFU Mutual Tim Price said at first glance, there isn't a lot for farmers to get excited about.
Mr Price said a few measures will ease farmers' tax bills, such as fuel duty seeing no increase. He said this measure will come as a "huge relief" for people living in the countryside.
“Those running small farms and rural businesses will heave a sigh of relief that they won‘t be faced with expensive accounting admin as the Chancellor has decided to keep the threshold for VAT registration at the current £85,000,” Mr Price said.
“There was good news for self-employed farmers and all those working as employees that the Chancellor has stuck to the Tory’s promise to keep increasing personal tax allowances. They will be going up to £11,850 for basic rate taxpayers and £46,350 – which means a few hundred pounds more out of the taxman’s grasp.”
Mr Price said that the confirmation of the government’s plans to facilitate building of 300,000 new homes by the mid 2020s could mean "great opportunities" for farmers.
He continued: “We campaigned hard for the Chancellor to drop plans to increase the rate of Insurance Premium Tax – and we’re delighted that he decided not to further add to the costs of responsible businesses by leaving the tax at its current rate of 12%.
“NFU Mutual believes further increases in IPT would have placed an unfair burden on country people who have no option but to use cars to get around.”
'Continued viability'
Andrew Fallows, Head of Rural Agency at Carter Jonas said the decision that business rates will be revalued every three years is a welcome intervention because many rural businesses depend on robust, long term plans to ensure their continued viability.
But he said rumours of a reduction in Agricultural Property Relief (APR) unfortunately remained untouched in today’s announcement.
“The government’s commitment to the housing sector is commendable, but the continued pledge to protect the green belt raises more questions than it offers answers. We look forward to Mr Javid’s statement, for clarification on how this investment will impact the UK’s rural communities,” Mr Fallows said.
“Finally, we welcome the Government’s further investment in delivering superfast broadband to the regions, which will level the playing field between “more accessible” rural areas and those that are currently less connected.”
NFU’s six proposals
Before the budget was announced, the NFU’s outgoing president Meurig Raymond set out six key proposals for the government to deliver a new domestic agricultural policy with the environment, farm productivity and volatility mitigation at its heart.
1. The introduction of Farm Infrastructure Allowance to provide relief for the depreciation cost of farm infrastructure over its lifespan.
2. An exemption for agricultural buildings from any new system of Community Infrastructure Levy or Local Infrastructure Tariff contributions to avoid a further decline of farm investment.
3. An improved capital allowances regime to encourage the adoption of more new technologies and improve productivity.
4. Rolling out superfast broadband and providing complete mobile phone coverage to help farms make the most of emerging technologies such as robotics and GPS.
5. The introduction of a UK farm management deposit scheme to allow farms to better manage cash flow volatility and maintain more consistent levels of investment.
6. A review of trading loss restrictions to help farmers invest in restructuring their businesses.
