The spending review delivered a mixed bag for farming, with the agricultural budget set at £2.7 billion per year over the next three years — a headline figure that conceals a substantial reduction in real terms.
David Morley, head of environment at H&H Land & Estates, has analysed the detail, warning that while the cut is smaller than many feared, the implications for farmers could be significant.
Of the total £2.7bn secured by Defra, £2.3bn is earmarked for payments to farmers, covering the Environmental Land Management schemes (ELMS), support for innovation and productivity, and the diminishing de-linked Basic Payments.
Compared to the average spend over the past three years, this represents a cut of around £200 million annually.
Mr Morley notes: “This is a smaller cut than had been anticipated by many commentators, but it’s still a significant downturn in farming support.
"In a world of ever-increasing global uncertainty, it is concerning that food security appears to be so low on the list of government priorities.”
Land management schemes: Funding but few open doors
Around £2 billion a year will go into land management programmes such as the Sustainable Farming Incentive (SFI), Countryside Stewardship (CS), Landscape Recovery (LR), and various grants and legacy schemes.
However, Mr Morley points out that “commitments to existing agreements are likely to take up around 40% of the funding,” and there is little clarity on how the rest will be distributed.
At present, most schemes remain closed to new applicants. While Higher Tier CS is expected to re-open later this year, it will be limited to an ‘invitation-only’ basis.
A summer announcement is expected regarding the future of SFI, and a re-launch of the Capital Grant Scheme is also anticipated.
However, caps on available grants and long lead times for LR projects mean funding won’t reach many farmers any time soon.
Innovation, productivity, and who really benefits
An average of £300 million annually has been allocated to boost innovation and productivity. Yet there are concerns this funding will mostly serve large-scale agribusiness.
Mr Morley warns: “It seems likely that the majority of this money will support the industrial end of the farming spectrum, with little to benefit smaller family farms.”
De-linked payments: A quiet exit
The review also spells an earlier-than-expected end to de-linked payments. By 2026, farmers will receive just 2% of the first £30,000 of their Basic Payment reference amount — a maximum of £600 per year, down from £7,200 in 2025.
Mr Morley is clear on the implications: “To all intents and purposes, that effectively ends de-linked payments two years earlier than had been planned under the previous government.”
For many, particularly those tied into older land management schemes, opportunities to replace this lost income remain elusive.
Nature schemes: Ambition without detail
An additional £450 million annually will go towards separate nature projects under the Nature for Climate Fund and the Biodiversity Targets Programme — supporting tree planting and peatland restoration outside of ELMS.
However, the mechanisms for delivery remain unclear. “As ever with Defra announcements, the devil will be in the detail, of which there is very little at this stage,” Mr Morley adds.
A sector still in limbo
While Defra's overall budget has not been slashed as deeply as some feared, rising inflation means the real-terms cut is even more painful.
And with virtually no schemes currently open to new applications, Mr Morley highlights the continuing uncertainty facing farmers.
“It is very challenging to decide how best to take their businesses forward. Farmers need clarity, consistency, and timely access to support — all of which remain in short supply.”
