Farm Retail Association concerned about ‘devastating impact’ of Labour’s Budget

Members of the British farming community say they are reeling after Labour’s recent Budget announcement, with the Farm Retail Association (FRA) issuing a stark warning about the measures introduced by Chancellor Rachel Reeves, which it believes could have ‘catastrophic consequences’.

FRA chair Emma Mosey, who also operates Yolk Farm in Boroughbridge, has deep concerns, and said the Budget “sounded a death knell for small-scale food production in the UK’, adding the organisation believes the announcement will “accelerate the decline of family farms and the loss of our rural heritage”.

Farmers will, the FRA said, be affected by several parts of the Budget – the ‘headline’ being changes to Inheritance Tax relief. Under Labour’s plans, IHT will be charged at 20% on farms worth more than £1 million.

This policy change, the FRA explained, could force many family-run farms and farm retail businesses to sell land and assets to meet new IHT demands, leading to a significant loss of agricultural heritage, and a decline in domestic food production.

The National Farmers’ Union (NFU) has echoed the FRA’s concerns, calling for British farmers and growers to lobby MPs to highlight the impact of the recent Budget, including changes to APR (Agricultural Property Relief) and BPR (Business Property Relief), on their farms.

Farming families, the NFU said, are “at breaking point” with many unable to absorb further cost burdens following a long period of upheaval due to record inflation, extreme weather and increased production costs.

NFU president, Tom Bradshaw, said, “Farmers are rightly angry and concerned about their future and the future of their family farms, having been reassured by minsters in the lead up to the Budget that APR and BPR changes were not on the table.

“The Treasury’s figures which claim this will only affect one in four British farms are misleading. The £1 million cap to APR shows how little this government understands the sector. Very few viable farms would be worth under £1m, but lots of smallholdings and houses with a few acres let for grazing might be.” Tom continued, “The asset value of genuine food-producing farms will be high, given the size they need to be to remain viable businesses; but that’s the value of the asset, it doesn’t reflect its profitability which is often, and increasingly so, very low.

“Clearly the government does not understand that family farms are not only small farms, and that just because a farm is an asset, it doesn’t mean those who work it are wealthy. Every penny the Chancellor saves from this will come directly from the next generation having to break up their family farm. It simply mustn’t happen.”

Other areas of concern for farmers are minimum wage increases, reduced business rates relief for retail and hospitality, and the employer’s National Insurance hike, which the FRA said will, combined, directly impact farm shops and other farm-based retail outlets, hindering growth, and increasing costs.

“Our members are facing a perfect storm of increased costs,” added Emma. “The combination of rising minimum wages, reduced business rates relief, and higher National Insurance contributions will squeeze profit margins and force businesses to make difficult decisions. This could lead to job cuts, reduced investment, and higher prices for consumers.”

Emma said FRA members are committed to paying fair wages and providing good working conditions, but added the rapid increase in costs is making it increasingly difficult to remain competitive, saying industry needs to have a “balanced approach” that supports businesses while ensuring a fair deal for workers.

“Despite running on a platform of supporting small businesses, promoting growth and reducing inflation, the government’s actions could just do the opposite,” Emma continued. “Many farm retail businesses are family-run by hard working people, which calls into question the government’s definition of a working person. These fears cannot be overplayed.”

The FRA, NFU and other farming bodies are urging the government to reconsider its new policies, instead implementing measures that support the agricultural sector. 

“A thriving farming industry is essential for the UK’s food security, rural economy, and environmental sustainability,” the FRA added.