Labour slammed over 'terrible' farming cap - 'vindictive tax causing nothing but misery'

Labour has been slammed for inflicting "months of distress, pain and panic" on British farmers as anger grows over plans to slap a funding cap on an "essential income stream".

The Government announced plans to limit applications for the Sustainable Farming Incentive (SFI) to an annual £100,000 last month, almost a year after the scheme was frozen out of the blue, leaving thousands of farmers in limbo.

The SFI provides a financial incentive for farmers to use their land for the "public good", including by planting wildflower strips and managing ponds and hedgerows.

Emma Reynolds, Secretary of State for the Department for Environment, Food and Rural Affairs (Defra) said the revised scheme, which also cut the number of environmental actions farmers are paid for from 102 to 71, was "simpler, fairer and more stable" than its predecessor.

However, the Country Land and Business Association (CLA) warned that the move risks "limiting the ambitions" of financially struggling farmers and shadow environment secretary Victoria Atkins has condemned it as the latest "terrible" example of Labour's stance towards the agricultural sector.

Ms Atkins also criticised Labour's partial U-turn on the Family Farm Tax in December, which raised the inheritance tax threshold from £1 million to £2.5 million.

"I have told the Government again and again the terrible impact of this vindictive tax on rural communities," she told the Express. "For 14 months, they dismissed farmers' concerns outright, producing dodgy numbers and refusing to acknowledge the terrible consequences.

"Their partial u-turn, snuck out just before Christmas, did not undo the months of distress, pain and panic. Many farmers are still on the line for huge bills, and even those that aren't will not easily forgive Labour. It is only the Conservatives who will scrap the Family Farm and Family Business Taxes in their entirety."

The new SFI scheme will open in stages this year, with small farms and those without an active Environmental Land Management (ELM) agreement able to apply from June, with a second application window for eligible farmers opening in September.

CLA President Gavin Lane said: "This is counterproductive when the government has legally binding environmental targets and some may have no choice but to intensify production. Many farm businesses are facing some of the bleakest profitability conditions in a generation.

"The Basic Payment Scheme is virtually gone and SFI is an essential income stream to build business resilience and support food production. We will continue to work closely with Defra to ensure the scheme is as accessible and flexible and possible."

Martin Lines, an arable farmer in South Cambridgeshire and CEO of the Nature Friendly Farming Network (NFFN), said the announcement would be welcomed by farmers left in the lurch by the scheme's suspension last year but warned of a "shortfall" in the amount needed to compensate farmers for nature-friendly work.

"If it wants to secure the future of British farming, the government must now commit to consistent, long-term funding for nature-friendly approaches to agriculture," he said.

"Concentrating initially on farms that do not have any ELM agreements is positive news, however the funding being offered here still falls considerably short of what is required for the full-scale transition to nature-friendly farming [to meet] our goals on climate mitigation and nature's restoration.

"It is also concerning that many farms could still be left without support, as a truly climate-resilient farming system will need every farm in England to be supported to work in nature-friendly ways."

James Heath, 39, an arable and poultry farmer in Shropshire, and Charlie Edgley, 63, an arable farmer in Buckinghamshire, suggested the scheme struck the right balance between encouraging sustainable farming and retaining land for food production.

However, they also both urged the government to take a longer-term approach to supporting the sector and stressed the industry's volatile financial position amid the inheritance tax changes coming into effect in April, weather-related uncertainty and rising running costs.

"The risk with this scheme is that people who have made their money elsewhere and bought land that won't be used for food production will benefit," Mr Edgley said.

"In farming and food production, everything revolves around planning for the long term. It takes time and effort, and you don't want to live in fear of it being taken away."

Mr Heath added: "The cap might prevent farmers from putting as much of their land into sustainability schemes and force them to use it as actual farmland. But what the government really needs to do is provide more security for them by scrapping the inheritance tax changes.

"They've got this black hole to fill and think farming is an easy target. I don't think they appreciate the important role it plays in the British economy. There's no sense of overall support, despite what they say."

The Government outlined plans to hit agricultural assets with a 20% inheritance tax from April 2026 in its first budget, with a partial U-turn last December raising the threshold by £1.5 million.

NFU president Tom Bradshaw also urged Ms Reynolds to plug the funding gap for the 10,000 SFI agreements due to run out this year, warning that failure to provide a roll-over of some kind was "unthinkable".

Jake Fiennes, head of conservation at Holkham Estate in Norfolk, said the new policy could disincentivise farms and large estates from keeping land in environmental schemes.

"With this new policy, there is all the potential of some wonderful work [that is] delivering for our environment being undone," he said.

"Many major schemes are due to end in December. These will have a significant environmental value and the resultant change in income driven by this policy will probably mean a reduction in environmental output in these areas, some of which have been committed to improving the environment for decades."

Defra cited analysis showing that a quarter of SFI funding previously went to just 4% of farms, with ministers arguing that the new cap would prevent disproportionately large agreements while ensuring that the majority of sites - the 97% who claim under £100,000 - remain unaffected.

Ministers also announced a wider funding package focused on boosting innovation and productivity, including through investment in new research and technology. Further capital grants are also expected to become available next year, supporting infrastructure projects including water management.

Ms Reynolds said she was "determined to give British farming the foundation it needs to grow", adding: "We want farm businesses that are productive, profitable and resilient."