Conservative Election Victory and Farming

Following the surprise Conservative victory in the General Election, thoughts are turning to what this might mean for farming and rural policy.  Some of the key pledges in the Tory manifesto are outlined below, along with some other issues that were not mentioned but may loom large over the next five years.  Of course, not all manifesto promises are kept, but the fact that the Conservatives will be able to govern without coalition partners may make it more likely that their polices will be implemented.

• Raising the Income Tax threshold to £12,500 and the Higher rate threshold to £50,000
• Increasing the Inheritance Tax threshold to £1m
• Pledges that VAT and NationalInsurance will not be increased
• Further cuts in public spending.  There must be a question of whether DEFRA will survive as an independent Department if its budget is cut much further
• A free-vote on repealing the ban on hunting with hounds
• A continuation of the current policy on TB control – including the badger cull
• Universal superfast broadband by 2020
• Renewables policy largely unchanged, but no public money for on-shore windfarms
• Support for infrastructure projects – HS2 will almost certainly go ahead (and perhaps HS3); a decision also needs to be made on airport expansion in the South East
• Housing – a pledge to build 200,000 starter homes to solve the housing crisis.  The only fundamental way to make housing more affordable is to get supply and demand in better balance by building more houses.  This seems difficult to square with a further pledge to protect the Greenbelt. 

In terms of agricultural policy the UK government has relatively little say, as the most important decisions are made at EU level under the CAP.  Other ‘Single Market’ issues that affect farming such as pesticides approvals and GM rules are also European decisions.  But the Conservatives have promised a referendum on the EU before the end of 2017 – once they have ‘renegotiated’ the terms of UK membership.  With a small majority, David Cameron will be reliant on the votes of the Eurosceptic wing of his party (with UKIP hovering in the background).  He will therefore be pushed to take a hard line on Europe.

The uncertainty arising from the referendum could cause volatility in economic indicators that affect farming – exchange rates, interest rates and asset values (land prices).  And then there is the big issue for farming of what would happen if the UK did leave the EU?  Certainly no UK government is likely to be as generous in supporting the farming industry as the CAP is.  And with the vast majority of our farm goods traded with the EU, any future relationship with the Single Market would be crucial.   The next few years may be interesting.