Spending Review

DEFRA faces a 15% real-terms cutin its budget over the next 5 years. This is the result of the settlement announced in the Chancellor’s Autumn Statement and Spending Review on the 25^th November.  The cut was somewhat lower than many had been expecting, but will still require significant savings from the Department.  Some spending areas were protected in the Review such as a £400m per year flood defence programme, spending on plant and animal disease prevention (including investment of £130m in DEFRA science facilities), and spending on National Parks and Areas of Outstanding Natural Beauty.  But this is likley to have the effect of requiring bigger cuts in other areas. DEFRA is aiming to reduce its administration budget by 26% by 2019-20.

Other announcements of interest to farming and rural businesses include;

• Profit averaging for farmers will be extended to five years (with the option of two years also being retained).
• The Renewable Heat Incentive (RHI) will be retained (there were rumours it was to be scrapped).  It will receive increase funding to £1.15bn by 2020-21, but the scheme will be reformed to deliver better value for money (details to be announced).
• An additional 3% Stamp Duty land Tax will be charged on purchases of additional properties that are not eh main residence.  This appears to target second-home buyers and buy-to-let landlords.
• The Government has committed to increase the rate of homebuilding, with an emphasis on affordable housing.  This is to include further reform of the Planning system which may increase development opportunities.
• Local Authorities will have greater powers to vary Business Rates.
• Small Business RateRelief will be extended by a further 12 months to April 2017.
• The proposal to reduce Tax Credits set out in the July Budget (see article at www.agribrief.co.uk/bulletins/generalpolicy/july-budget/) has been dropped.  
• There will be increased funding for infrastructure spending including HS2 and a roads-improvement programme.