NFU Scotland’s director of policy, Jonnie Hall, has described yesterday’s Labour Budget as “seismic”, reassuring farmers that despite the Budget’s unforeseen “confusing and complex” nature, “it is by no means bad news per se”.
Ultimately, the devolved governments no longer have a ring-fenced agriculture budget, but can instead has full discretion to spend as much or as little as they wish on agriculture.
According to the government, from 2025 to 2026, the Barnett formula will apply in the usual way to funding for agriculture and fisheries, rather than the devolved governments receiving a ringfenced addition to the block grant as they did for Spending Review 2021.
Funding from 2024 to 2025 has been baselined in each devolved government’s block grant, which signifies that the government has rolled over the 2024/2025 farm support funding for Scotland and added it to Scotland’s block grant.
In addition, the Scottish government is to receive an extra £3.4 billion in its block grant – taking it to the “largest real terms settlement since devolution” with an expected value of £47.7 billion in 2025 to 2026.
Hall surmised that in essence, the Scottish government is to receive an increased block grant that includes a rollover of the £620 million for 2025-2026, instead of a block grant which also included £620 million ring-fenced for the Agriculture & Rural Economy (ARE) portfolio.
Moreover, Hall argued that the increase in block grant equates to 8.1%, indicating a potential of increased funding for the ARE portfolio.
“Effectively, the UK government has said to the devolved administrations, including the Scottish government, we’ll give you your block grant, but it’s up to you as to how you spend it across all of your devolved responsibilities,” he added.
“As things stand, the £620 million farm support budget has been rolled over for 2025/2026, albeit no longer ring-fenced, and the Scottish government has additional funding in its block grant to allocate to farming and crofting if it chooses to.
“The ARE funding is now exclusively down to the Scottish government to deliver from their budget – but that also means we’re competing with health, education, etc,” Hall cautioned.
Based on this new development, NFU Scotland will shift its attention to the Scottish government on all matters relating to agriculture funding.
Hall has said that the organisation intends to meet with cabinet secretaries and ministers as soon as possible and will submit their formal Budget submission, within the next week or two.
“Time and again, the Scottish government has said on record there will be ‘no cliff edge’ for farmers and crofters.
“Ministers have repeatedly said there is a need for increased funding for farming and crofting to help deliver the objectives of the new Agriculture and Rural Communities (Scotland) Act 2024 (the ARC Act).
“Moreover, thanks to the lobbying and amendments we successfully pursued, the ARC Act requires the Scottish government to set out indicative budgets as part of the Rural Support Plan, paving the way for a significant degree of funding commitments over multiple years,” he added.
NFU
He also believes that there can no more hesitation to reinstate the outstanding £46 million of uncommitted funds from previous Scottish government budgets, given the block grant increase.
Hall has called on the Scottish government to solidify its commitment to agriculture, and it’s contribution to “high-quality food production, climate and nature restoration and thriving rural communities” by increasing the overall agri-budget in addition to the outstanding funding.
However, he recognises the challenge that the absence of a ring fenced budget presents to agriculture, which must now faces compete with other sectors like health and education, for funding.
“We must also seek out and secure a more certain multi-annual commitment on funding. As things stand, we’ve only got certainty on 2025/26. We need five-year or parliamentary term commitments from the Scottish government.
“The first minister has reiterated the commitment from his predecessor that, from 2026, at least 70% of the overall portfolio funding will be delivered as direct support under the new Tiers 1 and 2.
“In addition, we are waiting for a response to our repeated ask that at least 70% of that direct support envelope is allocated to Tier 1 – given new conditionality from 2025 and the existing split between the Basic Payment Scheme and Greening.
“The Scottish government Budget on December 4 was always going to be hugely important to the profitability and sustainability of Scottish farming and crofting, in the short, medium and long term.
“In the last 24 hours, the significance has heightened,” he said.
