Small Farms

Lord Katz Excerpts

Monday 1st December 2025 Lords Chamber

[The Lord Bishop of Hereford]

To ask His Majesty’s Government what steps they are taking to ensure that agricultural policies improve the profitability and long-term viability of small farming enterprises.

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, we have allocated £11.8 billion this Parliament to sustainable farming and food production, targeting public money where it delivers most value. We are making supply chains fairer to ensure that farmers, particularly smaller farmers who can be most exposed to market pressures, are protected in their contracts, while unlocking new markets for British produce. We are reviewing the profitability review recommendations from the noble Baroness, Lady Batters, and developing our 25-year farming road map for England.

[The Lord Bishop of Hereford]

I thank the Minister for his Answer. Farming is a long-term business, and long-term strategic planning is necessary for profitability. Yet we have seen over the course of the past 18 months the devastating effect of the withdrawal of the sustainable farming incentive and the very serious effects of the changes in APR and BPR on long-term planning. While it is welcome that the sustainable farming incentive will be reopened in the first half of 2026, we still as yet have no details of what that initiative will be. Can the Minister let the House know when the details will be released?

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[Lord Katz (Lab)]

I thank the right reverend Prelate for his question. He is right to say that the Government are committed to farming, food security and nature recovery through a number of different environmental and land management schemes, including the sustainable farming incentive. He will be aware that the current scheme was closed last March, but it is fair to say that all agreements agreed to under previous iterations of the scheme are still live. It pays farmers to adopt and maintain sustainable farming practices that can protect and enhance the natural environment, alongside food production, and support farm productivity. We are determined to get this right. It is worth noting that only 40,000 of a potential 100,000 farming businesses took up the scheme under previous iterations, so it is really important that we get it right. We are determined to ensure that every farmer takes a look at the new scheme when we do, and we will obviously keep the House updated as to its publication.

[Baroness McIntosh of Pickering (Con)]

My Lords—

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[Baroness McIntosh of Pickering (Con)]

My Lords, does the noble Lord share my concern that, on the figures I have, 6,365 agriculture businesses have closed in the last year? That is the highest number of businesses to close in farming since 2017. Will he bring forward SFI to new entrants as a matter of urgent priority? Payments under the basic farm payment scheme in England are going down much faster than anyone envisaged, and this is causing real hardship for those who farm in the hills and dales of northern England.

[Lord Katz (Lab)]

Of course, the Government share concern when any farming business closes, which is why we are backing farmers to be more profitable and unlocking the full potential of the rural economy, making sure there is business stability and clarity so that they can invest with confidence. That is why we very much welcome the work that the noble Baroness, Lady Batters, did on profitability. We will align that with other strategies, such as the land use strategy, as we unveil this once-in-a-generation farming road map that should cover the next 25 years of agriculture. It is important to understand that over half of England’s farmland, more than 50,000 farm businesses, are already benefiting from our investment in environmental land management schemes, not just SFI but the Countryside Stewardship and landscape recovery schemes. It is important that we get the balance right between restoring nature and having productive farming.

[Baroness Grender (LD)]

My Lords, will the Minister share with the House any analysis in advance of last week’s Budget to explain how the Government reached the conclusion that freezing income tax thresholds and raising the national living wage and national insurance costs, with only a modest tweak to inheritance tax, will avoid further existential threats to the viability of so many small family farms? If the Minister has that analysis, will he be willing to publish it?

[Lord Katz (Lab)]

I thank the noble Baroness for that question. To be clear, I do not know whether the Treasury has done precisely that analysis, but I can say that at the Budget last week, the Chancellor announced that any unused allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners from 6 April next year. We have taken this action after listening to feedback from many stakeholders who called strongly for the change to planned reforms to reduce complexity and remove an unfairness for widows and widowers. This change will double the tax-free allowance for agricultural business property available to estates of those widowed before 6 April 2026. It is worth pointing out that almost three-quarters of estates claiming agricultural property relief, including those that also claim business property relief, are not expected to pay more tax as a result of the changes in 2026-27, based on the latest available data.

[Lord Wigley (PC)]

My Lords, is the Minister aware that the farming pattern in Wales is very different from that in the majority of England? Most farmers may be capital rich but are income poor, with average incomes under £25,000 a year. In these circumstances, will the Government either exempt all agricultural holdings from capital gains tax where they are transferred from family to family for an ongoing agricultural purpose, or enable Senedd Cymru to introduce a new agricultural taxation system in Wales to safeguard our traditional family farms?

[Lord Katz (Lab)]

I thank the noble Lord for that question. It is probably a little outside my bailiwick to talk about changing the devolution settlement with the Senedd. To reassure him, we are working with farmers in all parts of the country and in all farming sectors to ensure that they have fairer, more equitable supply chains, which is of course a really important factor in ensuring that businesses are viable. We have already introduced fair dealing regulations for pig and dairy farmers to ensure that small businesses are treated fairly in their contractual dealings with large buyers. We are currently developing those regulations in other sectors, such as the milk/dairy sector, and I can tell him that the egg sector regulations are well advanced: we are getting cracking with it.

[Lord Winston (Lab)]

My Lords, in March 2023 this House passed the precision editing Bill, which allowed the release of modified organisms, plants and animals into the environment, specifically to help farmers, including small farmers—particularly with plants—to make profit. Many scientists felt, as I did, that this was a risky process, and it is still under review. This March, nine months ago, the Government announced that they were going to do some tests to see what the risk of mutations and other things might be with such plants. Can the Minister please update us on the current situation?

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[Lord Katz (Lab)]

I thank my noble friend for that question. I will have to write him with the details of the review. Agritech and engineering biology, such as precision breeding, are frontier growth sectors, which is why they were put in the Government’s industrial strategy that was published in June this year. We have a clear vision to make the UK the best place in the world to start growing and investing in agritech, in a safe and scientifically responsible way. To date, the farming innovation programme has supported almost 300 projects, which include a wide range of interesting uses of new technology that will benefit small farmers particularly, whether it is bio-derived fungicides, monitoring tools for dairy cow welfare or equipment to help maximise strawberry yields.

[Lord Roborough (Con)]

My Lords, last week BBC “Countryfile” broadcast an interview with an 82 year-old farmer who said he had considered suicide in direct response to the Government’s family farm tax. Given that the Budget makes clear the Government’s intention to press ahead regardless with a tax that dwarfs profitability, will the Minister commit to recording and publishing in a timely manner the number of farmers and family business owners who commit suicide in the run-up to April next year when the rules change? I refer the House to my registered interest as a farmer.

[Lord Katz (Lab)]

My Lords, this is a subject of the utmost seriousness. I cannot commit to publishing data without understanding that the data is available to be published in a correct and statistically reliable format. This is something that the Government take very seriously. The noble Lord will be aware that, since May 2024, Defra has funded the farmer welfare grant, which provides half a million pounds to support charity projects focused on improving the mental health and well-being of farmers in England. That fund runs until next March; we are currently evaluating how it works to see whether it is possible to extend and expand this fund post 2026.

In the wider NHS, we have hired 8,500 new mental health support workers, which will help access for anyone in distress. It is important that we do not politicise mental health issues across society, particularly when we have sectors that are impacted by it. This Government stand behind their farming sector. We understand that the changes that we had to make in last year’s Budget, which we have ameliorated in this year’s Budget, are tough on farming businesses, but it is important that we make decisions that put farming on a firm footing and are fair by the public finances.

[Lord Wigley (PC)]

My Lords, following my earlier question, I wish to ensure that my interests in matters regarding agriculture, which are in the register, are drawn to the attention of the House.