Defra to Return £100 Million ELM Underspend to Treasury

According to insiders, Treasury officials are looking to reduce the farming budget in England by £100 million as part of efforts to address a £22 billion gap in public finances.

Farmers Weekly reports that the Department for Environment, Food & Rural Affairs (Defra) is also considering making certain aspects of the Environmental Land Management (ELM) funding competitive, aiming to recover additional funds. This may involve implementing Higher Tier Countryside Stewardship options; however, it has been noted that the necessary computer system modeling required for this change is still not fully developed.

Martin Lines, a farmer from Cambridgeshire and chief executive of the Nature Friendly Farming Network (NFFN), expressed his concerns: “It would be disappointing to see a reduction in the agriculture budget when the need for investment in nature, climate, and food security is more crucial than ever.”

For further details, see: Editor’s View: Budget cuts are coming at Defra. What’s next?

Sources close to government officials indicate that the £100 million at risk is funding that was not disbursed by the previous Conservative government during the roll-out of the ELM scheme, which followed a series of cuts to the Basic Payment Scheme.

Defra officials reportedly regard this unspent funding as money that could be returned to the Treasury. “If Defra hadn’t identified this amount, the Treasury might have pursued even deeper cuts,” noted one insider.

Research conducted by the Royal Society for the Protection of Birds (RSPB) indicates that this budget reduction could lead to approximately 239,000 fewer hectares of farmland being managed in environmentally friendly practices.

Tom Bradshaw, president of the National Farmers’ Union (NFU), has cautioned that a £100 million reduction in the budget would further erode farmer confidence, which is already extremely low due to rising inflation, decreasing incomes, and severe weather conditions. He urged the government to uphold its commitment to agriculture, an essential element for national food security.

Chancellor Rachel Reeves is set to unveil her government’s public spending strategy, including allocations for UK agriculture, in the autumn Budget scheduled for Wednesday, 30 October.

In light of serious demands on public finances, such as the NHS, education, and national security, some leaders within the industry now believe that a freeze on the UK’s annual agricultural budget of £3.7 billion (£2.4 billion for England) for the following year would be a reasonable outcome for farmers.

Conversely, environmental organizations like the RSPB and Wildlife Trusts argue that financial support for sustainable agriculture should see an increase of £1 billion each year instead of a decrease, to help the UK government achieve its targets of halting species decline by 2030.

Alice Groom, head of sustainable land use policy at the RSPB, stated: “We definitely need to witness an increase in the agricultural budget if the government is to meet its ecological and climate goals, which are vital for the health of the farming industry and for food security.”

“Our findings suggest that the required budget should be £3.1 billion annually for England and £5.9 billion across the UK. While we recognize that asking for such an increase in the current financial environment may seem insensitive, the cost of neglecting the nature and climate crisis is far more significant – the longer we wait, the more expensive it gets.”

The UK government has been invited to provide a comment.