Sunday, March 25, 2012

Farming Talk: Opportunity is missed by new Coalition budget - Shropshire Star

The Budget represented a missed opportunity for the Treasury to introduce measures that might have helped farmers.

Chancellor George Osborne was right to focus on growth and I was pleased to see measures that could create a more competitive business environment in the UK.

John Mercer John Mercer

In particular, the Chancellor’s ambition to increase exports over the next decade to £1 trillion should benefit farmers who are the backbone of a food and drink industry which constitutes our biggest manufacturing sector.

I was also interested to hear that Michael Heseltine will be conducting a review into how spending departments interact with the private sector to deliver pro-growth policies, and I look forward to more details.

The Treasury has also mentioned a couple of imminent announcements which I await with interest – the review of the Habitats Directive to be published this week, and the National Planning Policy Framework (NPPF) due out next week.

I was pleased that the Chancellor confirmed the latter will contain a commitment to permitting sustainable development, something we welcomed when the draft policy statement was published.

Both announcements could contribute to reducing the regulatory burden on farmers, freeing them to invest and making businesses, and the industry, more competitive.

Nevertheless, before the Budget, I called on the Chancellor to bring forward policies that encourage and incentivise private sector investment in farm businesses, and build on the relative stability farmers have experienced since the economic crisis of 2008.

Changes to the tax treatment of farm reservoirs, for example, are crucial at a time when farmers need to prepare for scarcer water resources in some parts of the country, while a reversal of the decision to reduce the Annual Investment Allowance (AIA) on plant and machinery to £25k would encourage farmers to invest in costly machinery needed on modern, productive farms.

However, these are just a couple of the relatively small measures that seem to have been ignored by the Treasury.

With regard to capital allowances, the Chancellor’s focus on giving Britain the lowest corporation tax rate in the G20 ignores those businesses which are not incorporated. This includes a majority of farms – and it is they who will be discouraged from investing by the reduction in the AIA.

I know farmers will also be unhappy with the Chancellor’s decision not to stop the rise in fuel duty planned for August, especially as rural areas tend to suffer from higher fuel prices while the price of fuel on-farm continues to rise.

Whatever the economic circumstances, farming must prepare itself for a period of sustainable intensification of food production, allowing us to meet the future needs of a growing population. At the heart of this is the need for farmers to invest in their businesses, in new technology and techniques that will allow them to operate competitive and productive enterprises while minimising their environmental impact.

Unfortunately, the Budget didn’t do enough to remove some of the barriers preventing farmers from meeting this challenge.

John Mercer is NFU regional director.


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