Friday 13 December 2019 – A date to remember for farmers
Friday, 20 December 2019
Friday 13 December 2019 is a date which is likely to be remembered for many years. For younger clients it will be the biggest political landslide of a lifetime, and for all it will be seared into the collective memory. Without wishing to pass political comment, many will be grateful to see risk of huge tax increases for the better off, receding, along with the spectre of partial land nationalisation and a return to the levels of state sector control last seen in the 1970’s. We should also have a much more stable basis for forward planning, at least for the next five years along with the likelihood of a “Brexit boost” for businesses as deferred capital expenditure is at last released.
Agriculture Bill will be re-introduced
On the other hand, it seems probable that the Agriculture Bill will be re-introduced and will rapidly pass into law. Direct payments will be removed over a window (presumably still seven years) and new trade agreements will have an impact on agricultural prices. Quite how the government will balance consumer prices, food quality and farm profitability in the context of wider trade agreements remains a cause for concern.
Bruce Masson, a partner in our Farms and Landed Estates team commented:
“Planning for the future is absolutely crucial. The seven year transition period and the prospect of five years of political stability means that there is now no excuse for avoiding the issue of business restructuring for survival – and this winter would be the right time to consider how farm business’s will go forward without subsidy.”
In the medium term, the election will continue to have implications. The campaign has highlighted pressures in government spending plans and although the promises made are on a different scale to some that were proposed by opposition parties, there will be a need for new sources of tax to fund the promises made (and others such as long term care). Key taxes fixed by the “triple lock” increases in some of the areas of capital cannot be completely ruled out.
Farm reorganisation and streamlining
So, some questions have been settled, but the political landscape has changed and new challenges may emerge as government policies alter with a view to retain some of the swing votes for the future. It should not be assumed that agriculture will be at the forefront of government thinking in that process. On the basis of “hope for the best and prepare for the worst”, time spent over Christmas thinking about farm reorganisation and streamlining would not necessarily be wasted.
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Originally written on behalf of MHA MacIntyre Hudson, a member of MHA