NFU and supermarkets urge Budget action on food security

The NFU and nine major retailers have called on the chancellor to unlock billions of pounds in private investment in British food production ahead of the Budget.

In a joint letter, the organisations urged the government to increase the annual investment allowance (AIA) to at least £5m and extend it to cover farm buildings and other essential production infrastructure.

The AIA allows businesses to deduct 100% of qualifying expenditure on plant and machinery from their taxable profits in the year of purchase.

See also: Food security at stake as NFU presses for Budget support

The allowance is currently capped at £1m/year, with expenditure above that threshold instead qualifying for writing-down allowances.

The proposed tax changes would help farmers invest in reservoirs, polytunnels, livestock and poultry housing, and renewable energy, improving productivity, resilience and sustainability across the food supply chain.

NFU president Tom Bradshaw said farmers and growers wanted to invest in the future, but were being held back by tax rules that failed to support essential capital projects.

“Extending the annual investment allowance to include buildings and critical farm infrastructure would send a clear signal that the government does actually mean it when it says ‘food security is national security’,” he said.

The British Retail Consortium (BRC), Aldi, Asda, Co-op, Lidl, M&S, Morrisons, Sainsbury’s, Tesco and Waitrose signed the letter, arguing that investment in domestic production would strengthen supply chains while helping retailers keep British food on shelves at affordable prices.

The call comes as NFU analysis shows UK self-sufficiency has declined in 10 of 11 key food categories over the past 30 years, while agri-food import volumes have risen by 70%.

The NFU has also urged the government to support farm business confidence through measures including interest-free loans and changes to agricultural property and business property relief.

Public Accounts Committee sessions

Meanwhile, the House of Commons Public Accounts Committee will examine the resilience of the UK food supply in two evidence sessions this week.

Retail, food manufacturing and farming representatives, including NFU and BRC representatives and farmer Harry Metcalfe, are due to give evidence today (Monday 12 October), with senior Defra officials appearing on Thursday 15 October.

The inquiry will examine the risks posed by extreme weather, flooding, drought and cyber-attacks, alongside weaknesses in contingency planning and the government’s preparedness for major disruption.

The National Audit Office has previously identified shortcomings in food supply resilience planning, including limited involvement from food businesses in a 2023 catastrophic-event exercise.

The NFU and retailers have offered to work with HM Treasury and Defra on the design and implementation of the proposed tax changes.

The government does not comment on tax policy ahead of the Budget.