Opinion: Treasury as much to blame as Defra for SFI scramble

When the second window of the Sustainable Farming Incentive (SFI) opened, £253m was on the table. Within hours, it was gone.

There is plenty to complain about in how it was handled, although the application website itself seemed to work for most. It was the window itself that was truly absurd.

See also: Defra’s handling of SFI26 is an absolute ‘shambles’

A scheme meant for farmers across England was closed within hours, punishing those who were out drilling or feeding their animals.

Farming doesn’t stop because Whitehall has opened a portal, and a first-come, first-served dash is a lottery, not a policy.

But the process is not the real story. Had the window stayed open for months, the outcome would have been the same.

Thousands of farmers would still have been turned away, because the budget was never big enough to meet the demand. No website, however well built, can allocate money that doesn’t exist.

Treasury indifference

I don’t believe that the Treasury holds rural England in contempt. It is something more mundane: casual indifference.

The countryside is treated as a line to be trimmed rather than an economy to be grown. Environmental schemes are funded by loose change, and those whose job is to feed the nation and restore our environment are expected to do so with the sort of funding that the NHS spends in a few hours.

This same out-of-touch indifference is what led to the catastrophic changes to inheritance tax (IHT) reliefs, the impact of which has been stark.

Investment in the rural economy has collapsed as farming families put money aside for a future tax bill instead of spending it on new buildings, better slurry storage, diversification or extra staff.

Every pound held back for IHT is a pound not spent with local contractors, suppliers and retailers.

And it runs through the wider tax treatment of rural business. Higher employment costs, a business rates system that punishes the very diversification government says it wants, and a steady stream of new burdens all add up.

Rural businesses are taxed as though they were an endless source of revenue, rather than the employers, innovators and service providers that keep communities alive. The consequence is fewer jobs, less growth and villages that slowly die.

Environmental consequences

Nor does indifference come free. Underfunding SFI puts the Environmental Improvement Plan targets and the “30by30” commitment (to manage 30% of our land and seas for nature by 2030) further out of reach.

Hedgerows go unplanted, soils unimproved, water unmanaged. The Treasury may see a saving; the rest of us will see the bill later, in floods, droughts and lost nature.

So, what should change? First, SFI needs a budget that matches its ambition, set over several years so farmers can plan with confidence. A scheme that is genuinely open to all must be funded to be open to all.

Second, the Treasury should reverse the agricultural property relief and business property relief changes and recognise the damage to investment already under way.

Third, we should be more ambitious about private finance. Well-regulated nature and carbon markets, where businesses pay for verified environmental outcomes delivered by farmers, could bring significant new money into the countryside.

But private markets must add to public funding, not replace it. They cannot become the Treasury’s excuse for walking away.

Farmers have shown this week that they want to deliver for nature. The appetite is there. What is missing is a government willing to pay for it, and a Treasury that understands the rural economy is worth investing in rather than simply taxing.

The Budget is weeks away. Does prime minister Andy Burnham really want “growth in every postcode”? It’s time to prove that was more than just spin.