Reeves’ autumn Budget had already signalled that spending cuts may be on the horizon. Its accompanying Red Book warned of “significant funding pressures on flood defences and farm schemes of almost £600m in 2024-25”, that meant it was “necessary to review these plans from 2025-26 to ensure they are affordable”.
Whitehall sources acknowledged the budgets will come under fresh pressure from 2026 onwards, which could be intensified by the bond market turmoil that threatens to wipe out Reeves’ headroom and force her into more cuts.
The government said its commitment to supporting farmers is “steadfast”.
“We desperately need this new government to support farmers so that we can all have abundant food and water in the future,” he said.
The CEN warned that ministers appear “primed” to cut the £2.4bn nature-friendly farming budget, which includes measures designed to protect against river pollution and floods, to meet spending pressures from 2026 onwards, which were already tight and may now constrict further.
“Cutting this budget would be a fool’s errand for a government supposedly wanting to protect communities from flooding, fight climate change, protect nature, and support British farmers. The government should be figuring out how to raise the nature-friendly farming budget in line with inflation.”
She added: “Cuts to both the flood defences and farming budgets could have a detrimental effect on water quality, setting back efforts to clean up our rivers.”
The grants are tied to environmental measures that farmers must carry out on their land to receive funding and include measures designed to reduce river pollution.
Government grants support farmers to reduce river pollution by paying for things such as slurry storage and buffer strips between a farm and a waterway.
Leicestershire farmer Joe Stanley, a member of the National Farmers Union (NFU) national council, said agriculture was “uniquely placed in the economy to deliver on things like biodiversity, to deliver on climate climate change targets, water quality, air quality, whatever it is” and that slashing spending in this area would mean “cutting funding to the really very few people who can actually deliver on those targets”.
NFU Deputy President David Exwood said: “The NFU has urgent questions that need answering such as whether government has the long-term, flexible budget available to deliver the Environmental Land Management scheme (ELMs) in England in order to help restore farmer confidence. We estimate £4bn is required to deliver the government’s commitments.
Welsh sheep farmer Naomi Williams-Roberts, who operates under devolved funding, said: “Something that has been said quite a lot is that you can’t be environmentally green if you’re in the red.
A Department for Environment, Food and Rural Affairs spokeswoman said: “Our commitment to farmers is steadfast.
“We are going further with reforms to boost profits for farmers by backing British produce and reforming planning rules on farms to support food production.
“As we set out in our Plan for Change, we are focused on supporting our farmers, supporting rural economic growth and boosting Britain’s food security.”
The economic challenges facing Reeves
Experts point to global factors such as the impending arrival of Donald Trump in the White House and his potentially inflationary policies as the main driving force behind the recent soaring cost of borrowing.
However, they also acknowledge that Reeves’s decisions to change her fiscal rules to allow more borrowing for investment in infrastructure and place higher taxes on businesses have also had an impact on the markets and hindered growth.
The Chancellor also inherited what the Institute for Fiscal Studies previously described as a “decade and a half of historically poor growth” and left herself a thin £9.9bn head room in the Budget, which is now at risk of being wiped out by the high cost of borrowing.
Losing the headroom could force Reeves to raise more money through taxes or spending cuts.
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