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Methodology note

Raise farming budget to GBP 3bn: calculation note

Assumptions behind the Raise farming budget to GBP 3bn scenario. Implementation detail is incomplete, so uncertainty is explicit.

View main policy page: Raise farming budget to GBP 3bn

Central fiscal result

+GBP 1.0bn - Net fiscal impact in 2027-28

Low case: +GBP 0.3bn. High case: +GBP 2.5bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • England farming budget rises to GBP 3bn.
  • Climate-related farming subsidies are replaced or reduced.
  • No separate food-price subsidy is included.
  • Devolved consequentials are treated as high-case risk.

Affected population

  • Affected units are farms, landowners, tenants and rural suppliers.
  • England is the central geographic scope.
  • Consumers are affected indirectly through supply and prices.
  • Environmental public goods may lose funding.

Gross impact

  • Budget rise from about GBP 2.4bn to GBP 3bn implies GBP 0.6bn.
  • Central cost is GBP 1bn after transition and consequentials risk.
  • Low case keeps many schemes within existing budgets.
  • High case includes wider rural support demands.

Fiscal build-up, central case

  • Direct budget uplift: +GBP 0.6bn
  • Scheme transition and administration: +GBP 0.2bn
  • Devolved or rural spillovers: +GBP 0.2bn
  • Administration and uncertainty: +GBP 0.0bn

Central net impact: +GBP 1.0bn in 2027-28.

Behaviour and pass-through

  • Low case assumes spending is largely reallocated within programmes.
  • Central case assumes a real budget uplift and transition costs.
  • High case assumes wider eligibility and devolved funding pressure.
  • Food-price pass-through is not assumed.

Phasing

  • 2026-27: +GBP 0.3bn. Preparation or partial implementation.
  • 2027-28: +GBP 1.0bn. Main scenario year.
  • 2028-29: +GBP 1.1bn. Behaviour and pass-through develop.
  • 2029-30: +GBP 1.2bn. Steady-state uncertainty persists.

Main source groups

  • S1: Reform Contract and farm reporting describe GBP 3bn target.
  • S2: Defra blog gives recent farming-budget context.
  • S3: Subsidy-incidence and multiplier studies inform land-rent and output-risk assumptions.
  • S4: Environmental economics cautions against ignoring public goods.
  • S5: Exact replacement scheme is not specified.