PolicyLens

Methodology note

Raise farming budget to £3bn: calculation note

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

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

Central fiscal result

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

Low case: +£0.3bn. High case: +£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 £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 £2.4bn to £3bn implies £0.6bn.
  • Central cost is £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: +£0.6bn
  • Scheme transition and administration: +£0.2bn
  • Devolved or rural spillovers: +£0.2bn
  • Administration and uncertainty: +£0.0bn

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

Main source groups

  • Auerbach and Gorodnichenko, "Measuring the Output Responses to Fiscal Policy" (American Economic Journal: Economic Policy, 2012): Spending multipliers depend on economic slack, openness and policy context; informs GDP uncertainty from higher agricultural support.
  • Office for Budget Responsibility, "A brief guide to the public finances" (2026): The OBR expects public receipts of about £1,235bn in 2025-26; scale check for large packages.
  • Reform UK, "Our Contract with You" (2024): The Contract claims large savings from departments, QE reserves, aid, welfare and net zero; defines scenarios but needs caution.
  • Department for Environment, Food and Rural Affairs, "Update on the farming budget" (2025): Used for official spending, revenue or policy-costing baselines against which the scenario is compared.
  • Kirwan, "The Incidence of U.S. Agricultural Subsidies on Farmland Rental Rates" (Journal of Political Economy, 2009): Agricultural subsidies can be partly captured through land rents rather than fully reaching active producers; supports scepticism that higher farming budgets all raise farm output.
  • Reform UK, "Our Policies" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.