James Cowper Kreston cautiously welcomes the outcome of the Spending Review 2025

James Cowper Kreston’s rural team joins industry bodies in cautiously welcoming the outcome of the Spending Review, whilst acknowledging that the spending plans announced will present further challenges to an already stressed sector.

Within the modestly positive overall settlement of £7.4 billion for Defra, the £2.7 billion allocated for farming and nature recovery includes a £100 million reduction in funding for farming and countryside schemes including Countryside Stewardship, Landscape Recovery and capital grants. As NFU President, Tom Bradshaw, succinctly pointed out, this will mean that ‘farmers and growers will need to do more with less’.

Commenting on the announcements, Fiona Hawkins, Partner at James Cowper Kreston, said:

“This feels like a case of ‘it could have been worse’ for UK agriculture. With an eye on measures that promote the sustainability of businesses in both the environmental as well as the economic sense we are pleased to see significant investment in nature with increased support for environmental farming schemes, tree planting and peatlands. However, with the Chancellor commenting yesterday that ‘economic security relies on our ability to make and sell more in Britain’ it feels like there are missed opportunities to drive innovation and growth in the food and drink sector, which is underpinned by UK agriculture, and that the mark has again been missed in terms of the imperative of investing in national food security.”

The implications of the review for farmers in rural areas include the following opportunities and challenges:

Increased DEFRA Funding:

• More resources for sustainable agriculture programs, including grants for eco-friendly practices and regenerative farming.
• Support for transitioning away from EU-style subsidies to performance-based environmental schemes.

Subsidy Reform:

• The ongoing shift from direct payments to environmental land management schemes (ELMS) continues to create uncertainty or income gaps for some farmers.

Digital Infrastructure:

• Expansion of rural broadband will improve access to precision farming tools, online markets, and remote advisory services.

Climate Resilience & Environmental Stewardship:

• Funding for climate adaptation (e.g., flood defenses, drought-resistant crops).
• Incentives for carbon sequestration, rewilding, and biodiversity projects.

Agri-Tech & Innovation:

• Investment in agricultural technology (e.g., drones, AI, robotics) to boost productivity and reduce labour dependency.

Rural Enterprise Support:

• Grants and loans for diversification (e.g., farm shops, tourism, renewable energy projects).

Administrative Burden:

• New funding schemes often come with complex application processes and compliance requirements.

The 2025 Spending Review may lead to opportunities for increased funding and technological support; however, transitioning to new subsidy models and managing administrative complexities needs careful planning, particularly given the government’s reluctance to change the proposals on Inheritance tax announced last autumn.

Our rural team remains in continued support of our farming and rural clients in navigating these ongoing challenges. If you’d like to discuss how the announcements could affect your organisation, please get in touch with a member of our specialist Farms and Estates Team here.