On June 11, 2025, Chancellor Rachel Reeves unveiled the latest Spending Review, delivering a cautiously optimistic outcome for England's farming and environmental sectors. The announcement, which had been anxiously awaited by farmers, environmentalists, and industry leaders alike, confirmed that the Department for Environment, Food and Rural Affairs (Defra) would receive a better-than-expected financial settlement, easing fears of drastic budget cuts that had loomed over green farming support.
The Treasury settlement promises an average investment of £2.7 billion per year in farming and nature recovery from 2026 to 2029. This funding includes a substantial £2.3 billion annually through the Farming and Countryside Programme, matching the support levels under the previous Conservative government. In addition, up to £400 million will be channelled into supplementary nature schemes aimed at bolstering biodiversity and environmental restoration.
One of the most significant highlights of the Spending Review is the planned increase in funding for Environmental Land Management (ELM) schemes. Defra's budget for ELM is set to rise from £800 million in 2023-24 to a robust £2 billion by 2028-29. This is a marked improvement compared to earlier warnings that the programme could face steep reductions. However, the government has yet to clarify how this funding will be split between the Sustainable Farming Incentive (SFI) and Landscape Recovery (LR) schemes, leaving farmers eager for more detailed guidance.
Beyond direct farming support, the Treasury has committed £7 billion over the Spending Review period towards nature recovery efforts. This includes £5.9 billion allocated for environmental farming initiatives, £816 million dedicated to tree planting, and £85 million for peatland restoration. Capital funding for Defra will reach an impressive £16 billion over these years, reflecting an average real-terms growth rate of 2.5%.
The government emphasised that this settlement is designed not only to support food security and improve agricultural productivity but also to help meet the Environment Act targets concerning biodiversity, water, and air quality. Additional investments include £4.2 billion for flood defences over three years—a 5% increase compared to current spending—and £300 million to modernise Defra’s digital infrastructure. This modernisation effort will incorporate artificial intelligence to streamline grant delivery and reduce administrative costs, particularly through upgrades to the Rural Payments Agency (RPA).
Despite these positive developments, Defra faces the challenge of delivering at least 5% in departmental savings by 2029. This includes addressing legacy IT issues, reducing reliance on contractors, and achieving £144 million in technical efficiencies. The balancing act between increased investment and required savings has left some industry experts cautious.
Jason Beedell, rural research director at Strutt & Parker, offered a measured perspective on the Spending Review’s impact. He noted, “The government says it will invest more than £2.7 billion per year in sustainable farming and nature recovery from 2026‑27 until 2028‑29. Of this, £2.3 billion will be funnelled through the Farming and Countryside Programme, which includes the ELM schemes.” However, he added, “Given the National Audit Office reported in June 2024 that Defra had committed to spend £2.4 billion a year on the farming sector between 2020-21 and 2023-24, that appears to be a cut of around 4%. It feels like we need more detail. Farmers will need to wait for clarity on how individual schemes like the SFI may be impacted, although Defra has already signalled that the reset scheme is likely to target smaller farms.”
Victoria Vyvyan, president of the Country Land and Business Association, welcomed the funding as a “meaningful settlement,” but urged Defra to collaborate closely with industry stakeholders to maximise its benefits. “Trust and confidence have been shaken and this is an opportunity to rebuild,” she remarked, highlighting the cautious optimism within the sector.
George Dunn, chief executive of the Tenant Farmers Association, also expressed relief that nominal support levels have been maintained, despite real-terms cuts when factoring in inflation. “While this is a real-terms cut when adjusted for inflation, we’re relieved the government has maintained support in nominal terms. Now we must ensure schemes work for all, especially tenant farmers,” he said, underscoring the need for inclusivity in policy implementation.
Environmental groups, including the WWF, RSPB, and The Wildlife Trusts, had urged the government prior to the announcement not to squander the opportunity to restore nature and meet climate obligations. Joan Edwards, director of policy and public affairs at The Wildlife Trusts, acknowledged that “The government has listened to calls to protect nature-friendly farming, but real risks remain due to tight budgets and real-terms cuts amid persistent inflation.” Their cautious stance reflects ongoing concerns about the sustainability of funding in the face of economic pressures.
Meanwhile, the National Farmers’ Union (NFU) voiced a mix of praise and concern. NFU President Tom Bradshaw credited relentless lobbying and leadership efforts for protecting the agriculture budget from rumored severe cuts. He said, “I am pleased the government has listened, and credit should go to Defra Secretary of State Steve Reed for his work in maintaining a budget against such a tough financial backdrop.” Yet, Bradshaw also posed critical questions about the government’s recognition of food security as a vital component of national security and the feasibility of achieving environmental ambitions with a budget that has been cut in real terms. “Many big questions still need to be answered,” he cautioned, signaling that the NFU will provide further analysis in the coming days.
Chancellor Rachel Reeves’ Spending Review also outlined plans to raise budgets for defence and the National Health Service (NHS), positioning these as national priorities alongside environmental and agricultural funding. Notably, Defra avoided a major cut in this review, a relief to many in the farming and food industries who had feared significant reductions.
Despite the positive headlines, the sector remains vigilant. The lack of detailed breakdowns on scheme allocations and the pressure to achieve departmental savings mean that the full impact of the Spending Review will unfold over the coming months. Farmers, land managers, and environmentalists alike will be watching closely to see how these commitments translate into tangible support on the ground.
In an era marked by climate challenges, food security concerns, and economic uncertainty, the Spending Review represents a critical juncture. It attempts to balance competing demands: investing in sustainable agriculture and nature recovery while navigating fiscal constraints. Whether the government’s promises will meet the sector’s needs remains to be seen, but for now, the message is one of cautious hope and guarded optimism.
