You could be forgiven for thinking that there was not much on offer for rural businesses and places in the Spring 2023 Budget.
There were a few significant announcements, which include:
- The 100% first year allowance for companies to be able to write off the full cost of qualifying main rate plant and machinery investment in the year of investment. This complements the confirmation in the autumn of the Annual Investment Allowance (AIA) being permanently set at £1 million, which means that almost all businesses receive 100% tax relief on their qualifying plant and machinery investments.
- Maintaining the Energy Price Guarantee (EPG) at £2,500 per household until June 2023, which is estimated to save a typical household £160.
- The call for evidence and consultation on the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax to cover certain types of environmental land management. Done well, this could turbocharge environmental markets.
- Another call for evidence on reforming VAT on energy saving materials, which could help boost improvements to the energy efficiency of buildings.
- Another call for evidence from local authorities in England for locally led nutrient neutrality credit schemes.
However, despite all of the above announcements, there is still frustration and that is because the Budget and other recent announcements have not made it any clearer how the government intends to ‘level up’ rural places.
The CLA and Rural England remain very critical of the government’s refusal to fairly fund rural places in a way that recognises the higher cost of living and doing business in the countryside.
What I would like to see Chancellor Jeremy Hunt and Defra Secretary of State Thérèse Coffey commit to is:
- A proper acknowledgement of the lost economic and social potential of the countryside.
- To produce comprehensive strategies for land use and for food, now and into the future. A good starting point would be to publish a proper food strategy, replacing former Defra secretary’s George Eustice’s partial version published last summer.
- To develop policy faster. The number of policies that have been delayed, such as the environmental targets, and are still delayed, such as using in-use energy performance for Energy Performance Certificates (EPCs), is significant and is holding back businesses. Our tracker of regulation and legislation used to be four to five pages long; the last edition was 15 pages (and did include Scottish and Welsh policies).
- To deliver policy more effectively. I have lost count of the number of times that the Climate Change Committee has said that we have enough policies; we now need to get on and do it.
- To be more open about the future direction of policy. For example, how will the Environmental Land Management (ELM) scheme develop over time, especially if take up rates are below what they have planned for? When will the environmental baseline be published and, if environmental targets are not met, how will it evolve as Defra said that it would? This will give businesses much more certainty, which will encourage investment.
Making these commitments would offer at least as much benefit for rural businesses and places than those contained in the Budget.