News and views from Strutt & Parker
The government has promised comprehensive reforms to bring the planning system into the 21st Century, as part of its strategy to stimulate housing development.
The Budget 2020 confirmed that an ‘ambitious’ Planning White Paper will be published shortly.
It said reforms will aim to create a simpler system to accelerate planning decisions and to provide more certainty to the general public, local planning authorities and developers.
Ahead of the White Paper’s publication, housing secretary Robert Jenrick announced a range of new proposals which are detailed in a Planning for the Future document.
This signals that councils will be encouraged to make the most of brownfield sites for housing development first, particularly those close to existing transport hubs.
However, all local authorities will be required to have up-to-date Local Plans in place by December 2023, so enough homes are built for their communities, which could open up development opportunities for rural landowners.
Councils who fail to deliver on their Local Plans, measured by the Housing Delivery Test, will face increased scrutiny. Although little has been said directly about the implications of the reforms on rural planning, overall the signals do point to a more positive planning environment in the future.
The government is keen to meet its pledge to build one million more homes in the next five years and to deliver significant improvements in critical infrastructure, so it could open the door on opportunities for rural landowners in terms of development in villages and around towns.
Given the importance of digital connectivity in new homes, another positive announcement in the Budget was confirmation of funding to support the rollout of gigabit-capable broadband.
It was also confirmed that a £1bn deal has now been signed between government and mobile phone operators to bring 4G mobile phone coverage to 95% of the UK’s land mass by 2025. These are moves that could have a significant positive impact on the wider rural economy.
John McLarty, Head of Development & Planning john.mclarty@struttandparker.com
Thirty-nine people were killed on UK farms in 2018/19, with strikes by moving vehicles the main cause of fatalities.
Although just 1.2% of the UK’s total workforce is employed in the sector, agriculture has a fatal injury rate of 9.21 per 100,000 employees, compared with 1.31 in construction and 0.45 for industry overall.
The figures highlight the importance of managers doing all they can to promote a positive health and safety culture among their team.
The legal framework is set out in the Health and Safety at Work etc. Act 1974 and the Management of Health & Safety at Work Regulations 1999, and compliance with these laws should be seen as an essential part of farm business management.
But meeting the requirement to provide suitable and sufficient information, instruction, training and supervision to ensure – so far as is reasonably practicable – the health, safety and welfare of employees at work requires a thoughtful and proactive approach.
Growing numbers of farm businesses are finding pre-harvest health and safety briefings an invaluable tool to engage employees with health and safety matters in a practical and constructive way.
Adopting this approach can help to foster a positive health and safety culture, avoid accidents, safeguard against financial sanctions and reduce the costs and inconvenience associated with work-related ill health.
Robert Gazely, Farming robert.gazely@struttandparker.com
The government has broadened the scope of the Agriculture Bill to address agricultural tenancy reform and to help reinvigorate the let agricultural sector. The revised version of the Bill, tabled in January, includes:
These proposals, allied to the possibility that retiring farmers may be able to ‘roll up’ their remaining Basic Payment receipts into a lump-sum payment, appear to present a real opportunity for constructive and progressive reorganisation of the let sector to better enable it to cope with the significant changes ahead.
Alistair Cochrane, Land Management alistair.cochrane@struttandparker.com
The rumour mill went into overdrive ahead of Budget 2020 about possible changes to inheritance tax (IHT) reliefs which could have had a significant impact on farms.
In the event, there was no mention of changes to Agricultural Property Relief (APR) - which is a vital tool for succession planning in family farming businesses, given the returns from agriculture are generally not enough to pay high IHT bills without selling assets and jeapordising the future of the business.
However, there seems to be a general view that a review of the inheritance tax regime could still be on the cards.
A number of recommendations from the Office of Tax Simplification report are still on the table, one being the question of whether it is appropriate for the level of trading activity for Business Property Relief (BPR) to be at a lower level than that set for gift hold-over relief or entrepreneurs’ relief. This is clearly something that those with Balfour-style arrangements will need to be mindful of.
The recent All Party Parliamentary Group (APPG) report on Inheritance Tax and Intergenerational Fairness also called for sweeping changes. It suggested that APR and BPR should be abolished and a 10% IHT rate introduced. This is not an official policy document and would be unlikely to be taken forward without further consultation. But it highlights growing debate about the fairness of IHT and reliefs available to businesses, including owners of rural land-based businesses, and signals that a review might be on the way.
Patrick Beddows, Land Management patrick.beddows@struttandparker.com
The amount of rain which fell in the UK during February 2020 – the wettest February on record. This was also the fifth wettest calendar month since 1862, with the record being 227mm in October 1903. In contrast, April 2020 was the sunniest on record.
Plans to increase the amount of bioethanol in unleaded petrol from 5% to 10% have been tabled by the Department for Transport to help reduce greenhouse gas emmissions. The introduction of E10 grade fuel could underpin demand for feed wheat in the North of England where the Vivergo (Hull) and Ensus (Teeside) plants are located. Paul Dennison, Farming
Fossil fuel boilers have been the heating system of choice in British homes, but pressure is growing for homeowners to move away from fuels like gas, coal and oil and towards low-carbon alternatives, including biomass and ground or air source heat pumps.
Strutt & Parker has produced an overview of the main alternatives, including the most immediate pros and cons.
Visit: struttandparker.online/rural-lowcarbonheating Dave Bates, Building Surveying
Farmers in England still have time to make an application for the Mid-Tier Countryside Stewardship Scheme (CSS) ahead of the 31 July deadline.
A well-structured Mid-Tier CSS agreement can work for many farmers on a practical and financial level, as well as delivering for the environment. Requests for an online application pack must be made by 30 June. George Hoyes, Farming
NFU president Minette Batters calls for activists to be mindful of the victimisation of livestock farmers as part of the climate change debate.
The Universal Service Obligation (USO) which gives people the right to request a decent, affordable broadband service came into force on 20 March.
Anyone can request an upgraded connection if their broadband speed is below 10 Mbps download and 1 Mbps upload and BT has 30 days to confirm eligibility and how much it will cost to build a better connection.
If it costs more than £3,400 to connect a home, the homeowner will have to pay the excess costs. But once the connection has been upgraded, the broadband price must no be more than £46.10/month. Bryony Heaven, Land Management
Strutt & Parker has developed a new business analysis tool to offer rural estates insight into how they can improve their commercial performance.
The ‘Time to Review’ tool is designed to aid long-term, strategic decision-making for mixed rural businesses with let property, by quickly identifying their strengths and weaknesses in terms of a set of selected financial ratios.
It should be particularly useful for estate owners considering introducing new diversification projects, helping to offer clarity about investment decisions.
The financial ratios have been chosen as a useful starting point for discussions, but we appreciate that every landowner will have different personal objectives so every conversation about the results will be different.
Find out more at: struttandparker.online/rural-timetoreview Ed Mansel Lewis, Land Management
The question of how to accelerate woodland creation in England to enable tree planting targets to be met has risen to the top of the agenda in recent months, ahead of an expected consultation on a new English Tree Strategy.
Last year just 1,400ha of new woodland was planted in England, but the government has a UK target of 30,000ha of new woodland being planted every year by 2025.
This is why Strutt & Parker was delighted to sponsor and take part in an interactive online conference organised by Ecosystems Knowledge Network in late March, involving 150 delegates.
The event’s speakers included Defra Minister of State Zac Goldsmith who explained that there is no pathway to the UK meeting its net zero emissions target by 2050 that does not involve restoring and creating forests.
“We have a huge challenge to achieve a scale of tree planting and woodland management we haven’t seen before,” he said.
Lord Goldsmith urged landowners not to wait for the introduction of the Environmental Land Management System (ELMS) before they start planting trees, pledging that they will not be disadvantaged once ELMS becomes available. The developing business case for landowners and managers to become involved in woodland creation and management was examined by a line-up of speakers including Jon Lambert, head of John Clegg & Co, Strutt & Parker’s forestry arm.
A full recording and pre-conference blogs are available on the EKN website at: ecosystemsknowledge.net/events/woodland
Tanya Gato, John Clegg & Co tmg@johnclegg.co.uk
Farmers affected by flood damage caused by storms Ciara and Dennis are being encouraged to apply for support from the Farming Recovery Fund.
Defra has announced an additional £6m to help farmers who suffered uninsurable damage to their property as a result of the exceptional weather earlier this year.
Affected farmers in eligible areas can claim grants of between £500 and £25,000 to cover a number of uninsurable repair costs, such as the re-cultivation of farmland, reseeding grassland, replanting cover crops and alleviating soil compaction.
The support is also available to help pay for replacement fencing, gates and water troughs or to restore field tracks, bridges and open agricultural drains.
The eligible areas of the country are parts of East and North Yorkshire, Gloucestershire, Worcestershire, Shropshire, Staffordshire, Nottinghamshire and Herefordshire.
Grant applications are also still being accepted for those farm businesses hit by flooding as a result of significant rainfall in November 2019. The closing date for these is 31 July.
Richard Taylor, Farming richard.taylor@struttandparker.com
Regulations introducing new electrical safety standards in the private rented sector in England will come into force this summer to improve tenant safety.
The new rules mean estates and farm businesses with let residential property will need to plan and budget for mandatory five-yearly electrical safety checks if they are not already doing so.
Failure to carry out the checks and any remedial work needed as a result could leave landlords exposed to fines of up to £30,000.
Landlords will have to ensure that every fixed electrical installation is inspected and tested at least every five years by a qualified person. A fixed ‘electrical installation’ is defined as fixed electrical cables or equipment located on the consumer’s side of the supply meter, but excludes Portable Appliance Testing (PAT).
The period between inspections may be shorter than five years if it is noted during an inspection that an installation is compliant at that point in time, but becoming ‘aged’.
Any remedial work will need to be carried out within 28 days of the inspection or sooner if specified.
The regulations are expected to apply to new specified tenancies from 1 July 2020 and existing specified tenancies from 1 April 2021.
Jessica Waddington, Land Management jessica.waddington@struttandparker.com
More detail has emerged about how Defra intends to transition from direct payments to a new approach of ‘public money for public goods’.
The plan is for Basic Payments to be replaced by the Environmental Land Management System (ELMS), with funding to remain at current levels of about £3.2bn in the UK and £2.2bn in England until the end of this Parliament.
However, Strutt & Parker modelling suggests that despite this, there could be a significant impact for those farms not currently in the top 25% of economic performance. It indicates that farms in the middle 50% or bottom 25% could see their net profits fall by as much as half.
Net profits that land managers earn from BPS are estimated to be about 80-90% of the payment received because the costs associated with claiming BPS payments each year are small.
However, the net profits that will come from ELMS are likely to be much lower, due to the associated costs of carrying out environmental management work.
Discussions are still ongoing about how payments might be calculated under ELMS, but a recent Defra discussion document suggests payments under Tier 1 of the scheme may not be significantly different than under current agri-environmental schemes, as they will be based on ‘income foregone’.
Given this, we strongly recommend all land managers produce budgets for their businesses from now to 2028.
Strutt & Parker has a calculator to assess the impact of the proposed changes on net profits, allowing for three different scenarios.
A member of the farming team can run any business through the scenarios, free of charge. This can provide a valuable starting point for discussions about how best to address this potential funding gap, with solutions including raising productivity, reducing costs and growing profits from diversification and environmental management.
Find out more: struttandparker.online/rural-farmfunding2
Will Gemmill, Farming will.gemmill@struttandparker.com
Jason Beedell, Research jason.beedell@struttandparker.com