The Rural Update: Devil in the detail
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership.
9 minutes to read
Viewpoint
The King’s Speech last week was Sir Keir Starmer’s first big chance to really flex his muscles and outline the direction in which his government plans to take the country. Containing 40 bills it was the most heavyweight since 2005 when Tony Blair won his third successive victory and 50 bits of new legislation were announced. But how ambitious is it? With just a few paragraphs of supporting detail published so far for each bill it is hard to tell, but some like the Great British Energy Bill do suggest a new way of thinking. However, it is important that the practicalities of delivering change are also considered. Banning no fault evictions, for example, could end in chaos if the court system is not properly reformed or resourced to cope with the move. Likewise, when it comes to planning reform Labour says it wants to “further reform” compulsory purchase compensation rules to ensure that compensation paid to landowners is “fair but not excessive”. But, as Tim Broomhead of Knight Frank’s Compensation team points-out, successive governments have been grappling with that concept since the 1950s, despite there being little evidence that the compensation landowners receive is actually excessive or hindering development. As and when the new bills start their journeys through parliament, we’ll report what devil lies in the detail.
In this week's update:
• Grains down as combines roll
• Milk prices too low
• King’s speech sets out agenda
• Welsh farm support
• Miliband wind taskforce
• Crown Estate unleashed
• HS2 Phase 2 still scrapped
• UK falling short on net zero
• SFI open now
• Six inches of soil – Online now
• Farmland - Values hold firm
• Development land – Market stays flat
• Northumberland opportunity
Commodity markets
Grains down as combines roll
Wheat and oilseed prices have taken another hit, just as the UK harvest gets under way. Markets reacted negatively to a 5.4 million-tonne hike in the USDA’s forecast for global wheat output in 2024, which puts total production at 796 million tonnes. Worries about corn yields in Ukraine were not enough to stop speculative fund selling. London November futures fell to £191/tonne.
Milk prices too low
A new report from dairy consultancy Kingshay shows that some milk producers are still not covering their costs of production and family labour. Farm-gate milk prices, although nudging up, remain well below their peak, costs are stubbornly high, while yields are down due to unfavourable weather conditions.
Headlines
King’s speech sets out agenda
The first stages of the new government’s legislative framework were revealed in last week’s King’s Speech, which included 40 pieces of legislation. The actual speech revealed very little about each bill, but some more outline detail can be found in this supporting document. The following bills will be of particular interest or relevance to farmers and estate owners.
For a few, the most personal piece of legislation will be the House of Lords (Hereditary Peers) Bill that sweeps away 600 years or so of history by removing the remaining 100 hereditary peers, many of whom have a deep understanding of rural issues, who still sit in the House of Lords.
There were no bills specifically focusing on agriculture or the environment, but those that could have the biggest impact on the countryside include the Planning & Infrastructure Bill, which aims to accelerate housebuilding and infrastructure delivery, and the Great British Energy Bill, which establishes a publicly owned energy production company (initially funded to the tune of £8.3 billion) that will own, manage and operate clean power projects up and down the country.
At a more practical level for any estate that lets out residential property, Labour plans to resuscitate the Conservative’s reforms of the housing rental market that were stalled by the general election. The Renters’ Rights Bill includes the banning of Section 21 “no-fault” evictions.
For details on some of the other bills please see below.
In brief
Welsh farm support
Then Welsh government has announced details of five interim support schemes that will be available to farmers in 2025 before the delayed Sustainable Farming Scheme is introduced in 2026. Contact Edward Holloway from Knight Frank’s Bristol office for more information.
1. Habitat Wales Scheme is offered in 2025 with all eligible individual farmers able to apply
2. Existing Habitat Wales Scheme Commons agreements can be extended for 2025
3. The Organic Support Payment will be maintained for 2025
4. An extension to Farming Connect to 2026, continuing the knowledge transfer and innovation support on farms
5. A new Integrated Natural Resources Scheme will support farmer-focussed partnerships delivering nature-based solutions across a landscape, catchment or on a pan Wales scale
Miliband wind taskforce
As well as the setting up of Great British Energy, energy minister Ed Miliband has also just announced the formation of a wind industry taskforce to help deliver on the government’s pledge to double onshore wind deployment by 2030. One of the key aims of the Onshore Wind Industry Taskforce will be to unlock the barriers to deployment that onshore wind developers by identifying “where there are financial, regulatory or policy challenges that are preventing the construction and operation of onshore wind projects in an efficient and cost-effective manner”. Please contact Chris Monkhouse for advice on renewable schemes.
Crown Estate unleashed
In addition to the renewable energy initiatives mentioned above, the Labour party also plans to reform the Crown Estate, which owns most of the seabed around the UK, to help deliver more green volts. The Crown Estate Bill, announced as part of the King’s Speech, will “modernise The Crown Estate by removing outdated restrictions on its activities, widening its investment powers and giving it the powers to borrow in order to invest at a faster pace”. That would include “vital marine investment needed to accelerate and quadruple offshore wind capacity by 2030 as part of the government’s plan to deliver long-term financial returns”.
HS2 Phase 2 still scrapped
Keen-eyed readers of the King’s Speech will have noticed the inclusion of the High Speed Rail (Crewe – Manchester) Bill. Happily, or sadly depending on your point of view, this does not mean that the Labour government is planning to resuscitate the northern leg of HS2 from Birmingham to Manchester that was scrapped by Rishi Sunak. Instead, the bill will be repurposed tto provide powers to construct and operate rail projects that improve east to west connectivity across the north of England. Please contact Tim Broomhead for advice on HS2 and other compulsory purchase matters.
BrewDog carbon rethink
Beer industry disruptor BrewDog has announced that it is withdrawing from the carbon credit market and will be using the money saved to further reduce its own carbon emissions. It said high-integrity carbon credits were becoming too expensive. As a result, the firm says it will also let its carbon-negative status claim lapse. The brewer’s plans to create a new forest on the Kinrara Estate in the Cairngorms, which it bought in 2021, have floundered too with many of the saplings planted dying.
UK falling short on net zero
According to the newly published emissions reduction progress report from the UK’s Climate Change Committee, only a third of the government’s 2030 target is currently covered by credible plans. To cut emissions by 68% compared to 1990 levels far more action is required over the next six years, says the report. The measures needed, it claims, include more tree planting and peatland restoration and removing planning barriers that are blocking heat pump installation, EV charging points and onshore wind. It also calls for a reversal of the last government’s back-peddling on targets relating to fossil-fuel boiler bans, the sale of non-EV cars and the watering down of obligations on landlords to improve the energy efficiency of rented homes.
SFI open now
The improved Sustainable Farming Incentive scheme is now open to everybody, points out Mark Topliff of Knight Frank’s Agri-Consultancy team. “Until this week potential applicants needed to make an expression of interest and then receive an invite. The enhanced offer from Defra includes 23 new actions and 57 amended actions carried across from Countryside Stewardship (CS) Mid-tier contributing to 102 total actions. Most of the actions (94) will be for a three-year period. But there will be 10 actions that will be capped at no more than 25% of your eligible area. From September 2024 those in CS Mid-Tier and HLS can transfer to SFI. However, if you have a CS Higher Tier or English Woodland Creation Offer, these schemes will remain separate with the expectation that agreement holders will continue with them.” For help navigating the schemes please contact Mark or Henry Clemons. For more details on how grants can help transform your business please read this article by Henry.
Knowledge exchange
Six inches of soil – Online now
For those who missed the live showings of Six Inches of Soil, the film, which follows the inspiring journeys of a number of young farmers adopting regenerative agricultural practices, is now available to watch online. Knight Frank held a recent screening of the film and received very positive feedback from the audience.
Research
Farmland - Values hold firm
The farmland market in England and Wales shrugged off the potential impact of the recent general election to register another quarterly price increase, according to the latest results from the Knight Frank Farmland Index. Average values nudged up by almost 1% in the second quarter of the year to hit £9,335/acre. For more insight and data please download the full report.
Development land - Market stays flat
The value of greenfield development sites remained static in the second quarter of the year, according to the latest results of the Knight Frank Residential Development Land Index. Over the past 12 months the index is down 2%. According to Anna Ward, who compiles the index, developers have welcomed Labour’s commitment to reinstate local housing targets and recruit more planning officers. But with interest rates failing to shift and build costs increasing, homebuilders still face significant headwinds, she adds. Download the full report for more insight and data.
Property of the week
Northumberland opportunity
It’s off to the north of England this week for a fantastic 2,010-acre Northumberland farming, sporting and environmental opportunity at Eglingham, near Alnwick, being offered in two lots. West Ditchburn Farm is a productive livestock unit that comes with a Grade II listed farmhouse in need of modernisation, modern farm building and 1,094 acres of grass and woodland. The guide price £9.5 million. Hagdon Farm, by contrast, offers a wilder experience. It includes a farmhouse surrounded by 815-acres of scenic moorland and 100 acres of grazing. The price is £2.5 million. Please contact Will Matthews or Claire Whitfield for more information.