The first Labour Government Budget for 14 years was seismic according to NFU Scotland director of policy, Jonnie Hall.

He writes: “From a farming and crofting perspective, the Inheritance Tax and changes to Agricultural Property Relief (APR) will be devastating to the vast majority of farms and crofts. This is something we will demand the UK government to review and amend as the pressures both financially and mentally this will put on family farming businesses will be immense. The shear lack of understanding of how agriculture works throughout the UK has been highlighted by this Government which has clearly gone back on its word.

Similarly, the farm support funding decisions in this Budget were not what anyone was expecting, and it’s been a challenge to unpick it. It’s complex and could be confusing, but it is by no means bad news per se.

Digging deep into the various Treasury publications issued yesterday once the Chancellor had sat down it appeared, at face value, to be seriously bad news…

The Government stated: “From 2025-26, the Barnett formula will apply in the usual way to funding for agriculture and fisheries, rather than the devolved governments receiving a ringfenced addition to the block grant as they did for Spending Review 2021. Funding from 2024-25 has been baselined in each devolved government’s block grant.”

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No ring-fenced funding, no multi-annual commitment, and (potentially) a real reduction in funding.

Deep breath, as it’s the second sentence that’s crucial. It means that the UK Government has rolled over the 2024/25 farm support funding for Scotland and included it within Scotland’s block grant.

In addition, the ‘Scottish headline’ from yesterday’s Budget is the Scottish Government is to receive an extra £3.4 billion in its block grant – taking it to the “largest real terms settlement since devolution” of some £47.7 billion in 2025-26.

In essence, this means that instead of the Scottish Government receiving a block grant which also included £620 million ring-fenced for the Agriculture & Rural Economy (ARE) portfolio, it appears that for 2025/2026 that the Scottish Government is to receive an increased block grant that includes a rollover of the £620 million.

Moreover, the increase in block grant equates to some 8.1 per cent – meaning, in theory, there is headroom to increase the ARE portfolio’s budget.

Effectively, the UK Government has said to the devolved administrations, including the Scottish Government, ‘we’ll give you your block grant, but it’s up to you as to how you spend it across all of your devolved responsibilities’.

As things stand, the £620 million farm support budget has been rolled over for 2025/26, albeit no longer ring-fenced, and the Scottish Government has additional funding in its block grant to allocate to farming and crofting if it chooses to.

The ARE funding is now exclusively down to the Scottish Government to deliver from their budget – but that also means we’re competing with health, education, etc.

So, what next? Our attention shifts completely to the Scottish Government on all aspects of future funding – not just the Scottish Budget on 4 December but in the years that follow.

We are seeking to meet with Cabinet Secretaries and Ministers as soon as possible, as well as providing our formal Budget submission within the next week or two.

Time and again, the Scottish Government has said on record there will be ‘no cliff edge’ for farmers and crofters. Ministers have repeatedly said there is a need for increased funding for farming and crofting - to help deliver the objectives of the new Agriculture and Rural Communities (Scotland) Act 2024 (the ARC Act).

Moreover, thanks to the lobbying and amendments we successfully pursued, the ARC Act requires the Scottish Government to set out indicative budgets as part of the Rural Support Plan – paving the way for a significant degree of funding commitments over multiple years.

And, given the increase in the block grant, there can be no more excuses for the full and prompt return of the outstanding £46 million of uncommitted funds from previous Scottish Government budgets. Indeed, the Scottish Government can now demonstrate its commitment to agriculture and all that we deliver - high-quality food production, climate and nature restoration and thriving rural communities - by increasing the overall budget in addition to returning this money.

The responsibility and decision making and, importantly, additional budget now solely lies with them.

But let’s not kid ourselves that this will be easy.

As there’s no longer a ring-fence around farm support, we must make the case alongside every other Scottish Government portfolio – health, education, social care, etc. We must also seek out and secure a more certain multi-annual commitment on funding. As things stand, we’ve only got certainty on 2025/26. We need five-year or parliamentary term commitments from the Scottish Government.

The First Minister has reiterated the commitment from his predecessor that, from 2026, at least 70 per cent of the overall portfolio funding will be delivered as direct support under the new Tiers 1 and 2.

In addition, we are waiting for a response to our repeated ask that at least 70 per cent of that direct support envelope is allocated to Tier 1 – given new conditionality from 2025 and the existing split between the Basic Payment Scheme and Greening.

The Scottish Government Budget on 4 December was always going to be hugely important to the profitability and sustainability of Scottish farming and crofting – in the short, medium and long term. In the last 24 hours, the significance has heightened.

As ever, work to do.

But opportunity has opened further for policy and funding to combine effectively to deliver what only Scotland’s farmers and crofters can in terms of producing high quality food, addressing climate challenges, enhancing nature, and underpinning thriving rural communities.