The Labour Party has outlined a strategy to prioritise British farmers in public procurement contracts worth £5 billion annually. The move follows backlash from the agricultural sector over recent tax policies, with Environment Secretary Steve Reed positioning the reforms as a financial lifeline for struggling growers.
Reed’s proposal aims to redirect public-sector spending towards domestically produced food, benefiting schools, hospitals, and prisons. The plan seeks to ease tensions with farmers, who have expressed frustration over recent inheritance tax reforms and the so-called tractor tax.
However, while the initiative could boost British farming, it may also offer advantages to European suppliers, given the UK’s international trade obligations.
A Shift Towards British Food in Public-Sector Contracts
The centrepiece of Labour’s proposal involves changing procurement rules to favour food grown under high environmental and welfare standards, according to Steve Reed. While the government cannot legally enforce a “British-only” purchasing policy, it can set benchmarks that at least 50% of public food procurement must meet strict sustainability criteria.
This shift would level the playing field for British farmers competing with cheaper imports. With £5 billion spent annually on food for public institutions, the reforms could enable UK farmers to access £2.5 billion worth of contracts, ensuring a stable revenue stream for the sector.
Reed, addressing the National Farmers’ Union (NFU), described the plan as a direct response to farmers’ concerns. “The Government is committed to using its own purchasing power to back British produce,” he said. “That means buying more British food where we can.”
The proposal has been seen as a strategic concession to the agricultural sector, particularly following protests against the Treasury’s refusal to adjust inheritance tax exemptions.
Industry representatives had sought a compromise mechanism to prevent immediate tax burdens when land is inherited, a request that was rejected last week at a government meeting.
Farmers Seek Financial Stability Amid Taxation Concerns
The public procurement shift comes at a time when British farmers face increasing economic strain. Many have criticised Labour’s recent tax policies, which remove inheritance tax relief for farms worth over £1 million.
The NFU, Tenant Farmers Association, and Country Land and Business Association had pushed for a “clawback” mechanism—where inheritance tax would only apply if land was sold shortly after inheritance—but ministers dismissed the proposal, according to NFU President Tom Bradshaw.
“The reaction from our members is going to be one of fury, one of real anger,” Bradshaw stated following the Treasury’s decision.
Industry data suggests that twice as many agricultural businesses are closing as opening, raising concerns over the long-term sustainability of British farming.
Many farmers argue that rising costs, tax burdens, and foreign competition are making it increasingly difficult to maintain operations.
