Farming, housing, and more: how the government spending review directly impacts you

Amid speculation of heavy budget cuts, the CLA has shared its initial reaction to the government's spending review following intense lobbying efforts, but what does the review mean in real-terms for our members and the rural economy?

For helpful guidance, watch the short discussion between CLA experts below, and scroll down to read how the announcements relate to different aspects of rural life.

Some of the categories below refer to announcements for England only, while the level of funding allocated to Wales will be determined by the Barnett Formula calculations and Welsh Government’s own budget that will be drafted towards the end of the year. CLA Cymru will be working with Welsh Government ministers and officials to ensure that the rural economy is a priority.

There is a combined farming and nature recovery commitment in England of £2.7bn from 2026/27 until 2028/29. This is broken down into an average of £2.3bn for the Farming and Countryside Programme and up to £400m from ‘additional nature schemes’. There will be increased support for Environmental Land Management (ELM) schemes, from £800m in 2023/24 to £2bn by 2028/29.

The announcement comes with a certain amount of relief given the recent rumors around more drastic cuts to the agriculture budget. CLA members in England have some assurances that existing agri-environment schemes will continue to be funded and that  future schemes, including the next version of the Sustainable Farming Incentive (SFI), will also be funded. It is unclear at this stage what is meant by ‘additional nature schemes’, though details will emerge in the coming months.

However, the spending plans do represent a cut to the existing agriculture budget, which is £2.6bn in the current financial year and was £2.4bn in the previous financial year. 

It remains to be seen how Defra and ministers will allocate the budget between the different funding schemes. The ELM schemes are mentioned explicitly but are currently closed for most applicants; the ambition to increase spending on these to £2bn by 2028/29 sounds impressive, but we are already at around a combined annual spend of well over £1bn across ELM schemes. Many other schemes, such as those focused on productivity, research and development and animal health and welfare, are also funded from the same budget and have uncertain futures.

There are no specific references to the final Basic Payment Scheme payments, though the spending review document states subsidy payments will be wound down ‘rapidly.’ Members should therefore adapt their business plans accordingly. 

We expect Defra to now go into a business planning process, where the department and ministers will determine how the budget is to be split between schemes, which could include relaunches of previous schemes or the launch of new ones. We have pressed Defra and ministers on the urgency to roll out the new ELM schemes in particular, given the closure of SFI in March.

£816m has been allocated to tree planting in England. Over three years, this is £272m per year.

Overall funding levels for tree planting appear to have been maintained, welcome news given the rumours of budget cuts. However, it is not yet known whether all of the allocation is designated for planting new trees or whether it is intended to also fund the many other important investments needed in England. This includes the management of existing woods, woodland resilience, Community Forests and necessary wider investment in the forestry and wood supply chain which were a feature of the last government’s Nature for Climate Fund.

Further clarity on this is needed before informed judgement can be made, and the CLA will provide more detailed analysis in due course.

Up to £450m additional investment per year has been confirmed for the courts system by 2028/29, compared to 2025/26, increasing crown court sitting days to record levels. This will help tackle court backlogs and improve productivity.

This announcement is welcome given the changes within the residential tenancy regime in England through the Renters’ Rights Bill. This will mean more possession cases going to the courts, however, the CLA questions whether this additional investment will be enough given the scale of change for the sector.

A funding pot of £39bn has been announced for a new ten-year Affordable Homes Programme for Homes England. 

Members will not be able to directly access this funding, but more money for housing associations may mean more opportunities for affordable rural homes delivered with members on their land. However, the devil is in the detail about how this will be allocated to smaller rural sites coming through the affordable homes programme, as a rural uplift for grant funding is important.

The government will fund the Warm Homes Plan in England and Wales, with a total of £13.2bn over the spending review period. This investment will be allocated across schemes that support the rollout of heat pumps, alongside energy efficiency measures and other low-carbon technologies, such as solar and batteries. Further details will be announced by October.

If a portion of the funds can be allocated to private residential landlords to meet their new minimum energy efficiency standards, this is a win for members. The CLA has long called for greater funding for retrofit work.

The spending review announced a 5% budget increase for flooding compared to the current review period, which ends in April 2026. This equates to an average of £1.4bn each year over the next three years.

More funding for the flooding budget is welcome, but what will matter more to land managers is how this money is distributed, particularly the allocation between capital (new schemes and replacements) and resource (maintenance of existing defences), which has not been published.

Defra is currently consulting on reforms to the floods investment framework in England, which will be applied from April 2026. The proposals are intended to make it easier for flood schemes which are smaller, rural, and nature-based to receive government funding, and will offer full funding for capital refurbishment of existing assets (the current system requires many schemes to secure private funding to proceed, which is not readily available). The consultation estimates the proposals would increase funding for Natural Flood Management (NFM) by 1,700%, expand the area of agricultural land protected by 171%, and provide a 143% increase in funding for capital refurbishment.

Therefore, the CLA expects members to be better protected from flooding irrespective of budget expansion. The 5% increase should expand protections further, although we will need to see what percentage is siphoned off for major projects like the Thames Estuary scheme.

Flooding is a devolved policy area, so the budget for flood protection in Wales is determined through the Barnett formula. Wales can therefore expect a similar, perhaps a proportionally larger increase to England, but it will use its own investment rules.

As expected, the spending review confirmed investment in large infrastructure projects including East West Rail between Oxford and Cambridge, nuclear energy expansion, rail and energy projects in Wales.

The CLA is currently lobbying to bring about better protection of landowners’ property rights in the Planning and Infrastructure Bill, which is currently progressing through Parliament. The latest announcements make this work all the more important, as the number of projects involving compulsory purchase of land and other property rises.