Committee publication · Special Report · 30 January 2026 · HC 1620
1st Special Report – Farming in Wales in 2025: Challenges and Opportunities: Government Response
From: Welsh Affairs Committee
Inquiry: Farming in Wales in 2025: Challenges and Opportunities
Summary
This is the UK Government's formal response to the Welsh Affairs Committee's November 2025 report on farming challenges and opportunities in Wales. The government addresses seven recommendations covering inheritance tax reform, agricultural funding, trade negotiations, and support for new farmers, accepting some commitments while defending others as already delivered or appropriately structured.
Key findings
- Government increased agricultural property relief threshold from £1m to £2.5m per person (£5m per couple) in December 2025, reducing estimated affected estates from 375 to 185 across the UK by 2026–27.
- Agricultural funding has been added to Welsh Government baseline from 2025–26 in cash terms, but ringfencing has been removed and Barnett Formula will apply to future allocations.
- UK Government negotiating Sanitary and Phytosanitary (SPS) agreement with EU; objective is to conclude by end of 2027 to reduce trade friction for agri-food exports (57% of UK agri-food exports go to EU).
- Government disputes need for Wales-specific tariff rate quota action plan, citing evidence that Australia/New Zealand trade agreements have not significantly impacted domestic beef and lamb production.
- Government commits to working with Welsh Government on new entrants and tenant farmer support, and to involving Wales Office in Wales-specific policy impact assessments where appropriate.
Government position
The government partially accepts the committee's recommendations. It has already increased inheritance tax relief thresholds and maintains agricultural funding in cash terms, but rejects the need for Wales-specific impact assessments as standard practice and disputes that tariff liberalisation requires an immediate action plan. On trade, it commits to SPS negotiations concluding by 2027 rather than publishing a roadmap by May 2026. The government defends its approach as balancing farm support with public finances and argues existing data and safeguards are adequate.
Tone
ProceduralTopics
Key actors
Welsh Affairs Committee, UK Government, HM Treasury, Department for the Environment, Food and Rural Affairs, Wales Office, Welsh Government, NFU Cymru, Farmers' Union of Wales
Notable line
“Around 85 per cent of estates across the UK claiming agricultural property relief, including those that also claim for business property relief …”
Key Quotes
“The Government announced in December 2025 that the allowance for 100 per cent rate of relief will be increased from £1 million to £2.5 million.”
“Agriculture and fisheries funding from 2024–25 has been added to the devolved governments' baseline funding from 2025–26, meaning the funding amount will be maintained in cash terms.”
“In 2024, 57% (£14.1 billion) of UK agri - food exports were to EU countries, while 72% (£45.5 billion) of imports came from the EU.”
“There is no evidence that the Trade Agreements with Australia and New Zealand have had an impact on Welsh beef or lamb production.”
“The Wales Office supports UK Government departments to design policies that both reflect the particular needs of Wales and augment the devolved responsibilities of the Welsh Government in areas such as agriculture …”
Source · parliament.uk record ↗