The Wealth Tax Commission’s report illustrates that a 1% per annum tax on net wealth over £500,000 could raise over a quarter of a trillion pounds in five years. Often the low income return of land is viewed as an obstacle to such an approach, however the group suggests secured borrowing could be used to pay the tax. To date the government has not announced any significant changes to taxation policy and instead is focused on the ongoing challenge of Covid-19 and rebuilding the economy via a green recovery. National ambition on the UK’s path to net zero has been increased further: the prime minister has announced a new target for 2030 which commits the UK to cutting emissions at the fastest rate of any major economy so far.

FOOD & FARMING

Transforming the food system
According to Emily Miles, chief executive of the Food Standards Agency, the government and food industry must become less reliant on consumer power to push the food system towards providing healthier and more sustainable food. She said that it places too much of a burden on consumers, with most people knowing what they need to do to have a healthier lifestyle but failing to do it. Food businesses in turn are faced with regulatory demands from a wide range of public bodies. Ms Miles would like reform to create “one joined-up ‘Crown’ relationship with these businesses, where regulatory requirements can be bolted on as appropriate”. While Ms Miles insisted that she does not want a “nanny state”, she called for the right regulation and the right, constructive relationships between government and the food industry.

Lab-grown meat for sale
Cultured protein has been approved for sale for the first time. “Chicken bites”, produced in bioreactors and without the slaughter of an animal, have passed a safety review by the Singapore Food Agency. The manufacturer, US-based Eat Just, says the approval could open the door to a future when all meat is produced without killing livestock. The cells for Eat Just’s product originated from a cell bank. They are grown in a 1,200-litre bioreactor and then combined with plant-based ingredients. The growth medium for the Singapore production line includes foetal bovine serum but this is largely removed before consumption. A plant-based serum was not available when the Singapore approval process began two years ago, but will be used in the next production line. Initial availability would be limited, the company said, and the bites would be sold in a restaurant in Singapore, but the approval sets a precedent for further innovation in cultured protein around the globe.

Sustainable use of pesticides
The government is consulting on its latest National Action Plan for the sustainable use of pesticides. The document is a UK-wide plan “to develop more sustainable methods of crop protection, amenity management, and garden pest control”. Its major aim is to increase the uptake of Integrated Pest Management (IPM) and sustainable crop protection, as well as supporting ambitions around biodiversity and carbon emissions. The proposed Sustainable Farming Incentive element of Environmental Land Management, which will require farmers in England to follow certain standards across their farm, is likely to be one mechanism through which the government encourages more widespread adoption of IPM and sustainable pesticide use.

Covid-19

Vaccine boosts recovery hopes
The biggest vaccine campaign in NHS history is now underway. In addition to safeguarding public health, it is hoped the campaign will allow the economy to recover. The UK economy grew by 0.4% in October, the sixth consecutive month of GDP growth following the record 19.5% crash in April. At the end of October the UK economy was 7.9% smaller than in February. It is expected that GDP will have since fallen again due to the second national lockdown in November.

Scotland: Support for residential tenants
A £10 million fund has opened to offer interest-free loans to tenants in Scotland who are struggling with rent arrears. The Tenant Hardship Loan Fund is designed to help people who have had their finances or employment impacted by the Covid-19 pandemic and do not have other means of housing support. Loans will be available for social and private tenants up to a maximum of nine months’ rent costs covering rent arrears and future rent, where those arrears have arisen since 1 January 2020. The loan will not be available where a tenant had rent arrears before this date. The loan can include up to a maximum of three months of future rent payments as part of the nine-month total.

POLICY

Wealth Tax proposed for millionaire households
A one-off wealth tax on millionaire couples could raise over quarter of a trillion pounds in five years. The Wealth Tax Commission, a body made up of academics, policymakers and tax practitioners has recommended that if the government chooses to raise taxes to cover the huge spending increase caused by the Covid-19 pandemic, it should implement a one-off wealth tax. The Commission believes those with the most wealth have the “broadest shoulders” with which to afford an additional contribution to society and that a wealth tax would be preferential to increasing taxes on work or spending. To be paid by any qualifying UK resident (including “non-doms” and recent emigrants), it would include all assets in the calculation of net wealth and be payable in instalments over five years.

Rather than recommending specific tax rates or thresholds, the Commission models various options in its report. At a threshold of £1 million per household (assuming two individuals with £500,000 in net assets each) and a rate of 1% per year on wealth above the threshold, a one-off wealth tax would raise £260 billion over five years after administration costs. This is equivalent to raising VAT by 6p or the basic rate of income tax by 9p for the same period. At a threshold of £4 million per household (assuming two individuals with £2 million in net assets each) and a rate of 1% per year on wealth above the threshold, a one-off wealth tax would raise £80 billion over five years after administration costs. Dr Arun Advani, Assistant Professor at the University of Warwick said: “We’re often told that the only way to raise serious tax revenue is from income tax, national insurance contributions, or VAT. This simply isn’t the case”. The Commission argues that the tax would be fair, difficult to avoid and also efficient in as much as it would not discourage economic activity.

As for exemptions, the Commission believes it essential that the government “resists any calls to exempt specific assets”. It stated that exemptions, such as those that exist on business and agricultural property, “disproportionately benefit the wealthy”. The liquidity of assets is unlikely to be considered either, as the commission argues that it is possible to borrow against the security of illiquid assets to pay the tax if necessary, particularly in relation to land.

Brexit negotiations to go down to the wire
There is a “strong possibility” of no trade deal being agreed between the UK and EU according to Boris Johnson. He said “now is the time” to prepare for that outcome and that although negotiators would continue talks, signs of an agreement were “not yet there at all”. Last week, Mr Johnson met with EU chief Ursula von der Leyen in an attempt to break the ongoing deadlock. In a statement, the UK side said there had been "a frank discussion about the significant obstacles which remain in the negotiations". Whilst Mrs von der Leyen said the talks had been "lively and interesting", and the two sides fully "understand each other's positions" but remained far apart. Talks continued over the weekend and were expected to end on Sunday night but, amidst signs of progress, both leaders agreed they would continue. In a joint statement, they said “we think it is responsible at this point to go the extra mile.” Mr Johnson later said "where there is life, there is hope", and that the UK "certainly won't be walking away from the talks". EU chief negotiator Michel Barnier has since briefed EU leaders that further progress has been made, with only fisheries access as the key outstanding issue to a wider deal being achieved.

The EU has set out a number of contingency plans in order to “mitigate some of the significant disruptions” if a deal is not in place, including:

• To ensure the provision of certain air services for six months, provided the UK does the same

• To allow aviation safety certificates to be used in EU aircraft without disruption to avoid grounding

• To ensure connectivity for road freight and other transport for six months, provided the UK does the same

• To allow reciprocal fishing access for UK and EU vessels for one year, or until an agreement is reached.

Tesco’s chairman has admitted the supermarket has been stockpiling groceries in preparation for a no deal Brexit. John Allan said long-life products have been set aside in preparation for a worst case scenario. Mr Allan also suggested that if we leave on a no deal basis, grocery bills could rise by as much as 5% due to tariffs. Concerns surrounding delays in Dover have also seen Tesco divert shipments to other ports in anticipation of “short term disruption” or even shortages of fresh food. In the event of a no deal departure the most significant concern for UK agriculture remains the impact on sheep farmers exporting to the EU. If it is required, the government has developed short term support measures for the lamb market but the specific details and extent of potential support remains unknown.

Scotland: private rented energy efficiency
New regulations are soon to be presented before the Scottish parliament, aimed at improving the energy efficiency of private rented housing. From 1 April 2022 to create a new tenancy a property must have a minimum EPC rating of D. By 31 March 2025, all tenancies will require an EPC rating of D. These targets are more ambitious than those in the regulations that were set to come into force on 1 April 2020 and postponed due to Covid-19. Any properties that are unable to meet the proposed minimum standard will be included on an exemption register. Property owners will need to prove that they have attempted to meet the standard and undertaken energy efficiency improvements to the property up to the cost cap of £10,000.

Scotland: Land Use Strategy
Scotland’s Third Land Use Strategy, which sets out the government’s vison for achieving sustainable land use, is now being consulted on. It will be different to its predecessors in two key respects. First, it aims to reach audiences beyond those with a vested interest in land use. Secondly, the new strategy does not contain any new policy proposals. Instead it brings together for the first time key strands of Scottish government policy that affect land use, and sets out how these various policy areas fit together on the ground. Setting out this strategic picture highlights how crucial land and land use is to everyday lives, and how changes will be needed to secure a sustainable future. The strategy will help determine how land is used in response to the twin threats of the climate emergency and biodiversity decline, whilst taking into account the potential of and requirements for different land uses including nature-based solutions, tourism, agriculture, forestry and renewable energy. It will be published in March 2021 and reviewed five years later.

Scotland: Taxes as a Land Reform tool
Taxes on land and property could serve as a powerful tool for helping Scotland develop a wellbeing economy according to a report for the Scottish Land Commission. The report looks at a range of ways in which taxes could be used to help achieve long term outcomes for land reform such as “tackling inequality, expanding the supply of land for housing and reducing the amount of vacant and derelict land”. It concludes that council tax, non-domestic rates and Land and Buildings Transaction Tax could be used as levers to achieve land reform objectives, as well as the option of introducing new local taxes designed to fund local authority expenditure. Corporation tax and inheritance tax also have the potential to influence land ownership and use, but are not devolved. The report argues that the Scottish government’s goal of inclusive economic growth has been given added urgency by the disproportionate impact of Covid-19 on the most deprived areas of Scotland. The Land Commission’s new Tax Expert Advisory Group will use the report as a starting point to work with the Commission on pragmatic and ambitious options for reforming tax on land and property. This will help to address inequalities and create a fairer, more resilient Scotland where everyone benefits from the use, management and ownership of land.

ENVIRONMENT & NATURAL CAPITAL

Ambitious new climate target
The UK will need to reduce net carbon emissions by 78% by 2035 to meet its long-term net-zero commitment. The Sixth Carbon Budget will cover the period between 2033 and 2037. It has been described as the “toughest yet”, being the first to contemplate the UK’s commitment to net zero. Chris Stark, chief executive of the Climate Change Committee (CCC), explained that a “front-load” approach to decarbonisation had been taken. More needs to happen in the 2020s than the 2040s in order to reduce the cost of the transition. The “front-load” approach ensures technologies mature sooner and investors have the certainty they need to provide support at scale.

According to the report, emissions from agriculture and land use were 54.6 MtCO2e and 12.8 MtCO2e respectively in 2018; 12% of all UK emissions. 63% of agricultural emissions were methane from livestock, 26% were nitrous oxide (N2O) and 11% were carbon dioxide from the use of fossil fuels. When it comes to land use, peatlands are the largest emissions source (24.5 MtCO2e) followed by cropland (9.8 MtCO2e). Forestry is the largest net sink at around 18 MtCO2e and grassland sequesters a further 9 MtCO2e.

Under the Balanced Net Zero Pathway, 25 MtCO2e could be saved by 2035. By 2050 residual emissions could be as low as 16 MtCO2e, or even fall to net zero by 2047 in the ‘Wider Innovation’ and ‘Tailwinds’ scenarios. Delivering this transition requires a transformation in the use of land. According to the CCC, around 9% of agricultural land will be needed for actions to reduce emissions and sequester carbon by 2035 with 21% needed by 2050. Improvements in agricultural productivity and a trend towards healthier diets are key to releasing land for afforestation, peatland restoration and bioenergy crops.

Responding to the new Budget, Stuart Roberts, deputy president of the NFU, said “it’s really disappointing that the comprehensive document overlooks the fact that people can continue to enjoy meat and dairy at the same time as reducing their carbon footprint”. He added “British farming has an ambition to be net zero by 2040 and the NFU’s plan outlines how we can achieve this while maintaining, if not increasing, our production of climate-friendly food”.

Ahead of the UK co-hosting the Climate Ambition Summit on Saturday 12 December, the prime minister committed to cut emissions by 68% by 2030 based on 1990 levels. The summit called on countries around the world to submit ambitious Nationally Determined Contributions or other climate plans in advance of the UN COP26 climate talks, which the UK government is hosting in Glasgow next year. This new target meets the recommendation of experts at the independent Climate Change Committee, which advises the government on emissions targets.

England: Task force created on sustainable farming of peatlands
The Lowland Agricultural Peat Task Force has been set up to help explore how England’s lowland agricultural peatlands can be better managed to safeguard productive agriculture as well as contributing to the government’s 2050 net zero target. It will be a key component of the government’s forthcoming England Peat Strategy and report to government in 2022.

Guide to soil health
An online soil guide has been launched which aims to become the world’s most comprehensive resource to help farmers improve soil health. The Good Soil Guide is a free-to-access online encyclopaedia designed for use in the field. It contains extensive information, empirical data and advice on how to improve soil health, increase soil organic matter, diagnose and treat problems with soil and crops, and help farmers to reduce carbon emissions.

PROPERTY & DEVELOPMENT

England: Business evictions ban extended
Business owners in England affected by the pandemic will be protected from eviction until the end of March 2021, giving landlords and tenants three months to come to an agreement on unpaid rent. The government is clear that where businesses can pay any or all of their rent, they should do so. Communities Secretary Robert Jenrick also announced that a review of the outdated commercial landlord and tenant legislation will start next year. It will consider the Landlord & Tenant Act 1954 Part II, different models of rent payment, and the impact of Covid-19 on the market in order to address concerns that the current framework does not meet the requirements of today. It will aim to improve the leasing process and explore how to enable better collaboration between commercial landlords and tenants.

OTHER RURAL NEWS

Savills UK Cross Sector Briefing 2021
In times of uncertainty, real estate is still an asset class that investors turn to. Our 2021 cross sector briefing comes during a time when knowledge is of utmost importance. We ask the question; what does the experience of 2020 mean for 2021? Our heads of research across commercial, residential and rural - Mat Oakley, Lucian Cook and Emily Norton - will present their forecasts for the coming year and give their top picks for out-performance in 2021 and beyond. They will also be joined by Sophie Chick, Director of World Research, who will provide an overview of what the environmental, social and governance (ESG) agenda means for each of the sectors. To register for the event at 4pm on 6 January click here.

Oxford Farming Conference 2021
The 2021 Oxford Farming Conference will be hosted as a digital one-day conference on 7 January 2021. It will mark the 75th anniversary since the first conference was held in 1936. The theme, “Business as Unusual”, will arrive just seven days after the end of the transition period for the UK leaving the EU and amidst a global pandemic. Emily Norton, OFC Director and Head of Rural Research at Savills will chair the Frank Parkinson Lecture in which author and renowned sustainability practitioner John Elkington will give his unique insight into how corporates and supply chains are responding to global sustainability challenges.

And finally…
Mansion-sized advent calendar
Christmas will be a bit different this year, but the National Trust’s Attingham Park is determined to make it no less magical. In addition to a Peter Rabbit Winter Adventure Activity Trail, a new sculpture and festive outdoor decorations, there is also a mansion-sized advent calendar. Literally. Though the building will remain closed, 24 of Attingham mansion’s 29 windows on the front façade have been turned into advent windows. Each day a window is turned around to reveal a Christmas or Attingham themed photograph.