Restore tax breaks for farm reservoirs, says NFU

Tax incentives to build winter storage reservoirs to tackle the drought should be restored, farmers said yesterday.

It was 'crazy' that the previous government scrapped tax breaks for farmers, who wanted to harvest surplus water to irrigate crops in period of drought, said Peter Kendall.

Speaking after the south-east had been officially declared to be in drought, he warned that a shortage of water for irrigation could push up food prices.

Environment secretary Caroline Spelman said drought-afflicted areas need 120pc of the normal rainfall up to the end of March and said that more water storage, including on farms, would help make the most of what rainfall the UK receives.

Mr Kendall, president of the National Farmers' Union, said: 'We all agree that water storage in water-stressed areas is a no-brainer – just look at the current drought situation. But in terms of policy signals that match your and Defra's call, what's coming out from the Treasury on farm reservoirs is woeful.

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'Businesses used to be eligible for tax relief if they built reservoirs. They no longer are.

'What kind of message does that really send to a vegetable producer who's got to reduce his summer abstraction?''

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Mrs Spelman said she had signalled to the Treasury the importance of on-farm water supplies and that the government's water White Paper encouraged the use of reservoirs on farms.

'Water capture and storage is the key to building resilience, not just for agriculture, for everyone in the country,' she added.

He said the government was talking to farmers early on in the current drought, adding: 'We're hoping we are going to get more reasonable prioritising of resources.''

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