Sir Keir Starmer’s election manifesto could not have been bolder. ‘Labour recognises that food security is national security,’ it declared.
The importance of farming, it seemed, was on a par with energy, and no wonder – just as oil and gas prices rocketed after Russia’s invasion of Ukraine, so did the cost of food.
But instead of pouring billions into the industry, as Labour has done with the energy sector, Chancellor Rachel Reeves has done her level best to pull the rug from under the feet of our struggling farmers.
Now confronted by a bill for 20 per cent of their farm’s estate above £1million upon the death of the owner, any grieving family will be forgiven for selling up.
For this is the dilemma facing a typical 500-acre mixed-use farm in southern England. Including farmhouse, barns, livestock and machinery, such a farm might be worth £5million – £4million of which will now incur an inheritance tax bill of £800,000.
Even with the decade’s grace period in which to pay this enormous sum, it still amounts to £80,000 a year.
I certainly don’t have such money at my disposal – and neither do the countless farmers who’ve contacted me since the Budget.
As one employee explained, it will mean the end of the farm on which he works, meaning five people out of a job, with a knock-on effect to others, such as the agronomist who inspects the crops, the millers who grind the corn, and a host of businesses that form the rural economy.
Make no mistake, this tax change will destroy communities.
It is not good enough to say that farmers could sell a few fields to pay the inheritance tax bill. Farms need to be a certain size in order to be viable.
While many farmers might be asset-rich, they are often cash-poor, in many cases extremely so.
Figures from the Department for Environment, Food and Rural Affairs (Defra) show that in 2022/23, 19 per cent of mixed farms made a loss, and 23 per cent made a profit of under £25,000.
The inheritance tax hit could not have come at a worse time.
When I stepped down as president of the National Farmers’ Union (NFU) in February, members had never had a more negative view of their future, as shown in 15 years of annual confidence surveys. A mental health charity working with farmers says it has received a 150 per cent increase in calls this year.
It seems unconscionable that Starmer and his colleagues would want to load a 20 per cent tax grab on the shoulders of those already burdened. For what it is worth, I do not think he has changed his mind about wanting to support farmers, as he trumpeted in Labour’s manifesto, and at the NFU’s conference in February when he said: ‘We can’t have farmers struggling.’
Instead, I think the PM has been badly advised. The Treasury has long wanted to end the inheritance tax relief open to farmers, believing that as a rich nation we can import our food. It has consistently turned a blind eye to investors buying land with no intention of farming it and in some cases foreign investors not even paying tax here.
However, the Treasury must recognise the difference between wealthy investors and genuine farmers who have been producing food, often for generations, on the same land. Limiting inheritance tax relief for farms to £1million does not achieve that. Instead, all manner of farms will be dragged into the tax’s clutches. Ministers claim that 73 per cent of farms will not be affected by the changes. Yet, they haven’t explained how they got that number. I suspect it includes so-called ‘lifestyle’ farms that don’t produce significant amounts of food.
Such small parcels of land are often bought by city folk looking for an exciting new vocation – unlike family-run farms that have grown to many hundreds of acres over generations.
Remove these ‘lifestyle’ farms from the equation and those figures will flip – with three quarters of family farms now incurring an inheritance tax bill.
It is imperative that the Government makes public the data on the number of farms that will be affected – as well as a full impact assessment on the effects on farming, rural communities and national food security. All the data is there. Anyone who rears sheep, cattle or pigs has to apply to Defra. The paperwork wrapped around farms is legion, with obligations to record everything from land use to animal movements.
Indeed, anyone who has watched ‘Cheerful’ Charlie Ireland, the land agent on TV’s Clarkson’s Farm, knows the amount of compliance forms involved.
In short, the Government knows exactly who is farming and who is not, and therefore has the means to exempt genuine farmers from inheritance tax.
But the truth is that this tax raid is just a symptom of the Government’s contempt towards food production.
The EU’s Common Agricultural Policy is steadily being replaced with a new system of subsidies that put biodiversity at their heart.
That is a good thing, except the new rules encourage land to be taken out of food production and ‘rewilded’ or planted with trees, in order for a landowner to claim lucrative ‘carbon credits’.
There are several parcels of land near where I farm in Wiltshire that are now 100 per cent taxpayer-funded, and yet they have not grown a single potato or cob of corn. This is madness.
Biodiversity is important and can be achieved by planting hedgerows, leaving field margins uncultivated and reintroducing ponds on low-lying land – but not by removing farms entirely.
Forty years ago, Britain’s food self-sufficiency – the amount of food produced as a proportion of the quantity consumed – stood at 78 per cent. In 2023, it was down to 62 per cent.
If that figure continues to fall, it won’t do anything for the environment, animal welfare or global carbon emissions.
It will simply mean this country having to import more food – and from countries that have lower standards than our own.
How will that help combat climate change?
The Labour Party rightly eulogises the inception of the NHS in 1948, but they seem to have forgotten the ideals instilled in a lesser known piece of legislation from the year before.
The 1947 Agriculture Act saw Clement Attlee’s post-war government commit to feeding the nation, declaring never again that the British people would face food rationing.
If only that sentiment resonated in Labour hearts today.
Why don’t they realise that food and farming are the solution to many of the challenges this country faces?
The party talked a good game in its manifesto, but it now needs to live up to that promise.
