| If the government was hoping that the controversy over its decision to impose a new inheritance tax regime on farmers would blow over, it may be in for a rude awakening. The farming industry has a history of difficult relations with the government of the day: two years ago, the Conservative environment secretary Thérèse Coffey was roundly booed at the same conference in a row over egg shortages. Can Reed expect the same treatment today? Given the colossal unpopularity among farmers of the inheritance tax changes, you wouldn’t bet against it. Here’s why the issue is still rumbling on – and how the government is trying to make it go away. What’s the mood among farmers? Jeremy Clarkson and James Dyson have, perhaps, not been the most persuasive advocates for the farmers’ cause, given their own substantial financial interests and suspicions that their passion for farming owes at least something to the associated tax breaks. But the average farmer is in very different circumstances, and much more David than Goliath. “It’s an incredibly emotional subject for them,” Helena said. “It’s about their business; it’s about their children; it’s about their death. And you hear the same thing from pretty much every farmer you speak to: they say that the tax breaks are the only reason their farms can remain viable, and that their children are going to have to sell up if this doesn’t change.” Reed should therefore be braced for vocal criticism. “He’s been followed recently by tractors beeping and farmers heckling him,” Helena said. “It’s a Treasury policy, rather than his own. But it could be difficult for him.” Are they right? Before the last budget, all agricultural property qualified for 100% relief from inheritance tax. Under the new rules, that relief will be capped at the first £1m, with assets worth more than that effectively subject to a rate of 20%, half the general inheritance tax rate, which also kicks in at a lower level. The government says that only about 500 estates a year will be affected by the change to the tax regime. And to the average family anticipating that much higher bill for the family home, the tax break for farmers might still look very significant. But that is a misunderstanding of the unique circumstances that apply to farmers, Helena said. “If you add up the value of the farm and the livestock and the machinery, they might be millionaires on paper – but they want to keep the land and produce food. And most farms are only making £30,000 to £50,000 a year. So in many cases they will have no choice but to sell.” The National Farmers’ Union of England and Wales (NFU) disputes the government’s 500 estates a year figure, and says that 75% of commercial family farms will be over the £1m threshold. The Central Association of Agricultural Valuers estimates that 75,000 farmers own properties that would be subject to tax, with that rising to almost 90,000 within a decade. These are two different ways of approaching the problem, each with their own issues. On the one hand, as Helena says, “you only die once”, and so the 500 figure probably makes the issue sound much smaller than it is to each individual family; on the other, the 90,000 figure discounts that a lot of these farms may not change hands for decades, and could be subject to different rules in the future. “The real number is somewhere in the middle,” Helena said. “The Treasury figures don’t take into account the impact on business property relief that farmers claim for things like machinery and livestock.” The other issue is whether the policy is well targeted in the first place. The tax expert Dan Neidle has estimated that about one-third of farm estates are held by investors for tax-planning purposes, but argues that the government’s policy is poorly designed to tackle that kind of avoidance, which is where it’s supposed to be aimed. Is the government doing anything else for farmers? That’s what Steve Reed is hoping to talk about today. There are two main policy areas where the government wants to tell a story about the support it is giving British farmers: encouraging the public sector to buy more British food by setting a target of getting at least half of their produce from farms with the highest welfare standards; and announcing a five-year extension of the seasonal farm workers’ scheme, something the NFU has been lobbying for since Labour took office. Those steps will be welcomed by farmers, Helena said, but they are relatively minor compared with the possible impact of the IHT changes. “The thrust is that by helping with procurement, and also through the government’s 25-year plan for farming, they will ensure fair prices and help farms become profitable. “But none of this really ameliorates the IHT rise. A lot of the farmers affected by this aren’t going to live long enough for the 25-year plan to have an effect before the tax is due. So it’ll be welcome, but it’s not going to assuage their anger.” Is there any chance of a U-turn? Neidle and the NFU both say that a “clawback” policy – maintaining the existing IHT exemption, but charging the general inheritance tax rate if the farm is sold within a given period – would be one way to tackle tax avoidance and raise revenue without breaking up genuine family farms. And, Helena said, “Defra knows that this is a poor policy because they are intimately involved in the farming sector. The Treasury didn’t consult them before putting it out.” That might make a change seem plausible, particularly given the political toxicity of the issue for Labour and the general popularity of the farmers’ cause. “But my feeling is that they’re not likely to change it now,” Helena said. “There are other unpopular measures in the budget that are more critical for growth, and it seems like the Treasury doesn’t want to open the floodgates.” Last week, the NFU said the government had refused to listen to its alternative proposals. Crucially, Helena said, the fact that the policy only kicks in gradually when farmers die means that “it might take a few years for there to start to be any effect on food production if families start selling farms to developers. So it may be that if you’re a Treasury official, you think the gain to the public finances is worth it.” Is it fair for farmers to ask for special treatment? By one analysis, farmers are dinosaurs: like black cab drivers in London, persisting in a dying industry while enjoying protections that nobody else is entitled to. But what that misses is the fact that there is a fairly broad political consensus – with Keir Starmer among those who have signed up to it – that “food security is national security”, with a national interest in producing food domestically. If so, and given the vast pressure exerted by supermarkets on farmers to sell their produce cheaply, a straightforward free market approach looks likely to have undesirable consequences. “We pay less of our pay packet on food than any other country in Europe,” Helena pointed out. “So the farmers have an argument that if we aren’t going to pay them properly, the tax break is a reasonable way to help them keep going.” The stories she’s heard in her reporting on the subject, she added, “are upsetting – these are stereotypically unemotional older men crying and feeling like failures, because they’ve been building up a business that provides a public good and expecting to be able to hand it to their children. Above all, they want to be listened to and understood. They feel that they have not been heard.” | 