Sending out the wrong message to farmers
19/11/24 - Westminster, London. Members of the public attend a rally to protest Labour's Family Farm Tax. Picture by Edward Massey / CCHQ
Sending out the wrong message to farmers
How things are and how things look can be two radically different things.
But managing the way things look to people is a critical skill for a government engaged in bringing about change.
And the optics following the introduction of a 20% inheritance tax on agricultural assets worth over £1m, introduced in last month’s Budget, are terrible.
It doesn’t matter how many Treasury number-crunchers line up to tell the rural community that the change will affect just a small number of farming families, the message could not be any clearer to those affected.
They hear it as:
We don’t care two hoots about the work you do producing food, caring for the environment, mitigating flooding in urban areas, providing homes for wildlife, generating energy and all the other vital jobs – we’re going to squeeze you for tax payments you never expected to have to meet – and if you can’t pay and have to sell up, tough luck.
That’s not, of course, the way Chancellor Rachel Reeves or Environment Secretary Steve Reed, intended it. Nor did they bank on the tractors rolling into Westminster on Tuesday, or the furious response from across the shires.
Some might say that there was never a good way to end the tax-free transfer of agricultural assets and the Government has gambled on less than enthusiastic support for landowners among a majority of voters – and the fact that it is five years until the next election.
But better understanding by ministers about the broader difficulties faced by the farming community could have helped them foresee that the inheritance tax changes might be the last straw.
Those challenges are causing a crisis for many farmers. They include:
Bad weather that made the 2024 harvest a shocker with many arable farmers losing money.
Land based farm subsidy payments that are being cut further and faster by this Government than was original envisaged by farmers.
Increases in the minimum wage and employers’ national insurance that will hit farming businesses disproportionally hard.
Access to environmental support schemes, replacing land-based subsidies, that is proving challenging – and expensive – for many farmers.
Fair warning to farming leaders about this tax change, along with a tapered arrangement to take more tax off the wealthiest, and carrots as well as sticks to demonstrate support for agriculture, might well have helped mitigate the damage. Now it is probably too late. Even a U-turn won’t change the mood music.
Labour now has around 100 rural MPs. They are already forming themselves into a group ready to listen and lobby for their constituents.
The Government may believe it can manage the current backlash by a minority of voters. Just 1% of the workforce are farmers, after all.
But if this protest grows and the policy changes begin to affect the wider population, through food shortages, unacceptable land use changes or threats to rural communities as farmers sell-up and move out, things could get a great deal worse.
Change is rarely without consequences. The lesson must be: Do your homework, consider the worst case scenario – and plan for it. The Government failed to do that. It is going to have to live with the effects.