Shafting farmers with £500m tax grab makes no sense

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The pasty tax. The tampon tax. The 10p tax. The poll tax. There have been many tax u-turns. Is the new farm inheritance tax next in line? It should be.

In the week or so since the Chancellor’s budget, there’s been an outpouring of visceral anger among farmers towards Rachel Reeves over her £500m cash grab, with plans to march on Westminster, to pull supply from supermarket shelves, to stop taking sewage sludge from water authorities and to lobby the 75 or so Labour MPs in the shires.

As harmful as other tax increases are to the fortunes of British businesses and working people, what’s so odd here is the absence of thought – political, economic or strategic.

Shafting the farmers makes no sense. Only nurses are trusted more [NFU]. Farmers are the salt (minerals and nutrients), of the earth, providing suppliers, supermarkets and ultimately shoppers with one of our seven basic needs. Already their future is increasingly tenuous, amid numerous economic, trade and environmental pressures. So while they are asset-rich on paper, the average return on capital for a farmer is 0.5%.

Short of sticking your cash under a mattress, buying a farm is a terrible investment. And farmers too will have to pay their extra share in lower business rates relief, increased National Insurance contributions and so forth.

But is food security no longer important to Labour? Does the government want to tax the UK’s most natural, healthy, life-giving, home-grown ingredients out of existence?

For make no mistake. Many farmers will be forced to sell up. And while it’s true, as Mark Twain once said, that when it comes to land, “they’re not making any more of it”, there’s no guarantee what the land will be used for as rich landowners and speculators consolidate and diversify the market.

Whether it’s rewilding, carbon offsetting or solar panels, food production may fall further. And tenant farms (which make up 40% of the market) are just as likely to be hit, with landowner rents rising to pay the Inheritance Tax bills, while investment from new landowners who no longer qualify for tax relief dries up.

It’s also likely many remaining farmers will scrap investment, either to save up for the IHT bill, or to minimise the capital value of their farming assets. That’s bad news in terms of productivity, new product development and Scope 3 emissions. So supermarkets and suppliers will surely be worried.

And finally there’s the economics. The Treasury calculated that 75% of farms would be unaffected. It’s simply not true. Unless you include the long tail of houses with tiny plots of land on which ordinary homeowners have claimed the agricultural property relief. No. This is a tax on ordinary, working farms, not filthy rich, wannabe tax dodgers or the landed gentry.