Prior to the announcement of the budget the Labour Government spent several weeks trying to clearly define what it meant when it used the term “working people”. They seemed to settle on the version used by Chancellor Rachael Reeves MP “Working people are people who get their income from going out to work every day”. That definition probably is the best description of a farming career, going out to work every day.
It may be that the motivation for the Labour Government’s change to inheritance tax was based on the increasing evidence from multi-millionaires that there was no need to offshore capital in foreign tax havens, investing in the purchase of UK farms gave the same tax avoidance benefits. For multi-millionaires purchasing a farm or land was not about a change in career direction and while Government must address the need to rebalance the tax system to ensure the tax burden falls heaviest on the wealthiest the change to Agricultural Property Relief is not the way to achieve this.
What Labour have shown is a distinct lack of understanding of the rural community and family farming in particular. The investment in infrastructure or additional land does not come from cash assets, it comes from borrowing where the effective repayment is not in 5 years or 10 years but is a multi-generational investment in the future. Farmland has increased significantly in value in the last 20 years, driven by competition not by productivity. The farmer who rises before dawn to milk his cows is not in control of the price he receives for that milk. There’s a long line of processors, distributors and supermarkets who all take a profit from his work before he gets what’s left, profit or loss. The Government response to concerns about APR being cut is to suggest that farmers seek the advice of tax accountants, life insurance salesmen and bankers, another list of people seeking to take a slice of the farm income cake.
The issue over inheritance tax shows a distinct lack of engagement and understanding of the family farming community, a decision that will adversely affect entire communities. The decision means there are far greater challenges for the Government, we face crisis after crisis, biodiversity loss, environmental decimation and climate change are just a few. Every issue affects the farming community, every issue requires a partnership between the farming community and Government to address. But partnerships are built on trust and what Government has lost is the trust of a sector that it desperately needs to work with over the next few years.
This decision has also emboldened other voices, those who deny climate change, those who ignore the environmental implications of the overuse of pesticides, herbicides or artificial fertiliser, those who rigorously oppose renewable energy. These voices will do more harm to the farming community as they urge farmers to ignore the fact that climate change alone will have the greatest impact on the farming community. The Government has emboldened these voices and given them a new audience.
The Government realistically has a choice, it can have the trust that it desperately needs, or it can have this tax, it cannot have both. That doesn’t mean that the multi-millionaires and billionaires shouldn’t pay their way, but it does mean that the Government must put more thought into the decisions it takes and the impact those decisions have.
