As our thoughts may be turning to the food we will be offering family and friends over the festive season, it is worth sparing a thought for those who will be providing it. Farming is a tough business, and those engaged in it have to be resilient in the face of powerful supermarkets which can drive down the price at which agricultural products are sold, and bad weather (of which we’ve had plenty this year) which makes it hard to grow or rear the product in the first place. To those hardships we can add Government policy. It is true that previous Governments have annoyed the farming community with their actions and inactions, but the recent Budget has provoked a level of anger I have not seen in almost 20 years of being an MP.
The Government has decided to apply inheritance tax to the passing of some family farms from one generation to the next, by removing tax reliefs which have been in place for decades and whose importance has been recognised by successive Governments. There is a vigorous debate about whether a small number of larger farms will be affected by the change (as the Government claims) or whether a larger proportion of farmers and more average-sized farms will find themselves caught by it (as many farmers and representative organisations fear), but decisions are already being made in the expectation that money will have to be saved to pay more tax – decisions to delay or cancel investments in new machinery or hire fewer workers. This will affect businesses that supply farmers as well as farmers themselves and, along with the increase in employers’ National Insurance, add to labour pressures in the sector. None of this is good for food prices or for the food security we should be increasingly concerned about.
What also upsets farmers is the assumption the Government seems to be making that farms worth a lot of money have a lot of money to spend on inheritance tax. They don’t. Farming businesses are often asset rich and cash poor. Even larger farms can operate on relatively low margins and will only be able to pay a big inheritance tax bill by selling land. That will mean less of the agricultural land in this country in the hands of family farmers. I think that’s a bad move. All the farming families I know care passionately about the quality of the food they produce and, for the livestock farmers among them, about the welfare of their animals. These are also high priorities for the British consumer. Planning to pass the farm to the next generation encourages the sort of long-term planning we want to see in the management of our farmland and the broader countryside in which they are set. We should also recognise that it is hard enough already to get younger people to come into farming and to stay there. The average age of UK farmers is 59, with 40% of them over 60. Making it harder to pass on family farms to younger members of the family who do want to farm it will make that problem worse.
Finally, the Government suggests this tax change is needed to stop non-farmers buying up agricultural land just for tax reasons. If that were the problem to be solved, it could be solved in a more targeted way. Why not limit the benefit of this tax relief to those who could prove continuous ownership of the farm by the family for a certain number of years, for example? In any case, owning land without farming it yourself is not necessarily a bad thing. Around two thirds of farmers working the land are renting at least some of that land, and renting farmland is, in particular, a way for younger people to get into the sector which, again, is something we need to encourage.
As Ebeneezer Scrooge demonstrated, Christmas is a good time to change your mind. The Government should change its mind on this tax change. I fear that if it doesn’t, there may be fewer family farms to provide our Christmas dinners in future years.
