Amid the furore over Lord Alli’s contributions to Lady Starmer’s wardrobe the new environment secretary, Steve Reed, was able to stay under the radar. Most of us weren’t aware that he had been schmoozing his way around British farms during the election campaign wearing brand new, top of the range Le Chameau wellies – also apparently gifted by the ubiquitous Lord Alli. At the time Reed was promising that Labour had no intention of changing Agricultural Property Relief. In fact, responding to an accusation by his Tory opponent, Steve Barclay, he dismissed it as ‘desperate nonsense’.
The efforts of the generations before me may all have been for nothing
So you can imagine the anger on British farms this morning after Rachel Reeves not only changed APR but also Business Property Relief (BPR). Tempers were further inflamed as it became apparent from social media posts that in the run-up to the Budget the mendacious Reed was chirruping, ‘Farmers are going to have to learn to do more with less’, presumably to manage our expectations.
Coming from someone who has climbed the greasy pole as a public sector fat cat in Lambeth Council – doing less with more, as one might say – this has landed like a prolapsed cow’s uterus with farmers who have proved themselves able to make ends meet in tough times more than most.
The fact is, though some families will, indeed, somehow tighten their belts and find a way through this crisis so that their farms can pass on to the next generation, paying inheritance tax on agricultural land and business assets worth over £1 million will be the final nail in the coffin for many. What Reeves appears not to understand, or maybe she is just deeply cynical, is that the only farmers who will benefit from her £1 million threshold are at the llama-owning end of the spectrum – hobby farmers with a nice house and a few acres, much like Sir Keir Starmer’s late parents’ donkey sanctuary in fact. Even small commercial farmers are, for now anyway, sitting on assets worth over £3 million for a 200-acre farm once all the livestock, plant and machinery is totted up.
Metropolitan readers may be starting to sneer at this ‘first world problem’ but, though most farmers are rich on paper, there is a famously low return on assets in farming. And the brutal facts are that, for the next generation, paying, say, £50,000 for ten years to clear the inheritance tax on our hypothetical small family farm would be simply too much out of taxed farming income. Land would have to be sold off (further reducing income) either in bits or, if a farm is already at critical mass, outright.
Society as a whole loses when that happens. The obvious bits to sell off under those circumstances are outlying fields to wealthy weekenders as pony paddocks (meaning land is lost to food production), or farm cottages to retirees or second home owners (meaning fewer affordable homes to rent in the countryside, or for young farmworkers to live in).
Of course there will be ways to mitigate the tax but these come at a cost. For those young enough and healthy enough to take out life insurance, that will be the route for many. So the spare cash currently spent on ‘working people,’ laying hedges or mending drystone walls, will now have to be spent on life insurance premiums.
It’s bound to be inflationary, too. Costs always feed into higher prices. Farmers may be price takers rather than price makers but the market always ends up setting prices at a level where efficient farmers can make a living and reinvest in their farms. Dairy farmers like me will need more for our milk and consumers will end up footing the bill for Labour’s ideological crusade. Gordon Brown could see that and didn’t touch APR, Rachel Reeves obviously can’t.
The economic illiteracy and ideological spite are extremely aggravating. But, most of all, I feel a deep sense of sadness that everything I have put into my farm over the last 25 years, and the efforts of the generations before me in the 150 years before that, may all have been for nothing. I am off to buy a large coffin-sized freezer and my children will be under strict instructions to stick my corpse in it and only report my death once we no longer have a Labour government.
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