My first reaction to the announcement in the budget that the government was going to impose inheritance tax on farmland was that it was bad politics. With one policy Labour risked giving up all the goodwill it had generated in the countryside through hard work whilst in opposition.
Our colleagues at the CLA have tested that thesis with polling in the 100 most rural constituencies in England and the evidence shows that Labour has indeed squandered the trust and support of a very significant part of the rural community. Of people in those constituencies, 57% say they trust Labour less as a result of the inheritance tax decision and nearly a quarter of Labour voters say they are now unhappy about the way they voted at the General Election. Only 23% think that family businesses like farms should be paying inheritance tax whilst 59% think they should be exempt. Meanwhile, councils across the country are supporting motions against the family farm tax.
The Conservatives called an opposition day debate on the family farm tax yesterday. Whilst that gave them and the other opposition parties an opportunity to state their objections to the policy and commitment to the farming community, it was probably not hugely helpful in resolving the issue. The reality, which will be the case for the next four years, is that Labour has a huge majority and any effective opposition to government policies will come from within the Labour party, not from outside it.
A debate designed to score party political points was never going to see new Labour MPs from rural constituencies leaving the party fold. It was noticeable, however, that some - including Markus Campbell-Savours from Penrith and Solway, and Sam Rushworth, from Bishop Auckland - were willing to voice some concerns about the policy. You can be sure that the questions they were willing to ask in public are merely the tip of the iceberg and that Ministers are hearing much more concern in private.
Farming Minister, Daniel Zeichner, had the unhappy job of defending the indefensible in summing up the debate. He did his best, but one line stood out when he claimed that “there is plenty of time for people to plan for change and to get professional advice about succession planning”. This is simply not true for those farmers approaching the end of their lives. As Ministers know, the policy as it stands creates a death trap where those who die before 1 April 2026 will be able to pass on farms without inheritance tax, as will those who gift them now and do not die within the next seven years. If they die between those dates, however, their estate will be liable for inheritance tax which may well force its sale. This is the cruellest element of the Treasury’s cruel family farm tax and that at least must surely be addressed.
Returning to the CLA’s polling, it suggests that there are real opportunities for Labour if it can extract itself from this unnecessary row over family farms. Of respondents, 59% want the government to build more affordable homes in rural communities and 56% support reform of the planning system to stimulate economic growth. These are policies that are central to Labour’s project, but unless this rift between rural voters and the Labour party can be resolved they will not help rural Labour MPs at the next election.