This is The Guardian. Keir Starmer and his government have started yet another fight, this time with farmers who crowded into London to protest against changes to inheritance tax. Now I know a lot of people all across the country and all walks of life took a bit of a kick on the shin with that budget. You lot got a knee in the nuts.
As the noise from the countryside gets louder, the government insists the move is fair and it's standing firm. The vast majority of estate owners will be totally unaffected. So who's going to win this fight and what's at stake? I'm John Harris and you're listening to Politics Weekly UK for The Guardian.
We're on Parliament Square, it's bitterly cold and it's raining.
and we're in the midst of something very strange, a big demonstration on a Tuesday morning. People involved in farming from all over the country have descended on London, feeling very irate and angry about what was in the budget, this change in the inheritance tax regime on farmers. I mean, this budget is, you know, the aftermath of it is still playing out, essentially. And I think for the government, this is a big one. There is an old adage apparently,
for politicians, which is don't pick a fight with professions you read about in children's books. Doctors, nurses and farmers, right? And that, probably in a nutshell, is that exploration of why this is all exploded. So it's quite a scene. Victoria Atkins, who's the shadow environment minister with farming in her brief, is doing her little speech. She's dressed in muddy wellies for the occasion.
The Guardian for our sins, we make the Guardian's politics podcast. Can I ask you two? So am I, I live in Somerset. Just tell me why you think these people feel so strongly about it. Ask the farmers yourself. For me, it's because they see their rural way of life, their family traditions, their livelihoods and their children's futures being snatched away from them because of this cruel policy.
which Treasury and defereministers don't seem to understand the impacts of, they do not understand the impact that these reliefs will have on family farms and that's going to have the real impact that we fear that it will have on family farms. Do you think while you were in government you could have done more for farmers? Because it's not just this, there are other things. Through the Agriculture Act, after Brexit, we were able to ensure that stewardship and the role of farmers as custodians of our countryside
Please recognise tenant farmers have said to me they won't be able to pay their rent next year. These are several broken promises across this budget that are harming farming families and they must answer for it. Thank you very much. Thanks, bye bye. Thank you. Right, there's the beef from the Conservative Party. Now let's go and find some farmers. I'm farmers' wife. How are you? My husband's working. OK, tell me where you've come from today. Norfolk. We don't have animals, so we grow potatoes and parsnips.
OK, and why have you come? Because I do not believe in the farm tax. When a government makes a policy that actually closes down industries and puts our food in jeopardy, then I think that's very serious. At the end of the day, the human population is increasing, meant to hit, was it 9 billion by 2050? So, before I'm an old lady, we're going to be queuing for bread.
How tight financially is farming for you and your family? We're quite a big farm but we work on 1% profit margins. Some farms work on half a percent profit margins. Therefore your salary is that 1% and if you're half a percent then that is your salary. So to suddenly chuck 20% plus the nitrogen, the fertilizer that is going up by 20%, it is just absolutely insane. It's not something farmers can compete with.
Given all these pressures and how difficult it is, do you think your family will stay in farming? We will, I would hope, stay in farming subject to them abolishing this tax because that is not something that we can afford and we are a big potato grower. Over on the podium is the dependably shy and retiring Jeremy Clarkson who's become a bit of a spokesperson for the farmers. Now I know a lot of people all across the country and all walks of life
Took a bit of a kick on the shin with that budget. You lot got a knee in the nuts. And a light hammer blow to the back of the head. Because we had pickup trucks, double cab pickup trucks, being reclassified as company cars. 211% tax rise there. 50 pound carbon tax.
We're on White Hill now facing the gates of Downing Street. There are thousands of people here. Many of them have got homemade placards. Never corner a farmer, it always ends badly. I think I saw one before saying, starmer the farmer, hammer. It's having a choppy time of it, isn't it? That's what hits you straight away. So much for the only thing in period. Every week a different thing seems to go off.
So tell me which part of the country you farm in and what you farm? I'm a farmer from Wallingford in Oxfordshire. OK, what do you farm? And cattle sheep and arable crops. OK, and as you've far been in your family for a fair while? Yeah, we've been farming for about 450 years. So, yeah, a few weeks, yeah. Why have you come today?
We're just trying to make our voice heard. We want to feed the nation, but we're just getting absolutely crippled by these potential tax rises. If I was to keel over today of a heart attack, my children who are 12 and 13 will get a seven-figure tax bill. Rachel reads on TV, you can pay it over 10 years.
The farm profits wouldn't even cover that. It's just absurd. You're putting a tax on a business for 10 years that is greater than the profits, even before tax on the profits. It's just, you look at it, it's just nonsense. Before this measure in the budget, farm was already having a really, really rough time for ages, right?
Yeah, it's a tough business. Some of it is, we've always been cut loose to world markets, bad trade deals. The weather, I can put up the weather, it's part of the job. But just the way it's been going for years, just persecution of farmers as a cash cow. And there is nothing left to give. Farming is important. Everyone here has three meals today. It doesn't come out of a supermarket. It's got to go in there in the first place. For you, how tight is your business?
year after year now. A struggle. We will survive. We take you ups and downs. That's the nature of a business. You know, I've got no idea what next year's harvest like. It could be the best harvest for a generation. It could be the worst, but we will survive that. But do you have years when you make, I don't know, less than 10
Yeah, if you look at the defra figures, a huge percentage of the farming industry working below the minimum wage. You've got a budget saying we're going to put the minimum wage up for everyone and then you've imposed a crippling tax on people who aren't even getting the minimum wage. You just look at, it's just cock.
Just cock, there's a there's a quotation, if ever I had one. You know, you know, to look at my business, you say, if you came to my farm, you wouldn't disagree with how we farm. And I've won a lot of awards for conservation, for good farming practice, a long-term farming farm, hopefully, you know,
It's worth a lot of money. I'm never going to sell it while I'm alive. Hopefully my children won't. Hopefully my grandchildren won't. If it is sold, it will have a massive capital gain lift on it. So the Treasury will get their pick of it then. They will get a big dip of the pot. But you're just putting a crippling tax on something that just doesn't, you know, you know, it's just, it's just, you're just looking at it. We're just talking, you're going to say it again. Yeah, yeah. We will go exactly the right one, see. We will go with private and flexible rhetoric there.
You need to fix this. A white hole here, obviously, was surrounded by these great towering government ministries. There's the sell-and-taff over there. And this demonstration. The like of which I don't think I've ever really seen. I mean, these people are actually carrying produce, you know. I saw some cauliflower being passed over, people said to be forced to brussel sprouts, and people come with their dogs.
But the other thing more seriously is that the speeches are received in this very sort of hushed atmosphere. And they're emotional. The first person I heard was talking about cleaning a combine arbiter at two in the morning till his hands bled, going out in all weathers. And what really gives you the sense that the government's picked quite a high stakes fight here is how central to all this family is, right? That's what everybody's talking about.
You know, I took this farm from my father. I want to pass it on. This has been in my family for generations. It's very sort of rich, heavy, powerful stuff in it. And I suppose that the political choreography of it is all that emotion versus the sort of cold, bureaucratic labor government. That's the way they want it to be seen. You know, Rachel Reeves and her mathematics versus this very sort of earthy human story about farming.
Yeah, it really is quite a thing to report on and to experience.
We're now on the banks of the Thames. The sort of ocean of green coats is just over there. They're queuing, I think, to lobby their MPs in Port Colle's house. And I've now met Helena Holt and the Guardian's Environment correspondent. Hello. Hiya. This whole issue is sort of simple and yet complicated, right? So like a pub quiz question. Can you just explain what exactly is issue here in 20 or 30 seconds?
So Labour is trying to raise money without raising income tax or national insurance for people and also they would not commit to a wealth tax. So they have to somehow raise money to pay for what they're going to do. So they thought, why not raise money on people who have got millions of pounds worth of land and assets? That's farmers. The land that they own has ballooned in value over the past few decades because of investors coming in and buying it up.
But these farmers have had the same land for like sometimes five generations even more and they haven't sold this land or seen that valley realized. They make a very small amount of money. So if you're going to the supermarket and buy a block of cheese, one penny of that will go towards the farmer because supermarkets squeeze their margins so tight.
Now, Labour has proposed putting or is going to put inheritance tax on Farnsworth more than £1m. That sounds like it's a lot of money. I mean, none of us probably have £1m, but actually that's about 100 acres. That's not a viable farm. And it also includes all their business assets. That includes a combine harvester, which can cost up to £1.5m. So once you have a combine harvester, you only have £1.5m left for land. And that's really a very, very small farm indeed.
Do you think the government's surprised to an extent or shocked that it's kind of blended into all this controversy? Absolutely. So the treasury came up with this policy. Defra have been saying to many people that they only heard about it the night before the budget. There's been no consultation and I think if there was a consultation they would have even tweaked it. So these farmers, they have thought all their lives they can give their farm down to their children.
but now they've been told, well, you can't. They're going to have to pay so much tax will wipe out their profits. So if you have a farm worth, say, $3 million, which is like a probably an average-sized farm, that's hundreds of thousands of pounds, you pay that over 10 years. But the average farm income is $28K. That's almost everything you're going to live on. It's brought out all these human stories because we're all talking about death. We're talking about... And family. Yeah. I was very struck by that, listening to the speeches.
The main thing, generalistically, is to push back and go, oh, come on, it's not that bad, or, you know, you should be paying your way or whatever. And it's quite hard to make those arguments. A, because it's obvious that so many people have been caught in this. And then secondly, you're dealing in this very human emotional vocabulary about, as you say, family and death and things that go back generations and so on. So it does feel, doesn't it? Like a sort of classic bureaucratic blunder where you do something
And then maybe in the treasury even, oh, we didn't realize there were all these consequences. Is that what it feels like to you? Yes, and for the cost of 500 million a year maximum to the treasury, it again sounds like a lot, but it's a rounding error. We're dealing with very big numbers here. I think that it's also like there's a shade of unfairness to it. So the James Dyson, the Jeremy Clarkson's, who are independently wealthy outside of farming, have an income
if their children get hit with an inheritance tax they have a state of tens of millions of pounds their children can pay it but the everyday farmer can't so they're trying to fix a problem caused by people who are not going to be put out of business by this tax but farm as well and there's also a loophole that so almost every member of the landed gentry in this country won't have to pay this tax
That's because there's a loophole called the Cultural Heritage Assets loophole, that if your home or your farm are listed as cultural heritage assets, which they are if you're a member of the aristocracy because your home's a special stately home, you pay absolutely zero inheritance tax. So we're taxing average farmers, but we're not taxing them. OK. What do you think it says about the government and agriculture more generally, do you think?
I think that the government tried really hard during the election and in the months up into the election saying, look, we are all townies, like the Environment Secretary is from Croydon, grew up in St. Albans, but we're listening to you, we understand your issues, your issues are the same as the working class throughout the country, so we're going to have your back. And I think that the rural community gave them a chance to listen to them, but the tenured way in which they've responded, like Stevie, the Environment Secretary said, check your facts to farmers,
who've been talking tearfully to their accountants for the last few weeks. They haven't just read things online. They've actually been talking to their accountants that will be hit by it. I think it shows they have a lack of understanding. What do you think is going to transpire? If they roll back on this and don't roll back on things like the winter support for pensioners or the two-child universal credit cap, people will then say they've caved into Jeremy Clarkson and farmers, but why are you letting children starve and pensioners freeze? But even then, what's your gut instinct on what's going to happen?
I don't think they'll do it. They're digging in so, so hard. I think they're not going to change. I agree. On the left, there's many proposals that would raise money, a wealth tax being proposed by the Green Party and by others. And also, at the moment, if you have a field, right, you're a farmer and you get planning information on it, that raises the value of the field a hundred fold.
If you sell your field, you pay zero capital gains tax. It's called rollover relief. You pay no capital gains tax on that field, which means that there's no incentive for food production. Some people have said that could raise up to 10 billion a year, so far more than the 500 million. And that would actually hit people who are buying land and speculating on it. And it wouldn't hit people who want to be a generational farmer. I'll tell you what I felt being here.
It's just a sort of journalistic thing one occasionally gets, which is this is fascinating. That's what I thought. I thought this is politics that is most sort of raw and compelling. Yeah, I was actually very touched by all the families that have come from all around the country. It's a couple of paragraphs and a budget, but then you go out there and it's tens of thousands of people.
OK, let's pause here for a minute when we come back. We'll speak to one farmer about why so many are saying this is the final straw for family farms.
Welcome back. Following this week's protest, Keir Starmer told journalists he was confident that the vast majority of farms will not be affected. And the government maintains that this move on tax is fair. I'm now joined by Julian Perron, a farmer we've had on the podcast before who manages a family farm in Lincolnshire run by two brothers that grows celeriac and daffodils. He wasn't on the march this week, but it's fair to say that he was there in spirit. Julian, just to give a sense of your day and how it works,
What have you been doing this morning? Hello, John. Yeah, this morning we started off with minus two lifting celeriac into store for sale next summer. So very bracing, biting wind on the flatlands of Lincolnshire. But the sun is shining, so we're happy we're going to make some good progress today.
But hard work. Cold work, hard work. It always has been long hours in the dark, early starts. The industry hasn't changed. Let me start with a slightly challenging question. Forgive me. People who own businesses in every area of the economy are subject to inheritance tax. Even if this change happens, farmers will still get a big inheritance tax discount.
So I suppose the obvious question which has been asked a lot this week is why farms and farmers should be treated differently. Yes, I'm amazed business hasn't erupted as much as farmers have is my starting point. Any private business agricultural not are just trying to keep trading, keep employing people.
keep being part of the local economy. I'm amazed they haven't had such an uprising as we have in the agricultural industry. Where we're coming from is the margins of farming and the profits are so slim now, the efficiency in the supply chain,
has tightened up so much since I've been farming over the last 29 years. I can give you one example. We are turning over seven times more than we did 29 years ago, and we are making about the same amount of money on the bottom line. That margin at the bottom is devalued by inflation over the 29 years, and it is about the same number.
So that shows you how much we're having to run on a treadmill faster and faster to maintain a level of profitability that we used to have. So your argument is a very practical argument based on the realities of farming here and now, which is that what sets you apart is the fact that of all the parts of the economy, you're one that really cannot cope with the financial hammer blow like this. That's really it, isn't it?
That's my argument. Yeah, but we have slim margins and huge working capital requirements and huge machinery expenditure requirements and relatively large balance sheets compared to the profitability because the land is inflated so much over the years. But the land was always bought and paid for pretty much. Most farms have just been passed down the generations. So the land was always a working asset. You used, you loved it, but you never were going to sell it. So you don't.
Compute a value of that capital tied up in your business. It's in the balance sheet, most businesses at the cost it was when it was bought in 1920. So you don't look at your business as a farmer, which is the industry's weakness and go, we're not making enough return on capital. Let's stop farming. Thank goodness. We haven't done that as an industry. So we do keep farming. So when you have a tax based on your balance sheet value, it's totally out of kilter to the profitability.
How will this change in inheritance tax and discounts and so on affect your farm and you directly?
Well, my co-directors and shareholders are 83 and 76. I am very worried. They are very worried. We didn't see this changing, rightly or wrongly. We have, you could call a major problem. It's probably the biggest single threat to our business continuity that I've ever seen. I have worked the numbers out with our accountant.
they are probably beyond what we can afford to cope with. So you mentioned a moment ago, I think you used the phrase business, continue it. In other words, you think this conceivably could finish the farm off.
The problem we've got, John, is in our business we're very capital intensive with a huge amount of work and capital tied up that will get looked at on the death of one of our shareholders. We have a huge amount of machinery. One harvesting machine is 900,000 pounds. So we can chew through this notional 1 million or 3 million, whatever number you want.
before you even think of looking at any land, we've probably got about £4 million worth of machinery in the business. So you can see the numbers we're dealing with and we are not a big business. We are a medium sized business in this area. We own 1200 acres, we're farming 2000 acres, the numbers are brightening and we are still very exposed to a very large bill that
We, at the minute, cannot afford to pay. We do have borrowings as a business. We just want to keep going. Pay our debts off. We employ 20 people full-time, up to 120 people, part-time for Daffodil Harvest. We pay a wage bill of about 1.7 million into the local economy. All we want to do is just keep a business on its legs. That's all we're trying to do. You mentioned this a moment ago in relation to the age of other people.
who own a big stake in the farm. A farm can be gifted from one set of people to another without paying an inheritance tax. I think as long as it's done seven years before the people concern die. That's been talked about a lot this week. Where does that sit with you? I think from a major shareholder.
may have run out of time with that option. It's very difficult to talk about these personal things, but I think balance of probabilities, we've run out of time with that one. That's too late. The other option, looking at the wider industry,
is people don't die in the necessary and the correct order. And I think you could put say a farm accident or a heart attack or a car crash could happen out the blue to anybody in the world and it could happen to out blue to any farmer.
And at that point, you have a very traumatic circumstance, then followed by a very traumatic financial issue imposed on a business without any warning. Now, obviously, if farms get sold, it doesn't follow that they carry on being farms. By the same token, if people like you have to sell some land to pay the tax bill, it doesn't mean that the land remains agricultural land.
That's right, isn't it? There's a danger here of even less of the British landscape being used for agriculture. I think it's a real risk at the moment, John. There's real big competing asks for land in this country. If I look locally, most of the land sold in the last few years has gone to non-farmer buyers, buyers who have a different agenda. What do they do with it?
There are people from the America buying land. There's people from Holland buying land. They are letting it at the moment, but I think the purposes may come clear in time. There's obviously biodiversity net gain requirements. There's solar, there's energy, there's battery storage, there's wind farms.
loads of other options available to these investors. But I think what we're seeing is a lot of investors coming in holding land, not necessarily ever going to be liable to narrative tax. So this is punishing the notional family farm further because they will never pay inheritance tax. They are foreign owned corporations who will be exempt from this. So it does not help keep Britain in the sort of style of land ownership that has
you know, happened in the past. Yeah, yeah. And obviously there are huge questions about food security, swirling around all that. You mentioned the financial realities of farming for you. Can you just talk about some of the other factors that play into that? I'm thinking about Brexit and reductions in subsidies, poor harvest lately and so on. What just tell me about what it's like being a farmer, being you right now?
I think as I mentioned earlier, the financial pressures are huge and that has come by a subsidy reduction in the last few years, which you could argue either way. It does put the industry on its own feet with less direct subsidies to produce food. We get allowances to do more environmental work now.
That's the five billion over the next two years that the government are talking about. We used to get about three billion a year from the EU. As subsidies, that's gone. We've got that in the background, which is really hurting. We've also then got labour issues. We hardly have a queue of farmers wanting to stay in the industry. It looks really sad from where I'm looking that it just is another nail driving people out the industry. It's in a very, very fragile condition.
You presumably accept the idea that we probably have got a problem with people buying up rich people, very rich people, buying up swathes of agricultural land as a tax dodge, and that if the government is short of money, a more targeted move on taxation in that sense might be a good idea.
to get some of their money often. Yeah, I think there is a problem with the pseudo farmer owning land to hold. Who could you possibly mean? Well, I mean, 50 acres, 100 acres, 1000 acres, it has happened that this pseudo contract farming that makes them a farmer
on paper, but they don't even know any tractors or employ any stuff. There must be a way of sorting that out. But they have taken a sledgehammer to crack it up. You mentioned Brexit and the reduction in subsidies, which has had a very big effect on British farms, as we both know. Nigel Farage was at the march on Tuesday. Richard Tite of Reform UK is now your MP. In fact, in the election campaign,
We came to see you and ask you about some of that. How do you feel about Brexitiers hanging around these demonstrations as if they're on the right side of the old? It was bound to happen. It was bound to happen. There was going to see an opportunity. I believe the industry's probably
has rejigged itself a bit since we've breakfasted and probably can see that there have been few benefits to leaving. We've certainly frustrated trade with one of our potentially biggest block of customers. We export daffodils and slarek occasionally when we've got too much. It is much, much more difficult to do that.
I suppose I'm just asking you in crude terms. How you feel about people who obviously aren't really friends of farming at all, pretending to be? Well, I think at the moment, we've probably got a bigger crisis on, so we'll take anyone who helps our calls. I suppose that's good. We'll take their helper on this issue. We're being faced. Very good. Let me just ask you about the immediate future. If the government does stand firm on this, and that's what they're indicating, where do you think these protests and this controversy could go next?
I really hope they're listening. And I was talking to my wife last night. And since you think, you know, if you were a minister in Whitehall yesterday, you would have been slightly rattled. I really hope they were. I don't think the farming industry is going to back down until changes are made. Some concessions are made that the limits are unrealistic. The working capital we tied up as I talked about is much, much bigger than they're talking. You know, the data is wrong. Deafran knows it's wrong.
So they've got to reconsider it. If they don't, they will be tone deaf, absolutely tone deaf, and they will cause great hardship to businesses. We don't want less farmers in this country, we don't want less farming businesses, and this is what it will achieve. Thank you so much for being here, Julie, and lovely to talk to you. It's a pleasure, John, as ever. Nice to share the issue with you.
Thank you for listening. I hope you enjoyed today's episode. If you did, make sure you subscribe to Potix Week UK, wherever you get your podcasts, and even better, leave us a review, preferably a nice one. That's how I get the money to buy food. This episode was produced by Frankie Toby, the music is by Axel Kuche, and the executive producers are Phil Maynard and Nicole Chacs.
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