Starmer v farmers – will the government have to backtrack?

This is The Guardian. Today, why Britain's farmers are in revolt?

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London is a use to protest, but not like the one that brought the capital to a standstill on Tuesday. Over 10,000 farmers came from all over Britain. Some had driven through the night on their tractors and arrived bleary-eyed and dirty wellies. Others were waterproof jackets with the slogan, Starmer the Farmer, Hama.

A few were carrying crates of cauliflowers and bags of potatoes to be donated to food banks. All were furious. I am the fourth generation of my farm and, you know, my father worked until he was 84, farmers don't retire, they work hard and we took over 15 years ago when my father died and we have children and grandchildren and I was hoping that they would carry on the tradition. But with this inheritance tax, probably we won't be able to.

Inside Parliament, 1,800 farmers were lobbying their MPs. They want to stop the government imposing inheritance tax on farms worth more than a million pounds. You know, we have no money in the bank, we have land where we don't have the money to pay the government and we just feel it's so unfair. I think it's short-sighted, they really haven't thought it through their desperate for money and they've just thought, oh well, who can we go for? We'll go for the farms.

Farmers argue this is not merely about reducing their tax bills. They insist this policy poses an existential threat to British farming and to food security in the UK. Everybody takes food for granted. You go to the supermarket, you expect to buy food. If they go in there one day and there's no food, they will wonder what's gone wrong.

What began as an almost throwaway line in the budget has prompted the biggest agricultural outcry in decades, and the first big public demonstration against Kistama's government. But can farmers change labour's mind? From the Guardian, I'm Helen Pitt. Today in focus, is this really a death knell for the family farm?

Heather Stewart, welcome back to today in focus. You've been on the show many times over the years, but this is the very first one as the Guardian's economics editor. You took over from the legend that is Larry Elliott just last week. He was in the job for 30 years, so no pressure there then. But tell us, first of all, these protests that we've seen in London this week.

Just how unprecedented have they been? Because when I think about farmers protesting, I think of French farmers blockading roads and ports. Yeah, I mean, we're not quite so good at it on this side of the channel. And it doesn't tend to be a group that you hear from that often. I mean, I think if you remember during the last Labour government, a slightly different group of people, but overlapping, perhaps you had the countryside alliance and some of the issues about hunting, for example, and that became very sort of noisy.

I don't think we very often get what we've seen, so convoys of tractors and so on. And when did this argument over inheritance tax start and why has it proved to be so controversial?

So, there have been arguments for quite a long time that it wasn't fair that farmers were able to pass on their farm to the next generation completely free of inheritance tax. In particular, there were suggestions, so think tanks such as the Resolution Foundation was saying this, that it had become a bit of a tax dodge.

So the suggestion was, you know, because you can pass on farmland tax-free that you had wealthy individuals who were being told by their accountants and their advisors, you know, if you've got a lot of money, you'd quite like to pass it on tax-free to your kids. Why not buy yourself a farm or a bit of farmland? You know, so there was a sense that it was a bit of a fiddle. It was a bit of a tax dodger. It was being used as a bit of a tax dodge. And so over the summer, we had that long period where everybody knew Rachel Reeves wanted to raise a lot of tax.

nobody knew quite how she was going to do it so this was definitely one of the suggestions that this might be somewhere that she would look at this sort of agricultural relief. So then on in her budget at the end of October she raised a lot of taxes right so she stood up raised you know forty billion pounds worth of extra money because labor says that no public realms in a terrible state public services.

infrastructure, all of that stuff. She needed to raise a lot of money, but really big tax rises were national insurance on employers, but this change is one of those that's generated the most attention and noise. Finally, we will reform agricultural property relief and business property relief. From April 2026, the first £1 million of combined business and agricultural assets will continue to attract no inheritance tax at all.

But for assets over £1 million, inheritance tax will apply with a 50% relief at an effective rate of 20%. This will ensure that we continue to protect small family farms and three quarters. It actually only raises about £520 million, I think, a year by the end of the sort of forecast period. So it's not big in terms of that £40 billion, but it's hugely controversial.

And can you just explain what Rachel Reeves is proposing to do exactly and how many farmers would be affected by this?

Yeah, so she's saying from spring 2026, if you're a farmer and you want to pass on your farm to your children, there will be a sort of one million pound threshold. So you can pass on a farm worth a million quid tax-free. If your farm is worth more than that, then your descendants will have to pay inheritance tax, not at the full rate, which is 40%, but at half that rate, 20%. So you'll have to pay 20% of everything over a million pounds. So that's the big change.

But in the case of couples, they can actually pass on a lot more, can't they? Yes, they can. And in fact, by the time you've used up all your various allowances, including for a property and, you know, your sort of normal inheritance tax threshold allowance that everyone gets, you can actually pass on three million between a couple. And that's getting sort of civil servants very frustrated because they feel that the million pound figure is being waved about. And people are saying, look, there are so many farms worth over a million. But they're saying, well, actually, if you sort of plan right,

And if you're a couple and of course not all farmers will be in a couple and not everybody will be able to organise themselves in this way but you know you could pass on potentially three million free of inheritance tax.

And with ordinary inheritance tax, there's this seven-year rule, isn't there, whereby you can give unlimited cash gifts? Is that right? And as long as you survive for seven years after you've given this gift, there is no tax incurred. Does that also apply to a farm? Could you give your farm to your children as long as you stay around for another seven years? No inheritance tax?

Yep, you absolutely could. No problem with that at all. And I think there's a taper rate too. So if it was six years, you wouldn't pay the full 20% rate, you would pay a bit less than that. And then also remember, these rules don't come in until 2026. So you've got seven years, but you've got a bit of time to sort your affairs out.

And that would affect all farmers in the UK with it. The Treasury estimates it won't affect that many farmers, so they are suggesting they think about 500 farms a year. So remember that a very small proportion of estates in the UK pay inheritance tax at all, four or five percent of people who die pay inheritance tax, which you sort of wouldn't know sometimes from the debate about it. People get absolutely furious about it, including lots of people who are never going to come anywhere near paying it.

But the National Farmers Union, the NFU, thinks that far more than just 500 farms would be affected, don't they? The very ill-considered actions, the lack of understanding of what this means. They keep on saying 73% of farms won't be impacted. But when you look at the farms that are producing the country's food, a significant proportion of those farms, defra's own figures suggest 66% are over the million pound threshold.

I don't really understand how there can be such discrepancies. How can you have defra at the department in charge of farming and rural affairs saying 66% of farms will be subject to inheritance tax? And then the Treasury saying no, it's 27%. They both can't be right, can they?

I know it's really hard to know to be honest. I mean, what the Treasury say is, look, these are tax numbers. So what we've got is we know how many farms have actually applied for this agricultural relief in recent years. Right. And this agricultural relief is effectively what has allowed farmers up until now to not pay inheritance tax. And the Treasury is saying that each year, around 500 people have applied for that.

Yes, they're pretty convinced their numbers are right. But yes, when you hear from the NFU, you hear the suggestion that there are a lot more farms that are worth enough to take them over the threshold. So it's unclear, I think, quite how we've got such a big discrepancy. But as I say, the Treasury are adamant that they've done their sums right.

Okay, so the Treasury thinks that it'll only affect the wealthiest 500 or so estates every year. And of those, are they mostly working farms or just large estates bought up by rich people who want to avoid inheritance tax?

So there has to be some farming going on as far as I understand it to get the tax relief, but also we know that there are absolutely people who are advised to buy farmland as a way of not having to pay in any inheritance tax. You know, for example, Mr. Jeremy Clarkson, who I think is

conceded himself that that's why he decided to get into the farming business because then he'd be able to pass on that to his children without them having to pay tax on it. So we know that there are people who have been using this and we know that financial advisors suggest this as a way of being able to pass on more assets to your children tax-free and there's an argument that that has sort of driven up the price of farmland artificially in recent years because there are different reasons for applying farmland and one of them is to

is a tax planning reason. Yeah, but it didn't stop Clarkson turning up at the protest today. Jeremy, what's your word to the government in the life of the sky? Please back down. Please back down. Please back down. Please back down the word there from Jeremy Clarkson.

It's not just Jeremy Clarkson, is it? There are a few other well-known names who've been howling in protest against these changes. Yeah, absolutely. James Dyson, well-known Hoover magnate and Brexiteer, apparently the owner of a large amount of farmland who would have benefited from this relief and been able to pass it on absolute tax-free to his family. The FT did the sums and they believed that given the size of Dyson's estate, his descendants could be in line for a

inheritance tax bill of £120m so it's not that surprising that he's making a lot of noise about it. The problem for the Treasury is that it's a mix, right? It will be some long-held family farms which are struggling to turn a profit and it will be some sort of wealthy individuals who've sort of turned to this as a way of protecting very large amounts of assets from the tax man.

And do you think Labour have been a bit too blase about this? Do you think that they were taken by surprise just how controversial this has proved to be? I mean, it's certainly been very noisy. I think they were expecting, you know, you can't raise the sums of money that they are raising without some squealing, right? I mean, they knew that whichever group they focused on and indeed, you know, businesses that are paying the higher rates of employer and national insurance have been

very vocal and sort of campaigning quite heavily about that and not happy at all about the budget. And I think they knew that they would get some backlash from farmers too, so they may be surprised at the veerments of it. I'm not sure they expected rows of tractors to be filing past the Treasury.

Lucy Half, one of our producers, went down to Westminster and spoke to some of the farmers at the protest. Yeah, names John come all the way from Northern Ireland this morning. That must have been a very, very early start for you. It was just as early as usual. We're usually up melting cows at that time anyway. And tell me what you farm? Yeah, farm dairy cows, we primarily produce milk.

We also keep a few shapes up on top of the land that's less suitable to Derek Howes and at times of the year we also were just beef. What's brought you here today? What's your message to the government? We're outside Downing Street now. The message I suppose we're trying to relay over to the government is that

They have tried to make out that us farmers are all multi-millionaires and we're all rich and we have a ball of cash setting ready just to pay our taxes for them.

The real reality is that the land which has been valued so high by the government has been passed down through generations and generations of farmers. In my own case, my ancestors bought a farm prior to the potato blight in the Irish farmer in early 1820s. Nine out of 10 of the family had the emigrate to Pennsylvania and America during the famine which left just the only sun. And not only sun is persevered over almost 200 years to the family farm we have today.

I don't think it's fair that the government should now tax the land that my ancestors have been carefully maintaining all of that time just because they feel now that they wish to provide extra services for a socialist agenda. My name is Olivia so I'm here with my husband and our three kids have got a five or three and a four week hold.

You've literally got your four-week-old straps to your front, to your four-week-old daughter. Yes, she's here. Bless the earth. First rally at four weeks, I'm sure there'll be more. So tell me why you've come here today. So we are tenant farmers, and we've also got a family farm. So from a tenant farmer point of view, it's, well, from a general point of view with our children, it's making sure that there are still farms for our children's farm if they choose to when they're older.

We produce a lot of beef and lamb. We're not arable farmers. Our family farmers and we rely heavily on other arable farmers for our contracting business. It's just trying to secure a future basically for the next generation. I think if we don't do something now it's going to be a totally different story when they're old enough to choose what they want to do.

And tell me about how hard it's been in the last few years besides this latest flow. Yeah, it's been tough anyway with Brexit. You know, we've lost a lot of government money and the government funding and things are getting more expensive, costs are just going up every year and we're not making any more money. For our family farm, for us to keep the family farm with the new inheritance tax.

we'd have to sell a large portion and it just makes it non-viable and especially where we are we're actually quite urban where we farm so it'll just be sold off the development which I think is tragic and we won't be able to produce enough food to feed the country. And do you think there's been a miscalculation here that Rachel Reeves thought that she was going for

wealthy land owners, people who might be using the land to evade tax, but actually it's going to hit farmers like yourself. Yeah, that's exactly it. The wealthy farmers in today will be able to afford the inheritance tax. People like us won't. It's just not going to happen. So, yeah, we're going to struggle. We're not going to be able to keep the land that we've got. We're not going to be able to keep farming. Did they already even know that's being pumped up?

And Heather, a lot of people listening to this might be thinking, well, I have to pay inheritance tax, even though, as you say, only a tiny proportion of the population do end up paying it. But they might be thinking, well, I have to pay it, so why shouldn't farmers? What is the argument for treating farmers differently?

Well that's a really good question because i think there's an argument isn't there about food security and that it's quite important for us to produce our own food and also you know i think there's to some extent a sort of sentimental attachment to these kinds of businesses isn't there into the idea that it should be possible to keep them in in families and you know you've got people who sort of know and understand the land and have been.

passing it down through generations. But I suspect if you spoke to some people in government, they would say, well, they're still only paying half the rate that lots of other people are paying, and they've got a much bigger threshold than other people will get. You know, they've got that sort of million pounds threshold before, which they won't have to pay anything at all. So it's tricky. It's tricky. Yeah. And it does feel a bit like this is perhaps the last straw for a lot of farmers. What are the challenges are they facing in the farming sector at the moment?

Yeah, so there are a lot of them. It's a sector that's seen a lot of change because the subsidy regime that we had when we were members of the EU has been completely replaced by a very different system that looks at our environmental objectives and other things, as well as just the size of your farm.

So Rachel Riese also announced changes to the way that farm subsidies are calculated and farmers are saying they're going to receive a lot less than they were expecting. So that's another issue. I mean, there was five billion pounds in the budget, I think, for change over to more sustainable farming, but quite how that's going to be spent and whether it'll actually reach any of these struggling farmers, I'm not sure. So yeah, I think they feel that they got it with both barrels as a result of the budget, basically.

Right, and I guess adding to those pressures is the very real challenge that farmers face to make enough profit to pay for that inheritance tax. The Guardians reported previously how farmers can only make one pea, one pence, for every loaf of bread or block of cheese that they sell to supermarkets. Just how hard is it for farmers to make a profit nowadays?

It's quite difficult to make a profit in the sector. A lot of farmers will tell you they get very squeezed by big buyers, big supermarkets and so on. Remember, farmers are also absolutely at the sort of rough end of the really dramatic changes we're seeing in the climate, right? So whether it's flooding, whether it's drought, whether it's kind of, you know, kind of not knowing how the seasonal pattern is going to work and having to change crops or think about things differently, you know, farmers are absolutely in the front line.

for that. So this is not just a protest about sort of practicalities and rationale, it's also there's also something a bit sort of emotional about it too because it's you know these are people who feel that they were already under a lot of pressure.

And you often hear farmers saying that they're really struggling to persuade their children to take on the family farm and presumably getting landed with a whopping tax bill is hardly going to encourage their descendants to take on what can be a financially quite precarious business and a hard one, getting up at the crack of sparrows every day, working 365 days a year, 7 days a week.

Yeah absolutely and you know there will be lots of descendants of farmers who had been the same for a very long time I'm sure but I suppose if the generational issue was already quite hard yeah absolutely adding a tax bill into the mix is not going to help but you know

People in lots and lots of industries are unable to pass on everything they want to pass on to their children, you know, inheritance tax-free, right? And this is something particularly emotional about farming, and I'm not sure quite where it comes from. But isn't that because it is a bit different, I think, farming, isn't it? That if all of the farmers die out and the people who can actually afford to buy these farms are just rich people who want to have huge estates, that we will lose something and that food security could be affected.

And it's also a way of life, isn't it, farming in a way that being a banker isn't? Absolutely. And it is kind of heartbreaking. But yeah, I mean, I do. Food security is very important. And I actually think the climate crisis almost makes that more acute, that we have more and more issues with food supply chain. But whether the right way to tackle that issue is by protecting family farms from inheritance tax, I'm not sure. Coming up, could labor come to regret incurring the wrath of farmers?

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Heather, do you think there's been a big miscalculation from Labour here, bearing in mind that Labour now has over 100 MPs in rural areas? Do you think it was wise for them to upset farmers as a group?

It's certainly true that Labour have courted voters in rural areas, although remember not everybody in a rural area is a farmer, a far from it. I do think there's a very symbolic weight that farmers have. There's definitely a very strong sympathy and I suspect if you're in a heavily farming kind of rural constituency, this is the sort of story that will have reached you and you might well, it might well colour what you think about the Labour government, even if your own finances have not been hit particularly directly.

And the National Farmers Union, the NFU, wanted the protest to be apolitical and peaceful and respectful. But ahead of the event, there were fears that the far right were going to hijack it. I mean, this didn't come to pass, thankfully. But do you think that this row over inheritance tax is at risk of becoming part of the culture wars?

Yeah, I mean, there's definitely efforts by some people to turn it into more of a culture war issue, which I genuinely don't think it is from Labour's point of view. In fact, Labour's quite keen to stay out of culture wars and generally look sort of managerial and competent and not get into those sort of murky waters.

There was Nick Griffin, former leader of the British National Party, having himself photographed in Jeremy Clarkson's pub. Jeremy Clarkson has suggested outrageously, I think, that what Labour is trying to do is ethnically cleanse farmers off the land, as it were, which is really unpleasant and totally out of all proportion.

I think the language being used about this whole issue has been kind of ridiculously overblown, you know, and the Conservatives have constantly talked about a sort of war on farmers, a war on family farmers. If you want to help us save your local family farm, I'm asking you to sign the petition at stopthefarmtax.com. Let's send the Government a message they cannot ignore.

And as you say, the Conservatives have come out very hard against what they are calling the family farm tax. The Lib Dems and the Greens are also against the measures. Do you think there's any chance that Labour is going to cave in on this one?

Not from anything I've seen or heard. I mean, certainly the conversations that I've had have been very much. Yes. Okay. We do accept that a relatively small number of family farms may not be able to continue completely intact, but they definitely think that part of what was going on here was tax avoidance. And they also think that because they've, there's still a million pound threshold,

and you could pay it over 10 years and it's not coming in until 2026. I think they just feel like they've left enough leeway really. Kistama who's in Brazil for the G20 Summit has robustly defended the policy this week. That's why I'm confident that the vast majority of farms and farmers will not be affected at all by that aspect of the budget. They will be affected by the £5 billion that we're putting into farming and I'm very happy to work with farmers on that.

I may be wrong, things might change. But as it stands, I don't get the impression that there's much of a sensing government of anyone changing their minds. And I also think that their sense is the vast majority of the voters that they are really keen to hang on to, you know, are not in this group. And so I can't see what the lever would be for making them change their minds, at least at the moment.

And there has been chat from some farmers, the idea of a strike, the idea of causing food shortages, no Brussels sprouts for Christmas and all that kind of thing. Do you think that's realistic? I don't know how realistic it is practically. I mean, I'm not sure how Tesco or Sainsbury or Aldi or Little or whoever would behave towards a farm that had promised it, you know, X tons of sprouts and didn't.

deliver them, there were fuel blockades during the Labour government, the last Labour government, and they were extremely effective. So, and trade unions know that withdrawing their labour, you know, the public sector strikes had a big effect on Rishi Sunak's government. So, you know, these things can work potentially, but I slightly struggled to reimagine it, but you know, these are very angry people, right? So, as you hear from the protests, so, yeah, we will see.

Mm-hmm. And look into your crystal ball now. What do you think is going to happen next? Assuming that you're right, that labour is going to stick to its guns, the tax will be introduced. Do you think the farmers will take it lying down, so to speak? No, I don't. I think the NFU, the National Farmers Union will continue to be angry about this, and I also think

We'll definitely hear about it and there will definitely be some real life stories. And I also suspect, if probably if you're one of those Labour MPs who's taken a rural constituency with a very slim margin, I'm sure you'll be feeling this quite acutely. But remember the alternative for Labour is, where else are you going to raise that money for? I mean, maybe they should have raised more of it from...

The city, maybe they should have hit private equity traders harder. So I would say it's not going to go away, but as it stands at the moment, it doesn't feel to me that it's going to change minds inside government. We will see Heather. Thank you very much. Thanks Helen.

That was Heather Stewart, the Guardian's economics editor. You can read her analysis of the inheritance tax protests at TheGuardian.com. Today's episode was produced by Tom Glasser, Lucy Hoff and Regina Stethans. It was presented by me, Helen Pitt. Sound Design was by Rudy Ziegablo, and the executive producer was Humma Khalili. We'll be back tomorrow. This is The Guardian.

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