Axing IHT relief for farms will ‘drive a coach and horses’ through rural communities, says Steve Barclay

Farming family
One option reportedly under discussion within the Labour Party has been changes to inheritance tax to make it more difficult to 'gift' assets, such as farmland, tax free - SolStock/E+

Axing the inheritance tax exemption for farmland will “drive a coach and horses” through protections for rural communities, the Environment Secretary has warned.

Steve Barclay has accused Labour of plotting an inheritance tax raid on farmers by scrapping tax breaks that allow agricultural land to be passed down tax-free.

He told The Telegraph that this policy was a “further illustration of just how out of touch Labour is with rural communities”.

Mr Barclay explained: “It is important that farmers have the confidence to invest in their farms. It is important to take long-term decisions in agriculture when investing on the farm.

“And people need to be able to know that they can invest with confidence without being hit by tax, such as inheritance tax.

“These are long-standing protections that have been in place, which Labour will drive a coach and horses through, because they have little understanding of rural issues.”

Steve Barclay
Steve Barclay, the Environment Secretary, said it is a 'further illustration of just how out of touch Labour is with rural communities' - John Lawrence/The Daily Telegraph

Labour has insisted that it has no plans to raise taxes beyond its targeted raids on private schools, foreign property owners and non-doms. But the party has only ruled out increases to income tax, National Insurance and VAT.

Earlier this week it was reported that Labour had been drawing up options for how it could raise money though extra wealth taxes.

One option under discussion was said to be making changes to inheritance tax to make it more difficult to “gift” assets, such as farmland, tax free.

The relief allows farming families to pass down land and buildings from generation to generation without having to pay hefty death duties.

In 2020-21, the latest year for which figures are available, the tax break was worth £1 billion and was claimed by 1,300 agricultural estates.

Many farmers also benefit from a separate business tax relief, which allows family companies to be handed down free of inheritance tax.

Sheep farmer
The tax break was worth £1 billion and was claimed by 1,300 agricultural estates in 2020-21 - Monty Rakusen/Getty

Mr Barclay accused Labour of attempting to “hoodwink” rural communities by saying “almost nothing” about their policies in their manifesto.

Some of the pledges Labour has made have not been well received by countryside communities, such as ending the badger cull and banning trail hunting.

“On trail hunting, as with [Bovine] TB, as with inheritance tax, as with so many areas, the Labour Party simply doesn’t understand the rural economy,” Mr Barclay said.

“It doesn’t understand the importance of different jobs within that economy and how these tokenistic measures, which they are bringing forward to appease their metropolitan base, will have a very damaging effect on jobs in rural communities.”

Writing for The Telegraph, below, Meurig Raymond, the former National Farmers Union president, said it was “disappointing” that Labour had not committed to any increase in the agricultural budget. He added that he was “extremely concerned” by Labour’s pledge to end the badger cull as a way to limit the spread of bovine TB.

Meanwhile, analysis by the Tories found that if Sir Keir Starmer were to replicate the Welsh Labour government’s sustainable farming scheme in England, it would lead to 1,819,600 hectares of land taken out of food production.

The scheme, which requires 20 per cent of farmland to be used for “semi-natural habitats”, would also lead to 28,200 farms being forced to close across England and Wales, according to their calculations.

However, Labour says it has ruled out introducing the Welsh farming schemes in England and is committed to the environmental land management schemes to protect Britain’s food security and protect nature.

Steve Reed, the shadow environment secretary, said: “This is yet more desperate nonsense from a Conservative Party that has lied throughout this campaign. Our rural communities have been abandoned by this Conservative government.

Steve Reed, the shadow environment secretary
Steve Reed, the shadow environment secretary, rejected the claims from Steve Barclay and said 'rural communities have been abandoned by this Conservative government' - Finnbarr Webster/Getty

“Labour will give rural communities their future back. That starts with introducing a new deal for farmers to turbocharge rural growth and boost Britain’s food security.

“We will cut energy bills for farmers by switching on GB Energy, reduce red tape in farming schemes and protect farmers from being undercut in trade deals.”


OP ED

Meurig Raymond, former NFU president

We all recognise that alongside shelter, food is one of life’s staples. The way in which food is produced before it reaches the supermarket shelves is not always recognised, for example the association between the livestock in the fields and the crops grown across our countryside. The shopping basket is far from understood, but still the consumer demands food that they can trust and is produced on British farms. The majority of British consumers trust and demand British food because they do realise our production standards are higher than other countries across the globe. That is why it is pleasing to hear the Conservative manifesto commit to a legally binding food security target. Food security is national security and we must never forget its importance.

I am a former president of the National Farmers Union of England and Wales and I know the importance of government financial support, which is required to invest in the future of British farming if we are to achieve the improvement in our productivity that society demands. The weather over the past nine months has been extremely challenging. I know at first hand how difficult this has been for farmers throughout the UK and I am relieved that the Government has supported farmers in England, to help them recover from the recent devastating floods.

It has been most encouraging to see a commitment from the Prime Minister to increase the farming budget by another £1 billion. It is very disappointing that Labour have not committed to any increase in the agricultural budget at a time when investment in the farming industry is desperately required, and without that strong manifesto commitment it is difficult to see how the agricultural budget can be increased or even protected.

We farm in a family partnership in Pembrokeshire, a mixed farming business of livestock and crops producing high-quality produce that are in high demand. We have 3,000 acres of good, productive land and under the initial proposals by the Welsh Labour government we would have to plant 10 per cent of this land with trees plus 10 per cent to environmental habitat. These proposals are totally unworkable and would have a catastrophic effect on our business, as well as reducing our vital food production by 20 per cent at a time when food security should be very much on everyone’s agenda. Just imagine if these proposals were implemented across the whole of England and Wales.

We also know, from our own devastating experience, the impact of bovine TB on farming families across England and Wales. When I travel around the country, I see and hear at first hand the misery and mental and financial stress that this disease has had on farming families. Livestock farmers in Wales, including ourselves, have been driven to despair in trying to rid their herds of this horrendous disease. The eradication programme in England proved to dramatically reduce the disease levels but I am extremely concerned that Labour are considering ending the badger cull. It is imperative that we continue with this programme as we need to use every tool available, otherwise the disease will become endemic again in England, as it is in Wales.

I am most concerned that Labour have not ruled out any change to agricultural property relief or inheritance tax relief. Any changes or abolition of this relief would have a devastating effect on the transfer and continuation of hard-working farming families, which is vital for the production of food and the well-being of rural communities.

We need a government to deliver the policies that ensure Britain retains its ability to be more self-sufficient, support home grown food, and ensure that we have profitable and progressive farming businesses in the future. I have yet to be convinced that Labour have any policies that will deliver these ambitions.