Labour have learnt nothing from their Winter Fuel Allowance disaster
The list of people whom this government clearly dislikes just got longer.
We already knew about those evil, selfish parents who buy a better education for their children using their ill-gotten gains (much, much worse than the nice, progressive, good parents who use their hard-earned public sector salaries to buy expensive homes within the catchment areas of “good” comprehensives).
And all those rich pensioners who don’t even have the sense and humility to qualify for pension credit can go to hell before this government squanders any cash to help them pay for their winter heating bills. Who do you think Rachel Reeves is – Gordon Brown?
And now it’s the farmers’ turn. You know the type – wealthy beyond the dreams of avarice, employing low-paid, low-skilled immigrant labour to do all the work for them while they swan around living a life of luxury even as the hard-pressed British tax-payer subsidises their affluent lifestyles.
Well, they’ll start paying now, thanks to Reeves’s Budget proposal to levy inheritance tax on farms for the first time. Okay, so many farmers will be forced out of business, but that just helps Ed Miliband meet his net zero targets, thanks to having fewer cows emitting all that methane into the air. So it all works out.
Labour has long endured a reputation as being hostile to the interests of those citizens living in rural areas. It is largely, outwith landslide election victories, the party of the cities and the suburbs, the party whose MPs disdain the countryside for its paucity of Michelin star restaurants. Matters were not helped when the last Labour government spent more time debating a ban on fox-hunting – another obsession of city-dwelling progressives – than on the decision to go to war in Iraq.
Now the Treasury will demand 20 per cent of the value of all farms valued at more than a million pounds when the owner dies, presumably on the assumption that the beneficiaries have a spare £200,000 they’re not doing anything with at the moment. Unlike most residential properties on which death tax is due, farms tend to be handed down as a working businesses and continue in that form, producing food for the wider population.
Whereas the parental home is generally shoved on the market as soon as possible after the funeral, with the blessing of the prospective heirs.
In other words, there will be at least some farms that will have to be sold rather than remain as going concerns in order to pay the taxman.
On the other hand, the revenue generated will be so immense that by 2030 it is estimated to be able to fund the NHS for more than a whole day – more than half a billion pounds. In five years’ time.
Compare that to just some of the other Budget measures – the increase in employers’ national insurance, for example, expected to generate £25 billion.
In other words, it is virtually impossible to justify Reeves’s belief that the current tax regime exempting farms from inheritance tax is no longer “affordable”. Because from a fiscal perspective, it clearly is; the chancellor has simply made a political choice and that choice is to penalise farmers.
From a narrow political perspective, this is a low-risk tactic. Labour MPs and activists loved the various Budget measures that made life more difficult for wealthier people, resurrecting folk memories of when Labour governments waged class war on half the country.
The biggest difference between this government and its Blair-and Brown-led predecessor in the noughties is that New Labour very deliberately eschewed tax rises for their own sake, which was itself a major cultural shift away from party orthodoxy. From the founding of the party at the turn of the 19th century, all the way up to the 1990s, Labour saw higher tax rates for the rich as an end in itself, irrespective of how the revenue was spent.
Blair and Brown changed that, recognising that tax rises across the board could only be justified if they were to fund a specific political purpose, like an increase in NHS spending. Otherwise, there was no case for even the wealthiest to pay more than they already were.
This didn’t sit easy with everyone in the party, of course, and they will be the ones most delighted at farmers’ misery today. The figures prove that this tax change is unnecessary, except in the strictly political context that a group of people seen broadly as Conservative supporters are more miserable and disconsolate now than they were under the last government, which is justification enough. Job done.
The problem for the opposition and its new leader, Kemi Badenoch, is that there are few votes in defending farmers – another reason why Labour sees them as an easy target.
But that must not mean they can be forgotten.