Reeves’s tax on farmers carries a strong whiff of class prejudice

Back in September 2000, British farmers working together with truck drivers brought the UK to the brink of collapse. Protesting successive sharp rises in petrol and diesel prices, farmers and hauliers blockaded roads, fuel shipping terminals and oil refineries, putting huge pressure on Tony Blair's New Labour government.

Blair declared an "NHS red alert", invoking "emergency powers" to ensure essential fuel deliveries in a bid to sway public opinion. But many voters, equally sick of spiralling fuel costs, staunchly backed the farmers even as slow-moving rows of tractors thwarted motorway traffic.

Having secured a landslide just a few years before, Labour suffered badly. As petrol stations closed and supermarkets began food rationing, the party's poll-rating plunged from a 10-point lead over the Tories to a five-point deficit in a single month.

Blair and Gordon Brown, then-chancellor, were forced to back down. They unveiled a range of measures to ease the tax burden on motorists including a freeze in fuel duty, which was the protesters' main demand. These were policies that ministers had previously dismissed as "impossible".

This Tuesday, the National Farmers' Union (NFU) is holding a mass lobby of MPs, with 1,800 members gathering in Westminster – three times the original number planned. The same day, a separate farmers' rally is taking place , also in central London – which has had to move location because of growing support.

At issue, of course, are the changes to inheritance tax announced in Chancellor Rachel Reeves's Budget. Unless the Government changes its mind we're likely in for a rerun of September 2000, with the related economic and political fall-out.

Labour had pledged not to change agricultural property relief (APR), which has long allowed farming families to pass on agricultural land to the next generation without paying inheritance tax.

But in Labour's first Budget for 14 years, Reeves broke that promise, announcing APR would be capped at £1m from April 2026. Assets above that value will attract inheritance tax at an effective rate of 20pc.

The Treasury claims the £1m threshold will protect smaller family farms. But the NFU insists that many will have to be broken up , becoming economically unviable, as land is sold to pay inheritance tax bills that could easily amount to hundreds of thousands of pounds.

While the Chancellor keeps citing Treasury analysis that 73pc of farms will be unaffected by these APR changes, her figures are contradicted by numbers from the Department for the Environment, Food and Rural Affairs (Defra), the branch of Government specialising in farming matters. These suggest that only 34pc of farms are valued at less than £1m – meaning almost two thirds would be impacted by this change.

"Very few viable farms are worth under £1m," says Tom Bradshaw, president of the NFU. "That could buy 50 acres and a house today. But no viable food-producing business is 50 acres – the average UK farm is over 250 acres."

Bradshaw says the Treasury's numbers are "wrong" as they include "a substantial number of small holdings" and are based on past APR claims without considering some also claimed "business property relief" on other vital aspects of their businesses.

The NFU highlights the plight of older farm owners, with just a few years to live, who will not be able to use the " seven-year rule " to keep family farms intact – the ability to pass on assets free of inheritance tax if you survive the gift by seven years.

"I've heard some really upsetting accounts of what this tax would do to family farms," said Bradshaw last week. "Men and women who've spent years building up farm businesses now wondering 'why carry on?' when it's going to be ripped apart."

Labour's APR tax changes strike me as ill-conceived and rushed with a strong whiff of class prejudice, as an overwhelmingly urban party takes aim at thousands of farming families perceived to be wealthy but actually seriously cash-strapped.

I'd like to make three points, as senior ministers, despite their denials, consider how to defuse what could soon become a deeply disruptive set of protests that would be far more damaging to the Government's authority than backing down and showing some leniency towards farmers.

British family farms are already stretched to breaking point after a decade of spiralling prices for fertiliser and other vital inputs, and extreme weather events. Most farms, squeezed by powerful supermarket buyers they dare not criticise, operate on acutely thin margins of less than 5pc. They don't have vast reserves of cash.

Secondly, the Treasury may be right to want to clamp down on the growing ranks of "non-farmers" who have been buying agricultural land solely to avoid inheritance tax. So why not just say that APR only applies to estates left by individuals who can demonstrate at least a 10 or 15-year track record of active, daily engagement with agriculture. That is how to exclude land-owning City financiers and private equity bosses with no real stake in farming.

The final point is that Labour is already taking serious liberties with the UK's energy security – the decision to close down new North Sea oil and gas production borders on insanity. Is this really the time to take risks with our food security too?

Between July and September – Labour's first three months in office – the economy stalled, growing by just 0.1pc, sharply down from 0.5pc the previous quarter. A prolonged fuel protest and the related disruption could shatter consumer and business confidence even more, pushing the UK into recession.

This Government's treatment of farmers is shabby, will stoke food price inflation and could seriously undermine this country's ability to feed itself. Ministers will soon be forced to change their minds. It is better for everyone – and Labour's poll-ratings – if they do so sooner rather than later.