Leading the thousands of farming families who walked through the pouring rain along Whitehall on Tuesday (19 November) was Rory Rees, from Pembrokeshire. Three-year-old Rory’s tractor was the only type of agricultural vehicle allowed to drive freely along the closed street – small, plastic and pedal-powered – but it nonetheless helped to send a message to those in power. Rory’s father Tom, 36, is the sixth generation of his family to work on Dudwell Farm near Haverfordwest. He hopes Rory will be the seventh, but for the first time in his career he is unsure if the farm can continue. A series of economic shocks to the farming industry, including energy prices, higher interest rates and the worst harvest for decades, have been followed by a change in government policy that farmers say will break the agricultural sector.
The freezing rain did not deter a large crowd from gathering on Whitehall. The Red Lion on the corner of Parliament Street, normally a haunt for civil servants and special advisers, could have been mistaken for a Newton Abbot pub on market day, such was the profusion of khaki jackets, wellies and sideburns among the drinkers gathered outside. Many of the marchers’ banners were a variant on the No Farmers, No Food theme. A darker current ran among them, however: a number of banners, and the people chatting around them, framed the new tax in more conspiratorial terms, as a means of control.
This was not only the usual grifters who will turn up to any protest – although they were there – but the voice of a group that feels singled out and betrayed. Tom Rees, a university graduate who voted Remain, told me he doubts the policy will raise any tax, because it will simply depress farm incomes. He sees it as a vindictive move: “This is about stopping family farms… it comes down to those proper socialists within the [Labour] party who just have a dislike for anyone who has something they don’t.” A former Conservative voter, he now feels Reform best represents him. Many of the party’s teal placards could be seen, held aloft among the crowd.
These views were not discouraged by the speakers who addressed the crowd. Ed Davey, speaking as always from the safe cover of irrelevance, repeated that it was “so wrong” for the government to force family farms to sell up to “private equity” and “big corporates”. Farmers exchanged bemused glances when Kemi Badenoch took to the stage, but cheered when she promised to end the “family farm tax”.
By far the greatest cheers, however, were reserved for Jeremy Clarkson, who wrote in the Sun last week that the government plans to “ethnically cleanse the countryside of farmers” in order to “carpet bomb our farmland with new towns for immigrants and net zero windfarms”. Clarkson, who is a struggling farmer to the same extent that Arnold Schwarzenegger is a cyborg from the future, told the Sunday Times in 2021 that inheritance tax was “critical” to his decision to buy Diddly Squat Farm, from which he makes the TV show Clarkson’s Farm. After being reminded about this by the BBC’s Victoria Derbyshire, he said that the BBC was “the mouthpiece of this infernal government”.
The reason for the revolt is this: in her Budget of 30 October, Rachel Reeves changed a tax relief that had for many years quietly subsidised family farms. Agricultural property relief and business property relief, or APR and BPR, reduce the tax payable when passing on land, buildings and equipment. For many years the farmhouse and the tractor have passed from parents to children untaxed. Reeves didn’t remove these reliefs, but she did introduce a cap: over £1m of assets, farmers must now begin paying inheritance tax.
With prime agricultural land costing well over £10,000 an acre, a farmer with several hundred acres certainly looks wealthy on a Treasury spreadsheet. Even after the £1m cap, the allowance still looks very generous: a couple that owns a farm have a £1m allowance each, which when combined with the other allowances available for inheritance tax means that only estates worth more than £3m have to pay any inheritance tax at all – and even then, the tax payable is (at 20 per cent) half the rate paid by everyone else. The government is also offering farmers an interest-free ten years in which to pay their new tax bills. From the perspective of a Whitehall economist, it seems rational – and in a sputtering, debt-laden economy, essential – that estates worth millions should be subject to at least some tax. Farmers say the reality on the ground is very different.
Bizza Walters, 26, hopes that she and her cousins will be the fourth generation to take on her family’s farm in Warwickshire, where her father and his two brothers raise around 500 sheep. The estate – including the land, buildings and equipment needed to make an income from it – is worth somewhere in the region of £10m. The CEO of any company with £10m in assets would expect to earn a very decent salary. Bizza’s father and his brothers, after the farm’s income has been reinvested into next year’s feed, crops, livestock, fuel and equipment, are able to pay themselves about £24,000 a year each. At seven days a week, they are effectively working for less than minimum wage.
This is the crucial difference between farmers and other business owners: most farmers wish their assets were worth less. On farmers’ forums, the prevailing sentiment is captured by an online poll which found more than 70 per cent would like land prices to fall (“like a stone” was the most popular choice). There is no landlord who feels the same way about their property portfolio, no start-up founder who wishes their share price was lower.
Part of the problem is that when the government gave farmers tax relief on their family property, other people saw a loophole and barged in. The tax relief, combined with the farm subsidies paid by the EU and then by the government post-Brexit, have led to the creation of what Rees calls “hobby farms”; any wealthy person with a big house in the country and ten acres can “register the pony paddock” and legally avoid inheritance tax on their enormous house. There are, too, the billionaires who have taken an interest in agriculture – the Emirati ruler Sheikh Mohammed bin Rashid al-Maktoum and the vacuum tycoon James Dyson each own tens of thousands of acres – which may in some cases represent tens of millions in reduced tax liabilities, relative to other assets.
While the tax status of agricultural land has inflated its value, farmers have been forced to buy more of it. Farmers do not get a say in what they pay for energy or what they’re paid for produce; both are decided by remote commodity markets, and the profits are largely concentrated towards one end of the supply chain, in large food producers and retailers. Trade deals leave them competing with inferior produce from abroad. The only way to improve returns is to grow in size, and the only way to do that is to borrow more money. This was the one compensation of higher land values: a more valuable estate enabled higher borrowing, and with no inheritance tax to pay, farmers could use this leverage to make ever-more expensive bets on the interplay between commodity prices, land values, political stability and the weather.
Photo by Joshua Atkins
Such bets have recently become much harder to place. Energy prices are higher and more volatile, borrowing is more expensive. A very wet autumn last year and low levels of sunshine this year have led to crop failures and poor grass growth for livestock. “The whole industry was on its knees, before this [tax increase],” said Rees. “I’ve never known it so bad.” The tycoons and overseas investors will not be deterred – a tax rate of 20 per cent still makes agricultural land a safe place to park one’s wealth – but for Rees, the tax bill for keeping his family farm would reach more than half a million pounds. Walters and her cousins think they might have to find a million. Neither thinks it would be possible to do so in ten years.
This is the economics behind the farmers’ march, a pervasive sense of unfairness among the real and very hard-working farmers that supply 60 per cent of the UK’s food (by economic value). But they are just one dejected interest group among many across the country. This week’s protest is the first mass demonstration by a group of working people against this Labour government, and it may tell us something about its future. Labour’s programme is one of mature, sensible government after years of chaos, but its vision of even-handed technocracy is coming apart. There are no apolitical decisions made on Whitehall; everything is political, every piece of fiscal policy will make someone better or worse off, to a degree unappreciated by spreadsheets. A tinker with the tax code can become a populist revolt.
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