Every major British supermarket has turned on Sir Keir Starmer over his tax-hiking Budget, warning the raid on family farmers will put food supply chains at risk.
Tesco, Sainsbury’s, Morrisons and Asda are among the supermarket giants signed up to a damning letter warning over “the long-term stability of the nation's food resilience”.
Lidl, Aldi, Co-op and Marks & Spencer have also signed the letter calling for the “abhorrent” tax raid, to be dropped.
The warning, organised by the National Farmers Union (NFU), is the largest rebellion yet against the chancellor’s decision to end inheritance tax exemptions for farms worth more than £1m.
The change means previously exempt farms will be hit with a 20 per cent levy on farming assets worth more than £1m, with critics claiming it will force family farmers to sell up and rip the heart out of Britain’s countryside.
NFU president Tom Bradshaw said farmers have made their views on the tax clear through months of protests across the country, “now so have 57 other businesses across the food supply chain”.
“This abhorrent policy has united farming and the whole of the supply chain like never before. How loud does the chorus of concern around the policy have to be for the Treasury to listen and take action?” Mr Bradshaw asked.
He added: “Scrapping critical inheritance tax reliefs not only affects family-run farms, but it stands to have far-reaching consequences for the whole industry, from food processors to supermarket retailers.
“Faced with a backdrop of global instability, a changing climate, high input costs and a growing global population to feed, this policy risks destabilising an industry that is vital to feeding the nation and one that supports millions of jobs.”
It is only the latest warning about the impact the policy will have on the farming industry. Last week, Rachel Reeves faced a convoy of furious farmers on tractors protesting outside her crucial growth speech in January, with one telling The Independent it was crushing investment and growth.
Julie Adams, who cancelled a £150,000 investment in her Bicester farm, said: “People are not going to invest in machinery, buildings, projects… everything. What she is doing will not just devastate the industry, but stop growth.”
Other major backers of the latest calls for a U-turn from the prime minister and chancellor include Waitrose, dairy giant Arla, Yeo Valley and Crunch Corner maker Muller.
NFU chief Mr Bradshaw added: “The chancellor has said she has seen no alternative proposals put forward, yet there have been solutions put forward by tax experts and Labour MPs. With large numbers of Britain’s biggest manufacturing sector – food and drink – against this policy, it is time for the chancellor to heed our calls to meet to discuss options and find a way forward out of this current mess.”
As well as warnings over the devastating impact on farmers, Labour has been warned over the electoral impact of the policy, with polling shared exclusively with The Independent revealing it could cost the party three in four of its rural seats.
The Treasury says that, with tax allowances, in reality, only farms worth £3m would be affected, just 28 per cent of family farms. But official Defra figures appear to suggest as many as 66 per cent could be hit.
And, in a fresh blow to Sir Keir and Ms Reeves, the £500m the policy was expected to raise each year has been given a “high” uncertainty rating by official spending watchdog the Office for Budget Responsibility (OBR).
Labour-supporting tax campaigner Dan Neidle says the Budget decision to charge inheritance tax on family farms worth over £1m should be dumped in favour of a £20m threshold with an added clawback system. That would apply to those who sold farms worth less than £20m immediately after inheriting them.
The proposal would remove the threat of farmers who want to pass on their farms to their children being forced to sell up to pay a massive tax bill, said Mr Neidle. Instead, the government should target rich landowners who use the current inheritance tax (IHT) exemption on farms as a tax dodge, he argued.
Insisting his “dramatic and simple” blueprint to end the row is “workable”, he said it was time for all concerned to do some “proper thinking” and ignore “the political noise”.
A government spokesperson said: “This Government will invest £5 billion into farming over the next two years, the largest budget for sustainable food production in our country’s history. We are going further with reforms to boost profits for farmers by backing British produce and reforming planning rules on farms to support food production.
“Our reform to Agricultural and Business Property Relief will mean estates will pay a reduced effective inheritance tax rate of 20%, rather than standard 40%, and payments can be spread over 10 years, interest-free. This is a fair and balanced approach, which fixes the public services we all rely on, affecting around 500 estates a year.”
