Keir Starmer has vehemently defended the imposition of inheritance tax on farms, as a new analysis suggested farmers are being increasingly squeezed out of the market for agricultural land by wealthy investors.
Amid a battle between the government and the National Farmers’ Union (NFU) over what proportion of farms could be affected by the change, announced in last month’s budget, Starmer said he was “absolutely confident” that the overwhelming majority of farmers would be exempt.
But the prime minister, speaking to reporters on his way to the G20 summit in Rio de Janeiro, suggested this message may not be getting through, adding it was “important for us to keep communicating how that works”.
Ministers have argued that the change will prevent some investors from avoiding inheritance tax by investing in farmland, much of which is often then barely used to produce anything.
A Labour analysis has shown a big recent growth in wealthy individuals and institutions buying up farmland across England, with a parallel drop in the amount of agricultural land actively used for farming.
While in 2010, such non-farmers were responsible for less than a third of farmland purchases, by last year this had risen to 56%, according to data collected by the property consultants Strutt & Parker.
According to official statistics for agricultural land use, in the last year alone, 400,000 hectares (988,422 acres) was taken out of use for farming. The analysis is linking this to financial advice that recommends the potential tax breaks of investing in farmland.
A Labour source said the party was “asking rich estates and farms with the highest values to pay their fair share”, with the money used to pay for public services that rural communities relied on.
Starmer will be at the G20 summit when farmers protest in central London against the plans, with Tom Bradshaw, the NFU’s president, saying on Sunday that his members felt “betrayed”.
Asked about the anger, Starmer noted what he said was significant government investment in farming, adding: “Obviously, there’s an issue around inheritance tax and I do understand the concern.
“But for a typical case, which is parents with a farm they want to pass on to one of their children, by the time you’ve taken into account not only the exemption for the farm property itself, but also the exemption for spouse to spouse, then parent to child, it’s £3m before any inheritance tax will be payable.
“That’s why I am absolutely confident the vast majority of farms and farmers will not be affected by this. It’s important for us to keep communicating how that works. Over the £3m, it’s then 20% rather than the usual rate and it’s payable over 10 years.”
Bradshaw told Sky News that he had “never seen the united sense of anger that there is in this industry today” and that he expected thousands of farmers to protest on Tuesday.
He said: “The industry is feeling betrayed, feeling angry. The government said that this wouldn’t happen.”
Bradshaw said farming families who were liable would often be unable to raise the money because of the need to reinvest any profits in production, which would be undermined, harming long-term food security.
There was also, he said, the effect on farmers, particularly older farmers who would struggle to adapt to the new regime: “Unfortunately, there are many who already have lost a spouse, that are in the twilight of their careers, that have given everything to producing this country’s food, and they have absolutely no way to plan through that. That is the betrayal that I’m talking about. The human impact of this is simply not acceptable.”
Some farmers have raised the prospect of refusing to supply supermarkets in protest, which Bradshaw said his union did not agree with.
“That is not an NFU tactic,” he said. “We do not support emptying supermarket shelves. But I do completely understand the strength of feeling that there is amongst farmers.”
The NFU has warned farmers attending the protests not to bring heavy machinery to the protest, emulating farmers in other countries who have blocked roads with tractors. Starmer said those protesting were entitled to express themselves – but said the police would respond appropriately.
“They are entitled to express their views. I do understand their concerns. It’s important I reiterate the support that is going in, it is quite considerable,” he said. “As to how the protest takes shape and what the response is, that will be a matter for them and the police for how they respond to it.”
