Why farmers' warning of Budget's 'devastating' effects must be taken seriously

Changes to inheritance tax could hit farmers and crofters hard, forcing the next generation to sell up

In today’s modern world, many people are completely divorced from a basic part of human existence: the production of food. Technology has enabled the mechanisation of farms and created a plethora of jobs in factories and offices in towns and cities where most food arrives, as if by magic, on supermarket shelves.

In such circumstances, there is a danger that politicians forget the importance of farmers and crofters, lack understanding of the lives people in rural areas lead and, therefore, introduce policies which have unintended, negative consequences.

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So the reaction of Jonnie Hall, the director of policy for the National Farmers Union Scotland, to Wednesday’s Budget should make Chancellor Rachel Reeves think twice.

Chancellor Rachel Reeves needs to think twice about the effect of changes to inheritance tax on the farming industry (Picture: Leon Neal)Chancellor Rachel Reeves needs to think twice about the effect of changes to inheritance tax on the farming industry (Picture: Leon Neal)
Chancellor Rachel Reeves needs to think twice about the effect of changes to inheritance tax on the farming industry (Picture: Leon Neal) | Getty Images

Changes to inheritance tax and agricultural property relief, he said, would be “devastating to the vast majority of farms and crofts”. “This is something we will demand the UK Government to review and amend as the pressures both financially and mentally this will put on family farming businesses will be immense,” he added “The sheer lack of understanding of how agriculture works throughout the UK has been highlighted by this government...”

‘Capital rich but cash poor’

As Liberal Democrat MP Alistair Carmichael points out in his Scotsman column, farmers are often “capital rich but cash poor”. If farmers’ children, who will have built up considerable knowledge about the business, are hit with a high tax bill when they inherit the family farm, they may be forced to sell land to pay it.

Given some farmers are already struggling to earn a decent living because of the market power of other companies in the food supply chain, this could be the final straw that persuades them to quit the business altogether, with the loss of generational knowledge and expertise.

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Hall was also concerned that the UK Government will no longer ring-fence agricultural funding for Scotland, with the money included in the block grant given to the Scottish Government. This means that SNP ministers can decide how much will go to agriculture and how much will go elsewhere.

Our political leaders need to take farmers’ concerns extremely seriously. If they do not, we may all, one day, come to regret taking food for granted.

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