Labour needs to realise farmers' tax complaints are more than the usual rhetoric

Survey finds farmers have cancelled investments and sold off land following changes to taxation introduced in last October’s Budget

When governments increase taxation, there is inevitably a chorus of complaints from those forced to pay more. But things usually settle down eventually as everyone gets on with their lives.

However, the uproar within the farming community about tax changes made in Labour’s Budget last October has remained strong – and new research by CBI-Economics helps explain why.

A survey of more than 4,000 farms and businesses across the UK found 49 per cent have paused or cancelled investments, 14 per cent plan to sell off assets or parts of their farm, and 10 per cent have downsized their farming operations since October.

This suggests farmers are not simply spouting the usual rhetoric, but facing real problems following changes to inheritance tax, increases in employers’ National Insurance contributions and other measures that are hitting their profit margins. It is one thing to complain, quite another to sell assets or scrap planned investment.

Farmers hold a tractor rally in protest at changes to inheritance tax on Edinburgh's city bypass (Picture: Jeff J Mitchell) | Getty Images

NFU understands tax rises are necessary

In a letter to Chancellor Rachel Reeves, Andrew Connon, president of National Farmers Union Scotland, warned the Budget could lead to decreased food production and increased food price inflation.

NFU Scotland is now calling for urgent talks with Treasury officials to “discuss practical changes that would reduce the negative impact on primary food producers”. The union is not being unreasonable, saying it understands “that tax rises are necessary for rebuilding public services and stabilising finances”, so it sounds like there is scope for a discussion.

Connon also stressed the importance of food security. And as Donald Trump continues his assault on global free trade, this may become an increasing issue.

We live in a highly urbanised country where it can sometimes seem like food simply appears in supermarkets. The empty shelves during the Covid pandemic as global supplies were disrupted provided a reminder of how vulnerable to shocks complex, ‘just-in-time’ delivery systems can be.

In this context, domestic food production is a significantly more important part of the UK economy than the actual value in pounds and pence might suggest.

Labour needs to meet with farmers to try to thrash out a compromise deal. At the very least, their proposals deserve to be heard and taken seriously.