After a year of devastating drought, a farmer in Cornwall told me they were reluctant to build an on-farm reservoir because it could increase the tax bill inherited by their children. Think about the absurdity. At the very moment we need investment in water resilience, tax policy is encouraging the opposite.
A full reversal proved impossible under the previous government, but we have not given up. We will continue pressing the new Government to scrap this ruinous policy. A tax that penalises food production is not a policy for growth. It is a brake on it in every rural postcode.
When I spoke to the Prime Minister on a farm in August, I came away confident that he understood the damage being caused. But inheritance tax is not the only threat hanging over British farming.
For many, the greatest danger is already at the farm gate: survival. They are questioning whether they will have the cash to produce next year’s food.
Global conflicts have sent production costs soaring. The worst drought in 50 years has damaged harvests, while the most severe bluetongue outbreak on record has hit livestock businesses.
This has been the most difficult summer in a generation. We cannot control every war, disease outbreak or extreme weather event. But today’s crisis is part of a longer decline, caused by successive governments taking our ability to feed ourselves for granted.
Britain now produces less food than it did 30 years ago. We are becoming more dependent on imports just as the world grows more volatile. It may take only one more war, drought or climate shock to disrupt global trade and leave supermarket shelves bare.
We have already seen warning signs. The war in Ukraine, rising production costs and drought in Spain contributed to fresh produce shortages in 2022. This summer, some supermarkets again struggled to stock cucumbers and peppers. These may seem isolated, but they expose the growing fragility of our food system.
The Government has repeatedly said that food security is national security. It is right. Our ability to feed ourselves is a strategic asset, every bit as important as energy or defence.
Reversing the decline must begin by ensuring farmers and growers have the working capital to produce next year’s food. That is why we are asking the Government to back the Keep Britain Growing Loan, offering short-term support to viable businesses pushed to the brink.
But that can only steady the ship. The longer-term answer is investment.
Farmers are tough, ambitious and want to build resilience. Horticultural businesses want to build low-carbon glasshouses. Poultry producers want to build sheds that give birds more space while meeting demand. Others want reservoirs to capture winter rainfall for increasingly dry summers.
If government extended the annual investment allowance this would help farms increase production, improve energy efficiency, manage water better and withstand global price shocks.
Yet this brings us back to the family farm tax. The Government can create every incentive it likes, but farmers will hold back if each new reservoir, building or piece of machinery adds to the bill their children might face. No farmer wants a lifetime’s work to become a burden for a family grieving their loss.
The higher threshold may have moved some families out of the eye of the storm, but many remain exposed. The policy continues to suppress investment, encouraging farmers to keep values down and abandon projects that could strengthen our food security.
The Prime Minister heard that reality first-hand from a farming family in Cornwall. He should now examine the full consequences of the policy and ask whether taxing investment in food production can possibly be the right approach.
Like an insect infestation eating a lettuce, inheritance tax is not acting alone. It is one more pressure sucking confidence and investment from British farming. Unless the infestation is stopped, we should not be surprised when the harvest begins to fail.
Tom Bradshaw is president of the National Farmers Union
