An open letter to our local MP
Friday 15th November 2024
Subject: Concerns over the new government's taxation rules affecting agriculture
Dear Dr Caroline Johnson MP,
We are writing to you, our local MP, today to raise our substantial concerns about the latest changes to taxation that appear to be specifically targeted at the agricultural industry by the new government. James and I are a farming couple in Lincolnshire running an arable operation, along with a number of holiday cottages. We would like to ask for your support in educating the policymakers and overturning these disastrous decisions for our farming communities.
Accountability
While it’s irrelevant to this specific plight, it’s hard to believe that so many lies can be told, yet nobody in the government is ever held accountable when they do the exact opposite of what they said they would or wouldn’t do. Keir Starmer has lied to the farming community, amongst many others, prior to becoming Prime Minister. There has been no consultation or discussion with the industry prior to these terrible decisions being made. Apparently, farmers are not fitting into the ‘working people’ criteria of the new government and the majority of farmers are being penalised with these new taxes. So much so, I’ve read that one farmer has sadly taken his own life.
Farmers are not working people / Farm diversification
It has to be questioned, how can farmers not be working people? Many of the farmers we know are putting in shifts that would be illegal in employment, for very little financial reward. Often, this is also at incredible financial and physical risk, while being subject to paying these significant taxes. There are additional pressures such as costly bureaucracy and regulation, of which all farmers are now subject to whilst battling the weather and ever-escalating costs, as well as theft, fly-tipping, sheep worrying, poaching – the list goes on and on. Then we’ve been told for years to diversify to make a living and yet, as discussed in the previous email we sent to you, many of these diversifications are now receiving new tax pressures, especially when it comes to the furnished holiday lets, of which many farms have. Farm Stay was in some ways the original ‘AirBnB’, as farmers recognised the need for other income streams and offered the possibility for people to be able to stay on farms, and this not-for profit company turned 40 last year. The decisions made on this had not considered the smaller rural communities and their businesses. I digress, but I’m also aware that on a personal level, you are very well placed to have a deep understanding of the farming industry and agricultural life.
Farming structure and Agricultural Property Relief
Farmers do this job for the previous and next generation; land is owned to pass on and in most cases we are just custodians of that land and do our best with it while we’re here. We aim to pass it along to ensure continuity and knowledge is handed down the generations to grow Britain’s food; often in each lifetime piling financial resource, while ‘going without’, into increasing the farm size to be able to withstand the economic pressures that we’ve been faced with, especially over the past 20 years. It’s wealth on paper not in pocket.
The newly introduced £1million threshold for Agricultural Property Relief (APR) is an insult and very poorly researched. Few viable ‘small farms’ that one or two people can solely live off sit under that threshold; a decent sized four-bedroom house in most towns costs close to that, so the ‘it won’t affect 3/4 of farmers’ is completely misleading. These figures allow for no differentiation between highly sought after Grade 1 vegetable land, land in fashionable areas – which may not grow any more crops than other areas in the UK – a 300 acre dairy farm, and an 800 or 1200 acre arable farm. There are so many variables between land types, farm types, land uses, and profitability.
Overall value doesn’t necessarily represent that the farmer is any better off with his or her cash flow. We see many farmers on social media suggesting a threshold alteration, but that is likely to be above the value of their own farms – no genuine farmer should be penalised for the value of their farm, because it doesn’t automatically mean they are earning any more to pay these tax bills. Each farming business is individual and is scaled accordingly – larger farms are likely to be employing more people, but it doesn’t necessarily mean the bottom line of profit is any more. For James and I, there is just the two of us – I work off farm too full time and run our holiday let business, as well as driving the farm machinery in extra busy periods and harvest. This farm used to be able to employ a number of people just 20 years ago; the machines now may be very slightly bigger, but the challenges growing here have actually become more complicated and the overall pressures much higher – for one, the windows of opportunity to cultivate/plant/harvest are much tighter due to weed control and weather. The upkeep of farms and their associated buildings is often costly too, as are escalating basic operating costs such as insurance.
Doing more with less?
Doing ‘more with less’ as the new DEFRA minister is quoted to have said is what everyone in agriculture is already doing. Next time the farmer is looking at a couple of drowned fields he’s invested £1000s in planting that they will need to just write-off, or the weeks of all-nighters to get the crops in the ground, he or she may just be wondering what we are doing it for if there’s no profit or future.
Farming is a way of life. It employs many up and down the country - it is the very fabric of our countryside and is one of the last real industries in the UK. This way of life is often glamorised in the media and television, but it’s generally hard graft with a lot of financial risks for often little financial reward. Farmers are under increasing pressure to improve their practices, and to partake in environmental provisions, which we are trying to do with less manpower. That knowledge of each inch of every farm is absolutely vital for our countryside’s land management.
The consequences
If these taxes are not revoked it’s likely we’ll see farms - and we’re not just talking farms of hundreds of acres, but 1000s of acres - disappear. Sold off to pay a tax bill that hardly makes a difference to the deficit, but will kill off an entire industry. Huge corporations buying up farmland, giving fewer people control over our food and food prices. Food security at risk - in a week when there’s reports of food import issues from the EU; if we’re not growing it here then the control is elsewhere. If a war or pandemic broke out, which is certainly not out of the realms of possibility considering the instability in the world we live in, we could all starve when those countries we import from take care of themselves. Estates will be broken up to pay the tax so tenant farmers will also suffer, and while some see it as an opportunity for new entrants, they will likely be outbid by huge charities, pension funds, developers and investors - possibly who need somewhere to obtain their carbon credits. So, there’s nothing to celebrate there, and to add insult to injury, these types of purchasers are unlikely to ever be subject to the inheritance tax going forwards.
The knowledge and passion for the countryside and growing know-how could be gone. Let’s not forget a lot of our electricity is powered by farm produce, so perhaps there’ll be a knock-on effect for energy security too. Machinery dealers, parts agents, agronomists, local produce retailers etc all could disappear. Our children may not be able to buy meat or veg locally, just imported rubbish in its plastic packets grown with lower standards and regulation. Or maybe the new ideology of meat grown in a lab will be escalated. Scary.
If APR is such an issue, perhaps a system ensuring the beneficiary of the land is going to be responsible for farming it would be fairer – a system that is utilised in other countries. The consequence of APR removal is like taking a plumber’s tools away; he can’t work without the tools to do the job, and a farmer can’t farm without his or her land. Even a reduction in land area it makes each business less viable. The removal of BPR (Business Property Relief) is also another unwelcome addition to this dire situation.
As Keir Starmer said prior to his party being elected, “Losing a farm is not like losing any other business, it can’t come back,” so how the government think generationally taxing the same land or tool farmers need to do the job makes any sense is beyond belief. It will affect every single person in this country. For an £11million farm, and forgetting the business assets/machinery, let’s say 1100 acres to keep it simple which in arable is now not really significant in size, there will be a roughly £2million Inheritance Tax bill. This means that the farmer would likely then have to sell his or her land reducing the farm’s viability, or they can pay £200,000 a year for 10 years in inheritance tax – most 1,000 acre farms are not earning anywhere near that in profit. By profit I mean enough left over for the farmer for his or herself or to reinvest in machinery or equipment, or to have on one-side to grow the next crop or replace the losses from any damaged crops – obviously speaking from an arable perspective. It is catastrophic. The PR-friendly £3million that Rachel Reeves talks about is not as straight forward as she makes it sound, and if a farmer dies young without willing it to the next generation (who could be a minor) it is completely irrelevant. There is the additional blow for many farms with the removal of BPR, which only compounds the situation further. Of course, succession planning can help with this, but it is a very complex matter – there will be many specialists that can advise on the reasons why - and it’s disastrous for those who have not planned properly for the future who end up with a death in the family within the next few years. In the immediate future, multiple generations could end up paying the tax twice in the next 10 years depending on the ownership of the farm, theoretically the farm’s size could be reduced by 40%.
Economic considerations
We need to think about this – if there’s 100 farms, then in principle that’s 100 tractors that will be purchased over time. If this is reduced to one super-farm then there will be fewer negotiations, purchases and needs for many other huge businesses up and down the country. There may just use one spray supplier, one muck supplier, less machinery that can cover larger areas. This will have a much wider economic impact than some of the farms disappearing, from components manufacturing to machinery dealerships and onwards, not least the competition in the markets; it is not only the food supply that will suffer.
Other taxes affecting farmers
There are also other taxes hitting farmers that are hardly being mentioned in the media; the proposed carbon taxes on fertiliser (with which we’ve seen extreme prices over the last few years with the war in Ukraine), tax reliefs on vehicles altered, Rural Payments Agency (RPA) delinked payments reduced faster; it’s all adding pressure to a pressure pot almost ready to burst. For those that employ staff, there are further budget changes that affect them, as they do for other businesses. I have also just read the Environment Agency (EA) plan to tax or charge farmers for a waste exemption, for spreading certain types of manure, biosolids or digestate, which is a vital part of the plan for improvement of depleted soils - a global issue - and for effectively using the byproduct of renewable energy, as well as an alternative for human waste going into the sea. Although I need to read more on this to understand it better, it does not sound good and just another charge that farmers will have to pay.
There has been some media articles pop up in recent days, likely to paint the government’s agricultural spending in a more positive light, about investment into services such as the Drainage Boards, but like other public services, even with the finances they have they are failing with no consequence – we know this from the significant flooding at the well-publicised farm within 20 miles of here. A cash injection doesn’t necessarily fix the faults. With all of this to consider, as you know a farm is not a place you ‘go to work and come home from’, farmers live and breathe it from morning until night. Farmers need the government and public’s support more than ever. This new tax regime and vendetta against British agriculture cannot continue.
Fertiliser and food security
Discussing the proposed ‘carbon tax’ on fertiliser that the UK will receive in full in 2027, but won’t be implemented fully in Europe until 2038: No matter whether we like it or not, to grow food at break-even or profitable scale in the UK we need to use prilled nitrogen (fertiliser). There is a distinguished focus on improving soil health, companion cropping, use of organic matter, min-till, and specific rotations to reduce the farming carbon footprint, but many of the ‘ideals’ are hard to put into practice with such small profit margins. Farmers are doing their best, after all the sprays and fertilisers are incredibly expensive.
From my understanding, 60% of the fertiliser we use in the UK is from abroad. So, when the war in Ukraine broke out the cost of fertiliser sky-rocketed from roughly £300 per ton, to over £650 a ton and in some cases reaching close to £1000 a ton. An increase of around 300%. Grain prices momentarily went up in this period, but they soon came crashing down. The food in everyone’s shopping trolley went up, but as far as we can tell from our weekly shop, have not since reduced. There’s been a lot of profiteering, but not for the farmers.
But what’s worrying is the fertiliser supply being in the hands of another country; how the cost can multiply overnight, as well as how fast obtaining this necessity can become so difficult. Do you agree it’s a demonstration of what could happen if we totally relied on food imports? If a global disaster or war broke out, there’s a serious risk of a food shortage in the UK. If traditional farms disappear, the country is ideologically rewilded, or bought by corporations and the control is elsewhere, we might not be able to feed ourselves. It’s important to consider that when thinking about the farmer’s plight over the new taxes. We all could go hungry, our children could go hungry. It appears to be a very real threat that seems to be being overlooked.
The carbon tax on fertiliser is very unjust, we all need to eat, and with diminishing margins and volatile growing conditions, it has to be asked, why is this specific tax being thrown upon the farmers? That extra cost can’t be passed on as many farmers don’t control the cost of their produce; when it comes to grain, the world markets do, in milk the supermarkets and processers do, and vegetable prices are largely controlled by the supermarkets too. It’s strange the farmers are being penalised, when food production is vital to each and every one of us. I have to reiterate costs – we recently found a newspaper that had the grain prices in it; in 1982 feed wheat was going for approximately £130 per ton, and a new mid-sized combine harvester cost £37,000. Today the feed wheat price is hovering around the £170-£180 per ton mark, yet a new mid-size combine is in excess of £350,000. Grain has gone up 30%, combine harvesters – and that’s just one of the machines we need – have gone up approximately 900%. The figures don’t take into account any subsidy, but it illustrates just how vastly off the rate of the inflationary costs against the income on farms is. Farms have had to scale up in size, and ruthlessly control their operation to be able to break-even, and now they will be penalised for that. Perhaps there would be less emphasis on this increase in taxes if we were actually being paid fairly for our produce, and I’m confident we also speak for all other farming sectors on this.
Conclusion
Overall, it is clear that the new government are intent on destroying the family farm. Huge conglomerates, charities, pension funds and investors will be able to buy up land and compete against the cash-poor farmer, and never pay the inheritance tax. They are unlikely to farm the land, so the other taxes are also not relevant – the underlying agenda is of great concern, as is some of the provocative material and inflammatory interviews that have been given by the government and its associates on this in recent days. It is completely misguided to lean on farmers this way, and a huge concern for the food security of this country, the health of our countryside, and the very fabric of our communities. Farms are also supposed to be pivotal in helping achieve Net Zero – however, if they disappear and we import more, surely we are actually making the problem worse? The comments from the current DEFRA minister and his deputy just show how out of touch they are with the very industry they are working with, and one also has to question the conflict of interests at large with Rachel Reeves’ husband being COO of DEFRA.
While the focus is clearly on agriculture, we also can’t ignore the rest of the taxes brought to the fore by this budget that affect and suffocate all family businesses and entrepreneurship. From a country we are proud to be from and to work hard in, it’s upsetting to see there is so little to motivate people to work hard in developing an enterprise, to create businesses that employ people, or for those willing to ‘have a go’, or to put something together for their futures. All inspiration and enthusiasm is gone for the private sector, penalised for wanting to be sensible, to save or invest and prepare for retirement. We know that taxes are needed for public services, but for all of the reasons above these recent decisions can only be detrimental to our country and countryside.
While this is not the work of the Conservative party, this tax regime with specific focus on the agricultural sector needs fighting for the survival of agriculture in this country. I dread to think how many more suicides will take place because of these announcements, in an industry that already has a very high suicide rate.
We hope to see you at the rally in London to support the farmers on the 19th of November.
Yours faithfully,
Jennifer and James Braithwaite
