Donald Trump is not a regular commentator on British rural affairs, but in a press conference during his trip to Scotland earlier this week, he was asked about the UK government’s decision to impose inheritance tax on family farms and how important farmers are to a country.
In his unique style, the President put his finger right on the strange attraction of farming: “They love that way of life and they love that dirt, that dirt is the most beautiful thing they’ve ever seen”. He then explained that the US has ended the estate (inheritance) tax on US farms: “A lot of these farms don't make a lot of money, but it's a way of life and they love that way of life…We have totally ended the estate tax and those situations, so there's no estate tax. So when a parent leaves the farm to the kids, they don't have to worry.”
Keir Starmer looked distinctly uncomfortable sitting next to the President. The Prime Minister must rue the day his Chancellor, Rachel Reeves, came to him and said she had a clever wheeze to raise more inheritance tax from agricultural land. The cost to his government in terms of credibility and support in rural constituencies has already far outweighed the limited financial benefits this policy might provide, and even in a press conference with the President of the United States he could not escape the consequences.
That, by the way, was not an accident. The NFU, the Alliance and other organisations are constantly working to keep the issue of the family farm tax on the political and media agenda. Apart from anything else it is important that Keir Starmer, Rachel Reeves and other Ministers understand that this issue is not going away. This is not simply a matter of riding out a political storm for a few months. The bad press will continue, not least from April next year when the new rules come into force.
President Trump explained that one of the main reasons America had ended estate tax was that “we were losing a lot of people to suicide” as banks foreclosed on farms which could not meet the cost of borrowing to pay the tax. This could not be a more sensitive subject - and we know that mental health is a huge challenge in the farming sector - but we also know that the death of farmers who have had no opportunity to plan their inheritance in coming years will put an intolerable burden on many who inherit farms which simply cannot generate enough income to pay inheritance tax.
As NFU President, Tom Bradshaw, has pointed out:“The US recognised that such a tax wasn’t conducive to running family businesses and producing food, and that it was having a detrimental impact on farmers’ wellbeing. As is right in that situation, it took action to rectify the policy”.
That is all farmers are asking of Keir Starmer. There are solutions which would not require the complete abolition of inheritance tax, but the current policy fails to achieve the government’s stated intentions of closing a loophole whilst protecting family farms. Like the US, the UK government needs to think again.