-
News
Blog: a response to the budget and wider uncertainty
Posted: November 14, 2024
Once again, the farming and wider rural economy finds itself exposed to the consequences of Government action that show Labour has a deeply limited understanding of the realities of family farming and rural business. To end the ability of farmers to pass on the family farm from one generation to the next puts its very existence at risk. That, coupled with their announcement of significant increases to employer’s national insurance contributions will put further substantial burdens on rural business. This is my abiding reflection of Labour’s first budget in 14 years – a bad budget for farmers, a bad budget for rural business and our rural economy.
Agricultural Property Relief has been in place ever since the creation of modern inheritance tax in 1984 and meant that family farms could be passed between generations of the same family without facing crippling tax demands for doing so. That exemption was a fair one, and one of the essential foundations of a rural economy.
Without that exemption the next generation would have faced HMRC tax demands far exceeding ability to pay. The reality of farming life is that many family farms may have significant value but are increasingly working on very tight margins. The 1984 exemption allowed the last two generations of family farmers to inherit the family assets and continue the life’s work of their parents, and grandparents.
To have brought that 100% exemption to an end demonstrates the Government’s lack of understanding and is a massive blow to our industry, our way of life, our region and jeopardises the future of rural businesses up and down the country. These changes will create a barrier for new generations to enter farming and force many to delay or even abandon reinvestment in their business. The entire ANM co-operative is determined to make them think again.
The budget confirmed that all farms of over £1m in value will now face a 20% charge on transferring between generations, whilst offering our industry ten years to pay that tax. Increases to National Insurance contributions and the lowering of the threshold at which it is charged will be felt across the rural economy with little opportunity to share that burden with customers. Surely, there must be someone in the Treasury who can join the dots, look at average farm and rural business income figures, and recognise that margins across the sector are extremely tight and that any additional costs are completely unaffordable.
Of course, we have become used to politicians across both parliaments talking a good game on the needs of the farming industry. I welcomed the opportunity to meet Sir Keir Starmer on a visit to Aberdeen earlier this year. It was important that I did so, recognising ANM’s commitment to members – restated on our 150th anniversary year – that we would continue to speak out on their behalf on issues that put the future of our sector at risk.
In that spirit, I challenged the Prime Minister before his election on his commitment to farming. I explained the scale of the dependence on the sector in this area, we spoke about the importance of food security, the rural economy and the crucial part played by our members in delivering quality local produce for the table. We also discussed sustainability, and maintaining our unique Scottish landscape to its best effect.
I had been encouraged by his statement in 2023 that “losing a farm is not like losing any other business. It can’t come back.”
Quite rightly, family farmers and their representative organisations, including ANM, are outraged that the end of Agriculture Property Relief and the increased tax burdens announced last week, flies in the face of his previous statement.
As an industry, we need to be focused on facts and solutions to the looming crisis facing family agriculture. We need to lobby hard during the consultation periods and provide to both Governments the facts along with a ‘dose of realism’ to ensure they make informed decisions. We need to make the case for the reinstatement of the exemption, in the context of our nation’s need for domestic food security.
In an increasingly uncertain world, we need to be sure that we can continue to feed our nation, whatever the international climate. We must convince the current Governments of the mistakes they have made and provide resolutions that will solve the crisis they have created.
To secure a diverse rural economy, we must provide young farmers and business with the financial security they need to continue operating, safe in the knowledge that there will be the infrastructure and supply chain required to service the industry. And whilst farmers will speak out, it is now time for UK food consumers to do the same.
We all have a responsibility to deliver transformational change in the farming and rural business environment, where quality local produce is respected, valued and protected.
Our co-operative, and its members, are more determined than ever before to end the relentless onslaught of dangerous Government action, or inaction, before it’s too late. Farms are not like losing any other business. They can’t be brought back.
Grant Rogerson
Chief Executive, ANM Group