Opinion: Government says it is listening, let’s see it act

Alistair Carmichael is Liberal Democrat MP for Orkney and Shetland, and chairs the cross-party Environment, Food and Rural Affairs (Efra) committee. Here he sets out why the government has got it so wrong on inheritance tax.

Every farmer knows this to be true: when you are in a hole, stop digging.

Last month I questioned the prime minister directly on the logic and consequences of his changes to inheritance tax.

His answers laid bare the inadequacy of the government’s thinking – and the need for a pause for reflection.

See also: Inheritance tax row dominates latest FW Question Time

Who, I asked, are the intended targets of the policy? His answer: it is purely about raising revenue, with no intention of stopping the super-rich buying up land to avoid tax (which was, of course, the rationale given by Treasury and Defra ministers). 

How many family farms will be affected? The prime minister stuck to the “500 farms” mantra from the Treasury.

As we all know, the Treasury figures do not paint the true picture – and if your starting point is wrong, then your conclusions will be wrong. 

I am therefore calling on the prime minister to consider alternative proposals, including raising the threshold for agricultural property relief (APR), and broadening the upcoming consultation so the cabinet can fully understand how the tax changes will affect rural communities.

The government’s figures on this have no credibility. If it takes the time to reflect and rethink, however, there is still the chance for a better policy to emerge.

Reform

Many farmers agree that there is a need to reform APR to prevent its misuse. The approach taken by the chancellor in the Budget, however, increasingly seems to be the worst of all worlds.

As Jeremy Moody of the Central Association for Agricultural Valuers told my committee, it hits the people it is supposed to protect, and protects those it is supposed to hit.  

Small wonder then, that since the Autumn Budget, there has been tremendous concern among the farming community. They fear that the future of their farms is at risk. 

The debate of the past few months has drawn attention to the low profitability of farming even as some talk up the idea of “millionaire farmers”.

There is an enormous mismatch between the value of assets being farmed and the return on them. 

Ensuring that farming remains a viable business will be a key focus of the Efra committee’s inquiry into the future of farming.

In our recent evidence session with Defra officials, we examined the transition to the environmental land management scheme.

A parallel inquiry is examining fairness in the food supply chain, another key influence on the profitability of farming.

Reassurance

Farmers have been crying out for stability and reassurance in policymaking, which is why the Treasury’s “see no evil, hear no evil” approach to APR is so wrongheaded. 

There is still time for the government to review the specifics of its policy and to introduce measures to protect family farms and tenant farmers, while discouraging land from being bought by the super-rich as a tax dodge.  

Meanwhile, the NFU has organised a national day of unity. Farmers still feel that the government is not listening to them – so they are going to keep raising the volume until they are heard.

Earlier this month, I was heartened to hear Defra secretary Steve Reed say at the Oxford Farming Conference that the government’s farming roadmap will “involve government and farmers working together to find answers to the challenges we face” – but words mean little without action.

If the government really believes in working with farmers, it should stop digging its heels in on APR – and stop digging itself deeper into this hole.