Rachel Reeves has been urged to make a second major U-turn by reversing her hated inheritance tax raid on farmers. The demand comes 24 hours after the Chancellor’s humiliating climbdown over Winter Fuel payment cuts. Senior Tory Vicky Atkins said the punishing levy is another “grave injustice” that must be put right. Her warning comes amid fears that farmers will be clobbered again today, with the Chancellor expected to take a scythe to the government’s agricultural budget in her Spending Review.
Ms Reeves has been blasted by the farming community after she slapped a 20% inheritance tax in her October Budget.
Many farmers as well as TV personality Jeremy Clarkson have held protests and rallies over the measure which will kick-in next year.
The Daily Express’s Save Britain’s Family Farms crusade has campaigned against the issue.
Hopes of a reversal were raised when Ms Reeves restored the winter fuel allowance to nine million pensioners this week.
But speaking exclusively to this newspaper Ms Reeves insisted that her policy on farms is “the right balance” and “a fair settlement”.
Asked whether she would reconsider the move the Chancellor said: “No, look, we’ve just had a conversation about the difficult decisions and the balancing act.
“We can make these changes about winter fuel, but difficult choices still remain about the balance of spending on taxation, and that’s why we are going to go ahead with those changes.”
An influential committee of MPs has urged the government to delay the changes – which are due to kick-in next April – to help protect vulnerable farmers by giving them more time to seek advice.
But explaining her refusal to budge on the issue, Ms Reeves added: “It does mean that if you have a farm and it’s owned by a couple, and you’ve got a house on the property, you can pass on £3 million tax free.
“And in addition, the tax rate even when it’s above 3 million pounds, the tax rate is just 20% compared to 40% inheritance tax for everyone else.
“That is the right balance to support our farmers. And of course, the farmers got a record settlement in the Spending Review The first phase of it last year.
“But I think that is the right balance to have a fair settlement for farmers, but also a fair settlement for other taxpayers.”
The Tories have repeatedly called on the government to reverse the policy.
Ms Atkins, the shadow environment secretary, added: “Keir Starmer and Rachel Reeves’ decision to introduce the Family Farms Tax in the Autumn budget remains utterly indefensible, and a stain on this country and this government.
“This is not just an existential threat to our rural communities, and their way of life, but a serious risk to this country as a whole.
“This week’s Winter Fuel U-turn has shown us that there is a path to victory, and under enough pressure, even this government is capable of realising the error of their ways and correcting course.”
NFU President Tom Bradshaw urged the government to “listen again” to protect British farmers.
He said: “We have put forward a credible alternative on inheritance tax that is fair and balanced that would protect British farmers without being costly to the Treasury.
“Just as the government has listened on winter fuel payments, it must now listen again, in order to protect Britain’s farmers who for generations have cared for the land and produced our food.”
Ms Reeves is widely expected to use her Spending Review to cut a post-Brexit farming fund, which Labour had promised a fund of £5billion over two years until 2026.
However, it will be slashed for all but a few farms beyond next year as Ms Reeves sets out budgets for each government department for the rest of this parliament, set to end in 2029.
The National Trust and RSPB have joined forces with farmers to warn that cutting the agricultural budget could be “catastrophic” for nature and rural businesses.
In a letter to food security and rural affairs minister Daniel Zeichner a dozen of the biggest rural industry organisations say they are “deeply concerned” about the move.
“Many of the environmental features present in the countryside and enjoyed by the public will be under threat and will disappear,” the letter says.
Sir Keir Starmer’s government has made getting to net zero by 2050 a key goal, already initiating several policies to restrict carbon emissions and make the UK greener since winning the election last July.
However, the government shocked farmers in March when it shut down applications for the Sustainable Farming Incentive (SFI), which rewards farmers for managing their land in environmentally sustainable ways, with just a few hours’ notice as they said a cap had been reached for the year.
The rural organisations say the Environmental Land Management (ELM) scheme payments are “critical to the government’s statutory targets on environmental improvement”, including the main goal of halting the decline of biodiversity.