‘Get in a row with farmers’ was probably not high on the government’s ideal November to-do list. Especially given its already alarming poll ratings, and the British public’s misty eyed romanticisation of agriculture.
But here we are, with hundreds of farmers descending on Westminster tomorrow for a ‘day of action’ to share their dissatisfaction with MPs over measures brought in by last month’s Budget to limit the exemptions farm property gets from inheritance tax.
The government’s approach will be to try to defuse the situation, emphasising that most farmers will be unaffected and that all they are doing is ensuring the richest pay their fair share.
Yet as it draws up its response, it must look beyond the short term, and recognise that this is unlikely to be the last time it comes into conflict with the farm lobby. John McTernan exaggerated unhelpfully when he likened the stand off to the miners’ strike last week – things are not that stark.
A ‘war on farmers’?
Accusations from the other side that Labour has declared war on farmers are also clearly overblown. Nevertheless, the government needs to recognise that this may end up being round one of an ongoing bout, and strategise appropriately.
This is a government whose two biggest priorities – the first two of its missions – are raising economic growth and achieving the climate transition. Both involve doing things farmers will resist.
On economic growth, there is the direct issue of Britain’s stagnant agricultural productivity, something any government seeking to take a supply side approach to growth needs to confront (it is easily forgotten that even Liz Truss listed the issue among her six supply side priorities).
At the very least, that is going to involve hard conversations about the shape of their industry –scale, methods, and particularly the age profile of farmers. One positive consequence of the inheritance tax changes might be to encourage some of the 38% of farmers that are over 65 to sell up a bit earlier – if only to their own children – which could support innovation. Then there is the issue of subsidies: famously, New Zealand has seen some of the biggest improvements in farm productivity following the phasing out of most government support in the 1980s.
READ MORE: Welsh Labour figures attempt to reassure farmers after protests outside party conference
A more immediate issue is land use. Following the inheritance tax announcement, many farmers were quick to point out that they are asset rich, but cash poor. The National Farmers’ Union chose to highlight their “extremely modest” return on capital, averaging less than 1% – but from an economists’ perspective, that suggests inefficient use of resources.
The government’s plans for planning reform and housebuilding may also lead them into conflict with farmers. The Home Builders’ Federation blames the leeway given to farmers in terms of exemptions from nitrogen pollution regulations for thwarting the construction of 160,000 homes. It is interesting that it has gone after agriculture in this way – in the Netherlands, farmers and those in favour of construction came together to resist the regulations.
On the environment, confrontation does not seem so imminent, but surely cannot be put off forever. Agriculture accounts for 12% of UK greenhouse gas emissions, and the Climate Change Committee, an independent advisory body to the government, has expressed growing frustration that “total emissions from agriculture have not significantly decreased since 2008”.
It has demanded an acceleration of progress and clearer policy, with its outgoing Chief Executive saying the government can no longer afford to “run scared” of confronting farmers on emissions. The Climate Change Committee says meat and dairy consumption should fall by 20% over the course of a decade; agricultural lobbyists deny livestock numbers need to come down at all.
Labour also has a mandate to clean up rivers, and while its focus has been on water companies, at some point it will need to address the fact that half of nitrates in rivers and a quarter of phosphates come from farms. In fact, more rivers are affected by agricultural pollution than wastewater run-offs.
Handling controversies
There are similarities between the current controversy and the government’s uncomfortable position on Winter Fuel Payments from earlier in the summer. In both cases, the policy decision it took was reasonable, but put them at odds with a vocal constituency that enjoys broad public sympathy and support – then pensioners, now farmers.
Doubtless there are those who believe the government should u-turn on these contentious policies, but I think a better lesson to take from the summer is that the government did not explain clearly enough why it was taking the decision it was, and how it fit into its wider governing strategy.
Farmers are a formidable interest group to take on, with the majority of people saying they would back farmers if they were to go ahead with a proposed strike. At the same time, it is unclear how deep that goodwill really runs.
READ MORE: ‘Five myths about Labour’s inheritance tax reforms – busted’
There is a risk of farmers overplaying their hand, turning people with what might come to appear a hyperbolic response to defend the interests of millionaires. Means testing Winter Fuel Payments affects millions of households; the inheritance tax changes less than 500 farms.
The government needs to move carefully, avoiding unnecessary antagonism and bringing the sector with it as far as possible. But it must also recognise that growing and decarbonising the economy, and building housing and infrastructure may bring more conflict.
It would be better to get out in front of these tensions rather than papering over them, explaining why change is necessary, even if it is not popular. That is not an easy road to take, but a government seeking to take the tough, responsible decisions necessary for national renewal doesn’t get to do things the easy way.
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