Last year, Keir Starmer looked farmers in the eye at the annual National Farmers’ Union (NFU) conference and said he knew what it meant to lose a farm. It is “not like losing any other business”, he said. “It can’t come back.” Since then, Labour has announced a number of new measures aimed at farmers, including dropping the inheritance tax exemption that many have enjoyed. This is a drastic shift for an already strained sector and has sparked heated debate among farmers I know. But one thing has been missing: an understanding of farming and the pressures it faces.
The modern UK farming industry has been shaped by decades of government policy aimed at ensuring we have enough food to survive. While agriculture isn’t directly state controlled, the government’s influence is felt through regulation and incentives. If you are old enough, you may remember rationing, which marked an era when governments prioritised access to cheap calories, driving the shift toward intensive farming. This focus, backed by successive governments, led to farmers ramping up production by using new technology and infrastructure, and chemicals such as DDT and glyphosate. But cheap food had vast environmental and social costs, posing a drastic threat to the sector’s sustainability and resilience in the long term, as soils were depleted and biodiverse habitats gave way to monocultures.
As these environmental impacts became clear, governments gradually changed tack. After Brexit, the then government introduced a new environmental subsidy scheme and sustainable farming incentives. Even so, subsidies aren’t generally free cash (they are normally paid in arrears and cover the cost of services that farm businesses have already paid for). Many farms are already transitioning back to regenerative approaches that harness the power of natural ecosystems, but this is costly, takes time and is often hampered by historical debts incurred by borrowing to pay for the equipment and other inputs that support society’s need for cheap food.
Today, British agriculture is in a grim situation. The rising cost of fuel, electricity, fertiliser and machinery is squeezing profit margins, while labour shortages exacerbated by Brexit make it harder to find staff. The climate crisis is presenting new challenges, with increasingly unpredictable weather, water scarcity, storms and floods. Meanwhile, new trade agreements and global competition, often from countries with lower animal welfare standards, affect the prices that farmers can charge. Most agricultural businesses are characterised by extremely low returns. Since the cost of farmland is disproportionate to the revenue it produces, a farm might be worth several million pounds on paper, but could still buckle under the pressure of tax rises.
When inheritance tax relief for farms was first introduced in the 1970s, it was to help farmers plan and invest long term. But successive governments have repeatedly shown they are unable to support farmers to do that. The 2024 budget made this clear: it introduced a number of new costs and paperwork for UK farmers, including increases in employer national insurance, higher minimum wage thresholds, and even taxes on some farm vehicles, such as pickup trucks. These threaten the profitability and sustainability of farms by reducing their already tight margins, which often fund farmers’ wages and allow them to reinvest in their farms.
This isn’t purely about money. For many people, farms are part of their family legacy, rooted in the landscapes and communities they serve. These living, productive ecosystems are often handed down through generations, and encompass the farmers, their families and the ground on which they stand. Most farmers care passionately about the state of the land for which they are lifetime stewards and caretakers. But if they’re going to do the right thing, they also need to be supported – and this is where government can help.
With the average UK farmer now 59, it is crucial to support new, energetic entrants to an industry marked by mental-health challenges, tough conditions and modest pay. The changes to inheritance tax have been billed as a way of helping people break into farming, freeing up land for farmers who don’t stand to inherit. But the changes merely create more financial burdens and will make the path to generational succession harder for those who might have taken on their family farms. Meanwhile, any ground that is offered for sale will probably be snapped up by carbon offset projects that do little to benefit the farmed environment – all while cutting out new farmers.
The government seems to assume farms are like any other business, subject to the same tax rates and restrictions. Yet farming is different, as Starmer acknowledged at the NFU conference last year. It requires a long-term perspective and an understanding of the agricultural ecosystem that farmers inhabit and harness. His government risks destabilising a critical industry that is already facing immense pressure. British farmers may sometimes be prone to grumbling, but they are also resourceful and resilient, and they normally bounce back – until they don’t. When that moment happens, we may find that what we have lost is more than we can ever recover.
Tom Fairfax farms Mindrum Farm, a regenerative mixed farm in the Cheviot foothills in Northumberland
